Valhi Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

vhi-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-5467

VALHI, INC.

(Exact name of Registrant as specified in its charter)

Delaware

87-0110150

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

5430 LBJ Freeway, Suite 1700

Dallas, Texas 75240-2620

(Address of principal executive office)

Registrant’s telephone number, including area code: (972) 233-1700

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	VHI	NYSE

Indicate by check mark:

Whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒.

Number of shares of the registrant’s common stock, $.01 par value per share, outstanding on October 30, 2020: 28,273,093

VALHI, INC. AND SUBSIDIARIES

INDEX

			Page number

Part I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets – December 31, 2019 and September 30, 2020 (unaudited)		3

		Condensed Consolidated Statements of Income (unaudited) – Three and nine months ended September 30, 2019 and 2020		5

		Condensed Consolidated Statements of Comprehensive Income (unaudited) – Three and nine months ended September 30, 2019 and 2020		6

		Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – Three and nine months ended September 30, 2019 and 2020		7

		Condensed Consolidated Statements of Cash Flows (unaudited) –Nine months ended September 30, 2019 and 2020		8

		Notes to Condensed Consolidated Financial Statements (unaudited)		9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		43

	Item 4.	Controls and Procedures		43

Part II.	OTHER INFORMATION

	Item 1.	Legal Proceedings		44

	Item 1A.	Risk Factors		44

	Item 6.	Exhibits		45

Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

	December 31,		September 30,
	2019		2020
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	523.8	$	497.8
Restricted cash equivalents		27.0		15.1
Marketable securities		2.1		1.4
Accounts and other receivables, net		329.2		333.3
Inventories, net		522.1		524.2
Other current assets		21.2		55.8
Total current assets		1,425.4		1,427.6

Other assets:
Investment in TiO₂ manufacturing joint venture		90.2		96.7
Goodwill		379.7		379.7
Deferred income taxes		106.0		112.0
Other assets		230.1		238.0
Total other assets		806.0		826.4

Property and equipment:
Land		46.2		47.7
Buildings		248.0		252.3
Equipment		1,166.0		1,199.3
Mining properties		26.2		16.0
Construction in progress		62.7		74.8
		1,549.1		1,590.1
Less accumulated depreciation and amortization		986.1		1,037.8
Net property and equipment		563.0		552.3
Total assets	$	2,794.4	$	2,806.3

- 3 -

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In millions)

	December 31,			September 30,
	2019			2020
				(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	4.9		$	3.2
Accounts payable and accrued liabilities		307.4			281.1
Income taxes		10.2			23.1
Total current liabilities		322.5			307.4
Noncurrent liabilities:
Long-term debt		789.4			796.2
Deferred income taxes		38.1			35.3
Payable to affiliate - income taxes		56.3			50.4
Accrued pension costs		315.6			328.6
Accrued environmental remediation and related costs		95.2			94.3
Other liabilities		197.2			197.1
Total noncurrent liabilities		1,491.8			1,501.9
Equity:
Valhi stockholders' equity:
Preferred stock		667.3			-
Common stock		.3			.3
Additional paid-in capital		3.3			668.3
Retained earnings		239.4			260.7
Accumulated other comprehensive loss		(220.7	)		(222.9	)
Treasury stock, at cost		(49.6	)		(49.6	)
Total Valhi stockholders' equity		640.0			656.8
Noncontrolling interest in subsidiaries		340.1			340.2
Total equity		980.1			997.0
Total liabilities and equity	$	2,794.4		$	2,806.3

Commitments and contingencies (Notes 12 and 15)

See accompanying Notes to Condensed Consolidated Financial Statements.

- 4 -

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2019			2020			2019		2020
	(unaudited)

Revenues and other income:
Net sales	$	475.2		$	458.6		$	1,483.5	$	1,332.9
Other, net		13.6			2.6			35.5		33.9
Total revenues and other income		488.8			461.2			1,519.0		1,366.8
Costs and expenses:
Cost of sales		376.8			368.9			1,140.0		1,039.5
Selling, general and administrative		76.0			70.2			221.1		210.7
Litigation settlement, net		(.3	)		-			19.3		-
Other components of net periodic pension and OPEB expense		4.1			5.2			12.3		14.9
Interest		10.3			8.9			30.7		27.4
Total costs and expenses		466.9			453.2			1,423.4		1,292.5
Income before income taxes		21.9			8.0			95.6		74.3
Income tax expense (benefit)		4.7			(11.4	)		31.8		21.2
Net income		17.2			19.4			63.8		53.1
Noncontrolling interest in net income of subsidiaries		4.1			4.0			25.3		22.4
Net income attributable to Valhi stockholders	$	13.1		$	15.4		$	38.5	$	30.7

Amounts attributable to Valhi stockholders:
Basic and diluted net income per share	$	.46		$	.54		$	1.35	$	1.08

Basic and diluted weighted average shares outstanding	$	28.5		$	28.5		$	28.5	$	28.5

See accompanying Notes to Condensed Consolidated Financial Statements.

- 5 -

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Three months ended					Nine months ended
	September 30,					September 30,
	2019			2020		2019			2020
	(unaudited)
Net income	$	17.2		$	19.4	$	63.8		$	53.1
Other comprehensive income (loss), net of tax:
Currency translation		(17.1	)		9.2		(10.8	)		(12.2	)
Defined benefit pension plans		2.3			3.1		6.8			9.1
Other		(.3	)		-		(.7	)		(.2	)
Total other comprehensive income (loss), net		(15.1	)		12.3		(4.7	)		(3.3	)
Comprehensive income		2.1			31.7		59.1			49.8
Comprehensive income attributable to noncontrolling interest		.1			7.1		24.1			21.2
Comprehensive income attributable to Valhi stockholders	$	2.0		$	24.6	$	35.0		$	28.6

See accompanying Notes to Condensed Consolidated Financial Statements.

- 6 -

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

	Three months ended September 30, 2019 and 2020 (unaudited)
										Accumulated
					Additional					other						Non-
	Preferred		Common		paid-in		Retained			comprehensive			Treasury			controlling
	stock		stock		capital		earnings			loss			stock			interest			Total

Balance at June 30, 2019	$	667.3	$	.3	$	3.3	$	230.2		$	(198.5	)	$	(49.6	)	$	364.0		$	1,017.0
Net income		-		-		-		13.1			-			-			4.1			17.2
Other comprehensive loss, net		-		-		-		-			(11.1	)		-			(4.0	)		(15.1	)
Dividends paid to noncontrolling interest		-		-		-		-			-			-			(4.2	)		(4.2	)
Cash dividends - $.24 per share		-		-		-		(6.8	)		-			-			-			(6.8	)
Equity transactions with noncontrolling interest, net and other		-		-		-		(1.0	)		-			-			(.4	)		(1.4

Price	2.00	EPS	0
Shares	342	P/E	8
MCap	684	P/FCF	6
Net Debt	226	EBIT	153
TEV	910	TEV/EBIT	6
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-05
10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-03-12
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-03-11
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-03-15
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-08
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-03-13
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-09
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-13
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-03-17
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-03-15
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-09
10-K	2011-12-31	Filed 2012-03-07
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-06-30	Filed 2011-08-04
10-Q	2011-03-31	Filed 2011-05-05
10-K	2010-12-31	Filed 2011-03-09
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-03-10

8-K	2020-11-05
8-K	2020-08-10
8-K	2020-08-06
8-K	2020-05-29
8-K	2020-05-28
8-K	2020-05-07
8-K	2020-04-24
8-K	2020-04-22
8-K	2020-03-13
8-K	2020-03-12
8-K	2020-02-27
8-K	2019-11-08
8-K	2019-10-31
8-K	2019-09-03
8-K	2019-08-08
8-K	2019-07-16
8-K	2019-05-23
8-K	2019-05-23
8-K	2019-05-09
8-K	2019-03-18
8-K	2019-03-11
8-K	2019-02-28
8-K	2018-11-08
8-K	2018-11-01
8-K	2018-08-31
8-K	2018-08-08
8-K	2018-05-30
8-K	2018-05-24
8-K	2018-05-09
8-K	2018-03-19
8-K	2018-03-15
8-K	2018-03-01
8-K	2018-01-26

EX-3.1	vhi-ex31_150.htm
EX-31.1	vhi-ex311_14.htm
EX-31.2	vhi-ex312_12.htm
EX-32.1	vhi-ex321_13.htm

VHI 10Q Quarterly Report

Valhi Earnings 2020-09-30