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Kronos Worldwide (KRO) Lags Q1 Earnings and Sales Estimates

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Kronos Worldwide, Inc. (KRO - Free Report) recorded net income of $70.7 million or 61 cents per share in first-quarter 2018, up from $36.8 million or 32 cents per share a year ago. However, earnings per share missed the Zacks Consensus Estimate of 70 cents. The bottom line in the reported quarter benefited from higher income from operations driven by higher average selling prices.

Net revenues jumped around 16% year over year to $430.4 million, on the back of higher average titanium dioxide (TiO2) selling prices, partly offset by lower sales volumes. The figure trailed the Zacks Consensus Estimate of $475 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 in the first quarter fell 13% year over year on declines in all key markets as a result of a controlled ramp-up in January 2018. The company’s production volumes also fell 8% due to the implementation of a productivity-enhancing improvement project at the company’s Belgian facility along with the timing of scheduled maintenance at certain facilities in 2018.  

Average TiO2 selling prices went up about 26% year over year with higher prices in all key markets.  

Balance Sheet

Kronos Worldwide ended the first quarter with cash and cash equivalents of $364.6 million, surging more than four-fold year over year.

Long-term debt was $487.4 million, up around 35.1% year over year. Cash flows from operating activities were $58.2 million for the quarter compared with $41.6 million a year ago.

Outlook

Kronos Worldwide expects production volumes to fall slightly in 2018 from last year, assuming the current economic conditions globally to continue. The company will continue to examine current and expected customer demand levels in the near term and align its 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 an expected higher average selling prices partly offset by raw material cost inflation (mainly feedstock ore).

Price Performance

Shares of Kronos Worldwide have gained 19.4% in over a year, outperforming the industry’s 9.7% gain.



Zacks Rank & Other Stocks to Consider

Kronos Worldwide currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks worth considering in the basic materials space are The Chemours Company (CC - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and Huntsman Corporation (HUN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term earnings growth rate of 15.50%. Its shares have jumped 21% over a year.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have rallied 37.5% over a year.

Huntsman has an expected long-term earnings growth rate of 8.3%. Its shares have moved up 19.8% over a year.

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