NLI HOLDINGS, INC.

Previous wording

Our net income attributable to NL stockholders was $36.0 million, or $.74 per share, in the third quarter of 2024 compared to a net loss attributable to NL stockholders of $.1 million, or nil per share, in the third quarter of 2023. As more fully described below, the increase in our net income attributable to NL stockholders from 2023 to 2024 is primarily due to the net effects of:

Current wording

Our net income attributable to NL stockholders was $.7 million, or $.01 per share, in the first quarter of 2025 compared to $6.8 million, or $.14 per share, in the first quarter of 2024. As more fully described below, the decrease in our net income attributable to NL stockholders from 2024 to 2025 is primarily due to the net effects of:

Previous wording

Our 2024 net income per share attributable to NL stockholders includes:

Current wording

Our 2024 net income per share attributable to NL stockholders includes a loss of $.01 per share due to Kronos’ recognition of an aggregate charge related to a write-off of deferred financing costs.

Previous wording

The following table shows the components of our income (loss) before income taxes exclusive of our income from operations.

Current wording

The following table shows the components of our income before income taxes exclusive of our income from operations.

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 compared to the same period in 2023 primarily due to lower Marine Components sales to the towboat market. See discussion of reporting units below.

Current wording

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

Previous wording

Cost of sales and gross margin– Cost of sales as a percentage of sales increased 3% 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 reporting units. Cost of sales as a percentage of sales increased 2% 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 discussion of reporting units below.

Current wording

Cost of sales and gross margin– CompX’s cost of sales as a percentage of sales decreased 5% in the first quarter of 2025 compared to the same period in 2024. As a result, CompX’s gross margin as a percentage of sales increased over the same period. CompX’s 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 discussion of reporting units below.

Previous wording

Operating costs and expenses– Operating costs 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

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 2025 increased $.3 million compared to the same period in 2024 primarily due to higher employee salaries and benefits at both reporting units. CompX’s selling, general and administrative expenses as a percentage of net sales for the first quarter of 2025 were comparable to the first quarter of 2024.

Previous wording

Income from operations– As a percentage of net sales, income from operations 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 discussion of reporting units below.

Current wording

Segment profit– As a percentage of net sales, CompX’s segment profit 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 selling, general and administrative expenses discussed above. See discussion of reporting units below.

Previous wording

The key performance indicators for CompX’s reporting units is the level of their gross margin and income from operations (see discussion below). Reporting unit results exclude CompX corporate expenses.

Current wording

The key performance indicators for CompX’s reporting units is the level of their reporting unit profit (see discussion below). Reporting unit results exclude CompX corporate expenses.

Previous wording

CompX’s expectations for its operations and the markets it serves are based on a number of factors outside its control. CompX has experienced global and domestic supply chain challenges, and any future impacts on its operations will depend on, among other things, any future disruption in its operations or its suppliers’ operations, the impact of economic conditions and geopolitical events on demand for its products or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Current wording

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

Previous wording

Corporate expense– Corporate expenses were $2.3 million in the third quarter of 2024, $.9 million lower than in the third quarter of 2023, primarily due to lower litigation fees and related costs and lower environmental remediation and related costs. Included in corporate expense in the third quarter of 2023 and 2024 are:

Current wording

Corporate expense– Corporate expenses were $2.7 million in the first quarter of 2025, $.3 million higher than in the first quarter of 2024, primarily due to higher environmental remediation and related costs and higher general and administrative costs, partially offset by lower litigation fees and related costs. Included in corporate expense in the first quarter of 2024 and 2025 are:

Previous wording

Overall, we currently expect that our net general corporate expenses in 2024 will be higher than in 2023 primarily due to higher expected environmental remediation and related costs.

Current wording

Overall, we currently expect that our net general corporate expenses in 2025 will be higher than in 2024 primarily due to income recognized in 2024 related to the settlement of a liability for an environmental remediation site in the fourth quarter of 2024. See Note 15 to our Condensed Consolidated Financial Statements.

Previous wording

Interest and dividend income– Interest and dividend income increased in the third quarter and for the first nine months of 2024 compared to the same periods of 2023 primarily due to higher average interest rates and increased investment balances, somewhat offset by lower average balances on CompX’s revolving promissory notes receivable from Valhi. See Note 4 to our Condensed Consolidated Financial Statements.

Current wording

Interest and dividend income– Interest and dividend income decreased in the first quarter of 2025 compared to the same period of 2024 primarily due to lower average interest rates and decreased cash balances.

Previous wording

Marketable equity securities– We recognized an unrealized gain of $18.6 million on the change in value of our marketable equity securities in the third quarter of 2024 compared to $.4 million in the third quarter of 2023. We recognized an unrealized gain of $21.8 million on the change in value of our marketable equity securities in the first nine months of 2024 compared to an unrealized loss of $10.5 million in the first nine months of 2023. See Note 4 to our Condensed Consolidated Financial Statements.

Current wording

Marketable equity securities– We recognized an unrealized loss of $8.5 million on the change in value of our marketable equity securities in the first quarter of 2025 compared to an unrealized gain of $2.4 million in the first quarter of 2024. See Note 5 to our Condensed Consolidated Financial Statements.

Previous wording

Income tax expense– We recognized income tax expense of $8.5 million in the third quarter of 2024 compared to an income tax benefit of $.9 million in the third quarter of 2023 and income tax expense of $10.8 million in the first nine months of 2024 compared to an income tax benefit of $6.8 million in the first nine months of 2023. 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 $20.1 million and $15.1 million in the first nine month periods of 2023 and 2024, respectively.

Current wording

Income tax expense– We recognized an income tax benefit of less than $.1 million in the first quarter of 2025 compared to an income tax expense of $1.0 million in the first quarter of 2024. 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 $6.7 million and $1.8 million in the first quarters of 2024 and 2025, 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 an effective tax rate of 12.7% in the first nine months of 2024 compared to an effective rate of 50% in the first nine months of 2023. The decrease in our effective rate from 2023 to 2024 is primarily attributable to Kronos’ anticipated higher full year earnings offset by the effect of lower anticipated full year dividends in 2024 as compared to 2023. See Note 11 to our Condensed Consolidated Financial Statements for more information about our 2024 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 15.2% in the first three months of 2025 compared to a negative effective tax rate of 10.6% in the first three months of 2024. The change in our effective rate from 2024 to 2025 is primarily attributable to Kronos’ anticipated higher full year earnings offset by the effect of lower anticipated full year dividends in 2025 as compared to 2024. See Note 13 to our Condensed Consolidated Financial Statements for more information about our 2025 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 decreased during the third quarter of 2024 and for the first nine months of 2024 compared to the same prior year periods. 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 first quarter of 2025 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

Equity in earnings (losses) of Kronos Worldwide, Inc.

Current wording

Equity in earnings of Kronos Worldwide, Inc.

Previous wording

As previously reported, effective July 16, 2024, Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator Investments, Ltd. (“Venator”). Prior to the acquisition, LPC was operated as a manufacturing joint venture between Kronos and Venator, and through a wholly-owned subsidiary, Kronos held a 50% joint venture interest in LPC. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. Kronos acquired the 50% joint venture interest that it did not already own for consideration of $185 million less a working capital adjustment of $11.0 million. An additional earn-out payment of up to $15 million based on Kronos’ aggregate consolidated net income before interest expense, income taxes and depreciation and amortization expense, or EBITDA, during a two-year period comprising calendar years 2025 and 2026 may be required. The acquisition was financed through borrowings of $132.1 million under Kronos’ revolving credit facility and the remainder paid with cash on hand. Kronos accounted for the acquisition of LPC’s interest as a business combination. See Note 5 to our Condensed Consolidated Financial Statements.

Current wording

As previously reported, effective July 16, 2024 (“Acquisition Date”), Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator Investments, Ltd. Prior to the acquisition, Kronos held a 50% joint venture interest in LPC. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. Kronos accounted for the acquisition as a business combination. The results of operations of LPC have been included in Kronos’ results of operations beginning as of the Acquisition Date. See Note 6 to our Condensed Consolidated Financial Statements.

Previous wording

Kronos and the TiO 2 industry experienced an extended period of significantly reduced demand across all major markets which was reflected in its sales volumes throughout 2023. While demand has improved in 2024 resulting in increased sales volumes across all major markets compared to the prior year, overall demand remains below average historical levels and during the third quarter of 2024, demand moderated as compared to the first half of the year. Kronos started 2024 with average TiO 2 selling prices 13% lower than at the beginning of 2023 and its average TiO 2 selling prices increased 4% during the first nine months of 2024. Kronos’ average TiO 2 selling prices in the first nine months of 2024 were 7% lower than average prices during the first nine months of 2023.

Current wording

Kronos started 2025 with average TiO 2 selling prices 2% higher than at the beginning of 2024 but its average TiO 2 selling prices declined 3% during the first quarter of 2025 due to market pressures in certain regions and a less favorable product sales mix. Kronos’ average TiO 2 selling prices in the first three months of 2025 were 2% higher than the average prices during the first three months of 2024. Kronos had higher overall sales volumes in its North American and European markets somewhat offset by lower sales volumes in its export markets in the first three months of 2025 as compared to the same period of 2024.

Previous wording

Kronos operated its production facilities at 71% of practical capacity utilization in the first nine months of 2023 in response to decreased demand and higher production costs. As a result of increased demand experienced in the fourth quarter of 2023 and first nine months of 2024, along with more favorable production costs, Kronos began increasing its production rates during the first quarter of 2024 and it operated at near practical capacity in the second and third quarters of 2024 resulting in 93% of practical capacity utilization in the first nine months of 2024.

Current wording

Kronos operated its production facilities at 93% of practical capacity utilization in the first quarter of 2025 compared to 87% in the first quarter of 2024 in response to increased customer demand.

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 nine months of 2024 was significantly lower as compared to the comparable period in 2023 primarily due to significant decreases in per metric ton production costs (primarily feedstock and energy).

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 three months of 2025 was lower as compared to the comparable period in 2024 due to decreases in per metric ton production costs (primarily raw materials, utilities and unabsorbed fixed costs due to improved operating rates in 2025).

Previous wording

Net sales– Kronos’ netsales in the third quarter of 2024 increased 22%, or $87.8 million, compared to the third quarter of 2023 primarily due to the effects of a 21% increase in sales volumes (which increased net sales by approximately $83 million) partially offset by a 1% decrease in average TiO 2 selling prices (which decreased net sales by approximately $4 million). The effects of changes in currency exchange rates in the third quarter of 2024 were comparable to the third quarter of 2023. 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 salesin the first quarter of 2025 increased 2%, or $11.0 million, compared to the first quarter of 2024 primarily due to the net effects of a 5% increase in sales volumes (which increased net sales by approximately $24 million), a 2% increase in average TiO 2 selling prices (which increased net sales by approximately $10 million) and changes in product mix (which decreased net sales by approximately $10 million). In addition, Kronos estimates that changes in currency exchange rates (primarily the euro) decreased its net sales by approximately $11 million in the first quarter of 2025 as compared to the first quarter of 2024. TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Previous wording

Kronos’ cost of sales as a percentage of net sales improved to 79% in the third quarter of 2024 compared to 91% in the same period of 2023 primarily due to the favorable effects of lower production costs and higher production volumes resulting in increased coverage of fixed production costs.

Current wording

Kronos’ cost of sales as a percentage of net sales improved to 78% in the first quarter of 2025 compared to 85% in the same period of 2024 primarily due to the favorable effects of lower production costs (primarily raw materials and utilities) and higher production volumes resulting in increased coverage of fixed production costs.

Previous wording

Kronos’ gross margin as a percentage of net sales increased to 21% in the third quarter of 2024 compared to 9% in the third quarter of 2023. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales increased primarily due to higher sales and production volumes and lower production costs, which were partially offset by lower average TiO 2 selling prices.

Current wording

Kronos’ gross margin as a percentage of net sales increased to 22% in the first quarter of 2025 compared to 15% in the first quarter of 2024. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales increased primarily due to higher sales and production volumes, higher average TiO 2 selling prices, lower overall production costs (primarily raw materials and utilities) and improved fixed cost absorption.

Previous wording

Kronos’ selling, general and administrative expense increased $17.5 million, or 11%, in the first nine months of 2024 compared to the same period in 2023 primarily due to higher distribution costs related to higher sales volumes. Kronos’ selling, general and administrative expense in the first nine months of 2024 also includes $2.2 million of transaction costs incurred in connection with the LPC acquisition. Kronos’selling, general and administrative expense as a percentage of net sales remained consistent in the first nine months of 2024 compared to the first nine months of 2023.

Current wording

Selling, general and administrative expense– Kronos’ selling, general and administrative expense increased $7.4 million, or 14%, in the first quarter of 2025 compared to the first quarter of 2024 primarily due to higher distribution costs related to higher sales volumes and additional distribution and warehousing costs incurred to position finished products inventory in the U.S. in response to anticipated U.S. federal government tariff announcements. Selling, general and administrative expense as a percentage of net sales increased to 13% in the first quarter of 2025 compared to 11% in the first quarter of 2024 as a result of the higher distribution and warehousing costs as described above.

Previous wording

Income (loss) from operations– Kronos had income from operations of $38.9 million in the third quarter of 2024 compared to a loss from operations of $25.3 million in the third quarter of 2023 as a result of the factors impacting gross margin discussed above. Kronos estimates that changes in currency exchange rates increased its income from operations by approximately $13 million in the third quarter of 2024 as compared to the same period in 2023, as discussed in the effects of currency exchange rates section below.

Current wording

Income from operations– Kronos’ income from operations increased by $18.9 million to $38.4 million in the first quarter of 2025 compared to income from operations of $19.5 million in the first quarter of 2024 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 $5 million in the first quarter of 2025 as compared to the same period in 2024, as discussed in the effects of currency exchange rates section below.

Previous wording

Kronos’ interest expense in the first nine months of 2024 increased $18.0 million compared to the first nine months of 2023 primarily due to higher interest rates on the debt exchange and the issuance of new notes noted above. As a result of the exchange, interest expense for the first nine months of 2024 includes a charge of $1.5 million for the write-off of deferred financing costs. Kronos recognized a gain of $2.6 million on the change in value of its marketable equity securities in the first nine months of 2024 compared to a loss of $1.3 million in the first nine months of 2023. Kronos’ other components of net periodic pension and OPEB cost in the first nine months of 2024 decreased $3.1 million compared to the first nine months of 2023 primarily due to a higher expected return on plan assets and a non-recurring $1.3 million in settlement costs related to the termination and buy-out of its U.K. pension plan in the second quarter of 2023.

Current wording

Other non-operating income (expense)– Kronos recognized an unrealized loss of $1.0 million in the first quarter of 2025 compared to an unrealized gain of $.3 million in the first quarter of 2024 related to the change in market price of its marketable equity securities. Kronos’ other components of net periodic pension and OPEB cost in the first quarter of 2025 increased $.2 million compared to the first quarter of 2024 primarily due to a lower expected return on plan assets. Kronos’ interest expense in the first quarter of 2025 increased $2.4 million compared to interest expense in the first quarter of 2024 primarily due to higher overall debt levels as the result of debt transactions entered into in 2024. Kronos’ interest expense in the first three months of 2024 also includes a charge of $1.5 million for the write-off of deferred financing costs.

Previous wording

Income tax expense (benefit)– Kronos recognized income tax expense of $22.7 million in the third quarter of 2024 compared to an income tax benefit of $8.7 million in the third quarter of 2023. The difference is primarily due to higher earnings in the third quarter of 2024 and the jurisdictional mix of such earnings. 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 or changes in its reserve for uncertain tax positions, to be higher than the U.S. federal statutory tax rate of 21% primarily because of its sizeable non-U.S. operations.

Current wording

Income tax expense– Kronos recognized income tax expense of $7.6 million in the first quarter of 2025 compared to income tax expense of $3.5 million in the first quarter of 2024. The difference is primarily due to higher earnings in the first quarter of 2025 and the jurisdictional mix of such earnings. 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

Previous wording

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, and (ii) changes in currency exchange rates during time periods when Kronos’ non-U.S. operations are holding non-local currency (primarily U.S. dollars).

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 gain or losses it would recognize from the first two items described above.

Previous wording

Overall, Kronos estimates that fluctuations in currency exchange rates had the following effects on its sales and income (loss) from operations for the periods indicated.

Current wording

Overall, Kronos estimates that fluctuations in currency exchange rates had the following effects on its sales and income from operations for the periods indicated.

Previous wording

The $1 million decrease in net sales (translation losses) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as Kronos’ euro-denominated sales were translated into fewer U.S. dollars in 2024 as compared to 2023. The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2024 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 $11 million decrease in net sales (translation losses) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as Kronos’ euro-denominated sales were translated into fewer U.S. dollars in 2025 as compared to 2024. The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2025 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 $13 million increase in income from operations was comprised of the following:

Current wording

The $5 million decrease in income from operations was comprised of the following:

Previous wording

As noted above, Kronos acquired control of LPC in July 2024. Kronos believes this acquisition is a unique opportunity to immediately add value to its customers and better serve the North American marketplace by allowing it to expand its product offerings and increase sales to new and existing customers while recognizing significant synergies, including commercial, overhead and supply chain optimization. Kronos is in the process of fully integrating the additional LPC production capacity and it expects the acquisition will have a positive impact on its earnings, although the potential positive impact in 2024 will be limited by competitive pressures, demand moderation in North America and by the additional debt service costs associated with the increase in borrowings to complete the transaction. With the increased borrowing availability under Kronos’ revolving credit facility, as well as cash on hand, Kronos is well positioned to finance the required working capital build needed to fully integrate the acquired LPC production capacity, which it expects to be complete by the end of the year. Beginning in the third quarter, Kronos reduced its quarterly dividend rate from $.19 per share to $.05 per share to provide the flexibility to absorb increased debt service costs, working capital needs and capital improvements from the LPC acquisition.

Current wording

As noted above, Kronos acquired full control of LPC in July 2024. Kronos believes this acquisition presents a unique opportunity to add immediate value for its customers and better serve the North American marketplace by expanding its product offerings and increasing sales to new and existing customers while realizing significant synergies, including commercial, overhead, and supply chain optimization. Kronos is in the process of fully integrating the additional LPC production capacity and it expects the acquisition to positively impact its earnings in 2025, although soft demand, competitive pressures and additional debt service costs associated with increased borrowings to complete the transaction may limit this impact. As noted above, Kronos’ tariff mitigation efforts in the first quarter required working capital to build and position inventory within the U.S. Kronos expects its cash on hand to improve as it reduces inventory levels over the next several quarters. With increased borrowing availability under Kronos’ revolving credit facility and cash on hand, Kronos believes it is well-positioned to finance its working capital needs, to repay in September the €75 million 3.75% Senior Secured Notes due 2025, and to fully integrate the acquired LPC production capacity.

Previous wording

Kronos’ expectations for the TiO 2 industry and its operations are based on a number of factors outside its control. Kronos has experienced global market disruptions, including high energy costs, and future impacts on its operations will depend on, among other things, future energy costs and the impact economic conditions and geopolitical events have on its operations or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Current wording

Kronos’ expectations for the TiO 2 industry and its operations are based on factors outside its control. Kronos’ operations are affected by global and regional economic, political, and regulatory factors, and it has experienced global market disruptions. Future impacts on Kronos’ operations will depend on, among other things, future energy costs, the effects of newly enacted tariffs on jurisdictions where it or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact of economic conditions, consumer confidence, and geopolitical events on its operations or those of its customers and suppliers, all of which remain uncertain and cannot be predicted.

Previous wording

Net cash provided by operating activities was $16.6 million in the first nine months of 2024 compared to $15.5 million in the first nine months of 2023. The increase in cash provided by operating activities in the first nine months of 2024 includes:

Current wording

Net cash used in operating activities was $47.5 million in the first three months of 2025 compared to net cash provided by operating activities of $6.7 million in the first three months of 2024. The decrease in cash provided by operating activities in the first three months of 2025 includes:

Previous wording

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, average days sales outstanding increased from December 31, 2023 to September 30, 2024 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 increased from December 31, 2023 to September 30, 2024 primarily because 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. Total average number of days in inventory decreased from September 30, 2023 to September 30, 2024 due to planned inventory reductions. For comparative purposes, we have provided December 31, 2022 and September 30, 2023 numbers below.

Current wording

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, average days sales outstanding increased from December 31, 2024 to March 31, 2025 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 at December 31, 2024 was comparable to March 31, 2025 as the increase at Security Products primarily due to increased inventory to meet current and expected customer demand was offset by the decline at Marine Components 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

Our capital expenditures, all of which relate to CompX, were $1.2 million in the first nine months of 2024 compared to $.6 million in the first nine months of 2023. 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).

Current wording

Our capital expenditures, all of which relate to CompX, were $.8 million in the first three months of 2025 compared to $.3 million in the first three months of 2024. During the first three months of 2025, the promissory note balance with Valhi has net activity of nil ($.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).

Previous wording

During the first nine months of 2024, we received gross proceeds from U.S. treasury bill maturities totaling $54.0 million. During the first nine months of 2023, we had gross purchases of U.S. treasury marketable securities aggregating $61.4 million and received gross proceeds totaling $54.0 million related to U.S. treasury bill maturities.

Current wording

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

Previous wording

Our board of directors declared a quarterly dividend of $.08 per share in each of the first, second and third quarters of 2024, and our board of directors declared a quarterly dividend of $.07 per share in each of the first, second and third quarters of 2023. During the first nine months of 2024 and 2023, we paid aggregate quarterly dividends to NL shareholders of $11.7 million and $10.3 million, respectively. Additionally, in August 2024 our board of directors declared a special dividend of $.43 per share on our common stock ($21.0 million). 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

In February 2025, our board of directors declared a quarterly dividend of $.09 per share, and in February 2024 our board of directors declared a quarterly dividend of $.08 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.

Previous wording

Cash flows from financing activities in the first nine months of each of 2023 and 2024 also include CompX dividends paid to its stockholders other than us.

Current wording

Cash flows from financing activities in the first three months of each of 2024 and 2025 also include CompX dividends paid to its stockholders other than us.