NL REPORTS FIRST QUARTER 2017 RESULTS
May 08 2017 - 4:20PM
DALLAS, TEXAS - May 8, 2017 - NL
Industries, Inc. (NYSE: NL) today reported a net income
attributable to NL stockholders of $8.4 million, or $.17 per share,
in the first quarter of 2017 compared to net loss attributable to
NL stockholders of $2.5 million, or $.05 per share, in the first
quarter of 2016.
Net sales increased $2.9 million
in the first quarter of 2017 compared to the same period in 2016
primarily due to higher Security Products sales volumes to existing
government security customers, partially offset by a decrease in
sales of security products to an original equipment manufacturer of
recreational transportation products. CompX's Marine
Components business also contributed higher sales in the 2017
period. Income from operations attributable to CompX
increased to $4.5 million in the first quarter of 2017 from $3.4
million in the first quarter of 2016 due to higher sales and
manufacturing efficiencies facilitated by higher production volumes
at CompX's Security Products business.
Kronos' net sales of $369.8
million in the first quarter of 2017 were $51.4 million, or 16%,
higher than in the first quarter of 2016. Kronos' net sales
increased in the first quarter 2017 as compared to the same period
in 2016 due to higher average TiO2 selling
prices and higher sales volumes. Kronos' average
TiO2 selling
prices were 17% higher in the first quarter of 2017 as compared to
the first quarter of 2016, and Kronos' average selling prices at
the end of the first quarter of 2017 were 4% higher than at the end
of 2016, with higher prices in all major markets.
TiO2 sales volumes
in the first quarter of 2017 were 3% higher as compared to the
first quarter of 2016 due to higher sales in the North American and
export markets, partially offset by lower sales in the European
market. Kronos' sales volumes in the first quarter of 2017
set a new overall record for a first quarter period.
Fluctuations in currency exchange rates (primarily the euro) also
affected net sales comparisons, decreasing net sales by
approximately $7 million in the first quarter 2017 as compared to
the first quarter of 2016. The table at the end of this press
release shows how each of these items impacted the overall increase
in Kronos' sales.
Kronos' income from operations in
the first quarter of 2017 was $52.3 million as compared to a loss
from operations of $.3 million in the first quarter of 2016.
Kronos' income from operations increased in the first quarter of
2017 as compared to the first quarter of 2016 primarily due to
higher average TiO2 selling
prices, higher sales and production volumes and lower raw materials
and other production costs. Kronos' TiO2
production volumes were 10% higher in the first quarter of 2017 as
compared to the first quarter of 2016. Kronos operated its
production facilities at an overall average capacity utilization
rate of 100% in the first quarter of 2017 compared to approximately
97% in the first quarter of 2016. Fluctuations in currency
exchange rates also affected Kronos' income from operations
comparisons, which decreased income from operations by
approximately $8 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.
Kronos' income tax expense in 2017
includes a $5.0 million (NL's equity interest was $1.0 million, or
$0.2 per share) non-cash deferred income tax benefit as a result of
a net decrease in its deferred income tax asset valuation allowance
related to its German and Belgian operations.
Corporate expenses decreased $.2
million in the first quarter of 2017 as compared to the first
quarter of 2016 primarily due to lower litigation fees and related
costs offset partially by higher environmental remediation and
related costs. Interest and dividend income increased $.3
million in the first quarter of 2017 as compared to the first
quarter of 2016 primarily due to interest earned on CompX's loan to
an affiliate which was entered into in August 2016.
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 ore, zinc, brass, aluminum, steel and energy 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
(such as Kronos' new enterprise resource planning system)
-
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)
(Unaudited)
|
Three months ended |
|
March 31, |
|
2016 |
|
2017 |
|
|
Net sales |
$ 27.1 |
|
$ 29.9 |
Cost of sales |
18.9 |
|
20.2 |
|
|
|
|
Gross
margin |
8.2 |
|
9.7 |
|
|
|
|
Selling, general and
administrative expense |
4.8 |
|
5.2 |
Other operating income
(expense): |
|
|
|
Insurance
recoveries |
.1 |
|
.1 |
Corporate
expense |
(5.7) |
|
(5.5) |
|
|
|
|
Loss from
operations |
(2.2) |
|
(.9) |
|
|
|
|
Equity in earnings
(losses) of Kronos Worldwide, Inc. |
(1.2) |
|
11.2 |
|
|
|
|
General corporate item
- |
|
|
|
Interest and
dividend income |
.4 |
|
.7 |
|
|
|
|
Income (loss)
before income taxes |
(3.0) |
|
11.0 |
|
|
|
|
Income tax expense
(benefit) |
(0.8) |
|
2.2 |
|
|
|
|
Net income
(loss) |
(2.2) |
|
8.8 |
|
|
|
|
Noncontrolling
interest in net income of subsidiary |
.3 |
|
.4 |
|
|
|
|
Net income (loss)
attributable to NL stockholders |
$ (2.5) |
|
$ 8.4 |
|
|
|
|
Net income (loss) per
share attributable to
NL stockholders |
$ (.05) |
|
$ .17 |
|
|
|
|
Weighted average
shares used in the |
|
|
|
calculation of
net income per share |
48.7 |
|
48.7 |
NL INDUSTRIES,
INC.
COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS
(In millions)
(Unaudited)
|
Three months |
|
ended March 31, |
|
2016 |
|
2017 |
|
|
|
|
CompX
- component products |
$ 3.4 |
|
$ 4.5 |
Insurance recoveries |
.1 |
|
.1 |
Corporate expense |
(5.7) |
|
(5.5) |
|
|
|
|
Income (loss) from operations |
$ (2.2) |
|
$ (.9) |
CHANGE IN KRONOS'
TiO2
SALES
(Unaudited)
|
Three months |
|
ended March 31, |
|
2017 vs. 2016 |
|
|
|
|
Percentage change in sales: |
|
|
|
TiO2 product
pricing |
|
17 |
% |
TiO2 sales
volume |
|
3 |
|
TiO2 product
mix/other |
|
(2) |
|
Changes in currency exchange rates |
|
(2) |
|
|
|
|
|
Total |
|
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 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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