NL INDUSTRIES INC

Previous 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:

Current wording

Our net income attributable to NL stockholders was $.3 million, or $.01 per share, in the second quarter of 2025 compared to $7.9 million, or $.16 per share, in the second 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 a loss of $.01 per share due to Kronos’ recognition of an aggregate charge related to a write-off of deferred financing costs.

Current wording

Our 2024 net income per share attributable to NL 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

In the first quarter of 2025, CompX’s segment profit increased to $5.9 million compared to $3.7 million in the first quarter of 2024. The increase in segment profit in the first quarter of 2025 compared to 2024 is primarily due to higher Marine Components reporting unit sales and gross margin.

Current wording

CompX’s segment profit in the second quarter of 2025 was $6.3 million compared to $5.1 million in the same period of 2024. CompX’s segment profit for the first six months of 2025 was $12.2 million compared to $8.8 million for the comparable prior year period. CompX’s segment profit 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

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.

Current wording

Cost of sales and gross margin– CompX’s cost of sales as a percentage of sales improved 1% in the second 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 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. CompX’s cost of sales as a percentage of sales improved 3% for the first six months 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. The increase in CompX’s 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 discussion of reporting units below.

Previous wording

Selling, general and administrative expenses– CompX’s selling, general and administrative expenses consist primarily of personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to CompX’s business unit and corporate management activities, as well as any gains and losses on property and equipment. CompX’s selling, general and administrative expenses for the first quarter of 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.

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 second quarter and the first six months of 2025 increased $.6 million and $.9 million,

Previous 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.

Current wording

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

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 on higher sales. Reporting unit profit 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

The raw material price increases CompX began experiencing in the third quarter of 2024 have continued through the first quarter of 2025 and it is starting to see some surcharges related to tariffs on certain commodity raw materials.

Current wording

Outlook**–**CompX’s sales for the first half of 2025 reflect continued robust demand across both of CompX’s reporting units, surpassing the first half of 2024 sales. CompX’s Marine Components sales and reporting unit profit 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. CompX’s 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 CompX began experiencing in the third quarter of 2024 have continued through the first half of 2025, and it is starting to see some surcharges related to tariffs on certain components, primarily electronic components from Asia.

Previous wording

CompX expects Security Products net sales in 2025 to improve modestly over 2024, and it expects gross margin and reporting unit profit percentages in 2025 to be slightly above 2024 due to price increases implemented in the first quarter and an improved Security Products product mix. CompX expects the Marine Components reporting unit 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, CompX expects demand from the towboat market to be consistent with 2024. Overall, CompX expects the Marine Components reporting unit to have improved gross margins and reporting unit profit percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.

Current wording

CompX expects Security Products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security and healthcare markets; however, it expects these increases will be offset somewhat by certain other markets that continue to be challenging including transportation and distribution. CompX’s Security Products gross margin and reporting unit profit margin percentages will be challenged during the last half of 2025 primarily due to higher cost inventory it 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 CompX expects to continue in the second half of 2025. As a result, CompX expects gross margin and reporting unit profit margin at Security Products to be in-line with prior year. CompX expects 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, CompX expects Marine Components to have improved gross margin and reporting unit profit margin percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.

Previous wording

CompX manufactures substantially all of its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. CompX also sources certain components, primarily electronic components from Asia, including China. In anticipation of the U.S. federal government tariffs announcements, CompX increased purchases of certain electronic components and other components to mitigate the potential near-term impact of tariffs. As noted above, CompX has recently experienced some raw material and component price increases related to tariffs. CompX believes it can increase selling prices to its customers to recoup its increased raw material costs, although the extent to which it can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of CompX’s customers to substitute alternative products. CompX will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.

Current wording

CompX manufactures substantially all of its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. CompX also sources certain components, primarily electronic components from Asia, including China. Early in the first quarter of 2025, in anticipation of the U.S. federal government tariffs announcements, CompX 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 CompX began incurring tariff related surcharges on certain raw materials, primarily electronic components. CompX is working to increase selling prices to its customers to recoup these increased raw material costs, although the extent to which it can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of its customers to substitute alternative products. CompX will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.

Previous 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:

Current wording

Corporate expense– Corporate expenses were $3.5 million in the second quarter of 2025, $.8 million lower than in the second quarter of 2024, primarily due to lower litigation fees and related costs and lower environmental remediation and related costs. Included in corporate expense in the second quarter of 2024 and 2025 are:

Previous 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.

Current wording

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

Previous 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.

Current wording

Marketable equity securities– We recognized an unrealized loss of $.1 million on the change in value of our marketable equity securities in the second quarter of 2025 compared to an unrealized gain of $.8 million in the second quarter of 2024. We recognized an unrealized loss of $8.6 million on the change in value of our marketable equity securities in the first six months of 2025 compared to an unrealized gain of $3.2 million in the first six months of 2024. See Note 5 to our Condensed Consolidated Financial Statements.

Previous 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.

Current wording

Income tax expense– We recognized an income tax benefit of less than $.1 million in the second quarter of 2025 compared to income tax expense of $1.3 million in the second quarter of 2024 and an income tax benefit of $.1 million in the first half of 2025 compared to income tax expense of $2.3 million in the first half 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

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 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.

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 a negative effective tax rate of .9% in the first six months of 2025 compared to an effective tax rate of 2.6% in the first six months of 2024. The change in our effective rate from 2024 to 2025 is primarily attributable to Kronos’ anticipated lower full year earnings and the effect of lower 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 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.

Current wording

Noncontrolling interest– Noncontrolling interest in net income of CompX increased during the second quarter and for the first six months of 2025 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.

Previous 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.

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

Previous 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.

Current wording

The first six months of 2025 have seen unprecedented global uncertainty related to U.S. trade policies and geopolitical tensions. Kronos’ customers have been hesitant to build inventories, given these uncertainties, which has prolonged the market downturn and which has impacted its sales volumes and pricing momentum. 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 4% during the first six months of 2025. Kronos’ average TiO 2 selling prices in the first six months of 2025 were comparable to the average selling prices during the first six months of 2024. Kronos had higher overall sales volumes in its European and North American markets somewhat offset by lower sales volumes in its export markets in the first six months of 2025 compared to the first six months of 2024.

Previous 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.

Current wording

Kronos operated its production facilities at 93% of practical capacity utilization in the first half of 2024. In the first half of 2025, Kronos’ practical capacity utilization was 87% as it reduced operating rates at certain of its manufacturing facilities.

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 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).

Current wording

Excluding the effect of changes in currency exchange rates, Kronos’ cost of sales per metric ton of TiO 2 sold in the second quarter and the first half of 2025 was higher as compared to the same periods in 2024 due to increases in per metric ton production costs (primarily unabsorbed fixed costs due to reduced operating rates in 2025).

Previous 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.

Current wording

Net sales– Kronos’sales in the second quarter of 2025 decreased 1%, or $6.1 million, compared to the second quarter of 2024 primarily due to the effects of a 1% decrease in average TiO 2 selling prices (which decreased net sales by approximately $7 million), changes in product mix (which decreased net sales by approximately $4 million) and a 1% decrease in sales volumes (which decreased net sales by approximately $3 million). In addition, Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $8 million in the second quarter of 2025 as compared to the second 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’ sales volumes increased 5% in the first quarter of 2025 as compared to the first quarter of 2024 due to higher overall sales volumes in its North American and European markets somewhat offset by lower sales volumes in its export markets.

Current wording

Kronos’ sales volumes increased 2% in the first six months of 2025 as compared to the same period in 2024 due to higher overall sales volumes in its North American and European markets somewhat offset by lower sales volumes in its export markets.

Previous 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.

Current wording

Kronos’ gross margin as a percentage of net sales decreased to 13% in the second quarter of 2025 compared to 20% in the second quarter of 2024. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales decreased primarily due to lower production volumes resulting in unfavorable fixed cost absorption.

Previous 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.

Current wording

Kronos’ selling, general and administrative expense increased $11.6 million, or 10%, in the first six months of 2025 compared to the first six months of 2024 primarily due to higher distribution costs related to higher sales volumes and additional warehousing costs incurred during the first quarter of 2025 to position finished products inventory in the U.S. in response to anticipated U.S. federal government tariff announcements and an increase of finished goods inventory during the second quarter of 2025. Selling, general and administrative expense as a percentage of net sales increased 2% in the first six months of 2025 compared to the same period of 2024 as a result of thefactors described above.

Previous 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.

Current wording

Income from operations– Kronos’ income from operations decreased by $28.5 million to $7.4 million in the second quarter of 2025 compared to income from operations of $35.9 million in the second quarter of 2024 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 $14 million in the second quarter of 2025 as compared to the same period in 2024, as discussed in the effects of currency exchange rates section below.

Previous 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.

Current wording

Kronos’ interest expense in the first six months of 2025 increased $5.4 million compared to interest expense in the first six months of 2024 primarily due to higher overall debt levels and higher average interest rates as the result of debt transactions entered into in 2024. Kronos’ interest expense for the first six months of 2024 includes a charge of $1.5 million for the write-off of deferred financing costs. Kronos’ other components of net periodic pension and OPEB cost in the first six months of 2025 increased $.5 million

Previous 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

Current wording

Income tax expense– Kronos recognized income tax expense of $3.5 million in the second quarter of 2025 compared to income tax expense of $8.5 million in the second quarter of 2024. The difference is primarily due to lower earnings in the second quarter of 2025 and the jurisdictional mix of such earnings, partially offset by the second quarter increase to the valuation allowance against Kronos’ Belgian deferred tax assets. 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.

Previous 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.

Current wording

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

Previous wording

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

Current wording

Fluctuations in currency exchange rates had the following effects on Kronos’ sales and income from operations for the periods indicated.

Previous wording

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

Current wording

The $14 million increase in income from operations was comprised of the following:

Previous 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.

Current wording

The $3 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

Overall Kronos’ customer demand improved in the first quarter of 2025 as compared to the same period in 2024, led by stronger demand in Europe. The momentum Kronos saw at the beginning of the year began to slow in the second half of the first quarter as uncertainty regarding the outcome of the U.S. federal government’s announced tariffs and responses to such tariffs from various affected countries tempered customer demand. Kronos expects demand, particularly in North America, to remain challenging until the uncertainty around tariffs is resolved; however, demand in Europe has improved in part due to the European Commission’s duties on Chinese imports of TiO 2, enacted in mid-2024. Overall, it is unclear how much impact the economic uncertainty caused by potential tariffs implemented by the U.S. and other countries will have on demand in 2025. Kronos believes customer inventory levels remain low, although in the face of this uncertainty customers are demonstrating hesitancy to build inventory, and it is receiving orders on shorter notice than previously experienced, indicating a cautious demand outlook and careful inventory management. TiO 2 selling prices have remained relatively stable in North America and in export markets and have increased slightly in Europe partly as a result of continued elevated costs for utilities and other raw materials. Kronos is evaluating production rates at its operating facilities based on current customer demand and expects its 2025 production rates to be near 2024 levels.

Current wording

Overall Kronos’ customer demand decreased in the second quarter of 2025 in all major markets. The momentum Kronos saw at the beginning of the year began to slow toward the second half of the first quarter of 2025 and persisted through the second quarter

Previous 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.

Current wording

As noted above, Kronos acquired full control of LPC in July 2024. Kronos believes this acquisition adds value to its customers and enables it to 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 expects the acquisition to positively impact its earnings. However, soft demand, competitive pressures and additional debt service costs from increased borrowings will limit this impact in the near term. Kronos is investing in technological and manufacturing improvements to the LPC facility which are expected to improve the flexibility, quality and cost effectiveness of the facility over the long term.

Previous 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:

Current wording

Net cash used in operating activities was $40.2 million in the first six months of 2025 compared to net cash provided by operating activities of $22.3 million in the first six months of 2024. The decrease in cash provided by operating activities in the first six 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, 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.

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 June 30, 2025 primarily as a result of a seasonal increase in CompX’s sales during the second quarter as compared to the fourth quarter and the timing of CompX’s sales and collections relative to the end of the quarter. Total 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 CompX’s Security Products and Marine Components reporting units. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

Previous 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).

Current wording

Our capital expenditures, all of which relate to CompX, were $2.2 million in the first six months of 2025 compared to $.7 million in the first six months of 2024. 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).

Previous wording

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

Current wording

During the first six months of 2024, we received gross proceeds from U.S. treasury bill maturities totaling $42.0 million.

Previous 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.

Current wording

Our board of directors declared a quarterly dividend of $.09 per share in each of the first, second, and third quarters of 2025, and our board of directors declared a quarterly dividend of $.08 per share in each of the first, second, and third quarters of 2024. 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. In this regard, in August 2025, our board of directors declared a special dividend of $.21 per share on our common stock, par value $.125 per share. The special dividend is payable on August 28, 2025 to stockholders of record at the close of business on August 18, 2025. Additionally, in August 2025, CompX’s board of directors declared a special dividend of $1.00 per share on CompX’s Class A common stock, par value $.01 per share. CompX’s special dividend is payable on August 27, 2025 to CompX’s stockholders of record at the close of business on August 18, 2025.

Previous 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.

Current wording

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

Previous wording

At March 31, 2025, Kronos had $43.2 million outstanding on its revolving credit facility (the “Global Revolver”). Availability under the Global Revolver is subject to a borrowing base calculation, as defined in the agreement. The borrowing base calculated as of March 31, 2025 exceeded $300 million. Kronos’ Senior Secured Notes, the Contran Term Loan and Kronos’ Global Revolver contain a number of covenants and restrictions which, among other things, restrict its ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of these types. Certain of Kronos’ credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants. For example, the credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, the credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. Kronos is in compliance with all of its debt covenants at March 31, 2025. Kronos believes that it will be able to continue to comply with the financial covenants contained in its credit facility through its maturity.

Current wording

At June 30, 2025, Kronos had $37.0 million outstanding on its revolving credit facility (the “Global Revolver”). Availability under the Global Revolver is subject to a borrowing base calculation, as defined in the agreement. Effective July 17, 2025, Kronos completed an amendment to its Global Revolver (the “Fourth Amendment”). Among other things, the Fourth Amendment increased the maximum borrowing amount from $300 million to $350 million. The maturity date of the facility remains July 2029. For the period ended June 30, 2025, the borrowing base exceeded $350 million. At June 30, 2025, Kronos had total availability for borrowing of approximately $300 million less any amounts outstanding under this facility. Kronos’ Senior Secured Notes, the Contran Term Loan and Kronos’ Global Revolver contain a number of covenants and restrictions which, among other things, restrict its ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of these types. Certain of Kronos’ credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants. For example, the credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, the credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. Kronos is in compliance with all of its debt covenants at June 30, 2025. Kronos believes that it will be able to continue to comply with the financial covenants contained in its credit facility through its maturity.