Susan E. Alderton
Chief Financial Officer
(281) 423-3332
Houston, Texas – April 23, 2001 – NL Industries, Inc. (NYSE:NL) today reported net income for the first quarter of 2001 of $.69 per diluted share, including $.14 per diluted share of after-tax insurance settlement gains related to environmental remediation. Net income in the first quarter of 2000 was $.46 per diluted share.
Operating income of Kronos' titanium dioxide pigments ("TiO2") business in the first quarter of 2001 increased 12% to $51.9 million compared to $46.2 million in the first quarter of 2000. The improved operating income is primarily due to higher average selling prices in billing currencies and higher production volume, partially offset by lower sales volume.
Kronos' average selling price in billing currencies (which excludes the effects of foreign currency translation) during the first quarter of 2001 was 5% higher than the first quarter of 2000 and 1% lower than the fourth quarter of 2000. Compared to the fourth quarter of 2000, prices were lower in all major markets. The average selling price in billing currencies in March was 1% lower than the average selling price during the first quarter. Kronos' first-quarter 2001 average selling price expressed in U.S. dollars computed using actual foreign currency exchange rates prevailing during the respective periods was 1% higher than the first quarter of 2000 and 2% higher than the fourth quarter of 2000.
Dr. Lawrence A. Wigdor, Kronos' President and Chief Executive Officer, stated, "Market conditions in the TiO2 industry have generally stalled our efforts to increase prices. Worldwide economic conditions will determine whether any price increases will be realized during the remainder of the year."
Kronos' first-quarter 2001 sales volume decreased 7% from the record first quarter of 2000 and increased 11% from the fourth quarter of 2000. Sales volume in the first quarter of 2001 was 7% and 11% lower in Europe and North America, respectively, compared to the first quarter of 2000 while export volume increased by 7%. Compared to the fourth quarter of 2000, sales volume increased by more than 10% in each of Kronos' major markets. Finished goods inventory levels at the end of March increased slightly from December 2000 levels and represent about two months of sales.
First-quarter 2001 production volume was 2% higher than the comparable 2000 period with operating rates near full capacity in both periods. Production at the Company's Leverkusen facility was adversely affected late in the first quarter by the previously reported fire. Production rates at the Company's Leverkusen chloride-process plant returned to full capacity on April 8th, and the Company's Leverkusen sulfate-process plant is expected to be over 50% operational in August 2001 and fully operational in October 2001.
The Company believes that the damages to property and the business interruption losses caused by the fire are covered by insurance. No insurance proceeds have been recognized during the first quarter of 2001 for the business interruption portion of the loss because the amount of such proceeds is presently not determinable. No provision for impairment of the damaged fixed assets has been recognized because the Company believes the insurance proceeds will exceed their carrying value.
As previously reported, an agreement was reached in January 2001 with the remaining members of NL's remaining principal former insurance carrier group to settle certain insurance coverage claims. The Company recognized a $10.3 million net pretax gain in the first quarter of 2001. A majority of the proceeds from the settlement were transferred by the remaining members of the insurance carrier group in April to a special-purpose trust established to pay future remediation and other environmental expenditures of the Company.
J. Landis Martin, President and Chief Executive Officer, stated, "NL posted another strong quarter and concluded its negotiations with its primary former insurance carrier group. However, we expect earnings per share in the second quarter to be lower than the first quarter of 2001, excluding the first-quarter settlement gain. Our second-quarter outlook recognizes that industry fundamentals have weakened due to slowing worldwide economies."
The Company's net debt at March 31, 2001 was $77 million (total debt of $263 million less cash of $186 million).
A conference call regarding NL's earnings announcement is scheduled for April 23, 2001 at 11:00 a.m. (EDT). Mr. Martin will host the call. Participants can access the call by dialing 800-450-0819 (domestic) and 612-332-1020 (international). The passcode is NL Earnings. A taped replay of the call will be available after 2:30 p.m. (EDT) the day of the call through 11:59 p.m. (EDT) on April 30, 2001 by calling 800-475-6701 (domestic) and 320-365-3844 (international), and using access code 582103. The call will also be broadcast live on the Internet at StreetEvents.com and an online replay will be available approximately one hour after the call.
NL Industries, Inc. is a major international producer of titanium dioxide pigments.
The statements in this
release (and statements made in the conference call referred to above) relating
to matters that are not historical facts are forward-looking statements that
represent management's beliefs and assumptions based on currently available
information. Forward-looking statements can be identified by the use of words
such as "believes," "intends," "may," "will,"
"should," "anticipates," "expects," or comparable
terminology or by discussions of strategy or trends. Although the Company believes
that the expectations reflected in such forward-looking statements are reasonable,
it cannot give any assurances that these expectations will prove to be correct.
Such statements by their nature involve risks and uncertainties, including,
but not limited to, the cyclicality of the titanium dioxide industry, global
economic and political conditions, global productive capacity, customer inventory
levels, changes in product pricing, changes in product costing, changes in foreign
currency exchange rates, competitive technology positions, operating interruptions
(including, but not limited to, labor disputes, leaks, fires, explosions, unscheduled
downtime and transportation interruptions), recoveries from insurance claims
and the timing thereof, the ultimate resolution of pending or possible future
lead pigment litigation and legislative developments related to the lead paint
litigation, the outcome of other litigation, and other risks and uncertainties
detailed in the Company's Securities and Exchange Commission filings. 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 forecasted or expected. The Company assumes
no duty to update any forward-looking statements.
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share and metric ton data) (Unaudited) |
||
|
Quarters
ended |
||
|
2001 |
2000 |
|
| Revenues and other income: | ||
|
$226.1 |
$231.0 |
|
1.2 |
1.7 |
|
227.3 |
232.7 |
|
| Cost of sales |
149.9 |
159.3 |
| Selling,
general and administrative, excluding corporate |
25.5 |
27.2 |
|
51.9 |
46.2 |
| Corporate income (expences): | ||
|
2.6 |
1.7 |
|
11.6 |
1.1 |
|
(6.8) |
(6.1) |
|
(7.0) |
(7.9) |
|
52.3 |
35.0 |
| Income tax benefit expense |
17.1 |
11.2 |
|
35.2 |
23.8 |
| Minority interest |
.6 |
.1 |
|
$ 34.6 |
$ 23.7 |
|
Earnings per share - net income: |
||
Basic |
$.69 |
$.47 |
|
$.69 |
$.46 |
| Weighted average shares used in the calculation of earnings per share: | ||
|
50.1 |
50.9 |
|
.2 |
.3 |
Diluted shares |
50.3
|
51.2
|
| Metric tons in thousands: | ||
|
103
|
111
|
|
108 |
106 |