Kronos Worldwide, Inc. Announces Q1 2023 Financial Results

DALLAS, TEXAS: Kronos Worldwide, Inc. has reported a net loss of $15.2 million, or $.13 per share, in the first quarter of 2023 compared to a net income of $57.5 million, or $.50 per share, in the first quarter of 2022. The decrease in net income was primarily due to lower sales volumes, higher production costs, including raw material costs, and higher average selling prices for TiO₂.

The first quarter of 2023 was negatively impacted by unabsorbed fixed production and other costs and reduced demand for certain products in all major markets. Additionally, changes in currency exchange rates also affected the company's financial results.

The net sales for Q1 2023 amounted to $426.3 million, which is $136.6 million or 24% lower than the net sales of Q1 2022. This reduction is mainly due to decreased sales volumes affecting all the major markets. However, the impact was partially offset by higher average selling prices of TiO₂. Specifically, TiO₂ sales volumes plunged by 29% in Q1 2023 compared to the same quarter in 2022. Meanwhile, the average selling prices of TiO₂ for Q1 2023 raised by 4%, compared to Q1 2022.

The average selling prices of TiO₂ experienced a 4% decline by the end of the first quarter of 2023, in comparison to the rate by the close of 2022. Alongside this, the fluctuations in currency exchange rates, particularly the euro, impacted the net sales comparison greatly, resulting in a reduction of roughly $11 million in Q1 2023 in contrast to Q1 2022.

TiO2 segment has reported a loss of $14.8 million in the first quarter of 2023. This is in stark contrast to the segment's profit of $86.8 million in the same period last year. The company attributes this loss to a decline in sales volumes and higher production costs, including raw material and energy expenses. Despite this, the company was able to partially offset the losses with higher average selling prices of TiO₂.

During the first quarter of 2023, we incurred $22 million in unabsorbed fixed production and other manufacturing costs due to production curtailments at some of our facilities. This was necessary to adjust TiO2 production volumes and match inventory levels with reduced demand. Compared to the first quarter of 2022, TiO2 production volumes were 24% lower during this period. As a result, the cost of sales in the first quarter of 2023 increased.

In the first quarter of 2023, our production facilities were operated at 76% of practical capacity due to a decline in demand and scheduled maintenance activities. This contrasts with the first quarter of 2022, when our facilities operated at full practical capacity.

Moreover, we were able to decrease our operating loss by approximately $19 million in the first quarter of 2023 due to fluctuations in currency exchange rates, primarily with respect to the Euro, as compared to the same period the previous year (2022).

In the first quarter of 2023, the net income before interest expense, income taxes, and depreciation and amortization expense (EBITDA), as per the non-GAAP information, was ($5.0) million, which is a significant drop from the first quarter of 2022 where the EBITDA was $93.2 million. Additionally, in the first three months of 2023, there was an insurance settlement gain of $1.7 million under other operating income, which is related to a 2020 business interruption insurance claim. The net income tax expense of this gain was $1.3 million, or $.01 per share.

Kronos Worldwide, Inc. is a leading global manufacturer of Titanium Dioxide products.