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DALLAS, TEXAS, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Kronos Worldwide, Inc. (NYSE:KRO) today reported net income of $29.5 million, or $.25 per share, in the second quarter of 2019 compared to net income of $77.7 million, or $.67 per share, in the second quarter of 2018. For the first six months of 2019, Kronos Worldwide reported net income of $59.8 million, or $.52 per share, compared to net income of $148.4 million, or $1.28 per share in the first six months of 2018. We reported lower net income in the 2019 periods primarily due to lower income from operations resulting from the effect 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 $484.5 million in the second quarter of 2019 were $12.7 million, or 3%, higher than in the second quarter of 2018. Net sales of $921.0 million in the first six months of 2019 were $18.8 million, or 2%, higher than in the first six 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 8% lower in the second quarter and first six months of 2019 as compared to the same prior year periods. Our average TiO2 selling prices at the end of the second quarter of 2019 were 2% higher than at the end of the first quarter with higher prices in all major markets and were 2% lower than at the end of 2018 with lower prices in the European, North American and Latin American markets partially offset by higher prices in the export market. TiO2 sales volumes in the second quarter of 2019 were 15% higher as compared to the second quarter of 2018 primarily due to higher sales in the European, North American and export markets. TiO2 sales volumes in the first six months of 2019 were 15% higher as compared to the same period in 2018 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 $17 million in the second quarter of 2019 and approximately $32 million in the first six 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 second quarter of 2019 was $51.1 million as compared to $124.2 million in the second quarter of 2018. For the year-to-date period, the Company’s segment profit was $104.4 million as compared to $236.0 million in the first six months of 2018. Segment profit decreased in the 2019 periods as the unfavorable effect of lower average TiO2 selling prices and higher raw materials (primarily third-party feedstock ore) and other production costs more than offset the favorable impact of higher sales volumes. Kronos’ TiO2 production volumes in the second quarter and first six months of 2019 were comparable to the same periods in 2018. We operated our production facilities at overall average capacity utilization rates of 97% in the first six months of 2019 (97% in the first and second quarters of 2019) compared to 96% in 2018 (95% and 97% in the first and second quarters of 2018, respectively). Fluctuations in currency exchange rates also affected segment profit comparisons, which decreased segment profit by approximately $9 million in the second quarter of 2019 and by approximately $1 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 second quarter of 2019 was $57.5 million compared to EBITDA of $127.3 million in the second quarter of 2018. For the first six months of 2019, the Company’s EBITDA was $116.0 million compared to $244.1 million in the first six 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:
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:
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)
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Net sales | $ | 471.8 | $ | 484.5 | $ | 902.2 | $ | 921.0 | |||||||
Cost of sales | 300.0 | 375.0 | 555.6 | 702.2 | |||||||||||
Gross margin | 171.8 | 109.5 | 346.6 | 218.8 | |||||||||||
Selling, general and administrative expense | 58.0 | 57.9 | 116.4 | 115.6 | |||||||||||
Other operating income (expense): | |||||||||||||||
Currency transactions, net | 9.8 | (1.1 | ) | 4.8 | (.2 | ) | |||||||||
Other income, net | .2 | .3 | .2 | .6 | |||||||||||
Corporate expense | (3.9 | ) | (4.3 | ) | (7.8 | ) | (8.1 | ) | |||||||
Income from operations | 119.9 | 46.5 | 227.4 | 95.5 | |||||||||||
Other income (expense): | |||||||||||||||
Trade interest income | .4 | .3 | .8 | .8 | |||||||||||
Other interest and dividend income | .8 | 1.4 | 1.4 | 3.0 | |||||||||||
Marketable equity securities | (2.2 | ) | 1.2 | (2.4 | ) | 1.8 | |||||||||
Other components of net periodic pension and OPEB cost |
(3.8 | ) | (3.8 | ) | (7.6 | ) | (7.6 | ) | |||||||
Interest expense | (5.0 | ) | (4.7 | ) | (9.8 | ) | (9.5 | ) | |||||||
Income before income taxes | 110.1 | 40.9 | 209.8 | 84.0 | |||||||||||
Income tax expense | 32.4 | 11.4 | 61.4 | 24.2 | |||||||||||
Net income | $ | 77.7 | $ | 29.5 | $ | 148.4 | $ | 59.8 | |||||||
Net income per basic and diluted share | $ | .67 | $ | .25 | $ | 1.28 | $ | .52 | |||||||
Weighted average shares used in the | |||||||||||||||
calculation of net income per share | 115.9 | 115.9 | 115.9 | 115.9 | |||||||||||
TiO2 data - metric tons in thousands: | |||||||||||||||
Sales volumes | 137 | 158 | 262 | 301 | |||||||||||
Production volumes | 136 | 136 | 269 | 270 |
KRONOS WORLDWIDE, INC.
RECONCILIATION OF INCOME FROM
OPERATIONS TO SEGMENT PROFIT
(In millions)
(Unaudited)
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June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Income from operations | $ | 119.9 | $ | 46.5 | $ | 227.4 | $ | 95.5 | |||||||
Adjustments: | |||||||||||||||
Trade interest income | .4 | .3 | .8 | .8 | |||||||||||
Corporate expense | 3.9 | 4.3 | 7.8 | 8.1 | |||||||||||
Segment profit | $ | 124.2 | $ | 51.1 | $ | 236.0 | $ | 104.4 |
RECONCILIATION OF NET INCOME TO EBITDA
(In millions)
(Unaudited)
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Net income | $ | 77.7 | $ | 29.5 | $ | 148.4 | $ | 59.8 | |||||||
Adjustments: | |||||||||||||||
Depreciation expense | 12.2 | 11.9 | 24.5 | 22.5 | |||||||||||
Interest expense | 5.0 | 4.7 | 9.8 | 9.5 | |||||||||||
Income tax expense | 32.4 | 11.4 | 61.4 | 24.2 | |||||||||||
EBITDA | $ | 127.3 | $ | 57.5 | $ | 244.1 | $ | 116.0 |
IMPACT OF PERCENTAGE CHANGE IN NET SALES
(Unaudited)
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June 30, | June 30, | ||||||||||
2019 vs. 2018 | 2019 vs. 2018 | ||||||||||
Percentage change in net sales: | |||||||||||
TiO2 product pricing | (8 | )% | (8 | )% | |||||||
TiO2 sales volumes | 15 | 15 | |||||||||
TiO2 product mix/other | - | (1 | ) | ||||||||
Changes in currency exchange rates | (4 | ) | (4 | ) | |||||||
Total | 3 | % | 2 | % |
Janet Keckeisen Vice President, Corporate Strategy and Investor Relations (972) 233-1700