NLI HOLDINGS, INC.

Previous wording

Our net income attributable to NL stockholders was $4.3 million, or $0.9 per share, in the first quarter of 2026 compared to $.7 million, or $.01 per share, in the first quarter of 2025. As more fully described below, the increase in our net income attributable to NL stockholders from 2025 to 2026 is primarily due to the net effects of:

Current wording

Our net income attributable to NLI stockholders was $9.0 million, or $.18 per share, in the second quarter of 2026 compared to $.3 million, or $.01 per share, in the second quarter of 2025. As more fully described below, the increase in our net income attributable to NLI stockholders from 2025 to 2026 is primarily due to the net effects of:

Previous wording

CompX is our component products business and corporate expense relates to NL. Each of these items is further discussed below.

Current wording

CompX is our component products business and corporate expense relates to NLI. Each of these items is further discussed below.

Previous wording

CompX’s segment profit in the first quarter of 2026 was $7.1 million compared to $5.9 million in the same period of 2025. The increase in segment profit 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 wording

CompX’s segment profit in the second quarter of 2026 was $8.9 million compared to $6.3 million in the same period of 2025. CompX’s segment profit for the first six months of 2026 was $16.0 million compared to $12.2 million for the comparable prior year period. CompX’s segment profit increased in the second quarter and for the first six months of 2026 due to higher sales and gross margins, predominantly at the Security Products reporting unit, and to a lesser extent, at the Marine Components reporting unit.

Previous wording

Net sales– CompX’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. See discussion of reporting units below.

Current wording

Net sales– CompX’s net sales increased $3.3 million and $3.6 million in the second quarter and for the first six months of 2026, respectively, compared to the same periods in 2025 due to higher Security Products sales across a variety of markets and higher Marine Components sales to the industrial market. See discussion of reporting units below.

Previous wording

Cost of sales and gross margin– CompX’s cost of sales as a percentage of 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. Gross margin percentage increased in the first quarter of 2026 compared to the same period in 2025 primarily due to higher gross margin percentage at Security Products. See discussion of reporting units below.

Current wording

Cost of sales and gross margin– CompX’s cost of sales as a percentage of net sales improved by 3.7% and 3.1% in the second quarter and first six months of 2026, respectively, compared to the same periods in 2025. As a result, CompX’s gross margin as a percentage of sales increased over the same periods. The improvement in CompX’s gross margin percentage for the second quarter and first six months of 2026 was primarily due to a higher gross margin percentage at Security Products. In addition, improved gross margin performance at Marine Components contributed favorably to the increase in the second-quarter comparative period. See discussion of reporting units below.

Previous wording

Selling, general and administrative expenses– CompX’s selling, general and administrative expenses consist primarily of personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to CompX’s business unit and corporate management activities, as well as any gains and losses on property and equipment. CompX’s selling, general and administrative expenses for the first quarter of 2026 were comparable to the same period in 2025. CompX’s selling, general and administrative expenses as a percentage of net sales for the first quarter of 2026 decreased slightly due to increased coverage of selling, general and administrative expenses as a result of higher sales.

Current wording

Selling, general and administrative expenses– CompX’s selling, general and administrative expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales, administrative costs relating to CompX’s business unit and corporate management activities, and gains and losses on property and equipment. CompX’s selling, general and administrative expenses for the second quarter and first six months of 2026 were comparable to the same periods in 2025. CompX’s selling, general and administrative expenses as a percentage of net sales decreased in the second quarter and first six months of 2026 due to higher coverage of operating costs and expenses as a result of higher sales.

Previous wording

Segment profit– As a percentage of net sales, CompX’s segment profit for the first quarter of 2026 increased compared to the same period of 2025 and was primarily impacted by the factors impacting sales, cost of sales, gross margin and selling, general and administrative expenses. See discussion of reporting units below.

Current wording

Segment profit– As a percentage of net sales, CompX’s segment profit for the second quarter and the first six months of 2026 increased compared to the same periods of 2025 and was primarily impacted by the factors impacting CompX’s sales, cost of sales, gross margin and selling, general and administrative expenses. See discussion of reporting units below.

Previous wording

Marine Components– 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. 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. Reporting unit profit margin decreased primarily due to the factors impacting gross margin discussed above, partially offset by increased coverage of selling, general and administrative expenses on higher sales.

Current wording

Marine Components– Marine Components net sales increased 6% in both the second quarter and first six months of 2026 compared to the same periods in 2025. The increase in second quarter sales was primarily due to $1.6 million higher sales to the industrial market, partially offset by $1.0 million lower sales to the government market. The increase in sales for the first six months of 2026 was primarily due to $3.5 million higher sales to the industrial market, partially offset by $1.5 million lower sales to the towboat market and $1.0 million lower sales to the government market. Towboat market sales in the first quarter of 2025 benefited from a one-time customer stocking event that did not repeat in 2026.

Previous wording

CompX manufactures substantially all its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. CompX 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, CompX incurred tariff-related surcharges on certain raw materials, primarily electronic components. In addition, some of CompX’s U.S.-based suppliers are applying tariff-related surcharges on certain domestically sourced materials. Where possible, CompX increases selling prices to recover these higher 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, duration of tariffs, and its customers’ ability to substitute alternative products. CompX will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.

Current wording

CompX manufactures substantially all of its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. CompX also sources certain components, primarily electronic components, from suppliers in Asia, including China. Beginning in the second quarter of 2025 and continuing through the second quarter of 2026, CompX experienced cost increases for certain imported raw materials, primarily electronic components, including increases in tariffs and shipping costs. In addition, inflationary pressures have increased costs for certain domestically-sourced raw materials. Where possible, CompX increases selling prices to recover these higher 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, duration of tariffs, and CompX’s customers’ ability to substitute alternative products. Accordingly, CompX continues to closely monitor raw material costs, including zinc, brass, aluminum, steel and energy, as well as current and anticipated customer demand levels, to ensure its production capacity and inventory levels remain aligned with market conditions.

Previous wording

Corporate expense– Corporate expenses were $3.0 million in the first quarter of 2026, slightly higher than in the first quarter of 2025 primarily due to higher general and administrative costs. Included in corporate expense in the first quarter of 2025 and 2026 are:

Current wording

Corporate expense– Corporate expenses were $2.8 million in the second quarter of 2026, $.7 million lower than in the second quarter of 2025, primarily due to lower environmental remediation and related costs. Included in corporate expense in the second quarter of 2025 and 2026 are:

Previous 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 14 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, predominantly in the second half of the year. See Note 14 to our Condensed Consolidated Financial Statements.

Previous wording

Interest and dividend income– Interest and dividend income decreased 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.

Current wording

Interest and dividend income– Interest and dividend income decreased in the second quarter and first six months of 2026 compared to the same periods of 2025 primarily due to decreased average investment balances and lower average interest rates.

Previous wording

Marketable equity securities– We recognized an unrealized gain of $2.7 million on the change in value of our marketable equity securities in the first quarter of 2026 compared to an unrealized loss of $8.5 million in the first quarter of 2025. See Note 5 to our Condensed Consolidated Financial Statements.

Current wording

Marketable equity securities– We recognized an unrealized gain of $.5 million on the change in value of our marketable equity securities in the second quarter of 2026 compared to an unrealized loss of $.1 million in the second quarter of 2025. We recognized an unrealized gain of $3.1 million on the change in value of our marketable equity securities in the first six months of 2026 compared to an unrealized loss of $8.6 million in the first six months of 2025. See Note 5 to our Condensed Consolidated Financial Statements.

Previous wording

Income tax expense– We recognized income tax expense of $1.5 million in the first quarter of 2026 compared to an income tax benefit of less than $.1 million in the first quarter of 2025. In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. Therefore, our full-year effective income tax rate will generally be lower than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in earnings of Kronos. Conversely, our effective income tax rate will generally be higher than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in losses of Kronos. During interim periods, our effective income tax rate may not necessarily correspond to the foregoing due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections. We received dividends from Kronos of $1.8 million in each of the first quarters of 2025 and 2026, respectively.

Current wording

Income tax expense– We recognized income tax expense of $2.5 million in the second quarter of 2026 compared to an income tax benefit of less than $.1 million in the second quarter of 2025 and income tax expense of $3.9 million in the first half of 2026 compared to an income tax benefit of $.1 million in the first half of 2025. In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. Therefore, our full-year effective income tax rate will generally be lower than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in earnings of Kronos. Conversely, our effective income tax rate will generally be higher than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in losses of Kronos. During interim periods, our effective income tax rate may not necessarily correspond to the foregoing due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections. We received dividends from Kronos of $3.5 million in the first six months of 2025 and 2026, respectively.

Previous wording

Our effective tax rate attributable to our equity in earnings of Kronos, including the effect of the nontaxable dividends we received from Kronos, was 22.7% in the first three months of 2026 compared to 15.2% in the first three months of 2025. The change in our effective rate from 2025 to 2026 is primarily attributable to Kronos’ anticipated higher full year earnings in 2026 as compared to 2025. See Note 12 to our Condensed Consolidated Financial Statements for more information about our 2026 income tax items, including a tabular reconciliation of our statutory tax expense to our actual expense.

Current wording

Our effective tax rate attributable to our equity in earnings of Kronos, including the effect of the nontaxable dividends we received from Kronos, was an effective tax rate of 12.4% in the first six months of 2026 compared to a negative effective tax rate of .9% in the first six months of 2025. The change in our effective rate from 2025 to 2026 is primarily attributable to Kronos’ anticipated higher full year earnings in 2026 as compared to 2025. See Note 12 to our Condensed Consolidated Financial Statements for more information about our 2026 income tax items, including a tabular reconciliation of our statutory tax expense to our actual expense.

Previous wording

Noncontrolling interest– Noncontrolling interest in net income of CompX increased during the first quarter of 2026 compared to the same prior year period. The noncontrolling interest we recognize in each period is directly related to the level of earnings at CompX for the period.

Current wording

Noncontrolling interest– Noncontrolling interest in net income of CompX increased during the second quarter and first six months of 2026 compared to the same prior year period. The noncontrolling interest we recognize in each period is directly related to the level of earnings at CompX for the period.

Previous wording

Kronos 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. Kronos’ 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, Kronos’ 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 its European market.

Current wording

Kronos started 2026 with average TiO 2 selling prices lower than at the beginning of 2025; however, its average TiO 2 selling prices increased 4% during the first six months of 2026. During the second quarter of 2026, Kronos announced and implemented various price increases and surcharges in response to higher operating costs. Kronos’ average TiO 2 selling prices for the first six months of 2026 were 4% lower than its average TiO 2 selling prices for the first six months of 2025. Overall, Kronos’ sales volumes increased in the first six months of 2026 compared to the same period in 2025 primarily due to market share gains across all markets resulting from changing competitive and supply conditions and the continued effect of anti-dumping duties which remain in effect in certain markets.

Previous wording

During the fourth quarter of 2025, Kronos 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, Kronos’ normal production capacity range has been adjusted to reflect its production capabilities under this new cost structure.

Current wording

During the fourth quarter of 2025, Kronos 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, Kronos adjusted its normal production capacity range in 2026 to reflect its production capabilities under this new cost structure.

Previous wording

Excluding the effect of changes in currency exchange rates, Kronos’ 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.

Current wording

Excluding the effect of changes in currency exchange rates, Kronos’ cost of sales per metric ton of TiO 2 sold in the first half of 2026 was lower than the comparable period 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 costs (primarily feedstock costs) and lower unabsorbed fixed costs.

Previous wording

Net sales– Kronos’ net sales in the first quarter of 2026 increased 4%, or $20.0 million, compared to the first quarter of 2025 primarily 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 Kronos estimates increased its 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.

Current wording

Net sales– Kronos’ net sales in the second quarter of 2026 increased 13%, or $63.7 million, compared to the second quarter of 2025 primarily due to the effects of a 16% increase in sales volumes (which increased net sales by approximately $79 million) and the favorable impact of changes in currency exchange rates (primarily the euro) which it estimates increased its net sales by approximately $10 million. These increases were partially offset by a 3% decrease in average TiO 2 selling prices (which decreased net sales by approximately $15 million) and by changes in product mix, primarily due to lower average selling prices and lower sales volumes in Kronos’ complementary businesses. TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, change in the relative level of supply and demand as well as change in raw material and other manufacturing costs.

Previous wording

Cost of sales and gross margin– Kronos’ costof sales increased by $43.5 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 wording

Cost of sales and gross margin– Kronos’ costof sales increased by $23.7 million, or 5%, in thesecond quarter of 2026 compared to thesecond quarter of 2025 due to a 16% increase in sales volumesand the unfavorable impact from changes in currency exchange rates. These increases were partially offset by lower production costs resulting primarily from the cost reduction initiatives implemented in the fourth quarter of 2025, lower raw material costs (primarily feedstock) and lower unabsorbed fixed costs. Unabsorbed fixed costs were not material in thesecond quarter of 2026 compared to approximately $20 million in thesecond quarter of 2025.

Previous wording

Kronos’ 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 wording

Kronos’ cost of sales as a percentage of net sales improved to 82% in the second quarter of 2026 compared to 87% in the same period of 2025, primarily due to the favorable effects of higher sales volumes and lower production costs, discussed above. These favorable impacts were partially offset by lower average TiO 2 selling prices and the unfavorable impact of lower average selling prices and sales volumes within Kronos’ complementary businesses.

Previous wording

Kronos’ 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, Kronos’ 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 costs and changes in currency exchange rates.

Current wording

Kronos’ gross margin as a percentage of net sales increased to 18% in the second quarter of 2026 compared to 13% in the second quarter of 2025. Kronos’ gross margin as a percentage of net sales increased primarily due to the net effects of higher sales volumes, lower average TiO 2 selling prices, lower production costs as discussed above, and the unfavorable impact from changes in currency exchange rates.

Previous wording

Selling, general and administrative expense– Kronos’ selling, general and administrative expense increased $2.0 million, or 3%, in the first quarter of 2026 compared to the first quarter of 2025 as the negative impact of currency exchange rates exceeded the benefits of lower costs during the quarter. Excluding the effects of currency exchange rates, Kronos realized lower selling, general and administrative expenses as a result of its (i) realization of cost savings as a result of the fourth quarter of 2025 restructuring, (ii) lower warehousing costs due to lower average finished products inventory volumes and (iii) non-recurring distribution costs incurred in the first quarter of 2025 associated with tariff mitigation strategies. Selling, general and administrative expense as a percentage of net sales decreased to 12% in thefirst quarter of 2026 compared to 13% in the first quarter of 2025 due to the effects of higher sales.

Current wording

Selling, general and administrative expense– Kronos’ selling, general and administrative expense increased $2.4 million, or 4%, in the second quarter of 2026 compared to the second quarter of 2025, as the unfavorable impact of changes in currency exchange rates and higher distribution costs more than offset cost savings realized from the fourth quarter of 2025 restructuring. Excluding the effects of changes in currency exchange rates, Kronos’ distribution costs increased primarily due to higher sales volumes and elevated U.S. freight rates beginning early in the second quarter of 2026. Kronos’ selling, general and administrative expense as a percentage of net sales decreased to 12% in the second quarter of 2026 compared to 13% in the second quarter of 2025, primarily due to the effects of higher sales.

Previous wording

Income (loss) from operations– Kronos’ income from operations decreased by $25.8 million to $12.6 million in the first quarter of 2026 compared to $38.4 million in the first quarter of 2025, primarily as a result of the factors impacting gross margin discussed above. Kronos estimates that changes in currency exchange rates decreased its income from operations 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.

Current wording

Income from operations– Kronos’ income from operations increased by $30.2 million to $37.6 million in the second quarter of 2026 compared to $7.4 million in the second quarter of 2025, primarily as a result of the factors impacting gross margin discussed above. Kronos estimates that changes in currency exchange rates decreased income from operations by approximately $12 million in the second quarter of 2026 compared to the same period in 2025, as discussed in the effects of currency exchange rates section below.

Previous wording

Other non-operating income (expense)– Kronos’ interest expense in the first quarter of 2026 increased $2.7 million compared to the first quarter of 2025 primarily due to higher average debt balances and higher interest rates. Kronos recognized an unrealized gain of $.3 million in the first quarter of 2026 related to the change in marketable equity securities compared to an unrealized loss of $1.0 million in the same period of 2025.

Current wording

Kronos’ interest expense in the first six months of 2026 increased by $4.1 million compared to the first six months of 2025 primarily due to higher average debt balances and higher interest rates. Other components of net periodic pension and OPEB costs in the first six months of 2026 increased $.5 million compared to the first six months of 2025 primarily due to lower expected return on plan assets. Kronos recognized an unrealized gain of $.3 million in the first six months of 2026 related to the change in marketable equity securities compared to an unrealized loss of $1.0 million in the same period of 2025.

Previous wording

Income tax expense– Kronos recognized income tax expense of $2.8 million in the first quarter of 2026 compared to income tax expense of $7.6 million in the first quarter of 2025. The decrease is primarily due to lower earnings in the first quarter of 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. Kronos’ earnings and losses are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of its non-U.S. operations are generally higher than the income tax rates applicable to its U.S. operations. Kronos would generally expect its overall effective tax rate, excluding the effect of any increase or decrease in its deferred income tax asset valuation allowance, changes in its reserve for uncertain tax positions, or tax rate changes to be higher than the U.S. federal statutory tax rate of 21% primarily because of its sizeable non-U.S. operations.

Current wording

Kronos’ recognized income tax expense of $10.5 million in the first six months of 2026 compared to income tax expense of $11.1 million in the same period of 2025. The decrease is primarily due to the jurisdictional mix of earnings partially offset by a net uncertain tax position of $2.0 million recognized in the first quarter of 2026. Kronos’ earnings and losses are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of Kronos’ non-U.S. operations are generally higher than the income tax rates applicable to its U.S. operations. Kronos would generally expect its overall effective tax rate, excluding the effect of any increase or decrease in its deferred income tax asset valuation allowances, changes in its reserve for uncertain tax positions, or tax rate changes to be higher than the U.S. federal statutory tax rate of 21% primarily because of Kronos’ sizeable non-U.S. operations.

Previous wording

the euro, other major European currencies and the Canadian dollar. A portion of Kronos’ sales generated from its non-U.S. operations is denominated in the U.S. dollar (and consequently Kronos’ non-U.S. operations will generally hold U.S. dollars from time to time). Certain raw materials used in all Kronos production facilities, primarily titanium-containing feedstocks, are purchased primarily in U.S. dollars, while labor and other production and administrative costs are incurred primarily in local currencies. Consequently, the translated U.S. dollar value of Kronos’ non-U.S. sales and operating results are subject to currency exchange rate fluctuations which may favorably or unfavorably impact reported earnings and may affect the comparability of period-to-period operating results. In addition to the impact of the translation of sales and expenses over time, Kronos’ non-U.S. operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, (ii) changes in currency exchange rates during time periods when Kronos’ non-U.S. operations are holding non-local currency (primarily U.S. dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time. Kronos periodically uses currency forward contracts to manage a portion of its currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts it holds from time to time serves in part to mitigate the currency transaction gains or losses it would recognize from the first two items described above.

Current wording

Kronos has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada). The majority of Kronos’ sales from non-U.S. operations are denominated in currencies other than the U.S. dollar, principally the euro, other major European currencies and the Canadian dollar. A portion of Kronos’ sales generated from its non-U.S. operations is denominated in the U.S. dollar (and consequently Kronos’ non-U.S. operations will generally hold U.S. dollars from time to time). Certain raw materials used in all Kronos production facilities, primarily titanium-containing feedstocks, are purchased primarily in U.S. dollars, while labor and other production and administrative costs are incurred primarily in local currencies. Consequently, the translated U.S. dollar value of Kronos’ non-U.S. sales and operating results are subject to currency exchange rate fluctuations which may favorably or unfavorably impact reported earnings and may affect the comparability of period-to-period operating results. In addition to the impact of the translation of sales and expenses over time, Kronos’ non-U.S. operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, (ii) changes in currency exchange rates during time periods when Kronos’ non-U.S. operations are holding non-local currency (primarily U.S. dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time. Kronos periodically uses currency forward contracts to manage a portion of its currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts it holds from time to time serves in part to mitigate the currency transaction gains or losses it would recognize from the first two items described above.

Previous wording

The $30 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as Kronos’ 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 Kronos’ net sales, as a substantial portion of the sales generated by its Canadian and Norwegian operations is denominated in the U.S. dollar.

Current wording

The $10 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as Kronos’ 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 Kronos’ net sales, as a substantial portion of the sales generated by its Canadian and Norwegian operations is denominated in the U.S. dollar.

Previous wording

The $6 million decrease in income from operations was comprised of the following:

Current wording

The $12 million decrease in income from operations was comprised of the following:

Previous wording

During the fourth quarter of 2025, Kronos 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. Kronos operated its facilities slightly below normal capacity during the first quarter of 2026. Kronos’ operating model balances improved cost efficiency with flexibility to respond to changes in demand. During the first quarter of 2026, Kronos 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 wording

The cost-reduction initiatives Kronos implemented during the fourth quarter of 2025, including workforce reductions and other measures designed to align its cost structure with current demand continue to benefit Kronos’ operating results in 2026. During the second quarter of 2026, Kronos realized improved gross margins, and it expects margins to continue to benefit from lower cost inventory produced during 2026 and more favorable selling prices. Kronos’ operational restructuring allows it to run its facilities more efficiently at lower production rates for extended periods while maintaining flexibility to respond to changing market conditions. Kronos operated its facilities within its normal capacity range during the first six months of 2026, and Kronos currently expects to continue operating within its normal capacity range for the remainder of the year.

Previous wording

Kronos is focused on improving operating margins through pricing actions, disciplined cost management, and continued execution of its operating cost structural realignment initiatives. Kronos 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 wording

Kronos remains focused on improving profitability through pricing actions, disciplined cost management and continued execution of its operating cost structural realignment initiatives. Kronos also continues to pursue targeted sales growth opportunities in regions affected by changing competitive and supply conditions, logistical challenges and trade measures that have reduced the competitiveness of certain imports.

Previous wording

Kronos’ liquidity and capital resources remain sufficient to support its operations and planned capital investments. While Kronos typically experiences significant seasonal cash usage in the first quarter, it expects cash on hand to improve over the remainder of the year. Kronos will continue to actively manage working capital, including inventories and receivables, to bolster operating cash flows and maintain financial flexibility. Kronos 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 wording

Kronos’ liquidity and capital resources remain sufficient to support its operations and planned capital investments. While Kronos typically experiences significant seasonal cash usage in the first half of the year, it expects cash on hand to improve over the remainder of the year. Kronos will continue to actively manage working capital, including inventories and receivables, to bolster operating cash flows and maintain financial flexibility. Kronos believes its revolving credit facility 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.

Previous wording

Net cash used in operating activities was $3.5 million in the first three months of 2026 compared to net cash used in operating activities of $47.5 million in the first three months of 2025. The decrease in net cash used in operating activities in the first three months of 2026 is primarily due to the net effects of:

Current wording

Net cash provided by operating activities was $7.4 million in the first six months of 2026 compared to net cash used in operating activities of $40.2 million in the first six months of 2025. The increase in net cash provided by operating activities in the first six months of 2026 is primarily due to the net effects of:

Previous wording

We do not have complete access to CompX’s cash flows in part because we do not own 100% of CompX. A detail of our consolidated cash flows from operating activities is presented in the table below. Intercompany dividends have been eliminated. The reference to NL Parent in the table below is a reference to NL Industries, Inc., as the parent company of CompX and our wholly-owned subsidiaries.

Current wording

We do not have complete access to CompX’s cash flows in part because we do not own 100% of CompX. A detail of our consolidated cash flows from operating activities is presented in the table below. Intercompany dividends have been eliminated. The reference to NLI Parent in the table below is a reference to NLI Holdings, Inc., as the parent company of CompX and our wholly-owned subsidiaries.

Previous wording

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in average days sales outstanding increased from December 31, 2025 to March 31, 2026 primarily as a result of relative changes in the timing of sales and collections relative to the end of the quarter. Total average number of days in inventory decreased from December 31, 2025 to March 31, 2026 primarily due to higher sales volumes in the first quarter of 2026 as compared to the fourth quarter of 2025 at CompX’s Marine Components reporting unit. For comparative purposes, we have provided December 31, 2024 and March 31, 2025 numbers below.

Current wording

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in average days sales outstanding increased from December 31, 2025 to June 30, 2026 primarily as a result of differences in the timing of sales and collections relative to the end of the quarter, including differences arising from CompX’s fiscal month-end close occurring before the calendar month-end, when certain large customers typically remit payments. Total average number of days in

Previous wording

Our capital expenditures, all of which relate to CompX, were $.4 million in the first three months of 2026 compared to $.8 million in the first three months of 2025. During the first three months of 2026, Valhi repaid a net $.6 million under the promissory note ($3.1 million of gross borrowings and $3.7 million of gross repayments). During the first three months of 2025, the promissory note balance with Valhi had net activity of nil ($.5 million of gross borrowings and $.5 million of gross repayments).

Current wording

Our capital expenditures, all of which relate to CompX, were $1.5 million in the first six months of 2026 compared to $2.2 million in the first six months of 2025. During the first six months of 2026, Valhi repaid a net $1.2 million under the promissory note ($7.6 million of gross borrowings and $8.8 million of gross repayments). 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).

Previous wording

In February 2026, our board of directors declared a quarterly dividend of $.10 per share and in February 2025 our board of directors declared a quarterly dividend of $.09 per share. The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon our financial condition, cash requirements, contractual obligations 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.

Current wording

Our board of directors declared a quarterly dividend of $.10 per share in each of the first, second and third quarters of 2026, and our board of directors declared a quarterly dividend of $.09 per share in each of the first, second and third quarters of 2025. The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon our financial condition, cash requirements, contractual obligations 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.

Previous wording

Cash flows from financing activities in each of the first three months of 2025 and 2026 also include CompX dividends paid to its stockholders other than us.

Current wording

Cash flows from financing activities in each of the first six months of 2025 and 2026 also include CompX dividends paid to its stockholders other than us.

Previous wording

At March 31, 2026, we had aggregate restricted and unrestricted cash and cash equivalents of $105.4 million, all of which was held in the U.S. A detail by entity is presented in the table below.

Current wording

At June 30, 2026, we had aggregate restricted and unrestricted cash and cash equivalents of $110.4 million, all of which was held in the U.S. A detail by entity is presented in the table below.