DALLAS, TEXAS - November 6, 2013 -
NL Industries, Inc. (NYSE:NL) today reported a loss from continuing
operations attributable to NL stockholders of $5.9 million, or $.12
per share, in the third quarter of 2013 compared to income from
continuing operations attributable to NL stockholders of $8.5
million, or $.18 per share, in the third quarter of 2012. For
the first nine months of 2013, NL reported a loss from continuing
operations attributable to NL stockholders of $22.3 million, or
$.46 per share, compared to income from continuing operations
attributable to NL stockholders of $54.2 million, or $1.11 per
share in the first nine months of 2012.
Net sales increased 14% in the
third quarter of 2013 and 9% in the first nine months of 2013 as
compared to the same periods of 2012 primarily due to higher demand
for high security pin tumbler locks 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 $3.0
million in the third quarter of 2013 compared to $1.6 million in
the 2012 period, and increased to $7.3 million in the first nine
months of 2013 compared to $5.3 million in the first nine months of
2012, primarily due to improved cost efficiencies from higher
sales.
Kronos' net sales of $419.1
million in the third quarter of 2013 were $53.8 million, or 11%,
lower than in the third quarter of 2012. Net sales of
$1,363.8 million in the first nine months of 2013 were $215.7
million, or 14%, lower than in the first nine months of 2012.
Kronos' net sales decreased in the third quarter and first nine
months of 2013 primarily due to lower average TiO2 selling
prices partially offset by higher sales volumes. Kronos'
average TiO2 selling
prices decreased 18% in the third quarter of 2013 as compared to
the third quarter of 2012, and decreased 21% in the first nine
months of the year as compared to the same prior year period.
Average TiO2 selling
prices at the end of the third quarter of 2013 were 1% higher than
at the end of the second quarter of 2013 and were 7% lower than at
the end of 2012. Kronos' TiO2 sales volumes
in the third quarter of 2013 were approximately 4% higher as
compared to the third quarter of 2012 due to higher customer demand
in European markets partially offset by lower sales in export and
North American markets, and were 8% higher in the first nine months
of 2013 due to higher customer demand primarily in European and
certain export markets, partially offset by decreased demand in
North American markets. Fluctuations in currency exchange
rates also impacted Kronos' net sales, increasing net sales by
approximately $12 million in the third quarter and approximately
$10 million in the first nine 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 $75.5 million from income of $38.5 million
in the third quarter of 2012 to a loss of $37.0 million in the
third quarter of 2013 primarily due to lower average selling prices
and a third quarter 2013 $35 million litigation settlement charge
(NL's equity interest was $4.5 million or $.09 per share, net of
income tax benefit), partially offset by lower raw materials costs
and higher sales and production volumes in 2013. Kronos'
income (loss) from operations decreased by $490.1 million from
income of $358.5 million in the first nine months of 2012 to a loss
of $131.6 million in the first nine months of 2013 primarily due to
lower average selling prices, higher raw materials costs and the
third quarter 2013 litigation settlement charge, partially offset
by higher sales and production volumes in 2013. As expected,
Kronos' cost of sales per metric ton of TiO2 sold in
the third quarter of 2013 was lower than the cost of sales per
metric ton of TiO2 sold in the
third quarter of 2012, primarily due to lower feedstock ore
costs. 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 15% higher in the third quarter of
2013 as compared to the third quarter of 2012, and were 1% higher
in the first nine months of 2013 compared to the first nine months
of 2012. Kronos' income from operations comparisons were also
impacted by fluctuations in currency exchange rates, which
increased income from operations by approximately $1 million in the
third quarter of 2013 and decreased income from operations by
approximately $7 million in the year-to-date period.
Kronos recognized an aggregate
non-cash pre-tax interest charge of $6.6 million in the first
quarter of 2013 and a $2.3 million pre-tax interest charge in the
third quarter of 2013, consisting of the write-off of unamortized
original issue discount costs and deferred financing costs, related
to the voluntary prepayment of its term loan by $290 million
principal amount in the first quarter and the remaining $100
million in the third quarter. Kronos recognized an aggregate
$7.2 million pre-tax interest charge in the second quarter of 2012
relating to the early extinguishment of its remaining Senior
Secured Notes. NL's aggregate equity interest in such
charges, net of income tax benefit, was $1.2 million and $.9
million in the first nine months of 2013 and 2012, respectively (or
$.02 per share in each year-to-date period).
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 $3.8 million (or $.05 per share,
net of income taxes) in the first nine months of 2013, compared to
$2.6 million (or $.03 per share, net of income taxes) in the first
nine months of 2012.
The litigation settlement gain of
$15.0 million in the 2012 year-to-date period ($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 third quarter and first nine months of 2013 compared to the
third quarter and first nine months of 2012 primarily due to higher
litigation and related costs.
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.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except earnings per
share)
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September
30, |
|
September
30, |
|
2012 |
|
2013 |
|
2012 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 21.3 |
|
$
24.2 |
|
$ 63.8 |
|
$
69.7 |
Cost of sales |
15.0 |
|
16.7 |
|
45.0 |
|
48.6 |
|
|
|
|
|
|
|
|
Gross
margin |
6.3 |
|
7.5 |
|
18.8 |
|
21.1 |
|
|
|
|
|
|
|
|
Selling, general and administrative
expense |
4.3 |
|
4.5 |
|
13.1 |
|
13.8 |
Other operating income
(expense): |
|
|
|
|
|
|
|
Insurance
recoveries |
1.2 |
|
2.2 |
|
2.6 |
|
3.8 |
Litigation
settlement gain |
- |
|
- |
|
15.0 |
|
- |
Other
income, net |
- |
|
- |
|
.4 |
|
- |
Asset held
for sale write-down |
(.4) |
|
- |
|
(.4) |
|
- |
Corporate
expense |
(3.4) |
|
(5.6) |
|
(24.9) |
|
(26.8) |
|
|
|
|
|
|
|
|
Loss from
operations |
(.6) |
|
(.4) |
|
(1.6) |
|
(15.7) |
|
|
|
|
|
|
|
|
Equity in earnings (loss) of Kronos
Worldwide, Inc. |
10.7 |
|
(9.1) |
|
72.0 |
|
(31.9) |
|
|
|
|
|
|
|
|
General corporate items: |
|
|
|
|
|
|
|
Interest and
dividends |
.8 |
|
.7 |
|
2.3 |
|
2.2 |
Interest
expense |
(.2) |
|
- |
|
(.7) |
|
(.1) |
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
before income taxes |
10.7 |
|
(8.8) |
|
72.0 |
|
(45.5) |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
2.1 |
|
(3.1) |
|
17.4 |
|
(23.8) |
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations |
8.6 |
|
(5.7) |
|
54.6 |
|
(21.7) |
Income from discontinued
operations, net of tax |
1.7 |
|
- |
|
3.2 |
|
- |
|
|
|
|
|
|
|
|
Net income (loss) |
10.3 |
|
(5.7) |
|
57.8 |
|
(21.7) |
|
|
|
|
|
|
|
|
Noncontrolling interest
in net income of subsidiary |
.3 |
|
.2 |
|
.8 |
|
.6 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ 10.0 |
|
$
(5.9) |
|
$ 57.0 |
|
$
(22.3) |
|
|
|
|
|
|
|
|
NL INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (CONTINUED)
(In millions, except earnings per
share)
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September
30, |
|
September
30, |
|
2012 |
|
2013 |
|
2012 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to NL
stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations |
$ 8.5 |
|
$
(5.9) |
|
$ 54.2 |
|
$
(22.3) |
Income from discontinued
operations |
1.5 |
|
- |
|
2.8 |
|
- |
Net income
(loss) attributable to NL stockholders |
$ 10.0 |
|
$
(5.9) |
|
$ 57.0 |
|
$
(22.3) |
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
Continuing
operations |
$ .18 |
|
$
(.12) |
|
$ 1.11 |
|
$
(.46) |
Discontinued
operations |
.03 |
|
- |
|
.06 |
|
- |
Net income
(loss) per share |
$ .21 |
|
$
(.12) |
|
$ 1.17 |
|
$
(.46) |
|
|
|
|
|
|
|
|
Basic and diluted weighted average
shares outstanding |
48.7 |
|
48.7 |
|
48.7 |
|
48.7 |
|
|
|
|
|
|
|
|
NL INDUSTRIES,
INC.
COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS
(In millions)
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September
30, |
|
September
30, |
|
2012 |
|
2013 |
|
2012 |
|
2013 |
|
|
|
|
|
|
|
|
CompX - component products |
$ 1.6 |
|
$ 3.0 |
|
$ 5.3 |
|
$ 7.3 |
Insurance recoveries |
1.2 |
|
2.2 |
|
2.6 |
|
3.8 |
Litigation settlement gain |
- |
|
- |
|
15.0 |
|
- |
Other income, net |
- |
|
- |
|
.4 |
|
- |
Corporate expense |
(3.4) |
|
(5.6) |
|
(24.9) |
|
(26.8) |
|
|
|
|
|
|
|
|
Loss from
operations |
$ (.6) |
|
$ (.4) |
|
$ (1.6) |
|
$
(15.7) |
|
|
|
|
|
|
|
|
CHANGE IN
KRONOS' TiO2
SALES
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2013 vs.
2012 |
|
2013 vs.
2012 |
|
|
|
|
Percentage change in sales: |
|
|
|
TiO2 product
pricing |
|
(18) |
% |
|
|
(21) |
% |
TiO2 sales
volume |
|
4 |
% |
|
|
8 |
% |
TiO2 product
mix |
|
1 |
% |
|
|
(2) |
% |
Changes in currency exchange rates |
|
2 |
% |
|
|
1 |
% |
|
|
|
|
|
|
|
|
Total |
|
(11) |
% |
|
|
(14) |
% |
|
|
|
|
|
|
|
|
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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