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Kronos (KRO) Expands North American Base With LPC Acquisition
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Kronos Worldwide, Inc. (KRO - Free Report) recently announced that it acquired a 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”). It was previously held by Venator Investments, Ltd. Kronos, through a wholly-owned subsidiary that already had a 50% interest in LPC. With this acquisition, LPC is now an indirect, wholly-owned subsidiary of Kronos. The transaction involved an upfront cash payment of $185 million (subject to working capital adjustments) and a potential earn-out payment of up to $15 million based on KRO’s aggregate consolidated EBITDA for calendar years 2025 and 2026.
This acquisition is a unique opportunity for Kronos to enhance customer value and better serve the North American market. By fully owning the LPC facility, Kronos will broaden its product offerings and boost sales to new and existing customers. Kronos expects to realize significant synergies, including commercial, overhead and supply chain optimization. It will also implement process innovations to increase capacity and improve efficiency, leveraging proven technology from other Kronos facilities. LPC, the newest chloride-process TiO2 production facility in the Western world, is now fully integrated into Kronos.
KRO had operated LPC as a joint venture with Venator Materials or its predecessors since 1993. Located near Lake Charles, LA, LPC has an estimated annual production capacity of 156,000 metric tons. The acquisition was financed through cash on hand and borrowings under Kronos’ global revolving credit facility. It will report LPC as a wholly-owned subsidiary starting with its third-quarter Form 10-Q filing. The company may also explore additional financing opportunities, subject to market conditions.
To support the acquisition and its general liquidity needs, Kronos amended its $225-million global revolving credit facility with Wells Fargo. The amendment raises the maximum borrowing amount to $300 million, extends the maturity date to 2029 and includes LPC and its receivables and certain inventories in the borrowing base.
Kronos’ board of directors declared a quarterly dividend of 5 cents per share, down 14 cents from second-quarter 2024 tally. The dividend is payable on Sep 19, 2024, to stockholders of record at the close of business as of Sep 6, 2024. The reduced dividend rate will help it maintain a strong balance sheet while pursuing strategic investment opportunities. This adjustment will also enhance its liquidity, providing flexibility to manage increased debt service costs, working capital needs and capital improvements from the LPC acquisition. KRO will continue to evaluate the dividend rate based on its progress, operational results and other relevant factors.
Shares of Kronos have gained 14.6% in the past year compared with a 7.3% fall in its industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Kronos currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Kinross Gold Corporation (KGC - Free Report) . Carpenter Technology and Eldorado Gold sport a Zacks Rank #1 (Strong Buy), and Kinross carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.35, indicating a year-over-year rise of 282%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 105.5% in the past year.
The Zacks Consensus Estimate for EGO’s current-year earnings is pegged at $1.13, indicating a year-over-year rise of 98.3%. EGO’s earnings estimates have increased 10% in the past 60 days. EGO beat the consensus estimate in the last four quarters, with the average earnings surprise being 430.7%. The stock has rallied 50.7% in the past year.
The Zacks Consensus Estimate for Kinross's current-year earnings is pegged at 56 cents, indicating a rise of 27.3% from the year-ago levels. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 77.1% in the past year.
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Kronos (KRO) Expands North American Base With LPC Acquisition
Kronos Worldwide, Inc. (KRO - Free Report) recently announced that it acquired a 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”). It was previously held by Venator Investments, Ltd. Kronos, through a wholly-owned subsidiary that already had a 50% interest in LPC. With this acquisition, LPC is now an indirect, wholly-owned subsidiary of Kronos. The transaction involved an upfront cash payment of $185 million (subject to working capital adjustments) and a potential earn-out payment of up to $15 million based on KRO’s aggregate consolidated EBITDA for calendar years 2025 and 2026.
This acquisition is a unique opportunity for Kronos to enhance customer value and better serve the North American market. By fully owning the LPC facility, Kronos will broaden its product offerings and boost sales to new and existing customers. Kronos expects to realize significant synergies, including commercial, overhead and supply chain optimization. It will also implement process innovations to increase capacity and improve efficiency, leveraging proven technology from other Kronos facilities. LPC, the newest chloride-process TiO2 production facility in the Western world, is now fully integrated into Kronos.
KRO had operated LPC as a joint venture with Venator Materials or its predecessors since 1993. Located near Lake Charles, LA, LPC has an estimated annual production capacity of 156,000 metric tons. The acquisition was financed through cash on hand and borrowings under Kronos’ global revolving credit facility. It will report LPC as a wholly-owned subsidiary starting with its third-quarter Form 10-Q filing. The company may also explore additional financing opportunities, subject to market conditions.
Kronos Worldwide Inc Price and Consensus
Kronos Worldwide Inc price-consensus-chart | Kronos Worldwide Inc Quote
To support the acquisition and its general liquidity needs, Kronos amended its $225-million global revolving credit facility with Wells Fargo. The amendment raises the maximum borrowing amount to $300 million, extends the maturity date to 2029 and includes LPC and its receivables and certain inventories in the borrowing base.
Kronos’ board of directors declared a quarterly dividend of 5 cents per share, down 14 cents from second-quarter 2024 tally. The dividend is payable on Sep 19, 2024, to stockholders of record at the close of business as of Sep 6, 2024. The reduced dividend rate will help it maintain a strong balance sheet while pursuing strategic investment opportunities. This adjustment will also enhance its liquidity, providing flexibility to manage increased debt service costs, working capital needs and capital improvements from the LPC acquisition. KRO will continue to evaluate the dividend rate based on its progress, operational results and other relevant factors.
Shares of Kronos have gained 14.6% in the past year compared with a 7.3% fall in its industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Kronos currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Kinross Gold Corporation (KGC - Free Report) . Carpenter Technology and Eldorado Gold sport a Zacks Rank #1 (Strong Buy), and Kinross carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.35, indicating a year-over-year rise of 282%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 15.1%. The company’s shares have soared 105.5% in the past year.
The Zacks Consensus Estimate for EGO’s current-year earnings is pegged at $1.13, indicating a year-over-year rise of 98.3%. EGO’s earnings estimates have increased 10% in the past 60 days. EGO beat the consensus estimate in the last four quarters, with the average earnings surprise being 430.7%. The stock has rallied 50.7% in the past year.
The Zacks Consensus Estimate for Kinross's current-year earnings is pegged at 56 cents, indicating a rise of 27.3% from the year-ago levels. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 77.1% in the past year.