NL REPORTS FIRST QUARTER 2022 RESULTS

Dallas, Texas, UNITED STATES


Dallas, Texas, May 04, 2022 (GLOBE NEWSWIRE) -- 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%  
 

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