NL REPORTS THIRD QUARTER 2024 RESULTS

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 ...