UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
OR
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
(Exact name of Registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive office)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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.
Whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Whether the Registrant is a large accelerated filer, an accelerated filer, a 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 |
| ☐ | |
| ☒ |
| 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. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
Number of shares of the registrant’s common stock, $.01 par value per share, outstanding on April 29, 2022:
VALHI, INC. AND SUBSIDIARIES
INDEX
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, | March 31, | |||||
| 2021 |
| 2022 | |||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: |
|
|
|
| ||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash equivalents |
| |
| | ||
Marketable securities |
| |
| | ||
Accounts and other receivables, net |
| |
| | ||
Inventories, net |
| |
| | ||
Prepaid expenses and other |
| |
| | ||
Total current assets |
| |
| | ||
Other assets: |
|
|
|
| ||
Investment in TiO2 manufacturing joint venture |
| |
| | ||
Goodwill |
| |
| | ||
Deferred income taxes |
| |
| | ||
Other assets |
| |
| | ||
Total other assets |
| |
| | ||
Property and equipment: |
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|
|
| ||
Land |
| |
| | ||
Buildings |
| |
| | ||
Equipment |
| |
| | ||
Mining properties |
| |
| | ||
Construction in progress |
| |
| | ||
| |
| | |||
Less accumulated depreciation and amortization |
| |
| | ||
Net property and equipment |
| |
| | ||
Total assets | $ | | $ | |
3
VALHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In millions)
December 31, | March 31, | |||||
| 2021 |
| 2022 | |||
(unaudited) | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: |
|
|
|
| ||
Current maturities of long-term debt | $ | | $ | | ||
Accounts payable and accrued liabilities |
| |
| | ||
Income taxes |
| |
| | ||
Total current liabilities |
| |
| | ||
Noncurrent liabilities: |
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|
|
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Long-term debt |
| |
| | ||
Deferred income taxes |
| |
| | ||
Payable to affiliate - income taxes |
| |
| | ||
Accrued pension costs |
| |
| | ||
Accrued environmental remediation and related costs |
| |
| | ||
Other liabilities |
| |
| | ||
Total noncurrent liabilities |
| |
| | ||
Equity: |
|
|
|
| ||
Preferred stock |
| — |
| — | ||
Common stock |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Retained earnings |
| |
| | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Treasury stock, at cost |
| ( |
| ( | ||
Total Valhi stockholders' equity |
| |
| | ||
Noncontrolling interest in subsidiaries |
| |
| | ||
Total equity |
| |
| | ||
Total liabilities and equity | $ | | $ | |
Commitments and contingencies (Notes 6, 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 | ||||||
March 31, | ||||||
| 2021 |
| 2022 | |||
(unaudited) | ||||||
Revenues and other income: |
|
|
|
| ||
Net sales | $ | | $ | | ||
Other income, net |
| |
| — | ||
Total revenues and other income |
| |
| | ||
Cost and expenses: |
|
|
|
| ||
Cost of sales |
| |
| | ||
Selling, general and administrative |
| |
| | ||
Other components of net periodic pension and OPEB expense |
| |
| | ||
Interest |
| |
| | ||
Total costs and expenses |
| |
| | ||
Income before income taxes |
| |
| | ||
Income tax expense |
| |
| | ||
Net income |
| |
| | ||
Noncontrolling interest in net income of subsidiaries |
| |
| | ||
Net income attributable to Valhi stockholders | $ | | $ | | ||
Amounts attributable to Valhi stockholders: |
|
|
|
| ||
Basic and diluted net income per share | ||||||
Basic and diluted weighted average shares outstanding |
| |
| |
See accompanying Notes to Condensed Consolidated Financial Statements.
5
VALHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Three months ended | ||||||
March 31, | ||||||
| 2021 |
| 2022 | |||
(unaudited) | ||||||
Net income | $ | | $ | | ||
Other comprehensive income (loss), net of tax: |
|
|
|
| ||
Currency translation |
| |
| | ||
Defined benefit pension plans |
| |
| | ||
Other |
| ( |
| ( | ||
Total other comprehensive income, net |
| |
| | ||
Comprehensive income |
| |
| | ||
Comprehensive income attributable to noncontrolling interest |
| |
| | ||
Comprehensive income attributable to Valhi stockholders | $ | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements.
6
VALHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
Three months ended March 31, 2021 and 2022 (unaudited) | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | other | Non- | ||||||||||||||||||||||
Preferred | Common | paid-in | Retained | comprehensive | Treasury | controlling | ||||||||||||||||||
stock |
| stock |
| capital |
| earnings |
| loss |
| stock |
| interest |
| Total | ||||||||||
Balance at December 31, 2020 | $ | — | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | ||||||||
Net income |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||
Other comprehensive income, net |
| — |
| — |
| — |
| — |
| |
| — |
| |
| | ||||||||
Dividends paid to noncontrolling interest |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
Cash dividends - $ |
| — |
| — |
| — |
| ( |
| — |
| — |
| — |
| ( | ||||||||
Equity transactions with noncontrolling |
| — |
| — |
| |
| — |
| — |
| — |
| ( |
| ( | ||||||||
|
|
|
|
| ||||||||||||||||||||
Balance at March 31, 2021 | $ | — | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | ||||||||
|
|
|
|
|
| |||||||||||||||||||
Balance at December 31, 2021 | $ | — | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | ||||||||
Net income |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||
Other comprehensive income, net |
| — |
| — |
| — |
| — |
| |
| — |
| |
| | ||||||||
Dividends paid to noncontrolling interest |
| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
Cash dividends - $ |
| — |
| — |
| — |
| ( |
| — |
| — |
| — |
| ( | ||||||||
Equity transactions with noncontrolling | — | — | | — | — | — | ( | ( | ||||||||||||||||
|
|
|
|
| ||||||||||||||||||||
Balance at March 31, 2022 | $ | — | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements.
7
VALHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three months ended | ||||||
March 31, | ||||||
| 2021 |
| 2022 | |||
(unaudited) | ||||||
Cash flows from operating activities: |
|
|
|
| ||
Net income | $ | | $ | | ||
Depreciation and amortization |
| |
| | ||
Benefit plan expense greater than cash funding |
| |
| | ||
Deferred income taxes |
| |
| | ||
Contributions to TiO2 manufacturing joint venture, net |
| ( |
| ( | ||
Other, net |
| |
| | ||
Change in assets and liabilities: |
|
|
|
| ||
Accounts and other receivables, net |
| ( |
| ( | ||
Land held for development, net |
| ( |
| | ||
Inventories, net |
| |
| ( | ||
Accounts payable and accrued liabilities |
| ( |
| ( | ||
Income taxes |
| |
| | ||
Accounts with affiliates |
| |
| | ||
Other, net |
| |
| ( | ||
Net cash provided by (used in) operating activities |
| |
| ( | ||
Cash flows from investing activities: |
|
|
|
| ||
Capital expenditures | ( | ( | ||||
Purchases of marketable securities |
| ( |
| ( | ||
Proceeds from disposal of marketable securities |
| |
| | ||
Other, net |
| |
| — | ||
Net cash used in investing activities |
| ( |
| ( | ||
Cash flows from financing activities: |
|
|
|
| ||
Principal payments on indebtedness |
| ( |
| ( | ||
Valhi cash dividends paid |
| ( |
| ( | ||
Distributions to noncontrolling interest in subsidiaries |
| ( |
| ( | ||
Subsidiary treasury stock acquired |
| ( |
| ( | ||
Net cash used in financing activities |
| ( |
| ( | ||
Cash, cash equivalents and restricted cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | | ( | ||||
Effect of exchange rates on cash | ( | ( | ||||
Balance at beginning of period | | | ||||
Balance at end of period | $ | | $ | | ||
Supplemental disclosures: | ||||||
Cash paid for: | ||||||
Interest, net of amounts capitalized | $ | | $ | | ||
Income taxes, net | | | ||||
Noncash investing activities: | ||||||
Change in accruals for capital expenditures | | |
See accompanying Notes to Condensed Consolidated Financial Statements.
8
VALHI, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022
(unaudited)
Note 1 – Organization and basis of presentation:
Organization – We are majority owned by a wholly-owned subsidiary of Contran Corporation (“Contran”), which owns approximately
Basis of Presentation – Consolidated in this Quarterly Report are the results of our wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and The LandWell Company (“LandWell”). Kronos (NYSE: KRO), NL (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the Securities and Exchange Commission (“SEC”).
The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 that we filed with the SEC on March 10, 2022 (the “2021 Annual Report”). In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments), in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. We have condensed the Consolidated Balance Sheet at December 31, 2021 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, 2021) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our results of operations for the interim period ended March 31, 2022 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our 2021 Consolidated Financial Statements contained in our 2021 Annual Report.
Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Valhi, Inc. and its subsidiaries (NYSE: VHI), taken as a whole.
Note 2 – Business segment information:
|
| % controlled at |
| ||
Business segment | Entity | March 31, 2022 |
| ||
Chemicals |
| Kronos |
| ||
Component products |
| CompX |
| ||
Real estate management and development |
| BMI and LandWell |
|
9
Our control of Kronos includes approximately
Three months ended | ||||||
March 31, | ||||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Net sales: | ||||||
Chemicals | $ | | $ | | ||
Component products |
| |
| | ||
Real estate management and development |
| |
| | ||
Total net sales | $ | | $ | | ||
Cost of sales: |
|
|
|
| ||
Chemicals | $ | | $ | | ||
Component products |
| |
| | ||
Real estate management and development |
| |
| | ||
Total cost of sales | $ | | $ | | ||
Gross margin: |
|
|
|
| ||
Chemicals | $ | | $ | | ||
Component products |
| |
| | ||
Real estate management and development |
| |
| | ||
Total gross margin | $ | | $ | | ||
Operating income: |
|
|
|
| ||
Chemicals | $ | | $ | | ||
Component products |
| |
| | ||
Real estate management and development |
| |
| | ||
Total operating income |
| |
| | ||
General corporate items: |
|
|
|
| ||
Interest income and other |
| |
| | ||
Other components of net periodic pension and OPEB expense |
| ( |
| ( | ||
Changes in market value of Valhi common stock held by subsidiaries |
| |
| | ||
General expenses, net |
| ( |
| ( | ||
Interest expense |
| ( |
| ( | ||
Income before income taxes | $ | | $ | |
Segment results we report may differ from amounts separately reported by our various subsidiaries due to purchase accounting adjustments and related amortization or differences in the way we define operating income. Intersegment sales are not material. Infrastructure reimbursement is included in the determination of Real Estate Management and Development operating income. See Note 11.
10
Note 3 – Accounts and other receivables, net:
December 31, | March 31, | |||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Trade accounts receivable: |
|
|
|
| ||
Kronos | $ | | $ | | ||
CompX |
| |
| | ||
BMI/LandWell |
| |
| | ||
VAT and other receivables |
| |
| | ||
Refundable income taxes |
| |
|
| | |
Receivables from affiliates: |
|
|
|
| ||
Louisiana Pigment Company, L.P. ("LPC") |
| |
|
| | |
Contran - trade items |
| |
|
| | |
Other - trade items |
| |
|
| | |
Allowance for doubtful accounts |
| ( |
| ( | ||
Total | $ | | $ | |
Note 4 – Inventories, net:
December 31, | March 31, | |||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Raw materials: |
|
|
|
| ||
Chemicals | $ | | $ | | ||
Component products |
| |
| | ||
Total raw materials |
| |
| | ||
Work in process: |
|
|
|
| ||
Chemicals |
| |
| | ||
Component products |
| |
| | ||
Total in-process products |
| |
| | ||
Finished products: |
|
|
|
| ||
Chemicals |
| |
| | ||
Component products |
| |
| | ||
Total finished products |
| |
| | ||
Supplies (chemicals) |
| |
| | ||
Total | $ | | $ | |
Note 5 – Other assets:
| December 31, |
| March 31, | |||
2021 | 2022 | |||||
(In millions) | ||||||
Other noncurrent assets: |
|
|
|
| ||
Restricted cash and cash equivalents | $ | | $ | | ||
Note receivables - OPA |
| |
| | ||
Land held for development | | | ||||
IBNR receivables |
| |
| | ||
Operating lease right-of-use assets |
| |
| | ||
Pension asset |
| |
| | ||
Marketable securities |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | |
11
Note 6 – Long-term debt:
December 31, | March 31, | |||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Valhi: |
|
|
|
| ||
Contran credit facility | $ | | $ | | ||
Subsidiary debt: |
|
|
|
| ||
Kronos: |
|
|
|
| ||
Senior Secured Notes |
| |
| | ||
BMI: |
|
|
|
| ||
Bank loan Western Alliance Bank |
| |
| | ||
LandWell: |
|
|
|
| ||
Note payable to Western Alliance Business Trust |
| |
| | ||
Other |
| |
| | ||
Total subsidiary debt |
| |
| | ||
Total debt |
| |
| | ||
Less current maturities |
| ( |
| ( | ||
Total long-term debt | $ | | $ | |
Valhi – Contran credit facility – During the first three months of 2022, we had
Kronos – Senior Notes – At March 31, 2022, the carrying value of Kronos’
Revolving credit facility – During the first three months of 2022, Kronos had
Other – We are in compliance with all of our debt covenants at March 31, 2022.
12
Note 7 – Accounts payable and accrued liabilities:
December 31, | March 31, | |||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Accounts payable: |
|
|
|
| ||
Kronos | $ | | $ | | ||
CompX |
| |
| | ||
BMI and LandWell |
| |
| | ||
Other |
| |
| | ||
Total | | | ||||
Payables to affiliates: | ||||||
Contran - income taxes | | | ||||
LPC | | | ||||
Accrued litigation settlement | | | ||||
Deferred income | | | ||||
Employee benefits | | | ||||
Accrued sales discounts and rebates |
| |
| | ||
Interest |
| |
| | ||
| |
| | |||
Environmental remediation and related costs |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | |
The accrued litigation settlement is discussed in Note 15.
Note 8 – Other noncurrent liabilities:
| December 31, |
| March 31, | |||
2021 | 2022 | |||||
(In millions) | ||||||
Deferred income | $ | | $ | | ||
Accrued development costs |
| |
| | ||
Accrued litigation settlement |
| |
| | ||
Insurance claims and expenses |
| |
| | ||
| | |||||
Other postretirement benefits |
| |
| | ||
Employee benefits |
| |
| | ||
Reserve for uncertain tax positions |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | |
The accrued litigation settlement is discussed in Note 15.
13
Note 9 – Revenue – disaggregation of sales:
The following table disaggregates the net sales of our Chemicals Segment by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Three months ended | ||||||
March 31, | ||||||
| 2021 |
| 2022 | |||
(In millions) | ||||||
Net sales - point of origin: |
|
|
|
| ||
United States | $ | | $ | | ||
Germany | | | ||||
Canada |
| |
| | ||
Belgium |
| |
| | ||
Norway |
| |
| | ||
Eliminations |
| ( |
| ( | ||
Total | $ | | $ | | ||
Net sales - point of destination: |
|
|
|
| ||
Europe | $ | | $ | | ||
North America |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | |
The following table disaggr