DALLAS, TEXAS - March 12, 2015 -
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $5.4 million, or $.11 per share,
in the fourth quarter of 2014 compared to a net loss attributable
to NL stockholders of $33.0 million, or $.68 per share, in the
fourth quarter of 2013. For the full year of 2014, NL
reported net income attributable to NL stockholders of $28.5
million, or $.59 per share, compared to a net loss attributable to
NL stockholders of $55.3 million, or $1.14 per share in 2013.
Net sales increased $2.4 million in the fourth
quarter of 2014 and $11.8 million in the full year of 2014 compared
to the same periods in 2013, primarily due to strong demand within
CompX's Security Products business, including a new initiative for
an existing government customer, increased market penetration in
electronic locks and strong demand in transportation markets.
Sales from CompX's Marine Components business also contributed to
the increase, reflecting greater penetration into non
high-performance marine markets. Income from operations
attributable to CompX increased to $3.0 million in the fourth
quarter of 2014 compared to $2.0 million in the fourth quarter of
2013, and increased to $13.6 million in the full year of 2014
compared to $9.3 million in the full year 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 the impact of lower variable margins due to
relative changes in customer and product mix as well as increased
administrative personnel costs and increased depreciation within
CompX's Security Products business.
Kronos' net sales of $373.5
million in the fourth quarter of 2014 were $4.9 million, or 1%,
higher than in the fourth quarter of 2013. Kronos' net sales
of $1,651.9 million in the full year of 2014 were $80.5 million, or
5%, lower than in the full year 2013. Kronos' net sales
increased in the fourth quarter of 2014 as compared to the fourth
quarter of 2013 primarily due to higher sales volumes largely
offset by lower average TiO2 selling
prices. Kronos' net sales decreased in the full year of 2014
primarily due to lower average TiO2 selling
prices. Kronos' average TiO2 selling
prices decreased 10% in the fourth quarter of 2014 as compared to
the fourth quarter of 2013, and decreased 6% for the full year as
compared to 2013. Kronos' average TiO2 selling
prices at the end of 2014 were 9% lower than at the end of 2013,
with lower prices in all major markets, most notably in certain
export markets. TiO2 sales volumes
in the fourth quarter of 2014 were 14% higher than in the fourth
quarter of 2013, while sales volumes for the full year 2014
remained relatively stable compared to 2013 as slightly higher
sales in Europe were offset by lower sales in certain export
markets. Fluctuations in currency exchange rates also
impacted Kronos' net sales comparisons, decreasing net sales by
approximately $11 million in the fourth quarter and increasing net
sales by approximately $12 million in the full year 2014 as
compared to the comparable periods in 2013. The table at the
end of this press release shows how each of these items impacted
the overall change in Kronos' sales.
Kronos' income from operations
increased by $32.4 million from a loss of $.9 million in the fourth
quarter of 2013 to income of $31.5 million in the fourth quarter of
2014. For the full year, Kronos' income from operations
increased $ 282.3 million from a loss of $132.6 million in 2013
compared to income of $149.7 million in 2014. Kronos' income
from operations improved in 2014 due to the net effects of lower
raw materials and other production costs, lower average
TiO2selling
prices, higher production volumes, higher sales volumes in the
fourth quarter period of 2014 and a 2013 litigation settlement
charge of $35 million (NL's equity interest was $4.5 million or
$.09 per share, net of income tax benefit.) Kronos' income
from operations in the fourth quarter of 2013 was negatively
impacted by one-time costs of approximately $9 million resulting
from the terms of the new collective bargaining agreement reached
with Kronos' Canadian workforce consisting principally of a
non-cash pension charge of approximately $7 million due to the
curtailment of one of Kronos' Canadian defined benefit pension
plans and severance and other back-to-work expenses. Kronos'
income from operations in the 2013 periods was also negatively
impacted by approximately $19 million of unabsorbed fixed
production and other manufacturing costs associated with the
lockout at the Canadian TiO2 production
facility, of which approximately $12 million related to the fourth
quarter.
Kronos' TiO2
production volumes were 7% higher in the fourth quarter of 2014 as
compared to the fourth quarter of 2013, and were 8% higher in 2014
over 2013. While Kronos' production utilization rates in the
second half of 2013 were impacted by the lockout at its Canadian
production facility that began in June 2013 and ended in December
2013, Kronos' utilization rates were also impacted by such lockout
in the first quarter of 2014, as restart of production of the
facility did not begin until February 2014. Kronos operated
its production facilities at an overall average capacity
utilization rate of 92% in 2014 (90%, 97%, 96% and 86% in each of
the first, second, third and fourth quarters, respectively).
Kronos' production rates in the fourth quarter of 2014 were
impacted by the implementation of certain productivity-enhancing
improvement projects at certain facilities as well as necessary
improvements to ensure continued compliance with its permit
regulations, which resulted in longer-than-normal maintenance
shutdowns in some instances. Fluctuations in currency
exchange rates also increased Kronos' income from operations by
approximately $13 million in the fourth quarter and by
approximately $42 million for the year.
As previously reported, Kronos
recognized an aggregate non-cash pre-tax interest charge of $8.9
million in 2013 associated with the write-off of unamortized
original issue discount costs and deferred financing costs, related
to the voluntary prepayment of its of $390 million term loan.
NL's aggregate equity interest in such charges was $1.2 million (or
$.02 per share, net of income tax benefit).
Kronos' income tax expense in 2014
includes an aggregate non-cash income tax benefit of $5.1 million
(NL's equity interest was $1.0 million, or $.02 per share, net of
income taxes) related to a net reduction of its reserve for
uncertain tax positions (mostly in the second quarter).
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 $10.4 million ($6.7 million, or
$.14 per share, net of income taxes) in 2014 as compared to $9.4
million ($6.1 million, or $.13 per share, net of income taxes) in
2013. Substantially all of the insurance recoveries we recognized
in 2014 relate to a settlement we reached in the third quarter with
one of our insurance carriers in which they agreed to reimburse us
for a portion of our past lead pigment litigation defense
costs.
Corporate expenses decreased $56.4
million in the fourth quarter of 2014 as compared to the fourth
quarter of 2013, and decreased $65.7 million in the full year 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 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 products and substitute
products
-
Price and product competition from low-cost
manufacturing sources (such as China)
-
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 upgrading or
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 credit
facilities
-
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 CompX's
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)
|
Three months
ended |
|
Year ended |
|
December
31, |
|
December
31, |
|
2013 |
|
2014 |
|
2013 |
|
2014 |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 22.3 |
|
$
24.7 |
|
$ 92.0 |
|
$103.8 |
Cost of sales |
15.8 |
|
17.0 |
|
64.4 |
|
71.6 |
|
|
|
|
|
|
|
|
Gross margin |
6.5 |
|
7.7 |
|
27.6 |
|
32.2 |
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
4.5 |
|
4.7 |
|
18.3 |
|
18.6 |
Other operating income (expense): |
|
|
|
|
|
|
|
Insurance recoveries |
5.6 |
|
.4 |
|
9.4 |
|
10.4 |
Other income, net |
.1 |
|
- |
|
.1 |
|
.1 |
Corporate expense |
(60.2) |
|
(3.8) |
|
(87.0) |
|
(21.3) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
(52.5) |
|
(.4) |
|
(68.2) |
|
2.8 |
|
|
|
|
|
|
|
|
Equity in earnings (loss) of Kronos Worldwide,
Inc. |
.9 |
|
6.1 |
|
(31.0) |
|
30.2 |
|
|
|
|
|
|
|
|
General corporate items: |
|
|
|
|
|
|
|
Interest and dividend income |
.7 |
|
.3 |
|
2.9 |
|
1.6 |
Interest expense |
- |
|
- |
|
(.1) |
|
- |
|
|
|
|
|
|
|
|
Income (loss) before taxes |
(50.9) |
|
6.0 |
|
(96.4) |
|
34.6 |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
(18.1) |
|
.4 |
|
(41.9) |
|
5.0 |
|
|
|
|
|
|
|
|
Net income (loss) |
(32.8) |
|
5.6 |
|
(54.5) |
|
29.6 |
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
.2 |
|
.2 |
|
.8 |
|
1.1 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ (33.0) |
|
$
5.4 |
|
$ (55.3) |
|
$
28.5 |
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to NL
stockholders |
$ (.68) |
|
$
.11 |
|
$ (1.14) |
|
$
.59 |
|
|
|
|
|
|
|
|
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 INCOME (LOSS) FROM OPERATIONS
(In millions)
(Unaudited)
|
Three months
ended |
|
Year ended |
|
December
31, |
|
December
31, |
|
2013 |
|
2014 |
|
2013 |
|
2014 |
|
|
|
|
|
|
|
|
CompX - component products |
$ 2.0 |
|
$
3.0 |
|
$ 9.3 |
|
$
13.6 |
Insurance recoveries |
5.6 |
|
.4 |
|
9.4 |
|
10.4 |
Other income, net |
.1 |
|
- |
|
.1 |
|
.1 |
Corporate expense |
(60.2) |
|
(3.8) |
|
(87.0) |
|
(21.3) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
$ (52.5) |
|
$
(.4) |
|
$ (68.2) |
|
$
2.8 |
|
|
|
|
|
|
|
|
CHANGE IN KRONOS' TiO2
SALES
(Unaudited)
|
Three months
ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
2014 vs.
2013 |
|
2014 vs.
2013 |
|
|
|
|
|
|
|
|
Percentage change in sales: |
|
|
|
|
|
|
|
TiO2 product
pricing |
|
(10) |
% |
|
|
(6) |
% |
TiO2 sales
volume |
|
14 |
|
|
|
- |
|
TiO2 product
mix |
|
- |
|
|
|
- |
|
Changes in currency exchange rates |
|
(3) |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Total |
|
1 |
% |
|
|
(5) |
% |
|
|
|
|
|
|
|
|
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#1900670
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