DALLAS, Nov. 1, 2010 /PRNewswire-FirstCall/ -- NL
Industries, Inc. (NYSE: NL) today reported net income attributable
to NL stockholders of $11.5 million,
or $.24 per share, in the third
quarter of 2010 compared to net income of $3.1 million, or $.06 per share, in the third quarter of 2009.
For the first nine months of 2010, NL reported net income
attributable to NL stockholders of $13.5
million, or $.23 per share,
compared to a net loss of $10.9
million, or $.22 per share, in
the first nine months of 2009.
Net sales increased 22% and 18%, respectively, in the third
quarter and first nine months of 2010 compared to the same periods
in 2009. Net sales increased due to an increase in order
rates from our customers resulting from improving economic
conditions in North America.
Net sales were also impacted by relative changes in currency
exchange rates, which increased sales by approximately $.2 million for the quarter and $.9 million for the year-to-date period.
Income from operations attributable to CompX increased in the
third quarter and first nine months of 2010 to $3.1 million and $7.8
million, respectively, compared to a loss from operations of
$.2 million and $2.0 million for the same periods of 2009.
Income from operations improved primarily due to the impact
of higher sales and the related leveraging of fixed expenses as
well as lower patent litigation expense, partially offset by a
negative impact of relative changes in currency exchange rates.
Changes in currency exchange rates negatively impacted
CompX's income from operations by $.2
million for the quarter and by $1.3
million year-to-date compared to the same periods of
2009.
Kronos' net sales of $376.6
million in the third quarter of 2010 were $66.5 million, or 21%, higher than in the third
quarter of 2009. Kronos' net sales of $1,076.4 million for the first nine months of
2010 were $236.2 million, or 28%,
higher than in the first nine months of 2009. Net sales
increased in the third quarter and first nine months of 2010 due
primarily to higher sales volumes and higher average TiO2 selling
prices. The increase in sales volume for the third quarter and
first nine months is a result of increased demand in all markets.
Kronos' sales volumes for the nine months ended September 30, 2010 are a new record for Kronos
for the first nine months of a year. Kronos' average TiO2
selling prices increased 16% in the third quarter of 2010 versus
the prior year period, and increased 7% in the first nine months of
the year versus the prior year period. Kronos' average TiO2
selling prices at the end of the third quarter of 2010 were 16%
higher than at the end of 2009 and 10% higher than the second
quarter of 2010, continuing the improvement in selling prices that
began in the second half of 2009. Fluctuations in currency
exchange rates also impacted Kronos' net sales, decreasing net
sales by approximately $22 million
for the third quarter and $19 million
for the first nine months of 2010. The table at the end of
this press release shows how each of these items impacted Kronos'
net sales.
Kronos' income from operations in the third quarter of 2010 was
$57.0 million compared with income
from operations of $21.1 million in
the third quarter of 2009. For the year-to-date period
Kronos' income from operations was $117.5
million compared with a loss from operations of $26.9 million in the first nine months of 2009.
Income from operations in both 2010 periods increased due to
higher sales volumes, higher TiO2 selling prices and lower
manufacturing costs per ton resulting from higher production
volumes. These increases were partially offset by the
unfavorable effects of fluctuations in currency exchange rates
which decreased Kronos' income from operations by approximately
$4 million and $24 million in the third quarter and the
year-to-date period, respectively. Kronos' TiO2 production
volumes were 4% higher in the third quarter of 2010 as compared to
the third quarter of 2009 and were 40% higher in the year-to-date
period. Kronos' operating rates were at approximately 70% of
capacity for the first nine months of 2009, with operating rates at
58% of capacity for the first half of 2009 and 96% of capacity in
the third quarter of 2009, as compared to operating rates at near
full capacity for the same periods in 2010. Temporary plant
curtailments in the first half of 2009 resulted in approximately
$80 million of unabsorbed fixed
production costs which were charged directly to Kronos' cost of
sales.
Kronos' income tax benefit in 2010 includes a $35.2 million (NL's equity interest was
$12.7 million, or $.17 per share, net of income taxes) non-cash
deferred income tax benefit in the first quarter related to a
European Court ruling that resulted in the favorable resolution of
certain income tax issues in
Germany and an increase in the
amount of Kronos' German corporate and trade tax net operating loss
carryforwards.
Litigation settlement gain in 2010 relates to a $5.3 million pre-tax gain ($3.4 million, or $.07 per share, net of income taxes) recognized
in the third quarter for a settlement agreement we entered into
with another potentially responsible party for certain
environmental matters. Litigation settlement gain in 2009
relates to an $11.3 million pre-tax
gain ($7.3 million, or $.15 per share, net of income taxes) recognized
in the second quarter related to the second closing associated with
the settlement of condemnation proceedings on certain real property
we formerly owned that is subject to environmental remediation.
Litigation settlement expense in 2010 of $32.2 million ($20.8
million, or $.43 per share,
net of income taxes) relates to the settlement of certain legal
proceedings in April 2010.
Insurance recoveries reflect in part amounts we received from
certain of our former insurance carriers and relate to the recovery
of prior lead pigment and asbestos litigation defense costs
incurred by us. In addition, a substantial portion of the
insurance recoveries we recognized in 2010 relates to the
litigation settlement referred to above. Insurance recoveries
aggregated $18.6 million in 2010
($12.0 million, or $.25 per share, net of income taxes) and
$4.1 million in 2009 ($2.6 million, or $.05 per share, net of income taxes).
Corporate expenses were lower in the third quarter and first
nine months of 2010 as compared to the third quarter and first nine
months of 2009 primarily due to lower litigation and related costs
and lower environmental expense.
Our income tax expense in the first quarter of 2010 includes an
aggregate $1.9 million provision for
deferred income taxes ($1.6 million,
or $.03 per share, net of
noncontrolling interest) associated with a determination that
certain undistributed earnings of a non-U.S. subsidiary can no
longer be considered to be permanently reinvested.
The statements in this release relating to matters that are not
historical facts are forward-looking statements that represent
management's beliefs and assumptions based on currently available
information. Although NL believes that the expectations
reflected in such forward-looking statements are reasonable, we
cannot give any assurances that these expectations will prove to be
correct. Such statements by their nature involve substantial
risks and uncertainties that could significantly impact expected
results, and actual future results could differ materially from
those described in such forward-looking statements. While it
is not possible to identify all factors, we continue to face many
risks and uncertainties. Among the factors that could cause
actual future results to differ materially include, but are not
limited to:
- Future supply and demand for the Company's products;
- The extent of the dependence of the Company's businesses on
certain market sectors;
- The cyclicality of certain of the Company's businesses;
- Customer inventory levels;
- Changes in raw material and other operating costs;
- General global economic and political conditions;
- Possible disruption of business or increases in the cost of
doing business resulting from terrorist activities or global
conflicts;
- Competitive products and substitute products;
- Customer and competitor strategies;
- Potential consolidation or solvency of competitors;
- Demand for office furniture;
- Demand for high performance marine components;
- Substitute products;
- The impact of pricing and production decisions;
- Competitive technology positions;
- The ability of the Company to protect intellectual property
rights in its technology;
- The introduction of trade barriers;
- Service industry employment levels;
- Fluctuations in currency exchange rates;
- Operating interruptions (including, but not limited to, labor
disputes, leaks, natural disasters, fires, explosions, unscheduled
or unplanned downtime and transportation interruptions);
- The timing and amount of insurance recoveries;
- The ability of the Company to maintain sufficient
liquidity;
- The ability of the Company to renew, amend, refinance or comply
with debt agreements;
- The extent to which the Company's subsidiaries and affiliates
were to become unable to pay dividends to the Company;
- The ultimate outcome of income tax audits, tax settlement
initiatives or other tax matters;
- Potential difficulties in integrating completed or future
acquisitions;
- Decisions to sell operating assets other than in the ordinary
course of business;
- Uncertainties associated with new product development;
- The ultimate ability to utilize income tax attributes or
changes in income tax rates related to such attributes, the benefit
of which has been recognized under the more-likely-than-not
recognition criteria;
- Environmental matters;
- Government laws and regulations and possible changes
therein;
- The ultimate resolution of pending litigation; and
- Possible future litigation.
Should one or more of these risks materialize (or the
consequences of such a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ
materially from those currently forecasted or expected. We
disclaim any intention or obligation to update or revise any
forward-looking statement whether as a result of changes in
information, future events or otherwise.
NL Industries, Inc. is engaged in the component products
(security products, furniture components and performance marine
components), chemicals (TiO2) and other businesses.
NL
INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except earnings
(loss) per share)
(Unaudited)
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$29.4
|
|
$ 35.7
|
|
$87.1
|
|
$ 102.9
|
|
Cost of sales
|
22.4
|
|
26.1
|
|
69.1
|
|
75.3
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
7.0
|
|
9.6
|
|
18.0
|
|
27.6
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expense
|
6.9
|
|
6.0
|
|
19.0
|
|
19.3
|
|
Other operating income
(expense):
|
|
|
|
|
|
|
|
|
Insurance
recoveries
|
1.4
|
|
.3
|
|
4.1
|
|
18.6
|
|
Litigation settlement
gain
|
-
|
|
5.3
|
|
11.3
|
|
5.3
|
|
Litigation settlement
expense
|
-
|
|
-
|
|
-
|
|
(32.2)
|
|
Assets held for sale
write-down
|
-
|
|
(.5)
|
|
(.7)
|
|
(.5)
|
|
Corporate expense and
other, net
|
(5.3)
|
|
(3.6)
|
|
(14.6)
|
|
(10.8)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(3.8)
|
|
5.1
|
|
(.9)
|
|
(11.3)
|
|
|
|
|
|
|
|
|
|
|
Equity in
net income (loss) of Kronos Worldwide, Inc.
|
3.1
|
|
11.6
|
|
(14.4)
|
|
33.9
|
|
|
|
|
|
|
|
|
|
|
General corporate
items:
|
|
|
|
|
|
|
|
|
Interest and
dividends
|
.7
|
|
.6
|
|
2.1
|
|
1.9
|
|
Interest
expense
|
(.2)
|
|
(.5)
|
|
(.8)
|
|
(1.0)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(.2)
|
|
16.8
|
|
(14.0)
|
|
23.5
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
(benefit)
|
(3.4)
|
|
5.1
|
|
(2.9)
|
|
9.7
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
3.2
|
|
11.7
|
|
(11.1)
|
|
13.8
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in net
income (loss) of subsidiary
|
.1
|
|
.2
|
|
(.2)
|
|
.3
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to NL stockholders (a)
|
$3.1
|
|
$
11.5
|
|
$(10.9)
|
|
$
13.5
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income (loss) per share
|
$.06
|
|
$
.24
|
|
$(.22)
|
|
$
.23
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted average
shares outstanding
|
48.6
|
|
48.6
|
|
48.6
|
|
48.6
|
|
|
|
(a) Refer to Note 14 of
our Condensed Consolidated Financial
Statements included in our Quarterly Report on Form 10-Q for the
period ended September 30, 2010 for the computation of our per
share amounts.
|
|
|
|
|
|
|
|
|
|
NL
INDUSTRIES, INC.
COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS
(In millions)
(Unaudited)
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
CompX – component
products
|
$(.2)
|
|
$ 3.1
|
|
$(2.0)
|
|
$ 7.8
|
|
Insurance
recoveries
|
1.4
|
|
.3
|
|
4.1
|
|
18.6
|
|
Litigation settlement
gain
|
-
|
|
5.3
|
|
11.3
|
|
5.3
|
|
Litigation settlement
expense
|
-
|
|
-
|
|
-
|
|
(32.2)
|
|
Corporate expense and
other, net
|
(5.0)
|
|
(3.6)
|
|
(14.3)
|
|
(10.8)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
$(3.8)
|
|
$
5.1
|
|
$(.9)
|
|
$(11.3)
|
|
|
|
|
|
|
|
|
|
|
|
CHANGE IN
KRONOS' TiO2 SALES
(Unaudited)
|
|
|
Three months
ended
September 30,
2010 vs. 2009
|
|
Nine months
ended
September 30,
2010 vs. 2009
|
|
Percentage change in
sales:
|
|
|
|
|
TiO2 product
pricing
|
16 %
|
|
7%
|
|
TiO2 sales
volumes
|
11%
|
|
22 %
|
|
TiO2 product
mix
|
1 %
|
|
1 %
|
|
Changes in
currency exchange rates
|
(7)%
|
|
(2)%
|
|
|
|
|
|
|
Total
|
21
%
|
|
28
%
|
|
|
|
|
|
|
|
SOURCE NL Industries, Inc.