NL Industries (NL) Q3 2024 earnings summary

Executive summary

• Net income attributable to NL stockholders was $36.0 million ($0.74/share) in Q3 2024, reversing a net loss of $0.1 million in Q3 2023, driven by strong Kronos equity earnings and gains on marketable securities.

• For the nine months ended September 30, 2024, net income attributable to NL stockholders was $50.7 million ($1.04/share), compared to a net loss of $9.9 million ($0.20/share) in the prior year period.

• Key drivers included a $21.9 million swing in Kronos equity earnings in Q3, an $18.6 million unrealized gain on marketable securities, and higher insurance recoveries.

• Kronos acquired the remaining 50% of Louisiana Pigment Company (LPC), recognizing a $64.5 million non-cash gain and expanding TiO2 production capacity.

• Net income for Q3 2024 includes $1.1 million from insurance recoveries and $15.6 million from Kronos' non-cash gain on the LPC acquisition.

Financial highlights

• Q3 2024 net sales were $33.7 million, down 17% year-over-year; nine-month net sales were $107.5 million, down 9%.

• Q3 2024 gross margin was $9.5 million (28% of sales), down from $12.6 million (31%) in Q3 2023.

• Q3 2024 income from operations was $2.0 million, down 45% year-over-year; nine-month operating income was $4.2 million, down 55%.

• Kronos' Q3 2024 net sales rose 22% to $484.7 million, with income from operations of $38.9 million versus a loss of $25.3 million in Q3 2023.

• Consolidated cash and equivalents at September 30, 2024 were $176.2 million, up from $141.4 million at year-end 2023.

Outlook and guidance

• CompX expects Security Products sales to be challenged by the absence of 2023's government pilot project, but recurring sales remain strong; gross and operating margins for 2024 are expected to be lower due to reduced sales and higher costs.

• Marine Components sales are expected to remain weak due to continued contraction in the recreational marine industry and higher input costs.

• Kronos anticipates 2024 sales volumes will exceed 2023, with higher production rates and improved margins, but demand is expected to moderate in Q4.

• Kronos reduced its quarterly dividend to $0.05/share to provide flexibility for debt service and integration of LPC.