COMPX INTERNATIONAL INC
For the period ended Mar 31, 2025. Filed May 6, 2025.
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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, 2025 · Filed May 6, 2025
CIX$38.70+5.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001558370-24-014631
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0001558370-25-006501
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 50 previous paragraphs and 46 current paragraphs.
21 unchanged; 17 reworded; 7 added; 11 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 27 previous and 28 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 (7)
Current report
In the first quarter of 2025 operating income increased to $5.9 million compared to $3.7 million in the first quarter of 2024. The increase in operating income in the first quarter of 2025 compared to 2024 is primarily due to higher Marine Components sales and gross margin.
Current report
*Interest income.*Interest income decreased $.4 million in the first quarter of 2025 compared to the same period in 2024 primarily due to lower average interest rates and decreased cash balances.
Current report
Security Products. Security Products net sales increased 1% in the first quarter of 2025 compared to the same period last year primarily due to $1.6 million higher sales to the government security market and $.3 million higher sales to the healthcare market, substantially offset by lower sales to various other original equipment manufacturing (“OEM”) markets including the transportation, tool storage, bank equipment and vending/gaming markets. Gross margin and operating income as a percentage of net sales in the first quarter of 2025 were comparable to the same period in 2024.
Current report
Marine Components. Marine Components net sales increased 24% in the first quarter of 2025 compared to the same period last year primarily due to $1.7 million higher sales to the towboat market and $1.2 million higher sales to the government market, partially offset by lower sales to various other markets including $.3 million lower sales to the center console market. Gross margin as a percentage of net sales increased in the first quarter of 2025 compared to the same period last year primarily due to lower cost inventory produced during the fourth quarter of 2024 and sold in the first quarter of 2025, as well as, increased coverage of fixed costs. Operating income margin increased primarily due to increases in gross margin discussed above.
Current report
Outlook. First quarter sales and operating income exceeded prior year on the strength of improved demand at Marine Components, primarily in the towboat and government markets. Security Products sales improved slightly from prior year, as increased sales to the government security market were mostly offset by softness across a variety of markets. The raw material price increases we began experiencing in the third quarter of 2024 have continued through the first quarter of 2025 and we are starting to see some surcharges related to tariffs on certain commodity raw materials.
Current report
We expect Security Products net sales in 2025 to improve modestly over 2024, and we expect gross margin and operating income percentages in 2025 to be slightly above 2024 due to price increases implemented in the first quarter and an improved Security Products product mix. We expect Marine Components net sales to increase in 2025 predominantly due to higher expected sales to the government and industrial markets. In the first quarter Marine Components benefited from an increase in sales related to a one-time stocking event at a towboat OEM customer. For the remainder of the year, we expect demand from the towboat market to be consistent with 2024. Overall, we expect Marine Components to have improved gross margins and operating income percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.
Current report
We manufacture substantially all of our products in the U.S. and source a substantial majority of our raw materials from U.S. suppliers. We also source certain components, primarily electronic components from Asia, including China. In anticipation of the U.S. federal government tariffs announcements, we increased purchases of certain electronic components and other components to mitigate the potential near-term impact of tariffs. As noted above, we have recently experienced some raw material and component price increases related to tariffs. We believe we can increase selling prices to our customers to recoup our increased raw material costs, although the extent to which we can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of our customers to substitute alternative products. We will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly.
Removed paragraphs (11)
Previous report
Operating income in the third quarter of 2024 was $3.3 million compared to $6.6 million in the third quarter of 2023. The decrease in operating income in the third quarter of 2024 compared to 2023 is due to lower sales and gross margin at both Security Products and Marine Components. Operating income for the first nine months of 2024 was $12.1 million compared to $18.0 million in the first nine months of 2023. The decrease in operating income in the first nine months of 2024 compared to 2023 is primarily due to lower Marine Components sales and gross margin.
Previous report
compared to the same period in 2023 primarily due to lower Marine Components sales to the towboat market. See segment discussion below.
Previous report
*Interest income.*Interest income increased $.2 million and $.8 million in the third quarter and for the first nine months of 2024, respectively, compared to the same periods in 2023 primarily due to higher average interest rates and higher average investment balances, somewhat offset by lower average balances on the revolving promissory note receivable from Valhi. See Notes 3 and 10 to our Condensed Consolidated Financial Statements.
Previous report
Security Products. Security Products net sales decreased 15% in the third quarter of 2024 compared to the same period in 2023 primarily due to lower sales for a government security customer related to a pilot project that began shipping in the third quarter of 2023 for which there were no related sales in the third quarter of 2024. Relative to prior year, sales
Previous report
were $5.0 million lower to the government security market and $1.4 million lower to the transportation market, partially offset by $1.2 million higher sales to the healthcare market. Security Products net sales in the first nine months of 2024 were comparable to the same period in 2023, as $1.5 million higher sales to the healthcare market and $.6 million higher sales to the tool storage market were offset by $1.1 million lower sales to the transportation market, $.7 million lower sales to distributors and $.4 million lower sales to the government security market.
Previous report
Gross margin as a percentage of net sales decreased for the third quarter of 2024 compared to the same period in 2023 primarily due to lower sales, higher materials costs (primarily brass and electronics), higher labor costs and decreased coverage of fixed costs as a result of lower sales. Operating income as a percentage of net sales decreased in the third quarter of 2024 compared to the same period in 2023 due to the factors impacting gross margin as well as decreased coverage of operating costs and expenses on lower sales. Gross margin as a percentage of net sales for the first nine months of 2024 is comparable to the same period in 2023. Operating income as a percentage of net sales decreased in the first nine months of 2024 compared to the same period in 2023 due to increased operating costs and expenses including higher employee salaries and benefits of $.4 million, primarily in the first half of the year.
Previous report
Marine Components. Marine Components net sales decreased 21% in the third quarter of 2024 compared to the same period in 2023. Relative to prior year, the decrease in third quarter sales was primarily due to $1.3 million lower sales to the towboat market and $.5 million lower sales to the industrial market. Marine Components net sales decreased 32% in the first nine months of 2024 compared to the same period in 2023. Relative to prior year, the decrease in sales for the first nine months was primarily due to $8.7 million lower sales to the towboat market, $1.1 million lower sales to the industrial market and $.6 million lower sales to each the engine builder market and distributors.
Previous report
Gross margin as a percentage of sales decreased in the third quarter of 2024 compared to the same period in 2023 primarily due to lower sales and decreased coverage of fixed costs as a result of lower sales, partially offset by a more favorable customer and product mix as well as lower employee salaries and benefits of approximately $.5 million related to headcount reductions. Operating income as a percentage of net sales decreased in the third quarter of 2024 compared to the same period in 2023 due to the factors impacting gross margin as well as decreased coverage of operating costs and expenses on lower sales, partially offset by slightly reduced operating costs and expenses, including lower employee salaries and benefits of approximately $.1 million. For the first nine months of 2024, gross margin as a percentage of net sales declined compared to the same period in 2023 primarily due to higher cost inventory produced during the fourth quarter of 2023 and sold in the first quarter of 2024 and decreased coverage of fixed costs as a result of lower sales, partially offset by a more favorable customer and product mix as well as lower employee salaries and benefits of approximately $1.7 million related to headcount reductions. Operating income as a percentage of net sales decreased in the first nine months of 2024 compared to the same period in 2023 due to the factors impacting gross margin as well as decreased coverage of operating costs and expenses on lower sales, partially offset by reduced operating costs and expenses, including lower employee salaries and benefits of $.2 million.
Previous report
Outlook. As previously noted, beginning in the third quarter of 2023 Security Products had significant sales from a pilot project to a government security customer. Excluding these sales in 2023, sales would have increased in the first nine months of 2024 as compared to the first nine months of 2023 due to increased sales across a variety of markets, particularly increased sales of mechanical locks to the government security market. At Marine Components, the decline in sales to the towboat market as a result of the contraction in the recreational marine industry that began late in the first quarter of 2023 has continued. We are focused on aligning our resources with current demand levels, and particularly at
Previous report
Marine Components, we are adjusting inventory levels, operating expenses and labor resources to align with current orders while also preserving our ability to respond quickly when demand increases. Raw material prices have been relatively stable during the first nine months of 2024; however, we are beginning to experience price increases in certain raw materials. Our supply chains are stable and transportation and logistical delays are minimal. We have adjusted our order patterns in response to our customer demand levels and the stability of our raw materials supplies.
Previous report
We expect Security Products sales comparisons for the remainder of the year will be challenged by lower government security sales as the 2023 pilot project to a government security customer will not repeat. We expect our recurring Security Products sales for the remainder of the year to continue to be strong relative to the prior year. Overall, we expect Security Products gross margin and operating income margin for 2024 will be lower than 2023 primarily due to reduced coverage of fixed, selling, general and administrative costs as a result of lower expected sales as well as a less favorable product mix and higher materials and labor costs in the current economic environment. We expect Marine Components net sales for the full year of 2024 will be lower as compared to 2023 due to decreased demand in the towboat market. The recreational marine industry faces strong headwinds due to higher interest rates and broader market weakness. Overall, we expect Marine Components gross margin as a percentage of net sales for 2024 to be lower than 2023 due to lower coverage of fixed overhead as a result of lower expected sales, and operating income as a percentage of net sales to be similarly lower as a result of reduced coverage of selling, general and administrative expenses due to lower expected sales. We ended 2023 with elevated inventory balances at our Marine Components segment as a result of increased orders of certain raw materials due to previously long lead times coupled with the rapidly changing towboat demand which created a misalignment of our raw materials with near term demand. We made significant progress in aligning our Marine Components inventory balances with current demand in the first nine months of 2024; however, we expect further reduction of inventory quantities will be offset by higher raw materials costs for certain projects in the industrial and other marine components markets, outside of the towboat market, which in many instances are more expensive than the stainless steel inventory used in towboat products.
Reworded paragraphs (17)
Previous wording
Should one or more of these risks materialize or if the consequences worsen, or if the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.
Current wording
Should one or more of these risks materialize (or the consequences of such development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.
Previous wording
Net sales. Net sales decreased $6.7 million in the third quarter of 2024 compared to the same period in 2023 primarily due to lower Security Products sales to a government security customer and to a lesser extent lower Marine Components sales primarily to the towboat market. Net sales decreased $10.6 million for the first nine months of 2024
Current wording
Net sales. Net sales increased $2.3 million in the first quarter of 2025 compared to the same period in 2024 due to higher Marine Components sales primarily to the towboat and government markets and to a lesser extent higher Security Products sales primarily to the government security market. See segment discussion below.
Previous wording
*Cost of sales and gross margin.*Cost of sales as a percentage of sales increased 3.2% in the third quarter of 2024 compared to the same period in 2023. As a result, gross margin as a percentage of sales decreased over the same period. Gross margin percentage decreased in the third quarter of 2024 compared to the same period in 2023 primarily due to lower gross margin percentages at both Security Products and Marine Components. Cost of sales as a percentage of sales increased 1.9% for the first nine months of 2024 compared to the same period in 2023. As a result, gross margin as a percentage of sales declined over the same period. The decline in gross margin percentage for the nine-month comparative period is primarily due to lower gross margin percentage at Marine Components. See segment discussion below.
Current wording
*Cost of sales and gross margin.*Cost of sales as a percentage of sales decreased 4.7% in the first quarter of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. Gross margin percentage increased in the first quarter of 2025 compared to the same period in 2024 primarily due to higher gross margin percentage at Marine Components. See segment discussion below.
Previous wording
Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as any gains and losses on property and equipment. Operating costs and expenses for the third quarter of 2024 were comparable to the same period in 2023. For the first nine months of 2024, operating costs and expenses increased $.6 million compared to the same period in 2023 primarily due to higher employee salaries and benefits at Security Products during the first half of the year. Operating costs and expenses as a percentage of net sales increased for the third quarter of 2024 compared to the same period in 2023 due to decreased coverage of operating costs and expenses as a result of lower sales. Operating costs and expenses as a percentage of net sales increased for the first nine months of 2024 compared to the same period in 2023 due to decreased coverage of operating costs and expenses as a result of lower sales and higher operating costs as noted above.
Current wording
Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as any gains and losses on property and equipment. Operating costs and expenses for the first quarter of 2025 increased $.3 million compared to the same period in 2024 primarily due to higher employee salaries and benefits at both segments. Operating costs and expenses as a percentage of net sales for the first quarter of 2025 were comparable to the first quarter of 2024.
Previous wording
Operating income. As a percentage of net sales, operating income for the third quarter and the first nine months of 2024 compared to the same periods of 2023 was primarily impacted by the factors affecting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.
Current wording
Operating income. As a percentage of net sales, operating income for the first quarter of 2025 increased compared to the same period of 2024 and was primarily impacted by the factors impacting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.
Previous wording
Our expectations for our operations and the markets we serve are based on a number of factors outside our control. We have experienced global and domestic supply chain challenges, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the impact of economic conditions and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Current wording
Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal. We have in the past experienced global and domestic supply chain challenges, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs and the impact of economic conditions, consumer confidence and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Previous wording
Our net cash provided by operating activities for the first nine months of 2024 increased by $3.8 million as compared to the first nine months of 2023. The increase in net cash provided is primarily due to the net effects of:
Current wording
We generally report a net use of cash from operating activities in the first three months of each year due to seasonal changes in the level of our working capital. Our net cash provided by operating activities for the first three months of 2025 decreased by $1.8 million as compared to the first three months of 2024. The decrease in net cash provided is primarily due to the net effects of:
Previous wording
Our average number of days in inventory increased from December 31, 2023 to September 30, 2024 primarily due to the increase at Security Products somewhat offset by the decline at Marine Components. Security Products days in inventory at December 31, 2023 is lower than usual due to the fulfillment and shipping of a significant order during the fourth quarter of 2023 and September 30, 2024 is more favorable to September 30, 2023 balances due to planned inventory reductions. The average number of days in inventory for Marine Components declined from December 31, 2023 to September 30, 2024 as a result of planned inventory reductions. For comparative purposes, we have provided December 31, 2022 and September 30, 2023 numbers below.
Current wording
As shown below, our average number of days in inventory at December 31, 2024 was comparable to March 31, 2025 as the increase at Security Products was offset by the decline at Marine Components. Security Products days in inventory at March 31, 2025 increased from December 31, 2024 primarily due to increased inventory to meet current and expected customer demand. The average number of days in inventory for Marine Components declined from December 31, 2024 to March 31, 2025 due to sales growth in the first quarter of 2025. For comparative purposes, we have provided December 31, 2023 and March 31, 2024 numbers below.
Previous wording
*Investing activities.*Our capital expenditures were $1.2 million and $.6 million in the first nine months of 2024 and 2023, respectively. During the first nine months of 2024, Valhi repaid a net $2.7 million under the promissory note ($17.7 million of gross borrowings and $20.4 million of gross repayments). During the first nine months of 2023, Valhi repaid a net $1.2 million under the promissory note ($20.7 million of gross borrowings and $21.9 million of gross repayments). See Note 10 to our Condensed Consolidated Financial Statements.
Current wording
*Investing activities.*Our capital expenditures were $.8 million and $.3 million in the first three months of 2025 and 2024, respectively. During the first three months of 2025, the promissory note balance with Valhi had net activity of nil ($.5 million of gross borrowings and $.5 million of gross repayments). During the first three months of 2024, Valhi repaid a net $.8 million under the promissory note ($5.2 million of gross borrowings and $6.0 million of gross repayments). See Note 9 to our Condensed Consolidated Financial Statements.
Previous wording
During the first nine months of 2024, we received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities. During the first nine months of 2023, we had gross purchases of U.S. treasury marketable securities aggregating $36.3 million and received gross proceeds totaling $24.0 million related to U.S. treasury bill maturities. See Note 3 to our Condensed Consolidated Financial Statements.
Current wording
During the first three months of 2024, we received gross proceeds totaling $12.0 million related to U.S. treasury bill maturities.
Previous wording
*Financing activities.Financing activities consisted only of cash dividends. *In February 2024, our board of directors increased our regular quarterly dividend from $.25 per share to $.30 per share beginning in the first quarter of 2024. During the first nine months of 2024 and 2023, we paid aggregate quarterly dividends to CompX stockholders of $11.1 million and $9.2 million, respectively. Additionally, in August 2024 our board of directors declared a special dividend on our Class A common stock of $2.00 per share ($24.6 million). The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay.
Current wording
*Financing activities.Financing activities consisted only of cash dividends. *Our board of directors declared a regular quarterly dividend of $.30 per share in each of the first quarters of 2024 and 2025. The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay.
Previous wording
restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we may consider using available cash, issuing additional equity securities or increasing our indebtedness or that of our subsidiaries.
Current wording
Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we may consider using available cash, issuing additional equity securities or increasing our indebtedness or that of our subsidiaries.
Previous wording
We believe that cash generated from operations together with cash on hand, as well as our ability to obtain external financing, will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service, dividends (if declared) and any amounts we might loan from time to time under the terms of our revolving loan to Valhi discussed in Note 10 to our Condensed Consolidated Financial Statements (which loans would be solely at our discretion) for both the next 12 months and five years. To the extent that our actual operating results or other developments differ from our expectations, our liquidity could be adversely affected.
Current wording
We believe that cash generated from operations together with cash on hand, as well as our ability to obtain external financing, will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service, dividends (if declared) and any amounts we might loan from time to time under the terms of our revolving loan to Valhi discussed in Note 9 to our Condensed Consolidated Financial Statements (which loans would be solely at our discretion) for both
Previous wording
All of our $58.8 million aggregate cash and cash equivalents at September 30, 2024 were held in the U.S.
Current wording
All of our $56.1 million aggregate cash and cash equivalents at March 31, 2025 were held in the U.S.
Previous wording
Capital expenditures. Firm purchase commitments for capital projects in process at September 30, 2024 totaled $.6 million. We expect our capital expenditures for 2024 will be approximately $2.1 million primarily to meet our existing customer demand and those required to properly maintain our facilities and technology infrastructure.
Current wording
Capital expenditures. Firm purchase commitments for capital projects in process at March 31, 2025 totaled $.7 million. We expect our capital expenditures for 2025 will be approximately $3.4 million primarily to meet our existing customer demand and those required to properly maintain our facilities and technology infrastructure.
Previous wording
We are subject to certain commitments and contingencies, as more fully described in our 2023 Annual Report, or in Note 8 to our Condensed Consolidated Financial Statements or in Part II, Item 1 of this report, including certain legal proceedings.
Current wording
We are subject to certain commitments and contingencies, as more fully described in our 2024 Annual Report or in Note 7 to our Condensed Consolidated Financial Statements.
Previous wording
There have been no changes in the first nine months of 2024 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report.
Current wording
There have been no changes in the first three months of 2025 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
the next 12 months and five years. To the extent that our actual operating results or other developments differ from our expectations, our liquidity could be adversely affected.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or