NL REPORTS THIRD QUARTER 2021 RESULTS
November 04 2021 - 4:20PM
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $10.3 million, or $.21 per
share, in the third quarter of 2021 compared to net income
attributable to NL stockholders of $3.9 million, or $.08 per share,
in the third quarter of 2020. NL results include an unrealized loss
of $1.2 million in the third quarter of 2021 related to the change
in value of marketable equity securities compared to a $3.2 million
unrealized gain in the third quarter of 2020. For the first nine
months of 2021, NL reported net income attributable to NL
stockholders of $36.3 million, or $.74 per share, compared to net
income of $10.4 million, or $.21 per share for the first nine
months of 2020. NL results include an unrealized gain of $9.7
million in the first nine months of 2021 related to the change in
value of marketable equity securities compared to an $11.1 million
unrealized loss in the first nine months of 2020.
CompX net sales were $34.5 million for the third
quarter of 2021 compared to $28.4 million in the third quarter of
2020 and $106.7 million for the nine months ended September 30,
2021 compared to $84.5 million for the same prior year
period. Income from operations attributable to CompX was $5.1
million for the third quarter of 2021 compared to $2.1 million for
the third quarter of 2020 and $16.7 million for the first nine
months of 2021 compared to $9.5 million for the same prior year
period. CompX third quarter 2021 net sales increased over the 2020
comparable period primarily due to higher Security Products sales
across a variety of markets and to a lesser extent higher Marine
Component sales primarily to the towboat market. CompX net sales
increased for the first nine months of 2021 compared to the same
period in 2020 primarily due to higher sales volumes at both of
CompX’s reporting units, particularly in the second quarter of
2021, as many of its customers were temporarily closed or reduced
production during the second quarter of 2020 due to government
ordered closures or reduced demand resulting from the COVID-19
pandemic. CompX income from operations was negatively impacted by
the COVID-19 pandemic in the second and third quarters of 2020,
which significantly impacts income from operations comparisons for
the third quarter and the nine-month comparative periods. Income
from operations increased for both comparative periods due to the
favorable effect of higher production and sales volumes, partially
offset by higher production costs including increased raw
materials, shipping, and labor costs.
NL recognized equity in earnings of Kronos of
$10.9 million in the third quarter of 2021 compared to $2.4 million
in the same period of 2020 and $24.7 million in the first nine
months of 2021 compared to $16.3 million in the same period of
2020. Kronos’ net sales of $499.8 million in the third quarter of
2021 were $82.9 million, or 20%, higher than in the third quarter
of 2020. Kronos’ net sales of $1,443.4 million in the first nine
months of 2021 were $219.5 million, or 18%, higher than in the
first nine months of 2020. Kronos’ net sales increased in the 2021
periods primarily due to higher sales volumes and higher average
TiO2 selling prices. Kronos’ TiO2 sales volumes were 6%
higher in the third quarter of 2021 as compared to the third
quarter of 2020 due to higher demand in its European and North
American markets and 8% higher in the first nine months of 2021 as
compared to the same prior year period due to higher demand in all
major markets. Increased demand resulted from continuing
improvements in global economic activity in the 2021 periods
compared to the negative impact from the COVID-19 pandemic on the
same periods in 2020. Kronos’ average TiO2 selling prices were 11%
higher in the third quarter of 2021 as compared to the third
quarter of 2020 and 4% higher in the first nine months of 2021 as
compared to the first nine months of 2020. Kronos’ average TiO2
selling prices at the end of the third quarter of 2021 were 10%
higher than its average TiO2 selling prices at the end of 2020.
Fluctuations in currency exchange rates (primarily the euro) also
affected net sales comparisons, increasing net sales by
approximately $5 million in the third quarter of 2021 and
increasing net sales by approximately $47 million in the first nine
months of 2021, as compared to the same periods in 2020. The table
at the end of this press release shows how each of these items
impacted Kronos’ net sales.
Kronos’ income from operations in the third
quarter of 2021 was $57.3 million as compared to $19.3 million in
the third quarter of 2020. For the year-to-date period, Kronos’
income from operations was $135.1 million as compared to $95.8
million in the first nine months of 2020. Kronos’ income from
operations increased in the 2021 periods primarily due to higher
average TiO2 selling prices and higher sales volumes, partially
offset by higher manufacturing and other production costs,
including higher costs for raw materials and energy. Kronos’ TiO2
production volumes were 13% higher in the third quarter of 2021 as
compared to the third quarter of 2020 and 4% higher in the
year-to-date period. Kronos decreased production levels in 2020
(primarily in the third quarter) to correspond to the temporary
decline in demand resulting from the COVID-19 pandemic. Kronos
operated its production facilities at overall average capacity
utilization rates of 99% in the first nine months of 2021 (97%,
100% and 100% in the first, second and third quarters of 2021,
respectively) compared to 92% in 2020 (95%, 96% and 86% in the
first, second and third quarters of 2020, respectively).
Fluctuations in currency exchange rates (primarily the euro)
increased income from operations approximately $2 million in the
third quarter of 2021 as compared to the third quarter of 2020.
Fluctuations in currency exchange rates (primarily the Canadian
dollar) also affected Kronos’ year-to-date income from operations
comparison, which decreased income from operations by approximately
$15 million in the year-to-date 2021 period as compared to the same
period of 2020.
Corporate expenses increased $.5 million in the
third quarter of 2021 compared to the third quarter of 2020
primarily due to higher environmental remediation and related costs
and higher litigation fees and related costs in 2021. Corporate
expenses increased $.3 million in the first nine months of 2021
compared to the same period of 2020 primarily due to higher
environmental remediation and related costs partially offset by
lower administrative expenses. Interest and dividend income was
comparable in the third quarter and decreased $.8 million in the
first nine months of 2021 compared to the prior year periods
primarily due to lower dividend income and lower interest income
related to lower average interested rates on invested balances, and
lower average outstanding balances under CompX’s revolving
promissory note receivable from Valhi. Marketable equity securities
represent the change in unrealized gains (losses) on our investment
in Valhi common stock 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 we believe
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
worldwide economy, disrupt our supply chain, increase material
costs or reduce demand or perceived demand for Kronos’ TiO2 and our
products or impair our ability to operate our facilities (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 COVID-19)
- 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 and between the euro and
the Norwegian krone), 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, cyber-attacks
and public health crises such as COVID-19)
- 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 component
products (security products and recreational marine components) and
chemicals (TiO2) businesses.
NL INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(In millions, except earnings per
share)(unaudited)
|
Three months ended |
|
|
Nine months ended |
|
|
September |
|
|
September |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
28.4 |
|
|
$ |
34.5 |
|
|
$ |
84.5 |
|
|
$ |
106.7 |
|
Cost of sales |
|
21.1 |
|
|
|
23.6 |
|
|
|
59.4 |
|
|
|
73.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
7.3 |
|
|
|
10.9 |
|
|
|
25.1 |
|
|
|
33.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
expense |
|
5.2 |
|
|
|
5.8 |
|
|
|
15.6 |
|
|
|
16.6 |
|
Other operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
recoveries |
|
- |
|
|
|
- |
|
|
|
.1 |
|
|
|
.1 |
|
Corporate
expense |
|
(2.4 |
) |
|
|
(2.9 |
) |
|
|
(7.4 |
) |
|
|
(7.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
(.3 |
) |
|
|
2.2 |
|
|
|
2.2 |
|
|
|
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of Kronos Worldwide,
Inc. |
|
2.4 |
|
|
|
10.9 |
|
|
|
16.3 |
|
|
|
24.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
dividend income |
|
.5 |
|
|
|
.4 |
|
|
|
2.1 |
|
|
|
1.3 |
|
Marketable equity securities |
|
3.2 |
|
|
|
(1.2 |
) |
|
|
(11.1 |
) |
|
|
9.7 |
|
Other components
of net periodic pension and
OPEB cost |
|
(.2 |
) |
|
|
(.1 |
) |
|
|
(.6 |
) |
|
|
(.4 |
) |
Interest
expense |
|
(.3 |
) |
|
|
(.3 |
) |
|
|
(1.0 |
) |
|
|
(.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
5.3 |
|
|
|
11.9 |
|
|
|
7.9 |
|
|
|
43.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
1.2 |
|
|
|
1.1 |
|
|
|
(3.6 |
) |
|
|
5.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
4.1 |
|
|
|
10.8 |
|
|
|
11.5 |
|
|
|
38.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in net income of
subsidiary |
|
.2 |
|
|
|
.5 |
|
|
|
1.1 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to NL
stockholders |
$ |
3.9 |
|
|
$ |
10.3 |
|
|
$ |
10.4 |
|
|
$ |
36.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share attributable to NL stockholders |
$ |
.08 |
|
|
$ |
.21 |
|
|
$ |
.21 |
|
|
$ |
.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in the
calculation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
net income per share |
|
48.8 |
|
|
|
48.8 |
|
|
|
48.8 |
|
|
|
48.8 |
|
NL INDUSTRIES,
INC.COMPONENTS OF INCOME (LOSS) FROM
OPERATIONS(In
millions)(unaudited)
|
Three months ended |
|
|
Nine months ended |
|
|
September 30, |
|
|
September 30, |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CompX -
component products |
$ |
2.1 |
|
|
$ |
5.1 |
|
|
$ |
9.5 |
|
|
$ |
16.7 |
|
Insurance
recoveries |
|
- |
|
|
|
- |
|
|
|
.1 |
|
|
|
.1 |
|
Corporate
expense |
|
(2.4 |
) |
|
|
(2.9 |
) |
|
|
(7.4 |
) |
|
|
(7.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
$ |
(.3 |
) |
|
$ |
2.2 |
|
|
$ |
2.2 |
|
|
$ |
9.1 |
|
CHANGE IN KRONOS’ TiO2
SALES(unaudited)
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2021 vs. 2020 |
|
2021 vs. 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
change in net sales: |
|
|
|
|
|
|
|
|
|
|
|
TiO2 sales volume |
|
|
6 |
|
% |
|
|
|
8 |
|
% |
TiO2 product pricing |
|
|
11 |
|
|
|
|
|
4 |
|
|
TiO2 product mix/other |
|
|
2 |
|
|
|
|
|
2 |
|
|
Changes in currency exchange
rates |
|
|
1 |
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
20 |
|
% |
|
|
|
18 |
|
% |
SOURCE: NL Industries, Inc.
CONTACT: Janet G. Keckeisen, Investor Relations, 972.233.1700
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