NL Reports Second Quarter 2014 Results
August 07 2014 - 5:15PM
DALLAS, TEXAS - August 7, 2014 -
NL Industries, Inc. (NYSE:NL) today reported net income
attributable to NL stockholders of $5.5 million, or $.11 per share,
in the second quarter of 2014 compared to a net loss attributable
to NL stockholders of $14.3 million, or $.29 per share, in the
second quarter of 2013. For the first six months of 2014, NL
reported net income attributable to NL stockholders of $9.2
million, or $.19 per share, compared to a net loss attributable to
NL stockholders of $16.4 million, or $.34 per share in the first
six months of 2013.
Net sales increased 12% in the
second quarter of 2014 and 16% in the first six months of 2014
compared to the same periods in 2013, primarily due to strong
demand within CompX's security products business line, including
new products 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 $3.9 million in the second quarter of 2014 compared to
$2.9 million in the second quarter of 2013, and to $7.2 million in
the first six months of 2014 compared to $4.4 million in the first
six months of 2013, primarily due to improved coverage of fixed
manufacturing costs over increased production volumes to meet the
higher demand for CompX's products, partially offset by higher
medical expenses in the second quarter of 2014.
Kronos' net sales of $443.5
million in the second quarter of 2014 were $37.6 million, or 8%,
lower than in the second quarter of 2013. Net sales of $863.6
million in the first six months of 2014 were $81.1 million, or 9%,
lower than in the first six months of 2013. Net sales
decreased in 2014 primarily due to lower average TiO2
selling prices and lower sales volumes. Kronos' average
TiO2 selling
prices were 4% lower in the second quarter of 2014 as compared to
the second quarter of 2013, and were 5% lower in the first six
months of the year as compared to the same prior year period.
Kronos' average TiO2 selling
prices at the end of the second quarter of 2014 were 5% lower than
at the end of 2013, with most of the decline occurring in the first
quarter of 2014 and with lower prices in most major markets, most
notably in certain export markets. TiO2 sales volumes
in the second quarter and first six months of 2014 were
approximately 8% lower than in each of the comparable periods of
2013 due to lower sales primarily in certain export and European
markets. Fluctuations in currency exchange rates also
impacted net sales, increasing net sales by approximately $13
million in the second quarter and approximately $20 million in the
first six months of 2014. The table at the end of this press
release shows how each of these items impacted the overall decrease
in Kronos' sales.
Kronos' income from operations
increased by $92.0 million from a loss of $47.7 million in the
second quarter of 2013 to income of $44.3 million in the second
quarter of 2014. Kronos' income from operations increased by
$164.9 million from a loss of $94.6 million in the first six months
of 2013 to income of $70.3 million in the first six months of
2014. Kronos' income from operations increased in 2014
primarily due to the net effects of lower raw materials and other
production costs, lower average TiO2 selling
prices and sales volumes and higher production volumes.
Kronos' TiO2 production
volumes were 9% higher in the second quarter of 2014 as compared to
the second quarter of 2013, and were 3% higher in the year-to-date
period. Kronos' production capacity utilization rates in the
first half of 2014 were impacted by the lockout at its Canadian
production facility that ended in December 2013, 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 93% in the first half of 2014 (90% in
the first quarter and 97% in the second quarter), primarily as a
result of the restart of production at its Canadian facility.
Fluctuations in currency exchange rates also impacted Kronos' net
sales, increasing income from operations by approximately $12
million in the second quarter and by approximately $20 million in
the year-to-date period, respectively.
Kronos' income tax expense in the second quarter
of 2014 includes an aggregate non-cash income tax benefit of $5.7
million (NL's equity interest was $1.1 million, or $.02 per share,
net of income taxes) related to a net reduction of its reserve for
uncertain tax positions.
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 $1.2 million ($.8 million, or $.02
per share, net of income taxes) in the first six months of 2014
compared to $1.5 million ($1 million, or $.02 per share, net of
income taxes) in the first six months of 2013.
Corporate expenses decreased $7.2
million in the second quarter of 2014 as compared to the second
quarter of 2013, and decreased $7.9 million in the first six months
of 2014 as compared to 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
-
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
-
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 |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
24.0 |
|
|
$ |
26.8 |
|
|
$ |
45.5 |
|
|
$ |
52.6 |
|
Cost of sales |
|
|
16.4 |
|
|
|
18.2 |
|
|
|
31.9 |
|
|
|
36.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
7.6 |
|
|
|
8.6 |
|
|
|
13.6 |
|
|
|
16.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense |
|
|
4.7 |
|
|
|
4.7 |
|
|
|
9.2 |
|
|
|
9.2 |
|
Other operating income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance recoveries |
|
|
.9 |
|
|
|
.4 |
|
|
|
1.5 |
|
|
|
1.2 |
|
Other income, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
.1 |
|
Corporate expense |
|
|
(16.2 |
) |
|
|
(9.0 |
) |
|
|
(21.2 |
) |
|
|
(13.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations |
|
|
(12.4 |
) |
|
|
(4.7 |
) |
|
|
(15.3 |
) |
|
|
(4.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings
(loss) of Kronos Worldwide, Inc. |
|
|
(10.3 |
) |
|
|
10.1 |
|
|
|
(22.8 |
) |
|
|
14.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General corporate
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income |
|
|
.7 |
|
|
|
.3 |
|
|
|
1.5 |
|
|
|
1.0 |
|
Interest expense |
|
|
(.1 |
) |
|
|
- |
|
|
|
(.1 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before taxes |
|
|
(22.1 |
) |
|
|
5.7 |
|
|
|
(36.7 |
) |
|
|
10.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
|
|
(8.0 |
) |
|
|
(.1 |
) |
|
|
(20.7 |
) |
|
|
.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
|
(14.1 |
) |
|
|
5.8 |
|
|
|
(16.0 |
) |
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest in net income of subsidiary |
|
|
.2 |
|
|
|
.3 |
|
|
|
.4 |
|
|
|
.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to NL stockholders |
|
$ |
(14.3 |
) |
|
$ |
5.5 |
|
|
$ |
(16.4 |
) |
|
$ |
9.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to NL stockholders |
|
$ |
(.29 |
) |
|
$ |
.11 |
|
|
$ |
(.34 |
) |
|
$ |
.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
calculation of net income (loss) per
share |
|
|
48.7 |
|
|
|
48.7 |
|
|
|
48.7 |
|
|
|
48.7 |
|
NL INDUSTRIES, INC.
COMPONENTS OF LOSS FROM OPERATIONS
(In millions)
(Unaudited)
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June
30, |
|
|
June
30, |
|
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CompX - component
products |
|
$ |
2.9 |
|
|
$ |
3.9 |
|
|
$ |
4.4 |
|
|
$ |
7.2 |
|
Insurance
recoveries |
|
|
.9 |
|
|
|
.4 |
|
|
|
1.5 |
|
|
|
1.2 |
|
Other income, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
.1 |
|
Corporate expense |
|
|
(16.2 |
) |
|
|
(9.0 |
) |
|
|
(21.2 |
) |
|
|
(13.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
$ |
(12.4 |
) |
|
$ |
(4.7 |
) |
|
$ |
(15.3 |
) |
|
$ |
(4.8 |
) |
CHANGE IN KRONOS' TiO2 SALES
(Unaudited)
|
Three months ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
2014 vs. 2013 |
|
2014 vs. 2013 |
|
|
|
|
|
|
|
|
Percentage change in sales: |
|
|
|
|
|
|
|
TiO2 product
pricing |
|
(4) |
% |
|
|
(5) |
% |
TiO2 sales
volume |
|
(8) |
|
|
|
(8) |
|
TiO2 product
mix |
|
1 |
|
|
|
2 |
|
Changes in currency exchange
rates |
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
Total |
|
(8) |
% |
|
|
(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#1846719
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