Kronos Worldwide (KRO) Q2 2024 earnings summary

Executive summary

• Acquired remaining 50% of Louisiana Pigment Company (LPC) for $185M cash plus up to $15M earn-out, making LPC a wholly owned subsidiary and expanding North American TiO2 capacity.

• Net income was $19.5M ($0.17/share) in Q2 2024 vs. net loss of $8.2M ($0.07/share) in Q2 2023; six-month net income was $27.6M vs. net loss of $23.4M year-over-year.

• Profitability improved due to higher sales and production volumes, lower production costs, and improved demand, partially offset by lower average TiO2 selling prices.

• Quarterly dividend reduced from $0.19 to $0.05 per share to support debt service, working capital, and strategic investments.

Financial highlights

• Q2 2024 net sales rose 13% to $500.5M; six-month net sales up 13% to $979.3M year-over-year.

• Gross margin improved to 20% in Q2 2024 from 10% in Q2 2023; six-month gross margin rose to 18% from 9%.

• Operating income was $35.9M in Q2 2024 vs. a loss of $6.7M in Q2 2023; six-month operating income was $55.4M vs. a loss of $25.0M.

• Q2 2024 EPS was $0.17 vs. $(0.07) in Q2 2023; six-month EPS was $0.24 vs. $(0.20) year-over-year.

• EBITDA for Q2 2024 was $56.2M vs. $3.6M in Q2 2023; six-month EBITDA was $87.9M vs. $1.4M year-over-year.

Outlook and guidance

• Sales volumes and production rates expected to exceed 2023 levels due to improved demand and higher plant utilization.

• TiO2 selling price increases have been implemented and are needed to restore margins to historical levels.

• Full integration of LPC expected by year-end, with anticipated synergies and positive earnings impact, partially offset by higher debt service.

• 2024 capital expenditures planned at $50M, with $8.1M spent through June.

• Average TiO2 selling prices remained stable in the first six months of 2024 after starting the year 13% lower than 2023.