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Kronos Worldwide (KRO) Down 0.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Kronos Worldwide (KRO - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kronos Worldwide due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Kronos Worldwide’s Q4 Earnings & Sales Trail Estimates

Kronos Worldwide logged a profit of $24 million or 21 cents per share in fourth-quarter 2018, down around 49% from $47.4 million or 41 cents in the year-ago quarter. Earnings missed the Zacks Consensus Estimate of 22 cents.

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

Net sales went down around 23% year over year to $349.4 million due to lower sales volumes and reduced average TiO2 selling prices. The figure lagged the Zacks Consensus Estimate of $378 million.  

FY18 Results

For 2018, profit was $205 million or $1.77 per share, down roughly 42% from $354.5 million or $3.06 recorded in 2017.

Net sales for the year fell roughly 4% year over year to $1.7 billion due to the net effect of lower sales volumes and increased average selling prices.  Sales volumes were down 16% year over year.

TiO2 production volumes fell 7% year over year in 2018. The company operated its production facilities at 95% of practical capacity during 2018 compared to full practical capacity in 2017.

Volumes and Pricing

Average TiO2 selling prices fell 2% year over year in the reported quarter. Average selling prices at the end of the quarter were down 3% year over year. Lower prices in the European, Latin American and export markets more than offset higher prices in North America.

The company’s TiO2 sales volume fell 22% year over year as a result of reduced sales in the European and export markets due to reduced shipments, partly offset by higher sales in the North American market. TiO2 production volumes fell 8% year over year in the quarter.

Profit in the TiO2 segment was $48.3 million in the fourth quarter, down 61% from $124.3 million a year ago. The decline reflects lower TiO2 selling prices, reduced sales and production volumes and increased raw materials and other production costs.

Balance Sheet

Kronos Worldwide ended 2018 with cash and cash equivalents of $373.3 million, up 16% year over year. Long-term debt was $455.1 million, down around 4% year over year.

Cash flows from operating activities were $188.5 million for 2018, down 32% from $276.1 million in 2017.

Outlook

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

The company expects its sales to be higher year over year in 2019, mainly due to 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 lower expected average selling prices and higher raw material costs.
 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.




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