NL Industries (NL) Q2 2024 earnings summary

Executive summary

• Net income attributable to NL stockholders was $7.9M ($0.16/share) in Q2 2024, reversing a net loss of $3.1M ($0.06/share) in Q2 2023, driven by improved Kronos earnings, marketable securities gains, and higher CompX operating income.

• Six-month net income attributable to NL stockholders was $14.7M ($0.30/share) in 2024 vs. a net loss of $9.8M ($0.20/share) in 2023, reflecting strong Kronos performance and marketable securities recovery.

• Results benefited from unrealized gains of $0.8M in Q2 2024 and $3.2M YTD on marketable securities, compared to losses in 2023.

• Kronos' acquisition of the remaining 50% of Louisiana Pigment Company (LPC) for $185M plus earn-out expands capacity and is expected to deliver synergies and operational efficiencies.

Financial highlights

• Q2 2024 net sales were $35.9M, down 2% year-over-year; six-month net sales were $73.9M, down 5%.

• Q2 2024 gross margin rose to $11.2M (31% of sales) from $10.3M (28%) in Q2 2023; six-month gross margin was $20.8M (28%) vs. $23.0M (30%).

• Q2 2024 income from operations was $0.8M, down from $1.4M in Q2 2023; six-month income from operations was $2.1M, down from $5.6M.

• Kronos net sales increased 13% year-over-year to $500.5M in Q2 2024, with TiO2 sales volumes up 29% but average selling prices down 8%.

• Corporate expenses increased $1.3M in Q2 2024, mainly due to higher environmental remediation costs.

Outlook and guidance

• CompX expects Security Products net sales in 2024 to be lower than 2023 due to non-repeating government security sales; gross margin is expected to be comparable, but operating income margin may decline.

• Marine Components net sales and margins are expected to be lower in 2024 due to continued weakness in the recreational marine industry.

• Kronos expects 2024 sales volumes to exceed 2023, with higher production rates and improved gross margins as lower-cost inventory replaces higher-cost stock.

• Kronos anticipates the LPC acquisition will positively impact 2024 earnings, partially offset by higher debt service costs.