NL Industries : NL Reports Fourth Quarter Results DALLAS, TEXAS - March 12, 2013 - NL Industries, Inc. (NYSE: NL) today reported income from continuing operations attributable to NL stockholders of $2.7 million, or $.05 per share, in the fourth quarter of 2012 compared to income from continuing operations of $19.7 million, or $.40 per share, in the fourth quarter of 2011. For the full year 2012, NL reported income from continuing operations attributable to NL stockholders of $56.6 million, or $1.16 per share compared to income from continuing operations of $78.1 million, or $1.61 per share, in 2011. Net sales increased 3% in the fourth quarter of 2012 as compared to the fourth quarter 2011 and increased 4% in the full year 2012 compared to 2011. Net sales increased principally due to growth in customer demand within both of CompX's businesses resulting from somewhat improved economic conditions in North America. Income from continuing operations attributable to CompX decreased to nil and $5.4 million, in the fourth quarter and full year of 2012, respectively, compared to income from continuing operations of $1.4 million and $6.4 million in the same periods of 2011. Income from continuing operations comparisons were negatively impacted by higher self-insured medical costs in 2012. In addition, the 2011 and 2012 full-year periods include the impact of write-downs on assets held for sale of $1.1 million and $1.2 million, respectively ($.02 per share, net of income taxes and noncontrolling interest, in both periods). Kronos' net sales of $396.8 million in the fourth quarter of 2012 were $40.6 million, or 9%, lower than in the fourth quarter of 2011. Kronos' net sales of $1,976.3 million in the full year of 2012 were $33.0 million, or 2%, higher than in the full year 2011. Net sales decreased in the fourth quarter of 2012 as compared to the fourth quarter of 2011 due to lower average TiO selling prices partially offset by higher sales volumes. Net sales increased in the full year of 2012 primarily due to higher average TiO selling prices, partially offset by lower sales volumes. Kronos' average TiO selling prices decreased 14% in the fourth quarter of 2012 as compared to the fourth quarter of 2011, and increased 10% for the full year as compared to 2011. Kronos' average TiO selling prices at the end of 2012 were 17% lower than at the end of 2011 and were 10% lower than at the end of the third quarter of 2012. TiO[2 ]sales volumes in the fourth quarter of 2012 were 6% higher than in the fourth quarter of 2011, while sales volumes for the full year 2012 were 6% lower than in 2011. Fluctuations in currency exchange rates also impacted net sales comparisons, decreasing net sales by approximately $12 million in the fourth quarter and approximately $82 million in the full year 2012 as compared to 2011. The table at the end of this press release shows how each of these items impacted Kronos' overall change in sales. Kronos' income from operations decreased by $142.2 million, from $143.3 million in the fourth quarter of 2011 to $1.1 million in the fourth quarter of 2012. For the full year, Kronos' income from operations decreased by $186.9 million from $546.5 million in 2011 to $359.6 million in 2012. Income from operations decreased in the fourth quarter period primarily due to the negative effects of lower TiO selling prices, lower production volumes and higher raw material costs offset in part by increased sales volume. Income from operation decreased for the full year primarily due to lower sales and production volumes, higher raw material costs and the unfavorable effects of unabsorbed fixed production costs resulting from reduced production volumes, partially offset by higher average sales prices. Changes in currency exchange rates decreased Kronos' income from operations by approximately $9 million in the fourth quarter and $10 million in the full year 2012 as compared to the same periods in 2011. As previously reported, in March 2011 Kronos redeemed €80 million principal amount of its 6.5% Senior Secured Notes due 2013, and in the third and fourth quarters of 2011, Kronos repurchased in open market transactions an aggregate €40.8 million principal amount of its Senior Notes. As a result of these redemptions and open market purchases, Kronos' results in 2011 include a net charge of $3.1 million (NL's equity interest was $.4 million, or $.01 per share, net of income tax benefit) consisting of the call premium, the write-off of unamortized deferred financing costs and original issue discount associated with the redeemed and purchased Notes. In June 2012, Kronos entered into a new $400 million term loan and used a portion of the net proceeds to redeem the remaining €279.2 million principal amount of Senior Notes outstanding. As a result, Kronos recognized a second quarter 2012 charge of $7.2 million (NL's equity interest was $.9 million or $.02 per share, net of income tax) associated with the early extinguishment of such remaining Senior Notes. Kronos' income tax expense in 2011 includes a provision for income taxes of $17.2 million (NL's equity was $3.4 million, or $.07 per share, net of income taxes) for U.S. incremental income taxes on earnings repatriated from its German subsidiary, which earnings were used to fund a portion of the repurchases of Kronos' Senior Secured Notes. Insurance recoveries reflect in part amounts we received from certain of our former insurance carriers, and relate to the recovery of prior lead pigment and asbestos litigation defense costs incurred by us. Such insurance recoveries aggregated $3.3 million ($2.2 million, or $.04 per share, net of income taxes) in 2012 as compared to $16.9 million ($11.0 million, or $.23 per share, net of income taxes) in 2011. A substantial portion of the insurance recoveries we recognized in 2011 relates to a settlement we reached for a portion of our past lead pigment litigation costs. Litigation settlement gain in 2012 relates to a $15.0 million gain ($9.7 million, or $.20 per share, net of income taxes) recognized in the second quarter related to the third and final closing associated with certain real property we formerly owned in New Jersey. Other operating income in the fourth quarter of 2012 includes a $3.2 million gain ($2.1 million, or $.04 per share after taxes) on the sale of certain real property owned by us. In addition, we recognized a $6.4 million goodwill impairment charge ($.13 per share) in the fourth quarter of 2012 associated with our insurance brokerage subsidiary. There is no income tax benefit associated with such charge. Corporate expenses were comparable in the 2011 and 2012 fourth quarter periods, and increased $4.0 million, or 16%, in the full year 2012 compared to 2011 primarily related to higher environmental and related costs in the first quarter of 2012. Securities transactions gains in the fourth quarter of 2012 consist of a $16.6 million gain ($10.8 million, or $.22 per share after taxes) on the sale, pursuant to a cash tender offer by a third party, of all of our shares of Titanium Metals Corporation (TIMET) common stock for $23.9 million. In December 2012, we completed the sale of CompX's Furniture Components operations to a competitor for proceeds, net of expenses, of approximately $58.0 million in cash. We recognized a pre-tax gain of approximately $23.7 million in the fourth quarter of 2012 ($14.5 million, or $.30 per share, net of income taxes and noncontrolling interests). Discontinued operations also includes full-year income related to the operations of such disposed unit of $3.5 million, or $.07 per share, in 2011 and $3.3 million, or $.07 per share in 2012, net of income taxes and noncontrolling interest. We have reclassified our Condensed Consolidated Statement of Operations to reflect the disposed business as discontinued operations for all periods. 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: oFuture supply and demand for our products oThe extent of the dependence of certain of our businesses on certain market sectors oThe cyclicality of our businesses (such as Kronos' TiO[2 ]operations) oUnexpected or earlier-than-expected industry capacity expansion (such as the TiO[2 ]industry) oChanges in raw material and other operating costs (such as energy, ore, zinc and brass costs) and our ability to pass those costs on to our customers or offset them with reductions in other operating costs oChanges in the availability of raw material (such as ore) oGeneral 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, TiO[2 ]and component products) oCompetitive pricing, products and substitute products oCustomer and competitor strategies oUncertainties associated with the development of new product features oPotential consolidation of Kronos' competitors oThe impact of pricing and production decisions oCompetitive technology positions oPotential difficulties in integrating future acquisitions oPotential difficulties in upgrading or implementing new manufacturing and accounting software systems oThe introduction of trade barriers oPossible disruption of Kronos' or CompX's business, or increases in our cost of doing business resulting from terrorist activities or global conflicts oThe impact of current or future government regulations (including employee healthcare benefit related regulations oFluctuations 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 oOperating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions and cyber attacks) oDecisions to sell operating assets other than in the ordinary course of business oCompX's and Kronos' ability to renew or refinance debt oOur ability to maintain sufficient liquidity oThe timing and amounts of insurance recoveries oThe extent to which our subsidiaries or affiliates were to become unable to pay us dividends oThe ultimate outcome of income tax audits, tax settlement initiatives or other tax matters oUncertainties associated with the development of new product features oOur ability to utilize income tax attributes or changes in income tax rates related to such attributes, the benefits of which have been recognized under the more-likely-than-not recognition criteria oEnvironmental 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) oGovernment laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on present and former manufacturers of lead pigment and lead-based paint, including us, with respect to asserted health concerns associated with the use of such products) oThe ultimate resolution of pending litigation (such as our lead pigment and environmental matters) oPossible 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 (TiO) and other businesses. Source: NL Industries, Inc. Contact: Gregory M. Swalwell, Vice President, Finance and Chief Financial Officer, 972-233-1700 NL INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except earnings per share) Three months ended Year ended December 31, December 31, 2011 2012 2011 2012 (Unaudited) Net sales $ 18.7 $ 19.3 $ 79.8 $ 83.2 Cost of sales 13.2 13.8 55.7 58.9 Gross margin 5.5 5.5 24.1 24.3 Selling, general and administrative 4.1 4.7 16.6 17.7 expense Other operating income (expense): Insurance .3 .7 16.9 3.3 recoveries Litigation - - - 15.0 settlement gain Assets held for - (.8) (1.1) sale write-down (1.2) Other income, .9 3.6 1.0 3.6 net Goodwill - (6.4) - impairment (6.4) Corporate (4.4) (4.4) (25.0) (29.0) expense Loss from (1.8) (6.5) (.7) operations (8.1) Equity in earnings (loss) of Kronos 26.1 (5.6) 97.6 66.4 Worldwide, Inc. General corporate items: Securities - 16.6 - 16.6 transactions gains Interest and .8 .8 3.0 3.2 dividends Interest expense (.2) (.2) (1.5) (1.1) Income from continuing operations 24.9 5.1 98.4 77.0 before income taxes Provision for income 5.1 2.4 19.8 19.9 taxes Income from 19.8 2.7 78.6 57.1 continuing operations Income from discontinued .3 18.6 4.1 21.9 operations, net of tax Net income 20.1 21.3 82.7 79.0 Noncontrolling interest in net .2 3.7 1.0 4.5 income of subsidiary Net income attributable to NL $ 19.9 $ 17.6 $ 81.7 $ 74.5 stockholders NL INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except earnings per share) Three months ended Year ended December 31, December 31, 2011 2012 2011 2012 (Unaudited) Amounts attributable to NL stockholders: Income from $ 19.7 $ 2.7 $ 78.1 $ 56.6 continuing operations Income from .2 14.9 3.6 17.9 discontinued operations Net income attributable to NL $ 19.9 $ 17.6 $ 81.7 $ 74.5 stockholders Basic and diluted net income per share: Income from $ .40 $ .05 $ 1.61 $ 1.16 continuing operations Discontinued .01 .31 .07 .37 operations Net income per share attributable $ .41 $ .36 $ 1.68 $ 1.53 to NL stockholders Weighted average shares outstanding used in the calculation of net 48.7 48.7 48.7 48.7 income per share NL INDUSTRIES, INC. COMPONENTS OF LOSS ATTRIBUTABLE TO CONTINUING OPERATIONS (In millions) (Unaudited) Three months ended Year ended December 31, December 31, 2011 2012 2011 2012 CompX - component $ 1.4 $ - $ 6.4 $ 5.4 products Insurance recoveries .3 .7 16.9 3.3 Litigation settlement - - - 15.0 gain Other income, net .9 3.6 1.0 3.6 Goodwill impairment - (6.4) - (6.4) Corporate expense (4.4) (4.4) (25.0) (29.0) Loss from $ (1.8) $ (6.5) $ (.7) $ (8.1) operations CHANGE IN KRONOS' TiO SALES (Unaudited) Three months ended Year ended December 31, December 31, 2012 vs. 2011 2012 vs. 2011 Percentage change in sales: TiO product pricing (14) % 10 % TiO sales volume 6 % (6) % TiO product mix 2 % 2 % Changes in currency exchange rates (3) % (4) % Total (9) % 2 % ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: NL Industries via Thomson Reuters ONE HUG#1684734
NL Industries : NL Reports Fourth Quarter Results
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