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Business and geographic segments | 12 Months Ended
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Dec. 31, 2023
Business and geographic segments |
Business and geographic segments | Note 2 – Business and geographic segments: ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | % controlled at |
Business segment | ​ | Entity | ​ | December 31, 2023 |
Chemicals |  | Kronos |  | 81% | ​
Component products |  | CompX |  | 87% | ​
Real estate management and development |  | BMI and LandWell |  | 63% - 77% | ​
​ Our control of Kronos includes 50% we hold directly and 31% 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. 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 (TiO2). TiO2 is used to impart whiteness, brightness, opacity and durability to a wide variety of products, including paints, plastics, paper, fibers and ceramics. Additionally, TiO2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals. 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 postal, recreational transportation, office and institutional furniture, cabinetry, tool storage, healthcare and a variety of other industries. CompX is also a leading manufacturer of wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, 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 and LandWell own real property in Henderson, Nevada. LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada. BMI previously, through wholly-owned subsidiaries, also was responsible for the delivery of water to the City of Henderson and various other users through September 2022, and provided utility services to certain industrial customers prior to December 2023.
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 significant in 2021, 2022 or 2023. 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,
​ |  | 2021 |  | 2022 |  | 2023
​ | ​ | (In millions)
Net sales: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Chemicals | ​ | $ | 1,939.4 | ​ | $ | 1,930.2 | ​ | $ | 1,666.5
Component products | ​ |  | 140.8 | ​ |  | 166.6 | ​ |  | 161.3
Real estate management and development | ​ |  | 216.2 | ​ |  | 125.7 | ​ |  | 93.9
Total net sales | ​ | $ | 2,296.4 | ​ | $ | 2,222.5 | ​ | $ | 1,921.7
Cost of sales: | ​ |  |  | ​ |  |  | ​ |  |
Chemicals | ​ | $ | 1,494.5 | ​ | $ | 1,540.2 | ​ | $ | 1,502.7
Component products | ​ |  | 98.1 | ​ |  | 117.8 | ​ |  | 112.1
Real estate management and development | ​ |  | 123.6 | ​ |  | 74.1 | ​ |  | 61.7
Total cost of sales | ​ | $ | 1,716.2 | ​ | $ | 1,732.1 | ​ | $ | 1,676.5
Gross margin: | ​ |  |  | ​ |  |  | ​ |  |
Chemicals | ​ | $ | 444.9 | ​ | $ | 390.0 | ​ | $ | 163.8
Component products | ​ |  | 42.7 | ​ |  | 48.8 | ​ |  | 49.2
Real estate management and development | ​ |  | 92.6 | ​ |  | 51.6 | ​ |  | 32.2
Total gross margin | ​ | $ | 580.2 | ​ | $ | 490.4 | ​ | $ | 245.2
Operating income (loss): | ​ |  |  | ​ |  |  | ​ |  |
Chemicals | ​ | $ | 200.8 | ​ | $ | 174.6 | ​ | $ | (41.1)
Component products | ​ |  | 20.5 | ​ |  | 25.4 | ​ |  | 25.4
Real estate management and development | ​ |  | 97.3 | ​ |  | 39.4 | ​ |  | 49.9
Total operating income | ​ |  | 318.6 | ​ |  | 239.4 | ​ |  | 34.2
General corporate items: | ​ |  |  | ​ |  |  | ​ |  |
Interest income and other | ​ | ​ | 4.0 | ​ | ​ | 10.4 | ​ | ​ | 21.3
Gain on land sales | ​ | ​ | 16.0 | ​ | ​ | — | ​ | ​ | 1.5
Other components of net periodic pension and OPEB expense | ​ |  | (17.0) | ​ |  | (13.9) | ​ |  | (11.8)
Changes in market value of Valhi common stock held by subsidiaries | ​ |  | 3.3 | ​ |  | (1.6) | ​ |  | (1.7)
General expenses, net | ​ |  | (34.6) | ​ |  | (36.5) | ​ |  | (34.7)
Interest expense | ​ |  | (32.5) | ​ |  | (27.9) | ​ |  | (28.3)
Income (loss) before income taxes | ​ | $ | 257.8 | ​ | $ | 169.9 | ​ | $ | (19.5)
​ Included in the determination of Chemicals operating income is restructuring costs related to workforce reductions of $5.8 million (see Note 20) and a fixed asset impairment related to the write-off of certain costs resulting from a capital project termination of $3.8 million, both recognized in the fourth quarter of 2023. Also included in the determination of Chemicals operating income are business interruption insurance settlement gains of $2.7 million recognized in the third quarter of 2022 and an aggregate $2.5 million recognized in the first, second and third quarters of 2023. See Note 13. Infrastructure reimbursements and land related income is included in the determination of Real Estate Management and Development operating income. See Notes 7 and 13. ​ Prior to BWC’s bankruptcy filing on September 10, 2022, BMI was responsible for the delivery of water to the City of Henderson and various other users under long-term contracts through a water delivery system owned and operated by BWC. BWC’s water delivery system operated on Lake Mead in Nevada. Due to the Western drought, water levels in Lake Mead have been declining for much of the last twenty years. As a result of water release curtailments upstream of Lake Mead which began late in the second quarter of 2022, Lake Mead water levels dropped precipitously to historically low levels. On June 30, 2022 BWC was no longer able to pump water without the risk of damaging the system and consequently ceased operations at its water intake facility to best preserve the system. We considered BWC’s inability to pump water from Lake Mead to be a triggering event under ASC 360 Property, Plant, and Equipment, which caused us to evaluate the water system fixed assets for impairment. Because BWC was unable to deliver water under its current contracts and therefore unable to generate revenue, we determined the water system’s assets were fully impaired except to the extent certain equipment had alternative use outside of BWC’s operations, in which case those assets were written down to estimated salvage value. The $16.4 million impairment charge primarily recognized in the second quarter of 2022 represented the write down of the book value to the estimated salvage value of the assets. Without the ability to pump and deliver water to its customers, BWC’s operating expenses exceeded its revenues, and on September 10, 2022 BWC and its subsidiaries voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Nevada. Because BWC filed for bankruptcy protection, we and BMI could no longer affirmatively assert we control BWC and, as such, in accordance with ASC 810, Consolidation, we deconsolidated BWC as of the date of the bankruptcy filing and recognized a loss of $2.0 million in the third quarter of 2022 on the deconsolidation. In addition, BMI had an outstanding intercompany accounts receivable balance with BWC on the date of the bankruptcy filing, and we recognized $1.3 million of bad debt expense to fully reserve this balance during the third quarter of 2022. All of these charges are included in the determination of the Real Estate Management and Development’s operating income in 2022. Operating income comparisons between 2023, 2022 and 2021 are also affected by BWC’s water delivery sales and related cost of sales. See Note 3. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years ended December 31,
​ |  | 2021 |  | 2022 | ​ | 2023
​ | ​ | (In millions)
Depreciation and amortization: |  | ​ |  |  | ​ |  |  | ​ |
Chemicals | ​ | $ | 52.8 | ​ | $ | 53.1 | ​ | $ | 49.9
Component products | ​ |  | 3.8 | ​ |  | 4.0 | ​ |  | 4.0
Real estate management and development | ​ |  | 2.7 | ​ |  | 1.4 | ​ |  | .2
Total | ​ | $ | 59.3 | ​ | $ | 58.5 | ​ | $ | 54.1
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Capital expenditures: | ​ |  |  | ​ |  |  | ​ |  |
Chemicals | ​ | $ | 58.6 | ​ | $ | 63.2 | ​ | $ | 47.4
Component products | ​ |  | 4.1 | ​ |  | 3.7 | ​ |  | 1.1
Real estate management and development | ​ |  | 1.4 | ​ |  | .7 | ​ |  | —
Total | ​ | $ | 64.1 | ​ | $ | 67.6 | ​ | $ | 48.5
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
​ |  | 2021 |  | 2022 |  | 2023
​ | ​ | (In millions)
Total assets: |  | ​ |  |  | ​ |  |  | ​ |
Operating segments: |  | ​ |  |  | ​ |  |  | ​ |
Chemicals | ​ | $ | 2,373.1 | ​ | $ | 2,293.5 | ​ | $ | 2,196.8
Component products | ​ |  | 146.4 | ​ |  | 131.3 | ​ |  | 141.5
Real estate management and development | ​ |  | 259.3 | ​ |  | 219.2 | ​ |  | 200.9
Corporate and eliminations | ​ |  | 226.4 | ​ |  | 191.7 | ​ |  | 197.8
Total | ​ | $ | 3,005.2 | ​ | $ | 2,835.7 | ​ | $ | 2,737.0
​ 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, 2022 and 2023 the net assets of our non-U.S. subsidiaries included in consolidated net assets approximated $699 million and $653 million, respectively. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years ended December 31,
​ |  | 2021 |  | 2022 |  | 2023
​ | ​ | (In millions)
Net sales - point of origin: |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 1,409.1 | ​ | $ | 1,518.9 | ​ | $ | 1,284.4
Germany | ​ |  | 971.7 | ​ |  | 895.4 | ​ |  | 726.4
Canada | ​ |  | 371.9 | ​ |  | 389.4 | ​ |  | 351.0
Norway | ​ |  | 257.2 | ​ |  | 273.5 | ​ |  | 252.1
Belgium | ​ |  | 295.7 | ​ |  | 306.5 | ​ |  | 217.1
Eliminations | ​ |  | (1,009.2) | ​ |  | (1,161.2) | ​ |  | (909.3)
Total | ​ | $ | 2,296.4 | ​ | $ | 2,222.5 | ​ | $ | 1,921.7
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net sales - point of destination: | ​ |  |  | ​ |  |  | ​ |  |
North America | ​ | $ | 999.7 | ​ | $ | 985.4 | ​ | $ | 871.0
Europe | ​ |  | 945.7 | ​ |  | 879.0 | ​ |  | 738.5
Other | ​ |  | 351.0 | ​ |  | 358.1 | ​ |  | 312.2
Total | ​ | $ | 2,296.4 | ​ | $ | 2,222.5 | ​ | $ | 1,921.7
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
​ |  | 2021 |  | 2022 |  | 2023
​ |  | (In millions)
Net property and equipment: |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 63.6 | ​ | $ | 45.8 | ​ | $ | 40.0
Germany | ​ |  | 214.8 | ​ |  | 204.7 | ​ |  | 213.0
Belgium | ​ |  | 107.7 | ​ |  | 101.4 | ​ |  | 98.5
Norway | ​ |  | 86.4 | ​ |  | 83.6 | ​ |  | 83.5
Canada | ​ |  | 91.1 | ​ |  | 88.3 | ​ |  | 82.3
Total | ​ | $ | 563.6 | ​ | $ | 523.8 | ​ | $ | 517.3
​

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