UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 9, 2022
(Exact Name of Registrant as Specified in Charter)
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices, and Zip Code)
Registrant’s Telephone Number, Including Area Code
(972 ) 233-1700
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The registrant hereby furnishes the information set forth in its press release entitled “Kronos Worldwide Reports Fourth Quarter 2021
Results” that the registrant issued on March 9, 2022, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The press release the registrant furnishes as Exhibit 99.1 to this current report is not deemed “filed” for purposes of section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the U.S. Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
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Financial Statements and Exhibits.
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(d)
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Exhibits
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Item No.
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Exhibit Index
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99.1
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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KRONOS WORLDWIDE, INC.
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(Registrant)
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Date: March 9, 2022
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By:
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/s/ Tim C. Hafer
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Tim C. Hafer,
Senior Vice President and Chief Financial Officer
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Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, TX 75240-2620
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Contact:
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Janet Keckeisen
Vice President,
Investor Relations
(972) 233-1700
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News Release
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FOR IMMEDIATE RELEASE
KRONOS WORLDWIDE REPORTS FOURTH QUARTER 2021 RESULTS
DALLAS, TEXAS…March 9, 2022… Kronos Worldwide, Inc. (NYSE:KRO) today reported net income of $31.6 million, or $.28 per share, in the fourth quarter of 2021
compared to $10.2 million, or $.09 per share, in the fourth quarter of 2020. For the full year of 2021, Kronos Worldwide reported net income of $112.9 million, or $.98 per share, compared to $63.9 million, or $.55 per share for the full year of 2020.
We reported higher net income in the fourth quarter of 2021 as compared to the fourth quarter of 2020 primarily due to higher income from operations resulting from higher average TiO2 selling prices, partially offset by higher production
costs, including raw material and energy costs. Net income in the full year of 2021 was higher than in the full year of 2020 primarily due to higher income from operations resulting from the effects of higher average TiO2 selling prices and
higher sales volumes, partially offset by higher production costs including raw material and energy costs. Our results of operations in 2020 were significantly impacted by the COVID-19 pandemic related demand contraction in 2020 which primarily
impacted the second and third quarters and was most acute in the second quarter of 2020. Comparability of our results was also impacted by the effects of changes in currency exchange rates, as discussed below.
Net sales of $496.0 million in the fourth quarter of 2021 were $81.1 million, or 20%, higher than in the fourth quarter of 2020. Net sales of $1.9 billion in
the full year of 2021 were $300.6 million, or 18%, higher than in the full year of 2020. Net sales increased in the fourth quarter of 2021 compared to the same period in 2020 primarily due to higher average TiO2 selling prices. Net sales
increased in the full year of 2021 compared to the full year of 2020 primarily due to higher average TiO2 selling prices and higher sales volumes. TiO2 sales volumes were 6% higher in the full year of 2021 as compared to the
full year of 2020 due to higher demand in our European, North American and Latin American markets. Increased demand resulted from continuing improvements in global economic activity in 2021 compared to the negative impact from the COVID-19 pandemic in
2020. TiO2 sales volumes in the fourth quarter of 2021 were comparable to the fourth quarter of 2020. Average TiO2 selling prices were 17% higher in the fourth quarter of 2021 as compared to the fourth quarter of 2020 and 8%
higher in the full year of 2021 as compared to the full year of 2020. Average TiO2 selling prices at the end of 2021 were 6% higher than the end of the third quarter of 2021 and 16% higher than at the beginning of the year. Fluctuations in
currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $4 million in the fourth quarter of 2021 and increasing net sales by approximately $43 million in the full year of 2021, as compared
to the same periods in 2020. The table at the end of this press release shows how each of these items impacted net sales.
Our TiO2 segment profit (see description of non-GAAP information below) in the fourth quarter of 2021 was $55.6 million as compared to $23.4
million in the fourth quarter of 2020. For the full year of 2021, the Company’s segment profit was $202.2 million as compared to $130.3 million in the full year of 2020. Segment profit increased in the fourth quarter of 2021 as compared to the fourth
quarter of 2020 primarily due to higher average TiO2 selling prices, partially offset by higher production costs, including raw material and energy costs. Segment profit increased in the full year of 2021 primarily due to higher average TiO2
selling prices and higher sales volumes, partially offset by higher manufacturing and other production costs, including higher costs for raw materials and energy. TiO2 production volumes were 8% higher in the fourth quarter of 2021 and
5% higher in the full year of 2021 as compared to the same periods in 2020. We decreased production levels in 2020 (primarily in the third quarter) to correspond to the temporary decline in demand resulting from the COVID-19 pandemic. We operated our
production facilities at full practical capacity in the full year of 2021 (97%, 100%, 100% and 100% in the first, second, third and fourth quarters of 2021, respectively) compared to 92% in 2020 (95%, 96%, 86% and 92% in the first, second, third and
fourth quarters of 2020, respectively). Fluctuations in currency exchange rates (primarily the euro) increased income from operations approximately $2 million in the fourth quarter of 2021 as compared to the fourth quarter of 2020. Fluctuations in
currency exchange rates (primarily the Canadian dollar) also affected the year-to-date segment profit comparison, which decreased segment profit by approximately $13 million in the full year of 2021 as compared to the full year of 2020.
Our net income before interest expense, income taxes and depreciation and amortization expense (EBITDA) (see description of non-GAAP information below) in
the fourth quarter of 2021 was $62.6 million compared to EBITDA of $30.7 million in the fourth quarter of 2020. For the full year of 2021, the Company’s EBITDA was $224.3 million compared to $157.1 million in the full year of 2020.
- 1 -
Other income (expense) in 2020 includes a pre-tax insurance settlement gain of $1.5 million ($1.2 million, or $.01 per share, net of income tax expense)
related to a property damage claim recognized in the first quarter.
The statements in this release relating to matters that are not historical facts are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements
by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such forward-looking statements. While it is not possible to
identify all factors, we continue to face many risks and uncertainties. The factors that could cause actual future results to differ materially include, but are not limited to, the following:
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Future supply and demand for our products
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The extent of the dependence of certain of our businesses on certain market sectors
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The cyclicality of our business
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Customer and producer inventory levels
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Unexpected or earlier-than-expected industry capacity expansion
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Changes in raw material and other operating costs (such as energy and ore costs)
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Changes in the availability of raw materials (such as ore)
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General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material and energy costs or
reduce demand or perceived demand for our TiO2 products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts,
global conflicts and public health crises such as COVID-19)
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Competitive products and substitute products
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Customer and competitor strategies
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Potential consolidation of our competitors
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Potential consolidation of our customers
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The impact of pricing and production decisions
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Competitive technology positions
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Potential difficulties in upgrading or implementing accounting and manufacturing software systems
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The introduction of trade barriers or trade disputes
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Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S. dollar and each of the euro, the Norwegian krone and
the Canadian dollar and between the euro and the Norwegian krone), or possible disruptions to our business resulting from uncertainties associated with the euro or other currencies
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Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned
downtime, transportation interruptions, cyber-attacks and public health crises such as COVID-19)
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Our ability to renew or refinance credit facilities
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Potential increases in interest rates
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Our ability to maintain sufficient liquidity
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The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform
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Our ability to utilize income tax attributes, the benefits of which may or may not have been recognized under the more-likely-than-not recognition
criteria
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Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities)
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Government laws and regulations and possible changes therein including new environmental health and safety regulations (such as those seeking to
limit or classify TiO2 or its use)
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Possible future litigation.
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Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. The Company disclaims any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.
- 2 -
In an effort to provide investors with additional information regarding the Company's results of operations as determined by accounting principles generally
accepted in the United States of America (GAAP), the Company has disclosed certain non-GAAP information which the Company believes provides useful information to investors:
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The Company discloses segment profit, which is used by the Company’s management to assess the performance of the Company’s TiO2 operations.
The Company believes disclosure of segment profit provides useful information to investors because it allows investors to analyze the performance of the Company’s TiO2 operations in the same way that the Company’s management
assesses performance. The Company defines segment profit as net income before income tax expense and certain general corporate items. These general corporate items include corporate expense and the components of other income (expense) except
for trade interest income; and
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The Company discloses EBITDA, which is also used by the Company’s management to assess the performance of the Company’s TiO2 operations.
The Company believes disclosure of EBITDA provides useful information to investors because it allows investors to analyze the performance of the Company’s TiO2 operations in the same way that the Company’s management assesses
performance. The Company defines EBITDA as net income before interest expense, income taxes and depreciation and amortization expense.
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Kronos Worldwide, Inc. is a major international producer of titanium dioxide products.
- 3 -
KRONOS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share and metric ton data)
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Three months ended
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Year ended
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December 31,
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December 31,
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2020
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2021
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2020
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2021
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(unaudited)
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Net sales
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$
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414.9
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$
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496.0
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$
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1,638.8
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$
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1,939.4
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Cost of sales
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328.2
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377.5
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1,287.6
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1,493.2
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Gross margin
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86.7
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118.5
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351.2
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446.2
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Selling, general and administrative expense
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56.8
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63.8
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218.6
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248.9
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Other operating income (expense):
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Currency transactions, net
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(7.2)
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.4
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(4.0)
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1.6
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Other income, net
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.7
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.5
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1.4
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3.2
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Corporate expense
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(3.0)
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(3.6)
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(13.8)
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(15.0)
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Income from operations
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20.4
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52.0
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116.2
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187.1
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Other income (expense):
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Trade interest income
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.3
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.1
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Other interest and dividend income
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.3
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1.5
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.3
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Insurance settlement gain
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1.5
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Marketable equity securities
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.2
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.8
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2.0
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Other components of net periodic pension
and OPEB cost |
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(5.0)
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(3.6)
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(19.4)
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(16.5)
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Interest expense
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(4.9)
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(4.6)
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(19.0)
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(19.6)
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Income before income taxes
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11.0
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44.8
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80.0
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153.4
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Income tax expense
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.8
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13.2
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16.1
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40.5
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Net income
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$
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10.2
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$
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31.6
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$
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63.9
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$
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112.9
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Net income per basic and diluted share
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$
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.09
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$
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.28
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$
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.55
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$
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.98
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Weighted average shares used in the
calculation of net income per share |
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115.5
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115.5
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115.6
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115.5
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TiO2 data - metric tons in thousands:
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Sales volumes
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135
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136
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531
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563
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Production volumes
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130
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141
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517
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545
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- 4 -
KRONOS WORLDWIDE, INC.
RECONCILIATION OF INCOME FROM
OPERATIONS TO SEGMENT PROFIT
(In millions)
(unaudited)
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December 31,
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December 31,
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2020
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2021
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2020
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2021
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Income from operations
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$
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20.4
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$
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52.0
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$
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116.2
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$
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187.1
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Adjustments:
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Trade interest income
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.3
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.1
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Corporate expense
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3.0
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3.6
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13.8
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15.0
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Segment profit
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$
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23.4
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$
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55.6
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$
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130.3
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$
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202.2
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RECONCILIATION OF NET INCOME TO EBITDA
(In millions)
(unaudited)
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Three months ended
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Year ended
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December 31,
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December 31,
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2020
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2021
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2020
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2021
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Net income
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$
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10.2
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$
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31.6
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$
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63.9
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$
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112.9
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Adjustments:
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Depreciation expense
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14.8
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13.2
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58.1
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51.3
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Interest expense
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4.9
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4.6
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19.0
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19.6
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Income tax expense
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.8
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13.2
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16.1
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40.5
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EBITDA
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$
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30.7
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$
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62.6
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$
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157.1
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$
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224.3
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IMPACT OF PERCENTAGE CHANGE IN NET SALES
(unaudited)
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Three months ended
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Year ended
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December 31,
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December 31,
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2021 vs. 2020
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2021 vs. 2020
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Percentage change in net sales:
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TiO2 product pricing
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17
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%
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8
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%
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TiO2 sales volume
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-
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6
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TiO2 product mix/other
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4
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1
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Changes in currency exchange rates
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(1)
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3
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Total
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20
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%
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18
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%
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- 5 -