Kronos Worldwide Reports Third Quarter 2019 Results

Dallas, Texas, Nov. 07, 2019 (GLOBE NEWSWIRE) — Kronos Worldwide, Inc. (NYSE:KRO) today reported net income of $17.9 million, or $.16 per share, in the third quarter of 2019 compared to net income of $32.6 million, or $.28 per share, in the third quarter of 2018.  For the first nine months of 2019, Kronos Worldwide reported net income of $77.7 million, or $.67 per share, compared to net income of $181.0 million, or $1.56 per share in the first nine months of 2018.  We reported lower net income in the 2019 periods primarily due to lower income from operations resulting from the effects of lower average selling prices and higher raw materials and other production costs partially offset by higher sales volumes as discussed below. Net sales of $437.4 million in the third quarter of 2019 were $27.1 million, or 7%, higher than in the third quarter of 2018.  Net sales of $1.4 billion in the first nine months of 2019 were $45.9 million, or 3%, higher than in the first nine months of 2018.  Net sales increased in 2019 due to the net effect of lower average TiO₂ selling prices and higher sales volumes.  The Company’s average TiO₂ selling prices were 5% lower in the third quarter of 2019 as compared to the third quarter of 2018 and 7% lower in the first nine months of 2019 as compared to the same prior year period.    Our average TiO₂ selling prices at the end of the third quarter of 2019 were 2% higher than at the end of the second quarter of 2019 and comparable to the end of 2018.  TiO₂ sales volumes were 17% higher in the third quarter of 2019 and 16% higher in the first nine months of 2019 as compared to the same prior year periods primarily due to higher sales in all major markets.  Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $9 million in the third quarter of 2019 and approximately $41 million in the first nine months of 2019 as compared to the same periods in 2018.  The table at the end of this press release shows how each of these items impacted net sales.The Company’s TiO₂ segment profit (see description of non-GAAP information below) in the third quarter of 2019 was $36.8 million as compared to $61.7 million in the third quarter of 2018.  For the year-to-date period, the Company’s segment profit was $141.2 million as compared to $297.7 million in the first nine months of 2018.  Segment profit decreased in the 2019 periods as the unfavorable effects of lower average TiO₂ selling prices and higher raw materials and other production costs more than offset the favorable impact of higher sales volumes.  Kronos’ TiO₂ production volumes were 4% higher in the third quarter of 2019 and 1% higher in the first nine months of 2019 as compared to the same periods in 2018.  We operated our production facilities at overall average capacity utilization rates of 97% in the first nine months of 2019 (97% in each of the first, second and third quarters of 2019) compared to 95% in 2018 (95%, 97% and 92% in the first, second and third quarters of 2018, respectively).  Fluctuations in currency exchange rates also affected segment profit comparisons, which increased segment profit by approximately $6 million in the third quarter of 2019 and by approximately $5 million in the year-to-date 2019 period as compared to the same periods in 2018.The Company’s net income before income taxes, interest expense and depreciation and amortization expense (“EBITDA”) (see description of non-GAAP information below) in the third quarter of 2019 was $40.6 million compared to EBITDA of $64.0 million in the third quarter of 2018.  For the first nine months of 2019, the Company’s EBITDA was $156.6 million compared to $308.1 million in the first nine months of 2018.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 the Company believes that the expectations reflected in such forward-looking statements are reasonable, it 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, the Company continues 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 productsThe extent of the dependence of certain of our businesses on certain market sectorsThe cyclicality of our businessCustomer and producer inventory levelsUnexpected or earlier-than-expected industry capacity expansionChanges 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 (such as changes in the level of gross domestic product in various regions of the world and the impact of such changes on demand for TiO₂)Competitive products and substitute productsCustomer and competitor strategiesPotential consolidation of our competitorsPotential consolidation of our customersThe impact of pricing and production decisionsCompetitive technology positionsPotential difficulties in upgrading or implementing accounting and manufacturing software systemsThe introduction of trade barriersPossible disruption of our business, or increases in our cost of doing business, resulting from terrorist activities or global conflictsFluctuations 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), or possible disruptions to our business resulting from potential instability resulting from uncertainties associated with the euro or other currenciesOperating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions and cyber-attacks)Our ability to renew or refinance credit facilitiesOur ability to maintain sufficient liquidityThe ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reformOur ability to utilize income tax attributes, the benefits of which may or may not have been recognized under the more-likely-than-not recognition criteriaEnvironmental 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 regulationsThe ultimate resolution of pending litigationPossible 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 income before income taxes, interest expense and certain general corporate items.  Corporate items excluded from the determination of segment profit include corporate expense and interest income not attributable to the Company’s TiO₂ operations; andThe 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 income taxes, interest expense 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)
(Unaudited)
KRONOS WORLDWIDE, INC.
RECONCILIATION OF INCOME FROM
OPERATIONS TO SEGMENT PROFIT
(In millions)
 (Unaudited)
RECONCILIATION OF NET INCOME TO EBITDA
(In millions)
 (Unaudited)
IMPACT OF PERCENTAGE CHANGE IN NET SALES
 (Unaudited)Janet Keckeisen
Vice President, Corporate Strategy and Investor Relations
(972) 233-1700