As a result, inventories dropped, but demand for TiO2 has not -- quite the opposite, in fact. As a result, Kronos has been able to operate its plants at higher utilization while enjoying a 50% rise in the commodity's selling prices! Clearly, the above table shows how gross margin percentage is closely tied to sales levels, a sure sign of a highly fixed cost structure. The downside is that, should TiO2 prices fall again, those margins will come crashing down again.
Despite a revenue swing of almost 250% during this span, gross margin remains the same at right around 46%, meaning the company has very few fixed costs in producing its products. This helps maintain profitable operations even in down periods.