NL Reports Second Quarter 2013 Results
August 07 2013 - 5:00PM
DALLAS, TEXAS - August 7, 2013 -
NL Industries, Inc. (NYSE:NL) today reported a loss from continuing
operations attributable to NL stockholders of $14.3 million, or
$.29 per share, in the second quarter of 2013 compared to income
from continuing operations attributable to NL stockholders of $25.2
million, or $.51 per share, in the second quarter of 2012.
For the first six months of 2013, NL reported a loss from
continuing operations attributable to NL stockholders of $16.4
million, or $.34 per share, compared to income from continuing
operations attributable to NL stockholders of $45.7 million, or
$.94 per share in the first six months of 2012.
Net sales increased 9% in the
second quarter of 2013 and 7% in the first six months of 2013 as
compared to the same periods of 2012 primarily due to higher demand
for postal products within CompX's security products business, and
to a lesser extent from an increase in marine component sales
outside of the high performance boat market through gains in market
share. Income from continuing
operations attributable to CompX increased to $2.9 million in the
second quarter of 2013 compared to $2.1 million in the 2012 period
and to $4.4 million in the first six months of 2013 compared to
$3.7 million in the first six months of 2012 primarily due to
improved cost efficiencies from higher sales.
Kronos' net sales of $481.1
million in the second quarter of 2013 were $64.2 million, or 12%,
lower than in the second quarter of 2012. Kronos' net sales
of $944.7 million in the first six months of 2013 were $161.9
million, or 15%, lower than in the first six months of 2012.
Net sales decreased in the second quarter and first six months of
2013 primarily due to lower average TiO2 selling
prices partially offset by higher sales volumes. Kronos'
average TiO2 selling
prices decreased 24% in the second quarter of 2013 as compared to
the second quarter of 2012 and decreased 22% in the first six
months of 2013 as compared to the same prior-year period.
Kronos' average TiO2 selling
prices at the end of the second quarter of 2013 were 1% lower than
at the end of the first quarter of 2013 and 8% lower than at the
end of 2012. TiO2 sales volumes
in the second quarter and first six months of 2013 were
approximately 17% and 9% higher, respectively, than in the
comparable periods of 2012 due to higher customer demand primarily
in certain export and European markets. Kronos' sales volumes
in the first half of 2013 set a new record for a first half
year. Fluctuations in currency exchange rates also impacted
Kronos' net sales, decreasing net sales by approximately $3 million
in the second quarter of 2013 and approximately $2 million in the
first six months of 2013. The table at the end of this press
release shows how each of these items impacted the overall decrease
in Kronos' sales.
Kronos' income (loss) from
operations decreased by $158.3 million from income of $110.6
million in the second quarter of 2012 to a loss of $47.7 million in
the second quarter of 2013 primarily due to the net effects of
lower selling prices, higher raw materials costs, higher sales
volumes and higher production volumes. Kronos' income (loss)
from operations decreased by $414.6 million from income of $320.0
million in the first six months of 2012 to a loss of $94.6 million
in the first six months of 2013 primarily due to the net effects of
lower selling prices, higher raw materials costs, higher sales
volumes and lower production volumes. Kronos' cost of sales
per metric ton of TiO2 sold in the
first half of 2013 was significantly higher than TiO2
sold in the first half of 2012, as a substantial portion of the
products sold in the first quarter of 2013 (and a portion of the
products sold in the second quarter of 2013) was produced with
significantly higher-cost feedstock ore purchased in 2012.
Kronos' production volumes were 5% higher in the second quarter of
2013 as compared to the second quarter of 2012, and were 5% lower
in the first six months of 2013 compared to the first six months of
2012. Kronos' income from operations comparisons were also
impacted by fluctuations in currency exchange rates, which
decreased income from operations by approximately $2 million in the
second quarter of 2013 and by approximately $8 million in the
year-to-date period.
As previously reported, in June
2012, Kronos entered into a new $400 million term loan and used a
portion of the net proceeds to redeem its remaining €279.2 million
principal amount of Senior Notes outstanding. As a result,
Kronos recognized a second quarter 2012 charge of $7.2 million
(NL's equity interest was $.9 million or $.02 per share, net of
income tax benefit) associated with the early extinguishment of
such remaining Senior Notes. In February 2013, Kronos
recognized an aggregate $6.6 million pre-tax charge (NL's equity
interest was $.9 million, or $.02 per share, net of income tax
benefit) consisting of the write-off of unamortized original issue
discount and deferred financing costs related to the voluntary
prepayment of $290 million of its term loan.
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. Such
insurance recoveries aggregated $1.5 million (or $.02 per share,
net of income taxes) in the first six months of 2013, compared to
$1.4 million (or $.02 per share, net of income taxes), in the first
six months of 2012.
The litigation settlement gain of
$15.0 million in the second quarter of 2012 ($9.7 million, or $.20
per share, net of income taxes) relates to the third and final
closing associated with certain real property we formerly owned in
New Jersey.
Corporate expenses were higher in
the second quarter of 2013 compared to the second quarter of 2012
primarily due to higher environmental remediation and related
costs, and were comparable in the first six months of 2013 compared
to the first six months of 2012.
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 our products
-
The extent of the dependence of certain of our
businesses on certain market sectors
-
The cyclicality of our businesses (such as
Kronos' TiO2
operations)
-
Customer and producer inventory levels
-
Unexpected or earlier-than-expected industry
capacity expansion (such as the TiO2
industry)
-
Changes in raw material and other operating
costs (such as energy, ore, zinc and brass costs) and our ability
to pass those costs on to our customers or offset them with
reductions in other operating costs
-
Changes in the availability of raw material
(such as ore)
-
General global economic and political conditions
(such as changes in the level of gross domestic product in various
regions of the world and the impact of such changes on demand for,
among other things, TiO2 and component
products)
-
Competitive pricing, products and substitute
products
-
Customer and competitor strategies
-
Uncertainties associated with the development of
new product features
-
Potential consolidation of Kronos'
competitors
-
Potential consolidation of Kronos'
customers
-
The impact of pricing and production
decisions
-
Competitive technology positions
-
Potential difficulties in integrating future
acquisitions
-
Potential difficulties in implementing new
manufacturing and accounting software systems
-
The introduction of trade barriers
-
Possible disruption of Kronos' or CompX's
business, or increases in our cost of doing business
resulting from terrorist activities or global conflicts
-
The impact of current or future government
regulations (including employee healthcare benefit related
regulations)
-
Fluctuations in currency exchange rates (such as
changes in the exchange rate between the U.S. dollar and each of
the euro, the Norwegian krone and the Canadian dollar), or possible
disruptions to our business resulting from potential instability
resulting from uncertainties associated with the euro
-
Operating interruptions (including, but not
limited to, labor disputes, leaks, natural disasters, fires,
explosions, unscheduled or unplanned downtime, transportation
interruptions and cyber attacks)
-
Decisions to sell operating assets other than in
the ordinary course of business
-
CompX's and Kronos' ability to renew or
refinance debt
-
Our ability to maintain sufficient
liquidity
-
The timing and amounts of insurance
recoveries
-
The extent to which our subsidiaries or
affiliates were to become unable to pay us dividends
-
The ultimate outcome of income tax audits, tax
settlement initiatives or other tax matters
-
Uncertainties associated with the development of
new product features
-
Our ability to utilize income tax attributes or
changes in income tax rates related to such attributes, the
benefits of which have been recognized under the
more-likely-than-not recognition criteria
-
Environmental matters (such as those requiring
compliance with emission and discharge standards for existing and
new facilities or new developments regarding environmental
remediation at sites related to our former operations)
-
Government laws and regulations and possible
changes therein (such as changes in government regulations which
might impose various obligations on former manufacturers of lead
pigment and lead-based paint, including us, with respect to
asserted health concerns associated with the use of such
products)
-
The ultimate resolution of pending litigation
(such as our lead pigment and environmental matters)
-
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 and performance marine
components), chemicals (TiO2) and other
businesses.
NL INDUSTRIES,
INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
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(In millions,
except earnings per share) |
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(Unaudited) |
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Three months
ended |
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Six months ended |
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June
30, |
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June
30, |
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2012 |
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2013 |
|
2012 |
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2013 |
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Net sales |
$ 22.1 |
|
$
24.0 |
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$ 42.5 |
|
$
45.5 |
|
Cost of sales |
15.6 |
|
16.4 |
|
30.0 |
|
31.9 |
|
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Gross
margin |
6.5 |
|
7.6 |
|
12.5 |
|
13.6 |
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Selling, general and administrative
expense |
4.4 |
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4.7 |
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8.8 |
|
9.2 |
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Other operating income
(expense): |
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Insurance
recoveries |
.3 |
|
.9 |
|
1.4 |
|
1.5 |
|
Litigation
settlement gain |
15.0 |
|
- |
|
15.0 |
|
- |
|
Other
income, net |
.2 |
|
- |
|
.4 |
|
- |
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Corporate
expense |
(5.1) |
|
(16.2) |
|
(21.5) |
|
(21.2) |
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Income
(loss) from operations |
12.5 |
|
(12.4) |
|
(1.0) |
|
(15.3) |
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Equity in earnings (loss) of Kronos
Worldwide, Inc. |
19.6 |
|
(10.3) |
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61.2 |
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(22.8) |
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General corporate items: |
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Interest and
dividends |
.8 |
|
.7 |
|
1.5 |
|
1.5 |
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Interest
expense |
(.2) |
|
(.1) |
|
(0.5) |
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(.1) |
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Income
(loss) from continuing operations
before income taxes |
32.7 |
|
(22.1) |
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61.2 |
|
(36.7) |
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Income tax expense (benefit) |
7.3 |
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(8.0) |
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15.3 |
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(20.7) |
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Income (loss) from
continuing operations |
25.4 |
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(14.1) |
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45.9 |
|
(16.0) |
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Income from discontinued
operations, net of tax |
.9 |
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- |
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1.6 |
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- |
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Net income (loss) |
26.3 |
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(14.1) |
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47.5 |
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(16.0) |
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Noncontrolling interest
in net income of subsidiary |
.3 |
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.2 |
|
.5 |
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.4 |
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Net income (loss) attributable to NL
stockholders |
$ 26.0 |
|
$
(14.3) |
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$ 47.0 |
|
$
(16.4) |
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NL INDUSTRIES,
INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED) |
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(In millions,
except earnings per share) |
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(Unaudited) |
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Three months
ended |
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Six months ended |
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June
30, |
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June
30, |
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2012 |
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2013 |
|
2012 |
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2013 |
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Amounts attributable to NL
stockholders: |
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Income (loss) from
continuing operations |
$ 25.2 |
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$
(14.3) |
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$ 45.7 |
|
$
(16.4) |
|
Income from discontinued
operations |
.8 |
|
- |
|
1.3 |
|
- |
|
Net income
(loss) attributable to NL stockholders |
$ 26.0 |
|
$
(14.3) |
|
$ 47.0 |
|
$
(16.4) |
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Net income (loss) per
share: |
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Continuing
operations |
$ .51 |
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$
(.29) |
|
$ .94 |
|
$
(.34) |
|
Discontinued
operations |
.02 |
|
- |
|
.03 |
|
- |
|
Net income
(loss) per share |
$ .53 |
|
$
(.29) |
|
$ .97 |
|
$
(.34) |
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Basic and diluted weighted average
shares outstanding |
48.7 |
|
48.7 |
|
48.7 |
|
48.7 |
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NL INDUSTRIES,
INC. |
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COMPONENTS OF INCOME (LOSS) FROM OPERATIONS |
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(In
millions) |
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(Unaudited) |
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Three months
ended |
|
Six months ended |
|
June
30, |
|
June
30, |
|
2012 |
|
2013 |
|
2012 |
|
2013 |
|
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|
CompX - component products |
$ 2.1 |
|
$ 2.9 |
|
$ 3.7 |
|
$ 4.4 |
Insurance recoveries |
.3 |
|
.9 |
|
1.4 |
|
1.5 |
Litigation settlement gain |
15.0 |
|
- |
|
15.0 |
|
- |
Other income, net |
.2 |
|
- |
|
.4 |
|
- |
Corporate expense |
(5.1) |
|
(16.2) |
|
(21.5) |
|
(21.2) |
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Income
(loss) from operations |
$ 12.5 |
|
$
(12.4) |
|
$ (1.0) |
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$
(15.3) |
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CHANGE IN
KRONOS' TiO2
SALES |
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(Unaudited) |
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Three months
ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
2013 vs.
2012 |
|
2013 vs.
2012 |
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Percentage change in sales: |
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TiO2 product
pricing |
|
(24) |
% |
|
|
(22) |
% |
TiO2 sales
volume |
|
17 |
% |
|
|
9 |
% |
TiO2 product
mix |
|
(5) |
% |
|
|
(2) |
% |
|
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|
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Total |
|
(12) |
% |
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|
(15) |
% |
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Source: NL Industries,
Inc.
Contact: Gregory M.
Swalwell, Executive Vice President and Chief Financial Officer,
(972) 233-1700
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: NL Industries via Thomson Reuters ONE
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