Kronos(KRO) - 2025 Q2 - Quarterly Results

Financial Performance Summary Kronos Worldwide experienced a net loss in Q2 2025 and reduced net income year-to-date, primarily due to lower production volumes and unabsorbed fixed costs, despite stable net sales Net Income and Earnings Per Share (EPS) Kronos Worldwide reported a net loss in Q2 2025 and a significant decline in year-to-date net income and EPS, driven by unabsorbed fixed costs | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | ($9.2 M) | $19.5 M | $8.9 M | $27.6 M | | EPS (diluted) | ($0.08) | $0.17 | $0.08 | $0.24 | - The decrease in net income for both Q2 and the first six months of 2025 was primarily driven by lower production volumes, leading to higher unabsorbed fixed costs[1] Net Sales Analysis Net sales in Q2 2025 slightly decreased due to lower TiO2 selling prices and export volumes, while year-to-date sales saw a modest increase | Period | Net Sales | Change YoY | | :--- | :--- | :--- | | Q2 2025 | $494.4 M | -1% | | YTD 2025 | $984.2 M | +1% | - Q2 2025 sales were negatively impacted by lower average TiO2 selling prices (-1%), changes in product mix (-1%), and lower sales volumes in export markets This was partially offset by higher sales volumes in North America and a positive currency effect (+2%)[2][15] - Market conditions in the first half of 2025 were affected by global uncertainty, geopolitical tensions, and customer hesitancy to build inventories, which deferred anticipated market recovery and impacted sales volumes and pricing[2] Segment Profit and EBITDA (Non-GAAP) TiO2 segment profit and EBITDA significantly declined in Q2 and year-to-date 2025, primarily due to unfavorable fixed cost absorption from reduced production | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Segment Profit | $10.9 M | $41.1 M | $52.5 M | $64.5 M | | EBITDA | $22.2 M | $56.2 M | $73.4 M | $87.9 M | - The decrease in Q2 segment profit was primarily due to unfavorable fixed cost absorption from reduced operating rates, higher cost inventory, and currency fluctuations[3] - Unabsorbed fixed production costs related to decreased production volumes were approximately $20 million in Q2 2025 and $18 million for the first six months of 2025[3] Operational Highlights Operational highlights include reduced production capacity utilization in H1 2025, contributing to higher unabsorbed costs, and the acquisition of Louisiana Pigment Company Production and Capacity Utilization Production capacity utilization significantly decreased in Q2 and H1 2025, notably to 81% in Q2, leading to increased unabsorbed fixed costs Capacity Utilization | Period | 2025 Utilization | 2024 Utilization | | :--- | :--- | :--- | | Q1 | 93% | 87% | | Q2 | 81% | 99% | | H1 | 87% | 93% | Production Volumes | Period | 2025 Production (k tons) | 2024 Production (k tons) | | :--- | :--- | :--- | | Q2 | 125 | 137 | | H1 | 268 | 258 | Corporate Developments Kronos Worldwide acquired the remaining 50% interest in Louisiana Pigment Company, L.P. in July 2024, making it a wholly-owned subsidiary - The company acquired the remaining 50% interest in Louisiana Pigment Company, L.P. (LPC) on July 16, 2024, making it a wholly-owned subsidiary LPC's results are included in Kronos's operations from that date[1] Financial Statements and Reconciliations This section presents detailed unaudited financial statements, including consolidated statements of operations and reconciliations of non-GAAP measures like Segment Profit and EBITDA Condensed Consolidated Statements of Operations The statement details the company's financial performance, showing declines in gross margin, income from operations, and a net loss in Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $494.4 | $500.5 | $984.2 | $979.3 | | Gross Margin | $62.8 | $100.2 | $169.7 | $171.7 | | Income from Operations | $7.4 | $35.9 | $45.8 | $55.4 | | Net Income (Loss) | ($9.2) | $19.5 | $8.9 | $27.6 | TiO2 Volumes (in thousands of metric tons) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales Volumes | 132 | 134 | 268 | 264 | | Production Volumes | 125 | 137 | 268 | 258 | Reconciliation of Non-GAAP Measures This section reconciles non-GAAP financial measures, bridging Income from Operations to Segment Profit and Net Income (Loss) to EBITDA Reconciliation to Segment Profit (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Income from Operations | $7.4 | $35.9 | $45.8 | $55.4 | | Segment Profit | $10.9 | $41.1 | $52.5 | $64.5 | Reconciliation to EBITDA (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | ($9.2) | $19.5 | $8.9 | $27.6 | | EBITDA | $22.2 | $56.2 | $73.4 | $87.9 | Forward-Looking Statements and Risk Factors The company identifies key forward-looking statements and risks, including those related to TiO2 supply and demand, raw material costs, global economic conditions, and competitive pressures - Management has identified several key risks that could affect future performance, including: * Future supply and demand for TiO2 products * Changes in raw material and energy costs * General global economic and political conditions, including tariffs and trade policies * Operating interruptions and technology-related disruptions * Competition from other producers, including Chinese suppliers * Fluctuations in currency exchange rates[7][10]