Kronos Worldwide (KRO) Q3 Earnings Miss, Sales Top Estimates

Kronos Worldwide, Inc. (NYSE:KRO) recorded profit of $17.9 million or 16 cents per share in third-quarter 2019, down 45% from $32.6 million or 28 cents in the year-ago quarter. Earnings per share also missed the Zacks Consensus Estimate of 19 cents.

Results in the reported quarter were hurt by lower average selling prices as well as higher raw materials and other production costs, partly offset by increased sales volumes.

Net sales rose 7% year over year to $437.4 million as higher sales volumes offset lower average titanium dioxide (TiO2) selling prices. The figure beat the Zacks Consensus Estimate of $427.5 million.

Volumes and Pricing

Average TiO2 selling prices fell 5% year over year in the reported quarter.

The company’s TiO2 sales volume rose 17% year over year on higher sales across all key markets. TiO2 production volumes in the third quarter were up 4% on a year-over-year basis.

Profit in the TiO2 segment was $36.8 million in the reported quarter, down around 40% year over year. The decline reflects lower TiO2 selling prices and higher raw materials as well as other production costs that more than offset higher sales volumes.

Balance Sheet

Kronos Worldwide ended the quarter with cash and cash equivalents of $385.8 million, down 11% year over year. Long-term debt was $434.6 million, down around 7% year over year.

Cash flow from operating activities was $123.8 million for the first nine months of 2019, down from $199 million in the year-ago period.

Outlook

Kronos Worldwide expects production volumes to be modestly higher year over year in 2019. The company also sees sales volumes for 2019 to be higher year over year based on expected production levels and assuming global economic conditions to remain stable. The company will continue to examine current and expected customer demand levels and align production and inventories accordingly.

The company expects sales to be higher year over year in 2019, resulting from higher expected sales volumes, partly offset by lower anticipated average selling prices.

Moreover, Kronos Worldwide expects its income from operations to be lower year over year in 2019 as benefits of higher expected sales volumes are expected to be more than offset by reduced expected average selling prices and increased raw material and other operating costs.

Price Performance

Shares of Kronos Worldwide have gained 19.6% year to date against 16.7% decline recorded by its industry.

Zacks Rank & Key Picks

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

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited (NYSE:AEM) , Kinross Gold Corporation (NYSE:KGC) and Franco-Nevada Corporation (TSX:FNV) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 64% in a year’s time.

Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 58% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 47% in a year’s time.

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