NL REPORTS FOURTH QUARTER 2021 RESULTS
March 09 2022 - 4:20PM
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $14.9 million, or $.31 per
share, in the fourth quarter of 2021 compared to $4.3 million, or
$.09 per share, in the fourth quarter of 2020. NL results include
an unrealized gain of $6.5 million in the fourth quarter of 2021
related to the change in value of marketable equity securities
compared to $2.4 million in the fourth quarter of 2020. For the
full year of 2021, NL reported net income attributable to NL
stockholders of $51.2 million, or $1.05 per share, compared to
$14.7 million, or $.30 per share in 2020. NL results include an
unrealized gain of $16.2 million in the full year of 2021 related
to the change in value of marketable equity securities compared to
an $8.7 million unrealized loss in 2020.
CompX’s net sales were $34.1 million in the
fourth quarter of 2021 compared to $30.0 million in the fourth
quarter of 2020 and $140.8 million for the year ended December 31,
2021 compared to $114.5 million for the full year of 2020.
CompX net sales increased in the fourth quarter of 2021 compared to
the same period in 2020 primarily due to higher Security Products
sales, largely increased sales to the government security and
transportation markets and, to a lesser extent, higher Marine
Component sales, predominantly to the towboat market. CompX’s net
sales increased for the full year of 2021 compared to the full year
of 2020 primarily due to higher sales volumes at both of CompX’s
business units. CompX’s net sales were negatively impacted by the
COVID-19 pandemic, as noted below.
Income from operations attributable to CompX was
$3.8 million in the fourth quarter of 2021 compared to $2.3 million
in the fourth quarter of 2020 and $20.5 million in the full year of
2021 compared to $11.8 million in the full year of 2020.
CompX’s income from operations increased in the fourth quarter of
2021 compared to the fourth quarter of 2020 as higher costs,
specifically increased raw material, shipping and labor costs, were
more than offset by higher sales. CompX’s net sales and income from
operations was negatively impacted by the COVID-19 pandemic in the
second and third quarters of 2020, which significantly impacts its
net sales and income from operations comparisons for the full year.
Beginning in the third quarter of 2020 and continuing through 2021,
CompX’s sales generally improved at both business units and its
operating income increased for the full year of 2021 as compared to
2020 primarily due to the favorable effect of higher sales and
production volumes, partially offset by higher production costs
including increased raw material, shipping and labor costs.
NL recognized equity in earnings of Kronos of
$9.6 million in the fourth quarter of 2021 compared to $3.1 million
in the same period of 2020 and $34.3 million in the full year of
2021 compared to $19.4 million in the full year of 2020.
Kronos’ net sales of $496 million in the fourth quarter of 2021
were $81.1 million, or 20%, higher than in the fourth quarter of
2020. Kronos’ net sales of $1.9 billion in the full year of
2021 were $300.6 million, or 18%, higher than in the full year of
2020. Kronos’ net sales increased in the fourth quarter of
2021 compared to the same period in 2020 primarily due to higher
average TiO2 selling prices. Kronos’ net sales increased in the
full year of 2021 compared to the full year of 2020 primarily due
to higher average TiO2 selling prices and higher sales volumes.
Kronos’ TiO2 sales volumes were 6% higher in the full year of 2021
as compared to the full year of 2020 due to higher demand in its
European, North American and Latin American markets. Increased
demand resulted from continuing improvements in global economic
activity in 2021 compared to the negative impact from the COVID-19
pandemic in 2020. Kronos’ TiO2 sales volumes in the fourth quarter
of 2021 were comparable to the fourth quarter of 2020. Kronos’
average TiO2 selling prices were 17% higher in the fourth quarter
of 2021 as compared to the fourth quarter of 2020 and 8% higher in
the full year of 2021 as compared to the full year of 2020.
Kronos’ average TiO2 selling prices at the end of 2021 were 6%
higher than the end of the third quarter of 2021 and 16% higher
than at the beginning of the year. Fluctuations in currency
exchange rates (primarily the euro) also affected Kronos’ net sales
comparisons, decreasing net sales by approximately $4 million in
the fourth quarter of 2021 and increasing net sales by
approximately $43 million in the full year 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 net sales.
Kronos’ income from operations in the fourth
quarter of 2021 was $52.0 million as compared to $20.4 million in
the fourth quarter of 2020. For the full year of 2021, Kronos’
income from operations was $187.1 million as compared to $116.2
million in 2020. Kronos’ income from operations
increased in the fourth quarter of 2021 as compared to the fourth
quarter of 2020 primarily due to higher average TiO2 selling
prices, partially offset by higher production costs, including raw
material and energy costs. Kronos’ income from operations increased
for the full year of 2021 compared to the full year of 2020
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 8% higher in the
fourth quarter of 2021 and 5% higher in the full year of 2021 as
compared to the same periods in 2020. 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 full
practical capacity in the full year of 2021 (97%, 100%, 100% and
100% in the first, second, third and fourth quarters of 2021,
respectively) compared to 92% in 2020 (95%, 96%, 86% and 92% in the
first, second, third and fourth quarters of 2020, respectively).
Fluctuations in currency exchange rates (primarily the euro)
increased income from operations approximately $2 million in the
fourth quarter of 2021 as compared to the fourth quarter of 2020.
Fluctuations in currency exchange rates (primarily the Canadian
dollar) also affected the year-to-date income from operations
comparison, which decreased income from operations by approximately
$13 million in the full year of 2021 as compared to the full year
of 2020.
Corporate expenses increased $.3 million in the
fourth quarter of 2021 compared to the fourth quarter of 2020
primarily due to higher environmental remediation and related
costs. Corporate expenses increased $.6 million in the full year of
2021 compared to the full year of 2020 primarily due to higher
environmental remediation and related costs partially offset by
lower administrative expenses. Interest and dividend income in the
fourth quarter and for the full year of 2021 decreased $.2 million
and $1.0 million, respectively, compared to the same periods in the
prior year primarily due to lower interest income related to 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 and energy
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;
-
Potential increases in interest rates;
-
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); and
-
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)
|
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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, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
|
(unaudited) |
|
|
|
|
|
|
Net sales |
|
$ |
30.0 |
|
$ |
34.1 |
|
$ |
114.5 |
|
$ |
140.8 |
Cost of
sales |
|
|
22.3 |
|
|
24.7 |
|
|
81.7 |
|
|
98.1 |
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Gross margin |
|
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7.7 |
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9.4 |
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32.8 |
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42.7 |
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Selling, general
and administrative expense |
|
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5.4 |
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5.6 |
|
|
21.0 |
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|
22.2 |
Corporate
expense |
|
|
2.1 |
|
|
2.4 |
|
|
9.4 |
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10.0 |
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Income from operations |
|
|
.2 |
|
|
1.4 |
|
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2.4 |
|
|
10.5 |
|
|
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Equity in
earnings of Kronos Worldwide, Inc. |
|
|
3.1 |
|
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9.6 |
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19.4 |
|
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34.3 |
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Other income
(expense): |
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Interest and dividend income |
|
|
.5 |
|
|
.3 |
|
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2.6 |
|
|
1.6 |
Marketable equity securities |
|
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2.4 |
|
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6.5 |
|
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(8.7) |
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|
16.2 |
Other components of net periodic pension and OPEB cost |
|
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(.2) |
|
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(.2) |
|
|
(.8) |
|
|
(.6) |
Interest expense |
|
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(.3) |
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(.2) |
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(1.3) |
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|
(1.1) |
|
|
|
|
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|
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|
|
|
|
|
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Income before income taxes |
|
|
5.7 |
|
|
17.4 |
|
|
13.6 |
|
|
60.9 |
|
|
|
|
|
|
|
|
|
|
|
|
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Income tax
expense (benefit) |
|
|
1.1 |
|
|
2.0 |
|
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(2.5) |
|
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7.5 |
|
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Net income |
|
|
4.6 |
|
|
15.4 |
|
|
16.1 |
|
|
53.4 |
|
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Noncontrolling
interest in net income of subsidiary |
|
|
.3 |
|
|
.5 |
|
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1.4 |
|
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2.2 |
|
|
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Net income
attributable to NL stockholders |
|
$ |
4.3 |
|
$ |
14.9 |
|
$ |
14.7 |
|
$ |
51.2 |
|
|
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|
|
|
|
|
|
|
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|
|
Net income per
share attributable to NL stockholders |
|
$ |
.09 |
|
$ |
.31 |
|
$ |
.30 |
|
$ |
1.05 |
|
|
|
|
|
|
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|
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|
|
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 FROM
OPERATIONS
(In millions)
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Three months ended |
|
Year ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
|
(unaudited) |
|
|
|
|
|
|
CompX -
component products |
|
$ |
2.3 |
|
$ |
3.8 |
|
$ |
11.8 |
|
$ |
20.5 |
Corporate
expense |
|
|
(2.1) |
|
|
(2.4) |
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|
(9.4) |
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|
(10.0) |
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Income from operations |
|
$ |
.2 |
|
$ |
1.4 |
|
$ |
2.4 |
|
$ |
10.5 |
CHANGE IN KRONOS’ NET
SALES
(unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
|
|
December 31, |
|
December 31, |
|
|
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2021 vs. 2020 |
|
2021 vs. 2020 |
|
Percentage change
in net sales: |
|
|
|
|
|
TiO2 product pricing |
|
17 |
% |
8 |
% |
TiO2 sales volume |
|
— |
|
6 |
|
TiO2 product mix/other |
|
4 |
|
1 |
|
Changes in currency exchange rates |
|
(1) |
|
3 |
|
|
|
|
|
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|
Total |
|
20 |
% |
18 |
% |
SOURCE: NL Industries, Inc.
CONTACT: Janet G. Keckeisen, Investor Relations, 972.233.1700
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