Dallas, TX, May 06, 2020 (GLOBE NEWSWIRE) — Kronos Worldwide, Inc. (NYSE:KRO) today reported net income of $27.0 million, or $.23 per share, in the first quarter of 2020 compared to net income of $30.3 million, or $.26 per share, in the first quarter of 2019. We reported lower net income in the first quarter 2020 as compared to the first quarter of 2019 primarily due to lower income from operations resulting from the effects of lower sales volumes and higher raw materials and other production costs, as discussed below. Comparability of our results was also impacted by the effects of changes in currency exchange rates, also discussed below.
Net sales of $421.0 million in the first quarter of 2020 were $15.5 million, or 4%, lower than in the first quarter of 2019. Net sales decreased in the first quarter of 2020 primarily due to lower sales volumes. TiO2 sales volumes were 5% lower in the first quarter of 2020 as compared to the first quarter of 2019 due to lower sales volumes in the North American, Latin American and export markets partially offset by higher sales volumes in the European market. Our average TiO2 selling prices in the first quarter of 2020 were comparable to our average TiO2 selling prices in the first quarter of 2019. Our average TiO2 selling prices at the end of the first quarter of 2020 were 2% lower than at the end of 2019. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $7 million in the first quarter of 2020 as compared to the first quarter of 2019. 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 first quarter of 2020 was $47.2 million as compared to $53.3 million in the first quarter of 2019. Segment profit decreased in the first quarter of 2020 primarily due to lower sales volumes and higher raw materials and other production costs. TiO2 production volumes were 1% lower in the first quarter of 2020 as compared to the first quarter of 2019. We operated our production facilities at overall average capacity utilization rates of 95% and 97% in the first quarters of 2020 and 2019, respectively. Fluctuations in currency exchange rates also affected segment profit comparisons, which increased segment profit by approximately $11 million in the first quarter of 2020 as compared to the first quarter of 2019.Our net income before interest expense, income taxes and depreciation and amortization expense (EBITDA) (see description of non-GAAP information below) in the first quarter of 2020 was $54.9 million compared to EBITDA of $58.5 million in the first quarter of 2019. Other income (expense) in the first quarter of 2020 includes a pre-tax insurance settlement gain of $1.5 million ($1.2 million, or $.01 per share, net of income tax expense) related to a property damage claim. Although the COVID-19 pandemic had limited impact on our operations during the first quarter of 2020, we believe U.S. and worldwide gross domestic product will be significantly impacted for an indeterminate period, including the demand for our products and those of our customers. Consequently, we expect to report lower sales and earnings than would otherwise have been expected for the remainder of 2020. The extent of the impact will depend on numerous factors, including future developments, and therefore is uncertain and cannot be predicted.
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 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 that harm the worldwide economy, disrupt our supply chain, increase material 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 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 barriers or trade disputesFluctuations 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 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, cyber-attacks and public health crises such as COVID-19)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 regulations such as those seeking to limit or classify TiO2 or its usePossible 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 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)
(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)Source: Kronos Worldwide, Inc.
Contact: Janet Keckeisen, Vice President, Corporate Strategy and Investor Relations, (972) 233-1700
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