DALLAS, TEXAS - August 7, 2015 -
NL Industries, Inc. (NYSE:NL) today reported a net loss
attributable to NL stockholders of $29.2 million, or $.60 per
share, in the second quarter of 2015 compared to net income
attributable to NL stockholders of $5.5 million, or $.11 per share,
in the second quarter of 2014. For the first six months of
2015, NL reported a net loss attributable to NL stockholders of
$19.2 million, or $.39 per share, compared to net income
attributable to NL stockholders of $9.2 million, or $.19 per share
in the first six months of 2014.
Net sales increased $2.1 million
in the second quarter of 2015 and $4.2 million in the first six
months of 2015 compared to the same periods in 2014, primarily due
to strong demand from existing government customers within CompX's
Security Products business line. Sales comparisons were also
favorably impacted by increased sales of security products to the
office equipment and institutional furniture markets, as well as
increased sales from CompX's Marine Components business to the
waterski/wakeboard boat market. Income from operations attributable
to CompX increased to $4.3 million in the second quarter of 2015
compared to $3.9 million in the second quarter of 2014, and to $8.0
million in the first six months of 2015 compared to $7.2 million in
the first six months of 2014, primarily due to the sales growth in
CompX's Security Products business line.
Kronos' net sales of $360.2
million in the second quarter of 2015 were $83.3 million, or 19%,
lower than in the second quarter of 2014. Net sales of
$725.3 million in the first six months of 2015 were $138.3 million,
or 16%, lower than in the first six months of 2014. Net sales
decreased in 2015 primarily due to lower average TiO2
selling prices, partially offset by higher sales volumes.
Kronos' average TiO2 selling
prices were 13% lower in the second quarter of 2015 as compared to
the second quarter of 2014, and were 12% lower in the first six
months of the year as compared to the same prior year period.
Kronos' average selling prices at the end of the second quarter of
2015 were 3% lower than at the end of the first quarter of 2015,
and 10% lower than at the end of 2014, with lower prices in all
major markets. Kronos' average TiO2 selling
prices in 2015 were also impacted by a higher percentage of sales
to lower-priced export markets in 2015 compared to 2014.
TiO2 sales volumes
in the second quarter and first six months of 2015 were 5% and 6%
higher, respectively, than in the same periods of 2014 due to
higher sales in European and export markets in 2015, partially
offset by slightly lower sales in North American markets.
Fluctuations in currency exchange rates (primarily the euro) also
affected net sales comparisons, decreasing net sales by
approximately $44 million in the second quarter and approximately
$77 million in the first six months of 2015. The table at the
end of this press release shows how each of these items impacted
the overall decrease in Kronos' sales.
Kronos' loss from operations in
the second quarter of 2015 was $10.4 million as compared to income
from operations of $44.3 million in the second quarter of
2014. For the year-to-date period, Kronos' income from
operations was $21.8 million compared to $70.3 million in the first
six months of 2014. Kronos' income (loss) from operations in
the 2015 periods includes an aggregate second quarter pre-tax
charge of $21.1 million (NL's equity interest was $3.6 million, or
$.07 per share, net of income tax benefit) associated with the
implementation of certain workforce reductions. Kronos'
income from operations decreased in 2015 primarily due to the net
effects of lower average TiO2 selling
prices, the workforce reduction charge, lower manufacturing and
other production costs (primarily raw materials) and higher sales
and production volumes. Kronos' TiO2
production volumes were 4% higher in the second quarter and first
six months of 2015 as compared to the same periods in 2014.
Kronos operated its production facilities at overall average
capacity utilization rates of 97% in the first six months of 2015
(approximately 93% of practical capacity in the first quarter and
at practical capacity in the second quarter) compared to
approximately 93% in the first six months of 2014 (90% and 97% in
the first and second quarters of 2014, respectively). Kronos'
production capacity utilization rates in the first quarter of 2014
were impacted by a union labor 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'
production rates in the first quarter of 2015 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 $11
million in the second quarter and by approximately $25 million in
the year-to-date period, respectively.
Kronos' income tax expense in the
second quarter of 2015 includes a non-cash deferred income tax
expense of $150.3 million (NL's equity interest was $29.7 million,
or $.61 per share, net of income taxes) related to the recognition
of a deferred income tax asset valuation allowance related to its
German and Belgian operations. 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
in its reserve for uncertain tax positions.
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 $3.4 million (or $.04 per share,
net of income taxes) in the first six months of 2015 compared to
$1.2 million (or $.02 per share, net of income taxes) in the first
six months of 2014. Substantially all of the insurance
recoveries we recognized in the first six months of 2015 relate to
a first quarter settlement we reached 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 $3.3
million in the second quarter of 2015 as compared to the second
quarter of 2014, and decreased $3.8 million in the first six months
of 2015 as compared to 2014, primarily due to lower environmental
remediation and related costs in 2015.
Our income tax benefit in the
first six months of 2015 includes a first quarter non-cash income
tax benefit of $3.0 million (or $.06 per share) related to a net
reduction in our reserve for uncertain tax positions.
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 may not presently 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, |
|
2014 |
|
2015 |
|
2014 |
|
2015 |
|
|
|
|
|
|
Net sales |
$ 26.8 |
|
$
28.9 |
|
$ 52.6 |
|
$
56.8 |
Cost of sales |
18.2 |
|
19.8 |
|
36.2 |
|
39.1 |
|
|
|
|
|
|
|
|
Gross margin |
8.6 |
|
9.1 |
|
16.4 |
|
17.7 |
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
4.7 |
|
4.8 |
|
9.2 |
|
9.7 |
Other operating income (expense): |
|
|
|
|
|
|
|
Insurance recoveries |
.4 |
|
.3 |
|
1.2 |
|
3.4 |
Other income, net |
- |
|
- |
|
.1 |
|
- |
Corporate expense |
(9.0) |
|
(5.7) |
|
(13.3) |
|
(9.5) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
(4.7) |
|
(1.1) |
|
(4.8) |
|
1.9 |
|
|
|
|
|
|
|
|
Equity in earnings (losses) of Kronos Worldwide,
Inc. |
10.1 |
|
(48.6) |
|
14.4 |
|
(43.0) |
|
|
|
|
|
|
|
|
General corporate items: |
|
|
|
|
|
|
|
Interest and dividend income |
.3 |
|
.3 |
|
1.0 |
|
.6 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
5.7 |
|
(49.4) |
|
10.6 |
|
(40.5) |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
(.1) |
|
(20.6) |
|
.8 |
|
(22.0) |
|
|
|
|
|
|
|
|
Net income (loss) |
5.8 |
|
(28.8) |
|
9.8 |
|
(18.5) |
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
.3 |
|
.4 |
|
.6 |
|
.7 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ 5.5 |
|
$(29.2) |
|
$ 9.2 |
|
$(19.2) |
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to NL
stockholders |
$ .11 |
|
$
(.60) |
|
$ .19 |
|
$
(.39) |
|
|
|
|
|
|
|
|
Weighted average shares used in the |
|
|
|
|
|
|
|
calculation of net income 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 |
|
Six months ended |
|
June
30, |
|
June
30, |
|
2014 |
|
2015 |
|
2014 |
|
2015 |
|
|
|
|
|
|
|
|
CompX - component products |
$ 3.9 |
|
$
4.3 |
|
$ 7.2 |
|
$
8.0 |
Insurance recoveries |
.4 |
|
.3 |
|
1.2 |
|
3.4 |
Other income, net |
- |
|
- |
|
.1 |
|
- |
Corporate expense |
(9.0) |
|
(5.7) |
|
(13.3) |
|
(9.5) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
$ (4.7) |
|
$
(1.1) |
|
$ (4.8) |
|
$
1.9 |
|
|
|
|
|
|
|
|
CHANGE IN KRONOS' TiO2
SALES
(Unaudited)
|
Three months
ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
2015 vs.
2014 |
|
2015 vs.
2014 |
|
|
|
|
|
|
|
|
Percentage change in sales: |
|
|
|
|
|
|
|
TiO2 product
pricing |
|
(13) |
% |
|
|
(12) |
% |
TiO2 sales
volume |
|
5 |
% |
|
|
6 |
% |
TiO2 product
mix |
|
(1) |
% |
|
|
(1) |
% |
Changes in currency exchange rates |
|
(10) |
% |
|
|
(9) |
% |
|
|
|
|
|
|
|
|
Total |
|
(19) |
% |
|
|
(16) |
% |
|
|
|
|
|
|
|
|
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#1943879
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