NL Reports Third Quarter Results
02 November 2009 - 11:15PM
PR Newswire (US)
DALLAS, Nov. 2 /PRNewswire-FirstCall/ -- NL Industries, Inc.
(NYSE:NL) today reported net income attributable to NL stockholders
of $3.1 million, or $.06 per share, in the third quarter of 2009
compared to a net loss of $6.7 million, or $.14 per share, in the
third quarter of 2008. For the first nine months of 2009, NL
reported a net loss attributable to NL stockholders of $10.9
million, or $.22 per share, compared to a net loss of $3.1 million,
or $.06 per share, in the first nine months of 2008. Net sales
decreased 33% and 32%, respectively, in the third quarter and first
nine months of 2009 compared to the same periods in 2008. Net sales
decreased principally due to lower order rates from our customers
resulting from unfavorable economic conditions in North America.
Component products sales were also unfavorably impacted by relative
changes in currency exchange rates, which decreased sales by $.1
million for the quarter and $1.1 million for the year-to-date
period. During the third quarter of 2008, we recorded a noncash
impairment charge of $10.1 million for our marine components
reporting unit. Excluding this goodwill impairment charge, income
from operations attributable to CompX decreased in the third
quarter and first nine months of 2009 to a loss of $.2 million and
a loss of $2.0 million, respectively, compared to income of $4.9
million and $12.3 million for the same periods of 2008. The
decrease is primarily due to reduced coverage of overhead and fixed
manufacturing costs as well as selling and general administrative
costs as a result of lower sales volumes and approximately $1.5
million and $2.5 million in patent litigation expenses incurred in
the third quarter and first nine months, respectively, of 2009.
Changes in currency exchange rates positively impacted component
products income from operations comparisons by a negligible amount
for the quarter and by $1.3 million in the year-to-date period.
Kronos' net sales of $310.1 million in the third quarter of 2009
were $35.5 million, or 10%, lower than in the third quarter of
2008. Kronos' net sales of $840.2 million for the first nine months
of 2009 were $229.8 million, or 21%, lower than in the first nine
months of 2008. Net sales decreased in the third quarter of 2009
primarily due to lower average TiO2 selling prices and to
unfavorable changes in product mix, partially offset by the
favorable impact of higher TiO2 sales volumes. Net sales were lower
in the first nine months of 2009 primarily due to a 14% decrease in
sales volumes and to unfavorable changes in product mix.
Additionally, the unfavorable effect of fluctuations in currency
exchange rates decreased the Kronos' sales by approximately $17
million for the quarter and $56 million in the year-to-date period.
Although Kronos' average selling prices were 5% lower in the third
quarter of 2009 as compared to the third quarter of 2008, the
average selling prices at the end of the third quarter 2009 were 1%
higher than at the end of the second quarter 2009. The table at the
end of this release shows how each of these items impacted the
overall decrease in sales. Kronos' income from operations improved
by $13.2 million from $7.9 million in the third quarter of 2008 to
$21.1 million in the third quarter of 2009. For the year-to-date
period, Kronos' income from operations declined $54.2 million from
income of $27.3 million in 2008 to a loss from operations of $26.9
million in 2009. Income from operations increased in the third
quarter of 2009 as compared to the third quarter of 2008 as the
unfavorable effect of lower average TiO2 selling prices was more
than offset by the favorable effect of lower maintenance and other
costs as well as higher sales volumes and fluctuations in currency
exchange rates, which increased income from operations by
approximately $2 million. For the first nine months of 2009, income
from operations declined primarily due to the negative effects of
production curtailments which resulted in significantly higher
manufacturing costs per ton of pigment production during the first
nine months of the year, as well as to the effect of lower sales
volumes. This was partially offset by lower maintenance costs and
the favorable effects of fluctuations in currency exchange rates,
which increased income from operations by approximately $50
million. Kronos' TiO2 production volumes were 3% higher in the
third quarter of 2009 and 28% lower in first nine months of 2009 as
compared to the same periods in 2008. Kronos' income tax benefit in
2008 includes a $7.2 million (NL's equity interest was $1.7
million, or $.03 per share, net of tax) non-cash deferred income
tax benefit in the second quarter related to a European Court
ruling that resulted in the favorable resolution of certain income
tax issues related to its German operations and an increase in the
amount of its German corporate and trade tax net operating loss
carryforwards. Insurance recoveries relate to amounts we received
from certain of our former insurance carriers, and relate
principally to the recovery of prior lead pigment and asbestos
litigation defense costs incurred by us. These recoveries
aggregated $4.1 million in the first nine months of 2009 ($2.6
million, or $.05 per share, net of income taxes) and $2.4 million
in the first nine months of 2008 ($1.5 million, or $.03 per share,
net of income taxes). Litigation settlement gain relates to an
$11.3 million pre-tax gain ($7.3 million, or $.15 per share, net of
income taxes) recognized in the second quarter of 2009 related to
the second closing associated with the settlement of condemnation
proceedings on certain real property we formerly owned that is
subject to environmental remediation. Corporate expenses were
higher in the third quarter and first nine months of 2009 as
compared to the same periods of 2008 primarily due to higher
defined benefit pension expense and higher environmental expense.
Interest income in 2008 includes $4.3 million ($.06 per share)
related to interest received in the second quarter related to
certain escrow funds. 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. Among the factors that could cause actual
future results to differ materially include, but are not limited
to: -- Future supply and demand for the Company's products, -- The
extent of the dependence of the Company's businesses on certain
market sectors, -- The cyclicality of certain of the Company's
businesses, -- The impact of certain long-term contracts on certain
of the Company's businesses, -- Customer inventory levels, --
Changes in raw material and other operating costs, -- General
global economic and political conditions, -- Competitive products
and substitute products, -- Possible disruption of business or
increases in the cost of doing business resulting from terrorist
activities or global conflicts, -- Customer and competitor
strategies, -- Potential consolidation or solvency of competitors,
-- The impact of pricing and production decisions, -- Competitive
technology positions, -- Service industry employment levels, --
Demand for high performance marine components, -- The introduction
of trade barriers, -- Fluctuations in currency exchange rates, --
Operating interruptions (including, but not limited to, labor
disputes, leaks, natural disasters, fires, explosions, unscheduled
or unplanned downtime and transportation interruptions), -- The
timing and amount of insurance recoveries, -- The ability of the
Company to renew, amend, refinance or comply with credit
facilities, -- The ability of the Company to maintain sufficient
liquidity, -- The extent to which the Company's subsidiaries and
affiliates were to become unable to pay dividends to the Company
(such as Kronos' suspension of its dividend in 2009), --
Uncertainties associated with new product development, -- The
ultimate outcome of income tax audits, tax settlement initiatives
or other tax matters, -- The ultimate ability to utilize income tax
attributes or changes in income tax rates related to such
attributes, the benefit of which has been recognized under the
more-likely-than-not recognition criteria, -- Potential
difficulties in integrating completed or future acquisitions, --
Decisions to sell operating assets other than in the ordinary
course of business, -- Environmental matters, -- Government laws
and regulations and possible changes therein, -- The ultimate
resolution of pending litigation, 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 the
component products (security products, furniture components and
performance marine components), chemicals (TiO2) and other
businesses. NL INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In millions, except earnings (loss) per share)
(Unaudited) Three months ended Nine months ended September 30,
September 30, ------------- ------------- 2008 2009 2008 2009 ----
---- ---- ---- Net sales $43.9 $29.4 $128.1 $87.1 Cost of sales
32.7 22.4 96.5 69.1 ---- ---- ---- ---- Gross margin 11.2 7.0 31.6
18.0 Selling, general and administrative expense 6.3 6.9 19.2 19.0
Other operating income (expense): Insurance recoveries .7 1.4 2.4
4.1 Litigation settlement gain - - - 11.3 Assets held for sale
write-down - - - (.7) Goodwill impairment (10.1) - (10.1) -
Corporate expense and other, net (3.0) (5.3) (13.9) (14.6) -----
----- ------ ------ Loss from operations (7.5) (3.8) (9.2) (.9)
Equity in net income (loss) of Kronos Worldwide, Inc. (1.3) 3.1 .7
(14.4) General corporate items: Interest and dividends .8 .7 6.9
2.1 Interest expense (.6) (.2) (1.8) (.8) ---- ---- ----- ---- Loss
before income taxes (8.6) (.2) (3.4) (14.0) Provision for income
taxes (benefit) (.9) (3.4) .2 (2.9) ---- ----- -- ----- Net income
(loss) (7.7) 3.2 (3.6) (11.1) Noncontrolling interest in net income
(loss) of subsidiary (1.0) .1 (.5) (.2) ----- -- ---- ---- Net
income (loss) attributable to NL stockholders $(6.7) $3.1 $(3.1)
$(10.9) ====== ==== ====== ======= Basic and diluted net income
(loss) per share $(.14) $.06 $(.06) $(.22) ======== ======= =======
======== Basic and diluted average shares outstanding 48.6 48.6
48.6 48.6 ==== ==== ==== ==== NL INDUSTRIES, INC. COMPONENTS OF
INCOME (LOSS) FROM OPERATIONS (In millions) (Unaudited) Three
months ended Nine months ended September 30, September 30,
------------- ------------- 2008 2009 2008 2009 ---- ---- ---- ----
CompX - component products $(5.2) $(.2) $2.2 $(2.0) Insurance
recoveries .7 1.4 2.4 4.1 Litigation settlement gain - - - 11.3
Corporate expense and other, net (3.0) (5.0) (13.8) (14.3) -----
----- ------ ------ Income (loss) from operations $(7.5) $(3.8)
$(9.2) $(.9) ====== ====== ====== ===== CHANGE IN KRONOS' TiO2
SALES (Unaudited) Three months ended Nine months ended September
30, September 30, 2009 vs. 2008 2009 vs. 2008 -------------
------------- Percentage change in sales: TiO2 product pricing (5)%
- % TiO2 sales volumes 3 % (14)% TiO2 product mix (3)% (2)% Changes
in currency exchange rates (5)% (5)% ---- ---- Total (10)% (21)%
===== ===== DATASOURCE: NL Industries, Inc. CONTACT: Gregory M.
Swalwell, Vice President, Finance and Chief Financial Officer of NL
Industries, Inc., +1-972-233-1700 Web Site: http://www.nl-ind.com/
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