VALHI INC /DE/

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2026

Note 1 – Organization and basis of presentation:

Organization**–**We are majority owned by a wholly-owned subsidiary of Contran Corporation (“Contran”), which owns approximately 91% of our outstanding common stock at September 30, 2026. A majority of Contran’s outstanding voting stock is held directly by Lisa K. Simmons and by family stockholders (Thomas C. Connelly (the husband of Ms. Simmons’ late sister), a family-owned entity and various family trusts established for the benefit of Ms. Simmons, Mr. Connelly and their children) who are required to vote their shares of Contran voting stock in the same manner as Ms. Simmons. Such voting rights are personal to Ms. Simmons and last through April 22, 2030. The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at September 30, 2026, Ms. Simmons and the Family Trust may be deemed to control Contran and us.

*Basis of Presentation –*Consolidated in this Quarterly Report are the results of our wholly-owned and majority-owned subsidiaries, including NLI Holdings, Inc. (“NLI”) (formerly NL Industries, Inc.), Kronos Worldwide, Inc., CompX International Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and The LandWell Company (“LandWell”). Kronos (NYSE: KRO), NLI Holdings, Inc. (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the Securities and Exchange Commission (“SEC”).

The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 that we filed with the SEC on March 10, 2026 (the “2025 Annual Report”). In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments), in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. We have condensed the Consolidated Balance Sheet at December 31, 2025 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, 2025) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our results of operations for the interim periods ended September 30, 2026 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our 2025 Consolidated Financial Statements contained in our 2025 Annual Report.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Valhi, Inc. and its subsidiaries (NYSE: VHI), taken as a whole.

Note 2 – Business segment information:

Our control of Kronos includes approximately 50% we hold directly and approximately 31% held directly by NLI. We own approximately 83% of NLI. Our control of CompX is through NLI. We own approximately 63% of BMI. Our control of LandWell includes the approximately 27% we hold directly and 50% held by BMI.

Our chief operating decision maker (“CODM”) evaluates segment performance based on each segment’s operating income (loss), which is defined as income (loss) before income taxes and interest expense, exclusive of certain non-recurring items (such as gains or losses on disposition of business units and other long-lived assets outside the ordinary course of business and certain legal settlements) and certain general corporate income and expense items (including securities transactions gains and losses and interest and dividend income), which are not attributable to the operations of thereportable operating segments. Segment results we report may differ from amounts separately reported by our various subsidiaries due to purchase accounting adjustments and related amortization or

differences in the way we define operating income (loss). Intersegment sales are not material. Interest income included in the calculation of segment operating income (loss) is not significant for the three and nine months ended September 30, 2025 and 2026.

Included in the determination of the Real Estate Management and Development Segment operating income are infrastructure reimbursements and a gain from the sale of a building. See Note 12. During the third quarter of 2025, our Chemicals Segment recognized a non-cash gain of $4.6 million from the remeasurement of an earn-out liability associated with its 2024 acquisition of the remaining ownership interest in Louisiana Pigment Company, L.P. ("LPC"). Based on management’s assessment that the performance thresholds required to trigger payment of the earn-out were no longer probable of being achieved, the estimated fair value of the earn-out liability was reduced to zero, resulting in the recognition of the gain. Additional information regarding the LPC acquisition is included in Note 3 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 3 – Accounts and other receivables, net:

Note 4 – Inventories, net:

Note 5 – Marketable securities:

Our marketable securities consist of investments in marketable equity and debt securities. Our marketable equity securities are carried at fair value using quoted market prices, primarily Level 1 inputs as defined by ASC Topic 820,Fair Value Measurements and Disclosures, with any unrealized gains or losses on the securities recognized in other income, net on our Condensed Consolidated Statements of Income. The fair value of our marketable debt securities is generally determined using Level 2 inputs because although these securities are traded in many cases, the market is not active and the quarter-end valuation is generally based on the last trade of the quarter, which may be several days prior to quarter end. We accumulate unrealized gains and losses on marketable debt securities as part of accumulated other comprehensive income (loss), net of related deferred income taxes. See Note 17.

Note 6 – Other noncurrent assets:

Note 7 – Long-term debt:

Valhi –* Contran credit facility* – During the first nine months of 2026, we hadno borrowings and repaid $18.3 million under this facility. The average interest rate on the credit facility for the nine months ended September 30, 2026 was 7.76%. At September 30, 2026, the interest rate was 8.0% and $119.7 million was available for borrowing under this facility.

Kronos*–9.50% Senior Secured Notes due 2029* – At September 30, 2026, the carrying value of the 9.50% Senior Secured Notes due 2029 (€426.174 million aggregate principal amount outstanding) is stated net of $7.6 million of unamortized premium and $5.2 million of unamortized debt issuance costs (at December 31, 2025 the amounts were $9.0 million and $6.9 million, respectively).

*Revolving credit facility (the “Global Revolver”) –*During the first nine months of 2026, Kronos borrowed and repaid $375.7 million under its $350 million Global Revolver. The average interest rate on outstanding borrowings under this facility during the nine months ended September 30, 2026 was 5.6%. At September 30, 2026, there wereno amounts outstanding under its Global Revolver. At September 30, 2026, Kronos had borrowing availability of approximately $254 million.

Other* –* We are in compliance with all of our debt covenants at September 30, 2026.

Note 8 – Accounts payable and accrued liabilities:

See Note 18 for additional information related to accrued severance costs.

Note 9 – Other noncurrent liabilities:

See Note 13 for additional information related to the uncertain tax positions.

Note 10 – Revenue – disaggregation of sales:

The following table disaggregates the net sales of our Chemicals Segment by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following table disaggregates the net sales of our Component Products Segment by major product line.

Substantially all of the Real Estate Management and Development Segment’s sales are related to land sales.

Note 11 – Defined benefit pension plans:

The components of our net periodic defined benefit pension cost are presented in the table below.

We expect to contribute the equivalent of approximately $17 million to all of our defined benefit pension plans during 2026.

Note 12 – Other income, net:

Infrastructure reimbursement–* *As disclosed in Note 7 to our 2025 Annual Report, under an OPA entered into by LandWell with the Redevelopment Agency of the City of Henderson, Nevada, as LandWell develops certain real property for commercial and residential purposes in its master planned community in Henderson, Nevada, the cost of certain public infrastructure may be reimbursed to LandWell through tax increment. LandWell received approval for additional tax reimbursement of $16.7 million in the first nine months of 2026 ($5.4 million in the first quarter and $11.3 million in the second quarter) and $34.2 million in the first nine months of 2025 ($17.2 million in the second quarter and $17.0 million in the third quarter), which were recognized as other income and are evidenced by a promissory note issued to LandWell by the City of Henderson. The maximum infrastructure reimbursement of $170 million available under the OPA has been approved.

LandWell has agreements with certain utility providers servicing the Cadence master planned community under which certain costs incurred for the development of power infrastructure may be reimbursed to LandWell. LandWell received $.4 million and $.3 million in reimbursement during the first nine months of 2026 and 2025, respectively, for past costs incurred.

*Gain on the sale of office building –*In June 2026, LandWell completed the sale of the office building used in its operations for cash proceeds of approximately $6.8 million and recognized a gain on sale of approximately $5.8 million.

Note 13 – Income taxes:

The provision for income taxes and the difference between such provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate of 21% are presented below.

The amount shown in the preceding table of our income tax rate reconciliation for incremental tax benefit on earnings or losses of subsidiary represents net current and deferred U.S. income tax benefit attributable to one of our Chemicals Segment’s non-U.S. subsidiaries which is treated as a dual resident for U.S. income tax purposes. The amount shown for incremental tax benefit on investment in BMI/LandWell represents current and deferred income taxes associated with distributions and earnings from our investment in BMI and LandWell. BMI and LandWell are not members of our consolidated tax group for federal and state tax purposes although we do hold a controlling interest. Income allocable to non-affiliated equity holders is not taxable to us and results in a net incremental tax benefit.

Tax authorities are examining certain of our U.S. and non-U.S. income tax returns and may propose tax deficiencies, including penalties and interest. In March 2026, we received notices of assessment from the German tax authorities for tax years 2019 through 2021. We disagree with the assessments and have filed notice of appeal. However, due to the uncertainty of the appeal and the complexity of the appeal process, during the first quarter of 2026 we recorded net income tax expense of $2.0 million to establish an uncertain tax position, net of amounts expected to be received from other taxing jurisdictions.

We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

In 2024, we recognized income tax expense upon the enactment of final §987 currency regulations, which included transition rules requiring us to recognize a pre-transition gain for currency translation related to our qualified business units. In August 2026, the U.S. Department of the Treasury and the IRS issued proposed currency regulations under §987 that narrow the application of the 2024 final regulations by introducing a controlled foreign corporation (“CFC”) exemption election and related transition rules. Taxpayers may rely on these proposed regulations, which apply to tax years beginning after December 31, 2024. As a result of our assessment, we will no longer elect to amortize the pre-transition §987 gain and have recognized a non-cash deferred income tax benefit of $12.1 million in the third quarter of 2026.

On July 18, 2025, Germany enacted legislation which included, among other provisions, an additional depreciation allowance for certain fixed assets, improvements to the research and development tax allowance and, starting in 2028, a reduction of the 15% corporate tax rate byone percentage point annually for five years reaching 10% in 2032. We recorded a non-cash deferred income tax expense of $19.3 million in the third quarter of 2025 to reduce our net German deferred tax asset as a result of the reduction of the German corporate tax rate.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. It did not have a material impact on our consolidated financial statements.

Note 14 - Noncontrolling interest in subsidiaries:

Note 15 – Stockholders’ equity:

Accumulated other comprehensive loss– Changes in accumulated other comprehensive income (loss) attributable to Valhi stockholders are presented in the table below.

Note 16 – Commitments and contingencies:

Lead pigment litigation – NLI

NLI’s former operations included the manufacture of lead pigments for use in paint and lead-based paint. NLI, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (“LIA”), which discontinued business operations in 2002, have previously been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints. Certain of these actions were filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others were asserted as class actions. NLI currently has no pending lead paint class action cases or pending lead paint cases brought by housing authorities, school districts or other government entities.

New cases may continue to be filed against NLI. We do not know if we will incur liability in the future in respect to any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings. In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against NLI or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against NLI as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable. The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.

Environmental matters and litigation

Our operations are governed by various environmental laws and regulations. Certain of our businesses are and have been engaged in the handling, manufacture or use of substances or compounds that may be considered toxic or hazardous within the meaning of applicable environmental laws and regulations. As with other companies engaged in similar businesses, certain of our past and current operations and products have the potential to cause environmental or other damage. Our businesses have implemented and continue to implement various policies and programs in an effort to minimize these risks. Our policy is to maintain compliance with applicable environmental laws and regulations at all of our plants and to strive to improve environmental performance. From time to time, our businesses may be subject to environmental regulatory enforcement under U.S. and non-U.S. statutes, the resolution of which typically involves the establishment or enhancement of compliance programs. It is possible that future developments, such as stricter requirements of environmental laws and enforcement policies, could adversely affect our production, handling, use, storage, transportation, sale or disposal of such substances. We believe all of our facilities are in substantial compliance with applicable environmental laws.

Certain properties and facilities used in our former operations (primarily NLI’s former operations), including divested primary and secondary lead smelters and former mining locations, are the subject of civil litigation, administrative proceedings or investigations arising under federal and state environmental laws and common law. Additionally, in connection with past operating practices, we are currently involved as a defendant, potentially responsible party (“PRP”) or both, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (“CERCLA”), and similar state laws in various governmental and private actions associated with waste disposal sites, mining locations, and facilities that we or our predecessors, and NLI or its predecessors, our subsidiaries or their predecessors currently or previously owned, operated or used, certain of which are on the United States Environmental Protection Agency’s (“EPA”) Superfund National Priorities List or similar state lists. These proceedings seek cleanup costs, damages for personal injury or property damage and/or damages for injury to natural resources. Certain of these proceedings involve claims for substantial amounts. Although we may be jointly and severally liable for these costs, in most cases we are only one of a number of PRPs who may also be jointly and severally liable, and among whom costs may be shared or allocated. In addition, we are occasionally named as a party in a number of personal injury lawsuits filed in various jurisdictions alleging claims related to environmental conditions alleged to have resulted from our operations.

Obligations associated with environmental remediation and related matters are difficult to assess and estimate for numerous reasons including the:

In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. Actual costs could exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and costs may be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our Condensed Consolidated Financial Statements, results of operations and liquidity.

We record liabilities related to environmental remediation and related matters (including costs associated with damages for personal injury or property damage and/or damages for injury to natural resources) when estimated future expenditures are probable and reasonably estimable. We adjust such accruals as further information becomes available to us or as circumstances change. Unless the amounts and timing of such estimated future expenditures are fixed and reasonably determinable, we generally do not discount estimated future expenditures to their present value due to the uncertainty of the timing of the payout. We recognize recoveries of costs from other parties, if any, as assets when their receipt is deemed probable.

We do not know and cannot estimate the exact time frame over which we will make payments for our accrued environmental and related costs. The timing of payments depends upon a number of factors, including but not limited to the timing of the actual remediation process, which in turn depends on factors outside of our control. At each balance sheet date, we estimate the amount of the accrued environmental and related costs which we expect to pay within the next twelve months, and we classify this estimate as a current liability. We classify the remaining accrued environmental costs as a noncurrent liability.

The table below presents a summary of the activity in our accrued environmental costs during the first nine months of 2026.

*NLI –*On a quarterly basis, NLI evaluates the potential range of its liability for environmental remediation and related costs at sites where it has been named as a PRP or defendant. At September 30, 2026, NLI had accrued approximately $13 million related to

approximately 27 sites associated with remediation and related matters it believes are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to NLI for remediation and related matters for which NLI believes it is possible to estimate costs is approximately $38 million, including the amount currently accrued. These accruals have not been discounted to present value.

NLI believes that it is not reasonably possible to estimate the range of costs for certain sites. At September 30, 2026, there were approximately five sites for which NLI is not currently able to reasonably estimate a range of costs. For these sites, generally the investigation is in the early stages, and NLI is unable to determine whether or not NLI actually had any association with the site, the nature of its responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of NLI’s control, such as when the party alleging liability provides information to NLI. At certain of these previously inactive sites, NLI has received general and special notices of liability from the EPA and/or state agencies alleging that NLI, sometimes with other PRPs, is liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that NLI, along with any other alleged PRPs, is liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our consolidated financial statements, results of operations and liquidity.

Other** –**We have also accrued approximately $4 million at September 30, 2026 for other environmental cleanup matters which represents our best estimate of the liability.

Insurance coverage claims – NLI

NLI is involved in certain legal proceedings with a number of its former insurance carriers regarding the nature and extent of the carriers’ obligations to NLI under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for NLI’s lead pigment and asbestos litigation depends upon a variety of factors, and we cannot assure you that such insurance coverage will be available.

NLI has agreements with certain of its former insurance carriers pursuant to which the carriers reimburse it for a portion of its future lead pigment litigation defense costs and one such carrier reimburses us for a portion of NLI’s future asbestos litigation defense costs. We are not able to determine how much NLI will ultimately recover from these carriers for defense costs incurred by NLI because of certain issues that arise regarding which defense costs qualify for reimbursement. While NLI continues to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.

For a complete discussion of certain litigation involving NLI and certain of its former insurance carriers, refer to our 2025 Annual Report.

Other litigation

In addition to the litigation described above, we and our affiliates are involved in various other environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our present and former businesses. In certain cases, we have insurance coverage for these items, although we do not expect additional material insurance coverage for our environmental matters. We currently believe the disposition of all of these various other claims and disputes (including asbestos-related claims), individually or in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals already provided.

Note 17 – Fair value measurements and financial instruments:

The following table summarizes the valuation of our financial instruments recorded on a fair value basis as of December 31, 2025 and September 30, 2026:

See Note 5 for amounts related to our marketable securities.

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure:

At December 31, 2025 and September 30, 2026, the estimated market price of Kronos’9.50% Senior Secured Notes due 2029 was €937 and €1,007 per €1,000 principal amount, respectively. The fair value of Kronos’ Senior Secured Notes due 2029 were based on quoted market prices; however, these prices represented Level 2 inputs because the market in which the notes trade was not active. The fair value of other fixed-rate debt, which represents Level 2 inputs, is deemed to approximate carrying value. See Note 7. Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. See Notes 3 and 8.

Note 18 – Restructuring costs:

In the fourth quarter of 2025, Kronos initiated a restructuring plan through workforce reductions which is supporting an improved current and longer-term cost structure. These workforce reductions impacted approximately 226 positions with a substantial portion of such reductions accomplished through involuntary programs. A portion of the reductions was also accomplished through voluntary programs, for which eligible workforce reduction costs were recognized at the time both the employee and employer were irrevocably committed to the terms of the separation. During the fourth quarter of 2025, Kronos recognized an aggregate $10.3 million charge related to these workforce reductions. Accrued severance costs remaining at September 30, 2026 are expected to be substantially paid in 2026 and are included in accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheet. See Note 8. Kronos does not expect to accrue any further material amounts for the workforce reductions.

A summary of the activity in Kronos’ accrued restructuring costs for the first nine months of 2026 is shown in the table below:

Note 19 – Recent accounting pronouncements:

In November 2024, the FASB issued ASU No. 2024-03,Reporting Comprehensive Income - Expense Disaggregation Disclosures. The ASU requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. The ASU is effective for us beginning with our 2027 Annual Report, and for interim reporting, in the first quarter of 2028, with early adoption permitted. We are in the process of evaluating the additional disclosure requirements.

In May 2026, the FASB issued ASU No. 2026-02,Environmental Credits and Environmental Credit Obligations, which establishes guidance for the recognition, measurement, presentation, and disclosure of environmental credits and related compliance obligations. The standard is intended to improve consistency and comparability in accounting for environmental credit programs by providing a comprehensive accounting framework. The ASU is effective for us beginning in 2028, with early adoption permitted. We are in the process of evaluating the impact this standard will have on our Condensed Consolidated Financial Statements.