Kronos Worldwide Enters Material Agreement, Reports Financials

TL;DR

KRONOS WORLDWIDE (KRO) filed an 8-K detailing a new material agreement and financial results. Watch for updates.

AI Summary

Kronos Worldwide, Inc. announced on July 16, 2024, that it has entered into a material definitive agreement. The company also reported its results of operations and financial condition. This filing also details the creation of a direct financial obligation or an obligation under an off-balance sheet arrangement of the registrant, along with Regulation FD disclosures and financial statements.

Why It Matters

This 8-K filing indicates significant corporate actions and financial updates for Kronos Worldwide, Inc., which could impact its stock performance and investor outlook.

Risk Assessment

Risk Level: medium — The filing involves material definitive agreements and financial reporting, which can introduce volatility and require careful investor analysis.

Key Players & Entities

• Kronos Worldwide, Inc. (company) — Registrant
• July 16, 2024 (date) — Date of earliest event reported

FAQ

Key Financial Figures

• $185 million — eady own for an upfront cash payment of $185 million (subject to working capital adjustments
• $15 million — d a potential earn-out payment of up to $15 million based on aggregate consolidated net inc
• $650 million — rs for the two-year earn-out period are $650 million and $730 million, with $5 million of th
• $730 m — ar earn-out period are $650 million and $730 million, with $5 million of the earnout p
• $5 million — are $650 million and $730 million, with $5 million of the earnout payable if Kronos achiev
• $730 million — million payable if aggregate EBITDA is $730 million or greater for the period. If Kronos ac
• $10 million — million, the payment of the additional $10 million is pro-rated between the two targets. T
• $132 million — ed through a borrowing of approximately $132 million under Kronos' global revolving credit f
• $225 million — t facility (the "Global Revolver") from $225 million to $300 million, (b) extends the maturi
• $300 m — "Global Revolver") from $225 million to $300 million, (b) extends the maturity date of
• $300 million — er the Global Revolver in amounts up to $300 million through July 2029 (with revolving borro
• $35 m — NV, and Kronos Titan GmbH limited to US $35 million, 30 million and 60 million, respe
• $20 million — ronos and its subsidiaries in excess of $20 million. Kronos will pay an upfront fee of 50
• $495 million — second quarter of 2024 in the range of $495 million to $510 million compared to net sales o
• $510 million — of 2024 in the range of $495 million to $510 million compared to net sales of $443.2 million

Filing Documents

• kro-20240716x8k.htm (8-K) — 92KB
• kro-20240716xex10d1.htm (EX-10.1) — 215KB
• kro-20240716xex10d2.htm (EX-10.2) — 2397KB
• kro-20240716xex99d1.htm (EX-99.1) — 37KB
• kro-20240716xex10d1001.jpg (GRAPHIC) — 1KB
• kro-20240716xex10d2001.jpg (GRAPHIC) — 4KB
• kro-20240716xex99d1001.jpg (GRAPHIC) — 11KB
• 0001257640-24-000031.txt ( ) — 3334KB
• kro-20240716.xsd (EX-101.SCH) — 4KB
• kro-20240716_def.xml (EX-101.DEF) — 3KB
• kro-20240716_lab.xml (EX-101.LAB) — 12KB
• kro-20240716_pre.xml (EX-101.PRE) — 10KB
• kro-20240716x8k_htm.xml (XML) — 5KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Acquisition of Remaining Joint Venture Interest in LPC Pursuant to a Purchase and Sale Agreement dated as of July 16, 2024 (the "Effective Date") among Kronos Worldwide, Inc. ("Kronos"), Kronos Louisiana, Inc. ("KLA"), Venator Materials PLC and Venator Investments Ltd. (the "Purchase and Sale Agreement"), Kronos' wholly-owned subsidiary KLA acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. ("LPC") held by Venator Investments, Ltd., effective as of the Effective Date. Prior to the acquisition, KLA held a 50% joint venture interest in LPC. Following the acquisition, LPC is an indirect, wholly-owned subsidiary of Kronos. Kronos acquired the 50% joint venture interest that it did not already own for 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 aggregate consolidated net income before interest expense, income taxes and depreciation expense, or EBITDA, of Kronos during a two-year period comprising calendar years 2025 and 2026. The aggregate EBITDA tiers for the two-year earn-out period are $650 million and $730 million, with $5 million of the earnout payable if Kronos achieves $650 million in aggregate consolidated EBITDA, and a maximum of $15 million payable if aggregate EBITDA is $730 million or greater for the period. If Kronos achieves aggregate consolidated EBITDA between $650 million and $730 million, the payment of the additional $10 million is pro-rated between the two targets. The earn-out is payable at the earliest in April 2027. The acquisition was financed through a borrowing of approximately $132 million under Kronos' global revolving credit facility with the remainder paid with cash on hand. Kronos will report LPC as a wholly-owned subsidiary beginning with its third quarter Form 10-Q filing. A copy of the Purchase and Sale Agreement is attached as Exhibit 10.1 to this Current

02 Results of Operations and Financial Condition

Item 2.02 Results of Operations and Financial Condition. Preliminary Second Quarter 2024 Update The preliminary, unaudited financial information for the second quarter and expectations for the full fiscal year 2024 included in this Current Report on Form 8-K are based on information available to management of Kronos as of July 17, 2024. It remains subject to change based on management's ongoing review of the second quarter and first six months results. The actual results remain subject to the completion of the preparation of management's and the audit committee's reviews and Kronos' other financial closing procedures as well as the completion of the preparation of Kronos' consolidated financial results for the three and six-month periods ended June 30, 2024. During that process, management may identify items that would require Kronos to make adjustments, which could be material, to the information presented in this Current Report on Form 8-K. While Kronos does not expect its actual results for the three-month period ended June 30, 2024 will vary materially from the preliminary, unaudited financial results presented in this Current Report on Form 8-K, there can be no assurance that these estimates will be realized or that the sales, EBITDA, or capital expenditure amounts for the three-month period ended June 30, 2024, cash balance at the end of that period, or operating results during that period will equal or fall within the ranges of the values set forth below. Actual results could be materially different and are affected by the risk factors and uncertainties identified in this Current Report on Form 8-K and in Kronos' filings with the Securities and Exchange Commission. For these or other reasons, the actual results for this period could differ materially from these preliminary estimates. Kronos expects to report net sales for the second quarter of 2024 in the range of $495 million to $510 million compared to net sales of $443.2 million reported in the second

Forward-Looking Statements

Forward-Looking Statements The statements in this Current Report on Form 8-K relating to matters that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. These forward-looking statements include, among others, statements regarding the potential effect of the LPC acquisition, expected second quarter 2024 results and management's outlook for 2024 including the realization of potential cost savings. Although Kronos believes 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. The factors that could cause actual future results to differ materially include, but are not limited to, the following: Future supply and demand for our products Our ability to realize expected cost savings from strategic and operational initiatives Our ability to integrate acquisitions, including LPC, into our operations and realize expected synergies and innovations The extent of the dependence of certain of our businesses on certain market sectors The cyclicality of our business Customer and producer inventory levels Unexpected or earlier-than-expected industry capacity expansion Changes in raw material and other operating costs (such as energy and ore costs) Changes in the availability of raw materials (such as ore) General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material and energy costs, reduce demand or perceived demand for our TiO 2 products, or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, nat

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. The registrant hereby furnishes the information set forth in its press release dated July 17, 2024, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The press release the registrant furnishes as Exhibit 99.1 to this current report is not deemed "filed" for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the U.S. Securities and Exchange Commission shall not incorporate this information by reference, except as otherwise expressly stated in such filing.

Financial Statements and Exhibits

Financial Statements and Exhibits. (d) Exhibits 10.1 Purchase and Sale Agreement dated July 16, 2024 by and between Kronos Louisiana, Inc., Kronos Worldwide, Inc., Venator Investments, Ltd. and Venator Materials PLC. 10.2 Second Amendment to Credit Agreement dated July 17, 2024 among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH, Wells Fargo Bank, National Association as administrative agent and the lenders a party thereto. 99.1 Press Release, dated July 17, 2024, issued by Kronos Worldwide, Inc. 104 Cover Page Interactive Data File (embedded within Inline XBRL document). SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KRONOS WORLDWIDE, INC. (Registrant) Date: July 17, 2024 By: /s/ Tim C. Hafer Tim C. Hafer, Executive Vice President and Chief Financial Officer

View Full Filing

View this 8-K filing on SEC EDGAR