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PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT:
VALHI, INC. Bobby D. O'Brien
THREE LINCOLN CENTRE Vice President
5430 LBJ FREEWAY, SUITE 1700 (972) 233-1700
DALLAS, TEXAS 75240-2697
((72) 233-1700
VALHI REPORTS SECOND QUARTER RESULTS
DALLAS, TEXAS . . July 26, 2000. Valhi, Inc. (NYSE: VHI) reported
income from continuing operations in the second quarter of 2000 of $35.0
million, or $.30 per diluted share, compared to income of $61.8 million, or $.53
per diluted share, in the second quarter of 1999. Excluding the effects of the
non-recurring items discussed in the next paragraph, the Company would have
reported income from continuing operations of $17.7 million, or $.15 per diluted
share, in the second quarter of 2000 compared to income of $9.6 million, or $.08
per diluted share, in the second quarter of 1999. For the first six months of
2000, Valhi reported income from continuing operations of $45.5 million, or $.39
per diluted share, compared to income of $64.2 million, or $.55 per diluted
share, in the first six months of 1999. Excluding the effects of the
non-recurring items discussed in the next paragraph, the Company would have
reported income from continuing operations of $28.2 million, or $.24 per diluted
share, in the first six months of 2000 compared to income of $11.9 million, or
$.10 per diluted share, in the first six months of 1999.
The Company's results in 2000 include a $43 million second quarter
pre-tax net gain ($17.3 million, or $.15 per diluted share, net of income taxes
and minority interest) related to a June 2000 settlement with a former insurance
carrier of the Company's majority-owned subsidiary, NL Industries. The
settlement ends a court proceeding against the carrier in which NL sought
reimbursement for legal defense expenditures and indemnity coverage for certain
of NL's environmental remediation expenditures. Proceeds from the settlement
will be used by NL to pay for certain of its future remediation and other
environmental expenditures. The Company's results in 1999 include the
previously-reported $90 million second quarter income tax benefit ($52 million,
or $.45 per diluted share, net of minority interest) recognized by NL.
Total operating income in the second quarter of 2000 increased 36%
compared to the second quarter of 1999, and increased 37% in the first six
months of 2000 compared to the same period in 1999, due principally to higher
chemicals earnings at NL.
Chemicals sales and operating income increased in the second quarter
and first six months of 2000 compared to the same periods in 1999 due primarily
to higher average selling prices for titanium dioxide pigments ("TiO2"), and
higher TiO2 sales and production volumes. NL's average TiO2 selling prices in
billing currencies (which excludes the effects of foreign currency translation)
during the second quarter of 2000 were 5% higher than the second quarter of
1999, with increased prices in all major regions, and were 3% higher compared to
the first quarter of 2000, with higher selling prices in both European and
export markets and flat selling prices in North America. NL's average TiO2
selling prices in the first six months of 2000 were 3% higher than the same
period in 1999. NL's TiO2 sales volumes in the second quarter of 2000, the
highest quarter in NL's history, were 9% higher than both the second quarter of
1999 and the first quarter of 2000, reflecting sustained demand in all major
regions. TiO2 sales volumes in the first six months of 2000 were 16% higher than
the first six months of 1999. NL's TiO2 production volumes in the second quarter
of 2000 were slightly higher than the second quarter of 1999, with operating
rates in both periods near full capacity. Production volumes in the first six
months of 2000 were 8% higher than the same period in 1999. Chemicals operating
income in 1999 includes a $5.3 million second quarter foreign currency
transaction gain related to certain of NL's short-term intercompany cross-border
financings that were settled in July 1999. NL is optimistic that the tight
supply in the TiO2 industry will continue to allow prices to rise to what NL
believes are more acceptable levels. NL has recently announced price increases
of 7% in Europe and 4% in North America, both of which NL expects, depending on
market conditions, to implement during the second half of 2000. NL believes it
is on track to produce more Ti02 in 2000 than the record 434,000 metric tons NL
produced in 1998.
CompX International, the Company's component products subsidiary,
reported higher sales and operating income in the second quarter and first six
months of 2000 compared to the same periods in 1999. During the second quarter
of 2000, weakness in the Euro negatively impacted component products sales.
Excluding the effect of acquisitions and currency, component products sales
increased 8% in the second quarter of 2000 compared to the second quarter of
1999.
As previously-reported, the Company commenced consolidating the results
of operations of its waste management subsidiary, Waste Control Specialists, in
the third quarter of 1999. The waste management operations reported a lower
operating loss in the second quarter and first six months of 2000 compared to
the same periods of 1999 due in part to the favorable effect of certain cost
control measures implemented in the second half of 1999. Also as
previously-reported, the Company commenced consolidating the results of
operations of Tremont Corporation effective January 1, 2000. Tremont is
primarily a holding company which directly owns 20% of NL and 39% of Titanium
Metals Corporation ("TIMET"). TIMET's operating results in the second quarter
and first six months of 2000 continued to be negatively impacted by, among other
things, lower selling prices for its titanium mill products and an excess supply
of titanium inventory throughout the aerospace industry supply chain. TIMET
currently believes its sales and operating margins, before special items, will
be slightly lower during the second half of 2000 compared to the first half of
this year.
Securities transactions in 2000 consist primarily of a $5.6 million
second quarter gain related to common stock received by NL from the
demutualization of an insurance company from which NL had purchased certain
insurance policies. General corporate expenses increased in 2000 compared to the
same periods in 1999 due primarily to higher environmental and legal expenses of
NL. Interest expense declined in 2000 due primarily to lower levels of
outstanding indebtedness and lower European borrowing rates for NL. Discontinued
operations in 1999 represents additional consideration received by the Company
related to the 1997 disposal of its fast food operations.
The statements in this release relating to matters that are not
historical facts are forward-looking statements that represent management's
belief and assumptions based on currently available information. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it 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,
the Company continues to face many risks and uncertainties. Among the factors
that could cause actual future results to differ materially include, but are not
limited to, future supply and demand for the Company's products, the extent of
the dependence of certain of the Company's businesses on certain market sectors,
the cyclicality of certain of the Company's businesses, the impact of certain
long-term contracts with customers and vendors on certain of the Company's
businesses and such customers and vendors performance thereunder, customer
inventory levels, the possibility of labor disruptions, general global economic
conditions, competitive products and substitute products, customer and
competitor strategies, the impact of pricing and production decisions,
competitive technology positions, potential difficulties in integrating
completed acquisitions, environmental matters, governmental regulations and
possible changes therein, the ultimate resolution of pending litigation and
possible future litigation. Should one or more of these risks materialize (or
the consequences of such a development worsen), or should the underlying
assumptions prove incorrect, actual results could differ materially from those
forecasted or expected. The Company disclaims any intention or obligation to
update or revise any forward-looking statement whether as a result of new
information, future events or otherwise.
Valhi, Inc. is engaged in the titanium dioxide pigments, component
products (ergonomic computer support systems, precision ball bearing slides and
security products), titanium metals products and waste management industries.
* * * * *
<PAGE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ------------
1999 2000 1999 2000
---- ---- ---- ----
Net sales
<S> <C> <C> <C> <C>
Chemicals ............................ $232.5 $251.1 $434.1 $482.1
Component products ................... 55.0 65.1 110.2 131.2
Waste management (after consolidation) -- 3.8 -- 8.4
------ ------ ------ ------
Total net sales .................... $287.5 $320.0 $544.3 $621.7
====== ====== ====== ======
Operating income
Chemicals ............................ $ 39.2 $ 56.5 $ 65.2 $ 96.3
Component products ................... 9.7 11.5 19.2 22.4
Waste management (after consolidation) -- (1.4) -- (3.0)
------ ------ ------ ------
Total operating income ............. 48.9 66.6 84.4 115.7
Equity in
TIMET ................................ -- (2.2) -- (6.5)
Waste Control Specialists* ........... (3.3) -- (8.5) --
Tremont Corporation* ................. 5.2 -- 4.5 --
Other ................................ -- -- -- .3
General corporate items:
Legal settlement gain, net ........... -- 43.0 -- 43.0
Interest and dividend income ......... 10.9 8.8 21.5 20.3
Securities transactions .............. .6 5.6 .6 5.6
Other expenses, net .................. (5.6) (11.8) (12.0) (19.4)
Interest expense ....................... (18.0) (17.7) (36.4) (35.0)
------ ------ ------ ------
Income before income taxes ......... 38.7 92.3 54.1 124.0
Provision for income taxes (benefit) ... (74.3) 40.2 (69.2) 55.0
Minority interest in after-tax earnings 51.2 17.1 59.1 23.5
------ ------ ------ ------
Income from continuing operations .. 61.8 35.0 64.2 45.5
Discontinued operations ................ 2.0 -- 2.0 --
------ ------ ------ ------
Net income ......................... $ 63.8 $ 35.0 $ 66.2 $ 45.5
====== ====== ====== ======
</TABLE>
*Prior to consolidation.
<PAGE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS (CONTINUED)
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ -----------
1999 2000 1999 2000
---- ---- ---- ----
Basic earnings per common share
<S> <C> <C> <C> <C>
Continuing operations ................ $ .54 $ .30 $ .56 $ .39
Discontinued operations .............. .02 -- .02 --
------- ------- ------- -------
Net income ......................... $ .56 $ .30 $ .58 $ .39
======= ======= ======= =======
Diluted earnings per common share
Continuing operations ................ $ .53 $ .30 $ .55 $ .39
Discontinued operations .............. .02 -- .02 --
------- ------- ------- -------
Net income ......................... $ .55 $ .30 $ .57 $ .39
======= ======= ======= =======
Shares used in calculation
of per share amounts
Basic earnings ....................... 115.0 115.1 115.0 115.1
======= ======= ======= =======
Diluted earnings ..................... 116.2 116.2 116.2 116.2
======= ======= ======= =======
</TABLE>
