VALHI REPORTS SECOND QUARTER 2016 RESULTS

DALLAS, TEXAS . . August 8, 2016. Valhi, Inc. (NYSE: VHI) reported a net loss attributable to Valhi stockholders of $8.5 million, or $.02 per diluted share, in the second quarter of 2016 compared to $103.9 million, or $.30 per diluted share, in the second quarter of 2015. For the first six months of 2016, Valhi reported a net loss attributable to Valhi stockholders of $28.0 million, or $.08 per diluted share, compared to $92.0 million, or $.27 per diluted share in the first six months of 2015. We reported a net loss attributable to Valhi stockholders in the 2015 periods primarily due to the recognition of a non-cash deferred income tax asset valuation allowance related to the Chemicals Segment's German and Belgian operations.

The Chemicals Segment's net sales of $356.0 million in the second quarter of 2016 were $4.2 million, or 1%, lower than in the second quarter of 2015. The Chemicals Segment's net sales of $674.5 million in the first six months of 2016 were $50.8 million, or 7%, lower than in the first six months of 2015. The Chemicals Segment's net sales decreased in 2016 primarily due to lower average TiO₂ selling prices, partially offset by higher sales volumes. The Chemicals Segment's average TiO₂ selling prices were 7% lower in the second quarter of 2016 as compared to the second quarter of 2015, and were 11% lower in the first six months of the year as compared to the same prior year period. The Chemicals Segment's average selling prices at the end of the second quarter of 2016 were 4% higher than at the end of the first quarter of 2016, and 2% higher than at the end of 2015, with higher prices in most major markets except Latin America. TiO₂sales volumes in the second quarter and first six months of 2016 were 7% and 6% higher, respectively, than in the same periods of 2015 due to higher sales in European, North American and export markets in 2016, partially offset by lower sales in Latin America. The Chemicals Segment's sales volumes in the second quarter and first six months of 2016 set an overall new record for a second quarter and first-six-month period. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, increasing net sales by approximately $5 million in the second quarter and decreasing net sales by approximately $6 million in the first six months of 2016. The table at the end of this press release shows how each of these items impacted the overall decrease in net sales.

The Chemicals Segment's operating income in the second quarter of 2016 was $12.7 million as compared to an operating loss of $7.9 million in the second quarter of 2015. For the year-to-date period, the Chemicals Segment's operating income was $15.7 million as compared to $26.1 million in the first six months of 2015. The Chemicals Segment's operating income (loss) in the 2015 periods includes an aggregate second quarter workforce reduction charge of $21.1 million ($10.6 million, or $.03 per diluted share, net of noncontrolling interest and income tax benefit). Excluding the impact of the 2015 workforce reduction charge, operating income decreased in the second quarter of 2016 primarily due to the net effects of lower average TiO₂selling prices, lower raw material and other production costs (including cost savings resulting from workforce reductions implemented in 2015), higher sales volumes and lower production volumes. Excluding the impact of the workforce reduction charge, the Chemicals Segment's operating income was $13.2 million and $47.2 million in the second quarter and first six months of 2015, respectively. The Chemicals Segment's TiO₂ production volumes were 7% lower in the second quarter, and 1% lower in the first six months of 2016 as compared to the same periods of 2015. The Chemicals Segment operated its production facilities at overall average capacity utilization rates of 96% in the first six months of 2016 (approximately 97% and 95% of practical capacity in the first and second quarters, respectively) compared to approximately 97% in the first six months of 2015 (93% and 100% in the first and second quarters of 2015, respectively). The Chemicals Segment's production rates in the first quarter of 2015 were impacted by the implementation of certain productivity-enhancing improvement projects at certain facilities, as well as necessary improvements to ensure continued compliance with our permit regulations, which resulted in longer-than-normal maintenance shutdowns in some instances. Fluctuations in currency exchange rates also affected segment profit comparisons, which increased segment profit by approximately $4 million in the second quarter and by approximately $11 million in the year-to-date period in 2016.

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The Component Products Segment's net sales decreased 6% in the second quarter and 5% in the first six months of 2016 as compared to the same periods in 2015. Net sales decreased primarily due to security products sales in the second quarter and first six months of 2015 to a single government security end user that, as expected, did not recur in during 2016. In the first six months of 2016 the decrease was partially offset by increased marine components sales primarily as a result of improved demand for products sold to the waterski/wakeboard boat markets. The Component Products Segment's operating income decreased from $4.3 million in the second quarter of 2015 to $3.7 million in the second quarter of 2016 and decreased from $8.0 million in the first six months of 2015 to $7.1 million in the first six months of 2016, primarily due to the sales decline within the security products reporting unit.

The Waste Management Segment's net sales increased $1.1 million in the second quarter of 2016 compared to the same period of 2015 but decreased $8.7 million in the first six months of 2016 compared to the same period in 2015. Disposal volumes for the second quarter and first six months of 2016 were negatively impacted by a general industry wide slowdown in shipments of waste for disposal, but such decline in disposal volumes was offset by an increase in transportation related revenue in the second quarter of 2016 as we seek to increase our logistical capabilities to better manage customer disposal shipments. In addition, we benefited from a one-time disposal campaign related to the decommissioning of a nuclear power plant which contributed $4.8 million of revenue in the first six months of 2015, primarily in the first quarter. Higher revenue in the second quarter of 2016 resulted in better coverage of fixed costs as compared to the same period of 2015, and the second quarter also benefited from lower selling, general and administrative expenses as we are actively taking measures to control costs, where possible. As a result, our Waste Management Segment had a lower operating loss in the second quarter of 2016 than the same period of 2015. Lower disposal volumes in the first six months of 2016 resulted in lower coverage of fixed costs as compared to the same period of 2015, somewhat offset by lower selling, general and administrative expenses noted above. As a result, our Waste Management Segment had a significantly higher operating loss in the first six months of 2016 than in the same period of 2015.

The Real Estate Management and Development Segment had second quarter 2016 sales of $4.4 million, including $2.2 million in revenue on sales of land held for development, compared to sales of $9.7 million in the second quarter of 2015, including $7.5 million in sales of land held for development. For the first six months of 2016 the Real Estate Management and Development Segment had sales of $7.1 million, including $3.2 million in revenue on sales of land held for development, compared to sales of $17.8 million in the first six months of 2015, including $13.4 million in sales of land held for development. The Real Estate Management and Development Segment had operating income in the second quarter of 2016 of $.5 million, a decline of $.9 million compared to operating income of $1.6 million in the 2015 period, consistent with the lower revenues. The Real Estate Management and Development Segment recognized an operating loss in the first six months of 2016 of $5.4 million compared to operating income of $1.4 million in the same period of 2015. Included in the 2016 year-to-date operating loss is a first quarter contract related intangible asset impairment charge of $5.1 million ($.01 per diluted share, net of noncontrolling interest and income tax benefit) resulting from an amendment to a water delivery contract entered into in January 2016. Because the land held for development acquired was initially recognized at the estimated fair value at December 31, 2013 in connection with the previously-reported acquisition of a controlling interest in this segment, the Company does not expect to recognize significant operating income on land sales during 2016.

Corporate expenses were 25% lower in the second quarter of 2016 as compared to the second quarter of 2015, primarily due to lower environmental remediation and related costs. Corporate expenses were 3% higher in the first six months of 2016 compared to the same period of 2015, as lower litigation and related expenses were offset by higher administrative and environmental and related costs. Interest expense increased to $15.8 million in the second quarter of 2016 from $14.5 million in the second quarter of 2015 and to $31.5 million in the first six months of 2016 from $29.1 million in the same period of 2015 primarily due to higher average debt balances outstanding and higher average interest rates during 2016 compared to the same periods of 2015.

The Company's income tax expense in the second quarter of 2015 includes a non-cash deferred income tax expense of $150.3 million ($.26 per diluted share net of noncontrolling interest) related to the recognition of a deferred income tax asset valuation allowance related to the Chemicals Segment's German and Belgian operations. The Company's income tax expense in the second quarter of 2016 includes an additional non-cash deferred income tax expense of $2.9 million related to the recognition of a deferred income tax asset valuation allowance related to the Chemicals Segment's German and Belgian operations. The Company's income tax expense in the first six months of 2015 includes a non-cash income tax benefit of $2.9 million ($.01 per diluted share) related to a net reduction in our reserve for uncertain tax positions, most of which was recognized in the first quarter of 2015.

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The statements in this press release relating to matters that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Although the Company believes the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those predicted. While it is not possible to identify all factors, the Company continues to face many risks and uncertainties. Among the factors that could cause our actual future results to differ materially include, but are not limited to, the following:

·	Future supply and demand for our products;

·	The extent of the dependence of certain of our businesses on certain market sectors;

·	The cyclicality of certain of our businesses (such as Kronos' TiO₂ operations);

·	Customer and producer inventory levels;

·	Unexpected or earlier-than-expected industry capacity expansion (such as the TiO₂ industry);

·	Changes in raw material and other operating costs (such as energy, ore, zinc and brass costs) and our ability to pass those costs on to our customers or offset them with reductions in other operating costs;

·	Changes in the availability of raw materials (such as ore);

·	General global economic and political conditions (such as changes in the level of gross domestic product in various regions of the world and the impact of such changes on demand for, among other things, TiO₂and component products);

·	Competitive products and prices and substitute products, including increased competition from low-cost manufacturing sources (such as China);

·	Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts;

·	Customer and competitor strategies;

·	Potential difficulties in integrating future acquisitions;

·	Potential difficulties in upgrading or implementing new accounting and manufacturing software systems;

·	Potential consolidation of our competitors;

·	Potential consolidation of our customers;

·	The impact of pricing and production decisions;

·	Competitive technology positions;

·	The introduction of trade barriers;

·	The ability of our subsidiaries to pay us dividends;

·	The impact of current or future government regulations (including employee healthcare benefit related regulations);

·	Uncertainties associated with new product development and the development of new product features;

Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S. dollar and each of the euro, the Norwegian krone and the Canadian dollar) or possible disruptions to our business resulting from potential instability resulting from uncertainties associated with the euro or other currencies;

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·	Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions and cyber attacks);

·	Decisions to sell operating assets other than in the ordinary course of business;

·	The timing and amounts of insurance recoveries;

·	Our ability to renew, amend, refinance or establish credit facilities;

·	Our ability to maintain sufficient liquidity;

·	The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters;

·	Our ultimate ability to utilize income tax attributes, the benefits of which may not presently have been recognized under the more-likely-than-not recognition criteria;

·	Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities, or new developments regarding environmental remediation at sites related to our former operations);

Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on former manufacturers of lead pigment and lead-based paint, including NL, with respect to asserted health concerns associated with the use of such products);

·	The ultimate resolution of pending litigation (such as NL's lead pigment litigation, environmental and other litigation and Kronos' class action litigation);

·	Our ability to comply with covenants contained in our revolving bank credit facilities;

·	Our ability to complete and comply with the conditions of our licenses and permits;

·	Our ability to successfully defend against any possible future challenge to WCS' operating licenses and permits;

·	Unexpected delays in the operational start-up of shipping containers procured by WCS;

·	Changes in real estate values and construction costs in Henderson, Nevada;

·	Water levels in Lake Mead; and

·	Possible future litigation.

Should one or more of these risks materialize (or the consequences of such development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.

In an effort to provide investors with additional information regarding the Company's results of operations as determined by accounting principles generally accepted in the United States of America ("GAAP"), the Company has disclosed certain non-GAAP information, which the Company believes provides useful information to investors:

The Company discloses operating income (loss) before the impact of the workforce reduction charge, which is used by the Company's management to assess the performance of the Company's Chemicals Segment's operations. The Company believes disclosure of operating income (loss) before the impact of the workforce reduction charge provides useful information to investors because it similarly allows investors to analyze the performance of the Company's Chemicals Segment's operations in the same way that the Company's management assesses performance.

Valhi, Inc. is engaged in the titanium dioxide pigments, component products (security products and high performance marine components), waste management, and real estate management and development industries.

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VALHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except earnings per share)

	Three months ended						Six months ended
	June 30,						June 30,
	2015			2016			2015			2016
	(unaudited)						(unaudited)

Net sales
Chemicals	$	360.2		$	356.0		$	725.3		$	674.5
Component products		28.9			27.1			56.8			54.2
Waste management		10.0			11.1			25.0			16.3
Real estate management and development		9.7			4.4			17.8			7.1

Total net sales	$	408.8		$	398.6		$	824.9		$	752.1

Operating income (loss)
Chemicals:
Before workforce reduction charge	$	13.2		$	12.7		$	47.2		$	15.7
Workforce reduction charge		(21.1	)		-			(21.1	)		-
Total Chemicals		(7.9	)		12.7			26.1			15.7
Component products		4.3			3.7			8.0			7.1
Waste management		(8.1	)		(7.1	)		(11.0	)		(17.9	)
Real estate management and development		1.6			0.5			1.4			(5.4	)

Total operating income (loss)		(10.1	)		9.8			24.5			(0.5	)

General corporate items:
Securities earnings		6.7			6.9			13.4			13.7
Insurance recoveries		.3			0.2			3.4			.3
General expenses, net		(11.2	)		(8.6	)		(19.4	)		(20.1	)
Interest expense		(14.5	)		(15.8	)		(29.1	)		(31.5	)

Loss before income taxes		(28.8	)		(7.5	)		(7.2	)		(38.1	)

Income tax expense (benefit)		110.6			0.2			114.9			(8.4	)

Net loss		(139.4	)		(7.7	)		(122.1	)		(29.7	)

Noncontrolling interest in net income (loss)
of subsidiaries		(35.5	)		0.8			(30.1	)		(1.7	)

Net loss attributable to Valhi stockholders	$	(103.9	)	$	(8.5	)	$	(92.0	)	$	(28.0	)

Basic and diluted net loss per share:
Net loss per share attributable to Valhi
stockholders	$	(.30	)	$	(.02	)	$	(.27	)	$	(.08	)

Basic and diluted weighted average shares
outstanding		342.0			342.0			342.0			342.0

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VALHI, INC. AND SUBSIDIARIES
IMPACT OF PERCENTAGE CHANGE IN CHEMICAL SEGMENT'S NET SALES



	Three months ended			Six months ended
	June 30,			June 30,
	2016 vs. 2015			2016 vs. 2015
	(unaudited)			(unaudited)

Percentage change in TiO₂ sales :
TiO₂ product pricing		(7)	%		(11)	%
TiO₂ sales volumes		7			6
TiO₂ product mix		(2)			(1)
Changes in currency exchange rates		1			(1)

Total		(1)	%		(7)	%

Delaware	1-5467	87-0110150
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


5430 LBJ Freeway, Suite 1700, Dallas, Texas			75240-2697
(Address of principal executive offices)			(Zip Code)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

(d)	Exhibits

	Item No.	Description

	99.1*	Press release dated August 8, 2016 entitled "Valhi Reports Second Quarter 2016 Results" and issued by the registrant.

	99.2*	Press release dated August 8, 2016 entitled "Valhi Declares Quarterly Dividend" and issued by the registrant.

	Valhi, Inc.
	(Registrant)




	By: /s/ Gregory M. Swalwell
Date: August 8, 2016	Gregory M. Swalwell Executive Vice President, Chief Financial Officer and Chief Accounting Officer

	Item No.		Description

	99.1*		Press release dated August 8, 2016 entitled "Valhi Reports Second Quarter 2014 Results" and issued by the registrant.

	99.2*		Press release dated August 8, 2016 entitled "Valhi Declares Quarterly Dividend" and issued by the registrant.


	(Former name or former address, if changed since last report.)