UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported)
May 8, 2017
NL Industries, Inc.
(Exact name of registrant as specified in its charter)
|
New Jersey
|
1-640
|
13-5267260
|
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
|
|
|
|
|
|
|
|
|
5430 LBJ Freeway, Suite 1700, Dallas, Texas
|
75240-2697
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Registrant's telephone number, including area code
(972) 233-1700
|
|
|
|
|
|
(Former name or former address, if changed since last report.)
|
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
|
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
|
|
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
|
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
Item 2.02
|
Results of Operations and Financial Condition.
|
|
Item 7.01
|
Regulation FD Disclosure.
|
The registrant hereby furnishes the information set forth in its press release issued on May 8, 2017, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information, including the exhibit, the registrant furnishes in this report is not deemed "filed" for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the U.S. Securities and Exchange Commission shall not incorporate this information by reference, except as otherwise expressly stated in such filing.
|
Item 9.01
|
Financial Statements and Exhibits.
|
|
(d)
|
Exhibits
|
|
|
|
|
|
|
|
|
|
Item No.
|
|
Exhibit Index
|
|
|
|
|
|
|
|
99.1
|
|
Press release dated May 8, 2017 issued by the registrant.
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
NL Industries, Inc.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By: /s/ Gregory M. Swalwell
|
|
Date: May 8, 2017
|
Gregory M. Swalwell, Executive Vice President and Chief Financial Officer
|
INDEX TO EXHIBITS
|
Item No.
|
|
Exhibit Index
|
|
|
|
|
|
99.1
|
|
Press release dated May 8, 2017 issued by the registrant.
|
|
NL Industries, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, TX 75240-2697
|
Contact: Gregory M. Swalwell
Executive Vice President and
Chief Financial Officer
(972) 233-1700
|
|
News Release
|
FOR IMMEDIATE RELEASE
NL REPORTS FIRST QUARTER 2017 RESULTS
DALLAS, TEXAS – May 8, 2017 - NL Industries, Inc. (NYSE: NL) today reported a net income attributable to NL stockholders of $8.4 million, or $.17 per share, in the first quarter of 2017 compared to net loss attributable to NL stockholders of $2.5 million, or $.05 per share, in the first quarter of 2016.
Net sales increased $2.9 million in the first quarter of 2017 compared to the same period in 2016 primarily due to higher Security Products sales volumes to existing government security customers, partially offset by a decrease in sales of security products to an original equipment manufacturer of recreational transportation products. CompX's Marine Components business also contributed higher sales in the 2017 period. Income from operations attributable to CompX increased to $4.5 million in the first quarter of 2017 from $3.4 million in the first quarter of 2016 due to higher sales and manufacturing efficiencies facilitated by higher production volumes at CompX's Security Products business.
Kronos' net sales of $369.8 million in the first quarter of 2017 were $51.4 million, or 16%, higher than in the first quarter of 2016. Kronos' net sales increased in the first quarter 2017 as compared to the same period in 2016 due to higher average TiO2 selling prices and higher sales volumes. Kronos' average TiO2 selling prices were 17% higher in the first quarter of 2017 as compared to the first quarter of 2016, and Kronos' average selling prices at the end of the first quarter of 2017 were 4% higher than at the end of 2016, with higher prices in all major markets. TiO2 sales volumes in the first quarter of 2017 were 3% higher as compared to the first quarter of 2016 due to higher sales in the North American and export markets, partially offset by lower sales in the European market. Kronos' sales volumes in the first quarter of 2017 set a new overall record for a first quarter period. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $7 million in the first quarter 2017 as compared to the first quarter of 2016. The table at the end of this press release shows how each of these items impacted the overall increase in Kronos' sales.
Kronos' income from operations in the first quarter of 2017 was $52.3 million as compared to a loss from operations of $.3 million in the first quarter of 2016. Kronos' income from operations increased in the first quarter of 2017 as compared to the first quarter of 2016 primarily due to higher average TiO2 selling prices, higher sales and production volumes and lower raw materials and other production costs. Kronos' TiO2 production volumes were 10% higher in the first quarter of 2017 as compared to the first quarter of 2016. Kronos operated its production facilities at an overall average capacity utilization rate of 100% in the first quarter of 2017 compared to approximately 97% in the first quarter of 2016. Fluctuations in currency exchange rates also affected Kronos' income from operations comparisons, which decreased income from operations by approximately $8 million.
Kronos' other operating income, net in the first quarter of 2016 includes an insurance settlement gain of $2.0 million (NL's equity interest was $.3 million, or $.01 per share, net of income tax expense) related to a 2014 business interruption claim.
Kronos' income tax expense in 2017 includes a $5.0 million (NL's equity interest was $1.0 million, or $0.2 per share) non-cash deferred income tax benefit as a result of a net decrease in its deferred income tax asset valuation allowance related to its German and Belgian operations.
Corporate expenses decreased $.2 million in the first quarter of 2017 as compared to the first quarter of 2016 primarily due to lower litigation fees and related costs offset partially by higher environmental remediation and related costs. Interest and dividend income increased $.3 million in the first quarter of 2017 as compared to the first quarter of 2016 primarily due to interest earned on CompX's loan to an affiliate which was entered into in August 2016.
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. Although NL believes that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such forward-looking statements. While it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially include, but are not limited to:
|
·
|
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 ore, zinc, brass, aluminum, steel and energy 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
|
|
·
|
Potential difficulties in integrating future acquisitions
|
|
·
|
Potential difficulties in upgrading or implementing new accounting and manufacturing software systems (such as Kronos' new enterprise resource planning system)
|
|
·
|
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
|
|
·
|
The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters
|
|
·
|
Uncertainties associated with CompX's development of new product features
|
|
·
|
Our ability to utilize income tax attributes or changes in income tax rates related to such attributes, the benefits of which may not have been recognized under the more-likely-than-not recognition criteria
|
- 2 -
|
·
|
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)
|
|
·
|
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.
NL Industries, Inc. is engaged in the component products (security products and performance marine components), chemicals (TiO2) and other businesses.
- 3 -
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except earnings per share)
(Unaudited)
|
Three months ended
|
||||||||
|
March 31,
|
||||||||
|
2016
|
2017
|
|||||||
|
Net sales
|
$
|
27.1
|
$
|
29.9
|
||||
|
Cost of sales
|
18.9
|
20.2
|
||||||
|
Gross margin
|
8.2
|
9.7
|
||||||
|
Selling, general and administrative expense
|
4.8
|
5.2
|
||||||
|
Other operating income (expense):
|
||||||||
|
Insurance recoveries
|
.1
|
.1
|
||||||
|
Corporate expense
|
(5.7
|
)
|
(5.5
|
)
|
||||
|
Loss from operations
|
(2.2
|
)
|
(.9
|
)
|
||||
|
Equity in earnings (losses) of Kronos Worldwide, Inc.
|
(1.2
|
)
|
11.2
|
|||||
|
General corporate item -
|
||||||||
|
Interest and dividend income
|
.4
|
.7
|
||||||
|
Income (loss) before income taxes
|
(3.0
|
)
|
11.0
|
|||||
|
Income tax expense (benefit)
|
(0.8
|
)
|
2.2
|
|||||
|
Net income (loss)
|
(2.2
|
)
|
8.8
|
|||||
|
Noncontrolling interest in net income of subsidiary
|
.3
|
.4
|
||||||
|
Net income (loss) attributable to NL stockholders
|
$
|
(2.5
|
)
|
$
|
8.4
|
|||
|
Net income (loss) per share attributable to
NL stockholders |
$
|
(.05
|
)
|
$
|
.17
|
|||
|
Weighted average shares used in the
|
||||||||
|
calculation of net income per share
|
48.7
|
48.7
|
||||||
- 4 -
NL INDUSTRIES, INC.
COMPONENTS OF INCOME (LOSS) FROM OPERATIONS
(In millions)
(Unaudited)
|
Three months
|
||||||||
|
ended March 31,
|
||||||||
|
2016
|
2017
|
|||||||
|
CompX - component products
|
$
|
3.4
|
$
|
4.5
|
||||
|
Insurance recoveries
|
.1
|
.1
|
||||||
|
Corporate expense
|
(5.7
|
)
|
(5.5
|
)
|
||||
|
Income (loss) from operations
|
$
|
(2.2
|
)
|
$
|
(.9
|
)
|
||
CHANGE IN KRONOS' TiO2 SALES
(Unaudited)
|
Three months
|
||||
|
ended March 31,
|
||||
|
2017 vs. 2016
|
||||
|
Percentage change in sales:
|
||||
|
TiO2 product pricing
|
17
|
%
|
||
|
TiO2 sales volume
|
3
|
|||
|
TiO2 product mix/other
|
(2
|
)
|
||
|
Changes in currency exchange rates
|
(2
|
)
|
||
|
Total
|
16
|
%
|
||
- 5 -