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Why Is Kronos Worldwide (KRO) Up 32.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Kronos Worldwide (KRO). Shares have added about 32.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Kronos Worldwide due for a pullback? 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 Earnings & Sales Miss Estimates in Q4

Kronos Worldwide logged a profit of $9.4 million or 8 cents per share in fourth-quarter 2019, down from $24 million or 21 cents in the year-ago quarter. Earnings missed the Zacks Consensus Estimate of 10 cents.

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

Net sales rose 6.7% year over year to $372.7 million on the back of higher sales volumes and reduced average TiO2 selling prices. However, the figure trailed the Zacks Consensus Estimate of $378 million.

2019 Highlights

In 2019, the company reported profit of $87.1 million or 75 cents per share, down from $205 million or $1.77 per share recorded in 2018.

Net sales in the year rose 4.2% year over year to $1,731.1 million.

Volumes and Pricing

Average TiO2 selling prices fell 3% year over year in the reported quarter.

The company’s TiO2 sales volume increased 14% year over year owing to increased sales in the European and export markets, which were partly offset by lower sales in the Latin American and North American markets. TiO2 production volumes rose 4% year over year in the fourth quarter.

Profit in the TiO2 segment plunged 56.3% year over year to $21.1 million in the fourth quarter.

Balance Sheet

Kronos Worldwide ended 2019 with cash and cash equivalents of $390.8 million, up 4.7% year over year. Long-term debt was $444 million, down 2.4% year over year.

Cash flows from operating activities were $160.3 million for 2019, down 15% year over year.

Outlook

For 2020, Kronos Worldwide expects production volumes to be modestly higher on a year-over-year basis. However, the company anticipates slightly lower sales volumes compared with 2019 based on expected production levels and assuming global economic conditions to remain stable (including the limited impact of coronavirus). The company stated that it will continue to examine current and expected customer demand levels in the near term as well as align its inventories and production accordingly.

Overall, the company expects sales to be slightly lower year over year in 2020, mainly resulting from lower expected sales volumes. Additionally, the company expects lower income from operations this year due to higher raw material costs (mainly feedstock) and lower expected sales volumes.
 

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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