DALLAS, TEXAS - November 6, 2015 -
NL Industries, Inc. (NYSE:NL) today reported net income
attributable to NL stockholders of $.9 million, or $.02 per share,
in the third quarter of 2015 compared to net income attributable to
NL stockholders of $13.9 million, or $.29 per share, in the third
quarter of 2014. For the first nine months of 2015, NL
reported a net loss attributable to NL stockholders of $18.3
million, or $.38 per share, compared to net income attributable to
NL stockholders of $23.1 million, or $.47 per share in the first
nine months of 2014.
Third quarter net sales for 2015
were comparable to the same period in 2014 as a slight increase in
sales of CompX's Marine Components business was offset by a slight
decrease in sales of CompX's Security Products business over the
comparative period. Net sales increased $4.2 million in the
first nine months of 2015 compared to the same period in 2014 due
to sales growth within CompX's Security Products business,
primarily sales to existing government customers in the first half
of 2015, and sales growth in CompX's Marine Components business,
primarily as a result of improved demand for products sold to the
waterski/wakeboard boat market. Income from operations
attributable to CompX of $3.4 million in the third quarter of 2015
was comparable to the third quarter of 2014 as improved
profitability for CompX's Marine Components business offset a
slight decrease in operating margin for CompX's Security Products
business. Income from operations increased to $11.4 million
in the first nine months of 2015 compared to $10.6 million in the
first nine months of 2014, primarily due to the sales growth within
both of CompX's Security Products and Marine Components business
lines.
Kronos' net sales of $336.5
million in the third quarter of 2015 were $78.3 million, or 19%,
lower than in the third quarter of 2014. Net sales of
$1,061.8 million in the first nine months of 2015 were $216.6
million, or 17%, lower than in the first nine months of 2014.
Net sales decreased in the third quarter and first nine months of
2015 as compared to the same periods of 2014 primarily due to lower
average TiO2 selling
prices, partially offset by higher sales volumes. Kronos'
average TiO2 selling
prices were 15% lower in the third quarter of 2015 as compared to
the third quarter of 2014, and were 13% lower in the first nine
months of the year as compared to the same prior year period.
Kronos' average selling prices at the end of the third quarter of
2015 were 3% lower than at the end of the second quarter of 2015,
and 13% 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 third quarter of 2015 were approximately 8% higher as
compared to the third quarter of 2014 due to higher sales in
certain European and export markets. TiO2 sales
volumes in the first nine months of 2015 were approximately 7%
higher as compared to the same period in 2014 primarily due to
higher sales primarily in certain European and export markets,
partially offset by slightly lower sales in North American
markets. Fluctuations in currency exchange rates also
impacted net sales, decreasing net sales by approximately $36
million in the third quarter and by approximately $113 million in
the first nine 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 third quarter of 2015 was $3.2 million as compared to income
from operations of $47.9 million in the third quarter of
2014. For the year-to-date period, Kronos' income from
operations was $18.6 million compared to $118.2 million in the
first nine months of 2014. Kronos' income from operations in
the 2015 year-to-date period includes an aggregate workforce
reduction charge of $21.5 million (NL's equity interest was $3.6
million, or $.07 per share, net of income tax benefit), most of
which was recognized in the second quarter. 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
volumes. Kronos' TiO2 production
volumes were 1% lower in the third quarter of 2015 as compared to
the third quarter of 2014, and were 2% higher in the 2015
year-to-date period. Kronos operated its production
facilities at overall average capacity utilization rates of 96% in
the first nine months of 2015 (approximately 93%, 100% and 95% of
practical capacity in the first, second and third quarters,
respectively) compared to approximately 94% in the first nine
months of 2014 (90%, 97% and 96% in the first, second and third
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 increased Kronos' income
from operations by approximately $5 million in the third quarter
and by approximately $30 million in the year-to-date period.
Kronos' securities transactions,
net in the third quarter of 2015 includes an aggregate non-cash
charge of $12.0 million (NL's equity interest was $1.5 million, or
$.03 per share, net of income tax benefit), for an
other-than-temporary impairment on its investment in a marketable
equity security.
Kronos' income tax expense in the
first nine months of 2015 includes an aggregate non-cash deferred
income tax expense of $152.6 million (NL's equity interest was
$30.1 million, or $.62 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, most of which was
recognized in the second quarter. Kronos' income tax expense
in the first nine months of 2014 includes a second quarter
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 $3.5 million (or $.05 per share,
net of income taxes) in the first nine months of 2015 compared to
$10.0 million (or $.13 per share, net of income taxes) in the first
nine months of 2014. Substantially all of the insurance
recoveries we recognized in the first nine 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 $1.7
million in the third quarter of 2015 as compared to the third
quarter of 2014, and decreased $5.4 million in the first nine
months of 2015 as compared to 2014, primarily due to lower
environmental remediation and related costs and lower litigation
fees and related costs in 2015.
Our income tax benefit in the
first nine 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 |
|
Nine months ended |
|
September
30, |
|
September
30, |
|
2014 |
|
2015 |
|
2014 |
|
2015 |
|
|
|
|
|
|
|
|
Net sales |
$ 26.5 |
|
$
26.5 |
|
$ 79.1 |
|
$
83.3 |
Cost of sales |
18.3 |
|
18.4 |
|
54.6 |
|
57.5 |
|
|
|
|
|
|
|
|
Gross margin |
8.2 |
|
8.1 |
|
24.5 |
|
25.8 |
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
4.8 |
|
4.7 |
|
13.9 |
|
14.4 |
Other operating income (expense): |
|
|
|
|
|
|
|
Insurance recoveries |
8.8 |
|
.1 |
|
10.0 |
|
3.5 |
Other income, net |
- |
|
.1 |
|
.1 |
|
.1 |
Corporate expense |
(4.3) |
|
(2.6) |
|
(17.5) |
|
(12.1) |
|
|
|
|
|
|
|
|
Income from operations |
7.9 |
|
1.0 |
|
3.2 |
|
2.9 |
|
|
|
|
|
|
|
|
Equity in earnings (losses) of Kronos Worldwide,
Inc. |
9.7 |
|
(3.6) |
|
24.1 |
|
(46.6) |
|
|
|
|
|
|
|
|
General corporate items: |
|
|
|
|
|
|
|
Interest and dividend income |
.3 |
|
.3 |
|
1.3 |
|
.9 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
17.9 |
|
(2.3) |
|
28.6 |
|
(42.8) |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
3.8 |
|
(3.5) |
|
4.6 |
|
(25.5) |
|
|
|
|
|
|
|
|
Net income (loss) |
14.1 |
|
1.2 |
|
24.0 |
|
(17.3) |
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
.2 |
|
.3 |
|
.9 |
|
1.0 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ 13.9 |
|
$
.9 |
|
$ 23.1 |
|
$
(18.3) |
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to
NL stockholders |
$ .29 |
|
$
.02 |
|
$ .47 |
|
$
(.38) |
|
|
|
|
|
|
|
|
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 FROM OPERATIONS
(In millions)
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September
30, |
|
September
30, |
|
2014 |
|
2015 |
|
2014 |
|
2015 |
|
|
|
|
|
|
|
|
CompX - component products |
$ 3.4 |
|
$
3.4 |
|
$ 10.6 |
|
$
11.4 |
Insurance recoveries |
8.8 |
|
.1 |
|
10.0 |
|
3.5 |
Other income, net |
- |
|
.1 |
|
.1 |
|
.1 |
Corporate expense |
(4.3) |
|
(2.6) |
|
(17.5) |
|
(12.1) |
|
|
|
|
|
|
|
|
Income from operations |
$ 7.9 |
|
$
1.0 |
|
$ 3.2 |
|
$
2.9 |
|
|
|
|
|
|
|
|
CHANGE IN KRONOS' TiO2
SALES
(Unaudited)
|
Three months
ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2015 vs.
2014 |
|
2015 vs.
2014 |
|
|
|
|
|
|
|
|
Percentage change in sales: |
|
|
|
|
|
|
|
TiO2 product
pricing |
|
(15) |
% |
|
|
(13) |
% |
TiO2 sales
volume |
|
8 |
|
|
|
7 |
|
TiO2 product
mix |
|
(3) |
|
|
|
(2) |
|
Changes in currency exchange rates |
|
(9) |
|
|
|
(9) |
|
|
|
|
|
|
|
|
|
Total |
|
(19) |
% |
|
|
(17) |
% |
|
|
|
|
|
|
|
|
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#1963904
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