VALHI INC /DE/
For the period ended Mar 31, 2026. Filed May 7, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
VHI$16.10+12.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001104659-25-107777
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001104659-26-057165
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 126 current paragraphs.
59 unchanged; 45 reworded; 20 added; 40 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 112 previous and 83 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
During the fourth quarter of 2025, our Chemicals Segment implemented cost reduction initiatives, including workforce reductions and other measures, to permanently improve its cost structure and enable more efficient operation of its facilities at lower production rates for extended periods. As a result, beginning in the first quarter of 2026, our Chemicals Segment’s normal production capacity range has been adjusted to reflect its production capabilities under this new cost structure.
Current report
Our Chemicals Segment’s sales volumes increased 4% in the first quarter of 2026 as compared to the first quarter of 2025 primarily due to higher sales volumes in our Chemicals Segment’s North American, Latin American and export markets partially offset by lower sales volumes in the European market. The incremental market share gains our Chemicals Segment achieved in the European market during the second half of 2025, primarily as a result of competitor plant closures, continued into the first quarter of 2026. However, gains were not sufficient to offset the underlying decline in overall European demand.
Current report
Cost of Sales and Gross Margin–Our Chemicals Segment’s cost of sales increased by $43.6 million, or 11%, in thefirst quarter of 2026 compared to thefirst quarter of 2025 due to the effects of a 4% increase in sales volumesand the unfavorable impact from changes in currency exchange rates, partially offset by lower production costs driven primarily by the cost reduction initiatives as well as lower raw material and energy costs. In addition, unabsorbed fixed costs were not material in the first quarter of 2026 compared to $10 million of unabsorbed fixed costs in the first quarter of 2025.
Current report
Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 84% in the first quarter of 2026 compared to 78% in the same period of 2025, as the unfavorable impact of lower average TiO 2 selling prices more than offset the favorable effects of lower production costs.
Current report
Outlook – During the first quarter of 2026, our Chemicals Segment’s sales volumes improved compared to the same period in 2025, primarily driven by higher sales volumes in our Chemicals Segment’s North American, Latin American, and export markets. While our Chemicals Segment gained market share in Europe as a result of competitor capacity reductions in 2025, these gains were not sufficient to offset further weakening end-market demand in the region. Although customers remain reluctant to build inventory, order lead times have increased, which provides our Chemicals Segment with greater flexibility in near-and intermediate-term production planning. Our Chemicals Segment’s order backlog at the beginning of 2026 was generally higher than the comparable prior-year period and has continued to show positive trends entering the second quarter. However, overall demand remains below historical levels, and the timing and sustainability of a broader market recovery remain uncertain. Our Chemicals Segment implemented price increases during the first quarter of 2026; however, selling prices remain below 2025 levels, and additional price increases will be required to improve its operating margins.
Current report
During the fourth quarter of 2025, our Chemicals Segment implemented cost reduction initiatives, including workforce reductions and other measures, to permanently improve its cost structure and enable more efficient operation of its facilities at lower production rates for extended periods. Our Chemicals Segment operated its facilities slightly below normal capacity during the first quarter of 2026. Our Chemicals Segment’s operating model balances improved cost efficiency with flexibility to respond to changes in demand. During the first quarter of 2026, our Chemicals Segment sold through higher cost inventory produced in the fourth quarter of 2025 and expects gross margin to improve as it realizes the benefit of lower cost inventory produced during 2026.
Current report
Industry supply conditions tightened during the first quarter of 2026 due to the recent geopolitical conflict in the Middle East and related supply chain disruptions, including sulfuric acid pricing pressures, and higher energy costs, particularly in Europe. As a result, our Chemicals Segment is beginning to experience higher shipping and production costs driven by increased energy, utility and
Current report
raw material costs, especially in Europe. These cost pressures are expected to persist as long as uncertainty related to the conflict in the Middle East and broader global conditions continue. In response to rising costs, our Chemicals Segment implemented surcharges in most major markets and announced price increases effective in the second quarter of 2026. Our Chemicals Segment expects TiO₂ selling prices to continue to rise during 2026, which would help mitigate increases in distribution, raw material, energy, and other production costs, although margins will remain below historical levels.
Current report
Our Chemicals Segment is focused on improving operating margins through pricing actions, disciplined cost management, and continued execution of its operating cost structural realignment initiatives. Our Chemicals Segment is also continuing to pursue targeted market share opportunities in regions and markets impacted by competitor curtailments, closures, logistical disruptions, or trade measures such as tariffs or duties that have reduced the competitiveness of low-cost imports. These actions are intended to support improved operating performance while maintaining flexibility in the event of continued demand volatility.
Current report
Liquidity and capital resources remain sufficient to support our Chemicals Segment’s operations and planned capital investments. While our Chemicals Segment typically experiences a significant seasonal cash usage in the first quarter, our Chemicals Segment expects cash on hand to improve over the remainder of the year. Our Chemicals Segment will continue to actively manage working capital, including inventories and receivables, to bolster operating cash flows and maintain financial flexibility. Our Chemicals Segment believes its revolver availability, combined with the absence of near-term debt maturities and improved operating cash flows, will provide adequate liquidity for expected working capital needs and capital allocation requirements.
Current report
Our Component Products Segment’s operating income in the first quarter of 2026 was $7.1 million compared to $5.9 million in the first quarter of 2025. The increase in operating income in the first quarter of 2026 compared to 2025 is primarily due to higher gross margin at the security products reporting unit and, to a lesser extent, the impact of higher sales at the marine components reporting unit.
Current report
Net Sales– Our Component Products Segment’s net sales increased $.3 million in the first quarter of 2026 compared to the same period in 2025 primarily due to higher marine components sales to the industrial market partially offset by lower security products sales. Security products net sales decreased 1% in the first quarter of 2026 compared to the same period last year primarily due to lower
Current report
sales across a variety of markets. The decrease was driven by $.3 million lower sales to the healthcare market and $.2 million lower sales to each of the general cabinetry, electric control panel, and gas station security markets. These decreases were partially offset by $.3 million higher sales to the tool storage market and $.2 million higher sales to the institutional furniture market. Marine components net sales increased 6% in the first quarter of 2026 compared to the same period last year primarily due to $1.9 million higher sales to the industrial market partially offset by $1.4 million lower sales to the towboat market. Towboat market sales in the first quarter of 2025 benefitted from a one-time customer stocking event that did not repeat in 2026.
Current report
*Outlook –*Our Component Products Segment’s net sales for the first quarter of 2026 exceeded the prior year period, primarily driven by improved demand in the industrial market at the marine components reporting unit. Security products sales reflected mixed performance across the original equipment manufacturer (“OEM”) markets, driven by differences in customer demand cycles and project timing, resulting in slightly lower net sales compared to the prior year period. Our Component Products Segment’s operating income increased compared to the prior year primarily due to a more favorable customer and product mix at the security products reporting unit and, to a lesser extent, the impact of higher sales at the marine components reporting unit.
Current report
For the full year 2026, our Component Products Segment expects modest net sales growth* *as our Component Product Segment continues to align pricing, product features, and service levels with market conditions and customer requirements. Net sales growth at the marine components reporting unit is expected to be driven primarily by the industrial market. Recreational marine sales have largely stabilized and sales to the towboat market in 2026 are expected to be generally comparable to 2025 (excluding the impact of the one-time stocking event noted above). At the security products reporting unit, it expects net sales to be consistent with the prior year, reflecting anticipated continued variability across multiple OEM markets.
Current report
Our Component Products Segment expects gross margin and operating income margins across both the security products and marine components reporting units in 2026 to remain generally comparable to 2025. Operating income margin at the security products reporting unit benefited from favorable mix in the first quarter of 2026; however, margins are expected to moderate over the remainder of the year.
Current report
Our Component Products Segment increased inventory levels across both the security products and marine components reporting units during 2025 to support customer demand. These actions included an insourcing initiative at security products and a shift in customer mix at marine components. Our Component Products Segment’s inventory levels at the end of the first quarter of 2026 were comparable to those at December 31, 2025, and are expected to remain at these levels, consistent with near-term operating requirements.
Current report
to the City for approval of additional OPA note receivables. We currently expect to receive approval for the remaining $11 million infrastructure reimbursement note receivables – up to the $170 million cap – in 2026, and we expect to receive cash payments on the notes for the next 5 to 7 years.
Current report
During the three months ended March 31, 2026:
Current report
Availability under Kronos’ Global Revolver is subject to a borrowing base calculation, as defined in the agreement. The borrowing base calculated for the period ended March 31, 2026 was approximately $287 million.
Removed paragraphs (40)
Previous report
RESULTS OF OPERATIONS
Previous report
Our diluted net loss per share in the third quarter of 2025 includes:
Previous report
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024–
Previous report
million in 2024;
Previous report
Our diluted net loss per share in the first nine months of 2025 includes:
Previous report
As previously reported, effective July 16, 2024 (“Acquisition Date”), Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator Investments, Ltd. (“Venator”). Prior to the acquisition, Kronos held a 50% joint venture interest in LPC. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. Kronos accounted for the acquisition as a business combination. The results of operations of LPC have been included in our results of operations beginning as of the Acquisition Date. See Note 18 to our Condensed Consolidated Financial Statements.
Previous report
Our Chemicals Segment operated its production facilities at 93% of practical capacity utilization in the first nine months of 2024. In the first nine months of 2025, our Chemicals Segment’s practical capacity utilization was 85% as it reduced operating rates at certain of its manufacturing facilities in response to lower demand.
Previous report
The following table shows our Chemicals Segment’s capacity utilization rates during 2024 and 2025.
Previous report
Our Chemicals Segment’s sales volumes decreased 3% in the third quarter of 2025 as compared to the third quarter of 2024 primarily due to lower sales volumes in its European and export markets somewhat offset by higher sales volumes in its North American market.
Previous report
Our Chemicals Segment’s net sales in the first nine months of 2025 decreased 2%, or $22.9 million, compared to the first nine months of 2024 primarily due to the effects of a 2% decrease in average TiO 2 selling prices (which decreased net sales by approximately $32 million) and changes in product mix (which decreased net sales by approximately $2 million). In addition, our Chemicals Segment estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $11 million in the first nine months of 2025 as compared to the first nine months of 2024.
Previous report
Our Chemicals Segment’s sales volumes in the first nine months of 2025 were comparable to the same period in 2024 with higher overall sales volumes in its North American and European markets offset by lower sales volumes in its export market.
Previous report
Cost of Sales and Gross Margin– Our Chemicals Segment’s cost of sales increased by $26.0 million, or 7%, in the third quarter of 2025 compared to the third quarter of 2024 due to the net effects of unfavorable fixed cost absorption due to reduced operating rates at certain of our Chemicals Segment’smanufacturing facilities, higher cost inventory produced in the second quarter relative to the same quarter of 2024 and included in cost of sales in the third quarter and currency fluctuations (primarily the euro). Our Chemicals Segment’sunabsorbed fixed production costs related to decreased production volumes in the third quarter of 2025 were approximately $27 million. Cost of sales in the third quarter of 2024 includes a charge of approximately $4 million in non-cash charges related to accelerated depreciation in connection with the closure of its sulfate process line in Canada.
Previous report
Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 90% in the third quarter of 2025 compared to 79% in the same period of 2024 primarily due to the unfavorable fixed cost absorption and currency fluctuations, as discussed above.
Previous report
Our Chemicals Segment’s cost of sales increased by $32.9 million, or 3%, in the first nine months of 2025 compared to the first nine months of 2024 due to the effectsof approximately$45 million in additional unabsorbed fixed production costs recognized as a result of reduced operating rates at our Chemicals Segment’sproduction facilities somewhat offset by lower production costs of approximately $11 million (primarilyraw materials) and favorable currency fluctuations (primarily the euro). Cost of sales in the first
Previous report
nine months of 2024 includes a charge of approximately $2 million related to workforce reductions and approximately $14 million in non-cash charges primarily related to accelerated depreciation in connection with the closure of our Chemicals Segment’s sulfate process line in Canada.
Previous report
Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 85% in the first nine months of 2025 compared to 81% in the same period of 2024 primarily due to unfavorable fixed cost absorption somewhat offset by lower production costs and currency fluctuations noted above.
Previous report
Our Chemicals Segment’s gross margin as a percentage of net sales decreased to 15% in the first nine months of 2025 compared to 19% in the first nine months of 2024. As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to the unfavorable effects of lower fixed cost absorption and lower average selling prices.
Previous report
Our Chemicals Segment’s operating income decreased by $70.3 million to $35.6 million in the first nine months of 2025 compared to operating income of $105.9 million in the first nine months of 2024 as a result of the factors impacting gross margin discussed above. We estimate that changes in currency exchange rates increased our Chemicals Segment’s operating income by approximately $5 million in the first nine months of 2025 as compared to the same period in 2024, as further discussed below.
Previous report
The $4 million increase in our Chemicals Segment’s operating loss was comprised of the following:
Previous report
exchange rate risk associated with the maturity in September 2025 of Kronos’ €75 million 3.75% Senior Secured Notes due 2025, in the first quarter of 2025, our Chemicals Segment entered into a currency forward contract to purchase €25 million at an exchange rate of €1.05 per U.S. dollar. The contract was settled in August 2025, resulting in a $2.8 million currency transaction gain in our Condensed Consolidated Statement of Operations for the nine months ended September 30, 2025, and
Previous report
Outlook – Overall, our Chemicals Segment’s customer demand remained weak in the third quarter of 2025, continuing the softening trend that began earlier in the year. High interest rates and sustained economic uncertainty, driven by global tariff and trade tensions, continue to contribute to cautious customer spending. Our Chemicals Segment does not expect sales volumes to improve meaningfully in the near-term and, although it believes customer inventory levels remain low, our Chemicals Segment is taking additional actions in the fourth quarter of 2025 to reduce its inventory levels by further lowering its operating rates to better align with current demand levels. Given the current depressed demand environment and margins, our Chemicals Segment believes it is prudent to reduce its operating rates in the fourth quarter to reduce inventory and position its plants to improve operating costs at lower utilization rates. These measures are expected to improve operating cash flows as our Chemicals Segment focuses on maximizing liquidity to manage through the current challenging demand market and to be positioned to respond when market dynamics improve.
Previous report
In 2025, the TiO 2 market has experienced significant capacity reductions, including previously announced shutdowns or curtailments by multiple producers, such as recently announced facility closures in China and certain European jurisdictions in the third quarter of 2025. Our Chemicals Segment believes it may gain market share from these developments both from current and potential customers primarily in Europe. Although Our Chemicals Segment believes customer inventories are low, its customers’ near-term outlook remains uncertain. Certain customers have notified our Chemicals Segment that they intend to curtail production in the fourth quarter due to expected low downstream demand. In North America, downstream demand remains below historical norms across all end-use customers driven by low consumer confidence and lack of housing market mobility driven by high mortgage rates and home prices, which continue to delay the housing market recovery.
Previous report
Given the challenging market environment discussed above, our Chemicals Segment remains committed to implementing additional cost reduction initiatives to improve its long-term cost structure, to ensure it remains competitive, and to capitalize on potential market share opportunities. Our Chemicals Segment is currently implementing targeted workforce reductions across its operating locations impacting both manufacturing and selling, general and administrative costs. These reductions include union supported employees, which take longer to negotiate, and our Chemicals Segment cannot yet quantify the impact of such initiatives. However, our Chemicals Segment expects these workforce reductions will have a more significant financial impact than its 2023 and 2024 reductions. Beyond headcount cost savings, our Chemicals Segment is reviewing costs with all its partners, suppliers and vendors which its expects to result in cost reductions that will contribute to its cost savings.
Previous report
Pressure from lower demand and favorable TiO 2 availability has caused our Chemicals Segment’s selling prices to decrease since the beginning of 2025. Raw material, energy, and other input costs continue to trend lower, and our Chemicals Segment expects this moderation to continue through the remainder of 2025 as lower cost inventory works its way through cost of sales. However, our Chemicals Segment expects fourth quarter operating results to be lower than the third quarter and to report lower operating results for the full year of 2025 as compared to 2024 due to weaker than expected demand, continued pricing pressure, and lower fixed cost absorption as a result of reduced operating rates. The capacity reductions noted above and the implementation of anti-dumping duties in various jurisdictions, among other factors, should lead to pricing upside in 2026. Current profit margins are unsustainable, and our Chemicals Segment will need to achieve price increases, targeted market share gain opportunities, and successfully execute on its cost reduction efforts noted above to achieve reasonable profit margins.
Previous report
Our Chemicals Segment acquired full control of LPC in July 2024. Our Chemicals Segment believes this acquisition adds value to its customers and enables it to better serve the North American marketplace by expanding its product offerings and increasing sales to new and existing customers while realizing significant synergies, including commercial, overhead, and supply chain optimization. Our Chemicals Segment is in the process of fully integrating the additional LPC production capacity and expects the acquisition to positively impact its earnings. However, soft demand, competitive pressures and additional debt service costs from increased borrowings will limit this impact in the near term. During our Chemicals Segment’s planned fourth quarter curtailment, our Chemicals Segment is investing in technological and manufacturing improvements to the LPC facility which are expected to improve the flexibility, quality and cost effectiveness of the facility over the long term.
Previous report
In July 2025, our Chemicals Segment increased the maximum borrowings under its credit facility from $300 million to $350 million to provide additional liquidity for general corporate purposes. In September 2025, our Chemicals Segment successfully refinanced its €75 million 3.75% Senior Secured Notes due in September 2025 by issuing €75 million in additional 9.50% Senior Secured Notes due 2029 at an effective rate of 7.8%. Our Chemicals Segment expects its cash on hand to improve as it reduces inventory levels over the next several quarters. With no near-term debt maturities, significant borrowing availability under our Chemicals Segment’s revolving credit facility and cash on hand, our Chemicals Segment believes it is well-positioned to finance its working capital and capital expenditure needs.
Previous report
Our Component Products Segment’s operating income in the third quarter of 2025 was $4.8 million compared to $3.3 million in the third quarter 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 Component Products Segment’s 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 reporting units.
Previous report
Net Sales– Our Component Products Segment’s net sales increased $6.4 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 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. Relative to prior year, the increase in third quarter security products 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 2024, the increase in security products sales for the first nine months of 2025 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. Relative to prior year, the increase in third quarter marine component 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. Relative to 2024, the increase in marine component sales for the first nine months of 2025 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 report
Our Component Products Segment’s cost of sales as a percentage of net sales improved 2% for the first nine months of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of net sales increased over the same period. The increase in the gross margin percentage for the nine-month comparative period is primarily due to a higher gross margin percentage at the marine components reporting unit, partially offset by a lower gross margin percentage at the security products reporting unit. Marine components’ gross margin as a percentage of net sales increased for the first nine months of 2025 compared to the same period 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. Security products’ 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.
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*Outlook –*Our Component Products Segment’s sales for the first nine months of 2025 reflect sustained demand across both of its 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, our Component Products Segment began incurring tariff-related surcharges on certain components, primarily electronic components from Asia, beginning late in the second quarter of 2025. Our Component Products Segment expects these cost pressures to continue through the remainder of the year.
Previous report
Our Component Products Segment expects security products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security market. However, our Component Products Segment expects softness in various other markets to partially offset these gains, primarily the transportation and tool storage markets. The security products reporting unit’s 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. Our Component Products Segment expects 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 of 2025. Overall, our Component Products Segment expects the marine components reporting unit 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.
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Gain on Remeasurement of Investment in TiO2* Manufacturing Joint Venture*– We recognized a gain on the remeasurement of Kronos’ investment in LPC of $64.5 million in the third quarter of 2024 as a result of the acquisition. See Note 18 to our Condensed Consolidated Financial Statements.
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Gain on Remeasurement of Earn-out Liability– We recognized a gain on the remeasurement of Kronos’ earn-out liability of $4.6 million in the third quarter of 2025. See Note 18 to our Condensed Consolidated Financial Statements.
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During the nine months ended September 30, 2025:
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Effective July 17, 2025, Kronos completed an amendment to its Global Revolver (the “Fourth Amendment”). Among other things, the Fourth Amendment increased the maximum borrowing amount from $300 million to $350 million and increased the Belgian and German sub-limits from €30 million and €60 million to €55 million and €85 million, respectively, allowing greater access to Euro denominated borrowings. The maturity date of the Global Revolver remains July 2029. On September 15, 2025, KII issued Additional Notes, the proceeds of which were used to refinance the 3.75% Senior Secured Notes (€75 million aggregate principal amount) that matured in September 2025. The Additional Notes were issued as additional notes to the existing €351.174 million aggregate principal amount of 9.50% Senior Secured Notes due 2029 issued on February 12, 2024 and July 30, 2024 (the “Existing Notes”). The Additional Notes were issued at a premium of 105.0% of their principal amount, resulting in net proceeds of approximately $90 million after fees and estimated expenses. The Additional Notes are fungible with the Existing Notes, are treated as a single series and have the same terms as the Existing Notes, other than their date of issuance and issue price. See Note 7 to our Condensed Consolidated Financial Statements.
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Goodwill – Our net goodwill related to our Chemicals Segment totaled $355.2 million at September 30, 2025 primarily resulting from our various step acquisitions of Kronos and NL (which occurred before the implementation of the current accounting standards related to noncontrolling interest) and Kronos’ purchase of the remaining 50% interest in LPC in 2024. In accordance with the applicable accounting standards for goodwill, we do not amortize goodwill.
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We perform a goodwill impairment test annually in the third quarter of each year by reporting unit. Goodwill is also evaluated for impairment at other times whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. An entity may first assess qualitative factors to determine whether it is necessary to complete the quantitative impairment test using a more-likely-than-not criteria. If an entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed. Alternatively, an entity has an unconditional option to bypass the qualitative assessment and proceed directly to performing the quantitative impairment test. If the Company chooses not to complete a qualitative assessment for a reporting unit or if the initial assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required.
Previous report
If additional quantitative testing is performed, an impairment loss is recognized when the amount by which the carrying value of the reporting unit exceeds its fair value. A reporting unit can be a segment or an operating division based on the operations of the segment. Our Chemicals Segment is one reporting unit.
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In performing a quantitative test for impairment of goodwill, we use the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of the reporting unit. When performing an income approach method considerable management judgement is necessary to derive the primary assumptions used in estimating fair value under the discounted cash flow model including forecasted revenue, gross margin, operating expenses, capital expenditures, discount rate and the tax rate. Additionally, management judgement is necessary for the assumptions used to determine fair value under the guideline public company method including the selection of guideline companies and the valuation multiples applied. We performed our annual goodwill impairment test in the third quarter of 2025 for our Chemicals Segment goodwill and concluded there was no impairment of such goodwill.
Previous report
Estimating the fair value of a reporting unit requires the use of estimates and significant judgments that are based on a number of factors including actual operating results and future expectations such as global demand, product pricing, input costs and general economic trends. The judgements and estimates described above could change in future periods or the actual results may differ from the forecast and could result in the recognition of a material goodwill impairment.
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We reported a net loss attributable to Valhi stockholders of $22.2 million or $.78 per diluted share in the third quarter of 2025 compared to net income attributable to Valhi stockholders of $57.5 million or $2.01 per diluted share in the third quarter of 2024. As discussed more fully below, our net income attributable to Valhi stockholders decreased from 2024 to 2025 primarily due to the net effects of:
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We reported net income attributable to Valhi stockholders of $2.0 million, or $.07 per diluted share, in the first quarter of 2026 compared to net income attributable to Valhi stockholders of $16.9 million, or $.59 per diluted share, in the first quarter of 2025. As discussed more fully below, our net income attributable to Valhi stockholders decreased from 2025 to 2026 primarily due to lower operating income from our Chemicals Segment partially offset by higher operating income from our Component Products and our Real Estate Management and Development Segments.
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Our diluted net income per share in the third quarter of 2024 includes:
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Our diluted net income per share in the first quarter of 2026 includes:
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We currently expect consolidated operating income for 2025 to be lower as compared to 2024 primarily due to the net effects of:
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We currently expect consolidated operating income for 2026 to be higher as compared to 2025 primarily due to the net effects of:
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Current Industry Conditions– The first nine months of 2025 have seen unprecedented global uncertainty related to U.S. trade policies and geopolitical tensions. Our Chemicals Segment’s customers have been hesitant to build inventories, given these uncertainties, which has prolonged the market downturn and impacted our Chemicals Segment’s sales volumes and pricing momentum. Our Chemicals Segment started 2025 with average TiO 2 selling prices 2% higher than at the beginning of 2024 but its average TiO 2 selling prices declined 6% during the first nine months of 2025. Our Chemicals Segment’s average TiO 2 selling prices in the first nine months of 2025 were 2% lower than average selling prices during the first nine months of 2024. Overall, our Chemicals Segment’s sales volumes have been comparable in the first nine months of 2025 and 2024 with higher overall sales volumes in both the European and North American markets offset by lower sales volumes in our export market.
Current wording
Current Industry Conditions– Our Chemicals Segment started 2026 with average TiO 2 selling prices lower than at the beginning of 2025; however, its average TiO 2 selling prices increased 2% during the first quarter of 2026. Our Chemicals Segment’s average TiO 2 selling prices in the first quarter of 2026 were 6% lower than average TiO 2 selling prices during the first quarter of 2025. Overall, our Chemicals Segment’s sales volumes increased in the first quarter of 2026 compared to the same period in 2025 due to higher overall sales volumes in the North American, Latin American and export markets partially offset by lower sales volumes in the European market.
Previous wording
Excluding the effect of changes in currency exchange rates and unabsorbed fixed costs, our Chemicals Segment’s cost of sales per metric ton of TiO 2 sold in the third quarter and the first nine months of 2025 was lower as compared to the same periods in 2024 due to decreases in per metric ton production costs.
Current wording
Excluding the effect of changes in currency exchange rates, our Chemicals Segment’s cost of sales per metric ton of TiO 2 sold in the first quarter of 2026 was lower as compared to the first quarter of 2025 due to decreases in per metric ton production costs driven primarily by the cost reduction initiatives discussed above, as well as lower raw material and energy costs.
Previous wording
Net Sales– Our Chemicals Segment’s net sales in the third quarter of 2025 decreased 6%, or $27.8 million, compared to the third quarter of 2024 primarily due to the net effects of a 7% decrease in average TiO 2 selling prices (which decreased net sales by approximately $33 million), a 3% decrease in sales volumes (which decreased net sales by approximately $13 million) and changes in product mix (which increased net sales by approximately $4 million). In addition, our Chemicals Segment estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $14 million in the third quarter of 2025 as compared to the third quarter of 2024. TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.
Current wording
Net Sales– Our Chemicals Segment’s net sales in the first quarter of 2026 increased 4%, or $20.0 million, compared to the first quarter of 2025 due to the effects of a 4% increase in sales volumes (which increased net sales by approximately $20 million) and the favorable impact of changes in currency exchange rates (primarily the euro), which we estimate increased our Chemicals Segment’s net sales by approximately $30 million. These increases were partially offset by a 6% decrease in average TiO 2 selling prices (which decreased net sales by approximately $30 million). TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.
Previous wording
Our Chemicals Segment’s gross margin as a percentage of net sales decreased to 10% in the third quarter of 2025 compared to 21% in the third quarter of 2024. As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to lower average TiO 2 selling prices and lower production volumes resulting in unfavorable fixed cost absorption.
Current wording
Gross margin as a percentage of net sales decreased to 16% in the first quarter of 2026 compared to 22% in the first quarter of 2025. As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to the net effects of higher sales volumes, lower average TiO 2 selling prices, lower production costsand changes in currency exchange rates.
Previous wording
Operating Income (Loss)– Our Chemicals Segment’s operating income decreased by $58.5 million to an operating loss of $15.9 million in the third quarter of 2025 compared to operating income of $42.6 million in the third quarter of 2024 as a result of the factors impacting gross margin discussed above. We estimate that changes in currency exchange rates increased our Chemicals Segment’s operating loss by approximately $4 million in the third quarter of 2025 as compared to the same period in 2024, as discussed in the effects of currency exchange rates section below.
Current wording
Operating Income– Our Chemicals Segment’s operating income decreased $26.7 million to $14.5 million in the first quarter of 2026 compared to $41.2 million in the first quarter of 2025, primarily as a result of the factors impacting gross margin discussed above. We estimate that changes in currency exchange rates decreased operating income by approximately $6 million in the first quarter of 2026 compared to the same period in 2025, as discussed in the effects of currency exchange rates section below.
Previous wording
Our Chemicals Segment’s operating income (loss) is net of amortization of purchase accounting adjustments made in conjunction with our acquisitions of interests in NL and Kronos. As a result, we recognize additional depreciation expense above the amounts Kronos reports separately, substantially all of which is included within cost of sales. We recognized additional depreciation expense of $1.6 million and $2.0 million in the first nine months of 2025 and 2024, respectively, which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.
Current wording
Our Chemicals Segment’s operating income is net of amortization of purchase accounting adjustments made in conjunction with our acquisitions of interests in NL and Kronos. As a result, we recognize additional depreciation expense above the amounts Kronos reports separately, substantially all of which is included within cost of sales. We recognized additional depreciation expense of $.6 million and $.5 million in the first three months of 2026 and 2025, respectively, which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.
Previous wording
Fluctuations in currency exchange rates had the following effects on our Chemicals Segment’s sales and operating income (loss) for the periods indicated.
Current wording
Fluctuations in currency exchange rates had the following effects on our Chemicals Segment’s sales and operating income for the periods indicated.
Previous wording
The $14 million increase in our Chemicals Segment’s net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as its euro-denominated sales were translated into more U.S. dollars in 2025 as compared to 2024. The strengthening of the U.S. dollar relative to the Canadian dollar and weakening of the U.S. dollar relative to the Norwegian krone in 2025 did not have a significant effect on our Chemicals Segment’s net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations is denominated in the U.S. dollar.
Current wording
The $30 million increase in our Chemicals Segment net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into more U.S. dollars in 2026 as compared to 2025. The weakening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2026 did not have a significant effect on our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations is denominated in the U.S. dollar.
Previous wording
The $5 million increase in our Chemicals Segment’s operating income was comprised of the following:
Current wording
The $6 million decrease in our Chemicals Segment’s operating income was comprised of the following:
Previous wording
Our expectations for the TiO 2 industry and our Chemicals Segment’s operations are based on certain factors beyond our control. Our Chemicals Segment’s operations are affected by global and regional economic, political, and regulatory factors, and it has experienced global market disruptions. Future impacts on our Chemicals Segment’s operations will depend on, among other things, future energy costs, the effects of newly enacted tariffs in jurisdictions where our Chemicals Segment or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact of economic conditions, consumer confidence, and geopolitical events on its operations or those of its customers and suppliers, all of which remain uncertain and cannot be predicted.
Current wording
Our expectations for the TiO 2 industry and our Chemicals Segment’s operations are based on a number of factors outside its control. Our Chemicals Segment’s operations are affected by global and regional economic, political and regulatory factors, and it has experienced global market disruptions. Future impacts on our Chemicals Segment’s operations will depend on, among other things, future energy costs, the effect of newly enacted tariffs in jurisdictions where it or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact of economic conditions, consumer confidence, and geopolitical events on its operations or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Previous wording
Cost of Sales and Gross Margin– Our Component Products Segment’s cost of sales as a percentage of net sales in the third quarter of 2025 is consistent with the same period in 2024. As a result, gross margin as a percentage of net sales in the third quarter of 2025 was comparable to the same period in 2024 primarily due to lower security products gross margin percentage offset by higher marine components gross margin percentage. Security products gross margin as a percentage of net sales for the third 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. Marine components gross margin as a percentage of net sales increased in the third quarter of 2025 compared to the same period 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.
Current wording
Cost of Sales and Gross Margin– Our Component Products Segment’s cost of sales as a percentage of net sales decreased 3% in the first quarter of 2026 compared to the same period in 2025. As a result, gross margin as a percentage of net sales increased over the same period. Security products gross margin as a percentage of net sales increased in the first quarter primarily due to a more favorable customer and product mix. Marine components gross margin as a percentage of net sales decreased in the first quarter of 2026 compared to the same period last year primarily due to higher cost inventory produced during the fourth quarter of 2025 and sold in the first quarter of 2026, partially offset by increased coverage of fixed costs on higher sales.
Previous wording
Operating Income– As a percentage of net sales, our Component Products Segment’s 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 and gross margin discussed above.
Current wording
Operating Income– As a percentage of net sales, our Component Products Segment’s operating income for the first quarter of 2026 increased compared to the same period of 2025 and was primarily impacted by the factors affecting sales, cost of sales and gross margin discussed above.
Previous wording
Our Component Products Segment manufactures substantially all of its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. It also sources 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, our Component Products Segment 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 our Component Products Segment began incurring tariff-related surcharges on certain raw materials, primarily electronic components. In addition to tariffs on imported raw materials and components, some of its U.S. based suppliers have recently begun to implement tariff-related surcharges on certain U.S. based purchases. Where possible, our Component Products Segment is increasing selling prices to its customers to recoup these increased raw material costs, although the extent to which it 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 its customers to substitute alternative products. Our Component Products Segment will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.
Current wording
Our Component Products Segment manufactures substantially all its products in the U.S. and source a substantial majority of its raw materials from U.S. suppliers. Our Component Products Segment also sources certain components, primarily electronic components, from suppliers in Asia, including China. Beginning in the second quarter of 2025 and continuing through the first quarter of 2026, our Component Products Segment incurred tariff-related surcharges on certain raw materials, primarily electronic components. In addition, some of our Component Products Segment’s U.S.-based suppliers are applying tariff-related surcharges on certain domestically sourced materials. Where possible, our Component Products Segment increases selling prices to recover these higher raw material costs, although the extent to which our Component Products Segment can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, duration of tariffs, and our Component Products Segment’s customers’ ability to substitute alternative products. Our Component Products Segment will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.
Previous wording
minimal. Our Component Products Segment has experienced global and domestic supply chain challenges in the past, and any future impacts on its operations will depend on, among other things, any future disruption in its operations or its suppliers’ operations, the effect of tariffs and the impact of economic conditions, consumer confidence and geopolitical events on demand for our Component Products Segment’s products or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Current wording
Our Component Products Segment’s expectations for its operations and the markets it serves are based on a number of factors outside its control. Currently, our Component Products Segment’s supply chains are stable and transportation and logistical delays are minimal. Our Component Products Segment has experienced global and domestic supply chain challenges in the past. Any future impacts on its operations will depend on, among other things, disruption to its operations or its suppliers’ operations, the effect of tariffs,
Previous wording
LandWell began marketing land for sale in the residential/planned community in December 2013 and at September 30, 2025 approximately 20 saleable acres remain. In addition, outside of the community LandWell has been actively marketing and selling land zoned for commercial and light industrial use and at September 30, 2025 approximately 15 saleable acres remain. Contracts for land sales are negotiated on an individual basis, and sales terms and prices will vary based on such factors as location (including location within a planned community), expected development work and individual buyer needs. Although land may be under contract or land sales may be completed, we do not recognize revenue until we have satisfied the criteria for revenue recognition. In most instances buyers can cancel an escrow agreement with no financial penalties until shortly before the closing date. In some instances, LandWell will receive cash proceeds at the time the contract closes and record deferred revenue for some or all of the cash amount received, with such deferred revenue being recognized in subsequent periods. Substantially all of the land in the residential/planned community has been sold; however, we expect the development work to take two to three years to complete.
Current wording
LandWell began marketing land for sale in the residential/planned community in December 2013 and sold the last remaining parcel during 2025. In addition, adjacent to the residential/planned community, LandWell has been actively marketing and selling land zoned for commercial and light industrial use and sold the last of those remaining parcels during the first quarter of 2026. Although land sales may be completed, we do not recognize revenue until we have satisfied the criteria for revenue recognition. In some instances, LandWell will receive cash proceeds at the time the contract closes and record deferred revenue for some or all of the cash amount received, with such deferred revenue being recognized in subsequent periods. Although all of the land in the residential/planned community has been sold, we continue to complete our development obligations. We expect the development work to be completed by the end of 2027.
Previous wording
Net Sales and Operating Income – Substantially all of the net sales from our Real Estate Management and Development Segment in the third quarter and the first nine months of 2025 and 2024 were from land sales. We recognized $6.6 million in revenues on land sales during the third quarter of 2025 compared to $15.3 million in the third quarter of 2024 and $20.8 million in the first nine months of 2025 compared to $52.2 million in the same prior year period. All of the land sales revenues recognized in 2025 and 2024 are related to land sold in prior years. As noted above, we recognize revenue in our residential/planned community over time using cost-based input methods, and all of the land sales revenue we recognized in 2025 and 2024 was under this method of revenue recognition. Land sales revenue in the third quarter and the first nine months of 2025 decreased compared to the same prior year periods due to the decreased pace of development activity for previously sold parcels within the residential/planned community. The pace of development activities is dictated by a number of factors such as city permit and design approval, approval from the Nevada Department of Environmental Protection, labor and materials availability, and the amount of remaining development obligations. Cost of sales related to land sales revenues was $3.5 million and $10.9 million in the third quarter and the first nine months of 2025, respectively, compared to $8.8 million and $29.6 million in the third quarter and the first nine months of 2024, respectively. In addition we recognized income of $14.2 million and $34.2 million related to tax increment infrastructure reimbursement in the first nine months of 2024 and 2025, respectively.
Current wording
Net Sales and Operating Income – Substantially all of the net sales from our Real Estate Management and Development Segment in the first quarter of 2026 and 2025 were from land sales. Net sales increased $1.2 million in the first quarter of 2026 compared to the same period in 2025 primarily due to the sale of the final commercial parcel for $7.3 million, which had no further development obligations and was therefore recognized immediately as revenue. This increase was partially offset by the effects of a slower pace of development activity for previously sold parcels within the residential/planned community as our Real Estate Management and Development Segment nears completion of its development work. As noted above, we recognize revenue in our residential/planned community over time using cost-based input methods. All of the revenue we recognized in the first quarters of 2025 and 2026 for our residential/planned community was under this method of revenue recognition. The pace of development activities is dictated by a number of factors such as city permit and design approval, approval from the Nevada Department of Environmental Protection, labor and materials availability, and the amount of remaining development obligations. Cost of sales was $2.8 million in the first quarter of 2026 compared to $4.6 million in the first quarter of 2025. Included in operating income for the first quarter of 2026 was income related to tax increment infrastructure reimbursement of $5.4 million.
Previous wording
*Outlook –*LandWell is focused on developing the land it manages for the residential/planned community in Henderson with sales primarily to residential builders. At September 30, 2025, substantially all of the land in the residential/planned community had been sold with approximately 20 saleable acres remaining. The sale of the remaining 20 acres closed in October 2025. At September 30, 2025 we have deferred revenue of $28.6 million related to post-closing obligations on land sales closed prior to 2024. Because we recognize revenue over time using cost-based inputs, we will continue to recognize revenue on land previously sold over the development period, although we have already received substantially all the cash proceeds related to these sales. We currently expect to take one to two years to complete our post-closing obligations. Any delays or curtailments in infrastructure development related to post-closing obligation activities will delay the amount of revenue we recognize on previously closed land sales. There are also 15 saleable acres zoned for light industrial and commercial use adjacent to the 2,100 acre residential/planned community. Approximately one-half
Current wording
*Outlook –*LandWell is focused on completing development of the land it manages for the residential/planned community in Henderson. At March 31, 2026, all of the land in the residential/planned community had been sold and all saleable acreage zoned for light industrial and commercial use adjacent to the 2,100 acre residential/planned community has also been sold, with the final parcel closing in the first quarter of 2026. At March 31, 2026 we have deferred revenue of $24.8 million related to post-closing obligations on land sales in the residential/planned community closed prior to 2026. Because we recognize revenue over time using cost-based inputs, we will continue to recognize revenue on land previously sold over the development period, even though we have already received all the cash proceeds related to these sales. We currently expect to recognize all remaining deferred revenue during 2026. Any delays or curtailments in infrastructure development related to post-closing obligation activities would delay the timing of revenue recognized on these previously closed land sales.
Previous wording
of these acres is currently in escrow and is currently scheduled to close in the fourth quarter of 2025. Because this land is not in the residential/planned community we will recognize all the proceeds as land revenue when the sale closes. Under LandWell’s development agreement with the City of Henderson, the issuance of a specified number of housing permits requires LandWell to complete certain large infrastructure projects. LandWell began construction on several of these community-wide large projects in late 2021 with the construction expected to continue for the next two to three years. We expect these land development costs in 2025 to be comparable to 2024 due to the timing of planned infrastructure projects and the availability of certain construction materials. Because these large projects relate to the entirety of the residential/planned community, the costs associated with these large projects are not part of the cost-based inputs used to recognize revenue, and therefore, this spending will not correlate to revenue recognition. However, this spending is expected to be eligible for tax increment reimbursement under our Owner Participation Agreement (“OPA”) with the City of Henderson, and delays or curtailments in eligible infrastructure development activities will also delay LandWell’s ability to submit completed costs to the City for approval of additional OPA note receivables. The maximum reimbursement under the OPA is $209 million. We have collected $46.2 million to date and expect to reach the maximum over the next 7 to 10 years.
Current wording
Under LandWell’s development agreement with the City of Henderson, the issuance of a specified number of housing permits requires LandWell to complete certain large community-wide infrastructure projects. Construction on several of these large projects began in late 2021 and is expected to be completed in 2027. We expect 2026 land development costs to be comparable to those in 2025 due to the timing of planned infrastructure projects and the availability of certain construction materials. Because these large infrastructure projects relate to the entirety of the residential/planned community, the associated costs are not part of the cost-based inputs used to recognize revenue, and therefore, this spending will not correlate to revenue recognition. However, this spending is expected to be eligible for tax increment reimbursement under our Owner Participation Agreement (“OPA”) with the City of Henderson, and delays or curtailments in eligible infrastructure development activities will also delay LandWell’s ability to submit completed costs
Previous wording
Changes in the Market Value of Valhi Common Stock held by Subsidiaries– Our subsidiaries, Kronos and NL, hold shares of our common stock. As discussed in the 2024 Annual Report, we account for our proportional interest in these shares of our common stock as treasury stock at Kronos’ and NL’s historical cost basis. The remaining portion of these shares of our common stock, which are attributable to the noncontrolling interest of Kronos and NL, are reflected in our Condensed Consolidated Balance Sheet at fair value. Kronos and NL recognize unrealized gains or losses on these shares of our common stock in the determination of each of their respective net income or loss. Under the principles of consolidation we eliminate any gains or losses associated with our common stock to the extent of our proportional ownership interest in each subsidiary. We recognized a loss of $.1 million in the third quarter of 2025 compared to a gain of $3.7 million in the third quarter of 2024 and a loss of $1.8 million in the first nine months of 2025 compared to a gain of $4.3 million in the first nine months of 2024 in our Condensed Consolidated Statements of Operations, which represents the unrealized gain (loss) in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.
Current wording
Changes in the Market Value of Valhi Common Stock held by Subsidiaries– Our subsidiaries, Kronos and NL, hold shares of our common stock. As discussed in the 2025 Annual Report, we account for our proportional interest in these shares of our common stock as treasury stock at Kronos’ and NL’s historical cost basis. The remaining portion of these shares of our common stock, which are attributable to the noncontrolling interest of Kronos and NL, are reflected in our Condensed Consolidated Balance Sheet at fair value. Kronos and NL recognize unrealized gains or losses on these shares of our common stock in the determination of each of their respective net income or loss. Under the principles of consolidation we eliminate any gains or losses associated with our common stock to the extent of our proportional ownership interest in each subsidiary. We recognized a gain of $.5 million in the first quarter of 2026 compared to a loss of $1.7 million in the first quarter of 2025 in our Condensed Consolidated Statements of Income, which represents the unrealized gain (loss) in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.
Previous wording
Interest Income and Other– Interest income and other decreased $.8 million in the third quarter and $4.0 million in the first nine months of 2025 compared to the same periods of 2024 primarily due to lower average interest rates and decreased cash balances. See Note 12 to our Condensed Consolidated Financial Statements.
Current wording
Interest Income and Other– Interest income and other decreased $.8 million in the first quarter of 2026 compared to the same period of 2025 primarily due to decreased average investment balances and lower average interest rates. See Note 12 to our Condensed Consolidated Financial Statements.
Previous wording
Other General Corporate Items– Corporate expenses were 11% higher in the third quarter of 2025 compared to the same period in 2024 primarily due to higher litigation fees and related costs. Corporate expenses in the first nine months of 2025 were comparable to the same period in 2024.
Current wording
Other General Corporate Items– Corporate expenses in the first quarter of 2026 declined slightly as compared to the same period in 2025 primarily due to lower administrative and environmental remediation and related costs. Included in corporate expense are:
Previous wording
Overall, we currently expect that our net general corporate expenses in 2025 will be higher than in 2024 primarily due to income recognized in 2024 related to the settlement of a liability for an environmental remediation site in the fourth quarter of 2024. See Note 16 to our Condensed Consolidated Financial Statements.
Current wording
Overall, we currently expect that our net general corporate expenses in 2026 will be higher than in 2025 primarily due to expected increases in litigation fees and related costs. See Note 16 to our Condensed Consolidated Financial Statements.
Previous wording
Interest Expense– Interest expense increased $1.5 million in the third quarter of 2025 and $5.3 million in the first nine months of 2025 compared to the same periods in 2024 primarily due to higher overall debt levels and higher average interest rates as a result of Kronos debt transactions entered into in 2024. Interest expense in the first nine months of 2024 includes a charge of $1.5 million for the write-off of deferred financing costs. See Note 7 to our Condensed Consolidated Financial Statements.
Current wording
Interest Expense– Interest expense increased $1.5 million in the first quarter of 2026 compared to the respective period in 2025 primarily due to higher overall debt levels and higher average interest rates. See Note 7 to our Condensed Consolidated Financial Statements.
Previous wording
We expect interest expense will be higher in 2025 as compared to 2024 primarily due to the higher debt balances as a result of the third quarter acquisition of LPC and higher interest rates on Kronos’ new debt issued in 2024 and 2025.
Current wording
We expect interest expense will be higher in 2026 as compared to 2025 primarily due to higher debt balances and higher interest rates on Kronos’ debt issued in 2025.
Previous wording
Income Tax Expense* *– We recognized income tax expense of $14.3 million in the third quarter of 2025 compared to $34.3 million in the third quarter of 2024 and income tax expense of $30.3 million in the first nine months of 2025 compared to $46.6 million in the first nine months of 2024. The decrease in the third quarter and first nine months of 2025 is primarily due to lower earnings in 2025 and the jurisdictional mix of such earnings, partially offset by the increase to the valuation allowance against our business interest expense carryforwards and the impact of the German tax rate change on our German net deferred tax asset. During interim periods, our effective tax rate may not necessarily correspond to the current period income (loss) before taxes due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections of pre-tax income (loss).
Current wording
Income Tax Expense* *– We recognized income tax expense of $6.3 million in the first quarter of 2026 compared to income tax expense of $8.0 million in the first quarter of 2025. The decrease in the first quarter of 2026 is primarily due to lower earnings in 2026 and the jurisdictional mix of such earnings somewhat offset by a net uncertain tax position of $2.0 million recognized in the first quarter of 2026. During interim periods, our effective tax rate may not necessarily correspond to the current period income (loss) before taxes
Previous wording
We recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid such recognition of deferred income taxes is not available to us. At December 31, 2024, we recognized a deferred income tax liability with respect to our direct investment in Kronos of $49.6 million. There is a maximum amount (or cap) of such deferred income taxes we are required to recognize with respect to our direct investment in Kronos. The maximum amount of the cap is $153.6 million. During the first nine months of 2025, we recognized a non-cash deferred income tax benefit with respect to our direct investment in Kronos of $4.9 million for the decrease in the deferred income taxes required to be recognized with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock, this decrease related to our equity in Kronos’ net income during the period. We recognized a similar deferred income tax expense of $5.4 million in the first nine months of 2024. A portion of the net change with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock during such periods related to our equity in Kronos’ other comprehensive income (loss) items, and the amounts allocated to other comprehensive income (loss) items includes amounts related to our equity in Kronos’ other comprehensive income (loss) items.
Current wording
We recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid such recognition of deferred income taxes is not available to us. At December 31, 2025, we recognized a deferred income tax liability with respect to our direct investment in Kronos of $49.7 million. There is a maximum amount (or cap) of such deferred income taxes we are required to recognize with respect to our direct investment in Kronos. The maximum amount of the cap is $153.6 million. During the first three months of 2026, we recognized a $1.4 million non-cash deferred income tax benefit with respect to our direct investment in Kronos. This benefit reflects a decrease in the deferred income taxes required to be recognized on the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock and was related to our equity in Kronos’ net income during the period. We recognized a similar deferred income tax benefit of $.5 million in the first three months of 2025. A portion of the net change with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock during such periods related to our equity in Kronos’ other comprehensive income (loss) items, and the amounts allocated to other comprehensive income (loss) items includes amounts related to our equity in Kronos’ other comprehensive income (loss) items.
Previous wording
At December 31, 2024, we had significant German corporate and trade net operating loss (“NOL”) carryforwards of $449.3 million (deferred tax asset “DTA” of $71.1 million) and $41.8 million (DTA of $4.5 million), respectively. Prior to December 31, 2024, and using all available evidence, we had concluded that no deferred income tax asset valuation allowance was required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term. At September 30, 2025, we continue to conclude no valuation allowance is required to be recognized for our German DTAs although prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.
Current wording
At December 31, 2025, our Chemicals Segment had German corporate and trade net operating loss (“NOL”) carryforwards of $510.8 million (deferred tax asset (“DTA”) of $57.2 million) and $46.3 million (DTA of $5.0 million), respectively. We have previously concluded no valuation allowance is required to be recognized with respect to such carryforwards principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term. At March 31, 2026, we continue to conclude no valuation allowance is required to be recognized for our German DTAs. However, prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.
Previous wording
Noncontrolling Interest in Net Income of Subsidiaries– Noncontrolling interest in operations of subsidiaries decreased in the first nine months of 2025 compared to the same period in 2024 primarily due to decreased operating income at Kronos. See Note 14 to our Condensed Consolidated Financial Statements.
Current wording
Noncontrolling Interest in Net Income of Subsidiaries– Noncontrolling interest in operations of subsidiaries in the first three months of 2026 was comparable to the same period in 2025 primarily due to decreased operating income at our Chemicals Segment offset by higher operating income from our Component Products and Real Estate and Management Development segments. See Note 14 to our Condensed Consolidated Financial Statements.
Previous wording
Cash used in operating activities was $136.1 million in the first nine months of 2025 compared to cash used in operating activities of $1.8 million in the first nine months of 2024. This $134.3 million increase in cash used in operating activities in the first nine months of 2025 includes:
Current wording
Cash used in operating activities was $46.1 million in the first three months of 2026 compared to cash used in operating activities of $155.9 million in the first three months of 2025. This $109.8 million decrease in cash used in operating activities in the first three months of 2026 includes:
Previous wording
As noted in our discussion of our Real Estate Management and Development segment above, we have sold the majority of the land in our residential/planned community, and in accordance with our development agreement with the City of Henderson and our contractual obligations with builders, we expect to complete our land development obligations over the next two to three years. Because we have largely received cash proceeds from land sales, we expect LandWell to generate negative operating cash flows as it completes its required land development work.
Current wording
As noted in our discussion of our Real Estate Management and Development segment above, we have sold all of the land in our residential/planned community, and in accordance with our development agreement with the City of Henderson and our contractual obligations with builders, we expect to complete our land development obligations over the next two years. Because we have largely received cash proceeds from land sales, we expect LandWell to generate negative operating cash flows as it completes its required land development work.
Previous wording
During the nine months ended September 30, 2025, we spent $35.8 million in capital expenditures including $32.7 million in our Chemicals Segment and $3.1 million in our Component Products Segment.
Current wording
During the three months ended March 31, 2026, we spent $10.6 million in capital expenditures including $10.2 million in our Chemicals Segment and $.4 million in our Component Products Segment.
Previous wording
The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon a number of factors including our current and future expected results of operations, financial condition, cash requirements for our businesses, contractual and other 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 might be paid. There are currently no contractual restrictions on the amount of dividends which we may pay. Distributions to noncontrolling interest in subsidiaries in the first nine months of 2025 are comprised of CompX dividends paid to shareholders other than NL, Kronos dividends paid to shareholders other than us and NL, and LandWell dividends paid to partners other than us and BMI.
Current wording
The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon a number of factors including our current and future expected results of operations, financial condition, cash requirements for our businesses, contractual and other 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 might be paid. There are currently no contractual restrictions on the amount of dividends which we may pay. Distributions to noncontrolling interest in subsidiaries in the first three months of 2026 are comprised of CompX dividends paid to shareholders other than NL, Kronos dividends paid to shareholders other than us and NL, and LandWell dividends paid to partners other than us and BMI.
Previous wording
or treasury stock purchases. From time-to-time we will incur indebtedness, generally to (i) fund short-term working capital needs, (ii) refinance existing indebtedness, (iii) make investments in marketable and other securities (including the acquisition of securities issued by our subsidiaries and affiliates) or (iv) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business. Occasionally we sell assets outside the ordinary course of business, and we generally use the proceeds to (i) repay existing indebtedness (including indebtedness which may have been collateralized by the assets sold), (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.
Current wording
Our primary source of liquidity on an ongoing basis is our cash flows from operating activities and borrowings under various lines of credit and notes. We generally use these amounts to (i) fund capital expenditures, (ii) repay short-term indebtedness incurred primarily for working capital purposes and (iii) provide for the payment of dividends (including dividends paid to us by our subsidiaries) or treasury stock purchases. From time-to-time we will incur indebtedness, generally to (i) fund short-term working capital needs, (ii) refinance existing indebtedness, (iii) make investments in marketable and other securities (including the acquisition of securities issued by our subsidiaries and affiliates) or (iv) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business. Occasionally we sell assets outside the ordinary course of business, and we generally use the proceeds to (i) repay existing indebtedness (including indebtedness which may have been collateralized by the assets sold), (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.
Previous wording
Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending September 30, 2026) and long-term obligations (defined as the five-year period ending September 30, 2030). Kronos’ Global Revolver matures in July 2029, and at September 30, 2025 Kronos had total availability for borrowing of approximately $342 million less any amounts outstanding. The borrowing base is calculated at least quarterly, and the amount available for borrowing may change based on applicable period end balances. See Note 7 to our Condensed Consolidated Financial Statements. If actual developments differ from our expectations, our liquidity could be adversely affected.
Current wording
Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending March 31, 2027) and long-term obligations (defined as the five-year period ending March 31, 2031). Kronos’ Global Revolver matures in July 2029, and at March 31, 2026 Kronos had total availability for borrowing of approximately $287 million less any amounts outstanding. The borrowing base is calculated at least quarterly, and the amount available for borrowing may change based on applicable period end balances. See Note 7 to our Condensed Consolidated Financial Statements. If actual developments differ from our expectations, our liquidity could be adversely affected.
Previous wording
At September 30, 2025, we had an aggregate of $232.8 million of restricted and unrestricted cash, cash equivalents and marketable securities, including $34.6 million held by our non-U.S. subsidiaries. A detail by entity is presented in the table below.
Current wording
At March 31, 2026, we had an aggregate of $222.8 million of restricted and unrestricted cash, cash equivalents and marketable securities, including $23.7 million held by our non-U.S. subsidiaries. A detail by entity is presented in the table below.
Previous wording
We currently expect our aggregate capital expenditures for 2025 will be approximately $49 million as follows:
Current wording
We currently expect our aggregate capital expenditures for 2026 will be approximately $64 million as follows:
Previous wording
In addition, LandWell expects to spend approximately $30 million on land development costs during 2025.
Current wording
In addition, LandWell expects to spend approximately $39 million on land development costs during 2026.
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Current report — wording carried from elsewhere
and the impact of broader economic conditions, consumer confidence, and geopolitical events affecting demand for its products or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Current report — wording carried from elsewhere
due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections of pre-tax income (loss).
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
We reported a net loss attributable to Valhi stockholders of $4.4 million or $.15 per diluted share in the first nine months of 2025 compared to net income attributable to Valhi stockholders of $85.2 million or $2.99 per diluted share in the first nine months of 2024. Our net income attributable to Valhi stockholders decreased from 2024 to 2025 primarily due to the net effects of:
Previous report — wording carried elsewhere
Our diluted net income per share in the first nine months of 2024 includes:
Previous report — wording carried elsewhere
The $11 million increase in our Chemicals Segment’s net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as its euro-denominated sales were translated into more U.S. dollars in 2025 as compared to 2024. The strengthening of the U.S. dollar relative to the Canadian dollar and the weakening of the U.S. dollar relative to the Norwegian krone in 2025 did not have a significant effect on the reported amount of our Chemicals Segment’s net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations is denominated in the U.S. dollar.
Previous report — wording carried elsewhere
Our Component Products Segment’s expectations for its operations and the markets it serves are based on a number of factors outside its control. Currently, our Component Products Segment’s supply chains are stable and transportation and logistical delays are
Previous report — wording carried elsewhere
Our primary source of liquidity on an ongoing basis is our cash flows from operating activities and borrowings under various lines of credit and notes. We generally use these amounts to (i) fund capital expenditures, (ii) repay short-term indebtedness incurred primarily for working capital purposes and (iii) provide for the payment of dividends (including dividends paid to us by our subsidiaries)