NL REPORTS THIRD QUARTER 2024 RESULTS

Rhea-AI Summary

NL Industries (NYSE: NL) reported Q3 2024 net income of $36.0 million ($.74 per share), compared to a net loss of $.1 million in Q3 2023. The results include an $18.6 million unrealized gain from marketable equity securities. CompX net sales decreased to $33.6 million in Q3 2024 from $40.3 million in Q3 2023. Kronos reported higher net sales of $484.7 million in Q3 2024, up 22% year-over-year, driven by increased TiO2 sales volumes (+21%) despite lower average selling prices. Kronos acquired the remaining 50% stake in Louisiana Pigment Company, resulting in a non-cash gain of $64.5 million.

Positive

• Net income improved to $36.0 million in Q3 2024 from a loss in Q3 2023
• Kronos' net sales increased 22% to $484.7 million in Q3 2024
• Kronos' TiO2 sales volumes increased 21% in Q3 2024
• Kronos' production utilization improved to 93% in first nine months of 2024
• $64.5 million non-cash gain from Louisiana Pigment Company acquisition

Negative

• CompX net sales declined 17% to $33.6 million in Q3 2024
• CompX's income from operations decreased to $3.3 million from $6.6 million in Q3 2023
• Kronos' average TiO2 selling prices were 1% lower in Q3 2024
• $4 million non-cash charges related to sulfate process line closure in Canada

Insights

Financial Analyst

NL Industries delivered a significant turnaround in Q3 2024, posting $36.0 million net income vs. a loss in Q3 2023. Key drivers include a substantial $18.6 million unrealized gain from marketable securities and improved performance from Kronos equity holdings ($21.9 million earnings vs. $6.2 million loss year-over-year). However, CompX segment showed weakness with net sales declining to $33.6 million from $40.3 million, primarily due to lower Security Products and Marine Component sales.

Kronos' acquisition of Louisiana Pigment Company generated a notable $64.5 million non-cash gain. Their TiO2 business showed volume growth of 21% in Q3, though prices remained 1% lower than last year. Production utilization improved to 92% in Q3 2024 from 73% in Q3 2023, indicating operational efficiency gains.

Dallas, Texas, Nov. 06, 2024 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) today reported net income attributable to NL stockholders of $36.0 million, or .74 per share, in the third quarter of 2024 compared to a net loss attributable to NL stockholders of $.1 million, or nil per share, in the third quarter of 2023. NL results include an unrealized gain of $18.6 million in the third quarter of 2024 related to the change in value of marketable equity securities compared to $.4 million in the third quarter of 2023. For the first nine months of 2024, NL reported net income attributable to NL stockholders of $50.7 million, or $1.04 per share, compared to a net loss attributable to NL stockholders of $9.9 million, or $.20 per share, for the first nine months of 2023. NL results include an unrealized gain of $21.8 million in the first nine months of 2024 related to the change in value of marketable equity securities compared to a $10.5 million unrealized loss in the first nine months of 2023.

CompX net sales were $33.6 million for the third quarter of 2024 compared to $40.3 million in the third quarter of 2023 and $107.5 million for the first nine months of 2024, compared to $118.1 million for the same prior year period. CompX’s third quarter 2024 net sales decreased over the 2023 comparable period predominantly due to lower Security Products sales to a government security customer and to a lesser extent lower Marine Component sales primarily to the towboat market. Security Products third quarter 2023 net sales include sales to a government security customer for a pilot project that did not continue in 2024. CompX net sales decreased for the first nine months of 2024 compared to the same period in 2023 primarily due to lower Marine Components sales to the towboat market. Income from operations attributable to CompX was $3.3 million for the third quarter of 2024 compared to $6.6 million for the third quarter of 2023 and $12.1 million for the first nine months of 2024 compared to $18.0 million for the same prior year period. Income from operations attributable to CompX decreased in the third quarter of 2024 compared to the same period in 2023 due to lower sales and gross margin at both Security Products and Marine Components reporting units. Income from operations attributable to CompX decreased for the first nine months of 2024 compared to the same period in 2023 primarily due to lower Marine Components sales and gross margin.

NL recognized equity in earnings of Kronos of $21.9 million in the third quarter of 2024 compared to equity in losses of $6.2 million in the third quarter of 2023. NL recognized equity in earnings of Kronos of $30.4 million in the first nine months of 2024 compared to equity in losses of $13.4 million in the same period of 2023.

As previously reported, effective July 16, 2024, Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator Investments, Ltd. Prior to the acquisition, Kronos held a 50% joint venture interest in LPC. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. The results of operations of LPC have been included in Kronos’ results of operations beginning as of the acquisition date. Kronos’ net income for the third quarter and first nine months of 2024 include the recognition of an aggregate non-cash gain of $64.5 million ($50.9 million, net of income tax expense) associated with the remeasurement of its investment in LPC as a result of the acquisition.

Kronos’ net sales of $484.7 million in the third quarter of 2024 were $87.8 million, or 22%, higher than in the third quarter of 2023. Kronos’ net sales of $1.5 billion in the first nine months of 2024 were $197.6 million, or 16%, higher than in the first nine months of 2023. Kronos’ net sales increased in the third quarter and first nine months of 2024 compared to the same periods in 2023 due to the effects of higher sales volumes due to strengthening demand for TiO₂ in all its major markets, partially offset by lower average TiO₂ selling prices. Kronos’ TiO₂ sales volumes were 21% higher in the third quarter of 2024 as compared to the third quarter of 2023 and 26% higher in the first nine months of 2024 as compared to the first nine months of 2023. Kronos’ incremental sales volumes in the third quarter of 2024 resulting from the LPC acquisition did not materially impact comparisons to the prior year. Kronos started 2024 with average TiO₂ selling prices 13% lower than at the beginning of 2023 and its average TiO₂ selling prices increased 4% during the first nine months of 2024. Kronos’ average TiO₂ selling prices were 1% lower in the third quarter of 2024 as compared to the third quarter of 2023 and 7% lower in the first nine months of 2024 as compared to the first nine months of 2023. The effect of changes in currency exchange rates in the third quarter of 2024 were comparable to the third quarter of 2023. Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $5 million in the first nine months of 2024 as compared to the first nine months of 2023. The table at the end of this press release shows how each of these items impacted net sales.

Kronos’ income from operations in the third quarter of 2024 was $38.9 million as compared to a loss from operations of $25.3 million in the third quarter of 2023. For the year-to-date period, Kronos’ income from operations was $94.3 million as compared to a loss from operations of $50.3 million in the first nine months of 2023. Kronos’ income from operations increased in the third quarter and first nine months of 2024 compared to the same periods in 2023 primarily due to the net effects of higher sales and production volumes, lower production costs (primarily energy and raw material costs) and lower average TiO₂ selling prices. Kronos’ TiO₂ production volumes were 37% higher in the third quarter of 2024 compared to the third quarter of 2023 and 35% higher in the first nine months of 2024 compared to the same period of 2023. Due to improved overall demand and a more favorable production cost environment, Kronos increased its production rates to 93% of practical capacity utilization in the first nine months of 2024 (87%, 99% and 92% in the first, second and third quarters of 2024, respectively) compared to 71% in the first nine months of 2023 (76%, 64% and 73% in the first, second and third quarters of 2023, respectively). As a result, Kronos’ unabsorbed fixed production costs in the first nine months of 2024 were $12 million (incurred in the first quarter) compared to $74 million in the first nine months of 2023 related to curtailments in 2023 and continuing into the first quarter of 2024. Kronos’ third quarter production volumes include approximately 13,000 metric tons of incremental production resulting from the LPC acquisition. During the third quarter Kronos completed the closure of its sulfate process line in Canada and Kronos’ income from operations in the third quarter and first nine months of 2024 includes non-cash charges of approximately $4 million and $14 million, respectively, related to accelerated depreciation, and the first nine months of 2024 includes a charge of approximately $2 million related to workforce reductions. Kronos’ selling, general and administrative expense in the third quarter and first nine months of 2024 includes $2.2 million of transaction costs incurred in connection with the LPC acquisition. Fluctuations in currency exchange rates (primarily the euro) increased Kronos’ income from operations by approximately $13 million in the third quarter of 2024 and approximately $10 million in the first nine months of 2024 as compared to the same prior year periods.

Corporate expenses decreased $.9 million in the third quarter of 2024 compared to the third quarter of 2023 primarily due to lower litigation fees and related costs and lower environmental remediation and related costs. Corporate expenses in the first nine months of 2024 were comparable to the same period of 2023. Interest and dividend income increased in the third quarter and for the first nine months of 2024 compared to the same periods of 2023 primarily due to higher average interest rates and higher average investment balances, somewhat offset by lower average balances on CompX’s revolving promissory note receivable from Valhi. Marketable equity securities represent the change in unrealized gains (losses) on our portfolio of marketable equity securities during the periods.

Net income attributable to NL stockholders for the third quarter of 2024 includes income of $1.1 million ($.9 million, or $.02 per share, net of tax) related to insurance recoveries. Net income attributable to NL stockholders for the third quarter and the first nine months of 2024 includes income of $15.6 million ($12.3 million, or $.25 per share, net of tax) due to Kronos’ non-cash gain resulting from the remeasurement of its investment in LPC. Additionally, net income attributable to NL stockholders for the first nine months of 2024 includes a loss of $.3 million ($.3 million, or $.01 per share, net of tax) due to Kronos’ recognition of an aggregate charge related to a write-off of deferred financing costs and income of $1.3 million ($1.0 million, or $.02 per share, net of tax) related to insurance recoveries.

Net loss attributable to NL stockholders for the first nine months of 2023 includes a non-cash loss of $4.9 million ($3.9 million, or $.08 per share, net of tax) due to the termination of our U.K. pension plan. Additionally, net loss attributable to NL stockholders for the first nine months of 2023 includes income of $.6 million ($.5 million, or $.01 per share, net of tax) 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:

• Future supply and demand for our products;
• Kronos’ ability to realize expected cost savings from strategic and operational initiatives;
• Kronos’ ability to integrate acquisitions, including Louisiana Pigment Company, L.P. (“LPC”) into its operations and realize expected synergies and innovations;
• 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 materials (such as ore);
• General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material and energy 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);
• Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises);
• Technology related disruptions (including, but not limited to, cyber-attacks; software implementation, upgrades, or improvements; technology processing failures; or other events) related to our technology infrastructure that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders;
• 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;
• 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;
• Decisions to sell operating assets other than in the ordinary course of business;
• Kronos’ ability to renew or refinance credit facilities or other debt instruments in the future;
• Changes in interest rates;
• 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 or decommissioning obligations 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, sustainability or other 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); and
• Pending or possible future litigation or other actions.
  
  

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)

(unaudited)

		Three months ended						Nine months ended
		September 30,						September 30,
		2023			2024			2023			2024
Net sales		$	40.3		$	33.6		$	118.1		$	107.5
Cost of sales			27.7			24.1			82.5			77.2
Gross margin			12.6			9.5			35.6			30.3
Selling, general and administrative expense			6.0			6.2			17.6			18.2
Other operating income (expense):
Insurance recoveries			.3			1.1			.4			1.3
Corporate expense			(3.2)			(2.3)			(9.1)			(9.2)
Income from operations			3.7			2.1			9.3			4.2
Equity in earnings (losses) of Kronos Worldwide, Inc.			(6.2)			21.9			(13.4)			30.4
Other income (expense):
Interest and dividend income			2.4			2.7			6.5			7.9
Marketable equity securities			.4			18.6			(10.5)			21.8
Loss on pension plan termination			—			—			(4.9)			—
Other components of net periodic pension and OPEB cost			(.4)			(.3)			(1.1)			(.9)
Interest expense			(.2)			(.2)			(.6)			(.5)
Income (loss) before income taxes			(.3)			44.8			(14.7)			62.9
Income tax expense (benefit)			(.9)			8.5			(6.8)			10.8
Net income (loss)			.6			36.3			(7.9)			52.1
Noncontrolling interest in net income of subsidiary			.7			.3			2.0			1.4
Net income (loss) attributable to NL stockholders		$	(.1)		$	36.0		$	(9.9)		$	50.7
Net income (loss) per share attributable to NL stockholders		$	—		$	.74		$	(.20)		$	1.04
Weighted average shares used in the calculation of net income   (loss) per share			48.8			48.8			48.8			48.8

NL INDUSTRIES, INC.

COMPONENTS OF INCOME FROM OPERATIONS

(In millions)

(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2023			2024			2023			2024
CompX - component products	$	6.6		$	3.3		$	18.0		$	12.1
Insurance recoveries		.3			1.1			.4			1.3
Corporate expense		(3.2)			(2.3)			(9.1)			(9.2)
Income from operations	$	3.7		$	2.1		$	9.3		$	4.2

CHANGE IN KRONOS’ NET SALES

(unaudited)

	Three months ended			Nine months ended
	September 30,			September 30,
	2024 vs. 2023			2024 vs 2023
Percentage change in net sales:
TiO2 sales volume	21	%		26	%
TiO2 product pricing	(1)			(7)
TiO2 product mix/other	2			(3)
Changes in currency exchange rates	—			—
Total	22	%		16	%

FAQ

What was NL Industries' earnings per share in Q3 2024?

NL Industries reported earnings of $0.74 per share in Q3 2024.

How much did Kronos' TiO2 sales volumes increase in Q3 2024?

Kronos' TiO2 sales volumes increased by 21% in Q3 2024 compared to Q3 2023.

What was the impact of the Louisiana Pigment Company acquisition on NL's earnings?

The acquisition resulted in a non-cash gain of $64.5 million ($50.9 million after tax) for Kronos, contributing $15.6 million to NL's net income.

How did CompX's sales performance change in Q3 2024?

CompX's net sales decreased to $33.6 million in Q3 2024 from $40.3 million in Q3 2023, primarily due to lower Security Products sales.