DALLAS, TEXAS - May 6, 2016 - NL
Industries, Inc. (NYSE: NL) today reported a net loss attributable
to NL stockholders of $2.5 million, or $.05 per share, in the first
quarter of 2016 compared to net income attributable to NL
stockholders of $10.0 million, or $.21 per share, in the first
quarter of 2015.
Net sales decreased $.8 million in
the first quarter of 2016 compared to the same period in 2015
primarily due to CompX's Security Products business strong sales
for a government security end-user in the first quarter of 2015
that, as expected, did not recur in the first quarter of
2016. This decrease in 2016 sales was partially offset by
increased sales to another government customer within CompX's
Security Products business as well as an increase in CompX's Marine
Components business sales resulting from improved demand for
products sold to the waterski/wakeboard boat market. Income
from operations attributable to CompX decreased to $3.4 million in
the first quarter of 2016 from $3.7 million in the first quarter of
2015 due to the lower sales, including reduced leverage of fixed
manufacturing costs as a result of lower production volumes during
the first quarter of 2016, partially offset by improved variable
contribution margins attributable to relative changes in customer
and product mix in both CompX's Security Products and Marine
Components businesses for the period.
Kronos' net sales of $318.4
million in the first quarter of 2016 were $46.7 million, or 13%
lower than in the first quarter of 2015 primarily due to lower
average TiO2 selling
prices, partially offset by higher sales volumes. Kronos'
average TiO2 selling
prices were 14% lower in the first quarter of 2016 as compared to
the first quarter of 2015. Kronos' average selling prices at
the end of the first quarter of 2016 were 1% lower than at the end
of 2015, with slightly lower prices in certain European and North
American markets, partially offset by higher prices in certain
export markets, which are historically more volatile from period to
period due to the variability of product grade and customer
mix. TiO2 sales volumes
for the first quarter of 2016 increased 5% as compared to the first
quarter of 2015, with higher volumes in European and export
markets. Kronos' sales volumes in the first quarter of 2016
set a new record for a first quarter. Fluctuations in
currency exchange rates (primarily the euro) also affected net
sales comparisons, decreasing net sales by approximately $11
million as compared to the first quarter of 2015. The table
at the end of this press release summarizes how each of these items
impacted the overall decrease in sales.
Kronos' loss from operations for the first quarter
of 2016 was $.3 million compared to income from operations of $32.2
million in the first quarter of 2015. Kronos' income from
operations in the first quarter of 2016 decreased primarily due to
the net effects of lower average TiO2 selling
prices, lower raw material and other production costs (including
cost savings resulting from workforce reductions implemented in
2015 reflected in both cost of sales and other operating expenses),
and higher sales and production volumes. Kronos operated its
production facilities at overall average capacity utilization rates
of 93% and 97% in the first quarter of 2015 and 2016, respectively.
Kronos' production capacity utilization in the first quarter
of 2015 was 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 affected Kronos' income from
operations comparisons, which increased its income from operations
by approximately $7 million.
Kronos' other operating income,
net in the first quarter of 2016 includes an insurance settlement
gain of $2.0 million (NL's equity interest was $.3 million, or $.01
per share, net of income tax expense) related to a 2014 business
interruption claim.
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 were nominal in the first quarter 2016 as
compared to $3.1 million ($2.0 million, or $.04 per share, net of
income taxes) in the first quarter of 2015. 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.
Corporate expenses increased $1.9
million in the first quarter of 2016 as compared to the first
quarter of 2015 primarily due to higher environmental remediation
and related costs offset partially by lower litigation fees and
related costs.
As previously reported, our income tax benefit in
the first quarter of 2015 includes a 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.
NL INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except earnings per share)
Source: NL Industries, Inc.
Contact: Gregory M. Swalwell, Executive Vice
President and Chief Financial Officer, (972) 233-1700