Dallas, Texas, March 08, 2023 (GLOBE NEWSWIRE) -- Kronos Worldwide, Inc. (NYSE:KRO) today reported a net loss of $19.9 million, or $.18 per share, in the fourth quarter of 2022 compared to net income of $31.6 million, or $.28 per share, in the fourth quarter of 2021. For the full year of 2022, Kronos Worldwide reported net income of $104.5 million, or $0.90 per share, compared to net income of $112.9 million, or $.98 per share for the full year of 2021. Net income decreased in the comparable 2022 periods as compared to the same periods in 2021 primarily due to lower income from operations resulting from the net effect of lower sales volumes, higher production costs, including raw material and energy costs, and higher average TiO2 selling prices. Comparability of our results for both the fourth quarter and full year of 2022 was significantly impacted by unabsorbed fixed production and other costs associated with production curtailments at certain of our European facilities as a result of reduced demand for certain of our products occurring primarily in our European and export markets, as discussed further below. Our results were also impacted by the effects of changes in currency exchange rates.
Net sales of $342.4 million in the fourth quarter of 2022 were $153.6 million, or 31%, lower than in the fourth quarter of 2021. Net sales of $1.9 billion in the full year of 2022 were consistent with net sales for the full year of 2021. Net sales comparisons for both periods were impacted by the net effects of lower sales volumes in all our markets, partially offset by higher average TiO2 selling prices. TiO2 sales volumes were 40% lower in the fourth quarter of 2022 as compared to the fourth quarter of 2021 and our sales volumes in the full year of 2022 were 15% lower than in the full year of 2021. TiO2 sales volumes in the fourth quarter and full year of 2022 compared to the same periods in 2021 were impacted by weakening customer demand in our European and export markets which began late in the third quarter and continued throughout the fourth quarter. Average TiO2 selling prices were 15% higher in the fourth quarter of 2022 as compared to the fourth quarter of 2021 and 21% higher in the full year of 2022 as compared to the full year of 2021. Average TiO2 selling prices at the end of the fourth quarter of 2022 were 16% higher than the end of 2021. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $23 million in the fourth quarter of 2022 and approximately $106 million in the full year of 2022, as compared to the same periods in 2021. The table at the end of this press release shows how each of these items impacted net sales.
Our TiO2 segment loss (see description of non-GAAP information below) in the fourth quarter of 2022 was $15.0 million as compared to our TiO2 segment profit of $55.6 million in the fourth quarter of 2021. For the full year of 2022, our segment profit was $175.9 million as compared to $202.2 million in the full year of 2021. Segment profit decreased in both the fourth quarter and full year of 2022 compared to the same periods in 2021 primarily due to the net effect of lower sales volumes, higher production costs, (primarily raw material and energy costs), and higher average TiO2 selling prices. In addition, cost of sales in 2022 includes unabsorbed fixed production and other manufacturing costs of approximately $26 million associated with production curtailments at certain of our European facilities during the fourth quarter as we reduced TiO2 production volumes to align inventory levels with lower demand. TiO2 production volumes were 35% lower in the fourth quarter of 2022 compared to the fourth quarter of 2021 and 10% lower in the full year of 2022 compared to the same period of 2021. As a result of fourth quarter curtailments, we operated our production facilities at 89% of practical capacity utilization in 2022 (100%, 95%, 93% and 65% in the first, second, third and fourth quarters of 2022, respectively) compared to full practical capacity in 2021 (97%, 100%, 100% and 100% in the first, second, third and fourth quarters of 2021, respectively). Fluctuations in currency exchange rates (primarily the euro) increased income from operations approximately $2 million in the fourth quarter of 2022 as compared to the fourth quarter of 2021 and increased income from operations approximately $23 million in the full year of 2022 as compared to the full year of 2021.
Our net income (loss) before interest expense, income taxes and depreciation and amortization expense (EBITDA) (see description of non-GAAP information below) in the fourth quarter of 2022 was ($8.2) million compared to EBITDA of $62.6 million in the fourth quarter of 2021. For the full year of 2022, the Company’s EBITDA was $202.5 million compared to $224.3 million in the full year of 2021.
Other operating income, net in the full year of 2022 includes an insurance settlement gain of $2.7 million ($2.2 million, or $.02 per share, net of income tax expense) related to a 2020 business interruption insurance claim recognized in the third quarter of 2022.
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:
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 United States of America (GAAP), the Company has disclosed certain non-GAAP information which the Company believes provides useful information to investors:
Kronos Worldwide, Inc. is a major international producer of titanium dioxide products.
Investor Relations Contact: Bryan A. HanleySenior Vice President & TreasurerTel: (972) 233-1700
KRONOS WORLDWIDE, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share and metric ton data)
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
(unaudited) | ||||||||||||||||
Net sales | $ | 496.0 | $ | 342.4 | $ | 1,939.4 | $ | 1,930.2 | ||||||||
Cost of sales | 377.5 | 305.1 | 1,493.2 | 1,539.1 | ||||||||||||
Gross margin | 118.5 | 37.3 | 446.2 | 391.1 | ||||||||||||
Selling, general and administrative expense | 63.8 | 47.7 | 248.9 | 231.3 | ||||||||||||
Other operating income (expense): | ||||||||||||||||
Currency transactions, net | .4 | (5.6 | ) | 1.6 | 11.5 | |||||||||||
Other income, net | .5 | - | 3.2 | 3.4 | ||||||||||||
Corporate expense | (3.6 | ) | (3.7 | ) | (15.0 | ) | (15.1 | ) | ||||||||
Income (loss) from operations | 52.0 | (19.7 | ) | 187.1 | 159.6 | |||||||||||
Other income (expense): | ||||||||||||||||
Trade interest income | - | 1.0 | .1 | 1.2 | ||||||||||||
Other interest and dividend income | .2 | 2.0 | .3 | 3.9 | ||||||||||||
Marketable equity securities | .8 | (.5) | 2.0 | (1.0 | ) | |||||||||||
Other components of net periodic pension and OPEB cost | (3.6 | ) | (3.7 | ) | (16.5 | ) | (12.9 | ) | ||||||||
Interest expense | (4.6 | ) | (3.9 | ) | (19.6 | ) | (16.9 | ) | ||||||||
Income (loss) before income taxes | 44.8 | (24.8 | ) | 153.4 | 133.9 | |||||||||||
Income tax expense (benefit) | 13.2 | (4.9 | ) | 40.5 | 29.4 | |||||||||||
Net income (loss) | $ | 31.6 | $ | (19.9 | ) | $ | 112.9 | $ | 104.5 | |||||||
Net income (loss) per basic and diluted share | $ | .28 | $ | (.18) | $ | .98 | $ | .90 | ||||||||
Weighted average shares used in the calculation of net income per share | 115.5 | 115.4 | 115.5 | 115.5 | ||||||||||||
TiO2 data - metric tons in thousands: | ||||||||||||||||
Sales volumes | 136 | 82 | 563 | 481 | ||||||||||||
Production volumes | 141 | 91 | 545 | 492 |
KRONOS WORLDWIDE, INC.RECONCILIATION OF INCOME (LOSS) FROMOPERATIONS TO SEGMENT PROFIT(In millions)
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
(unaudited) | ||||||||||||||||
Income (loss) from operations | $ | 52.0 | $ | (19.7) | $ | 187.1 | $ | 159.6 | ||||||||
Adjustments: | ||||||||||||||||
Trade interest income | - | 1.0 | .1 | 1.2 | ||||||||||||
Corporate expense | 3.6 | 3.7 | 15.0 | 15.1 | ||||||||||||
Segment profit (loss) | $ | 55.6 | $ | (15.0) | $ | 202.2 | $ | 175.9 |
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA(In millions)
Three months ended | Year ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||
(unaudited) | ||||||||||||||
Net income (loss) | $ | 31.6 | $ | (19.9) | $ | 112.9 | $ | 104.5 | ||||||
Adjustments: | ||||||||||||||
Depreciation expense | 13.2 | 12.7 | 51.3 | 51.7 | ||||||||||
Interest expense | 4.6 | 3.9 | 19.6 | 16.9 | ||||||||||
Income tax expense (benefit) | 13.2 | (4.9) | 40.5 | 29.4 | ||||||||||
EBITDA | $ | 62.6 | $ | (8.2) | $ | 224.3 | $ | 202.5 |
IMPACT OF PERCENTAGE CHANGE IN NET SALES
Three months ended | Year ended | ||||||
December 31, | December 31, | ||||||
2022 vs. 2021 | 2022 vs. 2021 | ||||||
(unaudited) | |||||||
Percentage change in net sales: | |||||||
TiO2 product pricing | 15 | % | 21 | % | |||
TiO2 sales volume | (40 | ) | (15 | ) | |||
TiO2 product mix/other | (1 | ) | (1 | ) | |||
Changes in currency exchange rates | (5 | ) | (5 | ) | |||
Total | (31 | )% | - | % |