NL REPORTS FIRST QUARTER 2014 RESULTS
May 08 2014 - 5:06PM
DALLAS, TEXAS - May 8, 2014 - NL
Industries, Inc. (NYSE:NL) today reported net income attributable
to NL stockholders of $3.8 million, or $.08 per share, in the first
quarter of 2014 compared to a net loss attributable to NL
stockholders of $2.1 million, or $.04 per share, in the first
quarter of 2013.
Net sales increased 20% in the
first quarter of 2014 compared to the same period of 2013 primarily
due to strong demand within CompX's security products business
line, including new product sales for an existing government
customer, increased market penetration in electronic locks and
strong demand in transportation markets. Income from
operations attributable to CompX increased to $3.3 million in the
first quarter of 2014 compared to $1.4 million in the first quarter
of 2013, primarily due to improved coverage of fixed manufacturing
costs over increased production volumes to meet the higher demand
for CompX's products.
Kronos' net sales of $420.1
million in the first quarter of 2014 were $43.5 million, or 9%
lower than in the first quarter of 2013 primarily due to lower
average TiO2 selling
prices and lower sales volumes. Kronos' average
TiO2 selling
prices were 5% lower in the first quarter of 2014 as compared to
the first quarter of 2013, and average selling prices at the end of
the first quarter of 2014 were 4% lower than at the end of 2013,
with lower prices primarily in export markets that resulted from
competitive pressures. As a result, Kronos experienced
significantly lower sales to its generally lower-margin export
markets in the first quarter of 2014 as compared to the same period
in 2013. TiO2 sales volumes
for the first quarter of 2014 decreased 7% as compared to the first
quarter of 2013, with the lower volumes in export markets offset in
part by increased demand in certain European markets.
Fluctuations in currency exchange rates also affected Kronos' net
sales comparisons, increasing net sales by approximately $7 million
as compared to the first quarter of 2013. The table at the
end of this press release summarizes how each of these items
impacted the overall decrease in Kronos' sales.
Kronos' income from operations
increased by $72.9 million from a loss of $46.9 million in the
first quarter of 2013 to income of $26.0 million in the first
quarter of 2014 primarily due to the net effects of lower raw
materials and other production costs (primarily caused by lower
third-party feedstock ore costs), lower average TiO2
selling prices and lower sales volumes. As expected, Kronos'
cost of sales per metric ton of TiO2 sold in the
first quarter of 2014 was significantly lower than TiO2
sold in the first quarter of 2013, primarily due to lower raw
material costs. Kronos' TiO2 production
volumes were 2% lower in the first quarter of 2014 as compared to
the first quarter of 2013. Kronos' production capacity
utilization rates in the first quarter of 2014 were impacted by the
lockout at the Canadian production facility, as restart of
production at the facility did not begin until February 2014.
Kronos operated its production facilities at overall average
capacity utilization rates of 90% in the first quarter of 2014,
primarily as a result of the restart of production at its Canadian
facility. Fluctuations in currency exchange rates increased
Kronos' income from operations by approximately $8 million in the
first quarter of 2014 compared to the first quarter of 2013.
As previously reported, 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 taxes) consisting of the write-off of unamortized
original issue discount and deferred financing costs related to the
voluntary prepayment of $290 million of its prior 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 $.8 million (or $.01 per share, net
of income taxes) in the first quarter of 2014 compared to $.6
million (or $.01 per share, net of income taxes) in the first
quarter of 2013.
Corporate expenses were lower in
the first quarter of 2014 compared to the first quarter of 2013
primarily due to lower environmental remediation and related costs
in 2014.
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 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
-
Potential consolidation of Kronos'
competitors
-
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
-
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
-
Uncertainties associated with CompX's
development of new product features
-
The ultimate outcome of income tax
audits, tax settlement initiatives or other tax matters
-
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 |
|
March
31, |
|
2013 |
|
2014 |
|
|
Net sales |
$ 21.4 |
|
$ 25.8 |
Cost of sales |
15.4 |
|
18.0 |
|
|
|
|
Gross margin |
6.0 |
|
7.8 |
|
|
|
|
Selling, general and administrative expense |
4.6 |
|
4.5 |
Other operating income (expense): |
|
|
|
Insurance
recoveries |
.6 |
|
.8 |
Other income, net |
- |
|
.1 |
Corporate expense and
other, net |
(4.9) |
|
(4.3) |
|
|
|
|
Loss from
operations |
(2.9) |
|
(.1) |
|
|
|
|
Equity in earnings (loss) of Kronos Worldwide,
Inc. |
(12.5) |
|
4.3 |
|
|
|
|
General corporate items: |
|
|
|
Interest and dividend
income |
.7 |
|
.8 |
|
|
|
|
Income
(loss) before income taxes |
(14.7) |
|
5.0 |
|
|
|
|
Income tax expense (benefit) |
(12.7) |
|
1.0 |
|
|
|
|
Net income (loss) |
(2.0) |
|
4.0 |
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
.1 |
|
.2 |
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$
(2.1) |
|
$ 3.8 |
|
|
|
|
Net income (loss) per share attributable to NL
stockholders |
$
(.04) |
|
$ .08 |
|
|
|
|
Weighted average shares used in the |
|
|
|
calculation of net
income (loss) per share |
48.7 |
|
48.7 |
|
|
|
|
NL INDUSTRIES,
INC. |
|
|
|
COMPONENTS OF
LOSS FROM OPERATIONS |
|
|
(In millions) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Three months
ended |
|
March
31, |
|
2013 |
|
2014 |
|
|
|
|
CompX - component products |
$ 1.4 |
|
$ 3.3 |
Insurance recoveries |
.6 |
|
.8 |
Other income, net |
- |
|
.1 |
Corporate expense |
(4.9) |
|
(4.3) |
|
|
|
|
Loss from
operations |
$ (2.9) |
|
$ (.1) |
|
|
|
|
CHANGE IN KRONOS'
TiO2
SALES |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Three months
ended |
|
March 31, |
|
2014 vs.
2013 |
|
|
|
|
Percentage change in sales: |
|
|
|
TiO2
product pricing |
|
(5) |
% |
TiO2
sales volume |
|
(7) |
% |
TiO2
product mix |
|
1 |
% |
Changes in
currency exchange rates |
|
2 |
% |
|
|
|
|
Total |
|
(9) |
% |
|
|
|
|
Source: NL Industries,
Inc.
Contact: Gregory M. Swalwell, Executive Vice President and
Chief Financial Officer, 972-233-1700
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: NL Industries via Globenewswire
HUG#1783121
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