Dallas, Texas, May 04, 2023 (GLOBE NEWSWIRE) -- Valhi, Inc. (NYSE: VHI) reported a net loss attributable to Valhi stockholders of $4.9 million, or $.17 per share, in the first quarter of 2023 compared to net income of $45.4 million, or $1.59 per share, in the first quarter of 2022. Net income attributable to Valhi stockholders decreased in the first quarter of 2023 compared to the first quarter of 2022 primarily due to lower operating results from our Chemicals Segment.
The Chemicals Segment’s net sales were $426.3 million in the first quarter of 2023 compared to $562.9 million in the first quarter of 2022. The Chemicals Segment’s net sales comparisons were impacted by the net effects of lower sales volumes in all major markets, partially offset by higher average TiO2 selling prices. The Chemicals Segment’s 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 our Chemicals Segment’s 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 our Chemical Segment’s net sales.
The Chemicals Segment’s operating loss in the first quarter of 2023 was $15.1 million as compared to operating income of $86.4 million in the first quarter of 2022. The Chemicals Segment’s operating income 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, the Chemicals Segment’s 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 its facilities during the first quarter as the Chemicals Segment adjusted its TiO2 production volumes to align inventory levels with lower demand. 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, the Chemicals Segment 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 the Chemicals Segment’s operating loss by approximately $19 million in the first quarter of 2023 as compared to the first quarter of 2022.
The Chemicals Segment’s operating loss in 2023 includes an insurance settlement gain of $1.7 million related to a 2020 business interruption insurance claim.
The Component Products Segment’s net sales were $41.2 million in the first quarter of 2023 compared to $42.1 million in the first quarter of 2022. The Component Products Segment’s net sales decreased in the first quarter of 2023 compared to the same period in 2022 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. Operating income attributable to the Component Products Segment was $7.0 million in the first quarter of 2023 compared to $6.3 million in the first quarter of 2022. The Component Products Segment’s operating income increased during the first quarter of 2023 due to higher gross margins largely from marine components which more than offset lower security products sales.
The Real Estate Management and Development Segment had sales of $25.2 million in the first quarter of 2023, including $24.9 million in revenue on sales of land held for development, compared to sales of $24.0 million in the first quarter of 2022, including $22.2 million in revenue on sales of land held for development. Land sales revenue is generally recognized over time based on cost inputs, and land sales revenues are dependent on spending for development activities. Land sales revenues are also impacted by the relative timing of when new land parcel sales are closed. Sales comparisons between the first quarters of 2023 and 2022 are affected by Basic Water Company and its subsidiaries which was deconsolidated following the date it voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Nevada on September 10, 2022.
Corporate expenses and interest expense in the first quarter of 2023 were comparable to the first quarter of 2022. Interest income and other increased to $4.9 million in the first quarter of 2023 compared to $.9 million in the first quarter of 2022 primarily due to higher average interest rates and increased investment balances.
The statements in this press 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 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 predicted. While it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause our actual future results to differ materially include, but are not limited to, the following:
Should one or more of these risks materialize (or the consequences of such 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.
Valhi, Inc. is engaged in the chemicals (TiO2), component products (security products and recreational marine components) and real estate management and development industries.
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Investor Relations Contact
Bryan A. Hanley
Senior Vice President and Treasurer
Tel. 972-233-1700
VALHI, INC. AND SUBSIDIARIES
CONDENSED SUMMARY OF OPERATIONS
(In millions, except earnings per share)
Three months ended | |||||
March 31, | |||||
2022 | 2023 | ||||
(unaudited) | |||||
Net sales | |||||
Chemicals | $ | 562.9 | $ | 426.3 | |
Component products | 42.1 | 41.2 | |||
Real estate management and development | 24.0 | 25.2 | |||
Total net sales | $ | 629.0 | $ | 492.7 | |
Operating income (loss) | |||||
Chemicals | $ | 86.4 | $ | (15.1) | |
Component products | 6.3 | 7.0 | |||
Real estate management and development | 8.0 | 10.6 | |||
Total operating income | 100.7 | 2.5 | |||
General corporate items: | |||||
Interest income and other | .9 | 4.9 | |||
Other components of net periodic pension and OPEB expense | (3.3) | (1.2) | |||
Changes in market value of Valhi common stock held by subsidiaries | .1 | (1.1) | |||
General expenses, net | (8.2) | (7.9) | |||
Interest expense | (6.9) | (7.0) | |||
Income (loss) before income taxes | 83.3 | (9.8) | |||
Income tax expense (benefit) | 19.9 | (6.1) | |||
Net income (loss) | 63.4 | (3.7) | |||
Noncontrolling interest in net income of subsidiaries | 18.0 | 1.2 | |||
Net income (loss) attributable to Valhi stockholders | $ | 45.4 | $ | (4.9) | |
Amounts attributable to Valhi stockholders: | |||||
Basic and diluted net income (loss) per share | $ | 1.59 | $ | (.17) | |
Basic and diluted weighted average shares outstanding | 28.5 | 28.5 |
VALHI, INC. AND SUBSIDIARIES
IMPACT OF PERCENTAGE CHANGE IN CHEMICAL SEGMENT'S NET SALES
(unaudited)
Three months ended | |||
March 31, | |||
2023 vs. 2022 | |||
Percentage change in TiO2 net sales: | |||
TiO2 product pricing | 4 | % | |
TiO2 sales volumes | (29) | ||
TiO2 product mix/other | 3 | ||
Changes in currency exchange rates | (2) | ||
Total | (24) | % |