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What changed in KRONOS WORLDWIDE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KRONOS WORLDWIDE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+306 added−265 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-06)

Top changes in KRONOS WORLDWIDE INC's 2024 10-K

306 paragraphs added · 265 removed · 213 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

76 edited+9 added−12 removed67 unchanged
Biggest changeThese reports are available on the website, without charge, as soon as is reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission, or SEC. Additional information regarding us, including our audit committee charter, Code of Business Conduct and Ethics and our Corporate Governance Guidelines, can also be found at this website.
Biggest changeOur annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are available on our website at kronosww.com . These reports are available on the website, without charge, as soon as is reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission, or SEC.
KRONOS ® purified anatase grades meet the applicable requirements of the CTFA (Cosmetics, Toiletries and Fragrances Association), USP and BP (United States Pharmacopoeia and British Pharmacopoeia) and the FDA (United States Food and Drug Administration).
KRONOS ® purified anatase grades meet the applicable requirements of the CTFA (Cosmetics, Toiletries and Fragrances Association), USP (United States Pharmacopoeia), BP (British Pharmacopoeia) and the FDA (United States Food and Drug Administration).
These specialty chemicals are used in applications in the formulation of pearlescent pigments, production of electroceramic capacitors for cell phones and other electronic devices and natural gas pipe and other specialty applications. Manufacturing, operations and properties We produce TiO 2 in two crystalline forms: rutile and anatase.
These specialty chemicals are used in applications in the formulation of pearlescent pigments, production of electroceramic capacitors for cell phones and other electronic devices and natural gas pipe and other specialty applications. Manufacturing, operations and properties Manufacturing – We produce TiO 2 in two crystalline forms: rutile and anatase.
It is possible that future developments, such as stricter requirements in environmental laws and enforcement policies, could adversely affect our operations, including production, handling, use, storage, transportation, sale or disposal of hazardous or toxic substances or require us to make capital and other expenditures to comply, and could adversely affect our consolidated financial position and results of operations or liquidity.
It is possible that future developments, such as stricter requirements in environmental laws and enforcement policies, could adversely affect our operations, including production, 11 ​ handling, use, storage, transportation, sale or disposal of hazardous or toxic substances or require us to make capital and other expenditures to comply, and could adversely affect our consolidated financial position and results of operations or liquidity.
TiO 2 is considered a “quality-of-life” product. Demand for TiO 2 has generally been driven by worldwide gross domestic product and has generally increased with rising standards of living in various regions of the world. According to industry estimates, TiO 2 consumption has grown at a compound annual growth rate of approximately 2% since 2000.
TiO 2 is considered a “quality-of-life” product. Demand for TiO 2 has generally been driven by worldwide gross domestic product and has generally increased with rising standards of living in various regions of the world. According to industry estimates, TiO 2 consumption has grown at a compound annual growth rate of approximately 3% since 2000.
For internal global tracking, benchmarking and identification of opportunities for improvement, we collect the location specific information and apply a U.S.-based injury rate calculation to arrive at a global total frequency rate, which is expressed as the number of incidents at our operating locations per 200,000 hours.
For internal global tracking, benchmarking and identification of opportunities for improvement, we collect the location specific information and apply a U.S.-based injury rate calculation method to arrive at a global total frequency rate, which is expressed as the number of incidents at our operating locations per 200,000 hours.
We expect the raw materials purchased under this contract, and contracts that we may enter into, to meet our sulfate process feedstock requirements over the next several years. 8 Many of our raw material contracts contain fixed quantities we are required to purchase or specify a range of quantities within which we are required to purchase.
We expect the raw materials purchased under this contract, and contracts that we may enter into, to meet our sulfate process feedstock requirements over the next several years. Many of our raw material contracts contain fixed quantities we are required to purchase or specify a range of quantities within which we are required to purchase.
We believe all of our facilities are in substantial compliance with applicable environmental laws. ​ From time to time, new environmental, health and safety regulations are passed or proposed in the countries in which we operate or sell our products, seeking to regulate our operations or to restrict, limit or classify TiO 2 .
We believe all of our facilities are in substantial compliance with applicable environmental laws. ​ From time to time, new environmental, sustainability, health and safety regulations are passed or proposed in the countries in which we operate or sell our products, seeking to regulate our operations or to restrict, limit or classify TiO 2 .
At our facilities, we undertake various environmental sustainability programs, and we promote social responsibility and volunteerism through programs designed to support and give back to the local communities in which we operate. Each of 12 our locations maintains site-specific safety programs and disaster response and business continuity plans.
At our facilities, we undertake various environmental sustainability programs, and we promote social responsibility and volunteerism through programs designed to support and give back to the local communities in which we operate. Each of our locations maintains site-specific safety programs and disaster response and business continuity plans.
ITEM 1. BUSINESS General Kronos Worldwide, Inc. (NYSE: KRO) (Kronos), incorporated in Delaware in 1989, is a leading global producer and marketer of value-added titanium dioxide pigments, or TiO 2 , a base industrial product used in a wide range of applications.
ITEM 1. BUSINESS General Kronos Worldwide, Inc. (NYSE: KRO) (“Kronos”), incorporated in Delaware in 1989, is a leading global producer and marketer of value-added titanium dioxide pigments, or TiO 2 , a base industrial product used in a wide range of applications.
We also utilize sales agents and distributors who are authorized to sell our products in specific geographic areas. In Europe, our sales efforts are conducted primarily through our direct sales force and our sales agents. Our agents do not sell any TiO 2 products other than KRONOS ® branded products.
We also utilize sales agents and distributors who are authorized to sell our products in specific geographic areas. In Europe, our sales efforts are conducted primarily through our direct sales force and our sales agents. Our agents do not sell any 9 ​ TiO 2 products other than KRONOS ® branded products.
We expect 13 our manufacturing facilities to produce our products safely and in compliance with local regulations, policies, standards and practices intended to protect the environment and our people and have established global policies designed to promote compliance. We require our employees to comply with such requirements.
We expect our manufacturing facilities to produce our products safely and in compliance with local regulations, policies, standards and practices intended to protect the environment and people and have established global policies designed to promote such compliance. We require our employees to comply with such requirements.
Our TiO 2 business is enhanced by the following three complementary businesses, which comprised approximately 10% of our net sales in 2023: ● We own and operate an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term. Ilmenite is a raw material used directly as a feedstock by some sulfate-process TiO 2 plants.
Our TiO 2 business is enhanced by the following three complementary businesses, which comprised approximately 10% of our net sales in 2024: ● We own and operate an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term. Ilmenite is a raw material used directly as a feedstock by some sulfate-process TiO 2 plants.
Our major customers include domestic and international paint, plastics, decorative laminate and paper manufacturers. We ship TiO 2 to our customers in either a dry or slurry form via rail, truck and/or ocean carrier. Sales of our core TiO 2 pigments represented approximately 90% of our net sales in 2023.
Our major customers include domestic and international paint, plastics, decorative laminate and paper manufacturers. We ship TiO 2 to our customers in either a dry or slurry form via rail, truck and/or ocean carrier. Sales of our core TiO 2 pigments represented approximately 90% of our net sales in 2024.
As one of the few vertically integrated producers of sulfate process TiO 2 , we operate a rock ilmenite mine in Norway, which provided all of the feedstock for our European sulfate process TiO 2 plants in 2023. We expect ilmenite production from our mine to meet our European sulfate process feedstock requirements for the foreseeable future.
As one of the few vertically integrated producers of sulfate process TiO 2 , we operate a rock ilmenite mine in Norway, which provided all of the feedstock for our European sulfate process TiO 2 plants in 2024. We expect ilmenite production from our mine to meet our sulfate process feedstock requirements for the foreseeable future.
If actual developments differ from our expectations, the TiO 2 industry’s and our performance could be unfavorably affected. Research and development We employ scientists, chemists, process engineers and technicians who are engaged in research and development, process technology and quality assurance activities in Leverkusen, Germany.
If actual developments differ from our expectations, the TiO 2 industry and our performance could be unfavorably affected. Research and development We employ scientists, chemists, process engineers and technicians who are engaged in research and development, process technology and quality assurance activities in Leverkusen, Germany.
We did not experience any work stoppages during 2023, although it is possible that there could be future work stoppages or other labor disruptions that could materially and adversely affect our business, results of operations, financial position, or liquidity.
We did not experience any work stoppages during 2024, although it is possible that there could be future work stoppages or other labor disruptions that could materially and adversely affect our business, results of operations, financial position, or liquidity.
At December 31, 2023, approximately 50% of our common stock was owned by Valhi, Inc. (NYSE: VHI) and approximately 31% was owned by a wholly-owned subsidiary of NL Industries, Inc. (NYSE: NL). Valhi also owns approximately 83% of NL Industries’ outstanding common stock. A wholly-owned subsidiary of Contran Corporation held approximately 91% of Valhi’s outstanding common stock.
At December 31, 2024, approximately 50% of our common stock was owned by Valhi, Inc. (NYSE: VHI) and approximately 31% was owned by a wholly-owned subsidiary of NL Industries, Inc. (NYSE: NL). Valhi also owns approximately 83% of NL Industries’ outstanding common stock. A wholly-owned subsidiary of Contran Corporation held approximately 91% of Valhi’s outstanding common stock.
Our U.S. patent portfolio includes patents having remaining terms ranging from one year to 18 years. Trademarks – Our trademarks, including KRONOS ® , are covered by issued and/or pending registrations, including in Canada and the United States.
Our U.S. patent portfolio includes patents having remaining terms ranging from one year to 19 years. Trademarks – Our trademarks, including KRONOS ® , are covered by issued and/or pending registrations, including in Canada and the United States.
The chloride process produces an intermediate base pigment with a wide range of properties.
The chloride process produces an intermediate base pigment with a wide range of 6 ​ properties.
These individuals have the responsibility for improving our chloride and sulfate production processes, improving product quality and strengthening our competitive position by developing new products and applications. Our expenditures for these activities were approximately $17 million in 2021, $15 million in 2022 and $18 million in 2023. We expect to spend approximately $14 million on research and development in 2024.
These individuals have the responsibility for improving our chloride and sulfate production processes, improving product quality and strengthening our competitive position by developing new products and applications. Our expenditures for these activities were approximately $15 million in 2022, $18 million in 2023 and $14 million in 2024. We expect to spend approximately $15 million on research and development in 2025.
We purchase feedstock for our chloride process TiO 2 from the following primary suppliers for certain contractually specified volumes for delivery extending, in some cases, through 2026: ​ ​ ​ ​ ​ Supplier ​ Product ​ Renewal Terms Rio Tinto Iron and Titanium Ltd. ​ Chloride process grade slag ​ Auto-renews bi-annually Rio Tinto Iron and Titanium Ltd. ​ Upgraded slag ​ Auto-renews annually Eramet SA ​ Chloride process grade slag ​ Renewal terms upon negotiation Sierra Rutile Limited ​ Rutile ore ​ Renewal terms upon negotiation Iluka Resources Limited ​ Rutile ore ​ Renewal terms upon negotiation Saraf Agencies Private Limited ​ Chloride process grade slag ​ Renewal terms upon negotiation In the past we have been, and we expect that we will continue to be, successful in obtaining short-term and long-term extensions to these and other existing supply contracts.
We purchase feedstock for our chloride process TiO 2 from the following primary suppliers for certain contractually specified volumes for delivery extending, in some cases, through 2026: ​ ​ ​ ​ ​ Supplier ​ Product ​ Renewal Terms Rio Tinto Iron and Titanium Ltd. ​ Chloride process grade slag ​ Auto-renews bi-annually Rio Tinto Iron and Titanium Ltd. ​ Upgraded slag ​ Auto-renews annually Sierra Rutile Limited ​ Rutile ore ​ Renewal terms upon negotiation Iluka Resources Limited ​ Rutile ore ​ Renewal terms upon negotiation 8 ​ In the past we have been, and we expect that we will continue to be, successful in obtaining short-term and long-term extensions to these and other existing supply contracts.
We strive to maintain good relationships with all our employees, including the unions and workers’ councils representing those employees. In Europe, our union employees are covered by master collective bargaining agreements for the chemical industry that are generally renewed annually. At December 31, 2023, approximately 78% of our worldwide workforce is organized under collective bargaining agreements.
We strive to maintain good relationships with all our employees, including the unions and workers’ councils representing those employees. In Europe, our union employees are covered by master collective bargaining agreements for the chemical industry that are generally renewed annually. At December 31, 2024, approximately 75% of our worldwide workforce is organized under collective bargaining agreements.
All costs and capital expenditures are shared equally with Venator with the exception of feedstock (purchased natural rutile ore or chlorine slag) and packaging costs for the pigment grades produced. Our share of net costs is reported as cost of sales as the TiO 2 is sold. See Notes 5 and 14 to our Consolidated Financial Statements.
All costs and capital expenditures were shared equally with Venator, with the exception of feedstock (purchased natural rutile ore or chlorine slag) and packaging costs for the pigment grades produced. Our share of net costs was reported as cost of sales as the TiO 2 was sold. See Notes 5 and 14 to our Consolidated Financial Statements.
The chloride process is the preferred form for use in coatings and plastics, the two largest end-use markets. Due to environmental factors and customer considerations, the proportion of TiO 2 industry sales represented by chloride process pigments has remained stable relative to sulfate process pigments, and in 2023, chloride process production facilities represented approximately 43% of industry capacity.
The chloride process is the preferred form for use in coatings and plastics, the two largest end-use markets. Due to environmental factors and customer considerations, the proportion of TiO 2 industry sales represented by chloride process pigments has remained stable relative to sulfate process pigments, and in 2024, chloride process production facilities represented approximately 41% of industry capacity.
In addition, several of our competitors have recently closed or announced plans to close facilities or otherwise reduce capacity, including Chemours which closed its Taiwan facility with an estimated 160,000 tons of chloride process capacity in 2023 and Venator which announced plans in 2024 to close its Duisburg, Germany facility with an estimated 50,000 tons of sulphate process capacity.
However, several of our competitors have recently closed or announced plans to close facilities or otherwise reduce capacity, including Chemours which closed its Taiwan facility with an estimated 160,000 tons of chloride process capacity in 2023 and Venator which announced plans in 2024 to close its Duisburg, Germany facility with an estimated 50,000 tons of sulfate process capacity.
The table below shows our estimated market share for our significant markets, Europe and North America, for the last three years. ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2022 ​ 2023 Europe ​ 15% ​ 14% ​ 12% North America ​ 17% ​ 17% ​ 16% 4 We believe we are the leading seller of TiO 2 in several countries, including Germany.
The table below shows our estimated market share for our significant markets, Europe and North America, for the last three years. ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2023 ​ 2024 Europe ​ 14% ​ 12% ​ 14% North America ​ 17% ​ 16% ​ 17% We believe we are the leading seller of TiO 2 in several countries, including Germany.
We sell to a diverse customer base with only one customer representing 10% or more of our net sales in 2023 (Behr Process Corporation – 12%). Our largest ten customers accounted for approximately 35% of net sales in 2023. Neither our business as a whole nor any of our principal product groups is seasonal to any significant extent.
We sell to a diverse customer base with only one customer representing 10% or more of our net sales in 2024 (Behr Process Corporation – 10%). Our largest ten customers accounted for approximately 39% of net sales in 2024. Neither our business as a whole nor any of our principal product groups is seasonal to any significant extent.
We own our Leverkusen facility, which represents about one-third of our current TiO 2 production capacity, but we lease the land under the facility under a long-term agreement which expires in 2050. Lease payments are periodically negotiated for periods of at least two years at a time.
We own our Leverkusen facility, which represents approximately 29% of our current TiO 2 production capacity, but we lease the land under the facility under a long-term agreement which expires in 2050. Lease payments are periodically negotiated for periods of at least two years at a time.
The following tables show our approximate TiO 2 sales volume by geographic region and end-use for the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Sales volume percentages ​ Sales volume percentages by geographic region by end-use Europe 44% ​ Coatings ​ 57% North America ​ 41% ​ Plastics ​ 30% Asia Pacific 9% ​ Paper 9% Rest of World 6% ​ Other 4% ​ Some of the principal applications for our products include the following: TiO 2 for coatings – Our TiO 2 is used to provide opacity, durability, tinting strength and brightness in industrial coatings, as well as coatings for commercial and residential interiors and exteriors, automobiles, aircraft, machines, appliances, traffic paint and other special purpose coatings.
The following tables show our approximate TiO 2 sales volume by geographic region and end-use for the year ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ Sales volume percentages ​ Sales volume percentages by geographic region by end-use Europe 44% ​ Coatings ​ 60% North America ​ 40% ​ Plastics ​ 27% Asia Pacific 9% ​ Paper 9% Rest of World 7% ​ Other 4% ​ Some of the principal applications for our products include the following: TiO 2 for coatings – Our TiO 2 is used to provide opacity, durability, tinting strength and brightness in industrial coatings, as well as coatings for commercial and residential interiors and exteriors, automobiles, aircraft, machines, appliances, traffic paint and other special purpose coatings.
We believe Western Europe and North America currently account for approximately 14% and 15% of global TiO 2 consumption, respectively.
We believe Western Europe and North America each account for approximately 15% of global TiO 2 consumption, respectively.
In addition to salaries, these programs, which vary by country/region, can include annual bonuses, a defined benefit pension plan, a defined contribution plan with employer matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, employee assistance programs and tuition assistance.
In addition to salaries, these programs, which vary by country/region, can include annual bonuses, a defined benefit pension plan, a defined contribution plan with employer matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, employee assistance programs and tuition assistance. We recognize that everyone deserves respect and equal treatment.
European jurisdictions in which we operate have not yet adopted local legislation to implement the EU CSRD. We are evaluating and will continue to evaluate the applicability of the EU CSRD as regulatory guidance is issued and as the European countries in which we operate adopt implementing legislation and we will establish a compliance program to address any applicable requirements.
We are evaluating and will continue to evaluate the applicability of the EU CSRD as regulatory guidance is issued and as the European countries in which we operate adopt implementing legislation and we will establish a compliance program to address any applicable requirements.
Ltd. expansion mentioned above, we do not expect any significant efforts will be undertaken by us or our principal competitors to further increase capacity and we believe it is unlikely any new TiO 2 plants will be constructed in Europe or North America for the foreseeable future.
Other than through debottlenecking projects and the LB Group expansion mentioned above, we do not expect any significant efforts will be 10 ​ undertaken by us or our principal competitors to further increase capacity and we believe it is unlikely any new TiO 2 plants will be constructed in Europe or North America for the foreseeable future.
Germany and Belgium are members of the EU and follow its initiatives. Norway is not a member but generally patterns its environmental regulatory actions after those of the EU. From time to time, our facilities may be subject to environmental regulatory enforcement under U.S. and non-U.S. statutes. Typically, we establish compliance programs to resolve these matters.
Germany and Belgium are members of the EU and follow its initiatives. Norway is not a member but generally patterns its environmental regulatory actions after those of the EU. From time to time, our facilities may be subject to environmental regulatory enforcement under local or national laws. Typically, we update our compliance programs to resolve these matters.
We continually seek to improve the quality of our grades and have been successful in developing new grades for existing and new applications to meet the needs of our customers and increase product life cycles.
We continually seek to improve the quality of our grades and have been successful in developing new grades for existing and new applications to meet the needs of our customers and increase product life cycles. Since the beginning of 2020, we have added six new grades for pigments and other applications.
We also actively manage potential water-related risks, including flooding and water shortages. Our manufacturing facilities are strategically located adjacent to sources of water, which we use for process operations and for shipping and receiving raw materials and finished products. Water-critical processes are identified and ongoing efforts to minimize water use are incorporated into environmental planning.
Our manufacturing facilities are strategically located adjacent to sources of water, which we use for process operations and for shipping and receiving raw materials and finished products. Water-critical processes are identified and ongoing efforts to minimize water use are incorporated into environmental planning.
We conduct our businesses in ways intended to provide all personnel with a safe and healthy work environment and have established safety and environmental programs and goals to achieve these results.
We are conducting our businesses in ways that provide all personnel with a safe and healthy work environment and have established safety and environmental programs and goals to achieve such results.
Because TiO 2 represents a significant input cost for our customers, the purchasing decisions are often made by our customers’ senior management. We work to maintain close relationships with the key decision makers through in-depth and frequent contact.
Sales and marketing Our marketing strategy is aimed at developing and maintaining strong relationships with new and existing customers. Because TiO 2 represents a significant input cost for our customers, the purchasing decisions are often made by our customers’ senior management. We work to maintain close relationships with the key decision makers through in-depth and frequent contact.
Since the beginning of 2019, we have added seven new grades for pigments and other applications. 10 Patents, trademarks, trade secrets and other intellectual property rights We have a comprehensive intellectual property protection strategy that includes obtaining, maintaining and enforcing our patents, primarily in the United States, Canada and Europe. We also register, maintain and protect our trademark rights.
Patents, trademarks, trade secrets and other intellectual property rights We have a comprehensive intellectual property protection strategy that includes obtaining, maintaining and enforcing our patents, primarily in the United States, Canada and Europe. We also register, maintain and protect our trademark rights.
The TiO 2 industry is characterized by high barriers to entry consisting of high capital costs, proprietary technology and significant lead times required to construct new facilities or to expand existing capacity.
In addition, in 2024 we closed our sulfate production line in Varennes, Canada. The TiO 2 industry is characterized by high barriers to entry consisting of high capital costs, proprietary technology and significant lead times required to construct new facilities or to expand existing capacity.
We normally build inventories during the first and fourth quarters of each year in order to maximize our product availability during the higher demand periods normally experienced in the second and third quarters. 9 Competition The TiO 2 industry is highly competitive.
We normally build inventories during the first and fourth quarters of each year in order to maximize our product availability during the higher demand periods normally experienced in the second and third quarters. Competition The TiO 2 industry is highly competitive. We compete primarily on the basis of price, product quality, technical service and the availability of high-performance pigment grades.
Therefore, over the past ten years, we and our competitors increased industry capacity through debottlenecking projects; however, this increase only partly compensated for the shut-down of various TiO 2 plants throughout the world. Although overall industry demand is expected to increase in 2024, other than through debottlenecking projects and the LB Group Co.
Therefore, over the past ten years, we and our competitors increased industry capacity through debottlenecking projects; however, this increase only partly compensated for the shut-down of various TiO 2 plants throughout the world.
We account for our interest in the joint venture by the equity method. The joint venture operates on a break-even basis and therefore we do not have any equity in earnings of the joint venture. We are required to purchase one half of the TiO 2 produced by the joint venture.
The joint venture operated on a break-even basis, and therefore we did not have any equity in earnings of the joint venture. We were required to purchase one-half of the TiO 2 produced by the joint venture.
In addition, we operate a rutile slurry manufacturing plant near Lake Charles, Louisiana, which converts dry pigment primarily manufactured for us at the Lake Charles TiO 2 facility into a slurry form that is then shipped to customers.
In addition, we operate a rutile slurry manufacturing plant near our Lake Charles, Louisiana facility, which converts dry pigment primarily manufactured for us at our Lake Charles TiO 2 facility into a slurry form that is then shipped to customers. We have corporate and administrative offices located in the U.S., Germany, Norway, Canada, Belgium and France.
These metrics are not intended to be directly comparable to similar metrics utilized by other companies to track ESG performance, as the standards, methodologies and assumptions used to determine these metrics vary by subsidiary and jurisdiction.
We voluntarily developed these internal metrics and benchmarks, which we use to identify progress and opportunities for improvement. These metrics are not intended to be directly comparable to similar metrics utilized by other companies to track ESG performance, as the standards, methodologies and assumptions used to determine these metrics vary by subsidiary and jurisdiction.
Without the presence of TiO 2 , these materials would be unsuitable for use in many textile applications. 5 We produce high-purity sulfate process anatase TiO 2 used to provide opacity, whiteness and brightness in a variety of cosmetic and personal care products, such as skin cream, lipstick, eye shadow and toothpaste.
We produce high-purity sulfate process anatase TiO 2 used to provide opacity, whiteness and brightness in a variety of cosmetic and personal care products, such as skin cream, lipstick, eye shadow and toothpaste.
The sulfate process produces a warmer undertone and is preferred for use in selected paper products, ceramics, rubber tires, man-made fibers, food products, pharmaceuticals and cosmetics, some of which generate higher profit margins. 6 We produced 545,000, 492,000 and 401,000 metric tons of TiO 2 in 2021, 2022 and 2023, respectively.
The sulfate process produces a warmer undertone and is preferred for use in selected paper products, ceramics, rubber tires, man-made fibers, food products, pharmaceuticals and cosmetics, some of which generate higher profit margins.
Beginning in the fourth quarter of 2022 and continuing throughout 2023, we adjusted production levels to correspond with reduced customer demand resulting from challenging economic conditions and geopolitical uncertainties.
Beginning in the fourth quarter of 2022 and continuing throughout the first quarter of 2024, we adjusted production levels to correspond with reduced customer demand resulting from challenging economic conditions and geopolitical uncertainties. We increased production levels to align with higher overall customer demand in 2024. Properties – We operate facilities throughout North America and Europe.
See Note 5 to our Consolidated Financial Statements and “TiO 2 manufacturing joint venture.” The joint venture owns the land and facility. We own the land underlying all of our principal production facilities unless otherwise indicated in the table above. We also operate an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term.
We own the land underlying all of our principal production facilities unless otherwise indicated in the table above. We also operate an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term.
In an effort to align our non-employee directors’ financial interests with those of our stockholders, our board of directors established share ownership guidelines for our non-management directors. We have taken steps to integrate ESG considerations into operating decisions with other critical business factors. We biennially publish an ESG Report, which is available on our public website.
In an effort to align our non-employee directors’ financial interests with those of our stockholders, our board of directors established share ownership guidelines for our non-management directors. In addition, we have adopted an insider trading policy that applies to both employees and non-employee directors. We have taken steps to integrate ESG considerations into operating decisions with other critical business factors.
The primary purpose of our ESG Report is to describe our policies and programs in the area of ESG, including certain internal metrics and benchmarks related to various aspects of ESG. We voluntarily developed these internal metrics and benchmarks, which we use to identify progress and opportunities for improvement.
We periodically publish an ESG Report, which is available on our public website. The primary purpose of our ESG Report is to describe our policies and programs in the area of ESG, including certain internal metrics and benchmarks related to various aspects of ESG.
Our capital expenditures related to ongoing environmental compliance, protection and improvement programs, including capital expenditures which are primarily focused on increasing operating efficiency but also result in improved environmental protection such as lower emissions from our manufacturing facilities, were $11.2 million in 2023 and are currently expected to be approximately $28 million in 2024.
On November 23, 2022 the Court of Justice of the European Union annulled the classification of TiO 2 as a suspected carcinogen in its entirety, which decision is currently under appeal. 12 ​ Our capital expenditures related to ongoing environmental compliance, protection and improvement programs, including capital expenditures which are primarily focused on increasing operating efficiency but also result in improved environmental protection such as lower emissions from our manufacturing facilities, were $17 million in 2024 and are currently expected to be approximately $24 million in 2025.
The following table presents the division of our expected 2024 manufacturing capacity by plant location and type of manufacturing process: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of capacity by TiO 2 ​ ​ ​ ​ manufacturing process ​ Facility Description Chloride ​ Sulfate Leverkusen, Germany (1) ​ TiO 2 production, chloride process, co-products ​ 32 % - % Nordenham, Germany ​ TiO 2 production, sulfate process, co-products ​ - ​ 11 Langerbrugge, Belgium TiO 2 production, chloride process, co-products, titanium chemicals products 16 - ​ Fredrikstad, Norway (2) TiO 2 production, sulfate process, co-products - 6 ​ Varennes, Canada TiO 2 production, chloride and sulfate process, slurry facility, titanium chemicals products 18 3 ​ Lake Charles, LA, US (3) TiO 2 production, chloride process 14 - ​ Total ​ ​ 80 % 20 % (1) The Leverkusen facility is located within a more extensive manufacturing complex.
Our chloride process production and remaining sulfate production capacity has increased by approximately 5% over the past ten years due to debottlenecking programs with only moderate capital expenditures. 7 ​ The following table presents the division of our expected 2025 manufacturing capacity by plant location and type of manufacturing process: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of capacity by TiO 2 ​ ​ ​ ​ manufacturing process ​ Facility Description Chloride ​ Sulfate Leverkusen, Germany (1) ​ TiO 2 production, chloride process, co-products ​ 29 % - % Nordenham, Germany ​ TiO 2 production, sulfate process, co-products ​ - ​ 10 Langerbrugge, Belgium TiO 2 production, chloride process, co-products, titanium chemicals products 15 - ​ Fredrikstad, Norway (2) TiO 2 production, sulfate process, co-products - 5 ​ Varennes, Canada (3) TiO 2 production, chloride process, slurry facility, titanium chemicals products 15 - ​ Lake Charles, LA, US (4) TiO 2 production, chloride process 26 - ​ Total ​ ​ 85 % 15 % (1) The Leverkusen facility is located within a more extensive manufacturing complex.
The top five TiO 2 producers (i.e. we and our four principal competitors) account for approximately 52% of the world’s production capacity. The following chart shows our estimate of worldwide production capacity in 2023: ​ ​ ​ Worldwide production capacity - 2023 Chemours 14% Tronox ​ 12% LB Group Co.
Our principal competitors are LB Group Co. Ltd., The Chemours Company, Tronox Holdings PLC and Venator Materials PLC. The top five TiO 2 producers (i.e., we and our four principal competitors) account for approximately 51% of the world’s production capacity.
We compete primarily on the basis of price, product quality, technical service and the availability of high-performance pigment grades. Since TiO 2 is not traded through a commodity market, its pricing is largely a product of negotiation between suppliers and their respective customers.
Since TiO 2 is not traded through a commodity market, its pricing is largely a product of negotiation between suppliers and their respective customers. Price and availability are the most significant competitive factors along with quality and customer service for the majority of our product grades.
These teams are responsible for maintaining ISO 50001:2018 certifications (where applicable), performing regular reviews of local energy consumption, making recommendations regarding capital projects that reduce energy consumption and associated 11 Greenhouse Gas (GHG) emissions or enhance efficiency. When possible, we look for opportunities to partner with local government authorities through grant opportunities to reduce energy consumption and associated GHG emissions.
Four of our six production facilities maintain certifications to the ISO 50001:2018 Energy Management standard and all locations have local energy teams in place. These teams are responsible for maintaining ISO 50001:2018 certifications (where applicable), performing regular reviews of local energy consumption, making recommendations regarding capital projects that reduce energy consumption and associated Greenhouse Gas (GHG) emissions or enhance efficiency.
We are an electronic filer and the SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Such requests should be directed to the Corporate Secretary at our address on the cover page of this Form 10-K. We are an electronic filer and the SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. 14 ​
TiO 2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals.
TiO 2 is a white inorganic pigment used in a wide range of products for its exceptional durability and its ability to impart whiteness, brightness and opacity. TiO 2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals.
TiO 2 allows inks to achieve very high print quality while not interfering with the technical requirements of printing machinery, including low abrasion, high printing speed and high temperatures. Our TiO 2 is also used in textile applications where TiO 2 functions as an opacifying and delustering agent.
TiO 2 for other applications – We produce TiO 2 to improve the opacity and hiding power of printing inks. TiO 2 allows inks to achieve very high print quality while not interfering with the technical requirements of printing machinery, including low abrasion, high printing speed and high temperatures.
We operate facilities throughout North America and Europe, including the only sulfate process plant in North America and four TiO 2 plants in Europe (one in each of Leverkusen, Germany; Nordenham, Germany; Langerbrugge, Belgium; and Fredrikstad, Norway).
We have four TiO 2 plants in Europe (one in each of Leverkusen, Germany; Nordenham, Germany; Langerbrugge, Belgium; and Fredrikstad, Norway). In North America, we have a TiO 2 plant in Varennes, Quebec, Canada and a TiO 2 plant near Lake Charles, Louisiana.
Ltd. 12% Kronos 7% Venator 7% Other 48% ​ Chemours has approximately one-half of total North American TiO 2 production capacity and is our principal North American competitor. LB Group Co. Ltd. previously announced it plans to add an additional 200,000 tons of chloride process capacity which we expect will be added incrementally over the next several years.
LB Group previously announced it plans to add an additional 200,000 tons of chloride process capacity which we expect will be added incrementally over the next several years.
Products and end-use markets Including our predecessors, we have produced and marketed TiO 2 in North America and Europe, our primary markets, for over 100 years. We believe we are the largest chloride process TiO 2 producer in Europe with 44% of our 2023 sales volumes attributable to markets in Europe.
We believe we are the largest chloride process TiO 2 producer in Europe with 44% of our 2024 sales volumes attributable to markets in Europe.
TiO 2 is beneficial in these applications because it assists in preventing the material from fading or changing color after prolonged exposure to sunlight and other weathering agents. TiO 2 for other applications – We produce TiO 2 to improve the opacity and hiding power of printing inks.
Paper laminates are used to replace materials such as wood and tile for such applications as counter tops, furniture and wallboard. 5 ​ TiO 2 is beneficial in these applications because it assists in preventing the material from fading or changing color after prolonged exposure to sunlight and other weathering agents.
As discussed in Note 1 to our Consolidated Financial Statements, Lisa K. Simmons and a trust established for the benefit of Ms. Simmons and her late sister and their children (the “Family Trust”) may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.
As discussed in Note 1 to our Consolidated Financial Statements, Lisa K. Simmons and a trust established for the benefit of Ms.
The top layer of paper contains TiO 2 and plastic resin and is the layer that is printed with decorative patterns. Paper laminates are used to replace materials such as wood and tile for such applications as counter tops, furniture and wallboard.
The top layer of paper contains TiO 2 and plastic resin and is the layer that is printed with decorative patterns.
As of December 31, 2023, we employed the following number of people: ​ ​ ​ Europe 1,779 Canada ​ 369 United States (1) ​ 48 Total 2,196 (1) Excludes employees of our LPC joint venture. Certain employees at each of our production facilities are organized by labor unions.
We promote a respectful, diverse and inclusive workplace in which all individuals are treated with respect and dignity. 13 ​ As of December 31, 2024, we employed the following number of people: ​ ​ ​ Europe 1,813 Canada ​ 364 United States ​ 347 Total 2,524 ​ Certain employees at each of our production facilities are organized by labor unions.
Information contained on our website is not part of this report. We will also provide free copies of such documents upon written request. Such requests should be directed to the Corporate Secretary at our address on the cover page of this Form 10-K.
Additional information regarding us, including our Audit Committee Charter, Code of Business Conduct and Ethics and our Corporate Governance Guidelines, can also be found at this website. Information contained on our website is not part of this report. We will also provide free copies of such documents upon written request.
The following table summarizes our raw materials purchased or mined in 2023. ​ ​ ​ ​ Raw materials Production process/raw material procured or mined ​ ​ (In thousands ​ ​ of metric tons) Chloride process plants - ​ Purchased slag or rutile ore 430 Sulfate process plants: ​ Ilmenite ore mined and used internally 156 Purchased slag 15 Purchased ilmenite ore ​ 8 Sales and marketing Our marketing strategy is aimed at developing and maintaining strong relationships with new and existing customers.
The following table summarizes our raw materials purchased or mined in 2024. ​ ​ ​ ​ Raw materials Production process/raw material procured or mined ​ ​ (In thousands ​ ​ of metric tons) Chloride process plants - ​ Purchased slag or rutile ore 464 Sulfate process plants: ​ Ilmenite ore mined and used internally 233 Purchased ilmenite ore (1) ​ 11 (1) Relates to our Canadian sulfate production line, which was closed in the third quarter of 2024.
Our global total frequency rate aggregating information about employees and contractors was 1.08 in 2021 (0.90 was the frequency rate for employees only), 1.01 in 2022 (0.86 was the frequency rate for employees only) and 0.95 in 2023 (0.74 was the frequency rate for employees only). Diversity and inclusion – We recognize that everyone deserves respect and equal treatment.
Our global total frequency rate aggregating information about employees and contractors was 1.01 in 2022 (0.86 of the aggregate represents employees only), 0.95 in 2023 (0.74 of the aggregate represents employees only) and 0.70 in 2024 (0.80 of the aggregate represents employees only). Website and other available information Our fiscal year ends December 31.
During 2023, we had an estimated 6% share of worldwide TiO 2 sales volume, and based on sales volume, we believe we are the leading seller of TiO 2 in several countries, including Germany. Our principal competitors are The Chemours Company, Tronox Incorporated, LB Group Co. Ltd. and Venator Materials PLC.
Increasingly, we are focused on providing pigments that are differentiated to meet specific customer requests and specialty grades that are differentiated from our competitors’ products. During 2024, we had an estimated 7% share of worldwide TiO 2 sales volume, and based on sales volume, we believe we are the leading seller of TiO 2 in several countries, including Germany.
In man-made fibers such as rayon and polyester, TiO 2 corrects an otherwise undesirable glossy and translucent appearance.
Our TiO 2 is also used in textile applications where TiO 2 functions as an opacifying and delustering agent. In man-made fibers such as rayon and polyester, TiO 2 corrects an otherwise undesirable glossy and translucent appearance. Without the presence of TiO 2 , these materials would be unsuitable for use in many textile applications.
Our production volumes include our share of the output produced by our TiO 2 manufacturing joint venture discussed below. Our average production capacity utilization rates were approximately full practical capacity in 2021, 89% in 2022 and 72% in 2023.
Subsequent to the Acquisition Date, our 2024 production volumes include 100% of the production volumes from the LPC facility. Our average production capacity utilization rates were approximately 89% in 2022, 72% in 2023 and 96% in 2024.
Annually we update and publish our Safety, Environment, Energy and Quality Policy which is translated into local languages and distributed to all our employees and shared publicly via our website. We have implemented rigorous procedures for incident reporting and investigation, including root cause analysis of environmental and safety incidents and near misses.
We have a history of identifying new ways to reduce consumption and waste by converting byproducts to co-products through our KRONOS ecochem® products. We have a published Safety, Environment, Energy and Quality Policy which is translated into local languages and distributed to all our employees and shared publicly via our website.
Because TiO 2 production requires significant energy input, we are focused on energy efficiency at all production locations. Four of our five production facilities maintain certifications to the ISO 50001:2018 Energy Management standard and all locations have local energy teams in place.
We have implemented rigorous procedures for incident reporting and investigation, including root cause analysis of environmental and safety incidents and near misses. Because TiO 2 production requires significant energy input, we are focused on energy efficiency at all production locations.
We have corporate and administrative offices located in the U.S., Germany, Norway, Canada, Belgium and France. 7 TiO 2 manufacturing joint venture Kronos Louisiana, Inc., one of our subsidiaries, and Venator Investments each own a 50% interest in a manufacturing joint venture, Louisiana Pigment Company, L.P. (LPC).
LPC – Prior to July 16, 2024, Kronos Louisiana, Inc., one of our subsidiaries, and Venator each owned a 50% interest in LPC, which was operated as a manufacturing joint venture. LPC owns and operates a chloride-process TiO 2 plant located near Lake Charles, Louisiana.
Removed
We believe we have developed considerable expertise and efficiency in the manufacture, sale, shipment and service of our products in domestic and international markets. TiO 2 is a white inorganic pigment used in a wide range of products for its exceptional durability and its ability to impart whiteness, brightness and opacity.
Added
We believe we have developed considerable expertise and efficiency in the manufacture, sale, shipment and service of our products in domestic and international markets. Effective July 16, 2024 (“Acquisition Date”), we acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) held by Venator Investments, Ltd. (“Venator”) for consideration of $185 million less a working capital adjustment.
Removed
In North America, we have a TiO 2 plant in Varennes, Quebec, Canada and, through the manufacturing joint venture described below, a 50% interest in a TiO 2 plant near Lake Charles, Louisiana.
Added
Prior to the acquisition, we held a 50% joint venture interest in LPC through a wholly-owned subsidiary. LPC was operated as a manufacturing joint venture between us and Venator. Following the acquisition, LPC became a wholly-owned subsidiary of ours. See Note 5 to our Consolidated Financial Statements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may encounter difficulties enforcing agreements or other legal rights and our effective tax rate may fluctuate based on the variability of geographic earnings and statutory tax rates. TiO 2 production requires significant energy input, and economic sanctions or supply disruptions resulting from armed conflict could lead to additional volatility in global energy prices and energy supply disruptions.
Biggest changeTiO 2 production requires significant energy input, and economic sanctions or supply disruptions resulting from armed conflict could lead to additional volatility in global energy prices and energy supply disruptions. These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition. We are experiencing increasing competition from China.
Due to the increase in global cybersecurity incidents it has become increasingly difficult to obtain insurance coverage on reasonable pricing terms to mitigate some risks associated with technology failures or cybersecurity breaches, and we are experiencing such difficulties in obtaining insurance coverage. ​ 18 Physical impacts of climate change could have a material adverse effect on our costs and operations.
Due to the increase in global cybersecurity incidents it has become increasingly difficult to obtain insurance coverage on reasonable pricing terms to mitigate some risks associated with technology failures or cybersecurity breaches, and we are experiencing such difficulties in obtaining insurance coverage. Physical impacts of climate change could have a material adverse effect on our costs and operations.
Titanium-containing feedstocks suitable for use in our TiO 2 facilities are available from a limited number of suppliers around the world. Political and economic instability or increased regulations in the countries from which we purchase or mine our raw material supplies could adversely affect raw material availability.
Titanium-containing feedstocks suitable for use in our TiO 2 facilities are available from a limited number of suppliers around the world. Political and economic instability or increased regulations in the countries 15 ​ from which we purchase or mine our raw material supplies could adversely affect raw material availability.
TiO 2 is used in many “quality of life” products for which demand historically has been linked to global, regional and local gross domestic product and discretionary spending, which can be negatively impacted 14 by regional and world events or economic conditions.
TiO 2 is used in many “quality of life” products for which demand historically has been linked to global, regional and local gross domestic product and discretionary spending, which can be negatively impacted by regional and world events or economic conditions.
Increased compliance obligations and costs or restrictions on operations, raw materials and certain TiO 2 applications could negatively impact our future financial results through increased costs of production, or reduced sales which may decrease our liquidity, operating income and results of operations.
Increased compliance obligations and costs or restrictions on operations, raw materials and certain TiO 2 applications 17 ​ could negatively impact our future financial results through increased costs of production, or reduced sales which may decrease our liquidity, operating income and results of operations.
Operational Risk Factors Demand for, and prices of, certain of our products are influenced by changing market conditions for our products, which may result in reduced earnings or in operating losses. Our sales and profitability are largely dependent on the TiO 2 industry. In 2023, approximately 90% of our sales were attributable to sales of TiO 2 .
Operational Risk Factors Demand for, and prices of, certain of our products are influenced by changing market conditions for our products, which may result in reduced earnings or in operating losses. Our sales and profitability are largely dependent on the TiO 2 industry. In 2024, approximately 90% of our sales were attributable to sales of TiO 2 .
The global market in which we operate our business is concentrated, with the top five TiO 2 producers accounting for approximately 52% of the world’s production capacity and is highly competitive. Competition is based on a number of factors, such as price, product quality and service.
The global market in which we operate our business is concentrated, with the top five TiO 2 producers accounting for approximately 51% of the world’s production capacity and is highly competitive. Competition is based on a number of factors, such as price, product quality and service.
If we or our worldwide vendors are unable to meet our planned or contractual obligations and we are unable to obtain necessary raw materials, we could incur higher costs for raw materials or we may be required to reduce production levels. We experienced increases in feedstock costs in 2022 and 2023, for example, which affected our margins.
If we or our worldwide vendors are unable to meet our planned or contractual obligations and we are unable to obtain necessary raw materials, we could incur higher costs for raw materials or we may be required to reduce production levels. We experienced increases in feedstock costs in 2023 and 2024, for example, which affected our margins.
Our current agreements require us to purchase certain minimum quantities of feedstock with minimum purchase commitments aggregating approximately $583 million beginning in 2024 and extending through 2026. In addition, we have other long-term supply and service contracts that provide for various raw materials and services.
Our current agreements require us to purchase certain minimum quantities of feedstock with minimum purchase commitments aggregating approximately $542 million beginning in 2025 and extending through 2026. In addition, we have other long-term supply and service contracts that provide for various raw materials and services.
Our level of debt could have important consequences to our stockholders and creditors, including: ● making it more difficult for us to satisfy our obligations with respect to our liabilities; ● increasing our vulnerability to adverse general economic and industry conditions; ● requiring that a portion of our cash flows from operations be used for the payment of interest on our debt, which reduces our ability to use our cash flow to fund working capital, capital expenditures, dividends on our common stock, acquisitions or general corporate requirements; ● limiting the ability of our subsidiaries to pay dividends to us; ● limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or general corporate requirements; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and ● placing us at a competitive disadvantage relative to other less leveraged competitors.
Our level of debt could have important consequences to our stockholders and creditors, including: ● making it more difficult for us to satisfy our obligations with respect to our liabilities; ● increasing our vulnerability to adverse general economic and industry conditions; ● requiring that a portion of our cash flows from operations be used for the payment of interest on our debt, which reduces our ability to use our cash flow to fund working capital, capital expenditures, dividends on our common stock, acquisitions or general corporate requirements; ● limiting the ability of our subsidiaries to pay dividends to us; ● limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or general corporate requirements; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and ● placing us at a competitive disadvantage relative to other less leveraged competitors. 16 ​ Indebtedness outstanding under our Global Revolver accrues interest at variable rates.
In addition to our indebtedness, we are party to various lease and other agreements (including feedstock purchase contracts and other long-term supply and service contracts, as discussed above) pursuant to which, along with our indebtedness, we are committed to pay approximately $543 million in 2024.
In addition to our indebtedness, we are party to various lease and other agreements (including feedstock purchase contracts and other long-term supply and service contracts, as discussed above) pursuant to which, along with our indebtedness, we are committed to pay approximately $701 million in 2025.
These agreements require us to purchase certain minimum quantities or services with minimum purchase commitments aggregating approximately $72 million at December 31, 2023. Our commitments under these contracts could 15 adversely affect our financial results if we significantly reduce our production and we are unable to modify the contractual commitments.
These agreements require us to purchase certain minimum quantities or services with minimum purchase commitments aggregating approximately $67 million at December 31, 2024. Our commitments under these contracts could adversely affect our financial results if we significantly reduce our production and we are unable to modify the contractual commitments.
Changes in currency exchange rates and interest rates can adversely affect our net sales, profits and cash flows. We operate our businesses in several different countries and sell our products worldwide. For example, during 2022 and 2023, approximately 45% and 44%, respectively, of our sales volumes were sold into European markets.
Changes in currency exchange rates and interest rates can adversely affect our net sales, profits and cash flows. We operate our businesses in several different countries and sell our products worldwide. For example, during both 2023 and 2024, approximately 44% of our sales volumes were sold into European markets.
Therefore, we are exposed to risks related to the need to convert currencies we receive from the sale of our products into the currencies required to pay for certain of our operating costs and expenses and other liabilities (including indebtedness), all of which could result in future losses depending on fluctuations in currency exchange rates and affect the comparability of our results of operations between periods. 16 Legal, Compliance and Regulatory Risk Factors We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations.
Therefore, we are exposed to risks related to the need to convert currencies we receive from the sale of our products into the currencies required to pay for certain of our operating costs and expenses and other liabilities (including indebtedness), all of which could result in future losses depending on fluctuations in currency exchange rates and affect the comparability of our results of operations between periods.
If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs, including attorney’s fees and diversion of resources and management’s attention, and we may not prevail in any such suits or proceedings. 17 Global climate change laws and regulations could negatively impact our financial results or limit our ability to operate our businesses.
If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs, including attorney’s fees and diversion of resources and management’s attention, and we may not prevail in any such suits or proceedings.
Indebtedness outstanding under our global revolving credit facility (Global Revolver) accrues interest at variable rates. To the extent market interest rates rise, the cost of our debt could increase, even if the amount borrowed remains the same, adversely affecting our financial condition, results of operations and cash flows.
To the extent market interest rates rise, the cost of our debt could increase, even if the amount borrowed remains the same, adversely affecting our financial condition, results of operations and cash flows.
In addition, any adopted future laws and regulations focused on climate change and/or GHG emissions could negatively impact our ability (or that of our customers and suppliers) to compete with companies situated in areas not subject to such laws and regulations.
In addition, any adopted future laws and regulations focused on climate change and/or GHG emissions could negatively impact our ability (or that of our customers and suppliers) to compete with companies situated in areas not subject to such laws and regulations. 18 ​ General Risk Factors Operating as a global business presents risks associated with global and regional economic, political and regulatory environments.
We operate production facilities in several countries and many of our facilities require large amounts of energy, including electricity and natural gas, in order to conduct operations.
Global climate change laws and regulations could negatively impact our financial results or limit our ability to operate our businesses. We operate production facilities in several countries and many of our facilities require large amounts of energy, including electricity and natural gas, in order to conduct operations.
The nature of our operations exposes us to possible litigation claims, including disputes with customers and suppliers and matters relating to, among other things, antitrust, product liability, intellectual property, employment and environmental claims.
Legal, Compliance and Regulatory Risk Factors We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations. The nature of our operations exposes us to possible litigation claims, including disputes with customers and suppliers and matters relating to, among other things, antitrust, product liability, intellectual property, employment and environmental claims.
We have significant international operations which, along with our customers and suppliers, could be substantially affected by a number of risks arising from operating a multi-national business, including trade barriers, tariffs, economic sanctions, exchange controls, global and regional economic downturns, terrorism, armed conflict (such as the current conflicts between Russia and Ukraine and Israel and Hamas), natural disasters, pandemics or other health crises and political conditions.
We have significant international operations which, along with our customers and suppliers, could be substantially affected by a number of risks arising from operating a multi-national business, including: ● global or regional economic downturns; ● changes in tariffs, trade barriers, and regulatory requirements, such as the enactment of tariffs on goods imported into the U.S. including, but not limited to, the recently enacted tariff on goods imported from Canada where we manufacture a significant portion of the TiO 2 we sell in North America.
Financial Risk Factors Our leverage may impair our financial condition or limit our ability to operate our businesses. We have a significant amount of debt, primarily related to our Senior Secured Notes issued in September 2017 and February 2024. As of December 31, 2023, our total consolidated debt was approximately $441 million.
Financial Risk Factors Our leverage may impair our financial condition or limit our ability to operate our businesses. We have a significant amount of debt, primarily related to our 9.50% Senior Secured Notes due 2029 and our 3.75% Senior Secured Notes due 2025, our term loan from Contran, and borrowings on our global revolving credit facility (the “Global Revolver”).
These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition. Technology failures or cybersecurity breaches could have a material adverse effect on our operations.
The ultimate impact of any tariffs will depend on various factors, including the length of time tariffs are ultimately implemented and the amount, scope and nature of the tariffs. ​ 19 ​ Technology failures or cybersecurity breaches could have a material adverse effect on our operations.
Removed
General Risk Factors Operating as a global business presents risks associated with global and regional economic, political and regulatory environments.
Added
Our recent acquisition of the remaining 50% interest in LPC may not generate benefits we anticipate and may otherwise affect our business and prospects. We recently completed the LPC acquisition in which we purchased the 50% ownership interest in LPC we did not previously own.
Added
If we experience unforeseen technological, operational or other difficulties in managing the integration of LPC as our wholly-owned subsidiary, we may not be able to implement the process innovations at the facility that we expect. In addition, we may not be able to achieve the synergies or improve efficiency and product quality that we expect.
Added
With or without such difficulties, the integration of the LPC facility into our operations may divert significant management time and attention from our other operations.
Added
If we fail to successfully integrate LPC into our operations, or if the LPC acquisition does not provide expected synergies or sales increases, or if LPC has unexpected legal, regulatory, or financial liabilities, our business, financial condition, results of operations and prospects could be adversely affected.
Added
As of December 31, 2024, our total consolidated debt was approximately $507.4 million.
Added
We manufacture and distribute our products globally. Revenue from non-U.S. markets accounted for approximately 68%, 66%, and 66% of our revenue for the years ended December 31, 2022, 2023, and 2024, respectively.
Added
Tariffs could make our products more expensive which would reduce demand or require us to absorb the increased costs reducing our operating margins; ● protectionist laws, policies, and business practices and nationalistic campaigns such as economic sanctions and exchange controls; ● U.S. relations with the governments of the other countries in which we operate; ● t errorism, armed conflict (such as the current conflicts between Russia and Ukraine and Israel and Hamas); ● natural disasters, pandemics or other health crises, climate change and other events beyond our control; ● difficulties enforcing agreements or other legal rights; and ● our effective tax rate may fluctuate based on the variability of geographic earnings and statutory rates.
Added
Chinese competition generally has lower operating costs due to less stringent regulatory and environmental compliance requirements and less expensive energy prices. China has dumped lower cost sulfate process TiO 2 into the markets we serve.
Added
In some cases, the TiO 2 industry has been successful in getting anti-competitive duties enacted on Chinese imports such as the European duties enacted in 2024. ​ The U.S. federal government has recently implemented tariffs on certain foreign goods and may implement additional tariffs on foreign goods.
Added
For example, on March 4, 2025, the U.S. government implemented a 25% tariff on all imports from Mexico and Canada into the U.S.
Added
As we currently manufacture a significant portion of our North American TiO 2 in Canada, if sustained for an extended period of time, the 25% tariff on our imports into the U.S. from Canada, without exclusion, will make our products manufactured in Canada and sold into the U.S. more expensive.
Added
As a result, demand for these products could be reduced, or we could be required to absorb the increased costs or increase prices of such products.
Added
Such tariffs and, if enacted, any further legislation or actions taken by the U.S. government that restrict trade, such as additional tariffs, trade barriers and other protectionist or retaliatory measures taken in response, could adversely impact our ability to sell our products in the U.S. or reduce our revenues and gross margins.
Added
These measures may also increase our costs of Canadian feedstock imported into the U.S. and could adversely impact our gross margins or require us to raise prices thereby making our products less competitive.
Added
Additional tariffs imposed by the U.S or any retaliatory or reciprocal tariffs imposed by other countries could also increase the cost of feedstock and other raw materials that go into making TiO 2 , the extent of which is unknown.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur corporate cybersecurity program is led by our chief information officer (CIO), who is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response. Our CIO has extensive information technology and program management experience and leads a team that has many years of experience with our organization.
Biggest changeOur cybersecurity program is fully integrated into our enterprise-wide risk management framework. Our cybersecurity program is led by our chief information officer (CIO), who is responsible for developing and executing our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
For more information about the cybersecurity risks we face, see the risk factor entitled “Technology failures or cybersecurity breaches could have a material adverse effect on our operations.” in Item 1A- Risk Factors. ​
For more information about the cybersecurity risks we face, see the risk factor entitled “ Technology failures or cybersecurity breaches could have a material adverse effect on our operations. ” in Item 1A- Risk Factors.
ITEM 1C. CYBERSECURITY We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. Our cybersecurity programs are built on operations and compliance foundations.
ITEM 1C. CYBERSECURITY We recognize the importance of proactively assessing, identifying and managing material risks associated with cybersecurity threats. These risks include, among other things: operational disruptions, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. Our cybersecurity programs are built on both operational and compliance foundations.
All employees are required to complete cybersecurity training at least twice a year and have access to more frequent cybersecurity training through online training. We also require employees in certain roles to complete additional role-based, specialized cybersecurity trainings. We have a Cybersecurity Incident Disclosure and Controls Committee (CIDAC) which is central to our response and evaluation of cybersecurity incidents.
All employees are required to complete cybersecurity training at least twice a year and have access to more frequent cybersecurity training through periodic updates. Employees in certain roles also receive additional role-based, specialized cybersecurity training. We have a Cybersecurity Incident Disclosure and Controls Committee (CIDAC) which is central to our response and evaluation of cybersecurity incidents.
Operations focus on continuous detection, prevention, measurement, analysis, and response to cybersecurity alerts and incidents and on emerging threats. Compliance establishes oversight of our cybersecurity programs by creating risk-based controls to protect the integrity, confidentiality, accessibility, and availability of company data stored, processed, or transferred. Our cybersecurity program is integrated within our overall risk management processes.
The operational component focuses on continuous detection, prevention, measurement, analysis and response to cybersecurity alerts and incidents, and on emerging threats. The compliance component establishes oversight of our cybersecurity programs by creating risk-based controls to protect the integrity, confidentiality, accessibility and availability of company data stored, processed or transferred.
We continually enhance our security structure with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience in an effort to minimize the business impact should an incident occur. Third parties also play a role in our cybersecurity.
Our CIO reports to our chief executive officer. We continually enhance our cyber defense strategy with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously bolstering our system resilience in an effort to minimize the business impact 20 ​ should an incident occur. Third parties also play a role in our cybersecurity.
The full board retains oversight of cybersecurity because of its importance to us and visibility with our customers. ​ In the event of an incident, we intend to follow our detailed incident response playbook, which outlines the steps to be followed from incident detection to mitigation, recovery, and notification.
Our full board retains oversight of cybersecurity because of its importance to us and visibility with our customers. ​ In the event of an incident, we follow a structured incident response playbook, which outlines clear and defined steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (such as legal and human resources), senior leadership and the board, as appropriate.
We engage third-party services to conduct evaluations of our security controls through penetration testing, red team testing, consulting on best practices, and to address new challenges. These evaluations include testing both the design and operational effectiveness of security controls.
We engage reputable third-party security firms for consultation on industry best practices and regulatory standards and to conduct routine evaluations of our cybersecurity, such as through penetration testing and security audits; these evaluations include testing both the design and operational effectiveness of security controls.
Our CIDAC committee performs simulations and tabletop exercises at a management level to evaluate our readiness and response to cybersecurity incidents. External resources and advisors are incorporated as needed. Our board of directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
As needed, we collaborate with external cybersecurity experts and legal advisors to help ensure a robust response strategy. Our board of directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Senior leadership, including our CIO and chief financial officer, regularly briefs the board of directors on our cybersecurity and information security posture, and the board of 19 directors is apprised of cybersecurity incidents deemed to have a high or critical business impact, even if immaterial to us.
Senior leadership, including our CIO and chief financial officer, provides regular updates to the board of directors on our cybersecurity posture, emerging threats and our risk mitigation efforts. Our board of directors is apprised of cybersecurity incidents deemed to have significant business impact, even if they are not material to us.
This includes notifying functional areas (such as legal and human resources), senior leadership, and the board as appropriate. ​ We face a number of cybersecurity risks in connection with our business. To date, such risks have not materially affected us, including our business strategy, results of operations or financial condition.
We also conduct post-incident reviews to identify lessons learned and implement continuous improvements. We face a number of cybersecurity risks. To date, such risks have not materially affected us, including our business strategy, results of operations or financial condition.
Our cybersecurity risks are also reviewed and tested annually through third party assessments and internal and external information technology audits. Our information technology team reviews enterprise risk management level cybersecurity risks annually. Our CIO reports to our chief executive officer.
Our CIO has extensive information technology (IT) and program management experience and leads a team that has many years of experience with our organization. Our cybersecurity risks are also reviewed and tested annually through third party assessments and internal and external information technology audits. Our information technology team reviews cybersecurity risks at least annually, integrating findings into strategic risk assessments.
Our IT team is responsible for categorizing cybersecurity incidents, with incidents evaluated to be high or critical security risks brought to the CIDAC for review and evaluation. Incidents are evaluated to determine materiality as well as operational and business impact.
Our IT team is responsible for categorizing cybersecurity incidents, and those deemed high-risk or critical are escalated to the CIDAC for review and response coordination. Incidents are evaluated to determine materiality and for operational, financial and reputational impact. Our CIDAC performs simulations and tabletop exercises at a management level to evaluate our readiness and response to cybersecurity incidents.
While we have not experienced any breaches, we have encountered occasional attempts, albeit of minor significance, targeting our data and systems, including instances of malware and computer virus infiltration. Thus far all such incidents have been minor.
While we have not experienced any major breaches, we actively monitor and mitigate cyber threats, including phishing attempts, malware, and targeted attacks. Thus far all such incidents have been minor, isolated and promptly contained.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn accordance with applicable regulations of the SEC, the performance graph set forth below reflects both our current peer group and our prior peer group (which included Venator through May 14, 2023, the date of its bankruptcy filing). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 2019 2020 2021 2022 2023 Kronos common stock ​ $ 100 ​ $ 123 ​ $ 146 ​ $ 154 ​ $ 102 ​ $ 117 S&P 500 Composite Stock Index ​ ​ 100 ​ ​ 131 ​ ​ 156 ​ ​ 200 ​ ​ 164 ​ ​ 207 Current Peer Group ​ 100 ​ ​ 81 ​ ​ 114 ​ 170 ​ 136 ​ 145 Prior Peer Group ​ ​ 100 ​ ​ 82 ​ ​ 112 ​ 162 ​ 127 ​ 135 The information contained in the performance graph shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, except to the extent we specifically request that the material be treated as soliciting material or specifically incorporate this performance graph by reference into a document filed under the Securities Act or the Securities Exchange Act. 21 Equity compensation plan information We have an equity compensation plan, which was approved by our stockholders, pursuant to which an aggregate of 200,000 shares of our common stock can be awarded to members of our board of directors.
Biggest changeThe graph shows the value at December 31 of each year, assuming an original investment of $100 at December 31, 2019 and reinvestment of cash dividends and other distributions to stockholders. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 2020 2021 2022 2023 2024 Kronos Common Stock ​ $ 100 ​ $ 118 ​ $ 125 ​ $ 83 ​ $ 95 ​ $ 98 S&P 500 Composite Stock Index ​ ​ 100 ​ ​ 118 ​ ​ 152 ​ ​ 125 ​ ​ 158 ​ ​ 197 Peer Group ​ 100 ​ ​ 141 ​ ​ 210 ​ 168 ​ 179 ​ 111 The information contained in the performance graph shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, except to the extent we specifically request that the material be treated as soliciting material or specifically incorporate this performance graph by reference into a document filed under the Securities Act or the Securities Exchange Act.
See Note 13 to our Consolidated Financial Statements. 20 Performance graph Set forth below is a table and line graph comparing the yearly change in our cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Composite Stock Index and an index of a self-selected peer group of companies.
See Note 13 to our Consolidated Financial Statements. 22 ​ Performance graph Set forth below is a table and line graph comparing the yearly change in our cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Composite Stock Index and an index of a self-selected peer group of companies.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the New York Stock Exchange (symbol: KRO). As of February 29, 2024, there were approximately 1,600 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the New York Stock Exchange (symbol: KRO). As of February 28, 2025, there were approximately 1,500 holders of record of our common stock.
In 2023 we repurchased 313,814 shares, and we have 1,017,518 shares available for repurchase under the stock repurchase program at December 31, 2023.
We have 1,017,518 shares available for repurchase under the stock repurchase program at December 31, 2024 after repurchasing 313,814 shares in 2023 and none in 2024.
At December 31, 2023, 97,100 shares are available for awards under this plan. See Note 13 to our Consolidated Financial Statements.
Equity compensation plan information We have an equity compensation plan, which was approved by our stockholders, pursuant to which an aggregate of 200,000 shares of our common stock can be awarded to members of our board of directors. At December 31, 2024, 87,800 shares are available for awards under this plan. See Note 13 to our Consolidated Financial Statements.
Removed
The peer group index is comprised of The Chemours Company and Tronox Ltd. The graph shows the value at December 31 of each year, assuming an original investment of $100 at December 31, 2018 and reinvestment of cash dividends and other distributions to stockholders. We previously included Venator Materials PLC (Venator) in our peer group index.
Added
The peer group index is comprised of The Chemours Company and Tronox Holdings PLC.
Removed
Venator’s ordinary shares no longer trade on the New York Stock Exchange as a result of a Chapter 11 bankruptcy filing in May 2023. Therefore, we no longer believe Venator is sufficiently comparable to us.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn addition to the impact of the translation of sales and expenses over time, our non-U.S. operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency and (ii) changes in currency exchange rates during time periods when our non-U.S. operations are holding non-local currency (primarily U.S. dollars).
Biggest changeIn addition to the impact of the translation of sales and expenses over time, our non-U.S. operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency and (ii) changes in currency exchange rates during time periods when our non-U.S. operations are holding non-local currency (primarily U.S. dollars). 30 ​ Fluctuations in currency exchange rates had the following effects on our sales and income (loss) from operations for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of changes in currency exchange rates - 2024 vs. 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Translation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ gains ​ Total currency ​ Transaction gains recognized ​ impact of ​ impact ​ 2023 2024 Change rate changes 2024 vs. 2023 ​ ​ (In millions) Impact on: ​ ​ ​ ​ ​ Net sales ​ $ - ​ $ - ​ $ - ​ $ 5 ​ $ 5 Income (loss) from operations ​ 1 ​ 2 ​ 1 ​ 9 ​ 10 ​ The $5 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into more U.S. dollars in 2024 as compared to 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Business overview We are a leading global producer and marketer of value-added TiO 2 . TiO 2 is used for a variety of manufacturing applications, including plastics, paints, paper and other industrial and specialty products.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Business overview We are a leading global producer and marketer of value-added TiO 2 . TiO 2 is used for a variety of manufacturing applications, including paints, plastics, paper and other industrial and specialty products.
Our net loss in 2023 includes: ● an aggregate $2.5 million ($2.0 million, or $.02 per share, net of income tax expense) pre-tax insurance settlement gain related to a business interruption insurance claim arising from Hurricane Laura in 2020, recognized in the first, second and third quarters, ● recognition in the second quarter of a $1.3 million settlement loss related to the termination and buy-out of our pension plan in the United Kingdom ($.9 million, or $.01 per share, net of income tax expense), ● recognition in the fourth quarter of a $3.8 million ($2.8 million, or $.02 per share, net of income tax expense) fixed asset impairment related to the write-off of certain costs resulting from a capital project termination , and ● recognition, primarily in the fourth quarter, of $5.8 million ($4.3 million, or $.04 per share, net of income tax expense) of restructuring costs related to workforce reductions.
Our net loss in 2023 includes: ● an aggregate $2.5 million ($2.0 million, or $.02 per share, net of income tax expense) pre-tax insurance settlement gain related to a business interruption insurance claim arising from Hurricane Laura in 2020, recognized in the first, second and third quarters, ● recognition in the second quarter of a $1.3 million ($.9 million, or $.01 per share, net of income tax expense) settlement loss related to the termination and buy-out of our pension plan in the United Kingdom, ● recognition in the fourth quarter of a $3.8 million ($2.8 million, or $.02 per share, net of income tax expense) fixed asset impairment related to the write-off of certain costs resulting from a capital project termination , and ● recognition, primarily in the fourth quarter, of $5.8 million ($4.3 million, or $.04 per share, net of income tax expense) of restructuring costs related to workforce reductions.
Our Senior Secured Notes, our Global Revolver and the Contran term loan contain a number of covenants and restrictions which, among other things, restrict our ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of these types.
Our Senior Secured Notes, the Contran Term Loan and our Global Revolver contain a number of covenants and restrictions which, among other things, restrict our ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of these types.
Other components of net periodic pension and OPEB cost in 2023 decreased $7.2 million compared to 2022 primarily due to the net effects of higher discount rates impacting interest cost, previously unrecognized actuarial losses and $1.3 million 25 in settlement costs related to the termination and buy-out of our pension plan in the United Kingdom during the second quarter of 2023.
Other components of net periodic pension and OPEB cost in 2023 decreased $7.2 million compared to 2022 primarily due to the net effects of higher discount rates impacting interest cost, previously unrecognized actuarial losses and $1.3 million in settlement costs related to the termination and buy-out of our pension plan in the United Kingdom during the second quarter of 2023.
Through these actions we successfully reduced our finished goods inventory levels and maintained significant liquidity, although 22 our results of operations were negatively impacted by certain cost reduction initiatives and the significant unabsorbed fixed production costs incurred due to the curtailments. Comparability of our results was also impacted by the effects of changes in currency exchange rates.
Through these actions we successfully reduced our finished goods inventory levels and maintained significant liquidity, although our results of operations were negatively impacted by certain cost reduction initiatives and the significant unabsorbed fixed production costs incurred due to the curtailments. Comparability of our results was also impacted by the effects of changes in currency exchange rates.
Our effective tax rate is highly dependent upon the geographic distribution of our earnings or losses and the effects of tax laws and regulations in each tax- 32 paying jurisdiction in which we operate. Significant judgments and estimates are required in determining our consolidated provision for income taxes due to the global nature of our operations.
Our effective tax rate is highly dependent upon the geographic distribution of our earnings or losses and the effects of tax laws and regulations in each tax-paying jurisdiction in which we operate. Significant judgments and estimates are required in determining our consolidated provision for income taxes due to the global nature of our operations.
We will also from time-to-time sell assets outside the ordinary course of business and use the proceeds to (i) repay existing indebtedness, (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.
We will also from time-to-time sell assets outside the ordinary course of business and use the 39 ​ proceeds to (i) repay existing indebtedness, (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.
We recognize the full funded status of our defined benefit pension plans as either an asset (for overfunded plans) or a liability (for underfunded plans) on our Consolidated Balance Sheets.
We recognize the full funded status of our defined benefit pension plans as either an asset (for overfunded plans) or a liability (for underfunded 33 ​ plans) on our Consolidated Balance Sheets.
We used the following discount rates for our defined benefit pension plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rates used for: ​ ​ Obligations ​ Obligations ​ Obligations ​ ​ at December 31, 2021 ​ at December 31, 2022 ​ at December 31, 2023 ​ ​ ​ and expense in 2022 ​ and expense in 2023 ​ and expense in 2024 ​ Germany ​ 1.2% ​ 3.7% ​ 3.2% ​ Canada 2.9% ​ 5.1% ​ 4.6% ​ Norway 1.9% ​ 3.6% ​ 3.6% ​ U.S. 2.6% ​ 5.3% ​ 5.0% ​ ​ The assumed long-term rate of return on plan assets represents the estimated average rate of earnings expected to be earned on the funds invested or to be invested in the plans’ assets provided to fund the benefit payments inherent in the projected benefit obligations.
We used the following discount rates for our defined benefit pension plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rates used for: ​ ​ Obligations ​ Obligations ​ Obligations ​ ​ at December 31, 2022 ​ at December 31, 2023 ​ at December 31, 2024 ​ ​ ​ and expense in 2023 ​ and expense in 2024 ​ and expense in 2025 ​ Germany ​ 3.7% ​ 3.2% ​ 3.4% ​ Canada 5.1% ​ 4.6% ​ 4.6% ​ Norway 3.6% ​ 3.6% ​ 4.3% ​ U.S. 5.3% ​ 5.0% ​ 5.5% ​ ​ The assumed long-term rate of return on plan assets represents the estimated average rate of earnings expected to be earned on the funds invested or to be invested in the plans’ assets provided to fund the benefit payments inherent in the projected benefit obligations.
Similarly, if we lowered the assumed long-term rate of return on plan assets by 25 basis points for all of our plans, our defined benefit pension expense would be expected to increase by approximately $1.1 million during 2024. ● Income taxes – We operate globally and the calculation of our provision for income taxes and our deferred tax assets and liabilities involves the interpretation and application of complex tax laws and regulations in a multitude of jurisdictions across our global operations.
Similarly, if we lowered the assumed long-term rate of return on plan assets by 25 basis points for all of our plans, our defined benefit pension expense would be expected to increase by approximately $1.2 million during 2025. ● Income taxes – We operate globally and the calculation of our provision for income taxes and our deferred tax assets and liabilities involves the interpretation and application of complex tax laws and regulations in a multitude of jurisdictions across our global operations.
At December 31, 2023, we had substantial net assets denominated in the euro, Canadian dollar and Norwegian krone. Critical accounting policies and estimates Our significant accounting policies are more fully described in Note 1 to our Consolidated Financial Statements.
At December 31, 2024, we had substantial net assets denominated in the euro, Canadian dollar and Norwegian krone. Critical accounting policies and estimates Our significant accounting policies are more fully described in Note 1 to our Consolidated Financial Statements.
The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2023 did not have a significant effect on our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations is denominated in the U.S. dollar.
The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2024 did not have a significant effect on our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations is denominated in the U.S. dollar.
This is because we maintain defined benefit pension plans in several different countries in Europe and North America and the interest rate environment differs from country to country.
This is because we maintain or participate in defined benefit pension plans in several different countries in Europe and North America and the interest rate environment differs from country to country.
However, if we had lowered the assumed discount rate by 25 basis points for all plans as of December 31, 2023, our aggregate projected benefit obligations would have increased by approximately $21.0 million at that date and our defined benefit pension expense would be expected to decrease by approximately $.1 million during 2024.
However, if we had lowered the assumed discount rate by 25 basis points for all plans as of December 31, 2024, our aggregate projected benefit obligations would have increased by approximately $19.0 million at that date and our defined benefit pension expense would be expected to decrease by approximately $.1 million during 2025.
Our assumed long-term rates of return on plan assets for 2021, 2022 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2021 2022 ​ 2023 Germany ​ 2.0% ​ 2.0% ​ 4.8% Canada ​ 3.1% ​ 3.8% ​ 4.4% Norway 2.8% ​ 3.0% ​ 4.8% U.S. 4.0% ​ 4.0% ​ 5.0% ​ Our long-term rate of return on plan asset assumptions in 2024 used for purposes of determining our 2024 defined benefit pension plan expense for Germany, Canada, Norway and the U.S. are 5.0%, 4.9%, 4.8% and 5.0%, respectively.
Our assumed long-term rates of return on plan assets for 2022, 2023 and 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2022 2023 ​ 2024 Germany ​ 2.0% ​ 4.8% ​ 5.0% Canada ​ 3.8% ​ 4.4% ​ 4.9% Norway 3.0% ​ 4.8% ​ 4.8% U.S. 4.0% ​ 5.0% ​ 5.0% ​ Our long-term rate of return on plan asset assumptions in 2025 used for purposes of determining our 2025 defined benefit pension plan expense for Germany, Canada, Norway and the U.S. are 4.8%, 3.7%, 5.3% and 5.0%, respectively.
Our provision (benefit) for income taxes and deferred tax assets and liabilities reflect our best assessment of estimated current and future taxes to be paid, including the recognition and measurement of deferred tax assets and liabilities. We recognize deferred taxes for future tax effects of temporary differences between financial and income tax reporting.
Our provision (benefit) for income taxes and deferred tax assets and liabilities reflects our best assessment of estimated current and 35 ​ future taxes to be paid, including the recognition and measurement of deferred tax assets and liabilities. We recognize deferred taxes for future tax effects of temporary differences between financial and income tax reporting.
Based upon our expectation for the TiO 2 industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our short-term obligations (defined as the twelve-month period ending December 31, 2024) and our long-term obligations (defined as the five-year period ending December 31, 2028, our time period for long-term budgeting).
Based upon our expectation for the TiO 2 industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our short-term obligations (defined as the twelve-month period ending December 31, 2025) and our long-term obligations (defined as the five-year period ending December 31, 2029, our time period for long-term budgeting).
We estimate approximately $28 million of our 2024 capital expenditures will be in environmental compliance, protection and improvement programs which are primarily focused on increasing operating efficiency but also result in improved environmental protection, such as lower emissions from our manufacturing plants.
We estimate approximately $24 million of our 2025 capital expenditures will be in environmental compliance, protection and improvement programs which are primarily focused on increasing operating efficiency but also result in improved environmental protection, such as lower emissions from our manufacturing plants.
As discussed and quantified above, our gross margin as a percentage of net sales decreased primarily due to the net effects of higher average TiO 2 selling prices, lower production and sales volumes, higher production costs and fluctuations in currency exchange rates.
As discussed and quantified above, our gross margin as a percentage of net sales decreased primarily due to lower production and sales volumes, lower average TiO 2 selling prices, higher production costs and changes in currency exchange rates.
We periodically review our deferred tax assets (DTA) to determine if a valuation allowance is required.
We periodically review our deferred tax assets (“DTA”) to determine if a valuation allowance is required.
We believe the most critical accounting policies and estimates involving significant judgment primarily relate to long-lived assets, defined benefit pension plans and income taxes.
We believe the most critical accounting policies and estimates involving significant judgment primarily relate to long-lived assets, defined benefit pension plans, income taxes and the acquisition of joint venture.
The $16 million decrease in loss from operations was comprised of the following: ● Lower net currency transaction gains of approximately $11 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations, and in Norwegian krone denominated receivables and payables held by our non-U.S. operations, and ● Approximately $27 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2023 as compared to 2022.
The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2023 did not have a significant effect on our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations is denominated in the U.S. dollar. 31 ​ The $16 million decrease in loss from operations was comprised of the following: ● Lower net currency transaction gains of approximately $11 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations, and in Norwegian krone denominated receivables and payables held by our non-U.S. operations, and ● Approximately $27 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2023 as compared to 2022.
As shown below: ● Our average days sales outstanding, or DSO, increased from December 31, 2022 to December 31, 2023, primarily due to relative changes in the timing of collections, and ● Our average days sales in inventory, or DSI, decreased from December 31, 2022 to December 31, 2023, primarily due to lower inventory volumes attributable to sales volumes exceeding production volumes in 2023 compared to 2022 where our production volumes exceeded our sales volumes.
As shown below: ● Our average days sales outstanding, or DSO, decreased from December 31, 2023 to December 31, 2024, primarily due to relative changes in the timing of collections, and ● Our average days sales in inventory, or DSI, increased from December 31, 2023 to December 31, 2024, primarily due to production volumes exceeding sales volumes in 2024 compared to 2023 when our sales volumes exceeded our production volumes.
During 2022, we: ● paid quarterly dividends of $.19 per share to stockholders aggregating $87.8 million, and ● acquired 217,778 shares of our common stock in market transactions for an aggregate purchase price of $2.3 million. 34 During 2021, we: ● paid quarterly dividends of $.18 per share to stockholders aggregating $83.2 million, and ● acquired 14,409 shares of our common stock in market transactions for an aggregate purchase price of $.2 million.
During 2022, we: ● paid quarterly dividends of $.19 per share to stockholders aggregating $87.8 million, and ● acquired 217,778 shares of our common stock in market transactions for an aggregate purchase price of $2.3 million.
During 2023, 44% of our sales volumes were sold into European markets. We believe we are the largest chloride process producer of TiO 2 in Europe with an estimated 12% share of European TiO 2 sales volumes in 2023. In addition, we estimate we have a 16% share of North American TiO 2 sales volumes in 2023.
During 2024, 44% of our sales volumes were sold into European markets. We believe we are the largest chloride process producer of TiO 2 in Europe with an estimated 14% share of European TiO 2 sales volumes in 2024. In addition, we estimate we have a 17% share of North American TiO 2 sales volumes in 2024.
Based on the actuarial assumptions described above and our current expectation for what actual average currency exchange rates will be during 2024, we expect our defined benefit pension expense will approximate $7.5 million in 2024. In comparison, we expect to be required to contribute approximately $17 million to such plans during 2024.
Based on the actuarial assumptions described above and our current expectation for what actual average currency exchange rates will be during 2025, we expect our defined benefit pension expense will approximate $8 million in 2025. In comparison, we expect to be required to contribute approximately $16 million to such plans during 2025.
Our cost of sales as a percentage of net sales increased to 90% in 2023 compared to 80% in 2022 primarily due to the unfavorable effects of higher production costs (primarily raw materials) and unabsorbed fixed production costs due to lower production volumes.
Our cost of sales as a percentage of net sales increased to 90% in 2023 compared to 80% in 2022 primarily due to the unfavorable effects of higher production costs (primarily raw materials) and unabsorbed fixed production costs due to lower production volumes. 29 ​ Gross margin as a percentage of net sales decreased to 10% in 2023 compared to 20% in 2022.
We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors. ● Long-lived assets – The net book value of our property and equipment totaled $482.9 million at December 31, 2023.
We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors. ● Long-lived assets – The net book value of our property and equipment totaled $694.1 million at December 31, 2024.
LIQUIDITY AND CAPITAL RESOURCES Consolidated cash flows Operating activities Trends in cash flows as a result of our operating activities (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our earnings.
See Note 5 to our Consolidated Financial Statements. 36 ​ LIQUIDITY AND CAPITAL RESOURCES Consolidated cash flows Operating activities Trends in cash flows as a result of our operating activities (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our earnings.
See Note 13 to our Consolidated Financial Statements. Capital expenditures We intend to spend approximately $55 million on capital expenditures during 2024 (including approximately $3.2 million contractually committed at December 31, 2023), primarily to maintain and improve our existing facilities.
See Note 13 to our Consolidated Financial Statements. 40 ​ Capital expenditures We intend to spend approximately $55 million on capital expenditures during 2025 (including approximately $9 million contractually committed at December 31, 2024), primarily to maintain and improve our existing facilities.
At December 31, 2023, approximately 62%, 21%, 11% and 3% of the plan assets related to our plans in Germany, Canada, Norway and the U.S., respectively. We use several different long-term rates of return on plan asset assumptions in determining our consolidated defined benefit pension plan expense.
At December 31, 2024, approximately 58%, 18%, 10% and 11% of the plan assets related to our plans in Germany, Canada, Norway and the U.S., respectively. We use several different long-term rates of return on plan asset assumptions in determining our consolidated defined benefit pension plan expense.
Cash provided by operating activities was $81.7 million in 2022 compared to $206.5 million in 2021.
Cash provided by operating activities was $5.5 million in 2023 compared to $81.7 million in 2022.
For example, during 2023, relative changes in currency exchange rates resulted in a $1.0 million increase in the reported amount of our cash, cash equivalents and restricted cash compared to a $5.1 million decrease in 2022 and a $10.6 million decrease in 2021. 33 Cash provided by operating activities was $5.5 million in 2023 compared to $81.7 million in 2022.
For example, during 2024, relative changes in currency exchange rates resulted in a $.1 million decrease in the reported amount of our cash, cash equivalents and restricted cash compared to a $1.0 million increase in 2023 and a $5.1 million decrease in 2022. Cash provided by operating activities was $72.5 million in 2024 compared to $5.5 million in 2023.
However, prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German or Belgian operations for an extended period of time, or if applicable law were to change such that the carryforward period was no longer indefinite, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.
At December 31, 2024, we continue to conclude no valuation allowance is required to be recognized for our German DTAs although prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.
At December 31, 2023, approximately 71%, 15%, 8% and 2% of the projected benefit obligations related to our plans in Germany, Canada, Norway and the U.S., respectively. We use several different discount rate assumptions in determining our consolidated defined benefit pension plan obligation and expense.
At December 31, 2024, approximately 68%, 14%, 7% and 7% of the projected benefit obligations related to our plans in Germany, Canada, Norway and the U.S., respectively. We use several different discount rate assumptions in determining our consolidated defined benefit pension plan obligation and expense.
The $23 million increase in income from operations was comprised of the following: ● Higher net currency transaction gains of approximately $10 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations, and in Norwegian krone denominated receivables and payables held by our non-U.S. operations, and ● Approximately $13 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2022 as compared to 2021, partially offset by net currency translation losses primarily caused by a strengthening of the U.S. dollar relative to the euro as the negative effects of the stronger U.S. dollar on euro-denominated sales more than offset the favorable effects of euro-denominated operating costs being translated into fewer U.S. dollars in 2022 as compared to 2021 .
The $10 million increase in income from operations was comprised of the following: ● Higher net currency transaction gains of approximately $1 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations, and in Norwegian krone denominated receivables and payables held by our non-U.S. operations, and ● Approximately $9 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2024 as compared to 2023.
In addition, we receive third-party advice about appropriate long-term rates of return. We regularly review our actual asset allocation for each of our U.S. and non-U.S. plans and will periodically rebalance the investments in each plan to more accurately reflect the targeted allocation when considered appropriate.
We regularly review our actual asset allocation for each of our U.S. and non-U.S. plans and 34 ​ will periodically rebalance the investments in each plan to more accurately reflect the targeted allocation when considered appropriate.
Overall, we estimate that fluctuations in currency exchange rates had the following effects on our sales and income from operations for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of changes in currency exchange rates - 2023 vs. 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Translation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ gains ​ Total currency ​ Transaction gains recognized ​ impact of ​ impact ​ 2022 2023 Change rate changes 2023 vs. 2022 ​ ​ (In millions) Impact on: ​ ​ ​ ​ ​ Net sales ​ $ - ​ $ - ​ $ - ​ $ 10 ​ $ 10 Income (loss) from operations ​ 12 ​ 1 ​ (11) ​ 27 ​ 16 ​ The $10 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into more U.S. dollars in 2023 as compared to 2022.
The effect of the weakening of the U.S. dollar relative to the euro caused additional net translation gains as the positive effects of the weaker U.S. dollar on euro-denominated sales more than offset the unfavorable effects on euro-denominated operating costs being translated into more U.S. dollars in 2024 as compared to 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of changes in currency exchange rates - 2023 vs. 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Translation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ gains ​ Total currency ​ Transaction gains recognized ​ impact of ​ impact ​ 2022 2023 Change rate changes 2023 vs. 2022 ​ (In millions) Impact on: ​ ​ ​ ​ ​ Net sales ​ $ - ​ $ - ​ $ - ​ $ 10 ​ $ 10 Income (loss) from operations ​ 12 ​ 1 ​ (11) ​ 27 ​ 16 ​ The $10 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into more U.S. dollars in 2023 as compared to 2022.
Our Global Revolver is collateralized 35 by, among other things, a first priority lien on the borrower’s trade receivables and inventories. See Note 8 to our Consolidated Financial Statements.
Our Global Revolver is collateralized by, among other things, a first priority lien on the borrower’s trade receivables and inventories.
The majority of our sales from non-U.S. operations are denominated in currencies other than the U.S. dollar, principally the euro, other major European currencies and the Canadian dollar. A portion of our sales generated from our non-U.S. operations is denominated in the U.S. dollar (and consequently our non-U.S. operations will generally hold U.S. dollars from time to time).
A portion of our sales generated from our non-U.S. operations is denominated in the U.S. dollar (and consequently our non-U.S. operations will generally hold U.S. dollars from time to time).
At December 31, 2023, we have concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term.
Prior to December 31, 2024, and using all available evidence, we had concluded that no deferred income tax asset valuation allowance was required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have lengthy carryforward periods (the German and Belgian carryforwards may be carried forward indefinitely), (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term.
Net income decreased in 2023 as compared to 2022 primarily due to lower income from operations as a result of lower sales volumes, lower average TiO 2 selling prices and reduced production volumes.
We reported a net loss of $49.1 million, or $.43 per share, in 2023 compared to net income of $104.5 million, or $.90 per share, in 2022. Net income decreased in 2023 as compared to 2022 primarily due to lower income from operations as a result of lower sales volumes, lower average TiO 2 selling prices and reduced production volumes.
We would generally expect our overall effective tax rate, excluding the impact of the reversal of a portion of our deferred income tax asset valuation allowance, to be higher than the U.S. federal statutory rate of 21% primarily because of our sizeable non-U.S. operations.
We would generally expect our overall effective tax rate, excluding the effect of any increase or decrease in our deferred income tax asset valuation allowance or changes in our reserve for uncertain tax positions, to be higher than the U.S. federal statutory tax rate of 21% primarily because of our sizeable non-U.S. operations.
TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.
TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs. Incremental sales volumes resulting from the LPC acquisition did not significantly impact comparisons to the prior year.
During 2023, 2022 and 2021, we had no loans or collections under our unsecured revolving demand promissory note with Valhi. Financing activities During 2023, we: ● paid quarterly dividends of $.19 per share to stockholders aggregating $87.5 million, and ● acquired 313,814 shares of our common stock in market transactions for an aggregate purchase price of $2.8 million.
During 2023, we: ● paid quarterly dividends of $.19 per share to stockholders aggregating $87.5 million, and ● acquired 313,814 shares of our common stock in market transactions for an aggregate purchase price of $2.8 million.
Cash, cash equivalents, restricted cash and marketable securities At December 31, 2023 we had: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held by ​ ​ ​ U.S. ​ Non-U.S. ​ ​ ​ ​ ​ entities ​ entities ​ Total ​ ​ (In millions) Cash and cash equivalents $ 87.0 ​ $ 107.7 ​ $ 194.7 Current restricted cash - ​ 2.2 ​ 2.2 Noncurrent restricted cash - ​ 5.2 ​ 5.2 Noncurrent marketable securities 2.2 ​ - ​ 2.2 ​ Following implementation of a territorial tax system under the 2017 Tax Act, repatriation of any cash and cash equivalents held by our non-U.S. subsidiaries would not be expected to result in any material income tax liability as a result of such repatriation. 36 Stock repurchase program At December 31, 2023, we have 1,017,518 shares available for repurchase under a stock repurchase program authorized by our board of directors.
Cash, cash equivalents, restricted cash and marketable securities At December 31, 2024 we had: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held by ​ ​ ​ U.S. ​ Non-U.S. ​ ​ ​ ​ ​ entities ​ entities ​ Total ​ ​ (In millions) Cash and cash equivalents $ 28.9 ​ $ 77.8 ​ $ 106.7 Current restricted cash 1.3 ​ 2.0 ​ 3.3 Noncurrent restricted cash - ​ 4.7 ​ 4.7 Noncurrent marketable securities 3.4 ​ - ​ 3.4 Following implementation of a territorial tax system under the 2017 Tax Act, repatriation of any cash and cash equivalents held by our non-U.S. subsidiaries would not be expected to result in any material income tax liability as a result of such repatriation.
We recognized consolidated defined benefit pension plan expense of $31.3 million in 2021, $24.1 million in 2022 and $12.0 million in 2023. The funding requirements for these defined benefit pension plans are generally based upon applicable regulations (such as ERISA in the U.S.) and will generally differ from pension expense for financial reporting purposes.
The funding requirements for these defined benefit pension plans are generally based upon applicable regulations (such as ERISA in the U.S.) and will generally differ from pension expense for financial reporting purposes. We made contributions to all of our plans which aggregated $15.3 million in 2022, $16.1 million in 2023 and $15.4 million in 2024.
Our net income in 2022 includes the recognition of a pre-tax insurance settlement gain of $2.7 million recognized in the third quarter ($2.2 million, or $.02 per share, net of income tax expense) related to a business interruption insurance claim arising from Hurricane Laura in 2020. 23 Comparison of 2023 to 2022 Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2022 ​ 2023 ​ ​ ​ (Dollars in millions) Net sales $ 1,930.2 100 % $ 1,666.5 100 % Cost of sales 1,539.1 80 ​ 1,501.6 90 ​ Gross margin 391.1 20 ​ 164.9 10 ​ Selling, general and administrative expense 231.3 12 ​ 211.2 13 ​ Other operating income (expense): ​ ​ ​ ​ Currency transactions, net 11.5 1 ​ 1.4 - ​ Other operating expense, net (11.7) (1) ​ (11.1) - ​ Income (loss) from operations $ 159.6 8 % $ (56.0) (3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ TiO 2 operating statistics: ​ ​ ​ Sales volumes* ​ ​ 481 ​ ​ ​ ​ 419 ​ (13) % Production volumes* ​ ​ 492 ​ ​ ​ ​ 401 ​ (19) % Percentage change in net sales: ​ ​ ​ ​ TiO 2 sales volumes ​ ​ ​ ​ (13) % TiO 2 product pricing ​ ​ ​ (4) ​ TiO 2 product mix/other ​ ​ ​ 2 ​ Changes in currency exchange rates ​ ​ ​ 1 ​ Total ​ ​ ​ ​ (14) % * Thousands of metric tons ​ Industry conditions and 2023 overview – We and the TiO 2 industry are experiencing an extended period of significantly reduced demand across all major markets, which is reflected in our sales volumes in 2023.
Our net income in 2022 includes the recognition of a pre-tax insurance settlement gain of $2.7 million recognized in the third quarter ($2.2 million, or $.02 per share, net of income tax expense) related to a business interruption insurance claim arising from Hurricane Laura in 2020. 25 ​ Comparison of 2024 to 2023 Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2023 ​ 2024 ​ ​ ​ (Dollars in millions) Net sales $ 1,666.5 100 % $ 1,887.1 100 % Cost of sales 1,501.6 90 ​ 1,527.8 81 ​ Gross margin 164.9 10 ​ 359.3 19 ​ Selling, general and administrative expense 211.2 13 ​ 225.6 12 ​ Other operating income (expense): ​ ​ ​ ​ Currency transactions, net 1.4 - ​ 1.6 - ​ Other operating expense, net ​ ​ (11.1) ​ - ​ ​ (12.4) ​ - ​ Income (loss) from operations ​ ​ (56.0) ​ (3) ​ ​ 122.9 ​ 7 ​ Corporate expense and trade interest income, net 16.2 1 ​ 18.1 1 ​ Segment profit (loss) (1) $ (39.8) (2) % $ 141.0 8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ TiO 2 operating statistics: ​ ​ ​ Sales volumes* ​ ​ 419 ​ ​ ​ ​ 504 ​ 20 % Production volumes* ​ ​ 401 ​ ​ ​ ​ 535 ​ 33 % Percentage change in net sales: ​ ​ ​ ​ TiO 2 sales volumes ​ ​ ​ ​ 20 % TiO 2 product pricing ​ ​ ​ (5) ​ TiO 2 product mix/other ​ ​ ​ (2) ​ Changes in currency exchange rates ​ ​ ​ - ​ Total ​ ​ ​ ​ 13 % * Thousands of metric tons (1) The Company uses segment profit (loss) to assess the performance of the company’s TiO 2 operations.
These assumptions are principally the assumed discount rate, the assumed long-term rate of return on plan assets, the fair value of plan assets and the assumed increase in future compensation levels.
Under defined benefit pension plan accounting, defined benefit pension plan expense, pension assets and accrued pension costs are each recognized based on certain actuarial assumptions. These assumptions are principally the assumed discount rate, the assumed long-term rate of return on plan assets, the fair value of plan assets and the assumed increase in future compensation levels.
This $124.8 million decrease in the amount of cash provided was primarily due to the net effect of the following: ● lower income from operations in 2022 of $27.5 million, ● higher amount of net cash used associated with relative changes in our inventories, receivables, payables and accruals in 2022 of $94.9 million, ● higher net contributions to our TiO 2 manufacturing joint venture in 2022 of $14.3 million, and ● lower cash paid for income taxes of $4.3 million due to decreased earnings in 2022.
This $67.0 million increase in the amount of cash provided was primarily due to the net effect of the following: ● higher income from operations in 2024 of $178.9 million, ● higher amount of net cash used associated with relative changes in our inventories, receivables, payables and accruals in 2024 of $83.3 million, ● higher cash paid for interest in 2024 of $22.4 million, ● higher cash paid for taxes in 2024 of $17.2 million primarily due to higher earnings, ● cash premium of $6.0 million on the issuance of senior notes, and ● higher net contributions of $5.8 million to our TiO 2 manufacturing joint venture in 2024 prior to the LPC acquisition.
We reported lower net income in 2022 as compared to 2021 primarily due to lower income from operations resulting from the net effects of lower sales volumes, higher production costs, including raw material and energy costs and higher average TiO 2 selling prices.
Net income increased in 2024 as compared to 2023 primarily due to higher income from operations as a result of the effects of higher sales and production volumes and lower production costs (primarily energy and raw materials), partially offset by lower average TiO 2 selling prices.
We have experienced global market disruptions including high energy costs and future impacts on our operations will depend on, among other things, future energy costs and the impact economic conditions and geopolitical events have on our operations or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Future impacts on our operations will depend on, among other things, future energy costs, the effect newly enacted tariffs have on jurisdictions in which we or our customers and suppliers operate, our success in implementing mitigation strategies, and the impact economic conditions and geopolitical events have on our operations or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
The terms of all of our debt instruments are discussed in Note 8 to our Consolidated Financial Statements. We are in compliance with all of our debt covenants at December 31, 2023. We believe we will be able to continue to comply with the financial covenants contained in our credit facility through its maturity.
The terms of all of our debt instruments are discussed in Note 8 to our Consolidated Financial Statements. We are in compliance with all of our debt covenants at December 31, 2024.
In the event of any future acquisition or joint venture opportunity, we may consider using then-available liquidity, issuing our equity securities or incurring additional indebtedness.
In the normal course of our business, we may investigate, evaluate, discuss and engage in acquisition, joint venture, strategic relationship and other business combination opportunities in the TiO 2 industry. In the event of any future acquisition or joint venture opportunity, we may consider using then-available liquidity, issuing our equity securities or incurring additional indebtedness.
As part of overall cost saving measures, in the third quarter of 2023 we began implementing certain voluntary and involuntary workforce reductions. A substantial portion of our workforce reductions were accomplished through voluntary programs, for which eligible workforce reduction costs are recognized at the time both the employee and employer are irrevocably committed to the terms of the separation.
A substantial portion of our workforce reductions were accomplished through voluntary programs, for which eligible workforce reduction costs are recognized at the time both the employee and employer are irrevocably committed to the terms of the separation. These workforce reductions impacted approximately 100 employees.
Income (loss) from operations – We had a loss from operations of $56.0 million in 2023 compared to income from operations of $159.6 million in 2022 as a result of the factors impacting gross margin discussed above.
Segment profit (loss) – We had a segment loss of $39.8 million in 2023 compared to segment profit of $175.9 million in 2022 as a result of the factors impacting gross margin discussed above.
Excluding this project, we did not evaluate any long-lived assets for impairment during 2023 because no such impairment indicators were present. ● Defined benefit pension plans – We maintain various defined benefit pension plans in the U.S., Europe and Canada. See Note 10 to our Consolidated Financial Statements.
We do not assess our property and equipment for impairment unless certain impairment indicators are present. We did not evaluate any long-lived assets for impairment during 2024 because no such impairment indicators were present. ● Defined benefit pension plans – We participate in or maintain various defined benefit pension plans in the U.S., Europe and Canada.
This is because the plan assets in different countries are invested in a different mix of investments and the long-term rates of return for different investments differ from country to country. 31 In determining the expected long-term rate of return on plan asset assumptions, we consider the long-term asset mix (e.g. equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components.
In determining the expected long-term rate of return on plan asset assumptions, we consider the long-term asset mix (e.g. equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we receive third-party advice about appropriate long-term rates of return.
Capital spending for 2024 is expected to be funded through cash on hand or borrowing under our existing credit facility. It is possible we will delay planned capital projects based on market conditions. Commitments and contingencies See Notes 12 and 15 to our Consolidated Financial Statements for a description of certain income tax contingencies, certain legal proceedings and other commitments.
Capital spending for 2025 is expected to be funded through cash on hand or borrowing under our existing credit facility. It is possible we will delay planned capital projects based on market conditions.
For example, at December 31, 2023, we have significant German corporate and trade net operating loss (NOL) carryforwards of $478.7 million (DTA of $75.8 million) and $54.5 million (DTA of $5.9 million), respectively; and Belgian corporate NOL carryforwards of $47.0 million (DTA of $11.8 million).
For example, at December 31, 2024, we have significant German corporate and trade net operating loss (NOL) carryforwards of $447.3 million (DTA of $70.8 million) and $40.1 million (DTA of $4.4 million), respectively; and Belgian corporate NOL carryforwards of $72.0 million (DTA of $18.0 million).
We estimate that changes in currency exchange rates (primarily the euro) decreased our net sales by approximately $106 million, or 5% in 2022 as compared to 2021.
Changes in product mix negatively contributed to net sales, primarily due to changes in product sales mix in export markets in 2024 as compared to 2023. Additionally, we estimate that changes in currency exchange rates (primarily the euro) increased our net sales by approximately $5 million in 2024 as compared to 2023.
Gross margin as a percentage of net sales decreased to 10% in 2023 compared to 20% in 2022. As discussed and quantified above, our gross margin as a percentage of net sales decreased primarily due to lower production and sales volumes, lower average TiO 2 selling prices, higher production costs and changes in currency exchange rates.
As discussed and quantified above, our gross margin as a percentage of net sales increased primarily due to higher sales and production volumes as well as lower production costs, partially offset by lower average TiO 2 selling prices. 27 ​ Selling, general and administrative expense – Selling, general and administrative expense increased $14.4 million, or 7%, in 2024 compared to 2023.
We estimate changes in currency exchange rates decreased our loss from operations by approximately $16 million in 2023 as compared to 2022, as discussed in the Effects of currency exchange rates section below.
We estimate changes in currency exchange rates decreased our segment loss by approximately $16 million in 2023 as compared to 2022, as discussed in the Effects of currency exchange rates section below. Other non-operating income (expense) – We recognized unrealized losses of $1.0 million in each of 2023 and 2022 on the change in value of our marketable equity securities.
Executive summary We reported a net loss of $49.1 million, or $.43 per share, in 2023 compared to net income of $104.5 million, or $.90 per share, in 2022.
See Note 5 to our Consolidated Financial Statements. 24 ​ We reported net income of $86.2 million, or $.75 per share, in 2024 compared to a net loss of $49.1 million, or $.43 per share, in 2023.
Currently, many countries are drafting or have enacted legislation to implement the Pillar Two rules effective for years beginning on or after December 31, 2023. We are continuing to follow the Pillar Two legislative developments in order to evaluate the potential future impact it could have on our results of operations.
Currently, many countries have enacted legislation to implement the Pillar Two rules effective for years beginning on or after December 31, 2023.
Other non-operating income (expense) – We recognized a loss of $1.0 million in 2022 compared to a gain of $2.0 million in 2021 on the change in value of our marketable equity securities. See Note 6 to our Consolidated Financial Statements.
As a result of the exchange, interest expense for 2024 also includes a charge of $1.5 million for the write-off of deferred financing costs. See Note 8 to our Consolidated Financial Statements. We recognized a gain of $1.2 million on the change in value of our marketable equity securities in 2024 compared to a loss of $1.0 million in 2023.
Comparison of 2022 to 2021 Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2021 ​ 2022 ​ ​ (Dollars in millions) Net sales $ 1,939.4 100 % $ 1,930.2 100 % Cost of sales ​ ​ 1,493.2 ​ 77 1,539.1 80 ​ Gross margin ​ 446.2 23 ​ 391.1 20 ​ Selling, general and administrative expense ​ 248.9 13 ​ 231.3 12 ​ Other operating income (expense): ​ ​ ​ ​ Currency transactions, net ​ 1.6 - ​ 11.5 1 ​ Other operating expense, net ​ (11.8) - ​ (11.7) (1) ​ Income from operations $ 187.1 10 % $ 159.6 8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ TiO 2 operating statistics: ​ ​ ​ ​ Sales volumes* ​ 563 ​ ​ ​ 481 ​ (15) % Production volumes* ​ 545 ​ ​ ​ 492 ​ (10) % Percentage change in net sales: ​ ​ ​ ​ TiO 2 product pricing ​ ​ ​ ​ 21 % TiO 2 sales volumes ​ ​ ​ ​ (15) ​ TiO 2 product mix/other ​ ​ ​ ​ (1) ​ Changes in currency exchange rates ​ ​ ​ ​ (5) ​ Total ​ ​ ​ ​ - % * Thousands of metric tons Net sales – Our net sales in 2022 were consistent with net sales in 2021 primarily due to the net effects of a 21% increase in average TiO 2 selling prices (which increased net sales by approximately $407 million) and a 15% decrease in sales volumes (which decreased net sales by approximately $291 million).
See Note 12 to our Consolidated Financial Statements. 28 ​ Comparison of 2023 to 2022 Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2022 ​ 2023 ​ ​ (Dollars in millions) Net sales $ 1,930.2 100 % $ 1,666.5 100 % Cost of sales ​ ​ 1,539.1 ​ 80 1,501.6 90 ​ Gross margin ​ 391.1 20 ​ 164.9 10 ​ Selling, general and administrative expense ​ 231.3 12 ​ 211.2 13 ​ Other operating income (expense): ​ ​ ​ ​ ​ Currency transactions, net ​ 11.5 1 ​ 1.4 - ​ Other operating expense, net ​ ​ (11.7) ​ (1) ​ ​ (11.1) ​ - ​ Income (loss) from operations ​ ​ 159.6 ​ 8 ​ ​ (56.0) ​ (3) ​ Corporate expense and trade interest income, net ​ ​ 16.3 ​ 1 ​ ​ 16.2 ​ 1 ​ Segment profit (loss) (1) $ 175.9 9 % $ (39.8) (2) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ TiO 2 operating statistics: ​ ​ ​ ​ Sales volumes* ​ 481 ​ ​ ​ 419 ​ (13) % Production volumes* ​ 492 ​ ​ ​ 401 ​ (19) % Percentage change in net sales: ​ ​ ​ ​ TiO 2 product pricing ​ ​ ​ ​ (13) % TiO 2 sales volumes ​ ​ ​ ​ (4) ​ TiO 2 product mix/other ​ ​ ​ ​ 2 ​ Changes in currency exchange rates ​ ​ ​ ​ 1 ​ Total ​ ​ ​ ​ (14) % * Thousands of metric tons (1) The Company uses segment profit (loss) to assess the performance of the Company’s TiO 2 operations.
On February 12, 2024, for certain eligible holders of the Old Notes, KII executed an exchange of €325 million principal amount of the Old Notes for newly issued €276.174 million aggregate outstanding KII 9.50% Senior Secured Notes due March 2029 (the “New Notes” and together with Old Notes, the “Senior Secured Notes”) plus additional cash consideration of €50 million ($53.7 million).
(KII) 3.75% Senior Secured Notes due September 2025 (the “Old Notes”) for our newly issued €276.174 million 9.50% Senior Secured Notes due March 2029 (the “New Notes”) plus additional cash consideration of $52.6 million to certain eligible holders of the Old Notes and borrowed $53.7 million from Contran.
Cost of sales and gross margin – Cost of sales increased $45.9 million, or 3%, in 2022 compared to 2021 primarily due to the net effects of higher production costs of approximately $285 million (including higher costs for raw materials and energy), a 15% decrease in sales volumes and changes in currency exchange rates.
Cost of sales and gross margin – Cost of sales increased $26.2 million, or 2%, in 2024 compared to 2023 due to the net effects of a 20% increase in sales volumes, a 33% increase in production rates resulting in reduced unabsorbed fixed production costs, and lower production costs of approximately $115 million (primarily energy and raw materials).
Comparability of our results was also impacted by the effects of changes in currency exchange rates.
With improved demand in all of our major markets in 2024 compared to 2023 we increased production volumes, contributing to our improved profitability. Comparability of our results was also impacted by the effects of changes in currency exchange rates.
For comparative purposes, we have provided current and prior year numbers below. ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2022 December 31, 2023 DSO ​ 65 days ​ 64 days ​ 66 days DSI ​ 59 days ​ 103 days ​ 65 days ​ Investing activities Our capital expenditures were $47.4 million in 2023 compared to $63.2 million in 2022 and $58.6 million in 2021.
For comparative purposes, we have provided current and prior year numbers below. ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2023 December 31, 2024 DSO ​ 64 days ​ 66 days ​ 62 days DSI ​ 103 days ​ 65 days ​ 82 days 37 ​ Investing activities We paid $156.8 million, net of cash acquired, for the remaining TiO 2 manufacturing joint venture interest in LPC.
The following table shows our capacity utilization rates during 2022 and 2023. ​ ​ ​ ​ ​ ​ Production Capacity Utilization Rates ​ 2022 2023 First Quarter ​ 100% ​ 76% Second Quarter 95% ​ 64% Third Quarter 93% ​ 73% Fourth Quarter 65% ​ 75% Overall 89% ​ 72% Due to significant increases in per metric ton production costs (primarily feedstock and unabsorbed fixed costs due to reduced operating rates), our cost of sales per metric ton of TiO 2 sold in 2023 was significantly higher than in 2022 (excluding the effect of changes in currency exchange rates). 24 In response to the extended period of reduced demand, we have taken measures to reduce our operating costs and improve our long-term cost structure.
As a result of the increase in demand experienced in the fourth quarter of 2023 and the first quarter of 2024, along with more favorable production costs, we began increasing our production rates during the first quarter of 2024 and we operated at near practical capacity in the second, third and fourth quarters of 2024 resulting in 96% of practical capacity utilization in 2024. 26 ​ The following table shows our capacity utilization rates during 2023 and 2024. ​ ​ ​ ​ ​ ​ Production Capacity Utilization Rates ​ 2023 2024 First Quarter ​ 76% ​ 87% Second Quarter 64% ​ 99% Third Quarter 73% ​ 92% Fourth Quarter 75% ​ 97% Overall 72% ​ 96% Excluding the effect of changes in currency exchange rates, our cost of sales per metric ton of TiO 2 sold in 2024 was significantly lower as compared to 2023 primarily due to significant decreases in per metric ton production costs (primarily energy and raw materials).
Our results of operations for the year ended December 31, 2022 were significantly impacted by unabsorbed fixed production and other costs associated with production curtailments at two of our European facilities (discussed in greater detail below) and reduced demand for certain of our products occurring primarily in our European and export markets.
Our results of operations in 2023 were significantly impacted by reduced demand for certain of our products occurring in all major markets and unabsorbed fixed production costs as a result of production curtailments in response to the sharp decline in demand.
These workforce reductions impacted approximately 100 individuals and are substantially completed. We recognized a total of approximately $6 million in charges primarily in the fourth quarter of 2023 related to workforce reductions we implemented during the second half of the year, which is classified in selling, general and administrative expense.
We recognized a total of approximately $6 million in charges primarily in the fourth quarter of 2023 related to workforce reductions we implemented during the second half of 2023. In the third quarter of 2024, we closed our sulfate process production line at our plant in Varennes, Canada.
Other non-operating income (expense) – We recognized unrealized losses of $1.0 million in each of 2023 and 2022 on the change in value of our marketable equity securities. See Note 6 to our Consolidated Financial Statements.
Other non-operating income (expense) – We recognized a gain on the remeasurement of our investment in LPC of $64.5 million in 2024 as a result of the acquisition. See Note 5 to our Consolidated Financial Statements.
During 2023, we continued operating our production facilities at reduced rates to align production with expected customer demand. As a result, we operated our production facilities at 72% of practical capacity utilization in 2023 compared to 89% of practical capacity utilization in 2022.
We operated our production facilities at 72% of practical capacity utilization in 2023 in response to decreased demand and higher production costs.
Our cost of sales as a percentage of net sales increased to 80% in 2022 compared to 77% in 2021 due to the impact of higher production costs, including higher raw material and energy costs partially offset by the favorable effects of higher average TiO 2 selling prices.
Our cost of sales as a percentage of net sales decreased to 81% in 2024 compared to 90% in 2023 primarily due to the favorable effects of increased sales, lower production costs and higher production volumes resulting in increased coverage of fixed production costs.
In February 2024, our board of directors declared a first quarter 2024 regular quarterly dividend of $.19 per share, payable March 14, 2024 to stockholders of record as of March 5, 2024. Outstanding debt obligations and borrowing availability At December 31, 2023, our consolidated debt comprised €400 million aggregate outstanding on our wholly-owned subsidiary Kronos International, Inc.
In February 2025, our board of directors declared a first quarter 2025 regular quarterly dividend of $.05 per share, payable March 20, 2025 to stockholders of record as of March 11, 2025.
We expect these pricing pressures to be somewhat mitigated in 2024 and believe there is potential industry pricing upside in 2024 as a result of improved demand. Throughout 2023 we implemented cost reduction initiatives designed to improve our long-term cost structure, including targeted workforce reductions and the implementation of certain ongoing technology innovations and process improvement initiatives.
We are operating our facilities at production rates in line with the current and expected near-term demand and believe our production rates for 2025 will be slightly above 2024 rates. We are focused on cost reduction initiatives designed to improve our long-term cost structure. In 2023, we implemented targeted workforce reductions and certain ongoing process improvement initiatives.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Note 8 to our Consolidated Financial Statements. ​ 37 Currency exchange rates We are exposed to market risk arising from changes in currency exchange rates as a result of manufacturing and selling our products worldwide.
Biggest changeSee Notes 8 and 14 to our Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Indebtedness amount Year-end ​ ​ Carrying ​ Fair ​ interest ​ Maturity ​ ​ amount ​ value ​ rate ​ date ​ ​ (In millions) ​ ​ ​ ​ Fixed-rate indebtedness: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Kronos International, Inc. 9.50% Senior Secured ​ $ 365.4 ​ ​ 403.4 ​ 9.50 % 2029 Kronos International, Inc. 3.75% Senior Secured ​ ​ 78.3 ​ ​ 77.9 ​ 3.75 % 2025 Total fixed rate indebtedness ​ $ 443.7 ​ $ 481.3 ​ 8.49 % ​ Variable rate indebtedness: ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving credit facility ​ $ 10.0 ​ $ 10.0 ​ 6.25 % 2029 Currency exchange rates We are exposed to market risk arising from changes in currency exchange rates as a result of manufacturing and selling our products worldwide.
Earnings are primarily affected by fluctuations in the value of the U.S. dollar relative to the euro, the Canadian dollar, the Norwegian krone and to a lesser extent the United Kingdom pound sterling and the value of the euro relative to the Norwegian krone.
Earnings are primarily affected by fluctuations in the value of the U.S. dollar relative to 41 ​ the euro, the Canadian dollar, the Norwegian krone and to a lesser extent the United Kingdom pound sterling and the value of the euro relative to the Norwegian krone.
Actual future market conditions will likely differ materially from such assumptions. Accordingly, such forward-looking statements should not be considered to be projections by us of future events, gains or losses. 38
Actual future market conditions will likely differ materially from such assumptions. Accordingly, such forward-looking statements should not be considered to be projections by us of future events, gains or losses. 42 ​
However, we may enter into such contracts in the future to manage our currency exchange rate risk. We are not party to any currency forward contracts at December 31, 2023. Also, we are subject to currency exchange rate risk associated with our Senior Secured Notes, as such indebtedness is denominated in euros.
However, we may enter into such contracts in the future to manage our currency exchange rate risk. We are not party to any currency forward contracts at December 31, 2024. Also, we are subject to currency exchange rate risk associated with our Senior Secured Notes due 2025 and 2029, as such indebtedness is denominated in euros.
Information shown below for our euro-denominated 3.75% Senior Secured Notes due 2025 is presented in its U.S. dollar equivalent at December 31, 2023 and 2022 (net of unamortized debt issuance costs of $1.6 million and $2.4 million, respectively) using an exchange rate of U.S. $1.106 per euro and $1.066 per euro, respectively.
Information shown below for our euro-denominated 9.50% and 3.75% Senior Secured Notes due 2029 and 2025, respectively, is presented in its U.S. dollar equivalent at December 31, 2024 (net of unamortized debt issuance costs of $6.3 million, in addition to an unamortized bond premium of $5.3 million) using an exchange rate of U.S. $1.043 per euro.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General We are exposed to market risk from changes in interest rates, currency exchange rates, equity security and raw material prices. Interest rates At December 31, 2023 and 2022, our fixed-rate, euro-denominated KII 3.75% Senior Secured Notes due 2025 comprised the majority of our aggregate indebtedness.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General We are exposed to market risk from changes in interest rates, currency exchange rates, equity security and raw material prices.
Raw materials We are exposed to market risk from changes in commodity prices relating to our raw materials. As discussed in Item 1 we generally enter into long-term supply agreements for certain of our raw material requirements.
As discussed in Item 1 we generally enter into long-term supply agreements for certain of our raw material requirements. Many of our raw material contracts contain fixed quantities we are required to purchase or specify a range of quantities within which we are required to purchase.
Many of our raw material contracts contain fixed quantities we are required to purchase or specify a range of quantities within which we are required to purchase. Raw material pricing under these agreements is generally negotiated quarterly or semi-annually depending upon the suppliers.
Raw material pricing under these agreements is generally negotiated quarterly or semi-annually depending upon the suppliers.
At December 31, 2023, we had the equivalent of $442.5 million outstanding under our euro-denominated KII 3.75% Senior Secured Notes due 2025 (exclusive of unamortized debt issuance costs). The potential increase in the U.S. dollar equivalent of such indebtedness resulting from a hypothetical 10% adverse change in exchange rates at December 31, 2023 would be approximately $44 million.
At December 31, 2024, we had the equivalent of $365.4 million outstanding under our euro-denominated KII 9.5% Senior Secured Notes due 2029 (exclusive of unamortized bond premium and debt issuance costs) and $78.3 million outstanding under our euro-dominated KII 3.75% Senior Secured Notes due 2025 (exclusive of unamortized debt issuance costs).
The fixed-rate debt instrument minimizes earnings volatility that would result from changes in interest rates. Our Global Revolver is a variable-rate instrument; however, we had no borrowings under this facility during 2023 or 2022. The following table presents principal amounts and weighted average interest rates for our aggregate outstanding indebtedness at December 31, 2023 and 2022.
Interest rates At December 31, 2024, our aggregate indebtedness was comprised primarily of our fixed-rate, euro-denominated KII 9.5% Senior Secured Notes due 2029 and KII 3.75% Senior Secured Notes due 2025. The fixed-rate debt instruments minimize earnings volatility that would result from changes in interest rates. Our Global Revolver is a variable-rate instrument.
Removed
See Note 8 to our Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Indebtedness amount Year-end ​ ​ Carrying ​ Fair ​ interest ​ Maturity ​ ​ amount ​ value ​ rate ​ date ​ ​ (In millions) ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ Fixed-rate 3.75% Senior Secured Notes due 2025 ​ $ 440.9 ​ $ 424.5 3.75 % 2025 December 31, 2022 ​ ​ ​ Fixed-rate 3.75% Senior Secured Notes due 2025 ​ $ 424.1 ​ $ 374.2 3.75 % 2025 ​ On February 12, 2024, we exchanged €325 million principal amount of the outstanding 3.75% Senior Secured Notes due 2025 for newly issued €276.174 million aggregate outstanding KII 9.50% Senior Secured Notes due March 2029.
Added
The following table presents principal amounts and weighted average interest rates for our aggregate outstanding indebtedness at December 31, 2024.
Added
In addition, at December 31, 2024, we have a $53.7 million subordinated, unsecured term loan payable to a related party, Contran, due September 2029.
Added
The potential increase in the U.S. dollar equivalent of such indebtedness resulting from a hypothetical 10% adverse change in exchange rates at December 31, 2024 would be approximately $45 million. Raw materials We are exposed to market risk from changes in commodity prices relating to our raw materials.

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