HOUSTON, Oct 31, 2002 /PRNewswire-FirstCall via COMTEX/ -- NL Industries, Inc. (NYSE: NL) today reported net income for the third quarter of 2002 of $.18 per diluted share compared with $.41 per diluted share in the third quarter of 2001. Excluding the effect of an unusual item discussed below, net income in the third quarter of 2001 was $.36 per diluted share.
Net income for the first nine months of 2002 was $.60 per diluted share compared with net income in the first nine months of 2001 of $1.61 per diluted share. Excluding the unusual items discussed below, net income in the first nine months of 2002 was $.47 per diluted share compared with $1.39 per diluted share in the first nine months of 2001.
The Company's titanium dioxide pigments ("TiO2") operating income in the third quarter of 2002 decreased 18% to $29.6 million compared with $36.2 million in the third quarter of 2001. Operating income in the third quarter of 2001 included $3.0 million of business interruption insurance proceeds related to the previously reported fire at the Company's Leverkusen, Germany plant in 2001. The decrease in operating income from 2001 was primarily due to lower average selling prices, partially offset by higher sales and production volumes. Compared with the second quarter of 2002, operating income in the third quarter of 2002 increased 20% on higher average selling prices and higher production volume, partially offset by lower sales volume.
Operating income in the first nine months of 2002 was $76.4 million compared with $133.3 million in the first nine months of 2001 due to 12% lower average selling prices, partially offset by 13% higher sales volume and 6% higher production volume. Operating income in the first nine months of 2001 included $8.0 million of business interruption insurance proceeds.
The Company's average selling price in billing currencies (which excludes the effects of foreign currency translation) during the third quarter of 2002 was 7% lower than the third quarter of 2001 and was 3% higher than the second quarter of 2002. Compared with the second quarter of 2002, selling prices in billing currencies increased in all major markets. The average selling price in billing currencies in September 2002 was flat compared with the average selling price for the third quarter.
The Company's third quarter 2002 average selling price expressed in U.S. dollars (computed using actual foreign currency exchange rates prevailing during the respective periods) was 2% lower than the third quarter of 2001 and 8% higher than the second quarter of 2002. The average selling price expressed in U.S. dollars in September 2002 was flat compared with the average selling price for the third quarter. The average selling price expressed in U.S. dollars during the first nine months of 2002 was 11% lower than the first nine months of 2001.
The Company's third quarter 2002 sales volume increased 14% from the third quarter of 2001 and decreased 4% from the record second quarter of 2002. The increase from the comparable prior year period was due in part to lost sales volume in 2001 as a result of the Leverkusen fire.
The Company's third quarter 2002 production volume was 7% higher than the third quarter of 2001 and increased 3% from the second quarter of 2002 with operating rates near full capacity in the third quarter of 2002. The increase from the prior year period was due in part to lost sulfate-process production in 2001 as a result of the Leverkusen fire. Finished goods inventory levels at the end of the third quarter decreased 2% from June 2002 levels and represented approximately two months of sales.
J. Landis Martin, President and Chief Executive Officer, stated, "We are encouraged by the strong demand for our product and assuming demand remains at reasonable levels, further price improvement should be achieved in the fourth quarter. While we expect fourth quarter sales volume to be seasonally lower than third quarter levels, fourth quarter sales volume should significantly exceed fourth quarter 2001 sales volume. Taking these factors into account, we expect fourth-quarter earnings to exceed the prior-year comparable period, excluding previously disclosed unusual items."
Securities earnings in the third quarter of 2002 were comparable to the third quarter of 2001, while securities earnings for the first nine months of 2002 were $1.7 million lower compared with the first nine months of 2001, primarily due to lower average interest yields on invested funds in the first nine months of 2002.
Corporate expense in the third quarter and first nine months of 2002 increased $4.4 million and $10.2 million, respectively, from the comparable 2001 periods primarily due to higher environmental and legal expenses. Compared to the second quarter of this year, corporate expense in the third quarter of 2002 increased $3.1 million primarily due to higher legal expenses.
Interest expense in the third quarter of 2002 increased $.7 million from the third quarter of 2001 primarily due to higher levels of outstanding debt, partially offset by lower interest rates. Interest expense in the first nine months of 2002 increased $1.4 million from the first nine months of 2001 primarily due to additional second-quarter 2002 interest expense related to the early extinguishment of debt discussed below.
The Company's net debt at September 30, 2002 was $64.6 million, down $9.2 million from June 30, 2002. Net debt at September 30, 2002 was comprised of total debt of $307.7 million less cash, restricted cash and restricted marketable debt securities of $243.1 million. In the third quarter of 2002, certain U.S. subsidiaries of the Company entered into a three year $50 million secured revolving credit facility. Borrowings under the facility are available for working capital requirements and general corporate purposes, and to date no borrowings have been made under this facility.
Minority interest primarily related to the Company's majority-owned environmental management subsidiary.
Previously reported unusual items recorded in prior 2002 and 2001 quarters were as follows:
- In the second quarter of 2002, the Company included in corporate income a $6.3 million ($.13 per diluted share) foreign currency transaction gain related to the extinguishment of certain intercompany indebtedness.
- In the second quarter of 2002, the Company included in interest expense $2.0 million ($.03 per diluted share, net of income taxes) related to the early extinguishment of the Company's 11.75% Senior Secured Notes.
- In the first quarter of 2002, the Company included in corporate income a $1.9 million ($.02 per diluted share, net of income taxes) litigation settlement gain with former insurance carrier groups related to environmental remediation claims.
- In the second and third quarters of 2001, the Company included property damage gains of $1.9 million and $3.9 million, respectively, ($.03 and $.05, respectively, per diluted share, net of income taxes) related to the Leverkusen fire.
- In the first quarter of 2001, the Company included in corporate income a $10.6 million ($.14 per diluted share, net of income taxes) litigation settlement gain with former insurance carrier groups.
A conference call regarding NL's earnings announcement is scheduled for October 31, 2002 at 10:00 a.m. (EST). Mr. Martin will host the call. Participants can access the call by dialing (800) 230-1092 (domestic) and (612) 288-0318 (international). The title of the call is NL Earnings. A taped replay of the call will be available at 2:00 p.m. (EST) the day of the call through 11:59 p.m. (EST) on November 7, 2002 by calling (800) 475-6701 (domestic) and (320) 365-3844 (international). The access code for the replay is 656661. 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, changes in global productive capacity, changes in 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), 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 Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenues and other
income (expense):
Net sales $234.1 $207.0 $663.3 $653.1
Other income (expense),
excluding corporate 1.5 (.4) 1.3 1.7
235.6 206.6 664.6 654.8
Cost of sales 177.5 145.9 510.0 447.2
Selling, general and
administrative,
excluding corporate 28.5 24.5 78.2 74.3
Operating income 29.6 36.2 76.4 133.3
Insurance recoveries, net --- 3.9 --- 5.8
Income before corporate
items, income taxes
and minority interest 29.6 40.1 76.4 139.1
Corporate income
(expense):
Securities earnings 1.8 2.1 4.3 6.0
Litigation settlement
gains, net and other
income 1.0 1.1 5.4 14.1
Currency transaction
gains --- --- 6.3 ---
Expenses (10.6) (6.2) (28.2) (18.0)
Interest expense (7.6) (6.9) (22.2) (20.8)
Income before income
taxes and minority
interest 14.2 30.2 42.0 120.4
Income tax expense 4.7 9.7 11.7 38.9
Income before
minority interest 9.5 20.5 30.3 81.5
Minority interest .7 --- 1.1 1.0
Net income $8.8 $20.5 $29.2 $80.5
Earnings per share -
net income:
Basic $.18 $.41 $.60 $1.61
Diluted $.18 $.41 $.60 $1.61
Weighted average shares
used in the calculation
of earnings per share:
Basic shares 48.6 49.6 48.8 49.9
Dilutive impact of
stock options .1 .1 .1 .1
Diluted shares 48.7 49.7 48.9 50.0
Metric tons in thousands:
Sales volume 117 103 352 311
Production volume 116 109 335 315
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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