Kronos Worldwide Reports Second Quarter 2022 Results
03 Agosto 2022 - 3:15PM
FOR IMMEDIATE RELEASE
Kronos Worldwide, Inc. (NYSE:KRO) today reported
net income of $45.9 million, or $.40 per share, in the second
quarter of 2022 compared to $25.7 million, or $.22 per share, in
the second quarter of 2021. For the first six months of 2022,
Kronos Worldwide reported net income of $103.4 million, or $.90 per
share, compared to net income of $45.3 million, or $.39 per share
in the first six months of 2021. Net income increased in the 2022
periods as compared to the same periods in 2021 primarily due to
higher income from operations resulting from the net effects of
higher average TiO2 selling prices, favorable effects of changes in
currency exchange rates and higher production costs, as discussed
below.
Net sales of $565.3 million in the second
quarter of 2022 were $86.7 million, or 18%, higher than in the
second quarter of 2021. Net sales of $1.1 billion in the first six
months of 2022 were $184.6 million, or 20%, higher than in the
first six months of 2021. Net sales increased in the 2022 periods
compared to the same periods in 2021 primarily due to higher
average TiO2 selling prices. TiO2 sales volumes were 1% lower in
the second quarter of 2022 as compared to the second quarter of
2021 and our sales volumes in the first six months of 2022 were
comparable to the first six months of 2021. Average TiO2 selling
prices were 26% higher in the second quarter of 2022 as compared to
the second quarter of 2021 and 25% higher in the first six months
of 2022 as compared to the first six months of 2021. Average TiO2
selling prices at the end of the second quarter of 2022 were 12%
higher than the end of 2021. Fluctuations in currency exchange
rates (primarily the euro) also affected net sales comparisons,
decreasing net sales by approximately $29 million in the second
quarter of 2022 and approximately $51 million in the first six
months of 2022, as compared to the same periods in 2021. The table
at the end of this press release shows how each of these items
impacted net sales.
Our TiO2 segment profit (see description of
non-GAAP information below) in the second quarter of 2022 was $69.5
million as compared to $47.7 million in the second quarter of 2021.
For the year-to-date period, the Company’s segment profit was
$156.3 million as compared to $85.8 million in the first six months
of 2021. Segment profit increased in the 2022 periods as compared
to 2021 primarily due to the net effect of higher average TiO2
selling prices and higher production costs, including raw material
and energy costs. TiO2 production volumes were 4% lower in the
second quarter of 2022 compared to the second quarter of 2021 and
1% higher in the first six months of 2022 compared to the same
period of 2021. The lower production volumes in the second quarter
of 2022 were primarily due to maintenance activities and
availability of certain raw materials which temporarily reduced our
production rates. We operated our production facilities at 98% of
practical capacity utilization in the first six months of 2022
(100% and 95% in the first and second quarters of 2022,
respectively) compared to 99% in the first six months of 2021 (97%
and 100% in the first and second quarters of 2021, respectively).
Fluctuations in currency exchange rates (primarily the euro)
increased income from operations approximately $12 million in the
second quarter of 2022 as compared to the second quarter of 2021
and increased income from operations approximately $7 million in
the first six months of 2022 as compared to the first six months of
2021.
Our net income before interest expense, income
taxes and depreciation and amortization expense (EBITDA) (see
description of non-GAAP information below) in the second quarter of
2022 was $78.1 million compared to EBITDA of $52.9 million in the
second quarter of 2021. For the first six months of 2022, the
Company’s EBITDA was $171.3 million compared to $96.2 million in
the first six months of 2021.
The statements in this release relating to
matters that are not historical facts are forward-looking
statements that represent management's beliefs and assumptions
based on currently available information. Although we believe that
the expectations reflected in such forward-looking statements are
reasonable, we cannot give any assurances that these expectations
will prove to be correct. Such statements by their nature involve
substantial risks and uncertainties that could significantly impact
expected results, and actual future results could differ materially
from those described in such forward-looking statements. While it
is not possible to identify all factors, we continue to face many
risks and uncertainties. The factors that could cause actual future
results to differ materially include, but are not limited to, the
following:
- Future supply and demand for our
products
- The extent of the dependence of
certain of our businesses on certain market sectors
- The cyclicality of our
business
- Customer and producer inventory
levels
- Unexpected or earlier-than-expected
industry capacity expansion
- Changes in raw material and other
operating costs (such as energy and ore costs)
- Changes in the availability of raw
materials (such as ore)
- General global economic and
political conditions that harm the worldwide economy, disrupt our
supply chain, increase material and energy costs or reduce demand
or perceived demand for our TiO2 products or impair our ability to
operate our facilities (including changes in the level of gross
domestic product in various regions of the world, natural
disasters, terrorist acts, global conflicts and public health
crises such as COVID-19)
- Competitive products and substitute
products
- Customer and competitor
strategies
- Potential consolidation of our
competitors
- Potential consolidation of our
customers
- The impact of pricing and
production decisions
- Competitive technology
positions
- Potential difficulties in upgrading
or implementing accounting and manufacturing software systems
- The introduction of trade barriers
or trade disputes
- Fluctuations in currency exchange
rates (such as changes in the exchange rate between the U.S. dollar
and each of the euro, the Norwegian krone and the Canadian dollar
and between the euro and the Norwegian krone), or possible
disruptions to our business resulting from uncertainties associated
with the euro or other currencies
- Operating interruptions (including,
but not limited to, labor disputes, leaks, natural disasters,
fires, explosions, unscheduled or unplanned downtime such as
disruptions in energy supplies, transportation interruptions,
cyber-attacks and public health crises such as COVID-19)
- Our ability to renew or refinance
credit facilities
- Potential increases in interest
rates
- Our ability to maintain sufficient
liquidity
- The ultimate outcome of income tax
audits, tax settlement initiatives or other tax matters, including
future tax reform
- Our ability to utilize income tax
attributes, the benefits of which may or may not have been
recognized under the more-likely-than-not recognition criteria
- Environmental matters (such as
those requiring compliance with emission and discharge standards
for existing and new facilities)
- Government laws and regulations and
possible changes therein including new environmental health and
safety regulations (such as those seeking to limit or classify TiO2
or its use)
- Possible future litigation.
Should one or more of these risks materialize
(or the consequences of such a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ
materially from those forecasted or expected. The Company disclaims
any intention or obligation to update or revise any forward-looking
statement whether as a result of changes in information, future
events or otherwise.
In an effort to provide investors with
additional information regarding the Company's results of
operations as determined by accounting principles generally
accepted in the United States of America (GAAP), the Company has
disclosed certain non-GAAP information which the Company believes
provides useful information to investors:
- The Company discloses segment
profit, which is used by the Company’s management to assess the
performance of the Company’s TiO2 operations. The Company believes
disclosure of segment profit provides useful information to
investors because it allows investors to analyze the performance of
the Company’s TiO2 operations in the same way that the Company’s
management assesses performance. The Company defines segment profit
as net income before income tax expense and certain general
corporate items. These general corporate items include corporate
expense and the components of other income (expense) except for
trade interest income; and
- The Company discloses EBITDA, which
is also used by the Company’s management to assess the performance
of the Company’s TiO2 operations. The Company believes disclosure
of EBITDA provides useful information to investors because it
allows investors to analyze the performance of the Company’s TiO2
operations in the same way that the Company’s management assesses
performance. The Company defines EBITDA as net income before
interest expense, income taxes and depreciation and amortization
expense.
Kronos Worldwide, Inc. is a major international producer of
titanium dioxide products.
KRONOS WORLDWIDE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (In millions, except per share and metric ton
data)
|
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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|
2021 |
|
2022 |
|
2021 |
|
2022 |
|
|
(unaudited) |
Net sales |
|
$ |
478.6 |
|
|
$ |
565.3 |
|
|
$ |
943.6 |
|
|
$ |
1,128.2 |
|
Cost of sales |
|
|
369.6 |
|
|
|
444.8 |
|
|
|
738.9 |
|
|
|
858.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
109.0 |
|
|
|
120.5 |
|
|
|
204.7 |
|
|
|
269.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense |
|
|
62.9 |
|
|
|
63.2 |
|
|
|
120.9 |
|
|
|
124.6 |
|
Other operating income
(expense): |
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|
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|
|
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|
|
Currency transactions, net |
|
|
.5 |
|
|
|
11.9 |
|
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|
- |
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|
|
10.4 |
|
Other income, net |
|
|
1.1 |
|
|
|
.2 |
|
|
|
1.9 |
|
|
|
.6 |
|
Corporate expense |
|
|
(3.9 |
) |
|
|
(4.2 |
) |
|
|
(7.9 |
) |
|
|
(7.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
43.8 |
|
|
|
65.2 |
|
|
|
77.8 |
|
|
|
148.5 |
|
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Other income (expense): |
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Trade interest income |
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|
.1 |
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|
|
.1 |
|
|
|
.1 |
|
Other interest and dividend income |
|
|
.1 |
|
|
|
.5 |
|
|
|
.1 |
|
|
|
.6 |
|
Marketable equity securities |
|
|
.5 |
|
|
|
2.3 |
|
|
|
1.3 |
|
|
|
2.4 |
|
Other components of net periodic pension and OPEB
cost |
|
|
(4.3 |
) |
|
|
(3.1 |
) |
|
|
(8.6 |
) |
|
|
(6.3 |
) |
Interest expense |
|
|
(5.2 |
) |
|
|
(4.3 |
) |
|
|
(10.2 |
) |
|
|
(8.8 |
) |
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Income before income taxes |
|
|
34.9 |
|
|
|
60.7 |
|
|
|
60.5 |
|
|
|
136.5 |
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|
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|
|
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|
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|
|
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Income tax expense |
|
|
9.2 |
|
|
|
14.8 |
|
|
|
15.2 |
|
|
|
33.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
25.7 |
|
|
$ |
45.9 |
|
|
$ |
45.3 |
|
|
$ |
103.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per basic and
diluted share |
|
$ |
.22 |
|
|
$ |
.40 |
|
|
$ |
.39 |
|
|
$ |
.90 |
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Weighted average shares used
in the calculation of net income per share |
|
|
115.5 |
|
|
|
115.5 |
|
|
|
115.5 |
|
|
|
115.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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TiO2 data - metric tons in
thousands: |
|
|
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|
|
|
|
|
|
|
|
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Sales volumes |
|
|
144 |
|
|
|
142 |
|
|
|
285 |
|
|
|
286 |
|
Production volumes |
|
|
137 |
|
|
|
132 |
|
|
|
267 |
|
|
|
270 |
|
KRONOS WORLDWIDE, INC.RECONCILIATION OF INCOME
FROMOPERATIONS TO SEGMENT PROFIT(In millions)(unaudited)
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Three months ended |
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|
Six months ended |
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|
June 30, |
|
|
June 30, |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
43.8 |
|
|
$ |
65.2 |
|
|
$ |
77.8 |
|
|
$ |
148.5 |
|
|
|
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Adjustments: |
|
|
|
|
|
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|
|
Trade interest income |
|
|
- |
|
|
|
.1 |
|
|
|
.1 |
|
|
|
.1 |
Corporate expense |
|
|
3.9 |
|
|
|
4.2 |
|
|
|
7.9 |
|
|
|
7.7 |
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
Segment profit |
|
$ |
47.7 |
|
|
$ |
69.5 |
|
|
$ |
85.8 |
|
|
$ |
156.3 |
RECONCILIATION OF NET INCOME TO EBITDA(In
millions)(unaudited)
|
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|
|
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|
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|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
June 30, |
|
|
June 30, |
|
|
2021 |
|
2022 |
|
|
2021 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
25.7 |
|
$ |
45.9 |
|
|
$ |
45.3 |
|
$ |
103.4 |
|
|
|
|
|
|
|
|
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|
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|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
12.8 |
|
|
13.1 |
|
|
|
25.5 |
|
|
26.0 |
Interest expense |
|
|
5.2 |
|
|
4.3 |
|
|
|
10.2 |
|
|
8.8 |
Income tax expense |
|
|
9.2 |
|
|
14.8 |
|
|
|
15.2 |
|
|
33.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
52.9 |
|
$ |
78.1 |
|
|
$ |
96.2 |
|
$ |
171.3 |
IMPACT OF PERCENTAGE CHANGE IN NET
SALES(unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2022 vs. 2021 |
|
2022 vs. 2021 |
|
|
|
|
|
|
|
Percentage change in net
sales: |
|
|
|
|
|
TiO2 product pricing |
|
26 |
% |
|
25 |
% |
|
TiO2 sales volume |
|
(1 |
) |
|
- |
|
|
TiO2 product mix/other |
|
(1 |
) |
|
- |
|
|
Changes in currency exchange rates |
|
(6 |
) |
|
(5 |
) |
|
|
|
|
|
|
|
Total |
|
18 |
% |
|
20 |
% |
|
Contact: Janet Keckeisen, Vice President, Investor Relations,
(972) 233-1700
Kronos Worldwide (NYSE:KRO)
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