Kronos(US:KRO)2025-11-06 21:18Financial Performance - The company reported a net loss of $37.0 million, or $0.32 per share, in Q3 2025, compared to a net income of $71.8 million, or $0.62 per share, in Q3 2024[75]. - For the first nine months of 2025, the company reported a net loss of $28.1 million, or $0.24 per share, compared to a net income of $99.4 million, or $0.86 per share, in the same period of 2024[75]. - Segment profit decreased by $58.7 million to a segment loss of $15.3 million in Q3 2025, compared to a profit of $43.4 million in Q3 2024, with currency exchange rates increasing the segment loss by approximately $4 million[98]. - Segment profit decreased by $70.7 million to $37.2 million in the first nine months of 2025 compared to $107.9 million in the same period of 2024[111]. - Income from operations rose by $5 million, but customer demand remained weak, with expectations of no meaningful improvement in sales volumes in the near term[125]. Sales and Pricing - Average TiO2 selling prices declined by 6% during the first nine months of 2025, and were 2% lower than the average prices in the first nine months of 2024[82]. - Sales volumes decreased by 3% in Q3 2025 compared to Q3 2024, primarily due to lower sales in European and export markets[93]. - Net sales for the first nine months of 2025 decreased by 2%, or $22.9 million, primarily due to a 2% decrease in average TiO2 selling prices[104]. - Net sales increased by $11 million due to a weakening of the U.S. dollar relative to the euro, translating euro-denominated sales into more U.S. dollars in 2025 compared to 2024[124]. Costs and Expenses - Cost of sales increased by $26.4 million, or 7%, in Q3 2025 compared to Q3 2024, primarily due to unfavorable fixed cost absorption and higher inventory costs[94]. - Cost of sales increased by $33.4 million, or 3%, in the first nine months of 2025, with cost of sales as a percentage of net sales rising to 85% from 81% in the same period of 2024[106][107]. - Gross margin as a percentage of net sales decreased to 10% in Q3 2025 from 21% in Q3 2024, driven by lower average TiO2 selling prices and reduced production volumes[96]. - Gross margin as a percentage of net sales decreased to 15% in the first nine months of 2025 from 19% in the same period of 2024[108]. - Selling, general and administrative expense in Q3 2025 was $2.2 million lower than in Q3 2024, remaining consistent at 13% of net sales for both periods[97]. - Selling, general and administrative expense increased by $10.9 million, or 6%, in the first nine months of 2025, with the expense as a percentage of net sales rising to 13%[110]. Liquidity and Debt - As of September 30, 2025, the company had total cash, cash equivalents, and restricted cash of $36.4 million, with $34.6 million held by non-U.S. subsidiaries[152]. - The company expects to have sufficient liquidity to meet short-term obligations for the twelve-month period ending September 30, 2026, and long-term obligations for the five-year period ending September 30, 2030[152]. - The Global Revolver has total borrowing availability of approximately $342 million as of September 30, 2025, with maturity in July 2029[152]. - Outstanding debt obligations included €426.174 million on 9.50% Senior Secured Notes due March 2029, with a carrying amount of $502.3 million[146]. - The company is in compliance with all debt covenants as of September 30, 2025, and expects to maintain compliance unless future operating results differ materially from expectations[147]. Operational Efficiency - The company operated its production facilities at 85% practical capacity utilization in the first nine months of 2025, down from 93% in the same period of 2024[83]. - Capital expenditures were $32.7 million in the first nine months of 2025, up from $17.2 million in the same period of 2024, aimed at improving manufacturing cost-effectiveness[141]. - The company plans to invest approximately $45 million in capital expenditures for 2025, with $32.7 million spent through September 30, 2025[153]. - The company is implementing targeted workforce reductions to improve long-term cost structure and capitalize on market share opportunities[127]. Market Outlook - The company anticipates long-term demand growth for TiO2 of 2% to 3% per year, consistent with GDP growth expectations[73]. - The company expects fourth quarter operating results to be lower than the third quarter due to weaker demand and continued pricing pressure[128]. - The TiO2 industry is cyclical, and changes in pricing, production volumes, and customer demand significantly impact the company's earnings and operating cash flows[150]. - The company routinely evaluates liquidity requirements and may seek to refinance or restructure indebtedness, raise additional capital, or engage in acquisitions in the TiO2 industry[151]. - The company may delay planned capital projects based on market conditions, including expected demand and availability of necessary materials[153]. Taxation - Income tax expense decreased to $7.9 million in Q3 2025 from $22.7 million in Q3 2024, primarily due to lower earnings[100]. - Income tax expense for the first nine months of 2025 was $19.0 million, down from $34.7 million in the same period of 2024, reflecting lower earnings and jurisdictional mix[113]. Interest and Other Income - Interest expense in Q3 2025 increased by $2.3 million due to higher average debt balances and interest rates, while an unrealized loss of $0.1 million was recognized compared to a gain of $2.2 million in Q3 2024[99].