On August 7, 2024, Kronos Worldwide Inc (KRO, Financial) released its 8-K filing for the second quarter of 2024, reporting a net income of $19.5 million, or $0.17 per share. This marks a significant turnaround from the net loss of $8.2 million, or $0.07 per share, in the same quarter of 2023. For the first six months of 2024, the company reported a net income of $27.6 million, or $0.24 per share, compared to a net loss of $23.4 million, or $0.20 per share, in the first half of 2023.
Company Overview
Kronos Worldwide Inc manufactures and sells titanium dioxide pigments, a white inorganic pigment used in a variety of products. The majority of Kronos' sales come from titanium dioxide used for coatings on automobiles, aircraft, machines, appliances, traffic paint, and in both commercial and residential interiors and exteriors. The second-largest product category is titanium dioxide used for plastics such as packaging materials and food packaging, houseware, appliances, toys, and computer cases. The majority of revenue comes from the United States.
Performance and Challenges
Kronos Worldwide Inc's performance in Q2 2024 was bolstered by higher sales and production volumes, coupled with lower production costs, primarily in energy and raw materials. However, these gains were partially offset by lower average selling prices for titanium dioxide (TiO2). The company's results in the first half of 2023 were significantly impacted by reduced demand and unabsorbed fixed production costs due to lower production volumes. Improved demand in all major markets and increased production volumes in 2024 have contributed to the company's improved profitability.
Financial Achievements
Net sales for Q2 2024 were $500.5 million, a 13% increase from $443.2 million in Q2 2023. For the first six months of 2024, net sales were $979.3 million, also a 13% increase from $869.5 million in the same period of 2023. The increase in net sales was driven by higher sales volumes due to strengthening demand for TiO2, despite lower average selling prices. TiO2 sales volumes were 29% higher in Q2 2024 compared to Q2 2023 and 28% higher in the first half of 2024 compared to the same period in 2023.
Key Financial Metrics
| Metric | Q2 2023 | Q2 2024 | H1 2023 | H1 2024 |
|---|---|---|---|---|
| Net Sales ($ million) | 443.2 | 500.5 | 869.5 | 979.3 |
| Net Income ($ million) | (8.2) | 19.5 | (23.4) | 27.6 |
| EPS ($) | (0.07) | 0.17 | (0.20) | 0.24 |
| EBITDA ($ million) | 3.6 | 56.2 | (1.4) | 87.9 |
Commentary and Analysis
Net income increased in the 2024 periods as compared to the same periods in 2023 primarily due to higher income from operations as a result of the effects of higher sales and production volumes, lower production costs (primarily energy and raw materials), partially offset by lower average TiO2 selling prices."
The company's TiO2 segment profit for Q2 2024 was $41.1 million, compared to a segment loss of $2.3 million in Q2 2023. For the first six months of 2024, the segment profit was $64.5 million, compared to a segment loss of $17.1 million in the same period of 2023. The increase in segment profit was primarily due to higher income from operations driven by higher sales and production volumes, lower production costs, and lower average TiO2 selling prices.
Strategic Developments
Effective July 16, 2024, Kronos Worldwide Inc acquired the remaining 50% joint venture interest in Louisiana Pigment Company, L.P. (LPC) for an upfront cash payment of $185 million and a potential earn-out payment of up to $15 million. This acquisition is expected to result in significant synergies, including logistical cost optimization and other commercial and overhead efficiencies.
In conclusion, Kronos Worldwide Inc's Q2 2024 earnings report demonstrates a strong recovery and improved profitability driven by higher sales and production volumes. The company's strategic acquisition of LPC and increased production capacity position it well for future growth in the TiO2 market.
Explore the complete 8-K earnings release (here) from Kronos Worldwide Inc for further details.
