NLI Holdings Inc (NL) 2003 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Kronos International first quarter earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session with instructions given to you at that time. If you should require assistance during this call, please press zero, then star.

女士們、先生們，感謝你們的耐心等待。歡迎參加Kronos International第一季財報電話會議。目前所有參與者均處於唯讀模式。稍後我們將進行問答環節，屆時將向您提供相關說明。通話過程中如需協助，請按0，然後按星號。

As a reminder, this conference will be recorded. I would now like to turn the conference over to our host, Lawrence Wigdor. Go ahead.

再次提醒，本次會議將進行錄影。現在我謹將會議交給我們的主持人勞倫斯·威格多爾。前進。

Hello, I would like to thank you for joining us. This is Kronos International's first quarter earnings conference call. I'm Larry Wigdor, the CEO. With me are the key management team of Kronos International, Henry Basson, president of sales and marketing, Joe Moss, our worldwide marketing vice-president and Robert Hardy, our CFO.

您好，感謝您的參與。這是 Kronos International 的第一季財報電話會議。我是執行長拉里·威格多。與我一同出席的還有 Kronos International 的主要管理團隊成員：銷售與行銷總裁 Henry Basson、全球行銷副總裁 Joe Moss 以及財務長 Robert Hardy。

Some of the statements we will make today will be forward-looking in nature. Such statements involve risks and uncertainties. Our SEC filings and press releases contain discussion of risks and uncertainties that may affect actual results. And actual results, as you are well aware, may be different from what we discuss today. In addition we will be including in our discussion today as we did in the press release measures of our financial performance and financial condition. Such as EBITDA, that are non-U.S. GAAP measures. Please refer to our press release for a reconciliation of these items to U.S. GAAP. I would like to inform our audience that the company filed its first annual report on form report on form 10-K for 2002 with the U.S. SEC. The 10-K can be found on NL's Web site. Click on investor relations and then click on SEC filings.

我們今天發表的一些聲明將具有前瞻性。此類聲明涉及風險和不確定性。我們向美國證券交易委員會提交的文件和新聞稿中包含對可能影響實際結果的風險和不確定性的討論。如您所知，實際結果可能與我們今天討論的內容有所不同。此外，正如我們在新聞稿中所做的那樣，我們將在今天的討論中納入有關我們財務表現和財務狀況的指標。例如非美國地區的 EBITDA。GAAP指標。有關這些項目與美國通用會計準則的核對，請參閱我們的新聞稿。我想告知各位聽眾，公司已向美國證券交易委員會提交了 2002 年第一份年度報告（10-K 表格）。10-K 比賽資訊可在 NL 網站上找到。點擊“投資者關係”，然後點擊“美國證券交易委員會文件”。

Let me start in reviewing our operating income and our overview of our performance with some information that is in today's earnings release. We reported net income in the first quarter of $15 million, which compares with $8 million in the first quarter of 2002. The operating income of $29 million was $15 million higher than the first quarter of 2002. First quarter 2003 operating income increased from the prior year period due to higher average selling prices and higher production volumes. First quarter 2003 operating income was $17 million or 146% higher than the fourth quarter of 2002, primarily due to higher sales and production volumes, higher than average selling prices and lower operating costs, particularly maintenance.

首先，讓我回顧一下我們的營業收入和績效概況，這些資訊都包含在今天的收益報告中。我們公佈第一季淨收入為 1500 萬美元，而 2002 年第一季為 800 萬美元。營業收入為 2,900 萬美元，比 2002 年第一季高出 1,500 萬美元。2003 年第一季營業收入較上年同期成長，主要原因是平均售價上漲和產量增加。2003 年第一季營業收入為 1,700 萬美元，比 2002 年第四季成長了 146%，主要原因是銷售和生產量增加、售價高於平均水準以及營運成本降低，特別是維護成本降低。

Our operating margin for the first quarter of 2003 was 16%, an improvement of 6 percentage points over the first quarter of 2002 and an improvement of 8 percentage points over fourth quarter 2002.

2003 年第一季度，我們的營業利潤率為 16%，比 2002 年第一季提高了 6 個百分點，比 2002 年第四季提高了 8 個百分點。

EBITDA of $37 million represented an increase of nearly $17 million compared with the first quarter of 2002. EBITDA in the first quarter of 2003 was computed using $8 million of depreciation. Compared with the fourth quarter of 2002, EBITDA was $18 million higher due to higher sales and production volumes and higher average selling prices.

EBITDA 為 3,700 萬美元，比 2002 年第一季增加了近 1,700 萬美元。2003 年第一季的 EBITDA 是使用 800 萬美元的折舊計算得出的。與 2002 年第四季相比，由於銷售額和產量增加以及平均售價上漲，EBITDA 增加了 1,800 萬美元。

Turning to prices excluding the effects of foreign currency fluctuations, KII's average selling price during the first quarter of 2003 was 9% higher than the first quarter of 2002, and 2% had higher than the fourth quarter of 2002. KII's average selling price in billing currencies during the first quarter of 2003 were higher in the European and export markets as compared with the first quarter of 2002. Average selling prices in March 2003 were comparable to the average for the first quarter of 2003. The company's first quarter 2003 average selling prices expressed in U.S. dollars computed using actual foreign currency exchange rates prevailing during respective periods was 27% higher than the first quarter of 2002 and was 8% higher than the fourth quarter of 2002. The average selling price expressed in U.S. dollars in March 2003 was comparable to the average selling price for the first quarter.

剔除外匯波動的影響，KII 2003 年第一季的平均售價比 2002 年第一季高出 9%，比 2002 年第四季高出 2%。2003 年第一季度，KII 在歐洲和出口市場的平均售價（以結算貨幣計價）高於 2002 年第一季。2003 年 3 月的平均售價與 2003 年第一季的平均售價相當。該公司 2003 年第一季以美元計價的平均售價，採用當時實際的外匯匯率計算得出，比 2002 年第一季高出 27%，比 2002 年第四季高出 8%。2003 年 3 月以美元計的平均售價與第一季的平均售價相當。

When comparing sales revenue generated in the first quarter of 2003 to the first quarter of 2002, the effects of principally a stronger Euro, Norwegian Crone and UK Pound Sterling increased our sales revenue by approximately $26 million or roughly two thirds of the increase. The impact on operating income, however, was not significant primarily due to the offset in increased local operating currency costs.

將 2003 年第一季的銷售收入與 2002 年第一季的銷售收入進行比較，主要受歐元、挪威克朗和英鎊走強的影響，使我們的銷售收入增加了約 2,600 萬美元，約佔總成長額的三分之二。然而，由於當地貨幣運營成本增加抵消了部分成本，因此對營業收入的影響並不顯著。

Sales volumes in the first quarter of 2003 of 79,500 metric tons were comparable to the first quarter of 2002. European volumes were slightly higher, while North American and export volumes were slightly lower compared with the first quarter of 2002. Compared with the fourth quarter of 2002, sales volumes were nearly 24% higher with double digit increases in all major markets. Volume levels -- let me caution for the second half of 2003 are dependant on future worldwide economic condition and which there lies a high degree of uncertain uncertainty.

2003 年第一季的銷售量為 79,500 公噸，與 2002 年第一季的銷售量相當。與 2002 年第一季相比，歐洲銷量略有上升，而北美和出口銷售略有下降。與 2002 年第四季相比，銷售量成長了近 24%，所有主要市場均實現了兩位數的成長。2003 年下半年的銷售水準－需要提醒的是，這取決於未來的全球經濟狀況，而這其中存在著高度的不確定性。

Regarding our planned operating rates we ran our plants at near full capacity to meet customer demand and produced an all time company quarterly record. We will continue to evaluate the various market indicators to keep an appropriate balance of inventory on hand to meet the needs of our customers. Our de-bottlenecking efforts have proven successful and we are comfortable in saying we annually have annual capacity of 319,000 metric tons at KII. The inventories during the quarter decreased 1,000 metric tons and now represent approximately one and a half months of sales.

就我們計劃的營運率而言，我們以接近滿載的產能運行工廠，以滿足客戶需求，並創造了公司有史以來的季度記錄。我們將繼續評估各種市場指標，以維持適當的庫存平衡，滿足客戶的需求。我們的消除瓶頸的努力已經取得了成功，我們可以自信地說，KII 的年產能為 319,000 公噸。本季庫存減少了1000公噸，目前約佔一個半月的銷售額。

Turning now to CAPEX, we continue to work hard at maintaining our plants safely and well maintained. We spent $6 million in the first quarter of 2003. Interest expense to third-parties in the first quarter of 2003 increased $7 million from the first quarter of 2002, primarily due to higher levels of outstanding third-party debt and associated currency effects on our non-U.S. dollar borrowings Interest expense to affiliates decreased $10 million from the first quarter of 2002 due to the repayment of loans from affiliates in June 2002 using proceeds from our Euro 285 million senior secured notes offering. Interest income from affiliates decreased $9 million from the comparable year period due to the redemption and extinguishment of all notes receivables from affiliates in July 2002.

現在來說說資本支出，我們將繼續努力確保工廠的安全和良好維護。我們在2003年第一季花了600萬美元。2003 年第一季對第三方的利息支出比 2002 年第一季增加了 700 萬美元，主要是由於未償還的第三方債務水平較高以及相關的匯率波動對我們非美元借款的影響。由於 2002 年 6 月使用 2.85 億歐元優先擔保票據發行所得款項償還了關聯公司的貸款，2003 年第一季對關聯公司的利息支出比 2002 年第一季度減少了 1,000 萬美元。由於 2002 年 7 月贖回並註銷了所有來自關聯公司的應收票據，關聯公司利息收入比上年同期減少了 900 萬美元。

Cash flow from operations in the first quarter used $10 million in cash primarily due to timing and collection of customer receivables and payments made to suppliers and vendors. Free cash flow in the first quarter of 2003 was a negative $16 million. The company did not make any cash dividend distributions to its parents during the first quarter of 2003. At March 31, the company had approximately $48 million available for payment of dividends and other restricted payments defined in our Euro bond indenture.

第一季經營活動產生的現金流使用了 1,000 萬美元現金，主要原因是客戶應收帳款的收款時間和向供應商和廠商支付的款項。2003 年第一季的自由現金流為負 1,600 萬美元。該公司在 2003 年第一季沒有向其母公司派發任何現金股利。截至 3 月 31 日，公司約有 4,800 萬美元可用於支付股息和我們歐元債券契約中規定的其他受限款項。

The company's credit statistics remain strong and are improving. At the end of March our EBITDA to interest ratio was nearly five times, while total debt to EBITDA ratio was two and a half times on a trailing 12 months basis, EBITDA to interest was over three times and total debt to EBITDA was almost three and a half times.

該公司信用狀況依然良好，並且還在不斷改善。截至 3 月底，我們的 EBITDA 與利息比率接近 5 倍，而過去 12 個月的總負債與 EBITDA 比率為 2.5 倍，EBITDA 與利息比率超過 3 倍，總負債與 EBITDA 比率接近 3.5 倍。

Cash and restricted cash at the end of the quarter was $18 million comparable to our cash levels at December 31. At March 31, our outstanding indebtedness was Euro or Euro-equivalent 326 million or $350 U.S. million. Compared with December 31, our debt balances increased by approximately 15 million Euros or equivalent Euros. The increase in debt was primarily attributable to additional borrowings under the European revolving credit facility of 15 million Euros or $16 million using March 31 exchange rates. In April 2003 the company repaid 80 million Norwegian Crone or about $11 million U.S. using April exchange rates under the European revolving facility. After the pay down the average interest on the revolver decreased over 100 basis points and is currently around 4.4%.

截至季末，現金及受限現金為 1,800 萬美元，與 12 月 31 日的現金水準相當。截至 3 月 31 日，我們的未償債務為 3.26 億歐元或等值歐元，即 3.5 億美元。與 12 月 31 日相比，我們的債務餘額增加了約 1500 萬歐元或等值歐元。債務增加主要是因為根據歐洲循環信貸安排額外借款 1,500 萬歐元（以 3 月 31 日匯率計算為 1,600 萬美元）。2003 年 4 月，該公司根據歐洲循環信貸安排，以 4 月的匯率償還了 8,000 萬挪威克朗，約 1,100 萬美元。還款後，循環貸款的平均利率下降了 100 多個基點，目前約為 4.4%。

At the end of April 2003, our availability under the revolver was approximately Euro or Euro equivalent 48 million or approximately 53 -- 48 million Euros or approximately $53 U.S..

截至 2003 年 4 月底，我們在循環信貸項下的可用資金約為 4,800 萬歐元或約 5,300 萬美元。

Turning to the equity section of the balance sheet as of March 31, common stockholders' equity was $90 million up $13 million from December 31. The increase is primarily due to net income of $15 million offset by currency translation adjustments of $2 million.

截至 3 月 31 日，資產負債表權益部分顯示，普通股股東權益為 9,000 萬美元，比 12 月 31 日增加了 1,300 萬美元。成長主要歸因於淨收入增加 1500 萬美元，但被 200 萬美元的貨幣換算調整所抵消。

Regarding our outlook for 2003, for the most part we will not give forward-looking statements, but we do currently expect our 2003 sales volumes to approximate full year 2002 levels, with higher overall average selling prices in 2003 compared to 2002.

關於我們對 2003 年的展望，我們基本上不會發表前瞻性聲明，但我們目前預計 2003 年的銷售量將接近 2002 年全年的水平，並且 2003 年的總體平均售價將高於 2002 年。

EBITDA and operating income are forecasted to be above 2003. We remain cautious about the outlook for the second half of 2003 as the remains a high degree of uncertainty concerning worldwide economic conditions. We are strongly motivated to manage what is in our control and we will diligently work to continue our program of cost reduction and enhanced operating efficiency.

預計 EBITDA 和營業收入將高於 2003 年。鑑於全球經濟情勢仍存在高度不確定性，我們對 2003 年下半年的前景仍持謹慎態度。我們積極主動地管理好我們能夠控制的事項，並將努力繼續推進我們的成本削減和營運效率提升計劃。

That concludes my comments. And I would like to now open this conference call to any questions that you may have.

我的發言到此結束。現在我想開放本次電話會議，回答大家可能提出的任何問題。

Ladies and gentlemen, if you wish to ask a question, please press the one on your touchtone phone. You will hear a tone indicating that you have been placed in queue. You may remove yourself from this queue at any time by pressing the pounds key. Once again if you have any questions, please press one at this time.

女士們、先生們，如果您有任何疑問，請按您按鍵式電話上的數字鍵。你會聽到提示音，表示你已進入排隊狀態。您可以隨時按井號鍵從佇列中移除自己。如果您還有任何疑問，請按 1。

We have one question today. It comes from the line of Lee Wang. Please go ahead.

今天我們有一個問題。它源自李王一脈。請繼續。

Could you comment on why your free cash flow is negative for the fourth quarter? There was strong --

能否解釋為什麼貴公司第四季的自由現金流為負？氣氛很濃——

Sure, Robert?

當然可以，羅伯特？

Regarding the first quarter of '03 cash flow, before changes in assets and liabilities it was positive $25 million. However, when you go to operating cash flow from a working capital perspective, what the company seasonally does is raw material purchases are built up in the fourth quarter and the first quarter as we build for the spring coating season. And as our receivables are collected, we typically have stronger cash flow in the second, third, and fourth quarters. The fourth quarter of '02, sales volume is typically lower for this industry. Therefore, we don't have significant receivable collections as compared to our inventory purchases. So when you compress or look at the working capital, it's typically a burn of cash in the first quarter and rebuild of cash in quarters two, three, four. From the revolver, we drew $16 in Q1 for working capital needs, and we paid back in April $11 million in U.S. terms against that revolver.

關於 2003 年第一季的現金流，在資產和負債改變之前，現金流為正 2,500 萬美元。但是，從營運資本的角度來看，公司在季節性方面會加大原物料採購力度，在第四季和第一季增加原物料採購，為春季塗裝旺季做準備。隨著應收帳款的收回，我們通常會在第二、第三和第四季獲得更強勁的現金流。2002 年第四季度，該行業的銷售額通常會較低。因此，與我們的庫存採購相比，我們的應收帳款回收額並不高。因此，當你壓縮或查看營運資本時，通常會發現第一季現金消耗殆盡，而第二、三、四季則需要重建現金。第一季度，我們從循環信貸額度中提取了 1,600 萬美元用於營運資金需求，並在 4 月以美國貨幣償還了該循環信貸額度的 1,100 萬美元。

Thank you.

謝謝。

Once again, if there are any questions, please press one on your touchtone phone. We have a question from the line of Katherine Laganza from Citigroup, please go ahead.

再次提醒，如有任何疑問，請按您的按鍵式電話上的1鍵。我們收到花旗集團的 Katherine Laganza 的提問，請開始。

Hi. Can you talk about the prospective of inventories at the customer level? I think that would be, that was the interest levels from NL 's call back end of last week, on Friday. I think it might have, if I'm correct, they were cautioning regarding the outlook for the rest of the year based on such strong record volumes and the sense that they could be, there could be a lot of inventory build up at the customer level.

你好。能談談客戶層面的庫存前景嗎？我認為那應該是，那是NL上週五回購時的興趣程度。我認為可能是這樣，如果我沒理解錯的話，他們正在根據如此強勁的創紀錄銷量對今年剩餘時間的展望發出警告，並認為可能會出現大量客戶庫存積壓的情況。

I would say the conclusion that you are making relative to inventory wasn't commented on at the NL conference because I made the comments, Katherine.

凱瑟琳，我想說，你在庫存方面得出的結論在荷蘭會議上沒有得到評論，是因為是我發表了評論。

In principle, we believe the producer inventories have been relatively stable, comparable periods. And in terms of customer inventory, it would be nice that we always knew the answer to that question because clearly we are not privy to it, but we do spend a lot of time trying to figure it out ourselves. We are obviously hoping to get our prices up because there are announcements out there and during that kind of environment, the customers normally would tend to try to have a little bit more inventory than a little bit less. Whether they have a little bit more rather than a little bit less, frankly, I don't know. And our cautiousness has nothing really to do with the anticipation that the customers might have more inventory than they should be should have, because we have no reason to believe that is the case. But our cautiousness really stems from everything going on in the world and some of the economic reports. And we are never clairvoyant to be able to look with a high degree of certainty and this year with the myriad of things going on, I think the prudent company is more cautious than rather than less cautious than in the past.

原則上，我們認為生產者庫存一直處於相對穩定的可比時期。至於客戶庫存，我們當然希望能夠一直知道這個問題的答案，因為顯然我們並不了解庫存情況，但我們確實花費了大量時間試圖自己弄清楚。我們顯然希望提價，因為目前市場已經發布了相關公告，在這種環境下，顧客通常會傾向於多儲備一些庫存，而不是少儲備一些。坦白說，我不知道他們是多擁有一點還是少擁有一點。我們的謹慎與預期客戶可能持有過多的庫存無關，因為我們沒有理由相信情況會如此。但我們的謹慎實際上源於世界各地正在發生的一切以及一些經濟報告。我們永遠不可能預知未來，也無法高度確定地看待事物。今年發生了許多事情，我認為謹慎的公司會比過去更謹慎，而不是更不謹慎。

With regard to inventory, you have one and a half months on hand at the moment. What would be the amount that you would ideally like? What is the average --

就庫存而言，你們目前手上有足夠一個半月的用量。您理想中的金額是多少？平均值是多少？

We have a lot of grades -- that's a good question. We have a lot of grades. We pride ourselves on being able to offer our customers a lot of different choices, which enables us perhaps more than some of the others to get into some niche sectors. When we get down to one and a half months, it's pretty tight for us. So that at one and a half months, that's at the low end of where we like our inventory to be. Although I think we continue to strive to improve our operations and hopefully some day one and a half months will be more normal operations. But one and a half is a little bit light.

我們有很多成績——這是一個很好的問題。我們有很多成績。我們引以為傲的是，我們能夠為客戶提供許多不同的選擇，這使我們能夠比其他一些公司更容易進入一些細分領域。如果只剩下一個半月的時間，對我們來說就非常緊張了。所以，一個半月的庫存量，是我們希望庫存量達到的最低水準。儘管我認為我們仍在努力改進運營，希望一個半月後運營能恢復正常。但是一個半有點少。

Okay. Finally, with regard to guidance for 2003, are you guiding us that sales will be roughly flat from your 2002 level?

好的。最後，關於 2003 年的業績指引，您是否預期銷售額將與 2002 年的水準大致持平？

Yes, I think they are going to be reasonably comparable. Hopefully some others who have forecasted a stronger growth in the [TiO2] industry moved proved to be more correct than our current beliefs.

是的，我認為它們之間會有相當的可比性。希望其他一些預測[TiO2]行業將出現更強勁增長的人的預測比我們目前的看法更正確。

Great, thank you.

太好了，謝謝。

And at this time we don't have any other questions.

目前我們沒有其他問題。

I would like to thank you. If you, Joseph, can give them instructions for those who want to call in, I would appreciate it. The conference call is therefore finished, except for the comments Joseph is going to make. Thank you again for joining us. By now.

我想謝謝你。約瑟夫，如果你能給那些想打電話進來的人一些指示，我將不勝感激。因此，電話會議已經結束，只剩下約瑟夫要發表的評論。再次感謝您的參與。到現在為止。

Ladies and gentlemen, if you wish to join the replay, the replay starts today at 12:00 o'clock noon and ends midnight on May 13. You can dial 1-800-475-6701, international parties can dial 320-365-3844. And you must put in an access code. Your access code for this call today is 682424. This does conclude our conference for today. Thank you for your participation. Thanks for using AT&T.

女士們先生們，如果您想觀看重播，重播將於今天中午 12 點開始，一直持續到 5 月 13 日午夜。您可以撥打 1-800-475-6701，國際用戶可撥打 320-365-3844。您必須輸入訪問碼。您今天通話的接入碼是 682424。今天的會議到此結束。感謝您的參與。感謝您使用AT&T服務。