DALLAS, TEXAS - March 10, 2017 -
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $9.6 million, or $.20 per share,
in the fourth quarter of 2016 compared to a net loss attributable
to NL stockholders of $5.6 million, or $.11 per share, in the
fourth quarter of 2015. For the full year of 2016, NL
reported a net income attributable to NL stockholders of $15.3
million, or $.31 per share, compared to a net loss attributable to
NL stockholders of $23.9 million, or $.49 per share in 2015.
Net sales increased $.6 million to
$26.3 million in the fourth quarter of 2016 compared to the same
period in 2015 primarily due to higher Security Products sales to
existing government customers. Net sales for the full year of
2016 were comparable to 2015 as our Security Products segment was
able to substantially replace revenue for a government security
end-user project which did not recur in 2016 with a new project
with the same customer which began to ship in August and was
completed in December. Income from operations attributable to
CompX increased in the 2016 periods primarily due to a more
favorable customer and product mix for both Security Products and
Marine Components, particularly in the fourth quarter for Security
Products, and improved pricing and manufacturing efficiencies for
Marine Components resulting in better leverage of fixed
costs.
Kronos' net sales of $333.7
million in the fourth quarter of 2016 were $46.7 million, or 16%,
higher than in the fourth quarter of 2015. Net sales of
$1,364.3 million in the full year of 2016 were $15.5 million, or
1%, higher than in the full year of 2015. Net sales increased
in the fourth quarter as compared to the same period in 2015 due to
higher average TiO2 selling
prices and higher sales volumes. Net sales increased in the
full year 2016 primarily due to higher sales volumes partially
offset by lower average selling prices. Kronos' average
TiO2 selling
prices were 8% higher in the fourth quarter of 2016 as compared to
the fourth quarter of 2015, and were 3% lower in the full year as
compared to 2015. Kronos' average selling prices at the end
of 2016 were 2% higher than at the end of the third quarter of
2016, and were 10% higher than at the end of 2015.
TiO2 sales volumes
in the fourth quarter were 8% higher as compared to the fourth
quarter of 2015 due to higher sales in North American and export
markets, partially offset by lower sales in the European
market. TiO2 sales volumes
in the full year of 2016 were 7% higher than 2015 due to higher
sales in European, North American and export markets, partially
offset by lower sales in Latin America. Kronos' sales volumes
in the fourth quarter and full year 2016 set an overall new record
for a fourth quarter and full-year period. Fluctuations in
currency exchange rates (primarily the euro) also affected net
sales comparisons, decreasing net sales by approximately $1 million
in the fourth quarter 2016 and by approximately $9 million in the
full year 2016 period as compared to the comparable periods in
2015. The table at the end of this press release shows how
each of these items impacted the overall increase in sales.
Kronos' income from operations in
the fourth quarter of 2016 was $42.9 million as compared to a loss
from operations of $19.7 million in the fourth quarter of
2015. For the full year 2016, Kronos' income from operations
was $81.1 million as compared to loss from operations of $1.1
million for the full year 2015. Kronos' income from
operations for the full year 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 increased in the fourth quarter of 2016 as compared
to the fourth quarter of 2015 primarily due to the net effects of
higher average TiO2 selling
prices, higher sales and production volumes and lower raw material
and other production costs. Excluding the impact of the 2015
workforce reduction charge, Kronos' income from operations
increased in the full year 2016 primarily due to the net effects of
lower average TiO2 selling
prices, higher sales and production volumes and lower raw material
and other production costs (including cost savings resulting from
workforce reductions implemented in 2015). Kronos'
TiO2 production
volumes were 11% higher in the fourth quarter of 2016 and 3% higher
for the full year of 2016 as compared to the same periods of
2015. Kronos operated its production facilities at overall
average capacity utilization rates of 98% in 2016 (approximately
97%, 95%, 100% and 100% of practical capacity in the first, second,
third and fourth quarters, respectively) compared to approximately
95% in the in 2015 (93%, 100%, 95% and 92% in the first,
second, third and fourth quarters of 2015,
respectively). Kronos' production rates in the first and
fourth quarters 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 our 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 income from
operations by approximately $1 million in the fourth quarter of
2016 and by approximately $14 million for the full year of
2016.
Kronos' other operating income in
2016 includes an aggregate insurance settlement gain of $4.3
million (NL's equity interest was $.6 million, or $.01 per share,
net of income tax expense) related to two separate business
interruption claims, of which $.9 million (NL's equity interest was
$.1 million, net of income tax expense) was recognized in the
fourth quarter .
Kronos' securities transactions,
for full year 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 Kronos' investment in a marketable equity security.
Kronos' income tax expense in 2015
includes a 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. Kronos' income tax expense in 2016 includes a net
$3.4 million (NL's equity interest was $.7 million, or $.01 per
share, net of income taxes) current income tax benefit related to
the execution and finalization of an Advance Pricing Agreement
between the U.S. and Canada, a $2.2 million (NL's equity interest
was $.4 million, or $.01 per share, net of income taxes) non-cash
deferred income tax benefit related to a net decrease in the
deferred income tax asset valuation related to Kronos' German and
Belgian operations, mostly recognized in the second and fourth
quarters, and a $2.4 million (NL's equity interest was $.5 million,
or $.01 per share, net of income taxes) non-cash expense related to
the increase in Kronos' reserve for uncertain tax positions, mostly
recognized in the fourth quarter.
NL's 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 $3.7 million (or $.05 per share, net of
income taxes) in 2015 compared to $.4 million in 2016 (or $.01 per
share, net of income taxes). 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 decreased $1.9
million in the fourth quarter of 2016 as compared to the fourth
quarter of 2015 primarily due to lower environmental remediation
and related costs. Corporate expenses decreased $.5 million
in 2016 compared to 2015 primarily due to lower litigation and
related costs, partially offset by higher environmental remediation
and related costs.
As previously reported, our income
tax benefit in 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), chemical (TiO2) and other
businesses.
NL INDUSTRIES,
INC. |
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In millions, except
earnings per share) |
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(Unaudited) |
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Three months ended |
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Year ended |
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December 31, |
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December 31, |
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2015 |
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2016 |
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2015 |
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2016 |
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(Unaudited) |
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Net sales |
$ 25.7 |
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$
26.3 |
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$ 109.0 |
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$
108.9 |
Cost of sales |
18.1 |
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17.2 |
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75.6 |
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73.7 |
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Gross margin |
7.6 |
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9.1 |
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33.4 |
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35.2 |
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Selling, general and administrative expense |
5.0 |
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5.0 |
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19.4 |
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19.6 |
Other operating income (expense): |
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Insurance recoveries |
.2 |
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- |
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3.7 |
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.4 |
Other income, net |
- |
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- |
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.1 |
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- |
Corporate expense |
(5.4) |
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(3.5) |
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(17.5) |
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(17.0) |
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Income (loss) from operations |
(2.6) |
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.6 |
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.3 |
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(1.0) |
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Equity in earnings (losses) of Kronos Worldwide,
Inc. |
(6.2) |
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7.1 |
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(52.8) |
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13.2 |
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General corporate item: |
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Interest and dividend income |
.3 |
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.5 |
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1.2 |
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1.7 |
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Income (loss) before income taxes |
(8.5) |
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8.2 |
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(51.3) |
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13.9 |
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Income tax benefit |
(3.1) |
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(1.8) |
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(28.6) |
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(2.8) |
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Net income (loss) |
(5.4) |
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10.0 |
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(22.7) |
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16.7 |
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Noncontrolling interest in net income of
subsidiary |
.2 |
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.4 |
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1.2 |
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1.4 |
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Net income (loss) attributable to NL
stockholders |
$ (5.6) |
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$
9.6 |
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$ (23.9) |
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$
15.3 |
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Net income (loss) per share attributable
to
NL stockholders |
$ (.11) |
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$
.20 |
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$ (.49) |
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$
.31 |
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Weighted average shares used in the |
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calculation of net income per share |
48.7 |
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48.7 |
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48.7 |
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48.7 |
NL INDUSTRIES,
INC. |
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CHANGE IN KRONOS'
TiO2
SALES |
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(Unaudited) |
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Three months |
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Year |
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ended December 31, |
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ended December 31, |
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2016 vs. 2015 |
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2016 vs. 2015 |
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Percentage change in sales: |
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TiO2 product
pricing |
|
8 |
% |
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(3) |
% |
TiO2 sales
volume |
|
8 |
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|
7 |
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TiO2 product
mix/other |
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- |
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(2) |
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Changes in currency exchange rates |
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- |
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(1) |
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Total |
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16 |
% |
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1 |
% |
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SOURCE: NL Industries, Inc.
CONTACT: Gregory M. Swalwell, Executive Vice
President and Chief Financial Officer (972) 233-1700
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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
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