VALHI REPORTS HIGHER THIRD QUARTER EARNINGS DALLAS, TEXAS . . . October 23, 1995 . . . Valhi, Inc. (NYSE: VHI) reported net income of $13.7 million, or $.12 per share, for the third quarter of 1995, up from $4.6 million, or $.04 per share, in 1994. Net income for the first nine months of 1995 was $43.5 million, or $.38 per share, up from $6.9 million, or $.06 per share, in the first nine months of 1994. Operating income of $62.2 million in the third quarter of 1995 was up 29% on an 8% increase in sales to $494 million (% comparisons to 1994 pro forma results). Year-to-date operating income increased 46% to $196 million as sales increased 14% to $1.5 billion. Overall operating income margins were 13% in the first nine months of 1995 compared to 10% in 1994 as chemicals improvements more than offset other declines. The Company's improved sales and earnings were driven by higher titanium dioxide pigments ("TiO2") prices at NL Industries. Average TiO2 selling prices for the quarter were up 18% from the 1994 period and were 2% higher than in the second quarter of this year. TiO2 shipments in the third quarter of 1995 were 6% below third quarter 1994 volume, and year-to-date volume was slightly lower than last year. Economies worldwide have continued to grow in 1995, but at a slower pace than last year, which factors contributed to the somewhat lower TiO2 sales volume in 1995 compared to 1994. Higher refined sugar production costs, due partly to adverse weather conditions, for the crop year ended September 30, 1995 more than offset slightly higher selling prices and higher volumes. Average selling prices for medium density fiberboard ("MDF") during the quarter were up 4% from the 1994 period but were down 7% from the second quarter of this year. Increases in industry capacity, particularly in Europe, and slower economic growth in North America and Europe are contributing to lower MDF selling prices and operating rates. General corporate expenses were lower than 1994 pro forma due to reduced environmental remediation costs. Valhi, Inc. is a major producer of TiO2, refined sugar, MDF and other products. * * * * * VALHI, INC. AND SUBSIDIARIES SUMMARY OF CONTINUING OPERATIONS (Unaudited) Three months ended September 30, 1994 and 1995 (In millions, except earnings per share) 1994 1995 ================== Actual Pro forma* Actual -------- ------------------ Net sales Chemicals $ - $225.2 $255.4 Refined sugar 137.4 137.4 144.0 Building products 49.6 49.6 46.2 Other 45.6 45.6 48.9 ------ ------ ------ $232.6 $457.8 $494.5 ====== ====== ====== Operating income Chemicals $ - $ 22.1 $ 45.2 Refined sugar 8.5 8.5 6.0 Building products 10.8 10.8 4.5 Other 6.8 6.8 6.5 ------ ------ ------ Total operating income 26.1 48.2 62.2 Equity in NL Industries prior to consolidation (5.5) - - General corporate items, net (1.8) (10.4) (5.9) Interest expense (8.2) (29.2) (30.8) ------ ------ ------ Income before income taxes 10.6 8.6 25.5 Income taxes 3.3 3.1 12.0 Minority interest - .1 (.2) ------ ------ ------ Income from continuing $ 7.3 $ 5.4 $ 13.7 ------ ------ ------ operations Earnings per common share $.06 $.05 $.12 ==== ==== ==== [FN] * Pro forma 1994 results assume NL Industries (the Company's chemicals subsidiary) was consolidated during the 1994 period. VALHI, INC. AND SUBSIDIARIES SUMMARY OF CONTINUING OPERATIONS (CONTINUED) (Unaudited) Nine months ended September 30, 1994 and 1995 (In millions, except earnings per share) 1994 1995 ================== Actual Pro forma* Actual -------- ---------- -------- Net sales Chemicals $ - $ 664.2 $ 789.7 Refined sugar 353.9 353.9 387.8 Building products 143.0 143.0 154.2 Other 135.4 135.4 143.9 ------ -------- -------- $632.3 $1,296.5 $1,475.6 ====== ======== ======== Operating income Chemicals $ - $ 61.2 $ 134.2 Refined sugar 25.0 25.0 18.7 Building products 27.5 27.5 23.1 Other 20.8 20.8 20.0 ------ -------- -------- Total operating income 73.3 134.5 196.0 Equity in NL Industries prior to consolidation (23.5) - - General corporate items, net (6.7) (32.9) (16.3) Interest expense (26.0) (89.1) (96.0) ------ -------- -------- Income before income taxes 17.1 12.5 83.7 Income taxes 5.6 9.6 39.9 Minority interest - .6 .3 ------ -------- -------- Income from continuing $ 11.5 $ 2.3 $ 43.5 ------ -------- -------- operations Earnings per common share $.10 $.02 $.38 ==== ==== ==== [FN] * Pro forma 1994 results assume NL Industries (the Company's chemicals subsidiary) was consolidated during the 1994 period. VALHI, INC. AND SUBSIDIARIES SUMMARY OF OPERATIONS (Unaudited) (In millions, except earnings per share) Three months Nine months ended ended September 30, September 30, ---------------- --------------- 1994* 1995 1994* 1995 ---- ---- ---- ---- Net sales $232.6 $494.5 $632.3 $1,475.6 ====== ====== ====== ======== Operating income $ 26.1 $62.2 $ 73.3 $ 196.0 General corporate items, (1.8) (5.9) (6.7) (16.3) net Interest expense (8.2) (30.8) (26.0) (96.0) ------ ------ ------ -------- 16.1 25.5 40.6 83.7 Equity in NL Industries prior to (5.5) - (23.5) - ------ ------ ------ -------- consolidation (*) Income before income 10.6 25.5 17.1 83.7 taxes Income taxes 3.3 12.0 5.6 39.9 Minority interest - (.2) - .3 ------ ------ ------ -------- Income from continuing operations 7.3 13.7 11.5 43.5 Discontinued operations (2.7) - (4.6) - ------ ------ ------ -------- Net income $ 4.6 $ 13.7 $ 6.9 $ 43.5 ====== ====== ====== ======== Earnings per common share: Continuing operations $ .06 $.12 $ .10 $.38 Discontinued operations (.02) - (.04) - ----- ---- ----- ---- Net income $ .04 $.12 $ .06 $.38 ===== ==== ===== ==== Weighted average common shares 114.3 114.4 114.3 114.4 ----- ----- ----- ----- outstanding [FN] * NL Industries' chemicals operations, consolidated in 1995, were reported by the equity method in 1994.