HOUSTON, Oct. 18 /PRNewswire/ -- NL Industries, Inc. (NYSE: NL) today reported net income for the third quarter of 2001 of $.41 per diluted share, including a $.05 per diluted share after-tax property damage gain discussed below. Net income in the third quarter of 2000 was $.60 per diluted share. Excluding the unusual item, net income for the third quarter of 2001 was $.36 per diluted share, down 40% from the third quarter of 2000.
Net income for the first nine months of 2001 was $1.61 per diluted share compared to net income in the first nine months of 2000 of $2.31 per diluted share. Excluding unusual items discussed below, net income in the first nine months of 2001 was $1.39 per diluted share, down 18% compared to $1.70 per diluted share in the first nine months of 2000.
Operating income of Kronos' titanium dioxide pigments ("TiO2") business in the third quarter of 2001 decreased 37% to $36.2 million compared to $57.5 million in the third quarter of 2000. The decrease in operating income is primarily due to lower average selling prices in billing currencies and lower sales and production volumes. Operating income in the first nine months of 2001 decreased 20% to $133.3 million compared to $166.5 million in the first nine months of 2000 due to 10% lower sales volume and 4% lower production volume.
Kronos' average selling price in billing currencies (which excludes the effects of foreign currency translation) during the third quarter of 2001 was 6% lower than the third quarter of 2000 and 4% lower than the second quarter of 2001. Compared to the second quarter of 2001, prices in billing currencies were lower in all major markets. The average selling price in billing currencies in September was 1% lower than the average selling price during the third quarter as prices continued to trend downward. The average selling price in billing currencies during the first nine months of 2001 was comparable to the first nine months of 2000.
Kronos' third-quarter 2001 average selling price expressed in U.S. dollars, computed using actual foreign currency exchange rates prevailing during the respective periods, was 9% lower than the third quarter of 2000 and 4% lower than the second quarter of 2001. The average selling price expressed in U.S. dollars during the first nine months of 2001 was 4% lower than the first nine months of 2000.
Kronos' third-quarter 2001 sales volume decreased 9% from the near record third quarter of 2000 and decreased 2% from the second quarter of 2001. Sales volume in the third quarter of 2001 was 17% and 4% lower in Europe and North America, respectively, compared to the third quarter of 2000 while export volume increased moderately. Compared to the second quarter of 2001, sales volume decreased in Europe and North America while sales volume increased moderately in the export markets. Sales volume in the first nine months of 2001 was 10% lower than in the first nine months of 2000. Finished goods inventory levels at the end of September represented about two months of sales.
J. Landis Martin, NL's President & Chief Executive Officer, stated, "The sustained slowdown in the worldwide economy continues to cause a reduction in demand for TiO2, thereby hampering our efforts to improve TiO2 prices. Based on the current market conditions, we expect TiO2 prices to continue to trend downward through the end of the year and perhaps into the first quarter of 2002."
Third-quarter 2001 production volume was 4% lower than the comparable 2000 period with operating rates at 95% in the third quarter of 2001 compared to near full capacity in the third quarter of 2000. The lower production volume was primarily related to lost sulfate-process production at the Company's Leverkusen facility due to the previously reported fire in March 2001. The Leverkusen sulfate-process plant became approximately 50% operational in September and is expected to be fully operational by the end of October 2001.
During the third quarter of 2001, the Company's insurance carriers approved payment of $8 million ($6.8 million received as of September 30, 2001) as a partial payment for property damage costs and business interruption losses caused by the Leverkusen fire. Three million dollars of this payment represented partial compensation for business interruption losses which was recorded as a reduction of cost of sales to offset unallocated period costs that resulted from lost production. The remaining $5 million represented property damage recoveries against which the Company recorded $1.1 million of expenses related to clean-up costs, resulting in a net gain of $3.9 million. In the first nine months of 2001, the Company's insurance carriers approved payment of $18.5 million ($17.3 million received as of September 30, 2001) for losses caused by the Leverkusen fire. Eight million dollars of this payment was for business interruption losses and the remaining $10.5 million was for property damage losses against which the Company recorded $4.7 million of expenses resulting in a net gain of $5.8 million ($.08 per diluted share after tax).
In October 2001, the Company reached an agreement in principle with its insurance carriers to settle the coverage claim involving the Leverkusen fire. The Company expects to receive an additional $38 million in insurance recoveries, of which approximately $13 million relates to property damage costs, and approximately $25 million relates to business interruption losses and extra expenses resulting from the fire. The Company expects to report a gain, net of certain expenses, related to this insurance settlement in the fourth quarter of 2001.
Dr. Lawrence A. Wigdor, Kronos' President and Chief Executive Officer, stated, "We are pleased to reach an agreement with our insurance carriers which we believe is equitable. An expedited resolution of this matter allows the Company to remain focused on business development and cost saving initiatives in these difficult economic times."
Securities earnings in the first nine months of 2001 were down from the comparable period in 2000 primarily due to a $5.6 million ($.07 per diluted share after tax) second-quarter 2000 pretax securities gain from the demutualization of an insurance company. Corporate income in the first quarter of 2001 and the second quarter of 2000 includes pretax litigation settlement gains with former insurance carrier groups of $10.6 million ($.14 per diluted share after tax) and $43 million ($.54 per diluted share after tax), respectively. These gains have been previously reported as unusual items.
Corporate expenses in the first nine months of 2001 declined $5 million from the comparable period in 2000 primarily due to lower environmental and legal expenses.
The Company's net debt at September 30, 2001 was $54 million (total debt of $244 million less cash of $190 million).
A conference call regarding NL's earnings announcement is scheduled for October 18, 2001 at 11:30 a.m. (EDT). Mr. Martin will host the call. Participants can access the call by dialing 800-553-0318 (domestic) and 612-288-0329 (international). The passcode is NL Earnings. A taped replay of the call will be available after 3:00 p.m. (EDT) the day of the call through 11:59 p.m. (EDT) on October 25, 2001 by calling 800-475-6701 (domestic) and 320-365-3844 (international), and using access code 606811. 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, 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)
Quarters ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
Revenues and other
income (expense):
Net sales $207.0 $242.3 $653.1 $724.4
Other income (expense),
excluding corporate (.4) 1.4 1.7 5.6
206.6 243.7 654.8 730.0
Cost of sales 145.9 159.0 447.2 482.3
Selling, general and
administrative, excluding
corporate 24.5 27.2 74.3 81.2
Operating income 36.2 57.5 133.3 166.5
Insurance recoveries, net 3.9 --- 5.8 ---
Income before corporate
items, income taxes
and minority interest 40.1 57.5 139.1 166.5
Corporate income (expense):
Securities earnings 2.1 2.5 6.0 11.6
Litigation settlement
gains, net and other
income 1.1 1.0 14.1 46.2
Expenses (6.2) (6.8) (18.0) (23.0)
Interest expense (6.9) (7.7) (20.8) (23.5)
Income before income
taxes and minority
interest 30.2 46.5 120.4 177.8
Income tax expense 9.7 14.8 38.9 58.8
Income before minority
interest 20.5 31.7 81.5 119.0
Minority interest --- 1.5 1.0 1.7
Net income $ 20.5 $ 30.2 $ 80.5 $117.3
Earnings per share -
net income:
Basic $ .41 $ .60 $ 1.61 $ 2.32
Diluted $ .41 $ .60 $ 1.61 $ 2.31
Weighted average shares
used in the calculation
of earnings per share:
Basic shares 49.6 50.2 49.9 50.5
Dilutive impact of
stock options .1 .4 .1 .4
Diluted shares 49.7 50.6 50.0 50.9
Metric tons in thousands:
Sales volume 103 113 311 343
Production volume 109 113 315 329
MAKE YOUR OPINION COUNT - Click Here
http://tbutton.prnewswire.com/prn/11690X86349299
SOURCE NL Industries, Inc.
CONTACT: Susan E. Alderton, Chief Financial Officer of NL Industries, Inc., +1-281-423-3332/