VALHI REPORTS FIRST QUARTER 2021 RESULTS
06 Mayo 2021 - 3:15PM
Valhi, Inc. (NYSE: VHI) reported net income attributable to Valhi
stockholders of $14.8 million, or $.52 per share, in the first
quarter of 2021 compared to net income of $24.4 million, or $.86
per share, in the first quarter of 2020. Net income
attributable to Valhi stockholders decreased in the first quarter
of 2021 as compared to the first quarter of 2020 primarily due to
lower operating results from our Chemicals Segment and lower income
from tax increment infrastructure reimbursement from our Real
Estate Management and Development Segment in 2021.
The Chemicals Segment’s net sales were $465.0
million in the first quarter of 2021 compared to $421.0 million in
the first quarter of 2020. The Chemicals Segment’s net sales
increased in the first quarter of 2021 primarily due to higher
sales volumes partially offset by lower average TiO2 selling
prices. TiO2 sales volumes were 3% higher in the first
quarter of 2021 as compared to the first quarter of 2020 primarily
due to higher demand in North American and Latin American markets
partially offset by lower sales volumes in the European market.
The Chemicals Segment’s average TiO2 selling prices were 1%
lower in the first quarter of 2021 as compared to the first quarter
of 2020 and TiO2 selling prices at the end of the first quarter of
2021 were 1% higher than at the end of 2020. TiO2 selling
prices will increase or decrease generally as a result of
competitive market pressures, changes in the relative level of
supply and demand as well as changes in raw material and other
manufacturing costs. Fluctuations in currency exchange rates
(primarily the euro) also affected net sales comparisons,
increasing our Chemicals Segment’s net sales by approximately $20
million in the first quarter of 2021 as compared to the first
quarter of 2020. The table at the end of this press release shows
how each of these items impacted net sales.
The Chemicals Segment’s operating income in the
first quarter of 2021 was $37.7 million as compared to $46.8
million in the first quarter of 2020. The Chemicals Segment’s
operating income decreased in the first quarter of 2021 as compared
to the first quarter of 2020 primarily due to the net effects of
fluctuations in currency exchange rates, which decreased operating
income by approximately $16 million in the first quarter of 2021 as
compared to the first quarter of 2020, lower average TiO2 selling
prices, higher sales volumes and lower production costs. Due to the
phase-out of sulfate production at one of its facilities in the
fourth quarter of 2020, the Chemicals Segment’s TiO2 production
volumes were 1% lower in the first quarter of 2021 as compared to
the first quarter of 2020. The Chemicals Segment’s production
facilities operated at overall average capacity utilization rates
of 97% and 95% in the first quarters of 2021 and 2020,
respectively.
The Component Products Segment’s net sales were
$35.9 million in the first quarter of 2021 compared to $32.3
million in the first quarter of 2020. The Component Products
Segment’s net sales increased primarily due to higher marine
components sales to the towboat market and to a lesser extent
higher security products sales. The higher marine components sales
reflect the overall increase in demand in the recreational marine
market which began in late spring 2020. Operating income
attributable to the Component Products Segment was $5.8 million in
the first quarter of 2021 compared to $5.0 million in the first
quarter of 2020. The Component Products Segment’s operating income
increased in the first quarter of 2021 compared to the first
quarter of 2020 due to the higher marine components sales as well
as lower overall employee medical expenses for both security
products and marine components, partially offset by higher cost of
sales for security products.
The Real Estate Management and Development
Segment had sales of $8.1 million in the first quarter of 2021,
including $6.6 million in revenue on sales of land held for
development, compared to sales of $6.0 million in the first quarter
of 2020, including $3.6 million in revenue on sales of land held
for development. Land sales revenue is generally recognized over
time based on cost inputs, and land sales revenues are dependent on
spending for development activities as we balance development
requirements with home builder output during the year. Land
sales revenues are also impacted by the relative timing of when new
land parcel sales are closed. Land sales revenues increased
in the first quarter of 2021 as compared to the first quarter of
2020 primarily due to an increase in the amount of acreage sold in
2021 as compared to 2020. The Real Estate Management and
Development Segment had operating income in the first quarter of
2021 of $7.8 million compared to operating income of $19.2 million
in the first quarter of 2020. Operating income in the first
quarter of 2021 includes income related to the recognition of tax
increment reimbursement note receivables of $6.2 million ($3.2
million, or $.11 per share, net of income taxes and noncontrolling
interest) compared to $19.1 million ($9.9 million, or $.35 per
share, net of income taxes and noncontrolling interest) of such
income recognized in the first quarter of 2020.
Corporate expenses in the first quarter of 2021
were comparable to the first quarter of 2020. In the first quarter
of 2020, Kronos recognized a $1.5 million insurance settlement gain
($.8 million, or $.03 per share, net of income taxes and
noncontrolling interest) related to a property damage
claim.
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
costs, reduce demand or perceived demand for TiO2, component
products and land held for sale 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;
- 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;
- The impact of current or future government regulations
(including employee healthcare benefit related regulations);
- 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) 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;
- The timing and amounts of insurance recoveries;
- Our ability to renew, amend, refinance or establish credit
facilities;
- 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 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 and safety 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;
- Water levels in Lake Mead; and
- Possible future litigation.
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.
* * * * *
VALHI, INC. AND SUBSIDIARIES |
|
CONDENSED SUMMARY OF INCOME |
|
(In millions, except earnings per share) |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2020 |
|
|
2021 |
|
|
(unaudited) |
|
Net
sales |
|
|
|
|
|
|
|
Chemicals |
$ |
421.0 |
|
|
$ |
465.0 |
|
Component products |
|
32.3 |
|
|
|
35.9 |
|
Real estate management and development |
|
6.0 |
|
|
|
8.1 |
|
|
|
|
|
|
|
|
|
Total net
sales |
$ |
459.3 |
|
|
$ |
509.0 |
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
|
|
|
|
|
Chemicals |
$ |
46.8 |
|
|
$ |
37.7 |
|
Component products |
|
5.0 |
|
|
|
5.8 |
|
Real estate management and development |
|
19.2 |
|
|
|
7.8 |
|
|
|
|
|
|
|
|
|
Total operating
income |
|
71.0 |
|
|
|
51.3 |
|
|
|
|
|
|
|
|
|
General corporate
items: |
|
|
|
|
|
|
|
Securities earnings |
|
1.6 |
|
|
|
.9 |
|
Insurance recoveries |
|
1.6 |
|
|
|
- |
|
Changes in market value of Valhi common stock held by
subsidiaries |
|
(2.4 |
) |
|
|
1.3 |
|
Other components of net periodic pension and OPEB expense |
|
(4.7 |
) |
|
|
(4.3 |
) |
General expenses, net |
|
(8.1 |
) |
|
|
(8.1 |
) |
Interest expense |
|
(9.7 |
) |
|
|
(8.6 |
) |
|
|
|
|
|
|
|
|
Income before income
taxes |
|
49.3 |
|
|
|
32.5 |
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
11.4 |
|
|
|
8.0 |
|
|
|
|
|
|
|
|
|
Net income |
|
37.9 |
|
|
|
24.5 |
|
|
|
|
|
|
|
|
|
Noncontrolling
interest in net income of subsidiaries |
|
13.5 |
|
|
|
9.7 |
|
|
|
|
|
|
|
|
|
Net income
attributable to Valhi stockholders |
$ |
24.4 |
|
|
$ |
14.8 |
|
|
|
|
|
|
|
|
|
Amounts
attributable to Valhi stockholders: |
|
|
|
|
|
|
|
Basic and diluted net income per share |
$ |
.86 |
|
|
$ |
.52 |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding |
|
28.5 |
|
|
|
28.5 |
|
VALHI, INC. AND SUBSIDIARIES |
IMPACT OF PERCENTAGE CHANGE IN CHEMICALS SEGMENT'S NET
SALES |
(Unaudited) |
|
|
|
Three months ended |
|
March 31, |
|
2021 vs. 2020 |
|
|
|
|
|
|
|
Percentage
change in TiO2 net sales : |
|
|
|
|
|
TiO2 sales volumes |
|
|
3 |
|
% |
TiO2 product pricing |
|
|
(1 |
) |
|
TiO2 product mix/other |
|
|
3 |
|
|
Changes in currency exchange
rates |
|
|
5 |
|
|
|
|
|
|
|
|
Total |
|
|
10 |
|
% |
|
|
|
|
|
|
SOURCE: Valhi, Inc.
CONTACT: Janet G. Keckeisen, Vice President - Corporate Strategy and Investor Relations, 972.233.1700
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