KRONOS WORLDWIDE INC (KRO)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 was a weak quarter: net sales fell 1% year over year to $494.4M, and GAAP EPS swung to a loss of $0.08 versus $0.17 last year; results missed Wall Street consensus on both EPS ($0.14) and revenue ($504.7M), driven by reduced operating rates and unfavorable fixed cost absorption. *
• Profitability compressed sharply: EBITDA fell 60% YoY to $22.2M and segment profit declined to $10.9M on $20M of unabsorbed fixed production costs, higher cost inventory rolling through COGS, and FX headwinds.
• The company highlighted ongoing demand uncertainty tied to trade policies and geopolitics; average TiO2 selling prices declined 4% in 1H25 vs the start of 2025.
• Governance and capital allocation: board declared a $0.05 quarterly dividend; CFO transition announced (retirement of Tim Hafer; Bradley Troutman appointed CFO).
• Near-term narrative likely driven by margin repair and operating rate normalization; watch integration execution for the LPC acquisition and any pricing stabilization signals.

What Went Well and What Went Wrong

What Went Well

• North America volumes improved; FX (primarily euro) increased Q2 net sales by ~$8M; 1H25 net sales up 1% YoY, supported by higher volumes in North America and Europe.
• TiO2 capacity utilization was 93% in Q1 2025 (vs 87% in Q1 2024), supporting lower per-ton production costs earlier in the year.
• Continued balance-sheet and corporate actions: dividend maintained; LPC fully consolidated since July 2024, with management targeting synergies and innovations.

Quote: “We and the TiO2 industry have been operating in a market impacted by global uncertainty related to U.S. trade policies, geopolitical tensions and general hesitancy by customers to build inventories which have deferred any anticipated market recovery.”

What Went Wrong

• Production rates fell to 81% in Q2 2025; unabsorbed fixed production costs of ~$20M materially pressured margins and EPS.
• Average TiO2 prices declined 4% during 1H25; Q2 ASPs were 1% lower YoY, with weaker export markets and adverse mix.
• Segment profit and EBITDA compressed sharply: segment profit $10.9M (vs $41.1M) and EBITDA $22.2M (vs $56.2M), reflecting reduced operating absorption and prior-quarter higher-cost inventory flowing through Q2 COGS.

Financial Results

Income Statement and Profitability vs Prior Periods and Estimates

Values marked with * reflect S&P Global consensus estimates (Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean). Values retrieved from S&P Global.

Key surprises:

• EPS: -$0.08 vs $0.14 consensus → bold miss (driven by lower operating rates and ~$20M unabsorbed fixed costs). *
• Revenue: $494.4M vs $504.7M consensus → miss. *
• EBITDA: $22.2M vs $44.7M consensus → miss. *

Margin Profile (% of Revenue)

Segment and Volume KPIs

Net Sales Drivers (Company Attribution)

Guidance Changes

Note: The company did not issue quantitative revenue/EPS/EBITDA guidance ranges in the Q2 materials; management provided qualitative narrative on pricing, mix, FX, and operating rates.

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available in the document catalog; themes below reflect press releases and 8-Ks.

Management Commentary

• “We started 2025 with average TiO2 selling prices 2% higher than at the beginning of 2024 but our average TiO2 selling prices declined 4% during the first six months of 2025.”
• “Our unabsorbed fixed production costs related to decreased production volumes in the second quarter of 2025 were approximately $20 million.”
• “We operated our production facilities at overall average capacities of 87% of practical capacity utilization in the first six months of 2025 (93% and 81% in the first and second quarters of 2025, respectively).”
• “Fluctuations in currency exchange rates (primarily the euro) increased net sales by approximately $8 million in the second quarter of 2025.”
• LPC integration: reiteration of business combination and consolidation since July 16, 2024.

Governance update:

• CFO transition announced: Tim C. Hafer retiring as officer effective Aug 8, 2025; Bradley E. Troutman elected SVP & CFO effective Aug 8, 2025.

Q&A Highlights

• No Q2 2025 earnings call transcript was available in the catalog; therefore, Q&A themes and clarifications cannot be assessed from a transcript. We relied on the press release and 8-K references. [functions.ListDocuments returned none]

Estimates Context

• Consensus (S&P Global): EPS $0.14 vs actual -$0.08 (miss); Revenue $504.7M vs actual $494.4M (miss); EBITDA $44.7M vs actual $22.2M (miss).*
• Estimate breadth: 2 estimates for EPS and revenue for Q2 2025, indicating a relatively thin analyst coverage.*
• Implications: Expect downward revisions to near-term margin expectations and possibly to H2 operating rate assumptions given Q2 absorption drag; watch for commentary on normalization cadence and price stabilization.

Values marked with * reflect S&P Global consensus estimates. Values retrieved from S&P Global.

Key Takeaways for Investors

• The quarter was characterized by operating deleverage: reduced utilization (81%) and ~$20M of unabsorbed fixed costs drove a broad miss on EPS, revenue, and EBITDA; near-term stock narrative hinges on operating rate normalization. *
• Pricing pressure persists: average TiO2 prices fell 4% in 1H25 vs start of year; monitor North America resilience vs export weakness and mix recovery.
• Volumes and FX provided partial offsets, but were insufficient to counter cost absorption headwinds; segment profit collapsed to $10.9M.
• Capital allocation is steady (dividend maintained at $0.05); governance transition with new CFO may signal a focus on cost discipline and integration execution.
• Watch catalysts: any pricing announcements, production rate increases, inventory destocking progress, and integration benefits from LPC could pivot margin trajectory.
• Risk factors remain elevated: trade policy uncertainty, FX volatility, and competition (including Chinese suppliers) can impact volumes and pricing; position sizing should reflect cyclical and macro exposure.
• For traders: the magnitude of EPS/EBITDA miss is a negative surprise; monitor for relief rallies tied to stabilization signals or capacity utilization improvements; otherwise risk of estimate cuts persists near term. *

Citations: Press release and 8‑K figures and commentary .