COMPX INTERNATIONAL INC

Previous wording

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 wording

Operating income in the second quarter of 2025 was $6.3 million compared to $5.1 million in the same period of 2024. Operating income for the first six months of 2025 was $12.2 million compared to $8.8 million for the comparable prior year period. Our operating income increased in the second quarter and for the first six months of 2025 due to higher sales and gross margin at each of the Security Products and Marine Components segments.

Previous 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.

Current wording

Net sales. Net sales increased $4.5 million and $6.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 due to higher Security Products sales to the government security market and higher Marine Component sales to the government and towboat markets. See segment discussion below.

Previous 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.

Current wording

*Cost of sales and gross margin.*Cost of sales as a percentage of sales improved .8% in the second 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 second quarter of 2025 compared to the same period in 2024 primarily due to higher Marine Components gross margin percentage partially offset by lower Security Products gross margin percentage. Cost of sales as a percentage of sales improved 2.9% for the first six months of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. The increase in gross margin percentage for the six-month comparative period is primarily due to higher gross margin percentage at Marine Components, primarily in the first quarter. 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 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.

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 second quarter and the first six months of 2025 increased $.5 million and $.8 million, respectively, compared to the same periods in 2024 primarily due to higher employee related costs including salaries, benefits and medical expenses at both segments. Operating costs and expenses as a percentage of net sales decreased for the second quarter and for the first six months of 2025 due to higher coverage of operating costs and expenses as a result of higher sales.

Previous 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.

Current wording

Operating income. As a percentage of net sales, operating income for the second quarter and the first six months of 2025 increased compared to the same periods of 2024 and was primarily impacted by the factors affecting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.

Previous wording

*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 wording

*Interest income.*Interest income decreased $.4 million and $.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 primarily due to lower average interest rates and decreased cash balances.

Previous wording

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 wording

Marine Components. Marine Components net sales increased 26% in the second quarter of 2025 compared to the same period in 2024. Relative to prior year, the increase in second quarter sales was primarily due to $1.3 million higher sales to the government market and $.6 million higher sales to the towboat market. Marine Components net sales increased 25% in the first six months of 2025 compared to the same period in 2024. Relative to prior year, the increase in sales for the first six months was primarily due to $2.5 million higher sales to the government market and $2.4 million higher sales to the towboat market, partially offset by $.7 million lower sales to the center console market.

Previous wording

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 wording

Outlook. Sales for the first half of 2025 reflect continued robust demand across both of our segments, surpassing the first half of 2024 sales. Marine Components sales and operating income for the first six months of 2025 exceeded prior year on the strength of improved demand to the government market as well as increased sales to the towboat market primarily in the first quarter of 2025 related to a one-time stocking event for a towboat OEM customer. Security Products sales improved from prior year predominantly due to increased sales to the government security market and to a lesser extent increased sales to the healthcare market. The raw material price increases we began experiencing in the third quarter of 2024 have continued through the first half of 2025, and we are starting to see some surcharges related to tariffs on certain components, primarily electronic components from Asia.

Previous wording

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 wording

We expect Security Products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security and healthcare markets; however, we expect these increases will be offset somewhat by certain other markets that continue to be challenging including transportation and distribution. Security Products gross margin and operating income percentages will be challenged during the last half of 2025 primarily due to higher cost inventory we began producing late in the second quarter due to higher raw material costs and tariff related surcharges on certain raw materials, primarily electronic components, which we expect to continue in the second half of 2025. As a result, we expect gross margin and operating income margin at Security Products to be in-line with prior year. We expect Marine Components net sales to increase in 2025 predominantly due to higher expected sales to the government market as well as higher expected sales to the industrial market in the second half of the year. 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.

Previous wording

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.

Current wording

Early in the first quarter of 2025, 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, late in the second quarter we began incurring tariff related surcharges on certain raw materials, primarily electronic components. We are working to increase selling prices to our customers to recoup these 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.

Previous 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:

Current wording

Our net cash provided by operating activities for the first six months of 2025 decreased by $6.9 million as compared to the first six months of 2024. The decrease in net cash provided is primarily due to the net effects of:

Previous wording

Changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in our average days sales outstanding from December 31, 2024 to March 31, 2025 varied by segment primarily as a result of relative changes in the timing of sales and collections relative to the end of the quarter. For comparative purposes, we have provided December 31, 2023 and March 31, 2024 numbers below.

Current wording

Changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in our average days sales outstanding increased from December 31, 2024 to June 30, 2025 primarily as a result of a seasonal increase in sales during the second quarter as compared to the fourth quarter and the timing of sales and collections relative to the end of the quarter. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

Previous 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.

Current wording

As shown below, our average number of days in inventory increased from December 31, 2024 to June 30, 2025 primarily due to increased inventory as a result of higher raw material and production costs and to meet expected customer demand at both Security Products and Marine Components. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

Previous 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.

Current wording

*Investing activities.*Our capital expenditures were $2.2 million and $.7 million in the first six months of 2025 and 2024, respectively. During the first six months of 2025, Valhi repaid a net $.4 million under the promissory note ($6.0 million of gross borrowings and $6.4 million of gross repayments). During the first six months of 2024, Valhi repaid a net $1.4 million under the promissory note ($12.0 million of gross borrowings and $13.4 million of gross repayments). See Note 9 to our Condensed Consolidated Financial Statements.

Previous wording

During the first three months of 2024, we received gross proceeds totaling $12.0 million related to U.S. treasury bill maturities.

Current wording

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

Previous 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.

Current wording

*Financing activities.Financing activities consisted only of cash dividends. *During each of the first six months of 2025 and 2024, we paid aggregate quarterly dividends to CompX stockholders of $.60 per share. 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. In this regard, in August 2025, our board of directors declared a special dividend of $1.00 per share on our Class A common stock, par value $.01 per share. The special dividend is payable on August 27, 2025 to stockholders of record at the close of business on August 18, 2025.

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 9 to our Condensed Consolidated Financial Statements (which loans would be solely at our discretion) for both

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 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.

Previous wording

All of our $56.1 million aggregate cash and cash equivalents at March 31, 2025 were held in the U.S.

Current wording

All of our $56.2 million aggregate cash and cash equivalents at June 30, 2025 were held in the U.S.

Previous 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.

Current wording

Capital expenditures. Firm purchase commitments for capital projects in process at June 30, 2025 totaled $.6 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

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.

Current wording

There have been no changes in the first six 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.