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Business and Geographic Segments | 12 Months Ended
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Dec. 31, 2020
Segment Reporting [Abstract] |
Business and Geographic Segments | Note 2—Business and geographic segments:
Business segment |  |  | Entity |  | % controlled at December 31 2020 |
Chemicals |  |  | Kronos |  | 80 | %
Component products |  |  | CompX |  | 86 | %
Real estate management and development |  |  | BMI and LandWell |  | 63% - 77 | %
Our control of Kronos includes 50% we hold directly and 30% held directly by NL. We own 83% of NL. Our control of CompX is through NL. We own 63% of BMI. Our control of LandWell includes the 27% we hold directly and 50% held by BMI. See Note 3. We are organized based upon our operating subsidiaries. Our operating segments are defined as components of our consolidated operations about which separate financial information is available that is regularly evaluated by our chief operating decision maker in determining how to allocate resources and in assessing performance. Each operating segment is separately managed and each operating segment represents a strategic business unit offering different products. We have the following three consolidated reportable operating segments.
| ● | Chemicals—Our Chemicals Segment is operated through our majority control of Kronos. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments (“TiO 2”). TiO 2 is used to impart whiteness, brightness, opacity and durability to a wide variety of products, including paints, plastics, paper, fibers and ceramics. Additionally, TiO 2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, foods and cosmetics. See Note 7.
| ● | Component Products—We operate in the component products industry through our majority control of CompX. CompX is a leading manufacturer of security products used in the recreational transportation, postal, office and institutional furniture, tool storage, healthcare and a variety of other industries. CompX is also a leading manufacturer of stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems, trim tabs and related hardware and accessories for the recreational marine industry. All CompX production facilities are in the United States.
| ● | Real Estate Management and Development—We operate in real estate management and development through our majority control of BMI and LandWell. BMI provides utility services to certain industrial and municipal customers and owns real property in Henderson, Nevada. LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada.
We evaluate segment performance based on segment operating income, which we define as income before income taxes and interest expense, exclusive of certain non-recurring items (such as gains or losses on disposition of business units and other long-lived assets outside the ordinary course of business and certain legal settlements) and certain general corporate income and expense items (including securities transactions gains and losses and interest and dividend income), which are not attributable to the operations of the reportable operating segments. The accounting policies of our reportable operating segments are the same as those described in Note 1. Segment results we report may differ from amounts separately reported by our various subsidiaries and affiliates due to purchase accounting adjustments and related amortization or differences in how we define operating income. Intersegment sales are not material. Interest income included in the calculation of segment operating income is not material in 2018, 2019 or 2020. Capital expenditures include additions to property and equipment. Depreciation and amortization related to each reportable operating segment includes amortization of any intangible assets attributable to the segment. Amortization of deferred financing costs and any premium or discount associated with the issuance of indebtedness is included in interest expense. Segment assets are comprised of all assets attributable to each reportable operating segment, including goodwill and other intangible assets. Our investment in the TiO2 manufacturing joint venture (see Note 7) is included in the Chemicals Segment’s assets. Corporate assets are not attributable to any operating segment and consist principally of cash and cash equivalents, restricted cash and restricted cash equivalents and marketable securities.
| Years ended December 31, |
| 2018 |  |  | 2019 |  |  | 2020 |
| (In millions) |
Net sales: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 1,661.9 |  |  | $ | 1,731.2 |  |  | $ | 1,638.8 |
Component products |  | 118.2 |  |  |  | 124.2 |  |  |  | 114.5 |
Real estate management and development |  | 40.0 |  |  |  | 42.1 |  |  |  | 96.4 |
Total net sales | $ | 1,820.1 |  |  | $ | 1,897.5 |  |  | $ | 1,849.7 |
Cost of sales: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 1,101.7 |  |  | $ | 1,346.8 |  |  | $ | 1,291.0 |
Component products |  | 79.9 |  |  |  | 85.3 |  |  |  | 81.7 |
Real estate management and development |  | 29.3 |  |  |  | 30.8 |  |  |  | 64.9 |
Total cost of sales | $ | 1,210.9 |  |  | $ | 1,462.9 |  |  | $ | 1,437.6 |
Gross margin: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 560.2 |  |  | $ | 384.4 |  |  | $ | 347.8 |
Component products |  | 38.3 |  |  |  | 38.9 |  |  |  | 32.8 |
Real estate management and development |  | 10.7 |  |  |  | 11.3 |  |  |  | 31.5 |
Total gross margin | $ | 609.2 |  |  | $ | 434.6 |  |  | $ | 412.1 |
Operating income: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 342.9 |  |  | $ | 160.1 |  |  | $ | 126.5 |
Component products |  | 17.8 |  |  |  | 17.8 |  |  |  | 11.8 |
Real estate management and development |  | 10.0 |  |  |  | 14.8 |  |  |  | 47.8 |
Total operating income |  | 370.7 |  |  |  | 192.7 |  |  |  | 186.1 |
General corporate items: |  |  |  |  |  |  |  |  |  |  |
Securities earnings |  | 38.5 |  |  |  | 11.2 |  |  |  | 4.7 |
Insurance recoveries |  | 1.3 |  |  |  | 7.7 |  |  |  | 1.6 |
Gain on land sales |  | 12.5 |  |  |  | 4.4 |  |  |  | .5 |
Gain on sale of business |  | - |  |  |  | 3.0 |  |  |  | - |
Other components of net periodic pension and OPEB expense |  | (14.5 | ) |  |  | (16.5 | ) |  |  | (20.1 | )
Litigation settlement expense, net |  | (62.0 | ) |  |  | (19.3 | ) |  |  | - |
Changes in market value of Valhi common stock held by subsidiaries |  | (12.2 | ) |  |  | (.2 | ) |  |  | (1.7 | )
General expenses, net |  | (42.4 | ) |  |  | (37.5 | ) |  |  | (34.3 | )
Interest expense |  | (55.7 | ) |  |  | (40.8 | ) |  |  | (36.2 | )
Income from continuing operations before income taxes | $ | 236.2 |  |  | $ | 104.7 |  |  | $ | 100.6 |
Infrastructure reimbursements and land related income is included in the determination of Real Estate Management and Development operating income. See Notes 7 and 13.
| Years ended December 31, |
| 2018 |  |  | 2019 |  |  | 2020 |
| (In millions) |
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 52.0 |  |  | $ | 50.2 |  |  | $ | 61.9 |
Component products |  | 3.5 |  |  |  | 3.7 |  |  |  | 3.8 |
Real estate management and development |  | 2.9 |  |  |  | 2.9 |  |  |  | 2.8 |
Total | $ | 58.4 |  |  | $ | 56.8 |  |  | $ | 68.5 |
Capital expenditures: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 56.3 |  |  | $ | 55.1 |  |  | $ | 62.8 |
Component products |  | 3.1 |  |  |  | 3.2 |  |  |  | 1.7 |
Waste management(1) |  | .1 |  |  |  | - |  |  |  | - |
Real estate management and development |  | 1.9 |  |  |  | 1.6 |  |  |  | 1.0 |
Total | $ | 61.4 |  |  | $ | 59.9 |  |  | $ | 65.5 |
| December 31, |
| 2018 |  |  | 2019 |  |  | 2020 |
| (In millions) |
Total assets: |  |  |  |  |  |  |  |  |  |  |
Operating segments: |  |  |  |  |  |  |  |  |  |  |
Chemicals | $ | 2,266.6 |  |  | $ | 2,331.8 |  |  | $ | 2,400.7 |
Component products |  | 120.4 |  |  |  | 132.5 |  |  |  | 138.0 |
Real estate management and development |  | 218.5 |  |  |  | 191.6 |  |  |  | 171.3 |
Corporate and eliminations |  | 104.1 |  |  |  | 138.5 |  |  |  | 179.3 |
Total | $ | 2,709.6 |  |  | $ | 2,794.4 |  |  | $ | 2,889.3 |
(1)Denotes discontinued operations Geographic information. We attribute net sales to the place of manufacture (point-of-origin) and the location of the customer (point-of-destination); we attribute property and equipment to their physical location. At December 31, 2020 the net assets of our non-U.S. subsidiaries included in consolidated net assets approximated $565 million (in 2019 the total was $563 million).
| Years ended December 31, |
| 2018 |  |  | 2019 |  |  | 2020 |
| (In millions) |
Net sales - point of origin: |  |  |  |  |  |  |  |  |  |  |
United States | $ | 997.6 |  |  | $ | 1,164.8 |  |  | $ | 1,189.8 |
Germany |  | 886.1 |  |  |  | 883.6 |  |  |  | 836.0 |
Canada |  | 307.2 |  |  |  | 328.7 |  |  |  | 319.5 |
Belgium |  | 272.2 |  |  |  | 270.7 |  |  |  | 249.5 |
Norway |  | 209.6 |  |  |  | 192.2 |  |  |  | 211.8 |
Eliminations |  | (852.6 | ) |  |  | (942.5 | ) |  |  | (956.9 | )
Total | $ | 1,820.1 |  |  | $ | 1,897.5 |  |  | $ | 1,849.7 |
Net sales - point of destination: |  |  |  |  |  |  |  |  |  |  |
North America | $ | 698.7 |  |  | $ | 740.1 |  |  | $ | 778.2 |
Europe |  | 817.6 |  |  |  | 824.2 |  |  |  | 783.8 |
Asia and other |  | 303.8 |  |  |  | 333.2 |  |  |  | 287.7 |
Total | $ | 1,820.1 |  |  | $ | 1,897.5 |  |  | $ | 1,849.7 |
| December 31, |
| 2018 |  |  | 2019 |  |  | 2020 |
| (In millions) |
Net property and equipment: |  |  |  |  |  |  |  |  |  |  |
United States | $ | 74.5 |  |  | $ | 72.0 |  |  | $ | 67.8 |
Germany |  | 245.8 |  |  |  | 233.6 |  |  |  | 237.5 |
Canada |  | 66.1 |  |  |  | 73.1 |  |  |  | 88.6 |
Norway |  | 81.0 |  |  |  | 87.9 |  |  |  | 88.1 |
Belgium |  | 96.1 |  |  |  | 96.4 |  |  |  | 108.4 |
Total | $ | 563.5 |  |  | $ | 563.0 |  |  | $ | 590.4 |

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