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Kronos Worldwide (KRO) Earnings and Sales Lag Estimates in Q1

Kronos Worldwide, Inc. KRO logged a loss of 13 cents per share in first-quarter 2023, against earnings of 50 cents in the year-ago quarter. It missed the Zacks Consensus Estimate of earnings of 26 cents.

The bottom line in the reported quarter was hurt by lower income from operations resulting from higher production costs and reduced sales volumes, partly offset by increased average titanium dioxide (TiO2) selling prices.

Net sales fell around 24% year over year to $426.3 million as reduced sales volumes in all major markets more than offset higher average TiO2 selling prices. The top line missed the Zacks Consensus Estimate of $566 million.

 

Kronos Worldwide Inc Price, Consensus and EPS Surprise

 

Kronos Worldwide Inc Price, Consensus and EPS Surprise
Kronos Worldwide Inc Price, Consensus and EPS Surprise

Kronos Worldwide Inc price-consensus-eps-surprise-chart | Kronos Worldwide Inc Quote

 

Volumes and Pricing

TiO2 production volumes were down 24% year over year in the first quarter. TiO2 sales volumes fell 29% year over year.

TiO2 segment loss was $14.8 million in the reported quarter compared with segment profit of $86.8 million a year ago. The downside was driven by reduced income from operations on lower sales volumes and higher production costs, including raw material and energy costs. These were partly offset by higher average TiO2 selling prices.

Average TiO2 selling prices rose 4% year over year in the quarter.

Financials

Kronos Worldwide ended the quarter with cash and cash equivalents of $177.8 million, down roughly 49% year over year. Long-term debt was $433.5 million, a roughly 2% year-over-year decline.

Outlook

Kronos said that while it witnessed some improvement in demand in the first quarter, it continued to experience general economic weakness as customers operated at lower production rates due to weaker than expected sales and inventory right sizing. It anticipates customer demand will gradually return throughout 2023.

The company expects selling prices to increase throughout the balance of 2023, leading to improved margins as demand increases. KRO expects to report lower operating results for full-year 2023 on a year-over-year basis factoring in the weak demand recovery and higher production costs resulting from unfavorable fixed cost absorption at reduced production rates.

Price Performance

Shares of Kronos have lost 41.8% in the past year compared with a 7% decline of the industry.

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Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

Kronos currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, PPG Industries, Inc. PPG and Linde plc LIN.

Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.7%, on average. STLD has gained around 25% in a year.

PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.

PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 5% in a year.

Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.

Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 16% in the past year.

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Kronos Worldwide Inc (KRO) : Free Stock Analysis Report

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