NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $6.3 million, or $.13 per share,
in the fourth quarter of 2019 compared to net income attributable
to NL stockholders of $2.8 million, or $.06 per share, in the
fourth quarter of 2018. For the full year of 2019, NL
reported net income attributable to NL stockholders of $25.8
million, or $.53 per share compared to a net loss attributable to
NL stockholders of $41.0 million, or $.84 per share in 2018.
NL’s results included a pre-tax litigation settlement expense of
$19.3 million ($.31 per share, net of income tax benefit) and $62.0
million ($1.01 per share, net of income tax benefit) recognized in
2019 and 2018, respectively, as discussed below.
Net sales of $29.6 million in the fourth quarter
of 2019 increased $2.2 million compared to the fourth quarter of
2018 primarily due to higher security products sales to the
government security market and to a lesser extent higher marine
component sales to the towboat market. Income from operations
attributable to CompX increased for the fourth quarter of 2019
compared to the fourth quarter of 2018 primarily due to the benefit
of higher sales and a favorable customer and product mix at
security products. Net sales of $124.2 million in the full
year of 2019 increased $6.0 million compared to the full year in
2018 primarily due to higher marine component sales to the towboat
market. For the full year of 2019, income from operations
attributable to CompX was comparable to 2018 as the benefit of
higher marine component sales and favorable medical costs at
security products were offset by increased labor rates and
associated payroll costs at security products resulting from
regional pressure on wages for certain skilled labor positions.
Kronos’ net sales of $372.7 million in the
fourth quarter of 2019 were $23.3 million, or 7%, higher than in
the fourth quarter of 2018. Kronos’ net sales of $1.7 billion
in the full year of 2019 were $69.2 million, or 4%, higher than in
the full year of 2018. Kronos’ net sales increased in 2019
due to the net effect of lower average TiO2 selling prices and
higher sales volumes. Kronos’ average TiO2 selling prices
were 3% lower in the fourth quarter of 2019 as compared to the
fourth quarter of 2018 and 6% lower in the full year of 2019 as
compared to 2018. Kronos’ average TiO2 selling prices at the
end of 2019 were 1% lower than at the end of the third quarter of
2019 and 1% lower than at the end of 2018. Kronos’ TiO2 sales
volumes were 14% higher in the fourth quarter of 2019 as compared
to the fourth quarter of 2018 due to higher sales in the European
and export markets partially offset by lower sales in the North
American and Latin American markets. Kronos’ TiO2 sales volumes in
the full year of 2019 were 15% higher as compared to the full year
of 2018 primarily due to higher sales in the European, North
American and export markets, with the European market experiencing
the most significant increase. Fluctuations in currency
exchange rates (primarily the euro) also affected net sales
comparisons, decreasing net sales by approximately $8 million in
the fourth quarter of 2019 and approximately $49 million in the
full year of 2019 as compared to the same periods in 2018.
The table at the end of this press release shows how each of these
items impacted the overall change in Kronos’ net sales.
Kronos’ income from operations in the fourth
quarter of 2019 was $17.2 million as compared to $44.6 million in
the fourth quarter of 2018. For the full year of 2019,
Kronos’ income from operations was $145.8 million as compared to
$330.1 million in 2018. Kronos’ income from operations
decreased in the 2019 periods as the unfavorable effects of lower
average TiO2 selling prices and higher raw materials and other
production costs more than offset the favorable impact of higher
sales volumes. Kronos’ TiO2 production volumes were 4% higher
in the fourth quarter of 2019 and 2% higher in the full year of
2019 as compared to the same periods in 2018. Kronos operated
its production facilities at overall average capacity utilization
rates of 98% in the full year of 2019 (97% in each of the first,
second and third quarters and at full practical capacity in the
fourth quarter of 2019) compared to 95% in 2018 (95%, 97%, 92% and
95% in the first, second, third and fourth quarters of 2018,
respectively). Fluctuations in currency exchange rates also
affected income from operations comparisons, which decreased income
from operations by approximately $8 million in the fourth quarter
of 2019 and by approximately $3 million in the full year of 2019 as
compared to the same periods in 2018.
Kronos’ other income (expense) in 2019 includes
a pre-tax insurance settlement gain of $2.6 million (NL’s equity
interest was $.5 million, or $.01 per share, net of income tax
expense) related to a property damage claim, recognized in the
fourth quarter.
Kronos’ income tax expense in 2019 includes a
fourth quarter non-cash deferred income tax expense of $5.5 million
(NL’s equity interest was $1.3 million, or $.03 per share)
primarily related to the revaluation of Kronos’ net deferred income
tax asset in Germany resulting from a decrease in the German trade
tax rate and a fourth quarter income tax benefit of $3.0 million
(NL’s equity interest was $.7 million, or $.01 per share) related
to the favorable settlement of a prior year tax matter in
Germany.
Kronos’ income tax expense in 2018 includes a
fourth quarter current cash income tax expense of $3.7 million
(NL’s equity interest was $.9 million, or $.02 per share) related
to tax on global intangible low-tax income and an aggregate $2.1
million non-cash income tax expense (NL’s equity interest was $.5
million, or $.01 per share) related to an increase in Kronos’
reserve for uncertain tax positions, recognized in the first and
fourth quarters.
Corporate expense decreased by $.6 million in
the fourth quarter of 2019 compared to the fourth quarter of 2018
primarily due to lower litigation fees and related costs in 2019
and decreased by $5.9 million in the full year of 2019 compared to
the full year of 2018 primarily due to lower environmental
remediation and related costs and lower litigation fees and related
costs in 2019. We recognized a $62.0 million pre-tax
litigation settlement expense in 2018 related to a litigation
settlement agreement. We recognized an additional $19.3
million pre-tax litigation settlement expense in 2019 for a
settlement agreement in the same case that was approved by the
court in July 2019.
Insurance recoveries represent amounts we
receive from certain of our former insurance carriers and generally
relate to the recovery of past lead pigment and asbestos litigation
defense costs we have incurred. Substantially all the
insurance recoveries we recognized in 2019 relate to a settlement
we reached with a single insurance carrier that agreed to reimburse
us for a portion of our past and future litigation defense costs in
the second quarter. Such insurance recoveries aggregated $5.1
million ($.08 per share, net of income tax expense) in
2019.
Other income, net increased $6.8 million
in the full year of 2019 due primarily to a third quarter
gain of $4.4 million ($.07 per share, net of income tax expense)
related to a sale of excess property and a fourth quarter gain of
$3.0 million ($.05 per share, net of income tax expense) related to
the sale of our insurance and risk management business as compared
to the full year of 2018.
Interest and dividend income increased $.1
million in the fourth quarter of 2019 and $1.7 million in the full
year of 2019 as compared to the same periods in 2018 primarily due
to higher cash and cash equivalents and restricted cash and cash
equivalent balances available for investment, higher average
outstanding balances under CompX’s revolving promissory note
receivable from Valhi and higher average interest rates. We
also recognized $.6 million of accrued interest income on the
insurance recovery receivable in the second quarter of 2019.
Marketable equity securities represent unrealized gains (losses) on
our portfolio of marketable equity securities during the
periods.
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. 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, aluminum, steel 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 that harm the
U.S. economy, disrupt our supply chain, increase material costs or
reduce demand or perceived demand for Kronos’ TiO2 and our products
(including changes in the level of gross domestic product in
various regions of the world, natural disasters, terrorist acts,
global conflicts and public health crises such as the
coronavirus)
- 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
- Our ability to protect or defend intellectual property
rights
- Potential difficulties in integrating future acquisitions
- Potential difficulties in upgrading or implementing accounting
and manufacturing software systems
- The introduction of trade barriers or trade disputes
- 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 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 ability of our subsidiaries or affiliates to pay us
dividends
- Uncertainties associated with CompX’s development of new
products and product features
- The ultimate outcome of income tax audits, tax settlement
initiatives or other tax matters, including future tax reform
- 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), including new
environmental health and safety regulations such as those seeking
to limit or classify TiO2 or its use
- 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 recreational marine components),
chemicals (TiO2) and other businesses.
NL INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except earnings per
share)
|
Three months ended |
|
|
Year ended |
|
|
December 31, |
|
|
December 31, |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
27.4 |
|
|
$ |
29.6 |
|
|
$ |
118.2 |
|
|
$ |
124.2 |
|
Cost of sales |
|
19.5 |
|
|
|
20.6 |
|
|
|
79.9 |
|
|
|
85.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
7.9 |
|
|
|
9.0 |
|
|
|
38.3 |
|
|
|
39.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
expense |
|
5.0 |
|
|
|
5.5 |
|
|
|
20.5 |
|
|
|
21.3 |
|
Other operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance recoveries |
|
.4 |
|
|
|
(.1 |
) |
|
|
1.3 |
|
|
|
5.1 |
|
Other
income, net |
|
- |
|
|
|
3.0 |
|
|
|
.6 |
|
|
|
7.4 |
|
Litigation settlement expense, net |
|
- |
|
|
|
- |
|
|
|
(62.0 |
) |
|
|
(19.3 |
) |
Corporate expense |
|
(4.0 |
) |
|
|
(3.4 |
) |
|
|
(18.4 |
) |
|
|
(12.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
(.7 |
) |
|
|
3.0 |
|
|
|
(60.7 |
) |
|
|
(1.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of Kronos Worldwide,
Inc. |
|
7.3 |
|
|
|
2.9 |
|
|
|
62.3 |
|
|
|
26.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General corporate items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income |
|
1.4 |
|
|
|
1.5 |
|
|
|
5.0 |
|
|
|
6.7 |
|
Marketable equity securities |
|
(5.0 |
) |
|
|
(.5 |
) |
|
|
(60.9 |
) |
|
|
(.9 |
) |
Other components of net periodic
pension cost |
|
.1 |
|
|
|
(.1 |
) |
|
|
(.1 |
) |
|
|
(1.4 |
) |
Interest expense |
|
- |
|
|
|
(.4 |
) |
|
|
- |
|
|
|
(.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
|
3.1 |
|
|
|
6.4 |
|
|
|
(54.4 |
) |
|
|
28.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
- |
|
|
|
(.3 |
) |
|
|
(15.4 |
) |
|
|
.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
3.1 |
|
|
|
6.7 |
|
|
|
(39.0 |
) |
|
|
28.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
|
.3 |
|
|
|
.4 |
|
|
|
2.0 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to NL
stockholders |
$ |
2.8 |
|
|
$ |
6.3 |
|
|
$ |
(41.0 |
) |
|
$ |
25.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share attributable to NL stockholders |
$ |
.06 |
|
|
$ |
.13 |
|
|
$ |
(.84 |
) |
|
$ |
.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
calculation of net income (loss)
per share |
|
48.7 |
|
|
|
48.8 |
|
|
|
48.7 |
|
|
|
48.7 |
|
NL INDUSTRIES,
INC.COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS(In
millions) (Unaudited)
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CompX - component
products |
$ |
2.9 |
|
|
$ |
3.5 |
|
|
$ |
17.8 |
|
|
$ |
17.7 |
|
Insurance
recoveries |
|
.4 |
|
|
|
(.1 |
) |
|
|
1.3 |
|
|
|
5.1 |
|
Other income,
net |
|
- |
|
|
|
3.0 |
|
|
|
.6 |
|
|
|
7.4 |
|
Litigation
settlement expense |
|
- |
|
|
|
- |
|
|
|
(62.0 |
) |
|
|
(19.3 |
) |
Corporate
expense |
|
(4.0 |
) |
|
|
(3.4 |
) |
|
|
(18.4 |
) |
|
|
(12.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations |
$ |
(.7 |
) |
|
$ |
3.0 |
|
|
$ |
(60.7 |
) |
|
$ |
(1.6 |
) |
CHANGE IN KRONOS’ TiO2
SALES(Unaudited)
|
Three months ended |
|
Year ended |
|
December 31, |
|
December 31, |
|
2019 vs. 2018 |
|
2019 vs. 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change
in net sales: |
|
|
|
|
|
|
|
|
|
|
|
TiO2
product pricing |
|
|
(3 |
) |
% |
|
|
|
(6 |
) |
% |
TiO2 sales
volume |
|
|
14 |
|
|
|
|
|
15 |
|
|
TiO2
product mix/other |
|
|
(2 |
) |
|
|
|
|
(2 |
) |
|
Changes in
currency exchange rates |
|
|
(2 |
) |
|
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
7 |
|
% |
|
|
|
4 |
|
% |
SOURCE: NL Industries, Inc.
CONTACT: Janet G. Keckeisen, Vice President, Corporate Strategy and Investor Relations, 972.233.1700
NL Industries (NYSE:NL)
Historical Stock Chart
From Jun 2024 to Jul 2024
NL Industries (NYSE:NL)
Historical Stock Chart
From Jul 2023 to Jul 2024