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KRONOS Worldwide Posts Quarterly Earnings Results

Published on 2015-08-10. Author : SpecialChem

DALLAS, TEXAS -- Kronos Worldwide reported a net loss of $159.8 million, or $1.38 per share, in the second quarter of 2015 compared to net income of $33.1 million, or $.29 per share, in the second quarter of 2014. For the first six months of 2015, Kronos Worldwide reported a net loss of $141.4 million, or $1.22 per share, compared to net income of $47.4 million, or $.41 per share in the first six months of 2014. It reported a net loss in the 2015 periods due primarily to the recognition of a non-cash deferred income tax asset valuation allowance related to its German and Belgian operations and a charge associated with the implementation of certain workforce reductions, both of which were recognized in the second quarter of 2015. The future cost savings resulting from such workforce reductions, as well as other cost reduction initiatives it plan to implement throughout the organization over the next few quarters, are expected to result in a payback of the aggregate workforce reduction charge accrued at June 30, 2015 within approximately one year. Comparability of the Company's results was also impacted by lower average TiO2 selling prices in 2015, partially offset by the favorable effects of higher sales and production volumes, lower manufacturing and other production costs (primarily raw materials) and the net effect of changes in currency exchange rates, as discussed further below.

KRONO
Fig. 1: KRONOS

Net sales of $360.2 million in the second quarter of 2015 were $83.3 million, or 19%, lower than in the second quarter of 2014. Net sales of $725.3 million in the first six months of 2015 were $138.3 million, or 16%, lower than in the first six months of 2014. Net sales decreased in 2015 primarily due to lower average TiO2 selling prices, partially offset by higher sales volumes. The Company's average TiO2 selling prices were 13% lower in the second quarter of 2015 as compared to the second quarter of 2014, and were 12% lower in the first six months of the year as compared to the same prior year period. The Company's average selling prices at the end of the second quarter of 2015 were 3% lower than at the end of the first quarter of 2015, and 10% lower than at the end of 2014, with lower prices in all major markets. The Company's average TiO2 selling prices in 2015 were also impacted by a higher percentage of sales to lower-priced export markets in 2015 compared to 2014. TiO2 sales volumes in the second quarter and first six months of 2015 were 5% and 6% higher, respectively, than in the same periods of 2014 due to higher sales in European and export markets in 2015, partially offset by slightly lower sales in North American markets. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $44 million in the second quarter and approximately $77 million in the first six months of 2015. The table at the end of this press release shows how each of these items impacted the overall decrease in sales.

The Company's TiO2 segment loss in the second quarter of 2015 was $6.4 million as compared to segment profit of $47.1 million in the second quarter of 2014. For the year-to-date period, the Company's segment profit was $29.2 million as compared to $75.7 million in the first six months of 2014. Segment profit (loss) in the 2015 periods includes an aggregate second quarter workforce reduction charge of $21.1 million ($18.2 million, or $.16 per share, net of income tax benefit), $10.7 million of which is classified in cost of sales and $10.4 million of which is classified in selling, general and administrative expense. Segment profit decreased in 2015 primarily due to the net effects of lower average TiO2 selling prices, the workforce reduction charge, lower manufacturing and other production costs (primarily raw materials) and higher sales and production volumes. Excluding the impact of the workforce reduction charge, the Company's TiO2 segment profit was $14.7 million and $50.3 million in the second quarter and first six months of 2015, respectively. Kronos' TiO2 production volumes were 4% higher in the second quarter and first six months of 2015 as compared to the same periods of 2014. It operated its production facilities at overall average capacity utilization rates of 97% in the first six months of 2015 (approximately 93% of practical capacity in the first quarter and at practical capacity in the second quarter) compared to approximately 93% in the first six months of 2014 (90% and 97% in the first and second quarters of 2014, respectively). Its production capacity utilization rates in the first quarter of 2014 were impacted by a union labor lockout at its Canadian production facility that ended in December 2013, as restart of production at the facility did not begin until February 2014. Its production rates in the first quarter of 2015 were impacted by the implementation of certain productivity-enhancing improvement projects at certain facilities, as well as necessary improvements to ensure continued compliance with our permit regulations, which resulted in longer-than-normal maintenance shutdowns in some instances. Fluctuations in currency exchange rates also affected segment profit comparisons, which increased segment profit by approximately $11 million in the second quarter and by approximately $25 million in the year-to-date period.

The Company's income tax expense in the second quarter of 2015 includes a non-cash deferred income tax expense of $150.3 million ($1.30 per share) related to the recognition of a deferred income tax asset valuation allowance related to its German and Belgian operations. The Company's income tax expense in the second quarter of 2014 includes an aggregate non-cash income tax benefit of $5.7 million ($.05 per share) related to a net reduction in our reserve for uncertain tax positions.

About KRONOS

KRONOS is the TiO2 company. It takes pride in making the world brighter with the most effective whitening agent in the world – titanium dioxide. This inorganic compound pigment makes hundreds of things white – from computer mouse to the paint on the wall. Paper, toothpaste, sunscreen, cosmetics and just about any other commonplace item colored white contains KRONOS TiO2. TiO2 also makes colors as brilliant as they can be.

Source: KRONOS
 


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