Sign in

You're signed outSign in or to get full access.

VI

VALHI INC /DE/ (VHI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered sharply higher profitability: EPS $0.80 vs. $0.17 in Q4 2023, driven by Chemicals segment recovery and a $31.4M environmental remediation settlement ($0.72/sh net), partially offset by non-cash tax charges ($0.38/sh and $0.19/sh) .
  • Total net sales rose 6.2% YoY to $480.9M, with Chemicals net sales +6% YoY on higher TiO2 volumes (+4%) and prices (+2%); Component Products declined on a lapping government pilot, and Real Estate increased on development activity resumption .
  • Operating margin expanded to ~11.8% from ~3.8% YoY as capacity utilization reached 97% in Q4, energy/raw materials costs improved, and TiO2 pricing firmed modestly .
  • No formal financial guidance was issued; the board maintained the quarterly dividend at $0.08 per share (payable Mar 28, 2025) .
  • S&P Global Wall Street consensus for Q4 2024 EPS and revenue was unavailable via our data feed at time of writing; estimate comparisons are therefore not presented (Values from S&P Global unavailable).

What Went Well and What Went Wrong

What Went Well

  • Chemicals segment swing to operating income ($32.6M in Q4 2024 vs. $(1.6)M in Q4 2023) on higher volumes, lower production costs, and slightly higher prices; capacity utilization hit 97% in Q4 .
  • TiO2 demand strengthened across major markets; average TiO2 selling prices were +2% YoY in Q4, with volumes +4% YoY, supporting net sales +6% YoY for Chemicals .
  • Environmental remediation settlement added $31.4M to income ($0.72/sh net), boosting EPS and overall profitability in the quarter .

What Went Wrong

  • Component Products net sales fell to $38.4M from $43.2M YoY; operating income declined to $4.9M vs. $7.4M, reflecting the absence of a 2023 government security pilot and lower security products gross margin .
  • Interest expense rose to $13.3M in Q4 (vs. $6.9M), driven by higher rates on new Chemicals debt and higher average balances post-LPC acquisition .
  • Non-cash tax charges (final regulations and valuation allowance) totaled $24.7M pretax, reducing net EPS impact by $0.57/sh ($0.38/sh and $0.19/sh), tempering the benefit from operational improvements and the remediation settlement .

Financial Results

Consolidated Results vs. Prior Periods and YoY

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Net Sales ($USD Millions)$453.0 $559.7 $533.6 $480.9
Total Operating Income ($USD Millions)$17.2 $54.8 $67.7 $56.7
Net Income Attributable to VHI ($USD Millions)$4.9 $19.9 $57.5 $22.8
Diluted EPS ($USD)$0.17 $0.70 $2.01 $0.80
Operating Margin % (Total Op Inc / Sales)3.8% (17.2/453.0) 9.8% (54.8/559.7) 12.7% (67.7/533.6) 11.8% (56.7/480.9)

Notes:

  • Q4 EPS includes $31.4M remediation settlement income ($0.72/sh net) and two non-cash tax charges totaling $24.7M pretax ($0.57/sh net negative) .
  • Capacity utilization reached 97% in Q4; production cost tailwinds supported margin expansion YoY .

Segment Net Sales ($USD Millions)

SegmentQ4 2023Q2 2024Q3 2024Q4 2024
Chemicals$400.1 $500.5 $484.7 $423.1
Component Products$43.2 $35.9 $33.6 $38.4
Real Estate Mgmt & Development$9.7 $23.3 $15.3 $19.4
Total Net Sales$453.0 $559.7 $533.6 $480.9

Segment Operating Income ($USD Millions)

SegmentQ4 2023Q2 2024Q3 2024Q4 2024
Chemicals$(1.6) $40.5 $42.6 $32.6
Component Products$7.4 $5.1 $3.3 $4.9
Real Estate Mgmt & Development$11.4 $9.2 $21.8 $19.2
Total Operating Income$17.2 $54.8 $67.7 $56.7

Chemicals KPI Snapshot

KPIQ2 2024Q3 2024Q4 2024
TiO2 Sales Volumes YoY (%)+29% +21% +4%
Avg TiO2 Price YoY (%)−8% −1% +2%
Capacity Utilization (%)99% in Q2 92% in Q3 97% in Q4; 96% FY
Unabsorbed Fixed Costs ($mm)$12 (H1, incurred in Q1) $12 (9M, incurred in Q1) $12 (FY, incurred in Q1)
LPC Acquisition EffectsTransaction costs (~$2.2M in 2024) Remeasurement gain $64.5M (Q3) Sales/production volumes did not materially impact comps

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular Dividend per ShareQ1 2025 dividend (pay date Mar 28, 2025)$0.08 $0.08 Maintained
Financial Guidance (Revenue, Margins, OpEx, Tax, Segment-specific)2025Not provided Not provided N/A

No formal quantitative guidance was issued in the Q4 release/corresponding 8-K; the company reiterated risk factors without numeric targets .

Earnings Call Themes & Trends

Earnings call transcript was not available in our document corpus; themes below reflect management disclosures across Q2–Q4 press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
TiO2 demand & pricingVolumes +29% YoY; prices −8% YoY; capacity ramp to 99% Q2 Volumes +21% YoY; prices −1% YoY; capacity ~92% Q3 Volumes +4% YoY; prices +2% YoY; capacity 97% Q4 Improving demand and pricing stabilization
Production costs & utilizationLower energy/raw materials; utilization 99% Q2, H1 at 93% Continued cost tailwinds; utilization 93% for 9M Cost tailwinds; FY utilization 96%, Q4 97% Improving efficiency
LPC acquisition & integrationTransaction charges; closure planning for Canadian sulfate line Remeasurement gain $64.5M; incremental production; integration on track Transaction costs in FY; volumes/sales not materially distorting comps Integration executed; synergy realization ongoing
Component Products exposureLower marine towboat demand; security products higher in Q2 Lower security/marine sales; pilot project in 2023 did not continue Lower security sales; lapping pilot; gross margin pressure Mixed; security softness persists
Real Estate development paceLower due to permit delays Lower YoY; tax increment reimbursements recognized Activity increased in Q4 with materials receipt; YoY net sales +100% Reaccelerating activity
Interest expenseHigher due to 2024 refinancing Higher due to refinancing and LPC financing Higher rates and balances; deferred financing costs written off Headwind continuing
Currency impactsSales +$2–6M benefit H1; small negative on op income Sales +$5M benefit YTD; op income +$13M in Q3 Sales effect nominal in Q4; op income FX nominal in Q4; +$10M FY FX tailwind moderates

Management Commentary

  • “Net income attributable to Valhi stockholders increased in the fourth quarter of 2024 as compared to the fourth quarter of 2023 primarily due to higher operating results from the Chemicals Segment and aggregate income of $31.4 million … related to the settlement of a liability for an environmental remediation site … partially offset by … non-cash deferred income tax expense[s].”
  • “The Chemicals Segment’s operating income increased … primarily due to an increase in sales and production volumes, lower production costs (primarily energy and raw materials) and higher average TiO2 selling prices.”
  • “Due to improved overall demand and a more favorable production cost environment, the Chemicals Segment increased its production rates to 96% of practical capacity utilization in the full year of 2024 … 97% in the fourth quarter.”
  • “The Component Products Segment’s fourth quarter net sales decreased … predominantly due to lower security products sales to a government security customer, partially offset by higher marine components sales.”
  • “With the receipt of long lead time construction materials, development activities increased in the fourth quarter of 2024 compared to the same period in 2023.”

Q&A Highlights

  • Earnings call transcript was not available in our document set; no Q&A details to report from primary sources. We note disclosures on taxes, environmental settlement, LPC integration, and interest expense within the press release and 8-K exhibits .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable via our SPGI feed at time of writing; therefore, we cannot present beat/miss relative to S&P Global. Values from S&P Global unavailable.
  • The absence of consensus data suggests analysts may need to reassess Chemicals margins trajectory, interest expense run-rate post-refinancing, and the sustainability of price/volume improvements as TiO2 demand normalizes .

Key Takeaways for Investors

  • Chemicals recovery is broad-based: volumes up, pricing stabilizing, costs down, and utilization near full—key drivers for margin durability into 2025 absent price retrenchment .
  • Reported EPS benefited from one-time items ($0.72/sh remediation settlement; offset by $0.57/sh non-cash tax charges); focus on underlying operating trajectory rather than GAAP EPS alone .
  • Interest expense is a sustained headwind due to refinancing and LPC financing; monitor rate environment and leverage to gauge net earnings sensitivity .
  • Component Products faces demand variability tied to government/security cycles; marine towboat exposure remains a swing factor for segment profitability .
  • Real Estate development pace reaccelerated in Q4 with materials receipt; timing hinges on permits/environmental approvals—expect quarter-to-quarter variability .
  • FX tailwinds aided FY 2024 operating income (~$10M); contribution was nominal in Q4—do not extrapolate outsized FX benefits .
  • Dividend maintained at $0.08/sh; despite improving operations, capital allocation remains conservative given cyclical end-markets and recent debt dynamics .

Appendix: Additional Detail

  • 8-K filing furnished the Q4 2024 press release and dividend announcement as Exhibits 99.1 and 99.2 .
  • Q3 and Q2 2024 press releases provide comparative context on TiO2 volume/price trends, production utilization, and segment dynamics .