Net sales decreased
Kronos’ net sales of
Kronos’ income from operations in the third quarter of 2019 was
Corporate expense increased
Insurance recoveries represent amounts we receive from certain of our former insurance carriers and generally relate to the recovery of past lead pigment and asbestos litigation defense costs we have incurred. Substantially all of the insurance recoveries we recognized in the first nine months of 2019 relate to a settlement we reached with a single insurance carrier that agreed to reimburse us for a portion of our past and future litigation defense costs in the second quarter. Such insurance recoveries aggregated
Other income, net increased
Interest and dividend income increased
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.
- 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 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, TiO2 and component products)
- 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
- 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 or other currencies
- 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
- Kronos’ ability to renew or refinance credit facilities
- 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
- Uncertainties associated with CompX’s development of new 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
- 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except earnings per share)
(unaudited)
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Net sales | $ | 30.0 | $ | 29.7 | $ | 90.8 | $ | 94.6 | |||||||
Cost of sales | 20.4 | 20.2 | 60.5 | 64.6 | |||||||||||
Gross margin | 9.6 | 9.5 | 30.3 | 30.0 | |||||||||||
Selling, general and administrative expense | 5.1 | 5.2 | 15.4 | 15.8 | |||||||||||
Other operating income (expense): | |||||||||||||||
Insurance recoveries | .5 | .2 | .9 | 5.2 | |||||||||||
Other income, net | - | 4.4 | .6 | 4.4 | |||||||||||
Litigation settlement expense | - | .3 | (62.0 | ) | (19.3 | ) | |||||||||
Corporate expense | (1.6 | ) | (3.4 | ) | (14.4 | ) | (9.1 | ) | |||||||
Income (loss) from operations | 3.4 | 5.8 | (60.0 | ) | (4.6 | ) | |||||||||
Equity in earnings of Kronos Worldwide, Inc. | 9.9 | 5.4 | 55.0 | 23.6 | |||||||||||
General corporate items: | |||||||||||||||
Marketable equity securities | (35.6 | ) | (15.3 | ) | (55.9 | ) | (.4 | ) | |||||||
Other components of net periodic pension and OPEB cost |
(.1 | ) | (.5 | ) | (.2 | ) | (1.3 | ) | |||||||
Interest and dividend income | 1.3 | 1.6 | 3.6 | 5.2 | |||||||||||
Interest expense | - | (.3 | ) | - | (.3 | ) | |||||||||
Income (loss) before income taxes | (21.1 | ) | (3.3 | ) | (57.5 | ) | 22.2 | ||||||||
Income tax expense (benefit) | (6.2 | ) | (2.3 | ) | (15.4 | ) | .9 | ||||||||
Net income (loss) | (14.9 | ) | (1.0 | ) | (42.1 | ) | 21.3 | ||||||||
Noncontrolling interest in net income of subsidiary | .5 | .6 | 1.7 | 1.8 | |||||||||||
Net income (loss) attributable to NL stockholders | $ | (15.4 | ) | $ | (1.6 | ) | $ | (43.8 | ) | $ | 19.5 | ||||
Net income (loss) per share attributable to NL stockholders |
$ | (.32 | ) | $ | (.03 | ) | $ | (.90 | ) | $ | .40 | ||||
Weighted average shares used in the | |||||||||||||||
calculation of net income (loss) per share | 48.7 | 48.8 | 48.7 | 48.7 |
COMPONENTS OF INCOME (LOSS) FROM OPERATIONS
(In millions)
(unaudited)
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
CompX - component products | $ | 4.5 | $ | 4.3 | $ | 14.9 | $ | 14.2 | |||||||
Insurance recoveries | .5 | .2 | .9 | 5.2 | |||||||||||
Other income, net | - | 4.4 | .6 | 4.4 | |||||||||||
Litigation settlement expense | - | .3 | (62.0 | ) | (19.3 | ) | |||||||||
Corporate expense | (1.6 | ) | (3.4 | ) | (14.4 | ) | (9.1 | ) | |||||||
Income (loss) from operations | $ | 3.4 | $ | 5.8 | $ | (60.0 | ) | $ | (4.6 | ) |
CHANGE IN KRONOS’ TiO2 SALES
(unaudited)
Three months ended | Nine months ended | ||||||||||
September 30, | September 30, | ||||||||||
2019 vs. 2018 | 2019 vs. 2018 | ||||||||||
Percentage change in net sales: | |||||||||||
TiO2 product pricing | (5 | ) | % | (7 | ) | % | |||||
TiO2 sales volume | 17 | 16 | |||||||||
TiO2 product mix/other | (3 | ) | (3 | ) | |||||||
Changes in currency exchange rates | (2 | ) | (3 | ) | |||||||
Total | 7 | % | 3 | % |
SOURCE:NL Industries, Inc. CONTACT:Janet G. Keckeisen , Vice President Corporate Strategy and Investor Relations, 972.233.1700
Source: NL Industries