VALHI REPORTS FOURTH QUARTER 2023 RESULTS
- None.
- Valhi reported a net loss for the full year of 2023 compared to net income in 2022.
- The Chemicals Segment experienced lower operating income in 2023 due to a combination of factors including lower sales volumes and higher production costs.
- The Real Estate Management and Development Segment's sales decreased in Q4 and full year 2023 compared to 2022 due to decreased development activity.
Insights
The financial performance of Valhi, Inc. reveals a mixed picture, with a return to profitability in the fourth quarter of 2023 contrasting with an annual net loss. The swing from a net loss in Q4 2022 to net income in Q4 2023 suggests a recovery trajectory, potentially indicating operational improvements or cost optimizations. However, the overall annual loss in 2023, as opposed to the significant net income in 2022, underscores challenges faced throughout the year. Investors should consider the volatility of the Chemicals Segment, which, despite increased Q4 sales, suffered a full-year decline due to lower demand and selling prices for TiO2, a key product.
The reported unabsorbed fixed production costs reflect strategic adjustments to production volumes, which, while necessary to align with demand, have financial repercussions. The Component Products Segment's performance, particularly in security products, offers a counterbalance, suggesting diversification benefits. The Real Estate Management and Development Segment's decline in sales is concerning, yet the recognition of tax increment infrastructure reimbursement provides some offset.
Key financial indicators, such as operating income and net sales, are essential for stakeholders to assess the company's health and future prospects. The impact of currency fluctuations, particularly the euro and the detailed breakdown of segment performances, offer valuable insights into operational efficiency and market conditions. The fluctuations in interest income and other financial gains reflect broader economic trends, such as interest rate changes, which have a direct impact on corporate earnings.
The Chemicals Segment's performance is a critical factor in Valhi's overall results. The TiO2 market is influenced by global demand patterns, particularly in Europe and North America, which are primary markets for Valhi. The reported increase in TiO2 sales volumes in Q4 2023 suggests a rebound in demand, possibly linked to economic recovery or industry-specific trends. However, the decline in average selling prices indicates competitive pressures or excess supply. The full-year decrease in sales volumes across major markets suggests that the rebound is not yet stable and may be subject to further fluctuations.
The Component Products Segment's increased sales from government security projects may reflect a growing market for security products, an area that could offer growth opportunities for Valhi. Conversely, the decline in marine components sales, particularly to the towboat market, could signal sector-specific challenges or competitive displacement.
The Real Estate Management and Development Segment's decreased pace of development activity raises questions about local market conditions, regulatory hurdles and resource availability. The segment's performance is also indicative of the health of the residential real estate market, which can be cyclical and influenced by broader economic factors.
The reported financials of Valhi, Inc. reflect broader economic themes, such as the role of currency exchange rates in international business. The euro's fluctuation has a tangible impact on the company's Chemicals Segment, affecting both net sales and operating loss. This illustrates the importance of currency risk management in multinational operations.
The strategic production curtailments in response to lower demand for TiO2 demonstrate the company's responsiveness to market conditions but also highlight the risks associated with fixed costs in capital-intensive industries. The ability to adjust production levels is crucial for maintaining financial stability during demand downturns.
The real estate segment's results, influenced by development activity and land sales, serve as a microcosm of the real estate market's responsiveness to economic factors such as labor and material availability, regulatory processes and infrastructure investment. The segment's performance may also reflect consumer confidence and spending power in the residential market.
Overall, Valhi's financials provide a window into the interplay between corporate strategy, market dynamics and economic conditions. The company's ability to navigate these factors will determine its long-term financial health and growth trajectory.
Dallas, Texas, March 07, 2024 (GLOBE NEWSWIRE) -- Valhi, Inc. (NYSE: VHI) reported net income attributable to Valhi stockholders of
The Chemicals Segment’s net sales of
The Chemicals Segment’s operating loss in the fourth quarter of 2023 was
The Chemicals Segment’s operating loss in the full year of 2023 includes an insurance settlement gain related to a 2020 business interruption insurance claim of
The Component Products Segment’s net sales were
The Real Estate Management and Development Segment had sales of
Due to historically low water levels at Lake Mead, Nevada at the end of the second quarter of 2022, the Real Estate Management and Development Segment’s subsidiary Basic Water Company (BWC) ceased operations at its water intake facility and on September 10, 2022 BWC and its subsidiaries voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Nevada. The Real Estate Management and Development Segment recognized aggregate charges of
Corporate expenses decreased
Our net loss attributable to Valhi stockholders in 2023 includes a non-cash loss of
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:
- Future supply and demand for our products;
- The extent of the dependence of certain of our businesses on certain market sectors;
- The cyclicality of certain 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 ore, zinc, brass, aluminum, steel and energy 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, reduce demand or perceived demand for TiO2, component products and land held for development 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;
- Customer and competitor strategies;
- Potential difficulties in integrating future acquisitions;
- Potential difficulties in upgrading or implementing accounting and manufacturing software systems;
- Potential consolidation of our competitors;
- Potential consolidation of our customers;
- The impact of pricing and production decisions;
- Competitive technology positions;
- Our ability to protect or defend intellectual property rights;
- The introduction of trade barriers or trade disputes;
- The ability of our subsidiaries to pay us dividends;
- Uncertainties associated with new product development and the development of new product features;
- 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;
- The timing and amounts of insurance recoveries;
- Our ability to renew, amend, refinance or establish credit facilities;
- Increases in interest rates;
- Our ability to maintain sufficient liquidity;
- 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, 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 NL, with respect to asserted health concerns associated with the use of such products) including new environmental, health, 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 NL’s lead pigment and environmental matters);
- Our ability to comply with covenants contained in our revolving bank credit facilities;
- Our ability to complete and comply with the conditions of our licenses and permits;
- Changes in real estate values and construction costs in Henderson, Nevada; and
- Pending or possible future litigation or other actions.
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.
*****
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 | Year ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||
| (unaudited) | ||||||||||||
| Net sales | ||||||||||||
| Chemicals | $ | 342.4 | $ | 400.1 | $ | 1,930.2 | $ | 1,666.5 | ||||
| Component products | 40.0 | 43.2 | 166.6 | 161.3 | ||||||||
| Real estate management and development | 20.2 | 9.7 | 125.7 | 93.9 | ||||||||
| Total net sales | $ | 402.6 | $ | 453.0 | $ | 2,222.5 | $ | 1,921.7 | ||||
| Operating income (loss) | ||||||||||||
| Chemicals | $ | (15.3) | $ | (1.6) | $ | 174.6 | $ | (41.1) | ||||
| Component products | 5.4 | 7.4 | 25.4 | 25.4 | ||||||||
| Real estate management and development | 7.3 | 11.4 | 39.4 | 49.9 | ||||||||
| Total operating income (loss) | (2.6) | 17.2 | 239.4 | 34.2 | ||||||||
| General corporate items: | ||||||||||||
| Interest income and other | 4.8 | 6.8 | 10.4 | 21.3 | ||||||||
| Gain on land sales | — | — | — | 1.5 | ||||||||
| Other components of net periodic pension and OPEB expense | (4.1) | (1.8) | (13.9) | (11.8) | ||||||||
| Changes in market value of Valhi common stock held by subsidiaries | (.7) | .4 | (1.6) | (1.7) | ||||||||
| General expenses, net | (9.2) | (8.8) | (36.5) | (34.7) | ||||||||
| Interest expense | (7.0) | (6.9) | (27.9) | (28.3) | ||||||||
| Income (loss) before income taxes | (18.8) | 6.9 | 169.9 | (19.5) | ||||||||
| Income tax expense (benefit) | (8.3) | (3.8) | 33.8 | (22.4) | ||||||||
| Net income (loss) | (10.5) | 10.7 | 136.1 | 2.9 | ||||||||
| Noncontrolling interest in net income (loss) of subsidiaries | (1.1) | 6.8 | 45.9 | 15.0 | ||||||||
| Net income (loss) attributable to Valhi stockholders | $ | (9.4) | $ | 3.9 | $ | 90.2 | $ | (12.1) | ||||
| Amounts attributable to Valhi stockholders: | ||||||||||||
| Basic and diluted net income (loss) per share | $ | (.33) | $ | .14 | $ | 3.16 | $ | (.42) | ||||
| Basic and diluted weighted average shares outstanding | 28.5 | 28.5 | 28.5 | 28.5 | ||||||||
VALHI, INC. AND SUBSIDIARIES
IMPACT OF PERCENTAGE CHANGE IN CHEMICAL SEGMENT'S NET SALES
(unaudited)
| Three months ended | Year ended | ||||
| December 31, | December 31, | ||||
| 2023 vs. 2022 | 2023 vs. 2022 | ||||
| Percentage change in TiO2 net sales: | |||||
| TiO2 sales volumes | 29 | % | (13) | % | |
| TiO2 product pricing | (11) | (4) | |||
| TiO2 product mix/other | (4) | 2 | |||
| Changes in currency exchange rates | 3 | 1 | |||
| Total | 17 | % | (14) | % |
FAQ
What was Valhi, Inc.'s net income in Q4 2023?
What caused the increase in net income in Q4 2023 compared to Q4 2022?
Why did the Chemicals Segment's net sales increase in Q4 2023?
What impacted the Real Estate Management and Development Segment's sales in 2023?
