Investment Thesis
Kronos Worldwide is in fundamental financial distress with negative net income (-$4.8M), negative operating cash flow (-$51.3M), and critically inadequate interest coverage (0.7x) that cannot support its $602.7M debt load from operations. The company is hemorrhaging cash with -$94.2M free cash flow while revenues decline 1.5% YoY and operating margins collapse to 2.5%, indicating severe operational deterioration in its chemical business.
Strengths
- Strong current ratio (3.18x) and quick ratio (1.41x) provide near-term liquidity buffer
- Moderate leverage with debt-to-equity of 0.81x prevents immediate solvency crisis
- Positive gross profit of $83.3M demonstrates some core operational capability
Risks
- Interest coverage ratio of 0.7x indicates operating income cannot service debt obligations - imminent refinancing pressure required
- Negative operating cash flow of -$51.3M combined with -$94.2M free cash flow demonstrates unsustainable cash burn
- Net loss position (-$0.9% net margin) with declining revenue (-1.5% YoY) signals deteriorating business fundamentals with no turnaround catalyst evident
Key Metrics to Watch
- Operating cash flow trend - critical to assess if cash burn stabilizes or accelerates
- Interest coverage ratio - must improve above 1.5x to safely service debt
- Revenue stabilization and gross margin expansion - needed to return to profitability
Financial Metrics
Revenue
509.8M
Net Income
-4.8M
EPS (Diluted)
$-0.04
Free Cash Flow
-94.2M
Total Assets
1.8B
Cash
25.7M
Profitability Ratios
Gross Margin
16.3%
Operating Margin
2.5%
Net Margin
-0.9%
ROE
-0.6%
ROA
-0.3%
FCF Margin
-18.5%
Balance Sheet & Liquidity
Current Ratio
3.18x
Quick Ratio
1.41x
Debt/Equity
0.81x
Debt/Assets
0.0%
Interest Coverage
0.66x
Long-term Debt
602.7M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T10:52:28.818398 |
Data as of: 2026-03-31 |
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