2013-03-12 22:32:53 -
DALLAS, TEXAS - March 12, 2013 - NL Industries, Inc. (NYSE: NL) today reported
income from continuing operations attributable to NL stockholders of $2.7
million, or $.05 per share, in the fourth quarter of 2012 compared to income
from continuing operations of $19.7 million, or $.40 per share, in the fourth
quarter of 2011. For the full year 2012, NL reported income from continuing
operations attributable to NL stockholders of $56.6 million, or $1.16 per share
compared to income from continuing operations of $78.1 million, or $1.61 per
share, in 2011.
Net sales increased 3% in the fourth quarter of 2012 as compared to the fourth
quarter 2011 and increased 4% in the full year 2012 compared to 2011. Net sales
increased principally due to growth in customer demand within
both of CompX's
businesses resulting from somewhat improved economic conditions in North
America. Income from continuing operations attributable to CompX decreased to
nil and $5.4 million, in the fourth quarter and full year of 2012, respectively,
compared to income from continuing operations of $1.4 million and $6.4 million
in the same periods of 2011. Income from continuing operations comparisons were
negatively impacted by higher self-insured medical costs in 2012. In addition,
the 2011 and 2012 full-year periods include the impact of write-downs on assets
held for sale of $1.1 million and $1.2 million, respectively ($.02 per share,
net of income taxes and noncontrolling interest, in both periods).
Kronos' net sales of $396.8 million in the fourth quarter of 2012 were $40.6
million, or 9%, lower than in the fourth quarter of 2011. Kronos' net sales of
$1,976.3 million in the full year of 2012 were $33.0 million, or 2%, higher than
in the full year 2011. Net sales decreased in the fourth quarter of 2012 as
compared to the fourth quarter of 2011 due to lower average TiO(2) selling
prices partially offset by higher sales volumes. Net sales increased in the
full year of 2012 primarily due to higher average TiO(2) selling prices,
partially offset by lower sales volumes. Kronos' average TiO(2) selling prices
decreased 14% in the fourth quarter of 2012 as compared to the fourth quarter of
2011, and increased 10% for the full year as compared to 2011. Kronos' average
TiO(2) selling prices at the end of 2012 were 17% lower than at the end of 2011
and were 10% lower than at the end of the third quarter of 2012. TiO(2 )sales
volumes in the fourth quarter of 2012 were 6% higher than in the fourth quarter
of 2011, while sales volumes for the full year 2012 were 6% lower than in
2011. Fluctuations in currency exchange rates also impacted net sales
comparisons, decreasing net sales by approximately $12 million in the fourth
quarter and approximately $82 million in the full year 2012 as compared to
2011. The table at the end of this press release shows how each of these items
impacted Kronos' overall change in sales.
Kronos' income from operations decreased by $142.2 million, from $143.3 million
in the fourth quarter of 2011 to $1.1 million in the fourth quarter of 2012.
For the full year, Kronos' income from operations decreased by $186.9 million
from $546.5 million in 2011 to $359.6 million in 2012. Income from operations
decreased in the fourth quarter period primarily due to the negative effects of
lower TiO(2) selling prices, lower production volumes and higher raw material
costs offset in part by increased sales volume. Income from operation decreased
for the full year primarily due to lower sales and production volumes, higher
raw material costs and the unfavorable effects of unabsorbed fixed production
costs resulting from reduced production volumes, partially offset by higher
average sales prices. Changes in currency exchange rates decreased Kronos'
income from operations by approximately $9 million in the fourth quarter and $10
million in the full year 2012 as compared to the same periods in 2011.
As previously reported, in March 2011 Kronos redeemed €80 million principal
amount of its 6.5% Senior Secured Notes due 2013, and in the third and fourth
quarters of 2011, Kronos repurchased in open market transactions an aggregate
€40.8 million principal amount of its Senior Notes. As a result of these
redemptions and open market purchases, Kronos' results in 2011 include a net
charge of $3.1 million (NL's equity interest was $.4 million, or $.01 per share,
net of income tax benefit) consisting of the call premium, the write-off of
unamortized deferred financing costs and original issue discount associated with
the redeemed and purchased Notes. In June 2012, Kronos entered into a new $400
million term loan and used a portion of the net proceeds to redeem the remaining
€279.2 million principal amount of Senior Notes outstanding. As a result,
Kronos recognized a second quarter 2012 charge of $7.2 million (NL's equity
interest was $.9 million or $.02 per share, net of income tax) associated with
the early extinguishment of such remaining Senior Notes.
Kronos' income tax expense in 2011 includes a provision for income taxes of
$17.2 million (NL's equity was $3.4 million, or $.07 per share, net of income
taxes) for U.S. incremental income taxes on earnings repatriated from its German
subsidiary, which earnings were used to fund a portion of the repurchases of
Kronos' Senior Secured Notes.
Insurance recoveries reflect in part amounts we received from certain of our
former insurance carriers, and relate to the recovery of prior lead pigment and
asbestos litigation defense costs incurred by us. Such insurance recoveries
aggregated $3.3 million ($2.2 million, or $.04 per share, net of income taxes)
in 2012 as compared to $16.9 million ($11.0 million, or $.23 per share, net of
income taxes) in 2011. A substantial portion of the insurance recoveries we
recognized in 2011 relates to a settlement we reached for a portion of our past
lead pigment litigation costs.
Litigation settlement gain in 2012 relates to a $15.0 million gain ($9.7
million, or $.20 per share, net of income taxes) recognized in the second
quarter related to the third and final closing associated with certain real
property we formerly owned in New Jersey.
Other operating income in the fourth quarter of 2012 includes a $3.2 million
gain ($2.1 million, or $.04 per share after taxes) on the sale of certain real
property owned by us. In addition, we recognized a $6.4 million goodwill
impairment charge ($.13 per share) in the fourth quarter of 2012 associated with
our insurance brokerage subsidiary. There is no income tax benefit associated
with such charge.
Corporate expenses were comparable in the 2011 and 2012 fourth quarter periods,
and increased $4.0 million, or 16%, in the full year 2012 compared to 2011
primarily related to higher environmental and related costs in the first quarter
of 2012.
Securities transactions gains in the fourth quarter of 2012 consist of a $16.6
million gain ($10.8 million, or $.22 per share after taxes) on the sale,
pursuant to a cash tender offer by a third party, of all of our shares of
Titanium Metals Corporation (TIMET) common stock for $23.9 million.
In December 2012, we completed the sale of CompX's Furniture Components
operations to a competitor for proceeds, net of expenses, of approximately $58.0
million in cash. We recognized a pre-tax gain of approximately $23.7 million in
the fourth quarter of 2012 ($14.5 million, or $.30 per share, net of income
taxes and noncontrolling interests). Discontinued operations also includes
full-year income related to the operations of such disposed unit of $3.5
million, or $.07 per share, in 2011 and $3.3 million, or $.07 per share in
2012, net of income taxes and noncontrolling interest. We have reclassified our
Condensed Consolidated Statement of Operations to reflect the disposed business
as discontinued operations for all 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. Among the 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' TiO(2 )operations)
* Unexpected or earlier-than-expected industry capacity expansion (such as the
TiO(2 )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, TiO(2 )and
component products)
* Competitive pricing, products and substitute products
* Customer and competitor strategies
* Uncertainties associated with the development of new product features
* Potential consolidation of Kronos' competitors
* The impact of pricing and production decisions
* Competitive technology positions
* Potential difficulties in integrating future acquisitions
* Potential difficulties in upgrading or implementing new manufacturing and
accounting software systems
* The introduction of trade barriers
* Possible disruption of Kronos' or CompX's business, or increases in our
cost of doing business resulting from terrorist activities or global
conflicts
* 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), or possible disruptions to our business resulting from
potential instability resulting from uncertainties associated with the euro
* Operating interruptions (including, but not limited to, labor disputes,
leaks, natural disasters, fires, explosions, unscheduled or unplanned
downtime, transportation interruptions and cyber attacks)
* Decisions to sell operating assets other than in the ordinary course of
business
* CompX's and Kronos' ability to renew or refinance debt
* Our ability to maintain sufficient liquidity
* The timing and amounts of insurance recoveries
* The extent to which our subsidiaries or affiliates were to become unable to
pay us dividends
* The ultimate outcome of income tax audits, tax settlement initiatives or
other tax matters
* Uncertainties associated with the development of new product features
* Our ability to utilize income tax attributes or changes in income tax rates
related to such attributes, the benefits of which 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
present and former manufacturers of lead pigment and lead-based paint,
including us, with respect to asserted health concerns associated with the
use of such products)
* The ultimate resolution of pending litigation (such as our lead pigment and
environmental matters)
* 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 and
performance marine components), chemicals (TiO(2)) and other businesses.
Source: NL Industries, Inc.
Contact: Gregory M. Swalwell, Vice President, Finance and Chief Financial
Officer, 972-233-1700
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except earnings per share)
Three months ended Year ended
December 31, December 31,
------------------------------ ----------------------------
2011 2012 2011 2012
(Unaudited)
Net sales $ 18.7 $ 19.3 $ 79.8 $ 83.2
Cost of sales 13.2 13.8 55.7
58.9
Gross margin 5.5 5.5 24.1
24.3
Selling, general
and administrative 4.1 4.7 16.6
17.7
expense
Other operating
income (expense):
Insurance .3 .7 16.9
3.3
recoveries
Litigation - -
- 15.0
settlement gain
Assets held - (.8) (1.1)
(1.2)
for sale write-down
Other income, .9 3.6 1.0
3.6
net
Goodwill - (6.4)
- (6.4)
impairment
Corporate (4.4) (4.4) (25.0)
(29.0)
expense
Loss from (1.8) (6.5)
(.7) (8.1)
operations
Equity in earnings
(loss) of Kronos 26.1 (5.6) 97.6
66.4
Worldwide, Inc.
General corporate
items:
Securities - 16.6
- 16.6
transactions gains
Interest and .8 .8
3.0 3.2
dividends
Interest (.2) (.2) (1.5)
(1.1)
expense
Income
from continuing
operations 24.9 5.1 98.4
77.0
before income taxes
Provision for 5.1 2.4 19.8
19.9
income taxes
Income from
continuing 19.8 2.7 78.6
57.1
operations
Income from
discontinued .3 18.6 4.1
21.9
operations, net of
tax
Net income 20.1 21.3 82.7
79.0
Noncontrolling
interest in net .2 3.7 1.0
4.5
income of
subsidiary
Net income
attributable to NL $ 19.9 $ 17.6 $ 81.7 $ 74.5
stockholders
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except earnings per share)
Three months ended Year ended
December 31, December 31,
------------------------------ ----------------------------
2011 2012 2011 2012
(Unaudited)
Amounts
attributable to NL
stockholders:
Income from
continuing $ 19.7 $ 2.7 $ 78.1 $ 56.6
operations
Income from
discontinued .2 14.9 3.6
17.9
operations
Net income
attributable to NL $ 19.9 $ 17.6 $ 81.7 $ 74.5
stockholders
Basic and
diluted net income
per share:
Income
from continuing $ .40 $ .05 $ 1.61 $
1.16
operations
Discontinued .01 .31 .07
.37
operations
Net
income per share $ .41 $ .36 $ 1.68 $
1.53
attributable to NL
stockholders
Weighted
average shares
outstanding used
in the
calculation of net 48.7 48.7 48.7 48.7
income per share
NL INDUSTRIES, INC.
COMPONENTS OF LOSS ATTRIBUTABLE
TO CONTINUING OPERATIONS
(In millions)
(Unaudited)
Three months ended Year ended
December 31, December 31,
--------------------------- -------------------------
2011 2012 2011 2012
CompX - component $ 1.4 $ - $ 6.4 $
5.4
products
Insurance recoveries .3 .7 16.9 3.3
Litigation settlement - -
- 15.0
gain
Other income, net .9 3.6 1.0
3.6
Goodwill impairment - (6.4) -
(6.4)
Corporate expense (4.4) (4.4) (25.0) (29.0)
Loss from $ (1.8) $ (6.5) $ (.7) $
(8.1)
operations
CHANGE IN KRONOS' TiO(2) SALES
(Unaudited)
Three months Year ended
ended
December 31, December 31,
2012 vs. 2011 2012 vs. 2011
---------------- --------------
Percentage change in sales:
TiO(2) product pricing (14) % 10 %
TiO(2) sales volume 6 % (6) %
TiO(2) product mix 2 % 2 %
Changes in currency exchange rates (3) % (4) %
Total (9) % 2
%
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originality of the information contained therein.
Source: NL Industries via Thomson Reuters ONE
[HUG#1684734]
