Kronos Worldwide : Kronos Worldwide Announces Fourth Quarter Results

     Kronos Worldwide : Kronos Worldwide Announces Fourth Quarter Results

DALLAS, TEXAS.March 12, 2013. Kronos Worldwide, Inc. (NYSE:KRO) today reported
a net loss for the fourth quarter of 2012 of $18.1 million, or $.16 per share,
compared to net income of $85.8 million, or $.74 per share, in the fourth
quarter of 2011. For the full year of 2012, Kronos Worldwide reported net
income of $218.5 million, or $1.89 per share, compared with $321.0 million, or
$2.77 per share in 2011. Comparability of the Company's results for the
fourth quarter periods was impacted by lower income from operations in 2012
principally due to lower average TiO[2] selling prices, higher raw materials
costs and lower production volumes in the fourth quarter of 2012, partially
offset by higher sales volumes. Comparability of the full year periods was
impacted by lower income from operations in 2012, principally due to lower
sales and production volumes and higher raw materials costs in 2012, partially
offset by higher average TiO[2] selling prices in 2012, as discussed further
below.

Net sales of $396.8 million in the fourth quarter of 2012 were $40.6 million,
or 9%, lower than in the fourth quarter of 2011. Net sales of $1,976.3
million in the full year of 2012 were $33.0 million, or 2%, higher than in the
full year 2011. Net sales decreased in the fourth quarter of 2012 as compared
to the fourth quarter of 2011 due to lower average TiO[2] selling prices
partially offset by higher sales volumes. Net sales increased in the full
year of 2012 primarily due to higher average TiO[2] selling prices, partially
offset by lower sales volumes. The Company's average TiO[2] selling prices
decreased 14% in the fourth quarter of 2012 as compared to the fourth quarter
of 2011, and increased 10% for the full year as compared to 2011. The
Company's average TiO[2] selling prices at the end of 2012 were 17% lower than
at the end of 2011 and were 10% lower than at the end of the third quarter of
2012. TiO[2 ]sales volumes in the fourth quarter of 2012 were 6% higher than
in the fourth quarter of 2011, while sales volumes for the full year 2012 were
6% lower than in 2011. Fluctuations in currency exchange rates also impacted
net sales comparisons, decreasing net sales by approximately $12 million in
the fourth quarter and approximately $82 million in the full year 2012 as
compared to 2011. The table at the end of this press release shows how each
of these items impacted the overall change in sales.

The Company's TiO[2] segment profit (see description of non-GAAP information
below) in the fourth quarter of 2012 was $4.7 million compared to segment
profit of $145.9 million in the fourth quarter of 2011. For the full year the
Company's segment profit was $373.8 million compared to $555.8 million in
2011. Segment profit decreased in the fourth quarter of 2012 primarily due to
the negative effects of lower average TiO[2] selling prices, lower production
volumes and higher raw materials costs, offset in part by the higher sales
volumes. Segment profit decreased in the full year of 2012 primarily due to
lower sales and production volumes, higher raw materials costs and the
unfavorable effects of unabsorbed fixed production costs resulting from
reduced production volumes, partially offset by higher TiO[2] selling prices.
Kronos' TiO[2] production volumes were 20% lower in the fourth quarter of
2012 as compared to the fourth quarter of 2011, and were 15% lower for the
year. During the fourth quarter of 2012, Kronos operated its facilities at
approximately 80% of practical capacity primarily to align production and
inventory levels to current and anticipated near-term customer demand levels.
Segment profit comparisons were also impacted by the effects of fluctuations
in currency exchange rates, which decreased segment profit by approximately $9
million in the fourth quarter and by approximately $10 million for the year.

We recognized a $3.9 million securities transaction loss in the fourth quarter
of 2012 on the sale, pursuant to a cash tender offer by a third party, of all
of our shares of Titanium Metals Corporation (TIMET) common stock for $70.0
million.

As previously reported, in March 2011 we redeemed €80 million principal amount
of Kronos International, Inc.'s 6.5% Senior Secured Notes due 2013, and in the
third and fourth quarters of 2011, we repurchased in open market transactions
an aggregate €40.8 million principal amount of the Senior Notes. As a result
of these redemptions and open market purchases, the Company's results in 2011
include a net charge of $3.1 million ($2.1 million, or $.02 per share, net of
income tax benefit) consisting of the call premium, the write-off of
unamortized deferred financing costs and original issue discount associated
with the redeemed and purchased Senior Notes. In June 2012, we entered into
a new $400 million term loan, and used a portion of the net proceeds to redeem
the remaining €279.2 million principal amount of Senior Notes outstanding. As
a result, we recognized a second quarter 2012 charge of $7.2 million ($4.7
million, or $.04 per share, net of income tax benefit) associated with the
early extinguishment of such remaining Senior Notes. 

In February 2013, we voluntarily prepaid an aggregate $290 million principal
amount under the $400 million term loan, using $100 million of available cash
as well as borrowings of $190 million under a new loan from Contran
Corporation, our parent. The loan from Contran provides for borrowings of up
to $290 million, and contains terms and conditions substantially identical to
the terms and conditions of the term loan, except that the loan from Contran
is unsecured and contains no financial maintenance covenant. After such
prepayment, an aggregate $100 million principal amount remains outstanding
under the term loan.

Our income tax provision in 2012 includes a net incremental tax benefit of
$3.1 million. As previously reported, we had determined during the third
quarter of 2012 that due to global changes in the business the Company would
not remit any dividends from our non-U.S. jurisdictions. As a result, certain
current year tax attributes were available for carryback to offset prior year
tax expense and our provision for income taxes in the third quarter included
an incremental tax benefit of $11.1 million. However, as a result of a change
in circumstances related to our sale and the sale by certain of our affiliates
of their shares of TIMET common stock, which sale provided an opportunity for
us and other members of our consolidated U.S. federal income tax group to
elect to claim foreign tax credits, we determined that we could
tax-efficiently remit non-cash dividends from our non-U.S. jurisdictions
before the end of the year that absent the TIMET sale would not have been
considered. As a result, our provision for income taxes in the fourth quarter
of 2012 includes incremental taxes on the non-cash dividends remitted in the
fourth quarter of $8.0 million. Our income tax provision in 2011 includes a
provision for U.S. incremental income taxes on earnings repatriated from our
German subsidiary of $17.2 million ($4.0 million in the fourth quarter), which
earnings were used to fund a portion of the repurchases of our Senior Secured
Notes.

Steven L. Watson, Vice Chairman and Chief Executive Officer, said "We operated
our production facilities at reduced rates for the majority of 2012 in
response to weaker customer demand and global economic uncertainties. If
economic conditions improve in the various regions of the world during 2013,
we expect demand for our TiO[2] products will increase, and our sales volumes
would be expected to be higher in 2013 as compared to 2012. During 2013, we
will continue to monitor current and anticipated near-term customer demand
levels and align our production levels and inventories accordingly. We
experienced significantly higher costs for our raw materials such as feedstock
ore and petroleum coke in 2012. Although the cost of feedstock ore has
moderated recently, such reductions have been inadequate to compensate for the
decline in selling prices for our products. As a result, the Company expects
that it will implement increases in its selling prices during 2013 in order to
adequately compensate for its raw material production costs."

The statements in this release relating to matters that are not historical
facts are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, it cannot give any assurances that these expectations will
prove to be correct. Such statements by their nature involve substantial
risks and uncertainties that could significantly impact expected results, and
actual future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. The factors that
could cause actual future results to differ materially include, but are not
limited to, the following:

  oFuture supply and demand for our products;
  oThe extent of the dependence of certain of our businesses on certain
    market sectors;
  oThe cyclicality of our business;
  oCustomer inventory levels;
  oUnexpected or earlier-than-expected industry capacity expansion;
  oChanges in raw material and other operating costs (such as energy and ore
    costs);
  oChanges in the availability of raw materials (such as ore);
  oGeneral global economic and political conditions (such as changes in the
    level of gross domestic product in various regions of the world and the
    impact of such changes on demand for TiO[2]);
  oCompetitive products and substitute products;
  oCustomer and competitor strategies;
  oPotential consolidation of our competitors;
  oThe impact of pricing and production decisions;
  oCompetitive technology positions;
  oThe introduction of trade barriers;
  oPossible disruption of our business, or increases in our cost of doing
    business, resulting from terrorist activities or global conflicts;
  oFluctuations in currency exchange rates (such as changes in the exchange
    rate between the U.S. dollar and each of the euro, the Norwegian krone and
    the Canadian dollar), or possible disruptions to our business resulting
    from potential instability resulting from uncertainties associated with
    the euro;
  oOperating interruptions (including, but not limited to, labor disputes,
    leaks, natural disasters, fires, explosions, unscheduled or unplanned
    downtime, transportation interruptions and cyber attacks);
  oOur ability to renew or refinance credit facilities;
  oOur ability to maintain sufficient liquidity;
  oThe ultimate outcome of income tax audits, tax settlement initiatives or
    other tax matters;
  oOur ability to utilize income tax attributes, the benefits of which have
    been recognized under the more-likely-than-not recognition criteria;
  oEnvironmental matters (such as those requiring compliance with emission
    and discharge standards for existing and new facilities);
  oGovernment laws and regulations and possible changes therein;
  oThe ultimate resolution of pending litigation; and
  oPossible future litigation.

Should one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. The
Company disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of changes in information,
future events or otherwise.

In an effort to provide investors with additional information regarding the
Company's results of operations as determined by accounting principles
generally accepted in the United States of America (GAAP), the Company has
disclosed certain non-GAAP information, which the Company believes provides
useful information to investors:

  oThe Company discloses segment profit, which is used by the Company's
    management to assess the performance of the Company's TiO[2 ]operations.
    The Company believes disclosure of segment profit provides useful
    information to investors because it allows investors to analyze the
    performance of the Company's TiO[2 ]operations in the same way that the
    Company's management assesses performance. The Company defines segment
    profit as income before income taxes, interest expense and certain general
    corporate items. Corporate items excluded from the determination of
    segment profit include corporate expense and interest income not
    attributable to the Company's TiO[2 ]operations.

Kronos Worldwide, Inc. is a major international producer of titanium dioxide
products.

Source: Kronos Worldwide, Inc.
Contact: Janet Keckeisen, Vice President, Investor Relations, 972-233-1700

KRONOS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share and metric ton data)

                           Three months                     Year
                        ended December 31,           ended December 31,
                       2011          2012          2011           2012
                           (Unaudited)                        
                                                           
Net sales            $ 437.4    $ 396.8     $ 1,943.3     $ 1,976.3
Cost of sales         243.3    347.2     1,194.9      1,415.9
                                                           
 Gross margin     194.1    49.6     748.4     560.4
                                                       
Selling, general and
administrative        50.3    44.2     195.0     183.4
expense
Other operating                                             
income (expense):
 Currency                                             
transaction gains     2.6  (.5)           3.0  (1.0)
(losses), net
 Other expense,                   
net                  (.6)          (.3)           (.9)            (2.5)
 Corporate               (3.5)   (9.0)  
expense              (2.5)                                        (13.9)
                                                           
 Income      143.3    1.1    546.5     359.6
from operations
                                                           
Other income                                                
(expense):
 Trade interest       .1      
income               .1                           .3              .3
 Other interest   2.4   2.3    6.7  
and dividend income                                               8.7
 Securities                                  
transaction losses,  (.6)          (3.9)  (.6)           (3.9)
net
 Gain (loss) on                            
prepayment of debt,  .1           -             (3.1)  (7.2)
net
 Interest                (6.7)   (32.7)  
expense              (6.5)                                        (26.7)
                                                           
 Income
(loss) before income  138.8    (7.1)   517.1     330.8
taxes
                                                           
Income tax expense    53.0    11.0     196.1     112.3
                                                           
 Net income $ 85.8   $ (18.1)    $ 321.0     $ 218.5
(loss)
                                                           
Net income (loss)
per basic and        $ .74   $ (.16)   $ 2.77    $ 1.89
diluted share
                                                           
Weighted-average                                            
shares used in the
 calculation of
net income (loss)     115.9    115.9     115.9     115.9
per share
                                                           
TiO[2] data - metric                                        
tons in thousands:
 Sales volumes    97   102     503    470
 Production       141    113     550    469
volumes
                                                           

KRONOS WORLDWIDE, INC.
RECONCILIATION OF SEGMENT PROFIT TO
INCOME FROM OPERATIONS
(In millions)
(Unaudited)
                                                            
                            Three months                     Year
                         ended December 31,           ended December 31,
                        2011           2012          2011         2012
                                                            
Segment profit       $ 145.9      $ 4.7    $ 555.8     $ 373.8
Adjustments:                                           
 Trade interest   (.1)              
income                               (.1)           (.3)           (.3)
 Corporate        (2.5)    (3.5)   (9.0)   (13.9)
expense
                                                            
Income from          $ 143.3      $ 1.1    $ 546.5     $ 359.6
operations
                                                            

KRONOS WORLDWIDE, INC.
IMPACT OF PERCENTAGE CHANGE IN SALES
(Unaudited)

                                        Three months ended   Year ended
                                           December 31,     December 31,
                                          2012 vs. 2011     2012 vs. 2011

Percentage change in sales:                                         
 TiO[2] product pricing                  (14)    %        10  %
 TiO[2] sales volume                     6   %        (6) %
 TiO[2] product mix                      2   %        2 %
 Changes in currency exchange rates      (3)   %        (4) %
                                                                   
 Total                              (9)   %        2 %
                                                                   

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Source: Kronos Worldwide via Thomson Reuters ONE
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