DALLAS, TEXAS - March 10, 2016 -
NL Industries, Inc. (NYSE: NL) today reported a net loss
attributable to NL stockholders of $5.6 million, or $.11 per share,
in the fourth quarter of 2015 compared to net income attributable
to NL stockholders of $5.4 million, or $.11 per share, in the
fourth quarter of 2014. For the full year of 2015, NL
reported a net loss attributable to NL stockholders of $23.9
million, or $.49 per share, compared to net income attributable to
NL stockholders of $28.5 million, or $.59 per share in 2014.
Net sales increased $1.0 million in the fourth
quarter of 2015 and $5.2 million in the full year of 2015 compared
to the same periods in 2014 principally due to strong demand within
CompX's Security Products business from existing government
customers. Income from operations attributable to CompX
decreased to $2.6 million in the fourth quarter of 2015 compared to
$3.0 million in the fourth quarter of 2014 due to lower variable
margins related to changes in customer and product mix, and higher
fixed costs, in CompX's Security Products business. Income
from operations attributable to CompX increased to $14.0 million in
the full year of 2015 compared to $13.6 million in the full year of
2014 primarily as a result of higher sales and operating margins at
CompX's Marine Components business.
Kronos' net sales of $287.0
million in the fourth quarter of 2015 were $86.5 million, or 23%,
lower than in the fourth quarter of 2014. Kronos' net sales
of $1.35 billion in the full year of 2015 were $303.1 million, or
18%, lower than in the full year 2014. Kronos' net sales
decreased in the fourth quarter and full year 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 16% lower in the fourth quarter of 2015 as compared to
the fourth quarter of 2014, and were 14% lower in the full year as
compared to 2014. Kronos' average selling prices at the end
of the fourth quarter of 2015 were 4% lower than at the end of the
third quarter of 2015, and 17% 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 fourth quarter and the full year of 2015 were approximately
3% and 6% higher, respectively, than in same periods of 2014 due to
higher sales in certain European and export markets, partially
offset by lower sales in North American markets. Fluctuations
in currency exchange rates also impacted net sales comparisons,
decreasing net sales by approximately $25 million in the fourth
quarter and by approximately $138 million in the full year 2015 as
compared to the comparable periods in 2014. The table at the
end of this press release shows how each of these items impacted
the overall change in sales.
Kronos' loss from operations in
the fourth quarter of 2015 was $19.7 million compared to income
from operations of $31.5 million in the fourth quarter of
2014. For the full year 2015, Kronos' loss from operations
was $1.1 million compared to income from operations of $149.7
million in 2014. Kronos' loss from operations in the full
year of 2015 includes an aggregate workforce reduction charge of
$21.7 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
and production volumes. Kronos' TiO2 production
volumes were 7% higher in the fourth quarter of 2015 as compared to
the fourth quarter of 2014, and were 3% higher in 2015 over
2014. Kronos operated its production facilities at an overall
average capacity utilization rate of 95% in 2015 (approximately
93%, 100%, 95% and 92% of practical capacity in the first, second,
third and fourth quarters, respectively) compared to
approximately 92% in 2014 (90%, 97%, 96% and 86% in the first,
second, third and fourth 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 fourth quarter of 2014 and 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 $10 million in the fourth quarter
and by approximately $40 million for the year.
Kronos' securities transactions,
net in 2015 includes a third quarter 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 2015
includes an aggregate non-cash deferred income tax expense of
$159.0 million (NL's equity interest was $31.4 million, or $.65 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 (NL's equity interest recognized in the fourth quarter was
$1.3 million, or $.03 per share, net of income taxes).
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 in its reserve for uncertain tax positions, most of which
was recognized 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 $3.7 million ($2.4 million, or $.05
per share, net of income taxes) in 2015 as compared to $10.4
million ($6.7 million, or $.14 per share, net of income taxes) in
2014. Substantially all of the insurance recoveries we recognized
in 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. The
majority of the $10.4 million of insurance recoveries we recognized
in 2014 relate to a settlement we reached with another one of our
insurance carriers in which they agreed to reimburse us for a
portion of our past litigation defense costs.
Corporate expenses increased $1.6
million in the fourth quarter of 2015 as compared to the fourth
quarter of 2014 primarily due to higher environmental remediation
and related costs and decreased $3.8 million in the full year 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 full year 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 accounting and manufacturing 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 or other
currencies
-
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 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.
Source: NL Industries, Inc.
Contact: Gregory M. Swalwell, Executive Vice
President and Chief Financial Officer, 972-233-1700