COMPX INTERNATIONAL INC

Previous wording

Operating income in the second quarter of 2025 was $6.3 million compared to $5.1 million in the same period of 2024. Operating income for the first six months of 2025 was $12.2 million compared to $8.8 million for the comparable prior year period. Our operating income increased in the second quarter and for the first six months of 2025 due to higher sales and gross margin at each of the Security Products and Marine Components segments.

Current wording

Operating income in the third quarter of 2025 was $4.8 million compared to $3.3 million in the same period of 2024. Operating income for the first nine months of 2025 was $17.0 million compared to $12.1 million for the comparable prior year period. Our operating income increased in the third quarter and for the first nine months of 2025 due to higher sales and gross margin at each of the Security Products and Marine Components segments.

Previous wording

Net sales. Net sales increased $4.5 million and $6.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 due to higher Security Products sales to the government security market and higher Marine Component sales to the government and towboat markets. See segment discussion below.

Current wording

Net sales. Net sales increased $6.3 million and $13.1 million in the third quarter and for the first nine months of 2025, respectively, compared to the same periods in 2024 primarily due to higher Security Products sales to the government security market and higher Marine Component sales to various markets including the towboat, government and industrial markets. See segment discussion below.

Previous wording

*Cost of sales and gross margin.*Cost of sales as a percentage of sales improved .8% in the second quarter of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. Gross margin percentage increased in the second quarter of 2025 compared to the same period in 2024 primarily due to higher Marine Components gross margin percentage partially offset by lower Security Products gross margin percentage. Cost of sales as a percentage of sales improved 2.9% for the first six months of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. The increase in gross margin percentage for the six-month comparative period is primarily due to higher gross margin percentage at Marine Components, primarily in the first quarter. See segment discussion below.

Current wording

*Cost of sales and gross margin.*Cost of sales as a percentage of sales increased .5% in the third quarter of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales decreased over the same period. Gross margin percentage decreased in the third quarter of 2025 compared to the same period in 2024 primarily due to lower Security Products gross margin percentage partially offset by higher Marine Components gross margin percentage. Cost of sales as a percentage of sales improved 1.7% for the first nine months of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. The increase in gross margin percentage for the nine-month comparative period is primarily due to higher gross margin percentage at Marine Components, partially offset by lower Security Products gross margin percentage. See segment discussion below.

Previous wording

Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as any gains and losses on property and equipment. Operating costs and expenses for the second quarter and the first six months of 2025 increased $.5 million and $.8 million, respectively, compared to the same periods in 2024 primarily due to higher employee related costs including salaries, benefits and medical expenses at both segments. Operating costs and expenses as a percentage of net sales decreased for the second quarter and for the first six months of 2025 due to higher coverage of operating costs and expenses as a result of higher sales.

Current wording

Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as any gains and losses on property and equipment. Operating costs and expenses for the third quarter of 2025 were comparable to the same period in 2024. Operating costs and expenses for the first nine months of 2025 increased $1.0 million compared to the same period in 2024 primarily due to higher employee-related costs including salaries, benefits and medical expenses at both segments. Operating costs and expenses as a percentage of net sales decreased for the third quarter and for the first nine months of 2025 due to higher coverage of operating costs and expenses as a result of higher sales.

Previous wording

Operating income. As a percentage of net sales, operating income for the second quarter and the first six months of 2025 increased compared to the same periods of 2024 and was primarily impacted by the factors affecting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.

Current wording

Operating income. As a percentage of net sales, operating income for the third quarter and the first nine months of 2025 increased compared to the same periods of 2024 and was primarily impacted by the factors affecting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.

Previous wording

*Interest income.*Interest income decreased $.4 million and $.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 primarily due to lower average interest rates and decreased cash balances.

Current wording

*Interest income.*Interest income decreased $.4 million and $1.2 million in the third quarter and for the first nine months of 2025, respectively, compared to the same periods in 2024 primarily due to lower average interest rates and decreased cash balances.

Previous wording

Security Products. Security Products net sales increased 9% and 5% in each of the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. Relative to prior year, the increase in second quarter sales was primarily due to $3.3 million higher sales to the government security market and $.5 million higher sales to the healthcare market, partially offset by $.9 million lower sales to the transportation market, $.3 million lower sales to the tool storage market and $.2 million lower sales to distributors. Relative to prior year, the increase in sales for the first six months was primarily due to $4.9 million higher sales to the government security market and $.8 million higher sales to the healthcare market, partially offset by $1.5 million lower sales to the transportation market, $.6 million lower sales to the tool storage market and $.4 million lower sales to distributors.

Current wording

Security Products. Security Products net sales increased 14% and 8% in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024. Relative to prior year, the increase in third quarter sales was primarily due to $4.0 million higher sales to the government security market and $.3 million higher sales to the gas station security market, partially offset by $.7 million lower sales to the healthcare market and $.3 million lower sales to the tool storage market. Relative to prior year, the increase in sales for the first nine months was primarily due to $8.9 million higher sales to the government security market and $.5 million higher sales to the gas station security market, partially offset by lower sales to a variety of other markets including $1.3 million lower sales to the transportation market, $.9 million lower sales to the tool storage market and $.4 million lower contract plating sales.

Previous wording

Gross margin and operating income as a percentage of net sales for the second quarter of 2025 decreased slightly as compared to the same period in 2024 primarily due to higher employee related costs including salaries, benefits and medical expense partially offset by increased coverage of fixed costs and operating costs and expenses as a result of higher sales. Gross margin as a percentage of net sales in the first six months of 2025 were comparable to the same period in 2024. Operating income as a percentage of net sales in the first six months of 2025 decreased slightly compared to the same period in prior year due to higher employee related costs including salaries, benefits and medical expenses.

Current wording

Gross margin as a percentage of net sales for the third quarter of 2025 decreased compared to the same period in 2024 primarily due to higher cost inventory produced during the second quarter of 2025 and sold in the third quarter of 2025 and higher employee-related costs including salaries, benefits and medical expense partially offset by increased coverage of fixed costs as a result of higher sales. Gross margin as a percentage of net sales for the first nine months of 2025 decreased compared to the same period in 2024 primarily due to higher employee-related costs including salaries, benefits and medical expense partially offset by increased coverage of fixed costs as result of higher sales. Operating income margin for the third quarter and for the first nine months of 2025 decreased primarily due to the decreases in gross margin discussed above partially offset by increased coverage of operating costs and expenses on higher sales.

Previous wording

Marine Components. Marine Components net sales increased 26% in the second quarter of 2025 compared to the same period in 2024. Relative to prior year, the increase in second quarter sales was primarily due to $1.3 million higher sales to the government market and $.6 million higher sales to the towboat market. Marine Components net sales increased 25% in the first six months of 2025 compared to the same period in 2024. Relative to prior year, the increase in sales for the first six months was primarily due to $2.5 million higher sales to the government market and $2.4 million higher sales to the towboat market, partially offset by $.7 million lower sales to the center console market.

Current wording

Marine Components. Marine Components net sales increased 36% in the third quarter of 2025 compared to the same period in 2024. Relative to prior year, the increase in third quarter sales was primarily due to $1.2 million higher sales to the industrial market, $.9 million higher sales to the towboat market and $.5 million higher sales to the government market. Marine Components net sales increased 29% in the first nine months of 2025 compared to the same period in 2024. Relative to prior year, the increase in sales for the first nine months was primarily due to $3.2 million higher sales to the towboat market, $3.1 million higher sales to the government market and $1.0 million higher sales to the industrial market, partially offset by $.9 million lower sales to the center console market.

Previous wording

Gross margin as a percentage of net sales increased in the second quarter and for the first six months of 2025 compared to the same periods last year primarily due to increased coverage of fixed costs as a result of higher sales and to a lesser extent a more favorable customer and product mix. Operating income margin increased primarily due to increases in gross margin discussed above partially offset by higher employee related costs including salaries, benefits and medical expense.

Current wording

compared to the same periods last year primarily due to increased coverage of fixed costs as a result of higher sales and to a lesser extent a more favorable customer and product mix. Operating income margin increased primarily due to the increases in gross margin discussed above and increased coverage of operating costs and expenses on higher sales.

Previous wording

Outlook. Sales for the first half of 2025 reflect continued robust demand across both of our segments, surpassing the first half of 2024 sales. Marine Components sales and operating income for the first six months of 2025 exceeded prior year on the strength of improved demand to the government market as well as increased sales to the towboat market primarily in the first quarter of 2025 related to a one-time stocking event for a towboat OEM customer. Security Products sales improved from prior year predominantly due to increased sales to the government security market and to a lesser extent increased sales to the healthcare market. The raw material price increases we began experiencing in the third quarter of 2024 have continued through the first half of 2025, and we are starting to see some surcharges related to tariffs on certain components, primarily electronic components from Asia.

Current wording

Outlook. Sales for the first nine months of 2025 reflect sustained demand across both of our segments, with year-to-date results exceeding those for the same period in 2024. Marine Components sales and operating income for the first nine months of 2025 exceeded prior year levels, driven by improved demand in the government and industrial markets as well as increased sales to the towboat market primarily in the first quarter of 2025 related to a one-time stocking event for a towboat OEM customer. Security Products sales improved from prior year primarily due to increased sales to the government security market. Raw material price increases that began in the third quarter of 2024 have persisted through the first nine months of 2025. Additionally, we began incurring tariff-related surcharges on certain components, primarily electronic components from Asia, beginning late in the second quarter of 2025. We expect these cost pressures to continue through the remainder of the year.

Previous wording

We expect Security Products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security and healthcare markets; however, we expect these increases will be offset somewhat by certain other markets that continue to be challenging including transportation and distribution. Security Products gross margin and operating income percentages will be challenged during the last half of 2025 primarily due to higher cost inventory we began producing late in the second quarter due to higher raw material costs and tariff related surcharges on certain raw materials, primarily electronic components, which we expect to continue in the second half of 2025. As a result, we expect gross margin and operating income margin at Security Products to be in-line with prior year. We expect Marine Components net sales to increase in 2025 predominantly due to higher expected sales to the government market as well as higher expected sales to the industrial market in the second half of the year. Overall, we expect Marine Components to have improved gross margins and operating income percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.

Current wording

We expect Security Products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security market. However, we expect softness in various other markets to partially offset these gains, primarily the transportation and tool storage markets. Security Products gross margin and operating income percentages are expected to be slightly below prior year levels due to the impact of higher-cost inventory and tariff-related surcharges. We expect Marine Components net sales to increase in 2025 predominantly due to higher expected sales to the government and industrial markets as well as the one-time stocking event for a towboat OEM customer in the first quarter 2025. Overall, we expect Marine Components to have improved gross margin and operating income percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.

Previous wording

Early in the first quarter of 2025, in anticipation of the U.S. federal government tariffs announcements, we increased purchases of certain electronic components and other components to mitigate the potential near-term impact of tariffs. As noted above, late in the second quarter we began incurring tariff related surcharges on certain raw materials, primarily electronic components. We are working to increase selling prices to our customers to recoup these increased raw material costs, although the extent to which we can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of our customers to substitute alternative products. We will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly.

Current wording

We manufacture substantially all of our products in the U.S. and source a substantial majority of our raw materials from U.S. suppliers. We also source certain components, primarily electronic components from Asia, including China. Early in the first quarter of 2025, in anticipation of the U.S. federal government tariffs announcements, we increased purchases of certain electronic components and other components to mitigate the potential near-term impact of tariffs. As noted above, late in the second quarter we began incurring tariff-related surcharges on certain raw materials, primarily electronic components. In addition to tariffs on imported raw materials and components, some of our U.S. based suppliers have recently begun to implement tariff-related surcharges on certain U.S. based purchases. Where possible, we are increasing selling prices to our customers to recoup these increased raw material costs, although the extent to which we can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of our customers to substitute alternative products. We will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly.

Previous wording

Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal. We have in the past experienced global and domestic supply chain challenges, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs and the impact of economic conditions, consumer confidence and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Current wording

Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal. We have experienced global and domestic supply chain challenges in the past, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs, and the impact of economic conditions, consumer confidence, and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Previous wording

Our net cash provided by operating activities for the first six months of 2025 decreased by $6.9 million as compared to the first six months of 2024. The decrease in net cash provided is primarily due to the net effects of:

Current wording

Our net cash provided by operating activities for the first nine months of 2025 decreased by $4.8 million as compared to the first nine months of 2024. The decrease in net cash provided is primarily due to the net effects of:

Previous wording

Changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in our average days sales outstanding increased from December 31, 2024 to June 30, 2025 primarily as a result of a seasonal increase in sales during the second quarter as compared to the fourth quarter and the timing of sales and collections relative to the end of the quarter. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

Current wording

Changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in our average days sales outstanding increased from December 31, 2024 to September 30, 2025 primarily as a result of a seasonal increase in sales during the third quarter as compared to the fourth quarter and the timing of sales and collections relative to the end of the quarter. For comparative purposes, we have provided December 31, 2023 and September 30, 2024 numbers below.

Previous wording

As shown below, our average number of days in inventory increased from December 31, 2024 to June 30, 2025 primarily due to increased inventory as a result of higher raw material and production costs and to meet expected customer demand at both Security Products and Marine Components. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

Current wording

As shown below, our average number of days in inventory increased from December 31, 2024 to September 30, 2025 primarily due to increased inventory at Security Products as a result of higher raw material and production costs and to meet expected customer demand, partially offset by lower days in inventory at Marine Components primarily due to higher sales volumes for the third quarter of 2025 as compared to the fourth quarter of 2024. For comparative purposes, we have provided December 31, 2023 and September 30, 2024 numbers below.

Previous wording

*Investing activities.*Our capital expenditures were $2.2 million and $.7 million in the first six months of 2025 and 2024, respectively. During the first six months of 2025, Valhi repaid a net $.4 million under the promissory note ($6.0 million of gross borrowings and $6.4 million of gross repayments). During the first six months of 2024, Valhi repaid a net $1.4 million under the promissory note ($12.0 million of gross borrowings and $13.4 million of gross repayments). See Note 9 to our Condensed Consolidated Financial Statements.

Current wording

*Investing activities.*Our capital expenditures were $3.1 million and $1.2 million in the first nine months of 2025 and 2024, respectively. During the first nine months of 2025, Valhi repaid a net $1.2 million under the promissory note ($10.7 million of gross borrowings and $11.9 million of gross repayments). During the first nine months of 2024, Valhi repaid a net $2.7 million under the promissory note ($17.7 million of gross borrowings and $20.4 million of gross repayments). See Note 9 to our Condensed Consolidated Financial Statements.

Previous wording

During the first six months of 2024, we received gross proceeds totaling $24.0 million related to U.S. treasury bill maturities.

Current wording

During the first nine months of 2024, we received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities.

Previous wording

*Financing activities.Financing activities consisted only of cash dividends. *During each of the first six months of 2025 and 2024, we paid aggregate quarterly dividends to CompX stockholders of $.60 per share. The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay. In this regard, in August 2025, our board of directors declared a special dividend of $1.00 per share on our Class A common stock, par value $.01 per share. The special dividend is payable on August 27, 2025 to stockholders of record at the close of business on August 18, 2025.

Current wording

*Financing activities.Financing activities consisted only of cash dividends. *During the first nine months of 2025 and 2024, we paid aggregate quarterly dividends to CompX stockholders of $.90 per share. Additionally, in August 2024 and August 2025, our board of directors declared a special dividend on our Class A common stock of $2.00 per share ($24.6 million) and $1.00 per share ($12.3 million), respectively. The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay.

Previous wording

Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we may consider using available cash, issuing additional equity securities or increasing our indebtedness or that of our subsidiaries.

Current wording

Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we

Previous wording

All of our $56.2 million aggregate cash and cash equivalents at June 30, 2025 were held in the U.S.

Current wording

All of our $46.3 million aggregate cash and cash equivalents at September 30, 2025 were held in the U.S.

Previous wording

Capital expenditures. Firm purchase commitments for capital projects in process at June 30, 2025 totaled $.6 million. We expect our capital expenditures for 2025 will be approximately $3.4 million primarily to meet our existing customer demand and those required to properly maintain our facilities and technology infrastructure.

Current wording

Capital expenditures. Firm purchase commitments for capital projects in process at September 30, 2025 totaled $1.2 million. We expect our capital expenditures for 2025 will be approximately $4 million primarily to meet our existing customer demand and those required to properly maintain our facilities and technology infrastructure.

Previous wording

There have been no changes in the first six months of 2025 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report.

Current wording

There have been no changes in the first nine months of 2025 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report.