Operating income of Kronos' titanium dioxide pigments ("TiO2") business in the first quarter of 2002 was $22.2 million compared with $51.9 million from the prior year period. The decrease in operating income was primarily due to lower average selling prices, partially offset by higher sales volume.
Kronos' average selling price in billing currencies (which excludes the effects of foreign currency translation) during the first quarter of 2002 was 15% lower than the first quarter of 2001 and 5% lower than the fourth quarter of 2001. Compared with the fourth quarter of 2001, selling prices in billing currencies were lower in all major markets. The average selling price in billing currencies in March 2002 was slightly lower than the average selling price during the first quarter.
Kronos' first quarter 2002 average selling price expressed in U.S. dollars (computed using actual foreign currency exchange rates prevailing during the respective periods) was 18% lower than the first quarter of 2001 and 6% lower than the fourth quarter of 2001. March's average selling price expressed in U.S. dollars was slightly lower than the average selling price for the first quarter.
Kronos' first quarter 2002 sales volume increased 9% from the first quarter of 2001 and increased 23% from the fourth quarter of 2001. Sales volume in the first quarter of 2002 increased 9% and 15%, in Europe and North America, respectively, while export volume decreased 6%. Compared with the fourth quarter of 2001, sales volume increased 29% and 25%, in Europe and North America, respectively, while export volume decreased modestly. Finished goods inventory levels at the end of the first quarter decreased 7% from December 2001 levels and represented approximately two months of sales.
First quarter 2002 production volume decreased 2% compared with the first quarter of 2001 and increased 9% from the fourth quarter of 2001.
J. Landis Martin, President and Chief Executive Officer, stated, "Stronger than expected sales volume and corresponding increased production rates were the key drivers to our better than anticipated operating results. Selling prices continued to decline throughout the quarter; however, the rate of decline slowed during the quarter. We reported record first quarter sales volume due to strong March sales and believe this strong sales volume was primarily attributable to customers restocking inventory levels ahead of previously announced price increases. Although we believe there is growing confidence in an economic recovery, there is still uncertainty as to the timing of a recovery in end-user demand and the extent to which the previously announced price increases will be realized."
Securities earnings in the first quarter of 2002 was $1.3 million, or $1.3 million lower than the first quarter of 2001 primarily due to lower interest rates.
Corporate expense in the first quarter of 2002 was $10.1 million, or $3.3 million higher than the first quarter of 2001, primarily due to higher environmental expenses and higher legal expenses.
Interest expense for the first quarter was $6.4 million, a decrease of 9% compared with first quarter 2001 primarily due to reduced levels of outstanding debt. As previously announced, the Company redeemed $25 million of its 11.75% Senior Secured Notes in March 2002.
The Company's net debt at March 31, 2002 was $61.0 million, up $17.3 million from December 31, 2001. Net debt at March 31, 2002 was comprised of total debt of $217.7 million less cash, restricted cash and restricted marketable debt securities of $156.7 million.
Minority interest primarily related to the Company's majority-owned environmental management subsidiary.
Unusual items in the first quarter of 2002 and 2001 of $1.9 million ($.02 per diluted share, net of income taxes) and $10.6 million ($.14 per diluted share, net of income taxes), respectively, relate to litigation settlement gains with former insurance carrier groups related to environmental remediation claims.
A conference call regarding NL's earnings announcement is scheduled for April 26, 2002 at 10:30 a.m. (EDT). Mr. Martin will host the call. Participants can access the call by dialing (800) 288-8976 (domestic) and (612) 332-0820 (international). The title of the call is NL Earnings. A taped replay of the call will be available at 12:00 p.m. (EDT) the day of the call through 11:59 p.m. (EDT) on May 3, 2002 by calling (800) 475-6701 (domestic) and (320) 365-3844 (international). The access code for the replay is 634401. The call will also be broadcast live on the Internet at the Corporate Communications Broadcast Network ("CCBN") website at http://www.companyboardroom.com/ . In order to listen to the call, your computer must have Windows Media Player or RealPlayer installed, which can be downloaded prior to the call from the CCBN website. 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," "could," "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, transportation interruptions, war and terrorist activities), 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 disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share and metric ton data)
(Unaudited)
Three months ended
March 31,
2002 2001
Revenues and other income:
Net sales $202.4 $226.1
Other income, excluding corporate, net .7 1.2
203.1 227.3
Cost of sales 156.3 149.9
Selling, general and administrative, excluding
corporate 24.6 25.5
Operating income 22.2 51.9
Corporate income (expense):
Securities earnings 1.3 2.6
Litigation settlement gains, net and other
income 2.9 11.6
Expenses (10.1) (6.8)
Interest expense (6.4) (7.0)
Income before income taxes, minority
interest and extraordinary item 9.9 52.3
Income tax expense 3.2 17.1
Income before minority interest and
extraordinary item 6.7 35.2
Minority interest .2 .6
Income before extraordinary item 6.5 34.6
Extraordinary item, early extinguishment of debt (.1) ---
Net income $6.4 $34.6
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, (Continued)
(in millions, except per share and metric ton data)
(Unaudited)
Three months ended
March 31,
2002 2001
Basic earnings per share:
Income before extraordinary item $.13 $.69
Extraordinary item --- ---
Net income $.13 $.69
Diluted earnings per share:
Income before extraordinary item $.13 $.69
Extraordinary item --- ---
Net income $.13 $.69
Weighted average shares used in the calculation of
earnings per share:
Basic shares 48.9 50.1
Dilutive impact of stock options --- .2
Diluted shares 48.9 50.3
Metric tons in thousands:
Sales volume 112 103
Production volume 106 108
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SOURCE NL Industries, Inc.
CONTACT: Robert D. Hardy, Chief Financial Officer of NL Industries,
Inc., +1-281-423-3332
URL: http://www.companyboardroom.com
http://www.nl-ind.com
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