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Dallas, Texas, May 03, 2023 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) today reported a net loss attributable to NL stockholders of $6.7 million, or $.14 per share, in the first quarter of 2023 compared to net income attributable to NL stockholders of $18.6 million, or $.38 per share, in the first quarter of 2022. NL results include an unrealized loss of $5.5 million in the first quarter of 2023 related to the change in value of marketable equity securities compared to an unrealized gain of $.7 million in the first quarter of 2022.
CompX net sales were $41.2 million in the first quarter of 2023 compared to $42.1 million in the first quarter of 2022. CompX net sales decreased primarily due to lower Security Products sales to the government security and healthcare industry markets, partially offset by higher Marine Components sales predominantly to the industrial market. Income from operations attributable to CompX increased to $7.0 million in the first quarter of 2023 compared to $6.3 million in the first quarter of 2022 due to higher Marine Components sales and gross margins which more than offset lower Security Products sales.
NL recognized equity in losses of Kronos of $4.6 million in the first quarter of 2023 compared to equity in earnings of Kronos of $17.5 million in the first quarter of 2022. Kronos’ net sales of $426.3 million in the first quarter of 2023 were $136.6 million, or 24% lower than in the first quarter of 2022. Net sales comparisons were impacted by the net effects of lower sales volumes in all Kronos’ major markets, partially offset by higher average TiO2 selling prices. Kronos’ TiO2 sales volumes were 29% lower in the first quarter of 2023 as compared to the first quarter of 2022. Average TiO2 selling prices were 4% higher in the first quarter of 2023 as compared to the first quarter of 2022. Average TiO2 selling prices at the end of the first quarter of 2023 were 4% lower than at the end of 2022. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately $11 million in the first quarter of 2023 as compared to the first quarter of 2022. The table at the end of this press release shows how each of these items impacted Kronos’ net sales.
Kronos’ loss from operations in the first quarter of 2023 was $18.3 million as compared to income from operations of $83.3 million in the first quarter of 2022. Kronos’ income from operations decreased in the first quarter of 2023 compared to the same period in 2022 primarily due to lower sales volumes and higher production costs (including raw material and energy costs), somewhat offset by higher average TiO2 selling prices. In addition, cost of sales in the first quarter of 2023 includes $22 million of unabsorbed fixed production and other manufacturing costs associated with production curtailments at certain of Kronos’ facilities during the first quarter as it adjusted its TiO2 production volumes to align inventory levels with lower demand. Kronos’ TiO2 production volumes were 24% lower in the first quarter of 2023 compared to the first quarter of 2022. As a result of reduced demand and scheduled maintenance activities, Kronos operated its production facilities at 76% of practical capacity utilization in the first quarter of 2023 compared to full practical capacity in the first quarter of 2022. Fluctuations in currency exchange rates (primarily the euro) decreased Kronos' loss from operations approximately $19 million in the first quarter of 2023 as compared to the first quarter of 2022.
Corporate expenses increased $.4 million in the first quarter of 2023 compared to the first quarter of 2022 primarily due to higher litigation fees and related costs, partially offset by lower administrative expense. Interest and dividend income increased $1.7 million in the first quarter of 2023 compared to the same period of 2022 primarily due to higher average interest rates and increased investment balances, somewhat offset by lower average balances on CompX’s revolving promissory notes receivable from Valhi. Marketable equity securities represent the change in unrealized gains (losses) on our portfolio of marketable equity securities during the period.
Our net loss attributable to NL stockholders for the first three months of 2023 includes income of $.01 per share due to Kronos’ recognition of a pre-tax insurance settlement gain related to a business interruption insurance claim arising from Hurricane Laura in 2020.
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 we believe 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. Factors that could cause actual future results to differ materially include, but are not limited to:
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 component products (security products and recreational marine components) and chemicals (TiO2) businesses.
Investor Relations Contact
Bryan A. Hanley
Senior Vice President and Treasurer
(972) 233-1700
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except earnings per share)
| Three months ended | ||||||
| March 31, | ||||||
| 2022 | 2023 | |||||
| (unaudited) | ||||||
| Net sales | $ | 42.1 | $ | 41.2 | ||
| Cost of sales | 30.0 | 28.5 | ||||
| Gross margin | 12.1 | 12.7 | ||||
| Selling, general and administrative expense | 5.8 | 5.7 | ||||
| Corporate expense | 2.4 | 2.8 | ||||
| Income from operations | 3.9 | 4.2 | ||||
| Equity in earnings (losses) of Kronos Worldwide, Inc. | 17.5 | (4.6) | ||||
| Other income (expense): | ||||||
| Interest and dividend income | .3 | 2.0 | ||||
| Marketable equity securities | .7 | (5.5) | ||||
| Other components of net periodic pension and OPEB cost | (.2) | (.4) | ||||
| Interest expense | (.3) | (.2) | ||||
| Income (loss) before income taxes | 21.9 | (4.5) | ||||
| Income tax expense | 2.7 | 1.4 | ||||
| Net income (loss) | 19.2 | (5.9) | ||||
| Noncontrolling interest in net income of subsidiary | .6 | .8 | ||||
| Net income (loss) attributable to NL stockholders | $ | 18.6 | $ | (6.7) | ||
| Net income (loss) per share attributable to NL stockholders | $ | .38 | $ | (.14) | ||
| Weighted average shares used in the calculation of net income per share | 48.8 | 48.8 | ||||
NL INDUSTRIES, INC.
COMPONENTS OF INCOME FROM OPERATIONS
(In millions)
| Three months ended | |||||
| March 31, | |||||
| 2022 | 2023 | ||||
| (unaudited) | |||||
| CompX - component products | $ | 6.3 | $ | 7.0 | |
| Corporate expense | (2.4) | (2.8) | |||
| Income from operations | $ | 3.9 | $ | 4.2 | |
CHANGE IN KRONOS’ NET SALES
| Three months ended | ||
| March 31, | ||
| 2023 vs. 2022 | ||
| (unaudited) | ||
| Percentage change in net sales: | ||
| TiO2 product pricing | 4 | % |
| TiO2 sales volume | (29) | |
| TiO2 product mix/other | 3 | |
| Changes in currency exchange rates | (2) | |
| Total | (24) | % |