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Kronos Worldwide (KRO) Q2 Earnings Lag, Sales Top Estimates

Zacks Equity Research

Kronos Worldwide, Inc. KRO recorded profit of $29.5 million or 25 cents per share in second-quarter 2019, down from $77.7 million or 67 cents in the year-ago quarter. Earnings per share missed the Zacks Consensus Estimate of 34 cents.

Results in the reported quarter were affected by lower average selling prices as well as higher raw materials and other production costs, partly offset by increased sales volumes.

Net sales rose 3% year over year to $484.5 million as higher sales volumes offset lower average titanium dioxide (TiO2) selling prices. The top line beat the Zacks Consensus Estimate of $466.9 million.

Kronos Worldwide Inc Price, Consensus and EPS Surprise

 

Kronos Worldwide Inc Price, Consensus and EPS Surprise

Kronos Worldwide Inc price-consensus-eps-surprise-chart | Kronos Worldwide Inc Quote

 

Volumes and Pricing

Average TiO2 selling prices fell 8% year over year in the reported quarter. Average selling prices at the end of the quarter fell 2% year over year. Lower prices in European, Latin American and North American markets were partly offset by higher prices in the export market.

The company’s TiO2 sales volume rose 15% year over year on higher sales across all key markets. TiO2 production volumes in the second quarter were comparable on a year-over-year basis.

Profit in the TiO2 segment was $51.1 million in the reported quarter, down 58.9% from $124.2 million in the year-ago quarter. The decline reflects lower TiO2 selling prices and higher raw materials (stemming from third-party feedstock ore) as well as other production costs that more than offset higher sales volumes.

Balance Sheet

Kronos Worldwide ended the quarter with cash and cash equivalents of $328.6 million, down 23.9% year over year. Long-term debt was $452.2 million, down around 1.9% year over year.

Cash flow from operating activities was $26 million for the first half of 2019, down from $169.7 in the year-ago period.

Outlook

Kronos Worldwide expects production volumes to be modestly higher year over year in 2019. The company envisions sales volumes for 2019 to be higher year over year based on expected production levels and assuming current global economic conditions to remain stable. The company will continue to examine current and expected customer demand levels in the near term as well as align production and inventories accordingly.

The company expects sales to be higher year over year in 2019, courtesy of higher expected sales volumes, partly offset by lower expected average selling prices.

Moreover, Kronos Worldwide expects its income from operations to be lower year over year in 2019 as benefits of higher expected sales volumes are expected to be more than offset by reduced expected average selling prices and increased raw material costs (especially feedstock ore).

Price Performance

Shares of Kronos Worldwide have lost 46.8% in the past year compared with 40.2% decline recorded by its industry.



Zacks Rank & Key Picks

Kronos Worldwide currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Alamos Gold Inc AGI and Arconic Inc ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 134.8% for 2019. The company’s shares have surged 67.5% in the past year.

Alamos Gold has projected earnings growth rate of 260% for the current year. The company’s shares have gained 54.9% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 22.4% in the past year.

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