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Nov. 7, 2019, 4:20 p.m. EST

NL REPORTS THIRD QUARTER 2019 RESULTS

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    NL Industries Inc. (NL)

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Dallas, Texas, Nov 07, 2019 (GLOBE NEWSWIRE via COMTEX) -- DALLAS, TEXAS - November 7, 2019 - NL Industries, Inc. /zigman2/quotes/210222881/composite NL +7.93% today reported a net loss attributable to NL stockholders of $1.6 million, or $.03 per share, in the third quarter of 2019 compared to a net loss attributable to NL stockholders of $15.4 million, or $.32 per share, in the third quarter of 2018. For the first nine months of 2019, NL reported net income attributable to NL stockholders of $19.5 million, or $.40 per share compared to a net loss attributable to NL stockholders of $43.8 million, or $.90 per share in the first nine months of 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 the first nine months of 2019 and 2018, respectively, as discussed below.

Net sales decreased $.3 million in the third quarter of 2019 compared to the same period in 2018 as higher marine component sales to the towboat market were more than offset by lower security products sales across a variety of markets. Net sales increased $3.8 million in the first nine months of 2019 compared to the same period in 2018 due to strong sales growth at marine components, partially offset by lower security products sales predominantly in the third quarter. Income from operations attributable to CompX decreased for both periods primarily due to lower sales volumes and increased labor rates and associated payroll costs for security products, partially offset by the effect of higher sales volumes for marine components.

Kronos' net sales of $437.4 million in the third quarter of 2019 were $27.1 million, or 7%, higher than in the third quarter of 2018. Kronos' net sales of $1.4 billion in the first nine months of 2019 were $45.9 million, or 3%, higher than in the first nine months 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 5% lower in the third quarter of 2019 as compared to the third quarter of 2018 and 7% lower in the first nine months of 2019 as compared to the same prior year period. Kronos' average TiO2 selling prices at the end of the third quarter of 2019 were 2% higher than at the end of the second quarter of 2019 and comparable to the end of 2018. Kronos' TiO2 sales volumes were 17% higher in the third quarter of 2019 and 16% higher in the first nine months of 2019 as compared to the same prior year periods primarily due to higher sales in all major markets. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $9 million in the third quarter of 2019 and approximately $41 million in the first nine months 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 net sales.

Kronos' income from operations in the third quarter of 2019 was $33.1 million as compared to $58.1 million in the third quarter of 2018. For the year-to-date period, Kronos' income from operations was $128.6 million as compared to $285.5 million in the first nine months of 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 third quarter of 2019 and 1% higher in the first nine months of 2019 as compared to the same periods in 2018. Kronos' operated its production facilities at overall average capacity utilization rates of 97% in the first nine months of 2019 (97% in each of the first, second and third quarters of 2019) compared to 95% in 2018 (95%, 97% and 92% in the first, second and third quarters of 2018, respectively). Fluctuations in currency exchange rates also affected income from operations comparisons, which increased income from operations by approximately $6 million in the third quarter of 2019 and by approximately $5 million in the year-to-date 2019 period as compared to the same periods in 2018.

Corporate expense increased $1.8 million in the third quarter of 2019 compared to the third quarter of 2018 primarily due to higher environmental remediation and related costs and decreased $5.3 million in the first nine months of 2019 compared to the same prior year period 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 the first nine months of 2018 related to a litigation settlement agreement. We recognized an additional $19.3 million pre-tax litigation settlement expense in the first nine months of 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 of the insurance recoveries we recognized in the first nine months of 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 $5.2 million ($.08 per share, net of income tax expense) in the first nine months of 2019.

Other income, net increased $4.4 million ($.07 per share, net of income tax expense) in the third quarter and first nine months of 2019 as compared to the same prior year periods due to a gain from the sale of excess property.

Interest and dividend income increased $.3 million in the third quarter of 2019 and $1.6 million in the first nine months of 2019 as compared to the same periods in 2018 primarily due to higher interest earned on cash and cash equivalents and restricted cash and cash equivalents and CompX's revolving promissory note receivable from Valhi. We also recognized $.6 million of accrued interest income on the insurance recovery receivable in the second quarter of 2019. Marketable equity securities represents 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 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 (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

-- 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

/zigman2/quotes/210222881/composite
US : U.S.: NYSE
$ 3.54
+0.26 +7.93%
Volume: 26,739
July 15, 2020 2:18p
P/E Ratio
13.80
Dividend Yield
N/A
Market Cap
$159.92 million
Rev. per Employee
$216,119
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