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Kronos Worldwide (KRO) Lags Q2 Earnings & Sales Estimates

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Kronos Worldwide, Inc. (KRO - Free Report) delivered net income of $77.7 million or 67 cents per share in second-quarter 2018, down from $196.5 million or $1.70 in the year-ago quarter. The figure also missed the Zacks Consensus Estimate of 77 cents. Lower net income on a year-over-year basis reflects the recognition of a non-cash deferred income tax benefit in 2017.

Net sales went up around 7% year over year to $471.8 million on the back of higher average titanium dioxide (TiO2) selling prices, partly offset by lower sales volumes. However, the figure missed the Zacks Consensus Estimate of $536 million.   

Kronos Worldwide Inc Price, Consensus and EPS Surprise

 

Kronos Worldwide Inc Price, Consensus and EPS Surprise | Kronos Worldwide Inc Quote

Volumes and Pricing

TiO2 sales volumes fell 12% year over year in the quarter due to reduced shipments as well as lower sales in the European and export markets, partly offset by higher sales in the North American market.

The company’s TiO2 production volume also fell 4% and production facilities operated at 97% of practical capacity in the reported quarter.  

Average TiO2 selling prices rose 20% year over year, reflecting higher prices in the North American, European and export markets that were partly offset by lower prices in Latin America (due to changes in customer mix).

Balance Sheet

As of Jun 30, 2018, Kronos Worldwide had cash and cash equivalents of $431.9 million, surging nearly four-fold year over year from $114.1 million.

Long-term debt was $460.9 million, up around 31.4% year over year. Cash flows from operating activities were $169.7 million for the first half compared with $101.6 million for the same period a year ago.

Outlook

Kronos Worldwide expects production volumes to fall slightly in 2018 from the year-ago quarter’s level. It also expects sales volumes for 2018 to be somewhat lower year over year based on expected production levels and considering the current global economic conditions. The company believes that customer inventory level changes are short term and will not continue beyond the third quarter. The company will continue to examine current and expected customer demand levels in the near term and align production and inventories accordingly.

The company also envisions that income from operations in 2018 will be higher on a year-over-year basis, mainly due to expected higher average selling prices that will be partly offset by raw material cost inflation (mainly feedstock ore).

Price Performance

Shares of Kronos Worldwide have lost 4.8% over the past three months, against the industry’s 0.3% rise.



Zacks Rank & Key Picks

Kronos Worldwide currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are KMG Chemicals, Inc , Ingevity Corporation (NGVT - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 43% in a year.

Ingevity has an expected long-term earnings growth rate of 12%. Its shares have surged 78.3% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 21.8% in a year.

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