Kronos Worldwide Reports First Quarter 2022 Results
Net sales of
Our TiO2 segment profit (see description of non-GAAP information below) in the first quarter of 2022 was
Our net income before interest expense, income taxes and depreciation and amortization expense (EBITDA) (see description of non-GAAP information below) in the first quarter of 2022 was
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:
- Future supply and demand for our products
- The extent of the dependence of certain of our businesses on certain market sectors
- The cyclicality of our business
- Customer and producer inventory levels
- Unexpected or earlier-than-expected industry capacity expansion
- Changes in raw material and other operating costs (such as energy and ore costs)
- Changes in the availability of raw materials (such as ore)
- 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)
- Competitive products and substitute products
- Customer and competitor strategies
- Potential consolidation of our competitors
- Potential consolidation of our customers
- The impact of pricing and production decisions
- Competitive technology positions
- Potential difficulties in upgrading or implementing accounting and manufacturing software systems
- The introduction of trade barriers or trade disputes
- 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 - 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)
- Our ability to renew or refinance credit facilities
- Potential increases in interest rates
- Our ability to maintain sufficient liquidity
- The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform
- 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
- Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities)
- 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)
- Possible future litigation.
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.
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 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
- 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share and metric ton data)
| Three months ended | ||||||||
| 2021 | 2022 | |||||||
| (unaudited) | ||||||||
| Net sales | $ | 465.0 | $ | 562.9 | ||||
| Cost of sales | 369.3 | 413.6 | ||||||
| Gross margin | 95.7 | 149.3 | ||||||
| Selling, general and administrative expense | 58.0 | 61.4 | ||||||
| Other operating income (expense): | ||||||||
| Currency transactions, net | (.5) | (1.5 | ) | |||||
| Other income, net | .8 | .4 | ||||||
| Corporate expense | (4.0 | ) | (3.5 | ) | ||||
| Income from operations | 34.0 | 83.3 | ||||||
| Other income (expense): | ||||||||
| Trade interest income | .1 | - | ||||||
| Other interest and dividend income | - | .1 | ||||||
| Marketable equity securities | .8 | .1 | ||||||
| Other components of net periodic pension and OPEB cost |
(4.3 | ) | (3.2 | ) | ||||
| Interest expense | (5.0 | ) | (4.5 | ) | ||||
| Income before income taxes | 25.6 | 75.8 | ||||||
| Income tax expense | 6.0 | 18.3 | ||||||
| Net income | $ | 19.6 | $ | 57.5 | ||||
| Net income per basic and diluted share | $ | .17 | $ | .50 | ||||
| Weighted average shares used in the calculation of net income per share |
115.5 | 115.5 | ||||||
| TiO2 data - metric tons in thousands: | ||||||||
| Sales volumes | 141 | 144 | ||||||
| Production volumes | 130 | 138 | ||||||
RECONCILIATION OF INCOME FROM
OPERATIONS TO SEGMENT PROFIT
(In millions)
(unaudited)
| Three months ended | |||||||
| 2021 | 2022 | ||||||
| Income from operations | $ | 34.0 | $ | 83.3 | |||
| Adjustments: | |||||||
| Trade interest income | .1 | - | |||||
| Corporate expense | 4.0 | 3.5 | |||||
| Segment profit | $ | 38.1 | $ | 86.8 | |||
RECONCILIATION OF NET INCOME TO EBITDA
(In millions)
(unaudited)
| Three months ended | ||||||
| 2021 | 2022 | |||||
| Net income | $ | 19.6 | $ | 57.5 | ||
| Adjustments: | ||||||
| Depreciation expense | 12.7 | 12.9 | ||||
| Interest expense | 5.0 | 4.5 | ||||
| Income tax expense | 6.0 | 18.3 | ||||
| EBITDA | $ | 43.3 | $ | 93.2 | ||
IMPACT OF PERCENTAGE CHANGE IN
(unaudited)
| Three months ended | ||||
| 2022 vs. 2021 | ||||
| Percentage change in net sales: | ||||
| TiO2 product pricing | 24 | % | ||
| TiO2 sales volume | 2 | |||
| TiO2 product mix/other | - | |||
| Changes in currency exchange rates | (5 | ) | ||
| Total | 21 | % | ||
Contact:
Source: Kronos Worldwide