NL REPORTS FIRST QUARTER 2022 RESULTS
May 04 2022 - 4:20PM
NL Industries, Inc. (NYSE: NL) today reported net income
attributable to NL stockholders of $18.6 million, or $.38 per
share, in the first quarter of 2022 compared to net income
attributable to NL stockholders of $13.3 million, or $.27 per
share, in the first quarter of 2021. NL results include an
unrealized gain of $.7 million in the first quarter of 2022 related
to the change in value of marketable equity securities compared to
an unrealized gain of $6.4 million in the first quarter of
2021.
CompX net sales were $42.1 million in the first
quarter of 2022 compared to $35.9 million in the first quarter of
2021. CompX net sales increased primarily due to higher
Security Product sales across a variety of markets and to a lesser
extent higher Marine Components sales primarily to the towboat
market. Income from operations attributable to CompX increased to
$6.3 million in the first quarter of 2022 compared to $5.8 million
in the first quarter of 2021 due to the higher sales offset by
increased production costs including increased raw material costs,
higher shipping costs, and increased labor costs due to higher
wages, overtime, and increased headcount.
NL recognized equity in earnings of Kronos of
$17.5 million in the first quarter of 2022 compared to $6.0 million
in the first quarter of 2021. Kronos’ net sales of $562.9
million in the first quarter of 2022 were $97.9 million, or 21%
higher than in the first quarter of 2021 primarily due to higher
average TiO2 selling prices and higher sales volumes. Kronos’
TiO2 sales volumes were 2% higher in the first quarter of 2022 as
compared to the first quarter of 2021 due to the effects of
continuing high demand and improvements in its delivery and
distribution networks in 2022. Kronos’ average TiO2 selling
prices were 24% higher in the first quarter of 2022 as compared to
the first quarter of 2021 and were 7% higher at the end of the
first quarter of 2022 than at the end of 2021. Fluctuations
in currency exchange rates (primarily the euro) also affected net
sales comparisons, decreasing net sales by approximately $22
million in the first quarter of 2022, as compared to the first
quarter of 2021. 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 first
quarter of 2022 was $83.3 million as compared to $34.0 million in
the first quarter of 2021. Kronos’ income from operations
increased in the first quarter of 2022 compared to the first
quarter of 2021 primarily due to higher average TiO2 selling prices
and higher sales volumes, partially offset by higher production
costs, including raw material and energy costs. Kronos’ TiO2
production volumes were 6% higher in the first quarter of 2022
compared to the first quarter of 2021. Kronos operated its
production facilities at full practical capacity in the first
quarter of 2022 compared to 97% in the first quarter of 2021.
Fluctuations in currency exchange rates (primarily the euro)
decreased income from operations approximately $5 million in the
first quarter of 2022 as compared to the first quarter of 2021.
Corporate expenses increased $.6 million in the
first quarter of 2022 compared to the first quarter of 2021
primarily due to higher litigation fees and related costs and
higher environmental remediation and related costs. Interest and
dividend income declined slightly in the first quarter of 2022
compared to the same period of 2021 primarily due to lower average
balances on the note receivable from affiliate. Marketable equity
securities represent the change in 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 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)
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2021 |
|
2022 |
|
|
(unaudited) |
Net sales |
|
$ |
35.9 |
|
$ |
42.1 |
Cost of
sales |
|
|
24.9 |
|
|
30.0 |
|
|
|
|
|
|
|
Gross margin |
|
|
11.0 |
|
|
12.1 |
|
|
|
|
|
|
|
Selling, general
and administrative expense |
|
|
5.2 |
|
|
5.8 |
Corporate
expense |
|
|
1.8 |
|
|
2.4 |
|
|
|
|
|
|
|
Income from operations |
|
|
4.0 |
|
|
3.9 |
|
|
|
|
|
|
|
Equity in
earnings of Kronos Worldwide, Inc. |
|
|
6.0 |
|
|
17.5 |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
Interest and dividend income |
|
|
.4 |
|
|
.3 |
Marketable equity securities |
|
|
6.4 |
|
|
.7 |
Other components of net periodic pension and OPEB cost |
|
|
(.1) |
|
|
(.2) |
Interest expense |
|
|
(.3) |
|
|
(.3) |
|
|
|
|
|
|
|
Income before income taxes |
|
|
16.4 |
|
|
21.9 |
|
|
|
|
|
|
|
Income tax
expense |
|
|
2.5 |
|
|
2.7 |
|
|
|
|
|
|
|
Net income |
|
|
13.9 |
|
|
19.2 |
|
|
|
|
|
|
|
Noncontrolling
interest in net income of subsidiary |
|
|
.6 |
|
|
.6 |
|
|
|
|
|
|
|
Net income
attributable to NL stockholders |
|
$ |
13.3 |
|
$ |
18.6 |
|
|
|
|
|
|
|
Net income per
share attributable to NL stockholders |
|
$ |
.27 |
|
$ |
.38 |
|
|
|
|
|
|
|
Weighted average
shares used in the calculation of net income per
share |
|
|
48.8 |
|
|
48.8 |
NL INDUSTRIES, INC.
COMPONENTS OF INCOME FROM
OPERATIONS
(In millions)
|
|
|
|
|
|
|
Three months ended |
|
March 31, |
|
2021 |
|
2022 |
|
(unaudited) |
CompX -
component products |
$ |
5.8 |
|
$ |
6.3 |
Corporate
expense |
|
(1.8) |
|
|
(2.4) |
|
|
|
|
|
|
Income from operations |
$ |
4.0 |
|
$ |
3.9 |
CHANGE IN KRONOS’ NET
SALES
(unaudited)
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2022 vs. 2021 |
|
Percentage
change in net sales: |
|
|
TiO2 product pricing |
24 |
% |
TiO2 sales volume |
2 |
|
Changes in currency exchange rates |
(5) |
|
|
|
|
Total |
21 |
% |
SOURCE: NL Industries, Inc.
CONTACT: Janet G. Keckeisen, Investor Relations, 972.233.1700
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