16 unchanged sentences
CompX is a leading manufacturer of security products used in the recreational transportation, postal, office and institutional furniture, cabinetry, tool storage, healthcare and a variety of other industries.
−Removed: CompX also manufactures stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems and trim tabs for the recreational marine and other industries.
+Added: CompX also manufactures stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems, trim tabs and related hardware and accessories for the recreational marine and other industries.
Real Estate Management and Development —We operate in real estate management and development through our majority control of BMI and LandWell.
30 unchanged sentences
Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S.
−Removed: dollar and each of the euro, the Norwegian krone and the Canadian dollar) or possible disruptions to our business resulting from uncertainties associated with the euro or other currencies;
+Added: dollar and each of the euro, the Norwegian krone and the Canadian dollar and between the euro and the Norwegian krone) or possible disruptions to our business resulting from uncertainties associated with the euro or other currencies;
Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, cyber-attacks and public health crises such as COVID-19);
16 unchanged sentences
Operations Overview
−Removed: Quarter Ended September 30, 2020 Compared to the Quarter Ended September 30, 2019 —
−Removed: We reported net income attributable to Valhi stockholders of $15.4 million or $.54 per diluted share in the third quarter of 2020 compared to net income of $13.1 million or $.46 per diluted share in the third quarter of 2019.
−Removed: As discussed more fully below, our net income attributable to Valhi stockholders increased from 2019 to 2020 primarily due to the net effects of:
−Removed: lower operating income from our Chemicals and Component Products segments in 2020 compared to 2019, somewhat offset by higher operating income from our Real Estate Management and Development segment;
−Removed: lower income taxes in 2020 compared to 2019 due to a decrease in our 2020 expected annual effective income tax rate;
−Removed: recognition of a gain of $4.0 million in 2020 from proceeds received related to a prior land sale compared to a gain on the sale of land of $4.4 million in the third quarter of 2019.
−Removed: Our diluted net income per share in the third quarter of 2020 includes a gain of $.07 related to the proceeds received associated with the prior land sale, and the third quarter of 2019 includes a gain of $.10 per share related to the sale of land not used in our operations.
−Removed: Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019 —
−Removed: We reported net income attributable to Valhi stockholders of $30.7 million or $1.08 per diluted share in the first nine months of 2020 compared to $38.5 million or $1.35 per diluted share in the first nine months of 2019.
−Removed: As discussed more fully below, our net income attributable to Valhi stockholders decreased from 2019 to 2020 primarily due to the net effects of:
−Removed: lower operating income from our Chemicals and Component Products segments in 2020 compared to 2019, somewhat offset by higher operating income from our Real Estate Management and Development segment;
−Removed: a pre-tax litigation settlement expense of $19.3 million mostly recognized in the second quarter of 2019;
−Removed: income from infrastructure reimbursement of $19.6 million in 2020 compared to $9.2 million in 2019;
−Removed: insurance recoveries related to a single insurance recovery settlement of $4.7 million in the second quarter of 2019;
−Removed: recognition of a gain related to the sale of land of $4.0 million in the third quarter of 2020 compared to a gain on the sale of land of $4.4 million in the third quarter of 2019.
−Removed: Our diluted net income per share in the first nine months of 2020 includes:
+Added: Quarter Ended March 31, 2021 Compared to the Quarter Ended March 31, 2020 —
+Added: We reported net income attributable to Valhi stockholders of $14.8 million or $.52 per diluted share in the first quarter of 2021 compared to net income of $24.4 million or $.86 per diluted share in the first quarter of 2020.
+Added: As discussed more fully below, our net income attributable to Valhi stockholders decreased from 2020 to 2021 primarily due to:
+Added: lower operating income from our Chemicals Segment in 2021 compared to 2020, slightly offset by higher operating income from our Component Products Segment;
+Added: lower operating income from our Real Estate Management and Development segment including income from tax increment infrastructure reimbursement of $6.2 million in 2021 compared to $19.1 million in 2020.
+Added: Our diluted net income per share in the first quarter of 2021 includes income of $.11 per share related to the tax infrastructure reimbursement.
+Added: Our diluted net income per share in the first quarter of 2020 includes:
income of $.35 per share related to the tax increment infrastructure reimbursement;
−Removed: a gain of $.07 per share from the proceeds received in the third quarter related to a prior land sale;
a gain of $.03 per share related to an insurance recovery for a property damage claim at our Chemicals Segment.
−Removed: Our diluted net income per share in the first nine months of 2019 includes:
−Removed: a charge of $.45 per share related to the litigation settlement expense recognized in the second quarter;
−Removed: income of $.16 per share related to the infrastructure reimbursement primarily recognized in the second quarter;
−Removed: a gain of $.10 per share related to the insurance recovery recognized in the second quarter;
−Removed: a gain of $.10 per share related to the sale of land in the third quarter.
Current Forecast for 2021 —
−Removed: We currently expect to report lower consolidated operating income for 2020 as compared to 2019 primarily due to the net effects of:
−Removed: lower operating income from our Chemicals Segment and our Component Products Segment in 2020 due to the unfavorable impact of the COVID -19 pandemic on sales and earnings as further discussed below;
−Removed: higher operating income from our Real Estate Management and Development Segment in 2020 primarily from the recognition of tax increment infrastructure reimbursement.
−Removed: The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have resulted in sharp contractions across the global economy and are expected to continue to challenge workers, businesses and governments for the foreseeable future.
−Removed: Government actions in various regions have generally permit ted the resumption of commercial activities follo wing various regional shutdowns , but it is believed that the success and timi ng of these actions will depend in part on deployment of effective tools to fight COVID-19 before economic growth is likely to return to pre-pandemic levels .
−Removed: As a result, we expect U.S.
−Removed: and worldwide gross domestic product to be significantly impac ted for an indeterminate period which in turn would impact demand for our products and those of our customers.
−Removed: Consequently, we expect to report lower sales and earnings than would otherwise have been expected for the remainder of 2020.
−Removed: See additional discussion on the impact of the COVID-19 pandemic on each of our o perating s egments below .
+Added: We currently expect to report higher consolidated operating income for 2021 as compared to 2020 primarily due to higher operating income from our Chemicals Segment and our Component Products Segment.
+Added: Beginning in the second half of 2020 and continuing through the first quarter of 2021, sales at each of our operating segments have improved from reduced levels experienced in the first half of 2020 resulting from the COVID-19 pandemic.
+Added: We expect the improved demand experienced since late 2020 to continue for the remainder of 2021 and we expect our operating results to reflect the elevated demand.
+Added: See additional discussion on expectations for each of our operating segments below.
Segment Operating Results—2021 Compared to 2020 –
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Over the long-term, we expect demand for TiO 2 to be consistent with our expectations for the long-term growth in GDP.
−Removed: However, even if we and our competitors maintain consistent shares of the worldwide market, demand for TiO 2 in any interim or annual period may not change in the same proportion as the change in GDP, in part due to relative changes in the TiO 2 inventory levels of our customers.
−Removed: We believe that our customers’ inventory levels are influenced in part by their expectations for future changes in market TiO 2 selling prices as well as their expectations for future availability of product.
−Removed: Although certain of our TiO 2 grades are considered specialty pigments, the majority of our grades and substantially all of our production are considered commodity pigment products with price and availability being the most significant competitive factors along with product quality and customer and technical support service.
+Added: However, even if our Chemicals Segment and its competitors maintain consistent shares of the worldwide market, demand for TiO 2 in any interim or annual period may not change in the same proportion as the change in GDP, in part due to relative changes in the TiO 2 inventory levels of our Chemicals Segment’s customers.
+Added: We believe that our Chemicals Segment’s customers’ inventory levels are influenced in part by their expectations for future changes in market TiO 2 selling prices as well as their expectations for future availability of product.
+Added: Although certain of our Chemicals Segment’s TiO 2 grades are considered specialty pigments, the majority of its grades and substantially all of its production are considered commodity pigment products with price and availability being the most significant competitive factors along with product quality and customer and technical support service.
The factors having the most impact on our Chemicals Segment’s reported operating results are:
TiO 2 selling prices,
−Removed: our TiO 2 sales and production volumes,
+Added: our Chemicals Segment’s TiO 2 sales and production volumes,
manufacturing costs, particularly raw materials such as third-party feedstock, maintenance and energy-related expenses, and
currency exchange rates (particularly the exchange rate for the U.S.
−Removed: dollar relative to the euro, the Norwegian krone and the Canadian dollar).
+Added: dollar relative to the euro, the Norwegian krone and the Canadian dollar and the euro relative to the Norwegian krone).
Key performance indicators are our Chemicals Segment’s TiO 2 average selling prices, the level of TiO 2 sales and production volumes, and the cost of our Chemicals Segment’s third-party feedstock.
TiO 2 selling prices generally follow industry trends and prices will increase or decrease generally as a result of competitive market pressures.
−Removed: Three months ended September 30,
−Removed: Nine months ended September 30,
−Removed: (Dollars in millions)
+Added: Three months ended March 31,
(Dollars in millions)
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Thousands of metric tons
−Removed: Current I ndustry C onditions — Our Chemicals Segment started 2020 with average TiO 2 selling prices 1% lower than at the beginning of 2019 .
−Removed: At the end of the third quarter of 2020, our Chemicals Segment’s average TiO 2 selling prices were 3% lower than the beginning of the year and comparable to its average TiO 2 selling prices at the end of the second quarter of 2020.
−Removed: Our Chemicals Segment experienced lower sales volumes in all major markets in the first nine months of 2020 as compared to the same period of 2019 primarily due to demand contraction related to the COVID-19 pandemic, which primarily impacted the second and third quarters.
−Removed: See further discussion below under Outlook .
−Removed: Our Chemicals Segment operated its production facilities at overall average capacity utilization rates of 92% for the year-to-date period ended September 30, 2020 compared to 97% for the comparable period of 2019.
−Removed: Early in the third quarter of 2020, our Chemicals Segment decreased production levels to align with demand and market expectations for the near term as a result of the COVID-19 pandemic, and late in the third quarter it began increasing production levels as demand improved.
−Removed: The table below lists our Chemicals Segment’s comparative quarterly production capacity utilization rates.
−Removed: Production Capacity Utilization Rates
−Removed: First quarter
−Removed: Second quarter
−Removed: Third quarter
−Removed: Primarily due to a moderate rise in the cost of third-party feedstock procured in 2019 and 2020, our Chemicals Segment’s cost of sales per metric ton of TiO 2 sold in the first nine months of 2020 was higher as compared to the first nine months of 2019 (excluding the effect of changes in currency exchange rates).
−Removed: Net Sales — Our Chemicals Segment’s net sales in the third quarter of 2020 decreased 5%, or $20.5 million, compared to the third quarter of 2019 primarily due to a 6% decrease in sales volumes (which decreased net sales by approximately $26 million) and a 4% decrease in average TiO 2 selling prices (which decreased net sales by approximately $17 million).
+Added: Current Industry Conditions — Our Chemicals Segment started 2021 with average TiO 2 selling prices 3% lower than at the beginning of 2020 and our Chemicals Segment’s average TiO 2 selling prices at the end of the first quarter of 2021 were 1% higher than the end of 2020.
+Added: Our Chemicals Segment experienced higher sales volumes in its North American and Latin American markets, partially offset by lower sales volumes in its European market in the first three months of 2021 as compared to the same period of 2020.
+Added: Our Chemicals Segment operated its production facilities at overall average capacity utilization rates of 97% in the first quarter of 2021 compared to 95% in the first quarter of 2020.
+Added: Due to the phase-out of sulfate production at one of its facilities in the fourth quarter of 2020, our Chemicals Segment’s production volumes were 1% lower in the first quarter of 2021 as compared to the first quarter of 2020.
+Added: Net Sales — Our Chemicals Segment’s net sales in the first quarter of 2021 increased 10%, or $44.0 million, compared to the first quarter of 2020 primarily due to a 3% increase in sales volumes (which increased net sales by approximately $13 million), partially offset by a 1% decrease in average TiO 2 selling prices (which decreased net sales by approximately $4 million).
+Added: In addition to the net impact of higher sales volumes and lower average selling prices, we estimate that changes in currency exchange rates (primarily the euro) increased our Chemicals Segment’s net sales by approximately $20 million in the first quarter of 2021 as compared to the first quarter of 2020.
TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.
−Removed: Our Chemicals Segment’s sales volumes decreased 6% in the third quarter of 2020 as compared to the third quarter of 2019 primarily due to lower demand in its European and export markets resulting from the COVID-19 pandemic.
−Removed: In addition to the impact of lower sales volumes and lower average selling prices, we estimate that changes in currency exchange rates (primarily the euro) increased our Chemicals Segment’s net sales by approximately $7 million in the third quarter of 2020 as compared to the third quarter of 2019.
−Removed: Our Chemicals Segment’s net sales in the first nine months of 2020 decreased 10%, or $134.5 million, compared to the first nine months of 2019 primarily due to a 11% decrease in sales volumes (which decreased net sales by approximately $149 million) and a 2% decrease in average TiO 2 selling prices (which decreased net sales by approximately $27 million).
−Removed: Our Chemicals Segment’s sales volumes decreased 11% in the first nine months of 2020 as compared to the first nine months of 2019 primarily due to lower sales volumes in all major markets, with a significant portion of the decrease occurring in the second and third quarter resulting from the COVID-19 pandemic.
−Removed: In addition to the impact of changes in average TiO 2 selling prices and sales volumes, we estimate that changes in currency exchange rates (primarily the euro) decreased our Chemicals Segment’s net sales by approximately $4 million as compared to the first nine months of 2019.
−Removed: Cost of Sales and Gross Margin — Our Chemicals Segment’s cost of sales decreased 4% in the third quarter of 2020 compared to the third quarter of 2019 due to a 6% decrease in sales volumes and lower production costs of approximately $8 million (primarily lower energy costs).
−Removed: Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 81% in the third quarter of 2020 compared to 80% in the same period of 2019 primarily due to the unfavorable effects of lower average TiO 2 selling prices partially offset by lower production costs.
−Removed: Our Chemicals Segment’s gross margin as a percentage of net sales decreased to 19% in the third quarter of 2020 compared to 20% in the third quarter of 2019.
−Removed: As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to the net effects of lower sales volumes, lower average TiO 2 selling prices and lower production costs.
−Removed: Our Chemicals Segment’s cost of sales decreased 9% in the first nine months of 2020 compared to the same period in 2019 due to the net effect of a 11% decrease in sales volumes, higher raw materials and other production costs of approximately $21 million (including higher cost for third-party feedstock and other raw materials) and currency fluctuations (primarily the euro).
−Removed: Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 79% in the first nine months of 2020 compared to 78% in the same period of 2019 primarily due to the unfavorable effects of lower average TiO 2 selling prices and higher raw materials and other production costs, as discussed above.
−Removed: Our Chemicals Segment’s gross margin as a percentage of net sales decreased to 2 1 % in the first nine months of 2020 compared to 2 2 % in the first nine months of 2019.
−Removed: As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to the unfavorable effect s of lower average TiO 2 selling prices, lower sales volumes and higher raw materials and other production costs.
−Removed: Operating Income — Our Chemicals Segment’s operating income decreased 40% in the third quarter of 2020 compared to the third quarter of 2019, and operating income as a percentage of net sales decreased to 5% in the third quarter of 2020 from 8% in 2019.
−Removed: The decrease was driven by the lower gross margin discussed above.
−Removed: We estimate that changes in currency exchange rates decreased operating income by approximately $5 million in the third quarter of 2020 as compared to the same period in 2019, as discussed in the Effects of Currency Exchange Rates section below.
−Removed: Our Chemicals Segment’s operating income decreased 25% in the first nine months of 2020 compared to the first nine months of 2019, and operating income as a percentage of net sales decreased to 9% in 2020 from 10% in 2019.
−Removed: The decrease was driven by the lower gross margin discussed above.
−Removed: We estimate that changes in currency exchange rates increased our Chemicals Segment’s operating income by approximately $6 million in the first nine months of 2020 as compared to the same period in 2019.
+Added: Our Chemicals Segment’s sales volumes increased 3% in the first quarter of 2021 as compared to the first quarter of 2020 primarily due to higher demand in its North American and Latin American markets, partially offset by lower demand in its European market.
+Added: Cost of Sales and Gross Margin — Our Chemicals Segment’s cost of sales increased $36.4 million, or 11%, in the first quarter of 2021 compared to the first quarter of 2020 due to a 3% increase in sales volumes partially offset by lower production costs of approximately $13 million.
+Added: Our Chemicals Segment’s cost of sales as a percentage of net sales in the first quarter of 2021 was comparable to its cost of sales as a percentage of net sales in the first quarter of 2020.
+Added: Our Chemicals Segment’s gross margin as a percentage of net sales was 21% in each of the first quarters of 2021 and 2020.
+Added: Gross margin as a percentage of net sales increases or decreases primarily due to the net effect of fluctuations in sales volumes, average TiO 2 selling prices and raw materials and other production costs.
+Added: Operating Income — Our Chemicals Segment’s operating income decreased by $9.1 million, or 19%, in the first quarter of 2021 compared to the first quarter of 2020.
+Added: Operating income as a percentage of net sales decreased to 8% in the first quarter of 2021 from 11% in the same period of 2020.
+Added: We estimate that changes in currency exchange rates decreased income from operations by approximately $16 million in the first quarter of 2021 as compared to the same period in 2020, as discussed below.
Our Chemicals Segment’s operating income is net of amortization of purchase accounting adjustments made in conjunction with our acquisitions of interests in NL and Kronos.
As a result, we recognize additional depreciation expense above the amounts Kronos reports separately, substantially all of which is included within cost of sales.
−Removed: We recognized additional depreciation expense of $2.7 million in the first nine months of 2020 and $1.6 million in the same period of 2019, which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.
+Added: We recognized additio nal depreciation expense of $ .
+Added: 4 million in the first three months of 202 1 and $ .
+Added: 5 million in the same period of 20 20 , which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.
Currency Exchange Rates — – Our Chemicals Segment has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada).
14 unchanged sentences
operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S.
−Removed: dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, (ii) changes in currency exchange rates during time periods when our Chemicals Segment’s non-U.S.
+Added: dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, and (ii) changes in currency exchange rates during time periods when our Chemicals Segment’s non-U.S.
operations are holding non-local currency (primarily U.S.
−Removed: dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time.
−Removed: Our Chemicals Segment periodically uses currency forward contracts to manage a portion of its currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts it holds from time to time serve in part to mitigate the currency transaction gains or losses our Chemicals Segment would otherwise recognize from the first two items described above.
Overall, we estimate that fluctuations in currency exchange rates had the following effects on the reported amounts of our Chemicals Segment’s sales and operating income for the periods indicated.
Impact of changes in currency exchange rates
−Removed: Three months ended September 30, 2020 vs September 30, 2019
+Added: Three months ended March 31, 2021 vs March 31, 2020
+Added: gains (losses)-
Transaction gains (losses) recognized
2 unchanged sentences
The $20 million increase in our Chemicals Segment’s net sales (translation gain) was caused primarily by a weakening of the U.S.
−Removed: dollar relative to the euro, as our euro-denominated sales were translated into more U.S.
+Added: dollar relative to the euro, as our Chemicals Segment’s euro-denominated sales were translated into more U.S.
dollars in 2021 as compared to 2020.
−Removed: The strengthening of the U.S.
+Added: The weakening of the U.S.
dollar relative to the Canadian dollar and the Norwegian krone in 2021 did not have a significant effect on the reported amount of our Chemicals Segment’s net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations are denominated in the U.S.
−Removed: The currency effect on our Chemicals Segment’s operating income was comprised of the following:
−Removed: A decrease by approximately $9 million from net currency transaction gains and losses primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.
+Added: The $16 million decrease in our Chemicals Segment’s operating income was comprised of the following:
+Added: Lower net currency transaction gains of approximately $13 million caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.
dollar and the euro, Canadian dollar and the Norwegian krone, which causes increases or decreases, as applicable, in U.S.
1 unchanged sentence
dollar currency held by our Chemicals Segment’s non-U.S.
+Added: operations, and in Norwegian krone denominated receivables and payables held by our non-U.S.
operations, and
−Removed: Approximately $4 million from net currency translation gains primarily caused by the strengthening of the U.S.
−Removed: dollar relative to the Canadian dollar and Norwegian krone, as its local currency-denominated operating costs were translated into fewer U.S.
−Removed: dollars in 2020 as compared to 2019, and such translation, as it related to the U.S.
−Removed: dollar relative to the euro, had a nominal effect on our Chemicals Segment’s operating income in 2020 as compared to 2019.
−Removed: Impact of changes in currency exchange rates
−Removed: Nine months ended September 30, 2020 vs September 30 2019
−Removed: gains (losses) -
−Removed: Transaction gains (losses) recognized
−Removed: (In millions)
−Removed: Operating income
−Removed: The $4 million decrease in net sales (translation loss) was caused primarily by a strengthening of the U.S.
−Removed: dollar relative to the euro, as our Chemicals Segment’s euro-denominated sales were translated into less U.S.
+Added: Approximately $3 million from net currency translation losses primarily caused by the weakening of the U.S.
+Added: dollar relative to the Canadian dollar, as its local currency-denominated operating costs were translated into more U.S.
dollars in 2021 as compared to 2020.
−Removed: The strengthening of the U.S.
−Removed: dollar relative to the Canadian dollar and the Norwegian krone in 2020 did not have a significant effect on the reported amount of our net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations are denominated in the U.S.
−Removed: The $6 million increase in our Chemicals Segment’s operating income was comprised of the following:
−Removed: Lower net currency transaction gains of approximately $3 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.
−Removed: dollar and the euro, Canadian dollar and the Norwegian krone, which causes increases or decreases, as applicable, in U.S.
−Removed: dollar-denominated receivables and payables and U.S.
−Removed: dollar currency held by our Chemicals Segment’s non-U.S.
−Removed: operations, and
−Removed: Approximately $9 million from net currency translation gains primarily caused by the strengthening of the U.S.
−Removed: dollar relative to the Canadian dollar and Norwegian krone, as its local currency-denominated operating costs were translated into fewer U.S.
−Removed: dollars in 2020 as compared to 2019, and such translation, as it related to the U.S.
−Removed: dollar relative to the euro, had a nominal effect on income from operations in 2020 as compared to 2019.
−Removed: Outlook— In the third quarter of 2020 our Chemicals Segment’s sales volumes increased from the levels experienced during the second quarter, although the COVID-19 pandemic, including the measures employed to mitigate its spread, continues to impact our Chemicals Segment’s operations through reduced demand for its products, resulting in lower sales and earnings than otherwise would have been expected.
−Removed: Our Chemicals Segment’s manufacturing facilities operated at near planned production rates in the first half of 2020;
−Removed: however, early in the third quarter our Chemicals Segment decreased production levels to align with demand and its market expectations for the near term, and late in the third quarter our Chemicals Segment began increasing production levels as demand improved.
−Removed: To-date, the availability of raw materials has not been adversely impacted.
−Removed: Our Chemicals Segment’s manufacturing and administrative facilities are generally located in densely populated regions of Europe and North America which have experienced substantial outbreaks of COVID-19 and are in varying stages of outbreak and recovery.
−Removed: Our Chemicals Segment continues to employ a variety of methods to protect the health and well-being of its workforce and its customers, including the implementation of contact tracing, deep cleaning and disinfecting of facilities, work-from-home strategies and staggered shift deployment, among other health and safety protocols.
+Added: Such translations, as it related to the U.S.
+Added: dollar relative to the euro and Norwegian krone, had a nominal effect on our Chemicals Segment’s operating income in 2021 as compared to 2020.
+Added: Outlook— Beginning in the second half of 2020 and continuing through the first quarter of 2021, our Chemicals Segment’s sales volumes have increased from reduced levels experienced in the first half of 2020 resulting from the COVID-19 pandemic.
+Added: Our Chemicals Segment increased production volumes in late 2020 to correspond to increasing demand and has maintained production at those increased levels through the first quarter of 2021.
+Added: At the beginning of 2021, our Chemicals Segment’s average TiO 2 selling prices were 3% lower than at the beginning of 2020 and average selling prices increased 1% during the first quarter of 2021, although still below corresponding 2020 levels.
+Added: Despite continued challenges and uncertainties related to the pandemic in certain regions and industries, we expect global demand for consumer products, including those of our Chemicals Segment’s customers, to remain strong throughout 2021 and we expect that our Chemicals Segment’s sales and production volumes will reflect the elevated demand.
+Added: As global economic activity has begun to
+Added: recover, our Chemicals Segment ha s experienced certain disruptions in global supply chains along with increasing production costs, including higher third-party feedstock prices and related shipping costs, which are likely to continue for much of 2021.
+Added: Due to increas ed customer demand, we expect sales prices for TiO 2 to continue to rise throughout 2021, mitigating increases in distribution and production costs.
+Added: As such, we expect our Chemicals Segment’s 2021 sales and operating income will be higher than in 2020, principally due to higher TiO 2 sales prices and higher sales volumes.
+Added: Our Chemicals Segment continue s to monitor current and anticipated near-term customer demand levels and will align its production and inventories accordingly.
+Added: Our expectations for the TiO 2 industry and our Chemicals Segment’s operations are based on a number of factors outside our control, including the ongoing economic effects of the COVID-19 pandemic.
+Added: Future impacts of COVID-19 on our Chemicals Segment’s operations will depend on, among other things, demand for its products, any future disruption in its operations or its suppliers’ operations and the timing and effectiveness of the global measures deployed to fight COVID-19, all of which remain uncertain and cannot be predicted.
+Added: Our Chemicals Segment’s manufacturing and administrative facilities are generally located in densely populated regions of Europe and North America which have experienced substantial outbreaks of COVID-19 and are in varying stages of recovery.
+Added: Our Chemicals Segment continues to employ a variety of methods to protect the health and well-being of its workforce and its customers, and is encouraging its employees to be vaccinated.
To-date, our Chemicals Segment has had limited cases of COVID-19 among its workforce and all of its facilities have remained open and operational.
−Removed: The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have resulted in sharp contractions of vast areas of the global economy and are expected to continue to challenge workers, businesses and governments for the foreseeable future.
−Removed: Government actions in various regions have generally permitted the resumption of commercial activities following various regional shutdowns, but further government action restricting economic activity is possible in an effort to mitigate increases in COVID-19 in certain regions.
−Removed: As a result, we expect U.S.
−Removed: and worldwide gross domestic product to be significantly impacted for an indeterminate period of time.
−Removed: While many of our Chemicals Segment’s products are used by its customers in end-products that thus far have remained
−Removed: in demand across the world economy, we believe overall demand for our Chemicals Segment’s products and its customers’ products will continue to be negatively impacted by reduced economic activity.
−Removed: Given the impact of COVID-19 on the global economy, we expect our Chemicals Segment’s sales volumes and resulting earnings for the remainder of 2020 will continue to be lower compared to 2019.
−Removed: The full extent of the COVID-19 impact on its operations will depend on numerous factors, including customer demand for its products, any future disruption in its operations or its suppliers’ operations and the timing and effectiveness of measures deployed to fight COVID-19, all of which are uncertain and cannot be predicted.
−Removed: Our Chemicals Segment will continue to monitor current and anticipated near-term customer demand throughout the year and further align its production and inventory levels accordingly.
−Removed: Although it is not possible to predict the impact of the COVID-19 pandemic on future demand for our Chemicals Segment’s products or those of its customers, we believe that our Chemicals Segment has sufficient liquidity (including cash on-hand of approximately $348 million and borrowing capacity under its revolving credit facilities of approximately $231 million at September 30, 2020) available to meet its obligations, and our Chemicals Segment is prepared to implement multiple cash-saving strategies as necessary, including reduction of inventories, delays in certain capital expenditures and other cost saving initiatives.
−Removed: On August 24, 2020, the chloride-process TiO 2 facility operated by our Chemicals Segment’s 50%-owned joint venture, Louisiana Pigment Company (“LPC”), temporarily halted production due to Hurricane Laura.
−Removed: Although storm damage to core manufacturing facilities was not severe, a variety of factors, including loss of utilities, limited availability of employees to return to work and restrictions on the facility’s access to raw materials, prevented the resumption of operations until September 25, 2020.
−Removed: LPC believes insurance (subject to applicable deductibles) will cover a majority of its losses, including those related to property damage and the disruption of its operations.
−Removed: Our Chemicals Segment’s warehouse and slurry facilities located near LPC’s facility were also temporarily closed due to the hurricane, but property damage to these facilities was not significant.
−Removed: Our Chemicals Segment’s third quarter operating income includes immaterial costs related to Hurricane Laura, primarily costs to relocate inventory and modify shipping schedules in order to maintain service levels to its customers following the hurricane.
−Removed: We believe insurance (subject to applicable deductibles) will cover a majority of our Chemicals Segment’s losses from the hurricane, including property damage, business interruption losses related to its share of LPC’s lost production and other costs resulting from the disruption of operations, but no insurance recoveries have yet been recognized as the allowable damage claim amounts are not presently determinable.
−Removed: On October 9, 2020 Hurricane Delta caused an additional temporary halt to production at the LPC facility.
−Removed: Damages resulting from Hurricane Delta were not as severe and production activities were resumed within five days from the time of initial shutdown prior to landfall of the hurricane.
−Removed: Similar to Hurricane Laura, losses determined to be incurred by LPC and our Chemicals Segment as a result of Hurricane Delta are expected to be recoverable from insurance (subject to applicable deductibles).
Component Products –
1 unchanged sentence
The key performance indicator for our Component Products Segment is operating income and margins .
−Removed: Our Component Products Segment experienced normal sales volumes and operations during the first quarter of 2020.
−Removed: Beginning in late March 2020 as a result of the COVID-19 pandemic, our Component Products Segment began receiving requests from certain customers of both its security products and marine components reporting units to postpone shipments, in some cases because customers’ production facilities were temporarily closed.
−Removed: Our Component Products Segment operates three facilities, each of which specializes in certain manufacturing processes and is therefore dependent upon the other facilities to some extent to manufacture finished goods.
−Removed: With the onset of COVID-19, within each facility our Component Products Segment enhanced cleaning and sanitization procedures, mandated social distancing and implemented other health and safety protocols.
−Removed: For its sales, the second quarter of 2020 was the quarter most impacted by COVID-19 related order cancellations and delays.
−Removed: In the third quarter, our Component Products Segment experienced significant recovery in sales, particularly in its marine component reporting unit, though not to the level it would have expected prior to the pandemic.
−Removed: Our Component Products Segment’s operating income has not recovered to the extent its sales have due to a decline in gross margins discussed below.
−Removed: Three months ended September 30,
−Removed: Nine months ended September 30,
−Removed: (Dollars in millions)
+Added: In the first quarter of 2021 our Component Products Segment’s operating income increased to $5.8 million compared to $5.0 million in the first quarter of 2020, before its sales volumes and operations had been significantly affected by the COVID-19 pandemic.
+Added: The increase in operating income in the first quarter of 2021 compared to 2020 primarily resulted from higher marine components sales to the towboat market.
+Added: Our Component Products Segment sustained the greatest negative operating impact from COVID-19 in the second quarter of 2020 to both of its reporting units.
+Added: Beginning in the third quarter of 2020 and continuing through the first quarter of 2021, marine components experienced a significant recovery in sales, while security products sales generally improved sequentially, though not to pre-pandemic levels.
+Added: Three months ended March 31,
(Dollars in millions)
7 unchanged sentences
Operating income
−Removed: Net Sales — Our Component Products Segment’s net sales decreased $1.3 million in the third quarter compared to the third quarter of 2019 as higher sales of marine components to the towboat market were more than offset by lower sales of security products including transporation which had $1.3 million lower sales than the same period in 2019, distribution customers which were $.7 million lower than the same period in 2019, and office furniture which was $.6 million lower than the same period in 2019.
−Removed: Net sales decreased $10.1 million in the first nine months of 2020 compared to the same period in 2019 primarily due to lower sales of security products including $4.4 million in lower sales to the transporation market, $2.5 million in lower sales to distribution customers, and $1.2 million in lower sales to the office furniture market particularly in the second quarter of 2020 as many of our Component Products Segment’s customers were temporarily closed or reduced production due to government ordered closures or reduced demand resulting from the COVID-19 pandemic.
+Added: Net Sales — Our Component Products Segment’s net sales increased $3.6 million in the first quarter of 2021 compared to the same period in 2020 primarily due to higher marine components sales and to a lesser extent higher security products sales.
+Added: Marine components net sales increased 47% in the first quarter of 2021 compared to the same period last year primarily due to increased sales of $2.7 million to the towboat market, primarily wake enhancements systems and surf pipes to original equipment boat manufacturers.
+Added: Marine components sales continues to benefit from an overall increase in demand in the recreational marine market which began in late spring 2020.
+Added: Security products net sales increased 2% in the first quarter of 2021 compared to the same period last year primarily due to $.7 million of higher sales to the transportation market and $.5 million of higher sales to the government security market, partially offset by lower sales to markets that continue to be slower to recover from the effects of the COVID-19 pandemic, including $.4 million of lower sales to distribution customers and $.3 million of lower sales to the office furniture market.
Relative changes in selling prices did not have a material impact on net sales comparisons.
−Removed: Costs of Sales and Gross Margin — Cost of sales as a percentage of sales for the third quarter and for the first nine months of 2020 was approximately 6% and 2% higher than the same periods in 2019, respectively.
−Removed: As a result, gross margin as a percentage of sales decreased over the same periods.
−Removed: Gross margin percentages decreased in the third quarter and first nine months of 2020 compared to the same periods in 2019 primarily due to the decline in the security products gross margin and to a lesser extent the marine components gross margin percentage.
−Removed: Gross margin for both security products and marine components were negatively impacted as inventory sold in the third quarter was primarily produced in the second quarter of 2020 and had a higher carrying value compared to prior periods due to higher fixed costs per unit of production as a result of lower production volumes during the second quarter of 2020.
−Removed: Additionally, gross margin was unfavorably impacted by increased medical costs of $.5 million for the third quarter and $.9 million for the first nine months of 2020 compared to the same periods in the prior year.
−Removed: O perating Income — Our Component Products Segment’s operating income as a percentage of net sales for the third quarter and first nine months of 2020 decreased compared to the same periods of 2019 and was primarily impacted by the factors impacting cost of sales and gross margin discussed above.
−Removed: Outlook— In the third quarter of 2020, our Component Products Segment’s sales began to recover from the historically low levels it experienced during the second quarter, although the COVID-19 pandemic continues to impact its operations and demand for its products.
−Removed: In the third quarter, our Component Products Segment’s manufacturing operations returned to more normal production rates as demand from its customers began to return, although for the most part, below pre-pandemic levels.
−Removed: Both global and domestic supply chains remain intact and our Component Products Segment has experienced minimal supply chain disruptions.
−Removed: The markets our Component Products Segment sells to have recovered to varying degrees and our Component Products Segment’s management continues to work closely with all of its customers and monitor their progress as they continue to adjust their operations.
−Removed: Marine sales have outpaced prior year performance in the third quarter while the transportation, distribution and office furniture markets our security products reporting unit serves have been slow to recover and these trends are expected to remain for the rest of the year.
−Removed: Considerable effort continues at all of our Component Products Segment’s locations to manage current COVID-19 conditions including enhanced health and safety protocols and additional cleaning and disinfecting efforts.
−Removed: Throughout the course of the COVID-19 pandemic, our Component Products Segment management has focused its efforts on maintaining efficient operations, while closely managing its expenses and capital projects.
−Removed: In this regard our Component Products Segment management is constantly evaluating staffing levels and believes staffing is aligned with sales and production forecasts for the remainder of the year.
−Removed: The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have resulted in sharp contractions of vast areas of the global economy and are expected to continue to challenge workers, businesses and governments for the foreseeable future.
−Removed: Government actions in various regions have generally permitted the gradual resumption of commercial activities following various regional shutdowns, but further government action restricting economic activity is possible in an effort to mitigate increases in COVID-19 cases in certain regions.
−Removed: The success and timing of these mitigating actions will depend in part on deployment of effective tools to fight COVID-19, including increased testing, enhanced monitoring, data analysis, effective treatments and a safe vaccine, before economic growth is likely to return to pre-pandemic levels.
−Removed: Even as these measures are implemented and become effective, they will not directly address the business and employment losses already experienced.
−Removed: As a result, we expect U.S.
−Removed: and worldwide gross domestic product to be significantly impacted for an indeterminate period.
−Removed: Based on current conditions, we expect our Component Products Segment to report reduced sales and operating income in 2020 compared to 2019.
−Removed: Our Component Products Segment believes the second quarter of 2020 will be the period most impacted by reduced demand for its products due to COVID-19 as compared to 2019;
−Removed: however, due to the negative impact of higher fixed costs per unit of production in the third quarter as the result of lower production volumes in the second and third quarters of 2020 as discussed above our Component Products Segment expects operating income for the remainder of 2020 to be lower than comparable periods.
−Removed: The severity of the impact of COVID-19 on the remainder of the year will depend on customer demand for our Component Products Segment’s products, including the timing and extent to which its customers operations continue to be impacted, on its customers’ perception as to when consumer demand for their products will return to pre-pandemic levels and on any future disruptions in its operations or its suppliers’ operations, all of which are difficult to predict.
−Removed: Our Component Products Segment’s operations team meets daily to ensure it is taking appropriate actions to maintain a safe working environment for all of its employees, minimize operational disruptions and manage inventory levels.
−Removed: Our Component Products Segment increased inventory of both security products and marine components during the second quarter of 2020 to keep its workforce productive by focusing on high-demand products and components.
−Removed: As expected, inventory balances declined over the third quarter and we expect inventory to further decline over the remainder of the year as our Component Products Segment aligns its production to current demand levels.
−Removed: It is possible our Component Products Segment may temporarily close one or more of its facilities again for the health and safety of its employees before the COVID-19 crisis is over.
−Removed: Our Component Products Segment has significant cash balances of approximately $65.1 million at September 30, 2020, and we believe it is well positioned to navigate the uncertainty ahead.
+Added: Costs of Sales and Gross Margin — Cost of sales as a percentage of sales in creased 1 % in the first quarter of 202 1 compared to the same period in 20 20.
+Added: As a result, gross margin as a percentage of sales decreased over the same period .
+Added: Marine components gross margin and operating income as a percentage of sales increased in the first quarter of 2021 compared to the same period last year due to a favorable customer and product mix and increased coverage of fixed costs on higher sales as well as decreased employer paid medical costs.
+Added: Security products g ross margin and operating income margin for the first quarter of 2021 declined as compared to 2020 primarily due to higher cost inventory produced during the fourth quarter of 2020 and sold in the first quarter of 2021.
+Added: Security p roducts inventory produced during the fourth quarter of 2020 had a higher carrying value compared to the same period in 20 19 due to higher cost per unit of production as a result of lower production volumes during the fourth quarter of 2020 .
+Added: This negatively impacted security products’ gross margin and operating income margin as this higher cost inventory was sold during the first quarter of 2021 .
+Added: Additionally, security products’ gross margin and operating income margin were favorably impacted by lower employer paid medical costs of $ .7 million during the first quarter of 2021 compared to 2020.
+Added: O perating Income — Our Component Products Segment’s operating income for the first quarter of 2021 increased compared to the same period of 2020 and was primarily impacted by the factors impacting cost of sales and gross margin discussed above.
+Added: Outlook— Our Component Products Segment first began to feel the effects of the COVID-19 pandemic in late March 2020 when it began receiving requests from certain customers of both its security products and marine components reporting units to postpone shipments, in some cases because customers’ production facilities were temporarily closed.
+Added: The second quarter of 2020 sustained the greatest impact from COVID-19, but its effects continued to be felt through most of the remainder of the year.
+Added: In the second half of 2020, our Component Products Segment’s sales began to recover from the historically low levels experienced during the second quarter of 2020, with sales steadily improving for the remainder of the year and through the first quarter of 2021.
+Added: In the first quarter of 2021, our Component Products Segment’s manufacturing operations maintained normal production rates in-line with improved demand, although security products still has some markets which continue to be slower to recover, particularly distributors and office furniture.
+Added: Our Component Products Segment’s supply chains remain intact although it has been moderately impacted by recent global and domestic supply chain disruptions.
+Added: Thus far our Component Products Segment’s operations team has been able to manage through these disruptions with minimal impact on operations.
+Added: Most of the markets our Component Products Segment serves continue to recover, and it communicates closely with all its customers to monitor order levels.
+Added: Marine components sales outpaced prior year as demand for recreational boats increased as people sought socially distanced, outdoor activities.
+Added: Our Component Products Segment expects this trend to continue during the remainder of 2021.
+Added: Considerable effort continues at all of our Component Products Segment’s locations to manage COVID-19 conditions including enhanced health and safety protocols and cleaning and disinfecting efforts.
+Added: Throughout the course of the COVID-19 pandemic, our Component Products Segment has focused its efforts on maintaining efficient operations while closely managing its expenses.
+Added: The advance of the COVID-19 pandemic and the global efforts to mitigate its spread are expected to continue to challenge workers, businesses and governments during 2021.
+Added: The success and timing of mitigating actions depends in part on continued deployment of effective tools to fight COVID-19, including effective treatments and vaccine distribution before economies are likely to return to normal.
+Added: In this regard, as part of our health and safety protocols, our Component Products Segment is encouraging its employees to receive a COVID-19 vaccine and has offered paid time off to hourly employees to facilitate participation.
+Added: Based on current conditions, our Component Products Segment expects to report increased revenue and operating income in 2021 compared to 2020, despite some security products markets that have not fully recovered to pre-pandemic levels.
+Added: As a result, our Component Products Segment expects to continue to experience higher fixed costs per unit of production during 2021 which will continue to challenge security products gross margins.
+Added: The impact of COVID-19 on 2021 will depend on customer demand for our Component Products Segment’s products, including the timing and extent to which its customers’ operations may be impacted, on its customers’ perception as to consumer demand for their products and on any future disruptions in our Component Products Segment’s operations or its suppliers’ operations, all of which are difficult to predict.
+Added: As noted above, there are global supply chain disruptions and certain of our Component Products Segment’s customers have experienced temporary pauses in their operations as a result of these disruptions.
+Added: Thus far these pauses have not had a material negative effect on our Component Products Segment’s sales.
+Added: Our Component Products Segment’s operations teams meet frequently to ensure they are taking appropriate actions to maintain a safe working environment for all its employees, minimize material or supply related operational disruptions, manage inventory levels and improve operating margins.
+Added: Our Component Products Segment is constantly evaluating staffing levels and believes current staffing levels are aligned with its sales and production forecasts.
Real Estate Management and Development –
Three months ended
−Removed: Nine months ended
−Removed: September 30,
−Removed: September 30,
(In millions)
7 unchanged sentences
LandWell is actively engaged in efforts to develop certain real estate in Henderson, Nevada including approximately 2,100 acres zoned for residential/planned community purposes and approximately 400 acres zoned for commercial and light industrial use.
−Removed: Beginning in December 2013 and through the third quarter of 2020, LandWell has closed or entered into escrow on approximately 970 acres of the residential/planned community and approximately 70 acres zoned for commercial and light industrial use.
+Added: Beginning in December 2013 and through the first quarter of 2021, LandWell has closed or entered into escrow on approximately 1,100 acres of the residential/planned community and approximately 70 acres zoned for commercial and light industrial use.
Contracts for land sales are negotiated on an individual basis and sales terms and prices will vary based on such factors as location (including location within a planned community), expected development work, and individual buyer needs.
2 unchanged sentences
In some instances, we will receive cash proceeds at the time the contract closes and record deferred revenue for some or all of the cash amount received, with such deferred revenue being recognized in subsequent periods.
−Removed: We expect the development work to continue for 10 to 15 years on the rest of the land held for development, especially the remainder of the residential/planned community.
−Removed: Net Sales and Operating Income— A substantial portion of the net sales from our Real Estate Management and Development Segment in the first nine months of 2019 and 20 20 consisted of revenues from land sales.
+Added: We expect our development work on the residential/planned community to continue for 5 to 10 years although we may have sold or transferred ownership of all of the land within the community prior to development work completion.
+Added: Net Sales and Operating Income— A substantial portion of the net sales from our Real Estate Management and Development Segment in the first quarter of 2020 and 2021 consisted of revenues from land sales.
As noted above, we recognize revenue in our residential/planned community over time using cost based input methods (previously known as percentage completion method) and substantially all of the revenue we recognized in 2020 and 2021 was under this method of revenue recognition.
−Removed: The contracts on these sales (both within the planned community and otherwise) include approximately 6 6 5 acres of the residential planned community and certain other acreage which closed in December 2013 and through the third quarter of 20 20 .
−Removed: Land sales revenues were higher in the third quarter of 2020 as compared to the third quarter of 2019 primarily due to an increase in the amount of acreage sold in 2020 compared to 2019.
−Removed: Land sales revenues were lower in the first nine months of 20 20 as compared to the same period in 201 9 primarily due to a decrease in the amount of acreage sold in 20 20 compared to 201 9 and due to higher infrastructure development spending in 2019 ;
−Removed: due to uncertain demand as a result of the pandemic we slowed development activities during the second and third quarters of 2020 which in turn affects the amount of revenue we recognize .
−Removed: Cost of sales related to land sales revenues was $ 12.8 million in the first nine months of 2020 compared to $ 17 .
−Removed: 3 million in the first nine months of 2019.
−Removed: Operating income includes $ 19 .
−Removed: 1 million in the first nine months of 20 20 (all in the first quarter) and $ 8.8 million in the first nine months of 201 9 (primarily in the second quarter) of income related to the recognition of tax increment reimbursement note receivables, as discussed in Note 1 1 to our Condensed Consolidated Financial Statements.
−Removed: Operating income also includes $4.0 million in the first nine months of 2020 (all in the third quarter) related to proceeds BMI received associated with a prior land sale.
+Added: The contracts on these sales (both within the planned community and otherwise) include approximately 985 acres of the residential planned community and certain other acreage which closed in December 2013 and through the first quarter of 2021.
+Added: Land sales revenues were higher in the first quarter of 2021 as compared to the first quarter of 2020 primarily due to an increase in the amount of acreage sold in 2021 compared to 2020.
+Added: Cost of sales related to land sales revenues was $3.7 million in the first quarter of 2021 compared to $2.7 million in the first quarter of 2020.
+Added: Operating income includes $6.2 million in the first quarter of 2021 and $19.1 million in the first quarter of 2020 of income related to the recognition of tax increment reimbursement note receivables, as discussed in Note 11 to our Condensed Consolidated Financial Statements.
The remainder of net sales and cost of sales related to this segment primarily relates to water delivery fees and expenses.
We deliver water to several customers under long-term contracts.
−Removed: Outlook— Our Real Estate Management and Development Segment experienced minimal impact on operations and financial performance from COVID-19 during the first quarter of 2020.
−Removed: In April 2020, LandWell began receiving requests from some residential builders to delay or cancel closing on certain parcels in escrow and, as a result, LandWell began delaying or curtailing infrastructure development activities where possible to align with current land sales levels and residential builder output.
−Removed: In the third quarter, land sales activities improved, including increases in both the number of acres closed and entered into escrow.
−Removed: BMI continues to provide utility and water delivery services to its customers without interruption.
−Removed: Our Real Estate Management and Development management team is focused on protecting the health and safety of our employees and contractors through implementation of social distancing and work-from-home strategies among other health and safety protocols.
−Removed: If current land sales in escrow close as scheduled, we expect the level of land sales in the near term to be greater than comparable periods;
−Removed: however, as noted above, we cannot guarantee land held in escrow will close as currently scheduled because builders can generally cancel without financial penalty until shortly before scheduled closing.
−Removed: In addition, several COVID-19 mitigation procedures put into effect by the City of Henderson and utility providers are, in some cases, adding significant time to the typical permitting and mapping process required to be completed before the necessary approvals can be obtained to close a land sale.
−Removed: Given these factors and the overall uncertainty around the length and severity of COVID-19 on the economy and its operations, LandWell is continuing to delay or curtail infrastructure development activities in the near term where possible.
−Removed: Because we recognize revenue over time using cost based inputs for most of LandWell’s land sales, delays or curtailments in infrastructure development activities will lower the amount of revenue we recognize on previously closed land sales.
−Removed: In addition, delays or curtailments in infrastructure development activities will also delay LandWell’s ability to submit completed costs to the City of Henderson for approval of additional tax increment reimbursement note receivables.
−Removed: Landwell is continuing to actively develop and market land it manages, primarily to residential builders, for the residential/planned community in Henderson and given the current liquidity of our Real Estate Management and Development Segment, including approximately $18.2 million of cash and cash equivalents at September 30, 2020, we believe it is well positioned to meet its obligations and navigate the uncertainties ahead.
+Added: Outlook— As a result of the COVID-19 pandemic, LandWell experienced a decline in land sales activity during the second quarter of 2020 and, as a result, LandWell reduced development spending where possible to align with expected residential builder output.
+Added: Beginning in the second half of 2020 and continuing through the first quarter of 2021, land sales activities increased, including increases in both the number of acres sold and new escrow agreements.
+Added: LandWell returned to more normalized infrastructure development spending in late 2020 in line with increased land sales.
+Added: Throughout the COVID-19 pandemic, LandWell has continued to actively develop and market land it manages, primarily to residential builders, for the residential/planned community in Henderson and BMI has continued to provide utility and water delivery services to its customers without interruption.
+Added: Our Real Estate Management and Development management team remains focused on protecting the health and safety of our employees and contractors including implementation of enhanced health and safety protocols.
+Added: Based on current land sales activities, including current land sales in escrow, we expect the level of land sales in the near term to continue to be strong.
+Added: As noted above, we cannot guarantee land held in escrow will close as currently scheduled because builders can generally cancel without financial penalty until shortly before scheduled closing.
+Added: In addition, several COVID-19 mitigation procedures put into effect by the City of Henderson and utility providers are, in some cases, adding time to the typical permitting and mapping process required to be completed before the necessary approvals can be obtained to close a land sale.
+Added: In addition, under LandWell’s development agreement with the City of Henderson, the issuance of a specified number of housing permits requires LandWell to complete certain large infrastructure projects.
+Added: We expect LandWell to be required to begin several of these large projects in 2021 and, as a result, we expect land development costs to increase during 2021 as compared to 2020.
+Added: Because these costs relate to the entirety of the residential/planned community, these costs are not part of the cost based inputs used to recognize revenue and therefore this spending will not correlate to revenue recognition.
+Added: This spending is expected to be eligible for tax increment reimbursement.
General Corporate Items, Interest Expense, Income Taxes and Noncontrolling Interest—2021 Compared to 2020
2 unchanged sentences
The agreements with certain of NL’s insurance carriers also include reimbursement for a portion of its future litigation defense costs.
−Removed: We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by NL because of certain issues that arise regarding which defense costs qualify for reimbursement.
+Added: We are not able to determine how much NL will ultimately recover from these carriers for defense costs incurred by NL because of certain issues that arise regarding which defense costs qualify for reimbursement.
Accordingly, these insurance recoveries are recognized when the receipt is probable and the amount is determinable.
−Removed: Substantially all of the $5.2 million insurance recoveries we recognized in the first nine months of 2019 relates to a settlement NL reached with one of its insurance carriers in which they agreed to reimburse NL for a portion of NL’s past and future litigation defense costs.
See Note 15 to our Condensed Consolidated Financial Statements.
Kronos recognized $1.5 million of insurance recoveries in the first quarter of 2020 related to a property damage claim.
−Removed: Litigation Settlement Expense – We recognized a pre-tax $19.3 million litigation settlement expense in the first nine months of 2019 related to NL’s lead pigment litigation in California.
−Removed: See Note 15 to our Condensed Consolidated Financial Statements.
−Removed: Other Components of Net Periodic Pension and OPEB Expense – We recognized other components of net periodic pension and OPEB expe nse of $ 5.
−Removed: 2 million and $ 14.9 million in the third quarter and first nine months of 2020 compared to $4.1 million and $ 12 .
−Removed: 3 million in the same periods of 2019.
−Removed: The expense increase in both periods is primarily due to pension costs as a result of actuarial amortizations , discount rates and expected returns on plan assets.
Changes in the Market Value of Valhi Common Stock held by Subsidiaries —Our subsidiaries, Kronos and NL, hold shares of our common stock.
3 unchanged sentences
Under the principles of consolidation we eliminate any gains or losses associated with our common stock to the extent of our proportional ownership interest in each subsidiary.
−Removed: We recognized a gain of $.7 million in the third quarter of 2020 compared to a loss of $3.1 million in the same period of 2019 and a loss of $2.2 million in the first nine months of 2020 compared to a loss of $.1 million in the same period of 2019 in our Condensed Consolidated Statements of Income which represents the unrealized gain or loss in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.
−Removed: Other General Corporate Items — Corporate expenses were 12% lower in the third quarter and 10% lower in the first nine months of 2020 compared to the same periods of 2019 primarily due to lower litigation and related costs.
+Added: We recognized a gain of $1.3 million in the first quarter of 2021 compared to a loss of $2.4 million in the same period of 2020 in our Condensed Consolidated Statements of Income which represents the unrealized gain or loss in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.
+Added: Other General Corporate Items — Corporate expenses in the first quarter of 2021 were comparable to the same period of 2020.
Included in corporate expense are:
−Removed: litigation and related costs at NL of $.3 million in the third quarter of 2020 compared to $1.4 million in the third quarter of 2019 and $1.4 million in the first nine months of 2020 compared to $3.3 million in the first nine months of 2019;
−Removed: environmental remediation and related costs of $.1 million in each of the third quarters of 2020 and 2019 and $.5 million in the first nine months of 2020 compared to nil in the first nine months of 2019.
−Removed: Overall, we currently expect that our net general corporate expenses in 2020 will be comparable to 2019.
+Added: litigation and related costs at NL of $.3 million in the first quarter of 2021 compared to $.6 million in the first quarter of 2020;
+Added: environmental remediation and related costs of nil in the first quarter of 2021 compared to $.1 million in the first quarter of 2020.
+Added: Overall, we currently expect that our net general corporate expenses in 2021 will be higher than 2020 primarily due to higher expected litigation and related costs and higher environmental remediation and related costs.
The level of our litigation and related expenses varies from period to period depending upon, among other things, the number of cases in which we are currently involved, the nature of such cases and the current stage of such cases (e.g.
7 unchanged sentences
See Note 15 to our Condensed Consolidated Financial Statements.
−Removed: Interest Expense —Interest expense decreased to $8.9 million in the third quarter of 2020 from $10.3 million in the third quarter of 2019 and decreased to $27.4 million in the first nine months of 2020 from $30.7 million in the first nine months of 2019 primarily due to lower average interest rates and lower average balances on variable-rate indebtedness in 2020.
+Added: Interest Expense —Interest expense decreased to $8.6 million in the first quarter of 2021 from $9.7 million in the first quarter of 2020 primarily due to lower average interest rates and lower average balances on variable-rate indebtedness in 2021.
We expect interest expense will continue to be lower in the remainder of 2021 as compared to 2020 due to lower average rates and average balances.
−Removed: Provision for Income Taxes — We recognized an income tax benefit of $11.4 million in the third quarter of 2020 compared to income tax expense of $4.7 million in the third quarter of 2019 and income tax expense of $21.2 million in the first nine months of 2020 compared to $31.8 million in the first nine months of 2019.
−Removed: The decrease is primarily due to lower income from operations in the third quarter and first nine months of 2020 and a decrease in our 2020 expected annual effective income tax rate recognized in the third quarter of 2020.
−Removed: Income tax expense for the first nine months of 2020 includes higher amounts recognized for global intangible low-tax income (GILTI) as compared to the first nine months of 2019 due to limitations on related deductions and tax credits which correspond to our lower domestic earnings in 2020.
+Added: Provision for Income Taxes — We recognized an income tax expense of $ 8 .
+Added: 0 million in the first quarter of 20 2 1 compared to $ 11 .
+Added: 4 million in the first quarter of 20 20 .
+Added: The decrease is primarily due to lower income from operations in the first quarter 202 1 .
Our earnings are subject to income tax in various U.S.
5 unchanged sentences
At December 31, 2020, we had recognized a deferred income tax liability with respect to our direct investment in Kronos of $35.5 million.
−Removed: There is a maximum amount (or cap) of such deferred income taxes we are required to recognize
−Removed: with respect to our direct investment in Kronos.
+Added: There is a maximum amount (or cap) of such deferred income taxes we are required to recognize with respect to our direct investment in Kronos.
The maximum amount of such deferred income tax liability we would be required to have recognized (the cap) is $155.4 million.
−Removed: During the first nine months of 20 20 , we recognized a non-cash deferred income tax benefit with respect to our direct investment in Kronos of $ 1 .
−Removed: 8 million for the reduction in the deferred income taxes required to be recognized with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock, to the extent such reduction related to our equity in Kronos’ net income during such period .
−Removed: We recognized a similar deferred income tax expense of $3.3 million in the first nine months of 2019.
+Added: During the first quarter of 2021, we recognized a non-cash deferred income tax benefit with respect to our direct investment in Kronos of $.1 million for the decrease in the deferred income taxes required to be recognized with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock, to the extent such reduction related to our equity in Kronos’ net income during such period.
+Added: We recognized a similar deferred income tax expense of $.2 million in the first quarter of 2020.
A portion of the net change with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock during such periods related to our equity in Kronos’ other comprehensive income (loss) items, and the amounts allocated to other comprehensive income (loss) items includes amounts related to our equity in Kronos’ other comprehensive income (loss) items.
See Note 12 to our Condensed Consolidated Financial Statements for a tabular reconciliation of our statutory income tax provision to our actual tax provision.
−Removed: Noncontrolling Interest in Net Income (Loss) of Subsidiaries —Noncontrolling interest in operations of subsidiaries decreased from 2019 to 2020 primarily due to decreased earnings at Kronos and CompX.
−Removed: See Note 13 to our Condensed Consolidated Financial Statements.
+Added: Noncontrolling Interest in Net Income (Loss) of Subsidiaries —Noncontrolling interest in operations of subsidiaries decreased in 2021 compared to 2020 primarily due to decreased operating income at Kronos and LandWell.
LIQUIDITY AND CAPITAL RESOURCES
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subsidiaries.
−Removed: Cash flow from operating activities was $45.2 million in the first nine months of 2020 compared to $113.0 million in the first nine months of 2019.
−Removed: This $67.8 million decrease in cash provided was primarily due to the net effect of the following items:
−Removed: consolidated operating income of $139.2 million in the first nine months of 2020, a decrease of $28.4 million compared to operating income of $167.6 million in the first nine months of 2019;
−Removed: a $31.8 million increase in the amount of net cash used in relative changes in receivables, inventories, payables and accrued liabilities in the first nine months of 2020;
−Removed: lower net cash paid for income taxes in 2020 of $14.4 million due to decreased earnings in 2020.
+Added: Cash provided by operating activities was $56.6 million in the first quarter of 2021 compared to cash used in operating activities of $18.2 million in the first quarter of 2020.
+Added: This $74.8 million increase in cash provided was primarily due to the net effect of the following items:
+Added: a $78.6 million decrease in the amount of net cash used in relative changes in receivables, inventories, payables and accrued liabilities in the first quarter of 2021;
+Added: consolidated operating income of $51.3 million in the first quarter of 2021, a decrease of $19.7 million compared to operating income of $71.0 million in the first quarter of 2020;
+Added: higher net cash paid for income taxes in 2021 of $4.6 million.
Changes in working capital were affected by accounts receivable and inventory changes as shown below:
−Removed: Kronos’ average days sales outstanding (“DSO”) decreased from December 31, 2019 to September 30, 2020 primarily due to relative changes in the timing of collections.
−Removed: Kronos’ average days sales in inventory (“DSI”) decreased from December 31, 2019 to September 30, 2020 primarily due to lower inventory volumes attributable to sales volumes outpacing production volumes in the third quarter of 2020, which was not the case in the fourth quarter of 2019.
−Removed: CompX’s average DSO at September 30, 2020 increased from December 31, 2019 primarily due to relative changes in the timing of collections.
−Removed: CompX’s average DSI at September 30, 2020 increased as compared to December 31, 2019 due to security products inventory declining from unusually high second quarter balances offset by a decrease in the average DSI for marine components primarily as a result of rapid growth for the quarter.
+Added: Kronos’ average days sales outstanding (“DSO”) decreased from December 31, 2020 to March 31, 2021 primarily due to relative changes in the timing of collections.
+Added: Kronos’ average days sales in inventory (“DSI”) decreased from December 31, 2020 to March 31, 2021 primarily due to lower inventory volumes attributable to higher sales volumes in the first quarter of 2021 compared to the fourth quarter of 2020 while production volumes were comparable.
+Added: CompX’s average DSO at March 31, 2021 increased from December 31, 2020 primarily due to relative changes in the timing of collections.
+Added: CompX’s average DSI at March 31, 2021 decreased as compared to December 31, 2020 primarily due to marine components as a result of rapid sales growth in the first quarter of 2021.
For comparative purposes, we have also provided comparable prior period numbers below.
−Removed: September 30,
−Removed: September 30,
Days sales outstanding
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Intercompany dividends have been eliminated.
−Removed: Nine months ended
−Removed: September 30,
+Added: Three months ended
(In millions)
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Investing Activities—
−Removed: We spent $40.3 million in capital expenditures during the first nine months of 2020 including:
+Added: We spent $11.5 million in capital expenditures during the first three months of 2021 including:
$10.8 million in our Chemicals Segment;
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Financing Activities—
−Removed: During the nine months ended September 30, 2020, we:
−Removed: repaid $11.8 million under the Contran credit facility, repaid $2.0 million under Tremont’s promissory note payable, repaid $.9 million under BMI’s bank loan and repaid $1.6 million under LandWell’s note payable to the City of Henderson;
−Removed: paid aggregate quarterly dividends to Valhi stockholders of $.40 per share ($11.3 million) and;
−Removed: Kronos acquired shares of its common stock for an aggregate purchase price of $1.0 million.
+Added: During the three months ended March 31, 2021, we:
+Added: repaid $2.3 million under the Contran credit facility and repaid $1.5 million under Tremont’s deferred payment obligation;
+Added: paid a quarterly dividend to Valhi stockholders of $.08 per share ($2.2 million);
+Added: CompX acquired shares of its Class A common stock for a purchase price of $.8 million.
The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon a number of factors including our current and future expected results of operations, financial condition, cash requirements for our businesses, contractual and other requirements and restrictions and other factors deemed relevant by our board of directors.
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There are currently no contractual restrictions on the amount of dividends which we may pay.
−Removed: Distributions to noncontrolling interest in subsidiaries in the first nine months of 2020 are comprised of CompX dividends paid to shareholders other than NL and Kronos dividends paid to shareholders other than us and NL.
+Added: Distributions to noncontrolling interest in subsidiaries in the first three months of 2021 are comprised of CompX dividends paid to shareholders other than NL and Kronos dividends paid to shareholders other than us and NL.
Outstanding Debt Obligations
−Removed: At September 30, 2020, our consolidated indebtedness was comprised of:
+Added: At March 31, 2021, our consolidated indebtedness was comprised of:
Valhi’s $268.4 million outstanding on its $320 million credit facility with Contran which is due no earlier than December 31, 2022;
−Removed: €400 million aggregate outstanding on our KII 3.75% Senior Secured Notes ($464.7 million carrying amount, net of unamortized debt issuance costs) due in September 2025;
+Added: €400 million aggregate outstanding on the KII 3.75% Senior Secured Notes ($465.0 million carrying amount, net of unamortized debt issuance costs) due in September 2025;
$16.9 million on BMI’s bank loan ($16.3 million carrying amount, net of unamortized debt issuance costs) due through September 2032;
$14.2 million on LandWell’s bank loan due in April 2036;
−Removed: approximately $ 2 .
−Removed: 7 million of other indebtedness.
−Removed: Certain of our credit facilities require the respective borrowers to maintain a number of covenants and restrictions which, among other things, restrict our ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type.
−Removed: Certain of our credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants.
−Removed: For example, certain credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower.
−Removed: In addition, certain credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business.
−Removed: Kronos’ North American and European revolvers contain a number of covenants and restrictions which, among other things, restrict its ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type.
−Removed: Kronos’ European revolving credit facility also requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to the last twelve months EBITDA of the borrowers.
−Removed: The terms of all of our debt instruments (including revolving lines of credit for which we have no outstanding borrowings at September 30, 2020) are discussed in Note 9 to our 2019 Annual Report.
−Removed: We are in compliance with all of our debt covenants at September 30, 2020.
−Removed: We believe that we will be able to continue to comply with the financial covenants contained in our credit facilities through their maturity;
−Removed: however, if future operating results differ materially from our expectations we may be unable to maintain compliance.
+Added: approximately $1.6 million of other indebtedness.
+Added: On April 20, 2021, Kronos entered into a new $225 million global revolving credit facility (“Global Revolver”) which matures in April 2026.
+Added: Kronos had no outstanding borrowings on its previously existing North American and European revolving facilities at March 31, 2021 through the date of their termination.
+Added: Kronos currently has no outstanding borrowings on the new Global Revolver and the full $225 million was available for borrowing thereunder.
+Added: Kronos’ credit facilities contain a number of covenants and restrictions which, among other things, restrict its ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of these types .
+Added: Kronos’ credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants.
+Added: For example, the credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower.
+Added: In addition, the credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business.
+Added: The terms of all of our debt instruments outstanding at March 31, 2021 are discussed in Note 9 to our 2020 Annual Report.
+Added: See Note 6 to our Condensed Consolidated Financial Statements for discussion of the terms of Kronos’ new Global Revolver.
+Added: We were in compliance with all of our debt covenants at March 31 , 2021.
+Added: We believe we will be able to continue to comply with the financial covenants contained in our credit facilities through their maturity.
Future Cash Requirements
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however, if future operating results differ materially from our expectations we may be unable to maintain compliance.
−Removed: Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending September 30, 2021) and long-term obligations (defined as the five-year period ending September 30, 2025).
+Added: Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending March 31, 2022) and long-term obligations (defined as the five-year period ending March 31, 2026).
If actual developments differ from our expectations, our liquidity could be adversely affected.
−Removed: At September 30 , 20 20 , we had credit available under existing facilities of $ 2 89 .
−Removed: 4 million, which was comprised of:
−Removed: $105.6 (1) million under Kronos’ European revolving credit facility;
−Removed: $125.0 million under Kronos’ North American revolving credit facility;
−Removed: $58.8 (2) million under Valhi’s Contran credit facility.
−Removed: Based on Kronos’ EBITDA over the last twelve months ending September 30, 2020, the full €90.0 million amount is available for borrowing at such date.
−Removed: Amounts available under this facility are at the sole discretion of Contran.
−Removed: At September 30, 2020, we had an aggregate of $553.7 million of restricted and unrestricted cash, cash equivalents and marketable securities, including $141.1 million held by our non-U.S.
+Added: At March 31, 2021, we had $51.6 million available for borrowing under our credit facility with Contran.
+Added: Amounts available under this facility are at Contran’s discretion.
+Added: Kronos’ new $225 million Global Revolver entered into in April 2021, which replaced Kronos’ North American and European facilities, matures in April 2026 and at inception, the full $225 million was available for borrowing under this facility and Kronos could borrow all available amounts without violating its existing debt covenants.
+Added: See Note 6 to our Condensed Consolidated Financial Statements.
+Added: At March 31, 2021, we had an aggregate of $606.1 million of restricted and unrestricted cash, cash equivalents and marketable securities, including $204.7 million held by our non-U.S.
subsidiaries.
−Removed: Following implementation of a territorial tax system under the 2017 Tax Act, repatriation of any cash and cash equivalents held by our non-U.S.
−Removed: subsidiaries would not be expected to result in any material income tax liability as a result of such repatriation.
A detail by entity is presented in the table below.
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In addition, Kronos’ capital expenditures in the area of environmental compliance, protection and improvement include expenditures which are primarily focused on increased operating efficiency but also result in improved environmental protection, such as lower emissions from our manufacturing plants.
−Removed: We may further reduce, curtail or delay planned capital spending and land development activities if economic conditions warrant.
Repurchases of Common Stock –
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Cash on hand will be used to acquire the shares, and repurchased shares will be added to treasury shares and cancelled.
−Removed: At September 30, 2020, as adjusted for the 1-for-12 reverse stock split of our common stock effected on June 1, 2020, Valhi had approximately .3 million shares available to repurchase under authorizations made by our board of directors.
+Added: At March 31, 2021, Valhi had approximately .3 million shares available to repurchase under authorizations made by our board of directors.
Kronos’ board of directors authorized the repurchase of up to 2.0 million shares of its common stock in open market transactions, including block purchases, or in privately-negotiated transactions at unspecified prices and over an unspecified period of time.
Kronos may repurchase its common stock from time to time as market conditions permit.
−Removed: During the first nine months of 2020, Kronos acquired 122,489 shares of its common stock in open market purchases under such repurchase program for an aggregate purchase price of $1.0
−Removed: million and subsequently cancelled all such shares .
−Removed: At September 30 , 20 20 , approximately 1 .
−Removed: 6 million shares are available for repurchase.
+Added: At March 31, 2021, approximately 1.56 million shares are available for repurchase.
CompX’s board of directors authorized the repurchase of its Class A common stock in open market transactions, including block purchases, or in privately-negotiated transactions at unspecified prices and over an unspecified period of time.
−Removed: At September 30, 2020, approximately .7 million shares were available for purchase under these authorizations.
+Added: During the first three months of 2021, CompX acquired 50,000 shares of its Class A common stock in an open market purchase under such repurchase program for $.8 million.
+Added: At March 31, 2021, approximately .6 million shares were available for purchase under these authorizations.
Because our operations are conducted primarily through subsidiaries and affiliates, our long-term ability to meet parent company level corporate obligations is largely dependent on the receipt of dividends or other distributions from our subsidiaries and affiliates.
Kronos paid a regular dividend of $.18 per share in each quarter of 2020.
−Removed: If Kronos were to pay its $.18 per share in each quarter of 2020 based on the 58.0 million shares we held of Kronos common stock at September 30, 2020, we would receive aggregate annual regular dividends from Kronos of $41.8 million.
+Added: If Kronos were to pay its $.18 per share in each quarter of 2021 based on the 58.0 million shares we held of Kronos common stock at March 31, 2021, we would receive aggregate annual regular dividends from Kronos of $41.8 million.
+Added: NL paid a regular quarterly dividend of $.04 per share in 2020 for which we received $6.5 million.
In February 2021 the NL board of directors approved a quarterly dividend of $.06 per share.
−Removed: If NL were to pay its $.04 per share dividend in each quarter of 2020 based on the 40.4 million shares we hold of NL common stock at September 30, 2020, we would receive aggregate annual dividends from NL of $6.5 million.
+Added: If NL were to pay its $.06 per share dividend in each quarter of 2021 based on the 40.4 million shares we hold of NL common stock at March 31, 2021, we would receive aggregate annual dividends from NL of $9.7 million.
BMI and LandWell pay cash dividends from time to time, but the timing and amount of such dividends are uncertain.
−Removed: In this regard, we received aggregate dividends from BMI and LandWell of $29.1 million in 2019 and $10.6 million during the first nine months of 2020.
+Added: In this regard, we received aggregate dividends from BMI and LandWell of $43.0 million in 2020, none during the first three months of 2021 and $8.4 million in April 2021.
We do not know if we will receive additional dividends from BMI and LandWell during 2021.
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Instead any dividend paid by CompX is paid to NL.
−Removed: Our subsidiaries have various credit agreements with unrelated third-party lenders which contain customary limitations on the payment of dividends, typically a percentage of net income or cash flow;
+Added: Our subsidiaries have various credit agreements with unrelated third-party lenders which contain customary limitations on the payment of dividends;
however, these restrictions in the past have not significantly impacted their ability to pay dividends.
−Removed: Reverse Stock Split –
−Removed: On May 28, 2020 following stockholder approval at our annual meeting, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-12, which was effective June 1, 2020.
−Removed: All share and per-share disclosures for all periods presented have been adjusted to give effect to the reverse stock split, and we have adjusted our stockholders’ equity at December 31, 2018, June 30, 2019, September 30, 2019 and December 31, 2019 to reflect the split by reclassifying $3.3 million from common stock to additional paid-in capital representing $.01 per share par value of each share of common stock eliminated as a result of the reverse stock split.
Investment in our Subsidiaries and Affiliates and Other Acquisitions –
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Upon an event of default (as defined in the credit facility), Valhi will be entitled to terminate its commitment to make further loans to NL’s subsidiary, declare the outstanding loans (with interest) immediately due and payable, and exercise its rights with respect to the collateral under the loan documents.
−Removed: Such collateral rights include, upon certain insolvency events with respect to NL’s subsidiary or NL, the right to purchase all of the Kronos common stock at a purchase price equal to the aggregate market value, less amounts owing to Valhi under the loan documents, and up to 50% of such purchase price may be paid by Valhi in the form of an unsecured promissory note bearing interest at the prime rate plus 2.75% per annum, payable quarterly, with all amounts due no later than five years from the
−Removed: date of purchase, with the remainder of such purchase price payable in cash at the date of purchase.
+Added: Such collateral rights include, upon certain insolvency events with respect to NL’s subsidiary or NL, the right to purchase all of the Kronos common stock at a purchase price equal to the aggregate market value, less amounts owing to Valhi under the loan documents, and up to 50% of such purchase price may be paid by Valhi in the form of an unsecured promissory note bearing interest at the prime rate plus 2.75% per annum, payable quarterly, with all amounts due no later than five years from the date of purchase, with the remainder of such purchase price payable in cash at the date of purchase.
We also eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements.
−Removed: Prior to 201 9 NL’s subsidiary borrowed $.5 million under this facility, no additional amounts have been borrowed since then, and $.5 million is outstanding under this facility at September 30 , 20 20 .
+Added: Prior to 2020 NL’s subsidiary borrowed $.5 million under this facility, no additional amounts have been borrowed since then, and $.5 million is outstanding under this facility at March 31, 2021.
We eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements.
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The facility, as amended, is due on demand, but in any event no earlier than December 31, 2022.
−Removed: We had no borrowings from Kronos under this facility during the first nine months of 2020, and there was no outstanding balance at September 30, 2020.
−Removed: We could borrow $60.0 million under our current intercompany facility with Kronos at September 30, 2020.
+Added: We had no borrowings from Kronos under this facility during the first three months of 2021, and there was no outstanding balance at March 31, 2021.
+Added: We could borrow $40.0 million under our current intercompany facility with Kronos at March 31, 2021.
Kronos’ obligation to loan us money under this note is at Kronos’ discretion.
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The facility, as amended, is due on demand, but in any event no earlier than December 31, 2022.
−Removed: We had gross borrowings of $19.5 million and gross repayments of $22.8 million during the first nine months of 2020, and $30.5 million was outstanding at September 30, 2020.
−Removed: We could borrow $9.5 million under our current intercompany facility with CompX at September 30, 2020.
+Added: We had gross borrowings of $11.6 million and gross repayments of $11.9 million during the first three months of 2021, and $29.2 million was outstanding at
+Added: March 31, 2021 .
+Added: We could borrow $ 10 .
+Added: 8 million under our current intercompany facility with CompX at March 31, 2021 .
CompX’s obligation to loan us money under this note is at CompX’s discretion.
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There have been no material changes in our contractual obligations since we filed our 2020 Annual Report and we refer you to that report for a complete description of these commitments.
−Removed: We are subject to certain commitments and contingencies, as more fully described in Notes 1, 14 and 18 to our 2019 Annual Report, or in Notes 12 and 15 to our Condensed Consolidated Financial Statements and in Part II, Item 1 of this Quarterly Report, including:
+Added: We are subject to certain commitments and contingencies, as more fully described in our 2020 Annual Report, or in Notes 12 and 15 to our Condensed Consolidated Financial Statements and in Part II, Item 1 of this Quarterly Report, including:
certain income tax contingencies in various U.S.
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Recent Accounting Pronouncements
−Removed: See Note 17 to our Condensed Consolidated Financial Statements.
+Added: Not applicable
Critical Accounting Policies
−Removed: There have been no changes in the first nine months of 2020 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operation in our 2019 Annual Report.
+Added: There have been no changes in the first three months of 2021 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operation in our 2020 Annual Report.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.