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Kronos Worldwide (KRO) Misses on Q2 Earnings, Sales Up Y/Y

Zacks

Kronos Worldwide, Inc. KRO recorded net income of $196.5 million or $1.70 per share in second-quarter 2017, compared with net income of $1.7 million or a penny per share a year ago.

Higher income from operations resulting from favorable impacts of improved selling prices, increased sales and production volumes and reduced raw materials and other production costs provided a boost to Kronos Worldwide’s second-quarter performance.

Barring one-time items, adjusted earnings were 34 cents per share in the reported quarter, which missed the Zacks Consensus Estimate of 42 cents.

Net revenues jumped around 23.9% year-over-year to $441.4 million, on the back of higher titanium dioxide (TiO2) selling prices and increased sales volumes.

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 second quarter rose 6% year over year on increased sales in the European and North American markets, partly offset by decreased sales in the Latin American market.

TiO2 production volumes increased 8% year over year in the quarter and average TiO2 selling prices went up about 20% year over year in the reported quarter. Prices were also 12% higher compared with the end of 2016 with higher prices recorded across all key markets.

Balance Sheet

Kronos Worldwide ended the quarter with cash and cash equivalents of $114.1 million, up around 44.1% year over year. Long-term debt was $350.8 million, up around 4.2% year over year. Cash flows from operating activities were $101.6 million for first-half 2017 compared with $16.6 million for the same period a year ago.

Outlook

Kronos Worldwide expects its production volumes to be modestly higher in 2017 on a year-over-year basis as production rates this year will be favorably impacted by the implementation of certain productivity-enhancing improvement projects at some facilities.

The company also envisions income from operations in 2017 will be higher on a year-over-year basis, mainly due to an expected increase in average selling prices and the favorable impact of anticipated higher production volumes in 2017.

Price Performance

Shares of Kronos Worldwide have gained 40.3% in last six months, significantly outperforming the industry’s 7% gain.


Zacks Rank & Other Key Picks

Kronos Worldwide currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are POSCO PKX, The Chemours Company CC and Akzo Nobel NV AKZOY. All three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

POSCO has expected long-term earnings growth rate of 5%.

Chemours has expected long-term earnings growth rate of 15.5%.

Akzo Nobel has expected long-term earnings growth rate of 11.1%.

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