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NL Reports First Quarter Results

Published on 2005-05-18. Author : SpecialChem

DALLAS -- NL Industries, Inc. (NYSE: NL) reported income from continuing operations of $13.5 million, or $.27 per diluted share, in the first quarter of 2005 compared to $5.1 million, or $.11 per diluted share, in the first quarter of 2004.

The Company conducts its component products business through CompX International Inc. Component products segment profit for the first quarter of 2005 was $4.2 million compared to $2.5 million in the first quarter of 2004. Component products segment profit comparisons in 2005 were favorably impacted by the effect of certain cost reduction initiatives previously undertaken. Component products segment profit income comparisons were also favorably impacted by the net effects of increases in the cost of steel (the primary raw material for CompX's products) and a favorable change in product mix of security products.

Following the Company's July 2004 dividend in the form of shares of Kronos Worldwide, Inc. common stock distributed to NL stockholders, the Company's ownership of Kronos was reduced to less than 50%. Consequently, effective July 1, 2004, the Company ceased to consolidate Kronos' financial position, results of operations and cash flows, and the Company commenced accounting for its interest in Kronos by the equity method. The Company continued to report Kronos as a consolidated subsidiary through June 30, 2004, including the consolidation of Kronos' results of operations and cash flows for the first half of 2004.

Kronos' net sales of $291.9 million in the first quarter of 2005 were $28.6 million, or 11%, higher than the first quarter of 2004 due to the net effects of higher average TiO2 selling prices, lower sales volumes as well as the favorable effect of fluctuations in foreign currency exchange rates, which increased sales by approximately $11 million.

Kronos' average selling prices in billing currencies (which excludes the effects of fluctuations in the value of the U.S. dollar relative to other currencies) were 8% higher in the first quarter of 2005 as compared to the first quarter of 2004. Expressed in U.S. dollars computed using actual foreign currency exchange rates prevailing during the respective periods, Kronos' average selling prices in the first quarter of 2005 were 13% higher than the first quarter of 2004.

Kronos' first quarter 2005 TiO2 sales volumes decreased 3% from the first quarter of 2004, due primarily to lower sales volumes in export markets. Kronos' TiO2 production volumes were 4% higher in the first quarter of 2005 as compared to the first quarter of 2004, with operating rates at near full capacity in both periods. Kronos' production volume in the first quarter of 2005 was a new record for a first quarter.

Kronos' segment profit for the first quarter of 2005 was $48.0 million compared with $26.2 million in the first quarter of 2004. Segment profit comparison was impacted by the net effects of the higher average TiO2 selling prices, higher production volumes and lower sales volumes. Fluctuations in foreign currency exchange rates did not have a significant effect on segment profit comparison.

Securities transactions gains, net in 2005 includes a $14.6 million gain ($7.9 million, or $.16 per diluted share, net of income taxes) related to the Company's sale of shares of Kronos common stock in market transactions.

General corporate expenses, net for 2005 decreased compared to 2004 primarily due to lower environmental remediation and legal expenses.

Interest expense decreased primarily due to the change in accounting for Kronos to the equity method as of July 1, 2004. Prior to July 1, 2004, interest expense related to Kronos' debt was included in the Company's consolidated financial statements. CompX has a nominal amount of outstanding debt at March 31, 2005.

NL Industries, Inc. is engaged in the component products (precision ball bearing slides, security products and ergonomic computer support systems), titanium dioxide pigments and other businesses.

Source: NL Industries


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