NL REPORTS SECOND QUARTER 2017 RESULTS
August 07 2017 - 6:04PM
DALLAS, TEXAS - August 7, 2017 -
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $41.2 million, or $.85 per
share, in the second quarter of 2017 compared to $.9 million, or
$.02 per share, in the second quarter of 2016. For the first
six months of 2017, NL reported net income attributable to NL
stockholders of $49.5 million, or $1.02 per share, compared to net
loss attributable NL stockholders of $1.6 million, or $.03 per
share in the first six months of 2016.
Net sales increased $2.9 million
in the second quarter of 2017 and $5.8 million in the first six
months of 2017 compared to the respective periods in 2016, and
income from operations attributable to CompX increased to $4.6
million in the second quarter of 2017 from $3.7 million in the
second quarter of 2016 and to $9.1 million in the first six months
of 2017 compared to $7.1 million in the first six months of
2016. Second quarter and year-to-date 2017 net sales
increased over the comparable 2016 periods primarily due to the
Security Products reporting unit's 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. Income from operations
attributable to CompX increased for both comparative periods
principally due to the higher sales and manufacturing efficiencies
facilitated by the higher production volumes at the Security
Products reporting unit.
Kronos' net sales of $441.4
million in the second quarter of 2017 were $85.3 million, or 24%,
higher than in the second quarter of 2016. Kronos' net sales
of $811.2 million in the first six months of 2017 were $136.7
million, or 20%, higher than in the first six months of 2016.
Kronos' net sales increased in 2017 due to higher average
TiO2 selling
prices and higher sales volumes. Kronos' average
TiO2 selling
prices were 20% higher in the second quarter of 2017 as compared to
the second quarter of 2016 and were 19% higher in the first six
months of the year as compared to the same prior year period.
Kronos' average selling prices at the end of the second quarter of
2017 were 8% higher than at the end of the first quarter of 2017,
and were 12% higher than at the end of 2016, with higher prices in
all major markets. TiO2 sales volumes
in the second quarter of 2017 were 6% higher as compared to the
same period in 2016 due to higher sales in the North American and
European markets, partially offset by lower sales in the Latin
American market. TiO2 sales volumes
in the first six months of 2017 were 5% higher than the same period
in 2016 due to higher sales in the North American and export
markets, partially offset by lower sales in the Latin American
market. Kronos' sales volumes in the second quarter and first
six months of 2017 set a new overall record for a second quarter
and first-six-month period. Fluctuations in currency exchange
rates (primarily the euro) also affected net sales comparisons,
decreasing net sales by approximately $8 million in the second
quarter 2017 and approximately $15 million in the first six months
of 2017 as compared to the same periods in 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 second quarter of 2017 was $70.1 million as compared to $10.5
million in the second quarter of 2016. For the year-to-date
period, Kronos' income from operations was $122.4 million as
compared to $10.2 million in the first six months of 2016.
Kronos' income from operations increased in the 2017 periods
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 8% higher in the second quarter and 9%
higher in the first six months of 2017 as compared to the same
periods in 2016. Kronos operated its production facilities at
an overall average capacity utilization rate of 100% in the first
six months of 2017 (approximately 100% of practical capacity in the
first and second quarters) compared to approximately 96% in the
first six months of 2016 (97% and 95% in the first and second
quarters of 2016, respectively). Fluctuations in currency
exchange rates also affected comparisons, which decreased Kronos'
income from operations by approximately $5 million in the second
quarter and by approximately $13 million in the year-to-date
period.
Kronos' other operating income,
net in the first six months of 2016 includes an insurance
settlement gain of $3.4 million (NL's equity interest was $.5
million, or $.01 per share, net of income tax expense) related to a
2014 business interruption claim, of which $1.4 million was
recognized by Kronos in the second quarter.
Kronos' income tax benefit in the
first six months of 2017 includes a non-cash deferred income tax
benefit of $162.6 million (NL's equity interest was $32.1 million,
or $.66 per share, net of income tax expense) as a result of a net
decrease in Kronos' deferred income tax asset valuation allowance
related to its German and Belgian operations (such income tax
benefit of Kronos was $157.6 million in the second quarter of 2017,
and NL's equity interest was $31.2 million, or $.64 per share, net
of income tax expense). Kronos' income tax expense in the
second quarter and first six months of 2016 includes a non-cash
deferred income tax expense of $2.9 million (NL's equity was $.6
million, or $.01 per share, net of income taxes) as a result of a
net increase in Kronos' deferred income tax asset valuation
allowance related to its German and Belgian operations.
Corporate expenses were relatively
flat in the second quarter and first six months of 2017 compared to
the same period of 2016 as lower administrative expenses in both
the quarter and year-to-date periods were offset by higher
litigation fees and related costs in the quarter, and slightly
higher environmental remediation and related costs in the
year-to-date period. Interest and dividend income increased
$.5 million and $.8 million in the second quarter and first six
months of 2017 as compared to the same periods 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 or 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. |
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
(In millions, except
earnings per share) |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
Three months |
|
Six months |
|
ended June 30, |
|
ended June 30, |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
|
|
|
|
|
Net sales |
$ 27.1 |
|
$
30.1 |
|
$ 54.2 |
|
$
60.0 |
Cost of sales |
18.6 |
|
20.6 |
|
37.5 |
|
40.8 |
|
|
|
|
|
|
|
|
Gross margin |
8.5 |
|
9.5 |
|
16.7 |
|
19.2 |
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
4.8 |
|
4.9 |
|
9.6 |
|
10.1 |
Other operating income (expense): |
|
|
|
|
|
|
|
Insurance recoveries |
.2 |
|
- |
|
.3 |
|
.1 |
Corporate expense |
(3.3) |
|
(3.4) |
|
(9.0) |
|
(8.9) |
|
|
|
|
|
|
|
|
Income (loss) from operations |
.6 |
|
1.2 |
|
(1.6) |
|
.3 |
|
|
|
|
|
|
|
|
Equity in earnings (losses) of Kronos Worldwide,
Inc. |
.5 |
|
59.7 |
|
(.7) |
|
70.9 |
|
|
|
|
|
|
|
|
General corporate item - |
|
|
|
|
|
|
|
Interest and dividend income |
.4 |
|
.9 |
|
.8 |
|
1.6 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
1.5 |
|
61.8 |
|
(1.5) |
|
72.8 |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
.3 |
|
20.3 |
|
(.5) |
|
22.5 |
|
|
|
|
|
|
|
|
Net income (loss) |
1.2 |
|
41.5 |
|
(1.0) |
|
50.3 |
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
.3 |
|
.4 |
|
.6 |
|
.8 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ .9 |
|
$
41.1 |
|
$ (1.6) |
|
$
49.5 |
|
|
|
|
|
|
|
|
Net income (loss) per share attributable
to
NL stockholders |
$ .02 |
|
$
.85 |
|
$ (.03) |
|
$
1.02 |
|
|
|
|
|
|
|
|
Weighted average shares used in the |
|
|
|
|
|
|
|
calculation of net income (loss) per
share |
48.7 |
|
48.7 |
|
48.7 |
|
48.7 |
NL INDUSTRIES,
INC.
COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS
(In millions)
(Unaudited)
|
Three months |
|
Six months |
|
ended June 30, |
|
ended June 30, |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
|
|
|
|
|
|
|
CompX - component products |
$
3.7 |
|
$ 4.6 |
|
$
7.1 |
|
$ 9.1 |
Insurance recoveries |
.2 |
|
- |
|
.3 |
|
.1 |
Corporate expense |
(3.3) |
|
(3.4) |
|
(9.0) |
|
(8.9) |
|
|
|
|
|
|
|
|
Income (loss) from
operations |
$
.6 |
|
$ 1.2 |
|
$
(1.6) |
|
$ .3 |
NL INDUSTRIES, INC. |
CHANGE IN KRONOS' TiO2
SALES |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months |
|
Six months |
|
ended June 30, |
|
ended June 30, |
|
2017 vs. 2016 |
|
2017 vs. 2016 |
|
|
|
|
|
|
|
|
Percentage change in
sales: |
|
|
|
|
|
|
|
TiO2 product
pricing |
|
20 |
% |
|
|
19 |
% |
TiO2 sales
volume |
|
6 |
|
|
|
5 |
|
TiO2 product
mix/other |
|
- |
|
|
|
(2) |
|
Changes in currency
exchange rates |
|
(2) |
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
Total |
|
24 |
% |
|
|
20 |
% |
|
|
|
|
|
|
|
|
SOURCE: NL Industries, Inc.
CONTACT: Gregory M. Swalwell, Executive Vice
President and Chief Financial Officer, 972 233-2700
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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