Valhi(US:VHI)2021-11-04 20:41Financial Performance - Net income attributable to Valhi stockholders for Q3 2021 was $39.0 million or $1.36 per diluted share, compared to $15.4 million or $0.54 per diluted share in Q3 2020, reflecting a significant increase [88]. - For the first nine months of 2021, net income attributable to Valhi stockholders was $75.2 million or $2.64 per diluted share, up from $30.7 million or $1.08 per diluted share in the same period of 2020 [89]. - Consolidated net sales for Q3 2021 were $499.8 million, a 20% increase from $416.9 million in Q3 2020; for the first nine months of 2021, net sales were $1,443.4 million, an 18% increase from $1,223.9 million in the same period of 2020 [96]. - The company expects higher consolidated operating income for 2021 compared to 2020, driven by improved demand across all operating segments [90]. - The company anticipates continued elevated demand for its products through the remainder of 2021, following improvements since late 2020 [90]. Chemicals Segment Performance - The Chemicals Segment reported a gross margin of $122.7 million in Q3 2021, a 54% increase from $79.6 million in Q3 2020; operating income for the segment was $60.3 million, up 179% from $21.6 million in Q3 2020 [96]. - TiO2 average selling prices increased by 11% in Q3 2021 compared to Q3 2020 and were 4% higher in the first nine months of 2021 compared to the same period in 2020 [97]. - TiO2 sales volumes increased by 6% in Q3 2021 and by 8% in the first nine months of 2021 compared to the same periods in 2020 [96]. - The Chemicals Segment operated at an average capacity utilization rate of 99% in the first nine months of 2021, compared to 92% in the same period of 2020 [98]. - The Chemicals Segment's net sales increased by 20%, or $82.9 million, in Q3 2021 compared to Q3 2020, driven by an 11% increase in average TiO2 selling prices and a 6% increase in sales volumes [100]. - Sales volumes in the Chemicals Segment rose by 6% in Q3 2021 compared to Q3 2020, primarily due to higher demand in European and North American markets [101]. - For the first nine months of 2021, net sales increased by 18%, or $219.5 million, compared to the same period in 2020, attributed to an 8% increase in sales volumes and a 4% increase in average TiO2 selling prices [102]. - The Chemicals Segment's gross margin as a percentage of net sales improved to 25% in Q3 2021 from 19% in Q3 2020, due to higher production and sales volumes [105]. - Operating income for the Chemicals Segment surged by $38.7 million, or 179%, in Q3 2021 compared to Q3 2020, with operating income as a percentage of net sales increasing to 12% [108]. - The Chemicals Segment's cost of sales increased by 12% in Q3 2021 compared to Q3 2020, influenced by a 6% increase in sales volumes and higher production costs [104]. - The Chemicals Segment anticipates rising TiO2 selling prices through the remainder of 2021 to mitigate increases in production costs [117]. Currency Impact - Currency exchange rate fluctuations contributed an estimated $5 million increase in net sales and a $2 million increase in operating income in Q3 2021 compared to Q3 2020 [113][114]. - For the first nine months of 2021, currency exchange rate fluctuations resulted in a $47 million increase in net sales but a $15 million decrease in operating income compared to the same period in 2020 [116]. Component Products Segment Performance - Component Products Segment's operating income increased to $5.1 million in Q3 2021, up 146% from $2.1 million in Q3 2020 [120]. - Net sales for Component Products Segment rose by $6.1 million in Q3 2021, totaling $34.5 million, a 22% increase compared to Q3 2020 [121]. - Security products sales increased by 22% to $25.8 million in Q3 2021, while marine components sales rose by 21% to $8.7 million [121]. - Gross margin for Component Products Segment improved to 32% in Q3 2021, up from 26% in Q3 2020, driven by higher production volumes [122]. - Operating income for the first nine months of 2021 reached $16.7 million, a 76% increase from $9.5 million in the same period of 2020 [120]. - The Component Products Segment has faced challenges in maintaining staffing levels due to tight labor markets [125]. Real Estate Management and Development Segment Performance - Land sales in the Real Estate Management and Development Segment surged to $41.9 million in Q3 2021, compared to $10.6 million in Q3 2020 [128]. - Total net sales for the Real Estate Management and Development Segment increased to $44.6 million in Q3 2021, up from $13.3 million in Q3 2020 [128]. - The company expects strong demand to continue for the remainder of 2021, with increased sales and operating income anticipated compared to 2020 [126]. Financial Position and Liquidity - Cash provided by operating activities increased to $189.2 million in the first nine months of 2021, up from $45.2 million in the same period of 2020, a $144.0 million increase [149]. - Consolidated operating income was $188.1 million in the first nine months of 2021, an increase of $48.9 million compared to $139.2 million in the same period of 2020 [150]. - Kronos' average days sales outstanding (DSO) decreased from 68 days in Q3 2020 to 66 days in Q3 2021, indicating improved collection efficiency [150]. - Capital expenditures totaled $39.2 million during the first nine months of 2021, with net proceeds from the sale of land amounting to $23.4 million [153]. - At September 30, 2021, consolidated indebtedness included $35.9 million in the Chemicals Segment and $2.3 million in the Component Products Segment [155]. - Kronos entered into a new $225 million global revolving credit facility in April 2021, with no outstanding borrowings as of September 30, 2021 [157]. - As of September 30, 2021, the company had $621.3 million in total cash, cash equivalents, and marketable securities, with $111.2 million held by non-U.S. subsidiaries [163]. - The company expects capital expenditures for 2021 to be approximately $79 million, primarily funded through cash generated from operations and existing credit facilities [165]. - The company anticipates sufficient liquidity to meet both short-term and long-term obligations based on expected operating performance [161]. - The company does not have any off-balance sheet financing arrangements [178].