Kronos(KRO) - 2024 Q3 - Quarterly Report

Financial Performance - For the first nine months of 2024, the company reported net income of $99.4 million, or$0.86 per share, compared to a net loss of $43.8 million, or$0.38 per share, in the same period of 2023[73]. - The company experienced a net income of $71.8 million, or$0.62 per share, in the third quarter of 2024, compared to a net loss of $20.4 million, or$0.18 per share, in the third quarter of 2023[73]. - Net sales in Q3 2024 increased by 22%, or $87.8 million, compared to Q3 2023, driven by a 21$197.6 million, compared to the same period in 2023, primarily due to a 26% increase in sales volumes[97]. - Income from operations was $38.9 million in Q3 2024, compared to a loss of$25.3 million in Q3 2023, aided by favorable currency exchange rates[93]. Sales and Production - The average TiO2 selling prices increased by 4% during the first nine months of 2024, although they were still 7% lower than the average prices during the first nine months of 2023[80]. - Sales volumes of TiO2 increased by 21% in the third quarter of 2024 compared to the same period in 2023, reaching 130 thousand metric tons[86]. - Sales volumes increased by 21% in Q3 2024 due to higher overall demand across all major markets[88]. - Cost of sales increased by $21.0 million, or 6$185 million, with an additional potential earn-out payment of up to $15 million based on EBITDA for 2025 and 2026[72]. - The company recognized a non-cash, pre-tax gain of$64.5 million from the measurement of its investment in LPC in the first nine months of 2024[74]. - The company recognized a gain of $64.5 million on the remeasurement of its investment in LPC in Q3 2024 due to the acquisition[94]. - The LPC acquisition was financed through borrowings of$132.1 million under the Global Revolver, with the remaining amount paid in cash[126]. Cash Flow and Debt Management - Cash provided by operating activities was $23.2 million in the first nine months of 2024, a significant increase of$82.1 million compared to cash used of $58.9 million in the same period of 2023[118]. - As of September 30, 2024, the company's consolidated debt included €351.174 million on 9.50$53.7 million on a subordinated term loan from Contran[125]. - The quarterly dividend rate was reduced from $0.19 per share to$0.05 per share to manage increased debt service costs and working capital needs[115]. - The company is in compliance with all debt covenants as of September 30, 2024, and expects to maintain compliance through the maturity of its credit facility[127]. Market Outlook - The company anticipates long-term demand growth for TiO2 of 2% to 3% per year, consistent with GDP growth expectations[69]. - The company expects sales volumes in 2024 to exceed those of 2023, despite a moderation in customer demand during the third quarter[113]. - The TiO2 industry is cyclical, and changes in pricing, production volumes, and customer demand could significantly affect the company's liquidity[131]. Operational Metrics - The average days sales outstanding (DSO) increased to 68 days as of September 30, 2024, while days sales in inventory (DSI) decreased to 60 days[122]. - As of September 30, 2024, approximately $268 million was available for borrowings under the Global Revolver, which was amended to increase the maximum borrowing amount from$225 million to $300 million and extend the maturity date to July 2029[126]. - The company intends to invest approximately$42 million in capital expenditures during 2024, including $17.2 million spent through September 30, 2024[134]. - The company has 1,017,518 shares available for repurchase under its stock repurchase program as of September 30, 2024[135].