NL REPORTS THIRD QUARTER 2021 RESULTS

Rhea-AI Summary

NL Industries, Inc. (NYSE: NL) reported significant financial growth for Q3 2021, with net income of $10.3 million, compared to $3.9 million in Q3 2020. For the first nine months, net income reached $36.3 million, up from $10.4 million. CompX's net sales increased to $34.5 million in Q3 2021 from $28.4 million a year earlier. Additionally, Kronos saw net sales rise by 20% year-over-year to $499.8 million in Q3, bolstered by higher TiO2 selling prices and volumes. However, fluctuations in currency exchange rates had varying impacts on their financial results.

Positive

• Q3 2021 net income of $10.3 million versus $3.9 million in Q3 2020.
• Net income for first nine months of 2021 reached $36.3 million, up from $10.4 million.
• CompX net sales increased to $34.5 million in Q3 2021 from $28.4 million.
• Kronos net sales rose to $499.8 million in Q3 2021, a 20% increase year-over-year.
• Kronos achieved a 6% increase in TiO2 sales volumes in Q3 2021.

Negative

• Unrealized loss of $1.2 million in Q3 2021 related to marketable equity securities.

Dallas, Texas, Nov. 04, 2021 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) today reported net income attributable to NL stockholders of $10.3 million, or $.21 per share, in the third quarter of 2021 compared to net income attributable to NL stockholders of $3.9 million, or $.08 per share, in the third quarter of 2020. NL results include an unrealized loss of $1.2 million in the third quarter of 2021 related to the change in value of marketable equity securities compared to a $3.2 million unrealized gain in the third quarter of 2020. For the first nine months of 2021, NL reported net income attributable to NL stockholders of $36.3 million, or $.74 per share, compared to net income of $10.4 million, or $.21 per share for the first nine months of 2020. NL results include an unrealized gain of $9.7 million in the first nine months of 2021 related to the change in value of marketable equity securities compared to an $11.1 million unrealized loss in the first nine months of 2020.

CompX net sales were $34.5 million for the third quarter of 2021 compared to $28.4 million in the third quarter of 2020 and $106.7 million for the nine months ended September 30, 2021 compared to $84.5 million for the same prior year period.  Income from operations attributable to CompX was $5.1 million for the third quarter of 2021 compared to $2.1 million for the third quarter of 2020 and $16.7 million for the first nine months of 2021 compared to $9.5 million for the same prior year period. CompX third quarter 2021 net sales increased over the 2020 comparable period primarily due to higher Security Products sales across a variety of markets and to a lesser extent higher Marine Component sales primarily to the towboat market. CompX net sales increased for the first nine months of 2021 compared to the same period in 2020 primarily due to higher sales volumes at both of CompX’s reporting units, particularly in the second quarter of 2021, as many of its customers were temporarily closed or reduced production during the second quarter of 2020 due to government ordered closures or reduced demand resulting from the COVID-19 pandemic. CompX income from operations was negatively impacted by the COVID-19 pandemic in the second and third quarters of 2020, which significantly impacts income from operations comparisons for the third quarter and the nine-month comparative periods. Income from operations increased for both comparative periods due to the favorable effect of higher production and sales volumes, partially offset by higher production costs including increased raw materials, shipping, and labor costs.

NL recognized equity in earnings of Kronos of $10.9 million in the third quarter of 2021 compared to $2.4 million in the same period of 2020 and $24.7 million in the first nine months of 2021 compared to $16.3 million in the same period of 2020. Kronos’ net sales of $499.8 million in the third quarter of 2021 were $82.9 million, or 20%, higher than in the third quarter of 2020. Kronos’ net sales of $1,443.4 million in the first nine months of 2021 were $219.5 million, or 18%, higher than in the first nine months of 2020. Kronos’ net sales increased in the 2021 periods primarily due to higher sales volumes and higher average TiO₂ selling prices.  Kronos’ TiO₂ sales volumes were 6% higher in the third quarter of 2021 as compared to the third quarter of 2020 due to higher demand in its European and North American markets and 8% higher in the first nine months of 2021 as compared to the same prior year period due to higher demand in all major markets. Increased demand resulted from continuing improvements in global economic activity in the 2021 periods compared to the negative impact from the COVID-19 pandemic on the same periods in 2020. Kronos’ average TiO₂ selling prices were 11% higher in the third quarter of 2021 as compared to the third quarter of 2020 and 4% higher in the first nine months of 2021 as compared to the first nine months of 2020. Kronos’ average TiO₂ selling prices at the end of the third quarter of 2021 were 10% higher than its average TiO₂ selling prices at the end of 2020. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, increasing net sales by approximately $5 million in the third quarter of 2021 and increasing net sales by approximately $47 million in the first nine months of 2021, as compared to the same periods in 2020. The table at the end of this press release shows how each of these items impacted Kronos’ net sales.

Kronos’ income from operations in the third quarter of 2021 was $57.3 million as compared to $19.3 million in the third quarter of 2020. For the year-to-date period, Kronos’ income from operations was $135.1 million as compared to $95.8 million in the first nine months of 2020. Kronos’ income from operations increased in the 2021 periods primarily due to higher average TiO₂ selling prices and higher sales volumes, partially offset by higher manufacturing and other production costs, including higher costs for raw materials and energy. Kronos’ TiO₂ production volumes were 13% higher in the third quarter of 2021 as compared to the third quarter of 2020 and 4% higher in the year-to-date period. Kronos decreased production levels in 2020 (primarily in the third quarter) to correspond to the temporary decline in demand resulting from the COVID-19 pandemic. Kronos operated its production facilities at overall average capacity utilization rates of 99% in the first nine months of 2021 (97%, 100% and 100% in the first, second and third quarters of 2021, respectively) compared to 92% in 2020 (95%, 96% and 86% in the first, second and third quarters of 2020, respectively).  Fluctuations in currency exchange rates (primarily the euro) increased income from operations approximately $2 million in the third quarter of 2021 as compared to the third quarter of 2020. Fluctuations in currency exchange rates (primarily the Canadian dollar) also affected Kronos’ year-to-date income from operations comparison, which decreased income from operations by approximately $15 million in the year-to-date 2021 period as compared to the same period of 2020.

Corporate expenses increased $.5 million in the third quarter of 2021 compared to the third quarter of 2020 primarily due to higher environmental remediation and related costs and higher litigation fees and related costs in 2021. Corporate expenses increased $.3 million in the first nine months of 2021 compared to the same period of 2020 primarily due to higher environmental remediation and related costs partially offset by lower administrative expenses. Interest and dividend income was comparable in the third quarter and decreased $.8 million in the first nine months of 2021 compared to the prior year periods primarily due to lower dividend income and lower interest income related to lower average interested rates on invested balances, and lower average outstanding balances under CompX’s revolving promissory note receivable from Valhi. Marketable equity securities represent the change in unrealized gains (losses) on our investment in Valhi common stock during the 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 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:

• 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 energy, ore, zinc, aluminum, steel and brass 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 that harm the worldwide economy, disrupt our supply chain, increase material costs or reduce demand or perceived demand for Kronos’ TiO₂ and our products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises such as COVID-19)
• 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
• Our ability to protect or defend intellectual property rights
• Potential difficulties in integrating future acquisitions
• Potential difficulties in upgrading or implementing accounting and manufacturing software systems
• The introduction of trade barriers or trade disputes
• 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 and between the euro and the Norwegian krone), or possible disruptions to our business 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, cyber-attacks and public health crises such as COVID-19)
• 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 ability of our subsidiaries or affiliates to pay us dividends
• Uncertainties associated with CompX’s development of new products and product features
• The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform
• Our ability to utilize income tax attributes or changes in income tax rates related to such attributes, the benefits of which may or may not have been recognized under the more-likely-than-not recognition criteria
• 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), including new environmental health and safety regulations such as those seeking to limit or classify TiO₂ or its use
• 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 component products (security products and recreational marine components) and chemicals (TiO₂) businesses.

NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except earnings per share)
(unaudited)

	Three months ended								Nine months ended
	September								September
	2020				2021				2020				2021
Net sales	$	28.4			$	34.5			$	84.5			$	106.7
Cost of sales		21.1				23.6				59.4				73.4
Gross margin		7.3				10.9				25.1				33.3
Selling, general and administrative expense		5.2				5.8				15.6				16.6
Other operating income (expense):
Insurance recoveries		-				-				.1				.1
Corporate expense		(2.4	)			(2.9	)			(7.4	)			(7.7	)
Income (loss) from operations		(.3	)			2.2				2.2				9.1
Equity in earnings of Kronos Worldwide, Inc.		2.4				10.9				16.3				24.7
Other income (expense):
Interest and dividend income		.5				.4				2.1				1.3
Marketable equity securities		3.2				(1.2	)			(11.1	)			9.7
Other components of net periodic pension        and OPEB cost		(.2	)			(.1	)			(.6	)			(.4	)
Interest expense		(.3	)			(.3	)			(1.0	)			(.9	)
Income before income taxes		5.3				11.9				7.9				43.5
Income tax expense (benefit)		1.2				1.1				(3.6	)			5.5
Net income		4.1				10.8				11.5				38.0
Noncontrolling interest in net income of subsidiary		.2				.5				1.1				1.7
Net income attributable to NL stockholders	$	3.9			$	10.3			$	10.4			$	36.3
Net income per share attributable to  NL stockholders	$	.08			$	.21			$	.21			$	.74
Weighted average shares used in the calculation
of net income per share		48.8				48.8				48.8				48.8

NL INDUSTRIES, INC.
COMPONENTS OF INCOME (LOSS) FROM OPERATIONS
(In millions)
(unaudited)

	Three months ended								Nine months ended
	September 30,								September 30,
	2020				2021				2020				2021
CompX - component products	$	2.1			$	5.1			$	9.5			$	16.7
Insurance recoveries		-				-				.1				.1
Corporate expense		(2.4	)			(2.9	)			(7.4	)			(7.7	)
Income (loss) from operations	$	(.3	)		$	2.2			$	2.2			$	9.1

CHANGE IN KRONOS’ TiO₂ SALES
(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2021 vs. 2020						2021 vs. 2020
Percentage change in net sales:
TiO2 sales volume			6		%				8		%
TiO2 product pricing			11						4
TiO2 product mix/other			2						2
Changes in currency exchange rates			1						4
Total			20		%				18		%

FAQ

What was NL Industries' net income for Q3 2021?

NL Industries reported net income of $10.3 million for Q3 2021.

How did NL Industries' Q3 2021 results compare to Q3 2020?

In Q3 2021, NL Industries' net income was $10.3 million, up from $3.9 million in Q3 2020.

What were CompX's net sales in Q3 2021?

CompX's net sales for Q3 2021 amounted to $34.5 million.

How did Kronos perform in the third quarter of 2021?

Kronos' net sales increased by 20% year-over-year to $499.8 million in Q3 2021.

What were the unrealized gains or losses reported by NL Industries?

NL reported an unrealized loss of $1.2 million in Q3 2021 related to marketable equity securities.