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NL INDUSTRIES INC (NL)·Q4 2024 Earnings Summary

Executive Summary

  • NL reported Q4 2024 net income attributable to stockholders of $16.5M and EPS of $0.34, up from $7.6M and $0.16 in Q4 2023, aided by environmental remediation settlement income ($31.4M aggregate pre-tax; $24.8M net of tax, $0.51/share) which materially boosted corporate income .
  • Consolidated net sales (CompX) were $38.4M in Q4 2024 versus $43.2M in Q4 2023; sequentially, net sales improved from $33.6M in Q3 2024, as Marine Components sales to the towboat and government markets partially offset lower Security Products sales tied to a government security pilot project that did not continue into 2024 .
  • NL recognized equity in losses of Kronos of $4.0M in Q4 (vs. $1.6M loss in Q4 2023), driven by non-cash tax expense items related to final tax regulations on currency translation and a Belgian deferred tax valuation allowance at Kronos, despite strong operational recovery at Kronos (Q4 operating income $28.6M vs. a $5.7M loss YoY) .
  • Marketable equity securities recorded an unrealized loss of $12.0M in Q4 2024 (vs. $2.4M gain in Q4 2023), tempering bottom-line momentum; interest and dividend income were comparable YoY in Q4 .
  • Dividend maintained: quarterly dividend of $0.08 per share was declared for Q4 (payable December 17, 2024), following a $0.43 special dividend and $0.08 quarterly dividend in Q3 2024 .

What Went Well and What Went Wrong

What Went Well

  • Environmental remediation settlement provided material income ($31.4M aggregate; $24.8M net of tax, $0.51/share), elevating corporate income and Q4 EPS .
  • Kronos recovery: income from operations of $28.6M in Q4 vs. a $5.7M loss in Q4 2023, supported by higher sales volumes, lower energy/raw material costs, and higher average TiO2 selling prices; capacity utilization reached 97% in Q4 (96% for FY 2024) .
  • Sequential improvement in consolidated net sales (CompX) to $38.4M in Q4 from $33.6M in Q3 as Marine Components sales strengthened in towboat and government markets .

What Went Wrong

  • Year-over-year consolidated net sales decline to $38.4M from $43.2M due to lower Security Products sales to a government security customer after a 2023 pilot project ended; CompX segment profit fell to $4.9M from $7.4M YoY .
  • Equity in losses of Kronos widened to $4.0M in Q4, impacted by increased tax expense from new currency translation regulations ($5.1M loss impact, $4.0M net of tax, $0.08/share) and a Belgian deferred tax valuation allowance ($2.5M loss impact, $2.0M net of tax, $0.04/share) .
  • Portfolio headwind: $12.0M unrealized loss on marketable equity securities in Q4 vs. a $2.4M gain in Q4 2023, offsetting operational progress .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net sales ($USD Millions)$43.2 $35.9 $33.6 $38.4
Cost of sales ($USD Millions)$29.6 $24.8 $24.1 $27.4
Gross margin ($USD Millions)$13.6 $11.1 $9.5 $11.0
SG&A ($USD Millions)$6.2 $6.0 $6.2 $6.1
Income from operations ($USD Millions)$4.8 $0.8 $2.1 $33.7
Equity in earnings (losses) of Kronos ($USD Millions)$(1.6) $6.0 $21.9 $(4.0)
Interest & dividend income ($USD Millions)$3.1 $2.6 $2.7 $3.1
Marketable equity securities (unrealized gain/loss) ($USD Millions)$2.4 $0.8 $18.6 $(12.0)
Net income (loss) attributable to NL ($USD Millions)$7.6 $7.9 $36.0 $16.5
EPS ($USD)$0.16 $0.16 $0.74 $0.34

Segment Breakdown

MetricQ4 2023Q2 2024Q3 2024Q4 2024
CompX net sales ($USD Millions)$43.2 $35.9 $33.6 $38.4
CompX segment profit ($USD Millions)$7.4 $5.1 $3.3$4.9
NL equity in earnings (losses) of Kronos ($USD Millions)$(1.6) $6.0 $21.9 $(4.0)

Note: CompX segment profit is a non-GAAP measure defined as gross margin less SG&A directly attributable to CompX .

KPIs (Kronos TiO2 context)

KPIQ2 2024Q3 2024Q4 2024
Kronos net sales ($USD Millions)$500.5 $484.7 $423.1
TiO2 sales volume YoY change (%)+29% +21%+4%
TiO2 avg selling price YoY change (%)−8% −1%+2%
Capacity utilization (%)99% (Q2) 92% (Q3) 97% (Q4)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024$0.08 (Q3 2024 quarterly) $0.08 (payable Dec 17, 2024) Maintained
Special dividendQ3 2024None$0.43 (paid Aug 29, 2024) Initiated
Revenue, margins, OpEx, OI&E, tax rateQ4 2024Not providedNot providedN/A (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
TiO2 demand & pricingStrengthening demand across major markets; volumes +28–29% YoY; prices −8–9% YoY in Q2; volumes +21% YoY and prices −1% YoY in Q3 Demand strength continued; volumes +4% YoY and prices +2% YoY; net sales +6% YoY Improving pricing, sustained demand
Production & cost environmentCapacity utilization 99% (Q2), 93% YTD; lower energy/raw material costs aided margin; accelerated depreciation and workforce reduction charges tied to Canadian sulfate line closure Capacity utilization 97% in Q4, 96% FY; lower production costs; FX nominal in Q4 Stronger utilization, cost tailwinds
LPC acquisitionAcquired remaining 50%; recognized $64.5M non-cash gain (Kronos) in Q3; incremental volumes immaterial to YoY comps FY net income includes $64.5M non-cash gain; LPC did not materially impact prior-period comparisons Integration ongoing; accounting remeasurement completed
CompX end-market mixQ2: Security Products up; Marine Components down (towboat) Q3: lower Security Products due to gov’t pilot ending; Marine Components softer in towboat Q4: lower Security Products YoY; Marine Components improved toward towboat/government
Environmental & litigationQ2: higher corporate environmental costs Q3: lower litigation/environment costs YoY Q4: $31.4M environmental settlement income (accrual adjustment + customer receipts)

Management Commentary

  • “CompX’s segment profit (a non-GAAP measure defined as gross margin less selling, general and administrative expenses directly attributable to CompX) was $4.9 million for the fourth quarter of 2024 compared to $7.4 million for the fourth quarter of 2023...” .
  • “Kronos’ income from operations in the fourth quarter of 2024 was $28.6 million as compared to a loss from operations of $5.7 million in the fourth quarter of 2023,” driven by higher volumes, lower energy/raw material costs, and higher prices .
  • “Kronos increased its production rates to 96% of practical capacity utilization in the full year of 2024 (87%, 99%, 92% and 97% in the first, second, third and fourth quarters of 2024, respectively)” .
  • “Net income per share attributable to NL stockholders for the fourth quarter and for the full year of 2024 includes aggregate income of $31.4 million ($24.8 million, $.51 per share, net of tax) related to an environmental remediation settlement...” .
  • “CompX’s net sales were $38.4 million for the fourth quarter of 2024 compared to $43.2 million in the fourth quarter of 2023... due to lower Security Products sales to a government security customer, partially offset by higher Marine Components sales to the towboat and government markets” .

Q&A Highlights

  • A Q4 2024 earnings call transcript was not available in the filings and materials accessed; Q&A highlights are therefore unavailable.

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable at the time of retrieval; comparisons to consensus EPS and revenue for Q4 2024 are not provided.

Key Takeaways for Investors

  • Reported EPS of $0.34 in Q4 2024 was supported by a one-time environmental settlement ($31.4M aggregate; $0.51/share net of tax), which materially lifted corporate income; underlying CompX profitability softened YoY .
  • Sequential improvement in consolidated net sales to $38.4M from $33.6M reflects recovering Marine Components demand and seasonality, though Security Products remained pressured following the end of a government pilot project in 2023 .
  • Kronos’ operational recovery is a key medium-term driver: Q4 operating income of $28.6M, improved pricing, and high capacity utilization point to better TiO2 fundamentals entering 2025; watch for sustainability of pricing/mix and cost tailwinds .
  • Equity income from Kronos can be volatile near term due to non-cash tax effects (currency translation regulation and Belgian valuation allowance), which masked Q4 operational progress; investors should separate structural operating trends from one-off tax items .
  • Portfolio volatility persists: a $12.0M unrealized loss on marketable equity securities in Q4 offset operational gains; risk budgeting should incorporate securities valuation swings .
  • Capital returns: quarterly dividend maintained at $0.08 in Q4; prior $0.43 special dividend in Q3 suggests flexibility when excess cash exists; future distributions will depend on operating cash generation and balance sheet priorities .
  • Near-term trading: stock may react to clarity on Kronos pricing/mix trajectory, additional environmental/litigation resolutions, and Marine Components order flow; medium-term thesis hinges on Kronos’ demand recovery and cost normalization alongside steady CompX execution .