NL Industries (NYSE: NL) leans on Kronos TiO₂ and CompX component sales
Rhea-AI Filing Summary
NL Industries, Inc. is a New Jersey holding company whose value is driven mainly by two businesses: an 87% stake in CompX International, which makes security and marine components, and a 31% stake in Kronos Worldwide, a global titanium dioxide (TiO₂) producer. At June 30, 2025, 8.5 million non‑affiliate shares had an aggregate market value of $54.2 million, and 48,862,734 common shares were outstanding on February 27, 2026.
CompX sells engineered locks and marine hardware from three U.S. plants, with its ten largest customers accounting for about 52% of 2025 sales and the U.S. Postal Service alone representing 26%. Raw materials such as zinc, brass, aluminum and stainless steel were about 14% of total 2025 cost of sales, with total material costs at roughly 43%, and management highlights exposure to commodity volatility and tariff risk.
Kronos is one of the top four TiO₂ producers worldwide, with 2025 TiO₂ volumes concentrated in Europe and North America and about 90% of its net sales from TiO₂ pigments. It acquired the remaining 50% of Louisiana Pigment Company in July 2024, consolidating a major chloride‑process plant. Kronos produced 480,000 metric tons of TiO₂ in 2025 with capacity utilization of 77% and reports a 7% share of global TiO₂ sales volume and rising market shares in Europe and North America.
The filing emphasizes environmental compliance, ESG initiatives, and detailed human‑capital disclosures, including 549 CompX employees and 2,263 Kronos employees at December 31, 2025. Key risks include TiO₂ price cycles, intense global competition (particularly from Chinese producers), higher energy and feedstock costs, Kronos’ $557.4 million of consolidated debt as of year‑end 2025, potential impacts from tariffs and climate‑related regulation, and ongoing legal and environmental exposures related to legacy lead‑pigment activities.
Positive
- None.
Negative
- None.
Insights
NL’s value hinges on cyclical TiO₂ and niche engineered components, with leverage and litigation as key constraints.
NL is essentially a holding company wrapped around majority‑owned CompX and a significant minority stake in Kronos. CompX offers relatively steady, niche component earnings but has meaningful customer concentration, with the U.S. Postal Service at 26% of 2025 sales and the top ten customers at 52%. That limits pricing power if large buyers push back on increases meant to offset raw‑material inflation.
Kronos drives most of the economic risk. It sits in a concentrated TiO₂ industry that is cyclical and capital intensive, with 2025 capacity utilization at
Leverage at Kronos—about
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
OR
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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(Exact name of Registrant as specified in its charter)
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(Address of principal executive offices) Registrant’s telephone number, including area code: | ||
Securities registered pursuant to Section 12(b) of the Act:
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No securities are registered pursuant to Section 12(g) of the Act.
Indicate by check mark:
If the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
If the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or emerging growth company (as defined in Rule 12b-2 of the Act). See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | ☐ | ||||
☒ | Smaller reporting company | |||||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262 (b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the 8.5 million shares of voting stock held by nonaffiliates of NL Industries, Inc. as of June 30, 2025 (the last business day of the Registrant’s most recently-completed second fiscal quarter) approximated $
Number of shares of the registrant’s common stock, $.125 par value per share, outstanding on February 27, 2026:
Documents incorporated by reference
The information required by Part III is incorporated by reference from the Registrant’s definitive proxy statement to be filed with the Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
PART I
ITEM 1.BUSINESS
The Company
NL Industries, Inc. was organized as a New Jersey corporation in 1891. Our common stock trades on the New York Stock Exchange, or the NYSE, under the symbol NL. References to “NL Industries,” “NL,” the “Company,” the “Registrant,” “we,” “our,” “us” and similar terms mean NL Industries, Inc. and its subsidiaries and affiliate, unless the context otherwise requires.
Our principal executive offices are located at Three Lincoln Center, 5430 LBJ Freeway, Suite 1700, Dallas, TX 75240. Our telephone number is (972) 233-1700. We maintain a website at www.nl-ind.com.
Business summary
We are primarily a holding company. We operate in the component products industry through our majority-owned subsidiary, CompX International Inc. (NYSE American: CIX). We operate in the chemicals industry through our noncontrolling interest in Kronos Worldwide, Inc. CompX and Kronos (NYSE: KRO) each file periodic reports with the Securities and Exchange Commission (“SEC”).
Organization
At December 31, 2025, Valhi, Inc. (NYSE: VHI) held approximately 83% of our outstanding common stock and a wholly-owned subsidiary of Contran Corporation held approximately 91% of Valhi’s outstanding common stock. As discussed in Note 1 to our Consolidated Financial Statements, Lisa K. Simmons and a trust established for the benefit of Ms. Simmons and her late sister and their children (the “Family Trust”) may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi and us.
Forward-looking statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements in this Annual Report that are not historical facts are forward-looking in nature and represent management’s beliefs and assumptions based on currently available information. In some cases, you can identify forward-looking statements by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expects” or comparable terminology, or by discussions of strategies or trends. Although we believe the expectations reflected in such forward-looking statements are reasonable, we do not know if these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results. Actual future results could differ materially from those predicted. The factors that could cause actual future results to differ materially from those described herein are the risks and uncertainties discussed in this Annual Report and those described from time to time in our other filings with the SEC and include, but are not limited to, the following:
| ● | Future supply and demand for our products; |
| ● | Kronos’ ability to realize expected cost savings from strategic and operational initiatives; |
| ● | Kronos’ ability to integrate acquisitions into its operations and realize expected synergies and innovations; |
| ● | The extent of the dependence of certain of our businesses on certain market sectors; |
| ● | The cyclicality of our businesses (such as Kronos’ TiO2 operations); |
| ● | Customer and producer inventory levels; |
| ● | Unexpected or earlier-than-expected industry capacity expansion (such as the TiO2 industry); |
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| ● | Changes in raw material and other operating costs (such as energy, ore, zinc, aluminum, steel and brass costs) or the implementation of tariffs on imported raw materials and our ability to pass those costs on to our customers or offset them with reductions in other operating costs; |
| ● | Changes in the availability of raw material (such as ore); |
| ● | General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material and energy costs or reduce demand or perceived demand for TiO2 and our products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, tariffs, natural disasters, terrorist acts, global conflicts and public health crises); |
| ● | Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises); |
| ● | Technology related disruptions (including, but not limited to, cyber-attacks; software implementation, upgrades, or improvements; technology processing failures; or other events) related to our technology infrastructure (including manufacturing and accounting systems) that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders; |
| ● | Competitive products and substitute products; |
| ● | Competition from Chinese suppliers with less stringent regulatory and environmental compliance requirements; |
| ● | Customer and competitor strategies; |
| ● | Our ability to retain key customers; |
| ● | Potential consolidation of Kronos’ competitors; |
| ● | Potential consolidation of Kronos’ customers; |
| ● | The impact of pricing and production decisions; |
| ● | Competitive technology positions; |
| ● | Our ability to protect or defend intellectual property rights; |
| ● | Potential difficulties in integrating future acquisitions; |
| ● | The introduction of new, or changes in existing, tariffs, trade barriers or trade disputes |
| ● | Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S. dollar and each of the euro, the Norwegian krone and the Canadian dollar and between the euro and the Norwegian krone), or possible disruptions to our business resulting from uncertainties associated with the euro or other currencies; |
| ● | Decisions to sell operating assets other than in the ordinary course of business; |
| ● | Kronos’ ability to renew or refinance credit facilities or other debt instruments in the future; |
| ● | Changes in interest rates; |
| ● | Kronos’ ability to comply with covenants contained in its revolving bank credit facility; |
| ● | Our ability to maintain sufficient liquidity; |
| ● | The timing and amounts of insurance recoveries; |
| ● | The ability of our subsidiaries or affiliates to pay us dividends; |
| ● | Uncertainties associated with CompX’s development of new products and product features; |
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| ● | The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform; |
| ● | Our ability to utilize income tax attributes or changes in income tax rates related to such attributes, the benefits of which may or may not have been recognized under the more-likely-than-not recognition criteria; |
| ● | Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities or new developments regarding environmental remediation or decommissioning obligations at sites related to our former operations); |
| ● | Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on former manufacturers of lead pigment and lead-based paint, including us, with respect to asserted health concerns associated with the use of such products), including new environmental, sustainability, health and safety or other regulations (such as those seeking to limit or classify TiO2 or its use); |
| ● | The ultimate resolution of pending litigation (such as our lead pigment and environmental matters); and |
| ● | Pending or possible future litigation (such as litigation related to CompX’s use of certain permitted chemicals in its productions process) or other actions. |
Should one or more of these risks materialize (or the consequences of such development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.
Operations and equity investment
Information regarding our operations and the companies conducting such operations is set forth below. Geographic financial information is included in Note 2 to our Consolidated Financial Statements, which is incorporated herein by reference.
Component Products CompX International Inc. – 87% owned at December 31, 2025 | CompX manufactures engineered components that are sold to a variety of industries including postal, recreational transportation (including boats), office and institutional furniture, cabinetry, tool storage, healthcare, gas stations, vending equipment and industrial. CompX has three production facilities in the United States. |
Chemicals Kronos Worldwide, Inc. – 31% owned at December 31, 2025 | Kronos is a leading global producer and marketer of value-added titanium dioxide pigments, or TiO2, a base industrial product used in imparting whiteness, brightness, opacity and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals and other industrial and consumer “quality-of-life” products. Kronos has production facilities in Europe and North America. Sales of its core TiO2 pigments represented approximately 90% of Kronos’ net sales in 2025, with sales of other products that are complementary to Kronos’ TiO2 business comprising the remainder. |
COMPONENT PRODUCTS – COMPX INTERNATIONAL INC.
Industry overview – Through our majority-owned subsidiary, CompX, we manufacture engineered components utilized in a variety of applications and industries. CompX manufactures mechanical and electrical cabinet locks and other locking mechanisms used in postal, recreational transportation, office and institutional furniture, cabinetry, tool storage and healthcare applications. CompX also manufactures wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries. CompX continuously seeks to diversify into new markets and identify new applications and features for its products, which it believes provide a greater potential for higher rates of earnings growth as well as diversification of risk.
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Manufacturing, operations and products – CompX’s Security Products business manufactures mechanical and electrical cabinet locks and other locking mechanisms used in a variety of applications including mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. CompX’s Security Products business has one manufacturing facility in Mauldin, South Carolina and one in Grayslake, Illinois which is shared with its Marine Components business. CompX believes it is a North American market leader in the manufacture and sale of cabinet locks and other locking mechanisms. These products include:
| ● | disc tumbler locks which provide moderate security and generally represent the lowest cost lock CompX produces; |
| ● | pin tumbler locks which are more costly to produce and are used in applications requiring higher levels of security, including KeSet® and System 64® (which each allow the user to change the keying on a single lock 64 times without removing the lock from its enclosure), TuBar® and Turbine®; and |
| ● | CompX’s innovative CompX eLock® and StealthLock® electronic locks which provide stand-alone or networked security and audit trail capability for drug storage and other valuables through the use of a proximity card, magnetic stripe, radio frequency or other keypad credential. |
A substantial portion of CompX’s Security Products’ sales consist of products with specialized adaptations to an individual customer’s specifications, some of which are listed above. CompX also has a standardized product line suitable for many customers, which is offered through a North American distribution network to locksmith and smaller original equipment manufacturer (“OEM”) distributors via its STOCK LOCKS® distribution program.
CompX’s Marine Components business manufactures and distributes wake enhancement systems, stainless steel exhaust components, gauges, throttle controls, trim tabs and related hardware and accessories primarily for ski/wakeboard boats (towboats) and performance boats. CompX’s Marine Components business also manufactures and distributes to the industrial market. CompX’s Marine Components business has a facility in Neenah, Wisconsin and a facility in Grayslake, Illinois which is shared with Security Products. CompX’s specialty Marine Components products are high precision components designed to operate within tight tolerances in the highly demanding marine environment. These products include:
| ● | original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers and other exhaust components; |
| ● | high performance gauges such as GPS speedometers and tachometers; |
| ● | mechanical and electronic controls and throttles; |
| ● | wake enhancement devices, trim tabs, steering wheels and billet aluminum accessories; |
| ● | dash panels, LED indicators and wire harnesses; |
| ● | grab handles, pin cleats and other accessories; and |
| ● | made to order fabricated metal products primarily to the industrial market. |
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The following table sets forth the location, size and business operations for each of CompX’s principal operating facilities at December 31, 2025:
Business | Size | |||||
Facility Name | | Operations | | Location | | (square feet) |
Owned Facilities: |
| |
| |
| |
National (1) |
| SP |
| Mauldin, SC |
| 198,000 |
Grayslake(1) |
| SP/MC |
| Grayslake, IL |
| 133,000 |
Custom(1) |
| MC |
| Neenah, WI |
| 95,000 |
SP – Security Products business
MC – Marine Components business
| (1) | ISO-9001 registered facilities |
CompX believes all of its facilities are well maintained and satisfactory for their intended purposes.
Raw materials – The primary raw materials used in CompX’s manufacturing processes are:
| ● | Security Products – zinc and brass (for the manufacture of locking mechanisms). |
| ● | Marine Components – stainless steel (for the manufacture of exhaust headers and pipes and wake enhancement systems), aluminum (for the manufacture of throttles and trim tabs) and other components. |
These raw materials are purchased from several suppliers, are readily available from numerous sources and accounted for approximately 14% of our total cost of sales for 2025. Total material costs, including purchased components, represented approximately 43% of our cost of sales in 2025.
CompX occasionally enters into short-term commodity-related raw material supply arrangements to mitigate the impact of future price increases in commodity-related raw materials, including zinc, brass, aluminum and stainless steel. These arrangements generally provide for stated unit prices based upon specified purchase volumes, which help CompX to stabilize its commodity-related raw material costs to a certain extent. At other times, CompX may make spot buys of larger quantities of raw materials to take advantage of favorable pricing or volume-based discounts. During 2025, CompX experienced increases in the cost of certain raw materials. Throughout the year, market prices for brass and aluminum experienced a general upward trend. Stainless steel prices were relatively stable in the first part of the year but began increasing during the latter half of the year. Zinc pricing was relatively stable, and CompX was able to mitigate cost impacts through strategic spot buy purchases. In most cases, commodity raw materials CompX purchases include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation, and energy. Processing and conversion costs are not expected to decrease. Based on current economic conditions, CompX expects the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2026 to be more volatile compared to 2025. In addition to supply and demand, governmental actions such as tariffs may impact raw material markets. When purchased on the spot market, each of these raw materials may be subject to sudden and unanticipated price increases. When possible, CompX seeks to mitigate the impact of fluctuations in these raw material costs on its margins through improvements in production efficiencies or other operating cost reductions. In the event CompX is unable to offset raw material cost increases with other cost reductions, it may be difficult to recover those cost increases through increased product selling prices or raw material surcharges due to the competitive nature of the markets in which CompX competes. Consequently, overall operating margins can be negatively affected by commodity-related raw material cost pressures. Commodity market prices are cyclical, reflecting overall economic trends, specific developments in consuming industries and speculative investor activities.
Patents and trademarks – CompX holds a number of patents relating to its component products, certain of which it believes to be important to CompX and its continuing business activity. Patents generally have a term of 20 years and CompX’s patents have remaining terms ranging from less than one year to 15 years at December 31, 2025.
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CompX’s major trademarks and brand names in addition to CompX® include:
Security Products | | Security Products | | Marine Components |
|
CompX® Security Products™ | Lockview® | CompX Marine® | |||
National Cabinet Lock® | System 64® | Custom Marine® | |||
Fort Lock® | SlamCAM® | Livorsi® Marine | |||
Timberline® Lock® | RegulatoR® | Livorsi II® Marine | |||
Chicago Lock® | CompXpress® | CMI Industrial® | |||
STOCK LOCKS® | GEM® | Custom Marine® Stainless Exhaust | |||
KeSet® | Turbine® | The #1 Choice in Performance Boating® | |||
TuBar® | NARC iD® | Mega Rim® | |||
StealthLock® | NARC® | Race Rim® | |||
ACE® | ecoForce® | Vantage View® | |||
ACE® II | Pearl® | GEN-X® | |||
CompX eLock® |
Sales, marketing and distribution – A majority of CompX’s component sales are direct to large OEM customers through its factory-based sales and marketing professionals supported by engineers working in concert with field salespeople and independent manufacturer’s representatives. CompX selects manufacturer’s representatives based on special skills in certain markets or relationships with current or potential customers.
In addition to sales to large OEM customers, a substantial portion of CompX’s Security Products sales are made through distributors. CompX has a significant North American market share of cabinet lock security product sales as a result of the locksmith distribution channel. CompX supports its locksmith distributor sales with a line of standardized products used by the largest segments of the marketplace. These products are packaged and merchandised for easy availability and handling by distributors and end users.
CompX sells to a diverse customer base with only one customer representing 10% or more of its consolidated net sales in 2025 (United States Postal Service representing 26%). CompX’s largest ten customers accounted for approximately 52% of its sales in 2025.
Competition – The markets in which CompX participates are highly competitive. CompX competes primarily on the basis of product design, including space utilization and aesthetic factors, product quality and durability, price, on-time delivery, service and technical support. CompX focuses its efforts on the middle and high-end segments of the market, where product design, quality, durability and service are valued by the customer. CompX’s Security Products business competes against a number of domestic and foreign manufacturers. CompX’s Marine Components business competes with small domestic manufacturers and is minimally affected by foreign competitors.
Regulatory and environmental matters – CompX has a history of incorporating environmental management and compliance in its operations and decision making. CompX operates three manufacturing facilities and CompX’s production processes requiring waste-water discharge are consolidated at its Mauldin, South Carolina facility. This facility has received a ReWa Compliance Excellence Award from Renewable Water Resources, an organization which sets regulatory and water policies for the Mauldin facility’s geographic region, for multiple years for its exemplary performance. In addition, CompX operates extensive scrap metal recycling programs to reduce landfill waste.
CompX’s operations are subject to federal, state, and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, discharge, disposal, remediation of and exposure to hazardous and non-hazardous substances, materials and wastes, some of which are becoming stricter over time. CompX’s operations are also subject to federal, state and local laws and regulations relating to worker health and safety. CompX believes it is in substantial compliance with all such laws and regulations. To date, the costs of maintaining compliance with such laws and regulations have not significantly impacted its results; however, it is possible future laws and regulations may require CompX to incur significant additional expenditures.
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CHEMICALS – KRONOS WORLDWIDE, INC.
Business overview – Kronos is a leading global producer and marketer of value-added titanium dioxide pigments, or TiO2, a base industrial product used in a wide range of applications. Kronos, along with its distributors and agents, sells and provides technical services for its products to approximately 3,000 customers in 100 countries with the majority of sales in Europe, North America and the Asia Pacific region. Kronos believes it has developed considerable expertise and efficiency in the manufacture, sale, shipment and service of its products in domestic and international markets. Effective July 16, 2024 (“Acquisition Date”), Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) held by Venator Investments, Ltd. (“Venator”) for consideration of $185 million less a working capital adjustment. Prior to the acquisition, Kronos held a 50% joint venture interest in LPC through a wholly-owned subsidiary. LPC was operated as a manufacturing joint venture between Kronos and Venator. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. In 2025, LPC merged into Kronos’ wholly-owned subsidiary Kronos Louisiana, Inc. (the combined company is referred to as, “Kronos Louisiana”). See Note 6 to our Consolidated Financial Statements.
TiO2 is a white inorganic pigment used in a wide range of products for its exceptional durability and its ability to impart whiteness, brightness and opacity. TiO2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals. TiO2 is widely considered to be superior to alternative white pigments in large part due to its hiding power (or opacity), which is the ability to cover or mask other materials effectively and efficiently. TiO2 is designed, marketed and sold based on specific end-use applications.
TiO2 is the largest commercially used whitening pigment because it has a high refractive index, giving it more hiding power than any other commercially produced white pigment. In addition, TiO2 has excellent resistance to interaction with other chemicals, good thermal stability and resistance to ultraviolet degradation. Although there are other white pigments on the market, Kronos believes there are no effective substitutes for TiO2 because no other white pigment has the physical properties for achieving comparable opacity and brightness or can be incorporated in as cost-effective a manner. Pigment extenders such as kaolin clays, calcium carbonate and polymeric opacifiers are used together with TiO2 in a number of end-use markets. However, these products are not able to duplicate the opacity performance characteristics of TiO2 and Kronos believes these products are unlikely to have a significant impact on the use of TiO2.
TiO2 is considered a “quality-of-life” product. Demand for TiO2 has generally been driven by worldwide gross domestic product and has generally increased with rising standards of living in various regions of the world. According to industry estimates, TiO2 consumption has grown at a compound annual growth rate of approximately 3% since 2000. Per capita consumption of TiO2 in Western Europe and North America far exceeds that in other areas of the world, and these regions are expected to continue to be the largest consumers of TiO2 on a per capita basis for the foreseeable future. Kronos believes Western Europe and North America account for approximately 14% and 15% of global TiO2 consumption, respectively. Markets for TiO2 are generally increasing in China, the Asia Pacific region, South America and Eastern Europe and Kronos believes these are significant markets which will continue to grow as economies in these regions develop and quality-of-life products, including TiO2, experience greater demand.
Products and end-use markets – Kronos, including its predecessors, has produced and marketed TiO2 in North America and Europe, its primary markets, for over 100 years. Kronos believes it is the largest TiO2 producer and chloride process TiO2 producer in Europe with 45% of its 2025 sales volumes attributable to markets in Europe. The table below shows Kronos’ estimated market share for its significant markets, Europe and North America, for the last three years.
| 2023 | | 2024 | | 2025 |
| |
Europe |
| 12 | % | 14 | % | 15 | % |
North America |
| 16 | % | 17 | % | 19 | % |
Kronos believes it is the leading seller of TiO2 in several countries, including Germany. Overall, Kronos is one of the top four producers of TiO2 in the world.
Kronos offers its customers a broad portfolio of products that include over 30 different TiO2 pigment grades under the KRONOS® trademark, which provide a variety of performance properties to meet customers’ specific requirements.
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Kronos’ major customers include domestic and international paint, plastics, decorative laminate and paper manufacturers. Kronos ships TiO2 to its customers in either a dry or slurry form via rail, truck and/or ocean carrier. Sales of Kronos’ core TiO2 pigments represented approximately 90% of its net sales in 2025. Kronos and its agents and distributors primarily sell products in three major end-use markets: coatings, plastics and paper as well as into the market for white packaging inks.
The following tables show Kronos’ approximate TiO2 sales volume by geographic region and end-use for the year ended December 31, 2025:
Sales volume percentages by geographic region | Sales volume percentages by end-use | |||||||
Europe | 45 | % | Coatings | 59 | % | |||
North America | 40 | % | Plastics | 30 | % | |||
Asia Pacific | 8 | % | Paper | 8 | % | |||
Rest of World | 7 | % | Other | 3 | % | |||
Some of the principal applications for Kronos’ products include the following:
TiO2 for coatings – Kronos’ TiO2 is used to provide opacity, durability, tinting strength and brightness in industrial coatings, as well as coatings for commercial and residential interiors and exteriors, automobiles, aircraft, machines, appliances, traffic paint and other special purpose coatings. The amount of TiO2 used in coatings varies widely depending on the opacity, color and quality desired. In general, the higher the opacity requirement and the quality of the coating, the greater the TiO2 content.
TiO2 for plastics – Kronos produces TiO2 pigments that improve the optical and physical properties of plastics, including whiteness and opacity. TiO2 is used to provide opacity to items such as containers and packaging materials, and vinyl products such as windows, door profiles and siding. TiO2 also generally provides hiding power, neutral undertone, brightness and surface durability for housewares, appliances, toys, computer cases and food packages. TiO2’s high brightness along with its opacity, is used in some engineering plastics to help mask their undesirable natural color. TiO2 is also used in masterbatch, which is a concentrate of TiO2 and other additives and is one of the largest uses for TiO2 in the plastics end-use market. In masterbatch, the TiO2 is dispersed at high concentrations into a plastic resin and is then used by manufacturers of plastic containers, bottles, packaging and agricultural films. Kronos’ TiO2 is also included in engineering materials like polycarbonate or acrylonitrile butadiene styrene (“ABS”) which is used in the automotive industry and for appliances, consumer electronics and other applications.
TiO2 for paper – Kronos’ TiO2 is used in the production of several types of paper, including laminate (decorative) paper, filled paper and coated paper to provide whiteness, brightness, opacity and color stability. Although Kronos sells its TiO2 to all segments of the paper end-use market, its primary focus is on the TiO2 grades used in coated board and paper laminates, where several layers of paper are laminated together using melamine resin under high temperature and pressure. The top layer of paper contains TiO2 and plastic resin and is the layer that is printed with decorative patterns. Paper laminates are used to replace materials such as wood and tile for such applications as counter tops, furniture and wallboard. TiO2 is beneficial in these applications because it assists in preventing the material from fading or changing color after prolonged exposure to sunlight and other weathering agents.
TiO2 for other applications – Kronos produces TiO2 to improve the opacity and hiding power of printing inks. TiO2 allows inks to achieve very high print quality while not interfering with the technical requirements of printing machinery, including low abrasion, high printing speed and high temperatures. Kronos’ TiO2 is also used in textile applications where TiO2 functions as an opacifying and delustering agent. In man-made fibers such as rayon and polyester, TiO2 corrects an otherwise undesirable glossy and translucent appearance. Without the presence of TiO2, these materials would be unsuitable for use in many textile applications.
Kronos markets high-purity sulfate process anatase TiO2 used to provide opacity, whiteness and brightness in a variety of cosmetic and personal care products, such as skin cream, lipstick, eye shadow and toothpaste. In
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pharmaceuticals, Kronos’ TiO2 is used commonly as a colorant in tablet and capsule coatings as well as in liquid medicines to provide uniformity of color and appearance. KRONOS® purified anatase grades meet the applicable requirements of the CTFA (Cosmetics, Toiletries and Fragrances Association), USP (United States Pharmacopoeia) and BP (British Pharmacopoeia) and the FDA (United States Food and Drug Administration).
Kronos’ TiO2 business is enhanced by the following three complementary businesses, which comprised approximately 10% of its net sales in 2025:
| ● | Kronos owns and operates an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term. Ilmenite is a raw material used directly as a feedstock by some sulfate-process TiO2 plants. Along with supplying ilmenite ore to its sulfate plants in Europe, Kronos also sells ilmenite ore to third parties, some of whom are its competitors. The mine has estimated ilmenite reserves that it expects, based on internal estimates, to last approximately 50 years. |
| ● | Kronos manufactures and sells iron-based chemicals, which are co-products and processed co-products of sulfate and chloride process TiO2 pigment production. These co-product chemicals are marketed through its Ecochem division and are primarily used as treatment and conditioning agents for industrial effluents and municipal wastewater as well as in the manufacture of iron pigments, cement and agricultural products. |
| ● | Kronos manufactures and sells other specialty chemicals, which are side-stream products from the production of TiO2. These specialty chemicals are used in applications in the formulation of pearlescent pigments, production of electroceramic capacitors for cell phones and other electronic devices and natural gas pipe and other specialty applications. |
Manufacturing, operations and properties
Manufacturing – Kronos produces TiO2 in a rutile crystalline form. Rutile TiO2 is manufactured using both a chloride production process and a sulfate production process. Manufacturers of many end-use applications can use either form, especially during periods of tight supply for TiO2. The chloride process is the preferred form for use in coatings and plastics, the two largest end-use markets. Due to environmental factors and customer considerations, the proportion of TiO2 industry sales represented by chloride process pigments has remained stable relative to sulfate process pigments, and in 2025, chloride process production facilities represented approximately 39% of industry capacity. The sulfate process is preferred for use in selected paper products, ceramics, rubber tires, man-made fibers, food products, pharmaceuticals and cosmetics. Once an intermediate TiO2 pigment has been produced by either the chloride or sulfate process, it is “finished” into products with specific performance characteristics for particular end-use applications through proprietary processes involving various chemical surface treatments and intensive micronizing (milling).
| ● | Chloride process – The substantial majority of Kronos’ production capacity is manufactured using a chloride process which is a continuous process that uses chlorine to extract rutile TiO2. The chloride process produces less waste than the sulfate process because much of the chlorine is recycled, and it utilizes ore containing a higher TiO2 content. The chloride process also has lower energy requirements and is less labor-intensive than the sulfate process, although the chloride process requires a higher-skilled labor force and uninterrupted power. The chloride process produces an intermediate base pigment with a wide range of properties. The chloride process produces a product with a blueish undertone and is the preferred form to produce TiO2 pigments for use in coatings and plastics, the two largest end-use markets. |
| ● | Sulfate process – The sulfate process is a batch process in which sulfuric acid is used to extract the TiO2 from ilmenite or titanium slag. After separation from the impurities in the ore (mainly iron), the TiO2 is precipitated and calcined to form an intermediate base pigment ready for sale or can be upgraded through finishing treatments. The sulfate process produces a warmer undertone and is preferred for use in selected paper products, ceramics, rubber tires, man-made fibers, food products, pharmaceuticals and cosmetics, some of which generate higher profit margins. |
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Joint venture – Prior to July 16, 2024, one of Kronos’ subsidiaries, and Venator each owned a 50% interest in LPC, which was operated as a manufacturing joint venture. LPC owned and operated a chloride-process TiO2 plant located near Lake Charles, Louisiana. On July 16, 2024 Kronos acquired the remaining 50% interest in LPC held by Venator. In 2025, Kronos merged LPC into Kronos’ wholly-owned subsidiary Kronos Louisiana, Inc.
Prior to the acquisition, Kronos accounted for its interest in the joint venture by the equity method. The joint venture operated on a break-even basis and therefore Kronos did not have any equity in earnings of the joint venture. Kronos was required to purchase one half of the TiO2 produced by the joint venture. All costs and capital expenditures were shared equally with Venator, with the exception of feedstock (purchased natural rutile ore or chlorine slag) and packaging costs for the pigment grades produced. Kronos’ share of net costs was reported as cost of sales as the TiO2 was sold. See Note 6 to our Consolidated Financial Statements.
Operations – Kronos produced 401,000, 535,000 and 480,000 metric tons of TiO2 in 2023, 2024 and 2025, respectively. Kronos’ production volumes for 2023 and 2024 through the Acquisition Date include its share of the output produced by its TiO2 manufacturing joint venture. Subsequent to the Acquisition Date, Kronos’ 2024 and 2025 production volumes include 100% of the production volumes from the Kronos Louisiana facility.
Kronos’ average production capacity utilization rates were approximately 72% in 2023, 96% in 2024 and 77% in 2025. Kronos’ production levels during 2023 and the second half of 2025 were reduced to align with lower customer demand resulting from challenging economic conditions and geopolitical uncertainties. In 2024, Kronos increased production to meet higher overall customer demand.
Properties – Kronos operates facilities throughout North America and Europe. Kronos has four TiO2 plants in Europe (one in each of Leverkusen, Germany; Nordenham, Germany; Langerbrugge, Belgium; and Fredrikstad, Norway). In North America, Kronos has a TiO2 plant in Varennes, Quebec, Canada and a TiO2 plant near Lake Charles, Louisiana.
The following table presents the division of Kronos’ expected 2026 manufacturing capacity by plant location and type of manufacturing process:
|
| % of capacity by TiO2 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Facility | Description | Chloride |
| Sulfate | ||||||
Leverkusen, Germany (1) | TiO2 production, chloride process, co-products | 28 | % | — | % | |||||
Nordenham, Germany | TiO2 production, sulfate process, co-products | — | 11 | |||||||
Langerbrugge, Belgium | TiO2 production, chloride process, co-products, titanium chemicals products | 15 | — | |||||||
Fredrikstad, Norway (2) | TiO2 production, sulfate process, co-products | — | 6 | |||||||
Varennes, Canada (3) | TiO2 production, chloride process, slurry facility, titanium chemicals products | 16 | — | |||||||
Lake Charles, LA, US | TiO2 production, chloride process, slurry facility | 24 | — | |||||||
Total | 83 | % | 17 | % | ||||||
| (1) | The Leverkusen facility is located within a more extensive manufacturing complex. Kronos owns its Leverkusen facility, which represents approximately 28% of Kronos’ current TiO2 production capacity, but Kronos leases the land under the facility under a long-term agreement which expires in 2050. Lease payments are periodically negotiated for periods of at least two years at a time. A third-party operator of the manufacturing complex provides some raw materials including chlorine, auxiliary and operating materials, utilities and services necessary to operate the Leverkusen facility under separate supplies and services agreements. |
| (2) | The Fredrikstad facility is located on public land and is leased until 2063. |
| (3) | In the third quarter of 2024, Kronos closed its sulfate process line at its plant in Varennes, Canada. |
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Kronos owns the land underlying all of its principal production facilities unless otherwise indicated in the table above.
Kronos also operates an ilmenite mine in Norway pursuant to a governmental concession with an unlimited term.
In addition, Kronos has corporate and administrative offices located in the U.S., Germany, Norway, Canada, Belgium, and France.
Raw materials – The primary raw materials used in chloride process TiO2 are titanium-containing feedstock (purchased natural rutile ore, chlorine slag, or other high-grade feedstocks), chlorine and petroleum coke. Chlorine is available from a number of suppliers, while petroleum coke is available from a limited number of suppliers. Titanium-containing feedstock suitable for use in the chloride process is available from a limited but increasing number of suppliers principally in Australia, South Africa, Africa, the Middle East, Norway, Canada and India. Kronos purchases feedstock for its chloride process TiO2 from the following primary suppliers for volumes for delivery extending, in some cases, through 2028:
Supplier | Product | Renewal Terms | |||
Rio Tinto Iron and Titanium Ltd | Chloride process grade slag | Auto-renews every two years | |||
Rio Tinto Iron and Titanium Ltd | Upgraded slag | Auto-renews every two years | |||
Iluka Resources Limited | Rutile ore |
| Renewal terms upon negotiations |
In the past Kronos has been, and expects it will continue to be, successful in obtaining short-term and long-term extensions to these and other existing supply contracts. Kronos expects the raw materials purchased under these contracts, and contracts it may enter into, will meet its chloride process feedstock requirements over the next several years. Multi-year contracts generally may be terminated with a 12-month written notice or based on certain defaults by either party or failure to agree on pricing as noted in the agreements.
The primary raw materials used in sulfate process TiO2 are titanium-containing feedstock, primarily ilmenite or purchased sulfate grade slag, and sulfuric acid. Sulfuric acid is available from a number of suppliers. Titanium-containing feedstock suitable for use in the sulfate process is available from a limited number of suppliers principally in Norway, Canada, Australia, Africa, India and South Africa. As one of the few vertically-integrated producers of sulfate process TiO2, Kronos operates a rock ilmenite mine in Norway, which provided all of the feedstock for its sulfate process TiO2 plants in 2025. Kronos expects ilmenite production from its mine to meet its sulfate process feedstock requirements for the foreseeable future. Kronos expects the raw materials purchased under these contracts, and other contracts that it may enter into, to meet its sulfate process feedstock requirements over the next several years.
Many of Kronos’ raw material contracts contain fixed quantities it is required to purchase or specify a range of quantities within which it is required to purchase. The pricing under these agreements is generally negotiated quarterly or semi-annually.
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The following table summarizes Kronos’ raw materials purchased or mined in 2025.
Raw materials | ||
Production process/raw material | | procured or mined |
(In thousands of | ||
| metric tons) | |
Chloride process plants - | | |
Purchased slag or rutile ore | 458 | |
Sulfate process plants: | ||
Ilmenite ore mined and used internally | 229 |
Sales and marketing – Kronos’ marketing strategy is aimed at developing and maintaining strong relationships with new and existing customers. Because TiO2 represents a significant input cost for its customers, the purchasing decisions are often made by its customers’ senior management. Kronos works to maintain close relationships with the key decision makers through in-depth and frequent contact. Kronos endeavors to extend these commercial and technical relationships to multiple levels within its customers’ organizations using its direct sales force and technical service group to accomplish this objective. Kronos believes this helps build customer loyalty and strengthens its competitive position. Close cooperation and strong customer relationships enable Kronos to stay closely attuned to trends in its customers’ businesses. Where appropriate, Kronos works in conjunction with its customers to solve formulation or application problems by modifying specific product properties or developing new pigment grades. Kronos also focuses its sales and marketing efforts on those geographic and end-use market segments where it believes it can realize higher selling prices. This focus includes continuously reviewing and optimizing its customer and product portfolios.
Kronos also works directly with its customers to monitor the performance of its products in their end-use applications, evaluate the need for improvements in its product and process technology and identify opportunities to develop new product solutions for its customers. Kronos’ marketing staff closely coordinates with its sales force and technical specialists to ensure the needs of its customers are met, and to help develop and commercialize new grades where appropriate.
Kronos sells a majority of its products through its direct sales force operating in Europe, North America and other markets. Kronos also utilizes sales agents and distributors who are authorized to sell its products in specific geographic areas. In Europe, Kronos’ sales efforts are conducted primarily through its direct sales force and its sales agents. Kronos’ agents do not sell any TiO2 products other than KRONOS® branded products. In North America, Kronos’ sales are made primarily through its direct sales force and supported by a network of distributors. Kronos has increased its marketing efforts over the last several years in export markets and Kronos’ sales are now made through its direct sales force, sales agents and distributors. In addition to Kronos’ direct sales force and sales agents, many of its sales agents also act as distributors to service its customers in all regions. Kronos offers customer and technical service to customers who purchase its products through distributors as well as to its larger customers serviced by its direct sales force.
Kronos sells to a diverse customer base with no single customer representing 10% or more of its net sales in 2025. Kronos’ largest ten customers accounted for approximately 35% of net sales in 2025.
Neither Kronos’ business as a whole nor any of its principal product groups is seasonal to any significant extent. However, TiO2 sales are generally higher in the second and third quarters of the year, due in part to the increase in coatings production in the spring in the northern hemisphere to meet demand during the spring and summer painting seasons. Kronos generally builds inventories to meet expected customer demand.
Competition – The TiO2 industry is highly competitive. Kronos competes primarily on the basis of price, product quality, technical service, long-term stability and the availability of high performance pigment grades. Since TiO2 is not traded through a commodity market, its pricing is largely a product of negotiation between suppliers and their respective customers. Price and availability are the most significant competitive factors along with quality and customer service for the majority of its product grades. Increasingly, Kronos is focused on providing pigments that are differentiated to meet specific customer requirements and specialty grades that are differentiated from its competitors’ products. During 2025,
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Kronos had an estimated 7% share of worldwide TiO2 sales volume, and based on sales volume Kronos believes it is the leading seller of TiO2 in several countries, including Germany.
Kronos’ principal competitors are The Chemours Company, Tronox Holdings PLC and LB Group Co. Ltd. The top four TiO2 producers (i.e. Kronos and its three principal competitors) account for approximately 42% of the world’s production capacity.
The following chart shows Kronos’ estimate of worldwide production capacity in 2025:
Worldwide production capacity – 2025 | |||
LB Group | | 14 | % |
Chemours |
| 11 | % |
Tronox |
| 11 | % |
Kronos |
| 6 | % |
Other |
| 58 | % |
Chemours has approximately one-half of total North American TiO2 production capacity and is Kronos’ principal North American competitor. LB Group previously announced it plans to add an additional 200,000 tons of chloride process capacity, which Kronos expects may be added incrementally over the next several years. However, due to the current extended downturn in the industry as a whole several of Kronos’ competitors have recently closed facilities or announced plans to reduce capacity, including Chemours which closed its Taiwan facility with an estimated 160,000 tons of chloride process capacity in 2023, and Tronox, which closed its 90,000 ton chloride capacity facility in the Netherlands in 2025 and announced its plans to permanently close its 46,000 ton sulfate facility in China in January 2026. In 2025, Venator’s U.K. parent company entered bankruptcy and its facilities were idled and marketed for sale, with a total production capacity of approximately 400,000 tons at least temporarily off the market. In addition, in 2024 Kronos closed its sulfate production line in Varennes, Canada.
The TiO2 industry is characterized by high barriers to entry consisting of high capital costs, proprietary technology and significant lead times required to construct new facilities or to expand existing capacity. Therefore, over the past ten years, Kronos and its competitors increased industry capacity through debottlenecking projects; however, this increase only partly compensated for the shut-down of various TiO2 plants throughout the world. Other than through debottlenecking projects and the LB Group expansion mentioned above, Kronos does not expect any significant efforts will be undertaken by Kronos or its principal competitors to further increase capacity and Kronos believes it is unlikely any new TiO2 plants will be constructed in Europe or North America for the foreseeable future. If actual developments differ from Kronos’ expectations, the TiO2 industry and Kronos’ performance could be unfavorably affected.
Research and development – Kronos employs scientists, chemists, process engineers and technicians who are engaged in research and development, process technology and quality assurance activities in Leverkusen, Germany. These individuals have the responsibility for improving Kronos’ chloride and sulfate production processes, reducing production costs improving product quality and strengthening Kronos’ competitive position by developing new products and applications. Kronos’ expenditures for these activities were approximately $18 million in 2023, $14 million in 2024 and $16 million in 2025. Kronos expects to spend approximately $13 million on research and development in 2026.
Kronos continually seeks to improve the quality of its grades and has been successful in developing new grades for existing and new applications to meet the needs of its customers and increase product life cycles. Since the beginning of 2020, Kronos has added eight new grades for pigments and other applications.
Patents, trademarks, trade secrets and other intellectual property rights – Kronos has a comprehensive intellectual property protection strategy that includes obtaining, maintaining and enforcing its patents, primarily in the United States, Canada and Europe. Kronos also registers, maintains, and protects its trademark rights. Kronos maintains the secrecy of its trade secret rights and protects them by means of security protocols and confidentiality agreements. In some instances, Kronos has entered into license agreements with third parties concerning various intellectual property matters. Kronos has also from time to time been involved in disputes over intellectual property.
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Patents – Kronos has obtained patents and has numerous patent applications pending that cover certain aspects of its products and the technology used in the manufacture of its products. Kronos’ patent strategy is important to it and its continuing business activities. In addition to maintaining its patent portfolio, Kronos seeks patent protection for its technical developments, principally in the United States, Canada and Europe. U.S. patents are generally in effect from the time that they issue as patents and then extend for 20 years from the date of filing. Kronos’ U.S. patent portfolio includes patents having remaining terms ranging from one year to 18 years.
Trademarks – Kronos trademarks, including KRONOS®, are covered by issued and/or pending registrations, including in Canada and the United States. Kronos protects the trademarks it uses in connection with the products it manufactures and sells and has developed goodwill in connection with its long-term use of its trademarks.
Trade secrets – Kronos conducts research activities in secret and it protects the confidentiality of its trade secrets through reasonable measures, including confidentiality agreements and security procedures, including data security. Kronos relies upon unpatented proprietary knowledge and continuing technological innovation and other trade secrets to develop and maintain its competitive position. Kronos’ proprietary chloride production process is an important part of its technology and Kronos’ business could be harmed if it fails to maintain confidentiality of its trade secrets used in this technology.
Regulatory and environmental matters – Kronos’ operations and properties are governed by various environmental laws and regulations which are complex, change frequently and have tended to become stricter over time. These environmental laws govern, among other things, the generation, storage, handling, use, disposition and transportation of hazardous materials; the emission and discharge of hazardous materials into the ground, air or water; and the health and safety of its employees. Certain of Kronos’ operations are, or have been, engaged in the generation, storage, handling, manufacture or use of substances or compounds that may be considered toxic or hazardous within the meaning of applicable environmental laws and regulations. As with other companies engaged in similar businesses, certain of Kronos’ past and current operations and products have the potential to cause environmental or other damage. Kronos has implemented and continues to implement various policies and programs in an effort to minimize these risks. Kronos’ policy is to comply with applicable environmental laws and regulations at all its facilities and to strive to improve its environmental performance and overall sustainability. It is possible that future developments, such as stricter requirements in environmental laws and enforcement policies, could adversely affect its operations, including production, handling, use, storage, transportation, sale or disposition of hazardous or toxic substances or require Kronos to make capital and other expenditures to comply, and could adversely affect its consolidated financial position and results of operations or liquidity.
Kronos has a history of identifying new ways to reduce consumption and waste by converting byproducts to co-products through its KRONOS ecochem® products. Kronos has a published Safety, Environment, Energy and Quality Policy which is translated into local languages and distributed to all its employees and shared publicly via its website. Kronos has implemented rigorous procedures for incident reporting and investigation, including root cause analysis of environmental and safety incidents and near misses. Because TiO2 production requires significant energy input, Kronos is focused on energy efficiency at all production locations. Five of its six TiO2 production facilities maintain certifications to the ISO 50001:2018 Energy Management standard and all locations have local energy teams in place. These teams are responsible for maintaining ISO 50001:2018 certifications (where applicable), performing regular reviews of local energy consumption, making recommendations regarding capital projects that reduce energy consumption and associated Greenhouse Gas (“GHG”) emissions or enhance efficiency. When possible, Kronos looks for opportunities to partner with local government authorities through grant opportunities to reduce energy consumption and associated GHG emissions. Kronos also actively manages potential water-related risks, including flooding and water shortages. Kronos’ manufacturing facilities are strategically located adjacent to sources of water, which it uses for process operations and for shipping and receiving raw materials and finished products. Water-critical processes are identified and ongoing efforts to minimize water use are incorporated into environmental planning.
Kronos’ U.S. manufacturing operations are governed by federal, state and local environmental and worker health and safety laws and regulations. These include the Resource Conservation and Recovery Act, or RCRA, the Occupational Safety and Health Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act and the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act, or CERCLA, as well as the state counterparts of these statutes. Some of these laws
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hold current or previous owners or operators of real property liable for the costs of cleaning up contamination, even if these owners or operators did not know of, and were not responsible for, such contamination. These laws also assess liability on any person who arranges for the disposal or treatment of hazardous substances, regardless of whether the affected site is owned or operated by such person. Although Kronos has not incurred and does not currently anticipate any material liabilities in connection with such environmental laws, Kronos may be required to make expenditures for environmental remediation in the future.
While the laws regulating operations of industrial facilities in Europe vary from country to country, a common regulatory framework is provided by the European Union, or the EU. Germany and Belgium are members of the EU and follow its initiatives. Norway is not a member but generally adopts laws and patterns its environmental regulatory actions after those of the EU.
From time to time, Kronos’ facilities may be subject to environmental regulatory enforcement under local or national laws. Typically, Kronos updates its compliance programs to resolve these matters. Occasionally, Kronos may pay penalties. To date, such penalties have not involved amounts having a material adverse effect on Kronos’ consolidated financial position, results of operations or liquidity. Kronos believes that all of its facilities are in substantial compliance with applicable environmental laws.
From time to time, new environmental, sustainability, health and safety regulations are passed or proposed in the countries in which Kronos operates or sells its products, seeking to regulate its operations or to restrict, limit or classify TiO2. Kronos believes that it is in substantial compliance with laws applicable to the regulation of TiO2. However, increased regulatory scrutiny could affect consumer perception of TiO2 or limit the marketability and demand for TiO2 or products containing TiO2 and increase its regulatory and compliance costs.
On October 1, 2021, EU Regulation No. 1272/2008 classifying dry TiO2 and mixtures containing dry TiO2 as a suspected carcinogen via inhalation went into force. Kronos’ dry TiO2 products do not meet the criteria set forth in the regulation and therefore do not require classification labels. On November 23, 2022 the General Court of the European Union annulled the classification of TiO2 as a suspected carcinogen in its entirety, and in August 2025, the Court of Justice of the European Union upheld this decision on appeal.
Kronos’ capital expenditures related to ongoing environmental compliance, protection and improvement programs, including capital expenditures which are primarily focused on increasing operating efficiency but also result in improved environmental protection such as lower emissions from its manufacturing facilities, were $26 million in 2025 and are currently expected to be approximately $30 million in 2026.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
Through our subsidiaries and affiliates, we seek to operate our businesses in line with sound ESG principles that include corporate governance, social responsibility, sustainability and cybersecurity. We believe ESG means conducting operations with high standards of environmental and social responsibility, practicing exemplary ethical standards, focusing on safety as a top priority, respecting human rights and supporting our local communities, and continuously developing our employees. At their facilities, Kronos and CompX undertake various environmental sustainability programs, and promote social responsibility and volunteerism through programs designed to support and give back to the local communities in which each operates. Each of Kronos’ and CompX’s locations maintain site-specific safety programs and disaster response and business continuity plans. All manufacturing facilities have detailed, site-specific emergency response procedures Kronos and CompX believe adequately address regulatory compliance, vulnerability to potential hazards, emergency response and action plans, employee training, alarms and warning systems and crisis communication.
Governmental agencies of countries in which Kronos operates have adopted or are contemplating regulatory changes relating to certain ESG topics, such as the Corporate Social Responsibility Directive adopted by the European Union on November 28, 2022 (“EU CSRD”). Kronos is evaluating and will continue to evaluate the applicability of the EU CSRD as amendments are adopted and regulatory guidance is issued and as the European countries in which it operates adopt implementing legislation and it will establish a compliance program to address any applicable requirements.
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In an effort to align our non-employee directors’ financial interests with those of our stockholders, our board of directors established share ownership guidelines for our non-management directors. In addition, we have an insider trading policy that applies to both employees and non-employee directors.
Kronos has taken steps to integrate ESG considerations into operating decisions along with other critical business factors. Kronos periodically publishes an ESG Report, which is available on its public website. The primary purpose of its ESG Report is to describe Kronos’ policies and programs in the area of ESG, including certain internal metrics and benchmarks related to various aspects of ESG. Kronos voluntarily developed these internal metrics and benchmarks, which Kronos uses to identify progress and opportunities for improvement. These metrics are not intended to be directly comparable to similar metrics utilized by other companies to track ESG performance, as the standards, methodologies and assumptions used to determine these metrics vary by company and jurisdiction.
HUMAN CAPITAL RESOURCES
Employees – We operate through our subsidiaries and affiliate and through our intercorporate services agreement with Contran (see Note 16 to our Consolidated Financial Statements). We have no direct employees. Our operating results depend in part on Kronos’ and CompX’s ability to successfully manage their human capital resources, including attracting, identifying and retaining key talent. Kronos and CompX each have a well-trained labor force with a substantial number of long-tenured employees. Kronos and CompX provide competitive compensation and benefits to their employees, some of which for Kronos are offered under collective bargaining agreements. In addition to salaries, these programs, which vary by country/region, can include annual bonuses, a defined benefit pension plan (for Kronos), a defined contribution plan with employer matching, a profit sharing plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, employee assistance programs and tuition assistance.
We recognize that everyone deserves respect and equal treatment. Kronos and CompX embrace diversity and collaboration in their workforces and business initiatives. Kronos and CompX are equal opportunity employers, and base employment decisions on merit, competence and qualifications, without regard to race, color, national origin, gender, age, religion, disability, sex, sexual orientation or other characteristics protected by applicable law in the jurisdictions in which they operate. Kronos and CompX promote a respectful, diverse and inclusive workplace in which all individuals are treated with respect and dignity.
As of December 31, 2025, CompX employed 549 people, all in the United States.
As of December 31, 2025, Kronos employed the following number of people (an approximate ~10.5% decrease from 2024):
Europe | | 1,650 |
Canada |
| 302 |
United States |
| 311 |
Total |
| 2,263 |
CompX believes its labor relations are good at all of its facilities. Certain employees at each of Kronos’ production facilities are organized by labor unions. Kronos strives to maintain good relationships with all its employees, including the unions and workers’ councils representing those employees. In Europe, Kronos’ union employees are covered by master collective bargaining agreements for the chemical industry that are generally renewed annually. At December 31, 2025, approximately 76% of Kronos’ worldwide workforce is organized under collective bargaining agreements. Kronos did not experience any work stoppages during 2025, although it is possible that there could be future work stoppages or other labor disruptions that could materially and adversely affect its business, results of operations, financial position or liquidity.
Health and safety – Kronos and CompX believe protecting the health and safety of their workforce, customers, business partners and the natural environment are core values. Kronos and CompX are committed to maintaining a strong safety culture where all workers meet or exceed required industry performance standards and continuously seek to improve occupational and process safety performance. Kronos and CompX are conducting their businesses in ways that provide all personnel with a safe and healthy work environment and have established safety and environmental programs and goals
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to achieve such results. Kronos and CompX expect their manufacturing facilities to produce products safely and in compliance with applicable local regulations, and company policies, standards and practices intended to protect the environment and people and have established global policies designed to promote such compliance. Kronos and CompX require their employees to comply with such requirements. Kronos and CompX provide their workers with the tools and training necessary to make the appropriate decisions to prevent accidents and injuries. Each of Kronos’ and CompX’s operating facilities develops, maintains and implements safety programs encompassing key aspects of their operations. In addition, management reviews and evaluates safety performance throughout the year.
CompX uses lost time incidents as a key measure of worker safety. CompX defines lost time incidents as work-related accidents where a worker sustains an injury that results in time away from work. CompX had one lost time incident in each of 2023 and 2024 and two in 2025.
Kronos monitors conditions that could lead to a safety incident and keep track of injuries through reporting systems in accordance with laws in the jurisdictions in which it operates. With this data Kronos calculates incident frequency rates to assess the quality of its safety performance. Kronos also tracks overall safety performance at the global level. Each Kronos operating location is subject to local laws and regulations that dictate what injuries are required to be recorded and reported, which may differ from location to location and result in different methods of injury rate calculation. For internal global tracking, benchmarking and identification of opportunities for improvement, Kronos collects the location specific information and applies a U.S.-based injury rate calculation to arrive at a global total frequency rate, which is expressed as the number of incidents at its operating locations per 200,000 hours. This internal safety metric may not be directly comparable to a recordable incident rate calculated under U.S. law. Kronos’ global total frequency rate aggregating information about employees and contractors was 0.95 in 2023 (0.74 of the aggregate represents employees only), 0.70 in 2024 (0.80 of the aggregate represents employees only) and 0.57 in 2025 (0.64 of the aggregate represents employees only).
OTHER
In addition to our 87% ownership of CompX and our 31% ownership of Kronos at December 31, 2025, we also hold certain marketable securities and other investments. See Note 5 to our Consolidated Financial Statements.
Regulatory and environmental matters – We discuss regulatory and environmental matters in the respective business sections contained elsewhere herein and in Item 3 – “Legal Proceedings.” In addition, the information included in Note 17 to our Consolidated Financial Statements under the captions “Lead pigment litigation” and “Environmental matters and litigation” is incorporated herein by reference.
Insurance – We maintain insurance for our businesses and operations, with customary levels of coverage, deductibles and limits. See also Item 3 – “Legal Proceedings – Insurance coverage claims” and Note 17 to our Consolidated Financial Statements.
Business strategy – We routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows we expect to receive from our subsidiaries and affiliates. As a result of this process, we have in the past and may in the future seek to raise additional capital, incur debt, repurchase indebtedness in the market, modify our dividend policies, consider the sale of our interests in our subsidiaries, affiliates, business, marketable securities or other assets, or take a combination of these and other steps, to increase liquidity, reduce indebtedness and fund future activities. Such activities have in the past and may in the future involve related companies. From time to time, we also evaluate the restructuring of ownership interests among our respective subsidiaries and related companies.
We and other entities that may be affiliated with Contran routinely evaluate acquisitions of interests in, or combinations with, companies, including related companies that provide strategic opportunities and synergies or that we perceive to be undervalued in the marketplace. These companies may or may not be engaged in businesses related to our current businesses. In some instances, we have actively managed the businesses acquired with a focus on maximizing return-on-investment through cost reductions, capital expenditures, improved operating efficiencies, selective marketing to address market niches, disposition of marginal operations, use of leverage and redeployment of capital to more productive assets. In other instances, we have disposed of the acquired interest in a company prior to gaining control. We
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intend to consider such activities in the future and may, in connection with such activities, consider issuing additional equity securities and increasing our indebtedness.
Available information – Our fiscal year ends December 31. We furnish our shareholders with annual reports containing audited financial statements. In addition, we file annual, quarterly and current reports, proxy and information statements and other information with the SEC. Our consolidated subsidiary (CompX) and our significant equity method investee (Kronos) also file annual, quarterly, and current reports, proxy and information statements and other information with the SEC. We also make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments thereto available free of charge through our website at www.nl-ind.com as soon as reasonably practicable after they have been filed with the SEC. We also provide to anyone, without charge, copies of such documents upon written request. Such requests should be directed to the attention of the Corporate Secretary at our address on the cover page of this Form 10-K. Additional information, including our Audit Committee Charter, our Code of Business Conduct and Ethics and our Corporate Governance Guidelines can be found on our website. Information contained on our website is not part of this Annual Report.
We are an electronic filer and the SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.
ITEM 1A.RISK FACTORS
Listed below are certain risk factors associated with us and our businesses. See also certain risk factors discussed in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates.” In addition to the potential effect of these risk factors, any risk factor which could result in reduced earnings or operating losses, or reduced liquidity, could in turn adversely affect our ability to service our liabilities or pay dividends on our common stock or adversely affect the quoted market prices for our securities.
Operational Risk Factors
Demand for, and prices of, certain of Kronos’ products are influenced by changing market conditions for its products, which may result in reduced earnings or in operating losses.
Kronos’ sales and profitability are largely dependent on the TiO2 industry. In 2025, approximately 90% of Kronos’ sales were attributable to sales of TiO2. TiO2 is used in many “quality of life” products for which demand historically has been linked to global, regional and local gross domestic product and discretionary spending, which can be negatively impacted by regional and world events or economic conditions. Such events are likely to cause a decrease in demand for Kronos’ products and, as a result, may have an adverse effect on our results of operations and financial condition.
Pricing within the global TiO2 industry over the long term is cyclical and changes in economic conditions worldwide can significantly impact Kronos’ earnings and operating cash flows. Historically, the markets for many of Kronos’ products have experienced alternating periods of increasing and decreasing demand. Relative changes in the selling prices for Kronos’ products are one of the main factors that affect the level of its profitability. In periods of increasing demand, Kronos’ selling prices and profit margins generally will tend to increase, while in periods of decreasing demand Kronos’ selling prices and profit margins generally tend to decrease. In addition, pricing may affect customer inventory levels as customers may from time to time accelerate purchases of TiO2 in advance of anticipated price increases or defer purchases of TiO2 in advance of anticipated price decreases. Kronos’ ability to further increase capacity without additional investment in greenfield or brownfield capacity may be limited and as a result, Kronos’ profitability may become even more dependent upon the selling prices of its products.
The TiO2 industry is concentrated and highly competitive and Kronos faces price pressures in the markets in which it operates, which may result in reduced earnings or operating losses.
The global market in which Kronos operates its business is concentrated, with the top four TiO2 producers accounting for approximately 42% of the world’s production capacity and is highly competitive. Competition is based on
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a number of factors, such as price, product quality and service. Kronos faces significant competition from international and regional competitors, including increasing competition from TiO2 producers in China, who have significant sulfate production process capacity. Chinese producers have also continued to develop chloride process technology, and the risk of substitution of Kronos’ products with products made by Chinese producers could increase if Chinese producers increase the use of chloride process technology and improve the quality of their sulfate and chloride products. Some of Kronos’ competitors may be able to drive down prices for Kronos’ products if their costs are lower than Kronos’ costs, including its competitors with vertically integrated sources of raw materials for the chloride process who may have a competitive advantage during periods of high or rising raw material costs or who operate in regions with less stringent regulatory requirements. For example, Chinese competition generally has lower operating costs due to less stringent regulatory and environmental compliance requirements and less expensive energy prices. China has dumped lower cost sulfate process TiO2 into markets Kronos serves. In some cases, Western TiO2 producers have been successful in obtaining anti-dumping duties on Chinese imports such as duties recently enacted in the European Union, Brazil, Saudi Arabia, and other jurisdictions. In addition, some of Kronos’ competitors’ financial, technological and other resources may be greater than its resources and such competitors may be better able to withstand extended periods of reduced demand or other changes in market conditions. Kronos’ competitors may be able to respond more quickly than it can to new or emerging technologies and changes in customer requirements. Further, consolidation of Kronos’ competitors or customers may result in reduced demand for its products or make it more difficult for Kronos to compete with its competitors. The occurrence of any of these events could result in reduced earnings or operating losses.
CompX operates in mature and highly competitive markets, resulting in pricing pressure and the need to continuously reduce costs.
Many of the markets CompX serves are highly competitive, with a number of competitors offering similar products. CompX focuses its efforts on the middle and high-end segment of the market where it feels that it can compete due to the importance of product design, quality and durability to the customer. However, CompX’s ability to effectively compete is impacted by a number of factors. The occurrence of any of these factors could result in reduced earnings or operating losses.
| ● | Competitors may be able to drive down prices for CompX’s products beyond its ability to adjust costs because their costs are lower than CompX, especially products sourced from Asia. |
| ● | Competitors’ financial, technological and other resources may be greater than CompX’s resources, which may enable them to more effectively withstand changes in market conditions. |
| ● | Competitors may be able to respond more quickly than CompX can to new or emerging technologies and changes in customer requirements. |
| ● | Consolidation of CompX’s competitors or customers in any of the markets in which it competes may result in reduced demand for its products. |
| ● | New competitors could emerge by modifying their existing production facilities to manufacture products that compete with CompX’s products. |
| ● | CompX may not be able to sustain a cost structure that enables it to be competitive. |
| ● | Customers may no longer value CompX’s product design, quality or durability over the lower cost products of its competitors. |
CompX’s development of innovative features for current products is critical to sustaining and growing its sales.
Historically, CompX’s ability to provide value-added custom engineered products that address requirements of technology and space utilization has been a key element of its success. CompX spends a significant amount of time and effort to refine, improve and adapt its existing products for new customers and applications. Since expenditures for these types of activities are not considered research and development expense under accounting principles generally accepted in the United States of America (“GAAP”), the amount of CompX’s research and development expenditures, which is not significant, is not indicative of the overall effort involved in the development of new product features. The introduction of
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new product features requires the coordination of the design, manufacturing and marketing of the new product features with current and potential customers. The ability to coordinate these activities with current and potential customers may be affected by factors beyond CompX’s control. While CompX will continue to emphasize the introduction of innovative new product features that target customer-specific opportunities, it does not know if any new product features it introduces will achieve the same degree of success that it has achieved with its existing products. At times CompX works with new and existing customers on specific product innovations. Sometimes CompX has a cost sharing arrangement for development efforts although it may also fully bear the development costs. If a customer were to ultimately reject or abandon custom product innovation efforts, CompX may not be able to recover its development costs.
Higher costs or unavailability of CompX’s raw materials could negatively impact our financial results.
Certain raw materials used in CompX’s products are commodities that are subject to significant fluctuations in price in response to world-wide supply and demand as well as speculative investor activity. Zinc and brass are the principal raw materials used in the manufacture of security products. Stainless steel and aluminum are the major raw materials used in the manufacture of marine components. These raw materials are purchased from several suppliers and are generally readily available from numerous sources. CompX occasionally enters into short-term raw material supply arrangements to mitigate the impact of future increases in commodity-related raw material costs and ensure supply. Materials purchased outside of these arrangements are sometimes subject to unanticipated and sudden price increases.
Certain components used in CompX’s products are manufactured by foreign suppliers located in China and elsewhere. Global economic and political conditions, including natural disasters, terrorist acts, transportation disruptions, global conflicts or trade wars and public health crises such as pandemics, could prevent CompX’s vendors from being able to supply these components. Should CompX’s vendors not be able to meet their supply obligations or should CompX be otherwise unable to obtain necessary raw materials or components, CompX may incur higher supply costs or may be required to reduce or suspend production. In addition, the imposition of new tariffs or increases in existing tariffs by the U.S. government on imports from China, Mexico or other countries from which CompX imports raw materials and other components could increase its supply costs. Increases in CompX’s supply costs may decrease our liquidity or negatively impact our financial condition or results of operations as CompX may be unable to offset the higher costs with increases in its selling prices or reductions in other operating costs.
Dependence on CompX’s significant customers could adversely affect our business and results of operations.
For the year ended December 31, 2025, CompX’s ten largest customers accounted for approximately 52% of our consolidated net sales, with a single customer accounting for 26% of our consolidated net sales. Because CompX’s customers’ purchases are made through purchase orders rather than long-term contracts or minimum purchase commitments, order levels can fluctuate significantly period to period based on customer needs. In addition, significant customers may negotiate more favorable pricing or terms which may pressure our operating margins. If any significant CompX customer reduces its purchases, loses market share for its end-use products, experiences financial difficulty, changes suppliers, or otherwise alters its relationship with CompX, demand for its products could decline. Any such reduction in CompX’s sales could potentially have a material adverse effect on our revenues and results of operations.
Higher costs or limited availability of Kronos’ raw materials may reduce its earnings and decrease its liquidity. In addition, many of Kronos’ raw material contracts contain fixed quantities it is required to purchase.
For Kronos, the number of sources for and availability of certain raw materials is specific to the particular geographical region in which its facilities are located. Titanium-containing feedstocks suitable for use in Kronos’ TiO2 facilities are available from a limited number of suppliers around the world. Political and economic instability or increased regulations in the countries from which Kronos purchases or mines its raw material supplies could adversely affect raw material availability. If Kronos or Kronos’ worldwide vendors are unable to meet their planned or contractual obligations and Kronos was unable to obtain necessary raw materials, Kronos could incur higher costs for raw materials or may be required to reduce production levels. For example, Kronos experienced increases in feedstock costs in 2023 and 2024, which negatively affected its margins. Kronos has also experienced higher operating costs such as energy costs. Future variations in the cost of energy, which primarily reflect market prices for oil and natural gas, and for raw materials may
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significantly affect its operating results and decrease liquidity as Kronos may not always be able to increase its selling prices to offset the impact of any higher costs or reduced production levels.
Kronos has supply contracts that provide for its TiO2 feedstock requirements. While Kronos believes it will be able to renew these contracts, as necessary, Kronos does not know if it will be successful in renewing them or in obtaining long-term extensions to them prior to expiration. Kronos’ current agreements have minimum purchase requirements, targeted purchases or require it to purchase certain minimum percentage-based quantities of feedstock based upon its annual purchasing requirements. Kronos estimates purchases under these feedstock agreements will be between approximately $375 million and $450 million in 2026. In addition, Kronos has other long-term supply and service contracts that provide for various raw materials and services which may require Kronos to purchase certain minimum quantities. Kronos’ obligations under these contracts could adversely affect our financial results if Kronos significantly reduces its production and was unable to modify the contractual commitments.
Kronos’ acquisition of the remaining 50% interest in LPC may not generate benefits it anticipates and may otherwise affect its business and prospects.
In July 2024, Kronos completed the LPC acquisition in which it purchased the 50% ownership interest in LPC it did not previously own and Kronos subsequently merged LPC into Kronos’ wholly-owned subsidiary, Kronos Louisiana. If Kronos experiences unforeseen technological, operational or other difficulties in integrating the Kronos Louisiana facility into its operations as Kronos’ wholly-owned subsidiary, it may not be able to implement the process innovations at the facility that it expects. In addition, Kronos may not be able to achieve the anticipated synergies or improvements in efficiency and product quality that it expects. With or without such difficulties, the integration of the Kronos Louisiana facility into Kronos’ operations may divert significant management time and attention from its other operations. If Kronos fails to successfully integrate the Kronos Louisiana facility into its operations, if the acquisition does not provide expected synergies or sales increases, or if Kronos Louisiana has unexpected legal or financial liabilities, its business, financial condition, results of operations and prospects could be adversely affected.
Our assets consist primarily of investments in our operating subsidiaries and affiliate, and we are dependent upon distributions from our subsidiaries and affiliate.
The majority of our operating cash flows are generated by our operating subsidiaries and affiliate, and our ability to service liabilities and pay dividends on our common stock depends to a large extent upon the cash dividends or other distributions we receive from our subsidiaries and affiliate. Our subsidiaries and affiliate are separate and distinct legal entities and they have no obligation, contingent or otherwise, to pay cash dividends or other distributions to us. In addition, the payment of dividends or other distributions from our subsidiaries and affiliate could be subject to restrictions under applicable law, monetary transfer restrictions, currency exchange regulations in jurisdictions in which our subsidiaries and affiliate operate or any other restrictions imposed by current or future agreements to which our subsidiaries and affiliate may be a party, including debt instruments. Events beyond our control, including changes in general business and economic conditions, could adversely impact the ability of our subsidiaries and affiliate to pay dividends or make other distributions to us. If our subsidiaries and affiliate were to become unable to make sufficient cash dividends or other distributions to us, our ability to service our liabilities and to pay dividends on our common stock could be adversely affected.
In addition, a significant portion of our assets consist of ownership interests in our subsidiaries and affiliate. If we were required to liquidate our subsidiaries’ and affiliate’s securities in order to generate funds to satisfy our liabilities, we may be required to sell such securities at a time or times for less than what we believe to be the long-term value of such assets.
Financial Risk Factors
Kronos’ leverage may impair our financial condition.
Kronos has a significant amount of debt, primarily related to its 9.50% Senior Secured Notes due 2029, its term loan from Contran, and borrowings on its global revolving credit facility (“Global Revolver”). As of December 31, 2025,
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Kronos’ total consolidated debt was approximately $557.4 million. Kronos’ level of debt could have important consequences to our stockholders and creditors, including:
| ● | making it more difficult for Kronos to satisfy its obligations with respect to its liabilities; |
| ● | increasing its vulnerability to adverse general economic and industry conditions; |
| ● | requiring that a portion of its cash flows from operations be used for the payment of interest on its debt, which reduces its ability to use its cash flow to fund working capital, capital expenditures, dividends on its common stock, acquisitions or general corporate requirements; |
| ● | limiting the ability of Kronos’ subsidiaries to pay dividends to it or limiting its ability to pay dividends to its shareholders; |
| ● | limiting Kronos’ ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or general corporate requirements; |
| ● | limiting Kronos’ flexibility in planning for, or reacting to, changes in its business and the industry in which it operates; and |
| ● | placing Kronos at a competitive disadvantage relative to other less leveraged competitors. |
Indebtedness outstanding under Kronos’ Global Revolver accrues interest at variable rates. To the extent market interest rates rise, the cost of Kronos’ debt could increase, even if the amount borrowed remains the same, adversely affecting its financial condition, results of operations and cash flows.
In addition to Kronos’ indebtedness, Kronos is party to various lease and other agreements (including feedstock purchase contracts with minimum commitments and other long-term supply and service contracts, as discussed above) pursuant to which, along with its indebtedness, Kronos is committed to pay approximately $193 million in 2026. Kronos’ ability to make payments on and refinance its debt and to fund planned capital expenditures depends on its ability to generate cash flow in the future. To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. In addition, Kronos’ ability to borrow funds under its Global Revolver in the future, in some instances, will depend in part on its ability to maintain specified financial ratios and satisfy certain financial covenants contained in the credit agreement governing the Global Revolver.
Kronos’ business may not generate cash flows from operating activities sufficient to enable it to pay its debts when they become due and to fund its other liquidity needs. As a result, Kronos may need to refinance all or a portion of its debt before maturity, as it has done in the past. Kronos may not be able to refinance any of its debt in a timely manner on favorable terms, if at all, in the current credit markets. Any inability to generate sufficient cash flows or to refinance its debt on favorable terms could have a material adverse effect on its financial condition and impact its ability to pay a dividend to us.
Changes in currency exchange rates and interest rates can adversely affect Kronos’ net sales, profits and cash flows.
Kronos operates its businesses in several different countries and sells its products worldwide. For example, during both 2024 and 2025, approximately 44% and 45% of Kronos’ sales volumes, respectively, were sold into European markets. The majority (but not all) of Kronos’ sales from its operations outside the United States are denominated in currencies other than the United States dollar, primarily the euro, other major European currencies and the Canadian dollar. Therefore, Kronos is exposed to risks related to the need to convert currencies it receives from the sale of its products into the currencies required to pay for certain of its operating costs and expenses and other liabilities (including indebtedness), all of which could result in future losses depending on fluctuations in currency exchange rates and affect the comparability of Kronos’ results of operations between periods.
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Legal, Compliance and Regulatory Risk Factors
We could incur significant costs related to legal and environmental matters.
We formerly manufactured lead pigments for use in paint. We and others have been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints. These lawsuits seek recovery under a variety of theories, including public and private nuisance, negligent product design, negligent failure to warn, strict liability, breach of warranty, conspiracy/concert of action, aiding and abetting, enterprise liability, market share or risk contribution liability, intentional tort, fraud and misrepresentation, violations of state consumer protection statutes, supplier negligence and similar claims. The plaintiffs in these actions generally seek to impose on the defendants responsibility for lead paint abatement and health concerns associated with the use of lead-based paints, including damages for personal injury, contribution and/or indemnification for medical expenses, medical monitoring expenses and costs for educational programs. We entered into a legal settlement in one public-nuisance lead pigment case and have recognized a material liability related to the settlement. Any additional liability we might incur in the future for these matters could be material. See also Item 3 – “Legal Proceedings – Lead pigment litigation.”
Certain properties and facilities used in our former operations are the subject of litigation, administrative proceedings or investigations arising under various environmental laws. These proceedings seek cleanup costs, personal injury or property damages and/or damages for injury to natural resources. Some of these proceedings involve claims for substantial amounts. Environmental obligations are difficult to assess and estimate for numerous reasons, and we may incur costs for environmental remediation in the future in excess of amounts currently estimated. Any liability we might incur in the future could be material. See also Item 3 – “Legal Proceedings – Environmental matters and litigation.”
If some or all of Kronos’ or CompX’s intellectual property were to be declared invalid, held to be unenforceable or copied by competitors, or some or all of Kronos’ or CompX’s confidential information becomes known to competitors, or if Kronos’ or CompX’s competitors were to develop similar or superior intellectual property or technology, their ability to compete could be adversely impacted.
Protection of intellectual property rights, including patents, copyrights, trade secrets, confidential information, trademarks and tradenames, is important to Kronos’ and CompX’s businesses and their competitive positions. Kronos and CompX endeavor to protect their intellectual property rights in key jurisdictions in which their products are produced, sold or used and in jurisdictions into which their products are imported. However, Kronos and CompX may be unable to obtain protection for their intellectual property in key jurisdictions. Although Kronos and CompX have applied for numerous patents and trademarks throughout the world, they may have to engage in judicial enforcement in order to protect their patent rights and other proprietary rights. Kronos’ and CompX’s patents and other intellectual property rights may be challenged, invalidated, circumvented, rendered unenforceable or otherwise compromised. A failure to protect, defend or enforce intellectual property could have an adverse effect on our financial condition and results of operations. Similarly, third parties may assert claims against Kronos and Compx and their customers and distributors alleging their products infringe upon third-party intellectual property rights. In the event that any such third party prevails against Kronos or CompX on such claims, there could be an adverse effect on our financial condition and results of operations.
Although it is the practice of Kronos to enter into confidentiality agreements with its employees and third parties to protect its proprietary expertise and other trade secrets, these agreements may not provide sufficient protection for its trade secrets or proprietary know-how, or adequate remedies for breaches of such agreements may not be available in the event of an unauthorized use or disclosure of such trade secrets and know-how. Kronos also may not be able to readily detect breaches of such agreements. The failure of Kronos’ confidentiality agreements to protect its proprietary technology, know-how or trade secrets could result in a material loss of its competitive position, which could lead to significantly lower revenues, reduced profit margins or loss of market share.
CompX relies on patent, trademark and trade secret laws in the United States and similar laws in other countries to establish and maintain intellectual property rights in its technology and designs. Despite these measures, any of CompX’s intellectual property rights could be challenged, invalidated, circumvented or misappropriated. Third parties may independently discover CompX’s trade secrets and proprietary information, and in such cases CompX could not assert
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any trade secret rights against such parties. Further, CompX does not know if any of its pending trademark or patent applications will be approved. Costly and time-consuming litigation could be necessary to enforce and determine the scope of intellectual property rights. In addition, the laws of certain countries do not protect intellectual property rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions, CompX may be unable to protect its technology and designs adequately against unauthorized third-party use, which could adversely affect its competitive position.
Third parties may claim that CompX or its customers are infringing upon their intellectual property rights. Even if CompX believes such claims are without merit, they can be time-consuming and costly to defend and distract management’s and technical staff’s attention and resources. Claims of intellectual property infringement also might require CompX to redesign affected technology, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting CompX from marketing or selling certain technology. If CompX cannot or does not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business could be adversely impacted.
If Kronos or CompX must take legal action to protect, defend or enforce intellectual property rights, any suits or proceedings could result in significant costs, including attorney’s fees and diversion of resources and management’s attention, and Kronos or CompX may not prevail in any such suits or proceedings.
Environmental, health and safety laws and regulations, particularly as they relate to Kronos, may result in increased regulatory scrutiny which could decrease demand for Kronos’ products, increase Kronos’ manufacturing and compliance costs or obligations and result in unanticipated losses which could negatively impact its financial results or limit its ability to operate its business.
From time to time, new environmental, health and safety regulations are passed or proposed in the countries in which Kronos operates or sells its products, seeking to regulate its operations or to restrict, limit or classify TiO2, or its use. Increased regulatory scrutiny could affect consumer perception of TiO2 or limit the marketability and demand for TiO2 or products containing TiO2 or increase Kronos’ manufacturing and regulatory compliance obligations and costs. Increased compliance obligations and costs or restrictions on operations, raw materials and certain TiO2 applications could negatively impact Kronos’ future financial results through increased costs of production, or reduced sales which may decrease its liquidity, operating income and results of operations, which could in turn negatively impact our investment in Kronos.
Global climate change laws and regulations could negatively impact our financial results or limit Kronos’ and CompX’s ability to operate their businesses.
CompX operates production facilities in the United States and Kronos operates production facilities in North America and Europe. Many of Kronos’ and CompX’s facilities require large amounts of energy, including electricity and natural gas, in order to conduct operations. Governmental agencies of countries in which Kronos and CompX operate have determined, or may determine in the future the consumption of energy derived from fossil fuels is a major contributor to climate change and have adopted or are contemplating regulatory changes in response to the potential impact of climate change, including laws and regulations requiring enhanced reporting (such as the Corporate Social Responsibility Directive adopted by the European Union on November 28, 2022) as well as legislation regulating carbon and other GHG emissions and the use of renewable energy. International treaties or agreements may also result in increasing regulation of GHG emissions, including emissions permits and/or energy taxes or the introduction of carbon emissions trading mechanisms. To date, the existing GHG laws and regulations in effect in the various countries in which Kronos or CompX operates have not had a material adverse effect on financial results. Until the timing, scope and extent of any new or future regulation becomes known, we cannot predict the effect on Kronos’ or CompX’s business, results of operations or financial condition. However, if further GHG laws and regulations were to be enacted in one or more countries, it could negatively impact Kronos or CompX future results of operations through increased costs of production, particularly as it relates to their energy requirements or their need to obtain emissions permits. If such increased costs of production were to materialize, Kronos or CompX may be unable to pass price increases on to their customers to compensate for increased production costs, which may decrease their liquidity, operating income and results of operations. In addition, any adopted future laws and regulations focused on climate change and/or GHG emissions could negatively impact Kronos’ or CompX’s ability (or that of its customers and suppliers) to compete with companies situated in areas not subject to such laws and regulations.
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General Risk Factors
Kronos’ operating as a global business presents risks associated with global and regional economic, political, and regulatory environments.
Kronos manufactures and distributes its products globally. Revenue from non-U.S. markets accounted for approximately 66%, 66%, and 64% of Kronos’ revenue for the years ended December 31, 2023, 2024 and 2025, respectively. Kronos has significant international operations which, along with its customers and suppliers, could be substantially affected by a number of risks arising from operating a multi-national business, including:
| ● | global or regional economic downturn; |
| ● | changes in tariffs, trade barriers, and regulatory requirements, such as the enactment of tariffs on goods imported into the U.S. including, but not limited to, tariffs enacted on goods imported from Canada where Kronos manufactures a significant portion of the TiO2 it sells in North America. Tariffs could make Kronos’ products more expensive which would reduce demand or require it to absorb the increased costs reducing its operating margins; |
| ● | protectionist laws, policies, and business practices and nationalistic campaigns such as economic sanctions and exchange controls; |
| ● | U.S. relations with the governments of the other countries in which Kronos operates; |
| ● | terrorism, armed conflict (such as the current conflicts between Russia and Ukraine); |
| ● | natural disasters, pandemics or other health crises, climate change, and other events beyond Kronos’ control; |
| ● | difficulties enforcing agreements or other legal rights; and |
| ● | Kronos’ effective tax rate may fluctuate based on the variability of geographic earnings and statutory rates. |
TiO2 production requires significant energy input, and economic sanctions or supply disruptions resulting from armed conflict could lead to additional volatility in global energy prices and energy supply disruptions. These risks, individually or in the aggregate, could have an adverse effect on Kronos’ results of operations and financial condition.
The U.S. federal government has recently implemented tariffs on certain foreign goods and may implement additional tariffs on foreign goods. As Kronos currently manufactures a significant portion of its North American TiO2 in Canada, if sustained for an extended period of time, a tariff on Kronos’ imports into the U.S. from Canada, would make its products manufactured in Canada and sold into the U.S. more expensive. As a result, demand for these products could be reduced, or Kronos could be required to absorb the increased costs or increase prices of such products. Tariff mitigation strategies, such as those Kronos undertook in the first quarter of 2025 which included building and positioning inventory from its Canadian facility into the U.S., may result in increased shipping and warehousing costs. Future mitigation strategies may offer only temporary relief from the effect of these tariffs. Such tariffs and, if enacted, any further legislation or actions taken by the U.S. government that restrict trade, such as additional tariffs, trade barriers and other protectionist or retaliatory measures taken in response, could adversely impact Kronos’ ability to sell its products in the U.S. or reduce its revenues and gross margins. These measures may also increase Kronos’ costs of Canadian feedstock imported into the U.S. and could adversely impact its gross margins or require Kronos to raise prices thereby making its products less competitive. Additional tariffs imposed by the U.S or any retaliatory or reciprocal tariffs imposed by other countries could also increase the cost of feedstock and other raw materials that go into making TiO2, the extent of which is unknown. The ultimate impact of any tariffs will depend on various factors, including the length of time tariffs are ultimately implemented and the amount, scope and nature of the tariffs.
Technology failures or cybersecurity breaches could have a material adverse effect on our operations.
Kronos and CompX rely on integrated information technology systems to manage, process and analyze data, including to facilitate the manufacture and distribution of their products to and from their facilities, receive, process and ship orders, manage the billing of and collections from their customers and manage payments to vendors. Although Kronos and CompX have systems and procedures in place to protect information technology systems, there can be no assurance
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that such systems and procedures would be sufficiently effective. Therefore, any of Kronos’ and CompX’s information technology systems may be susceptible to outages, disruptions or destruction from power outages, telecommunications failures, employee error, cybersecurity breaches or attacks and other similar events. This could result in a disruption of Kronos’ or CompX’s business operations, injury to people, harm to the environment or their assets, and/or the inability to access their information technology systems and could adversely affect our results of operations and financial condition. Kronos and CompX have in the past experienced, and expect to continue to experience, cyber-attacks, including phishing and other attempts to breach or gain unauthorized access to, their systems, and vulnerabilities introduced into their systems by trusted third-party vendors who have experienced cyber-attacks. To date Kronos and CompX have not suffered breaches in their systems, either directly or through a trusted third-party vendor, which have led to material losses. Due to the increase in global cybersecurity incidents it has become increasingly difficult to obtain insurance coverage on reasonable pricing terms to mitigate some risks associated with technology failures or cybersecurity breaches, and Kronos and CompX are experiencing such difficulties in obtaining insurance coverage.
Physical impacts of climate change could have a material adverse effect on Kronos’ or CompX’s costs and operations.
Climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, such as hurricanes, thunderstorms, tornadoes, drought and snow or ice storms. Extreme weather conditions may increase our costs or cause damage to Kronos’ or CompX’s facilities, and any damage resulting from extreme weather may not be fully insured. Climate change has also been associated with rising sea levels and many of Kronos’ facilities are located near coastal areas or waterways where rising sea levels or flooding could disrupt its operations or adversely impact its facilities. Furthermore, periods of extended inclement weather or associated droughts or flooding may inhibit Kronos’ or CompX’s facility operations and delay or hinder shipments of products to customers. Any such events could have a material adverse effect on Kronos’ or CompX’s costs or results of operations.
ITEM 1B.UNRESOLVED STAFF COMMENTS
None
ITEM 1C.CYBERSECURITY
We operate through our subsidiaries and affiliate and receive services through our intercorporate services agreement (ISA) with Contran (see Note 16 to our Consolidated Financial Statements). We recognize the importance of proactively assessing, identifying and managing material risks associated with cybersecurity threats. These risks include, among other things: operational disruptions, intellectual property theft, fraud, extortion, harm to employees or customers and violations of data privacy or security laws. Our cybersecurity program is built on both operational and compliance foundations. The operational component focuses on continuous monitoring, detection, prevention, measurement, analysis and response to cybersecurity threats and incidents, including emerging risks. The compliance component provides oversight through risk-based controls designed to protect the confidentiality, integrity and availability of company data stored, processed or transmitted. Our cybersecurity program is fully
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We, Kronos and CompX continually enhance our cyber defense strategy with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously bolstering our system resilience in an effort to minimize the business impact should an incident occur. Third parties also play a role in our cybersecurity posture. We, Kronos and CompX
We, Kronos and CompX each have a Cybersecurity Incident Disclosure and Controls Committee (“CIDAC”) which is central to the response and evaluation of cybersecurity incidents. Our CIDAC is comprised of our CIO and other senior executives including our chief executive officer, chief financial officer and general counsel. Information security events and incidents are evaluated, ranked by severity and prioritized for response and remediation. The IT teams are responsible for categorizing cybersecurity incidents, and those deemed high-risk or critical are escalated to the CIDAC for strategic review and response coordination. Incidents are evaluated to determine regulatory requirements, materiality and potential operational, financial and reputational impact. Our CIDAC, as well as the Kronos and CompX CIDAC, performs simulations and tabletop exercises at a management level to evaluate our readiness and response to cybersecurity incidents. As needed, we collaborate with external cybersecurity experts and legal advisors to help ensure a robust response strategy.
We also maintain a documented incident response plan. In the event of an incident, we follow a structured incident response playbook, which outlines clear and defined steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (such as legal and human resources), senior leadership, and the board, as appropriate. We also conduct post-incident reviews to identify lessons learned and implement continuous improvements.
We, Kronos and CompX face a number of cybersecurity risks. To date,
ITEM 2.PROPERTIES
Our principal executive offices are located in an office building located at 5430 LBJ Freeway, Dallas, Texas, 75240-2620. The principal properties used in the operations of our subsidiaries and affiliates, including certain risks and uncertainties related thereto, are described in the applicable business sections of Item 1 – “Business.” We believe that our facilities are generally adequate and suitable for our respective uses.
ITEM 3.LEGAL PROCEEDINGS
We are involved in various legal proceedings. In addition to information that is included below, we have included certain of the information required for this Item in Note 17 to our Consolidated Financial Statements, and we are incorporating that information here by reference.
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Lead pigment litigation
Our former operations included the manufacture of lead pigments for use in paint and lead-based paint. We, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have previously been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints. Certain of these actions were filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others were asserted as class actions. We currently have no pending lead paint class action cases or pending lead paint cases brought by housing authorities, school districts or other government entities.
In the matter titled County of Santa Clara v. Atlantic Richfield Company, et al. (Superior Court of the State of California, County of Santa Clara, Case No. 1-00-CV-788657) on July 24, 2019, an order approving a global settlement agreement entered into among all of the plaintiffs and the three defendants remaining in the case (the Sherwin Williams Company, ConAgra Grocery Products and us) was entered by the court and the case was dismissed with prejudice. The global settlement agreement provided that an aggregate $305 million would be paid collectively by the three co-defendants in full satisfaction of all claims resulting in a dismissal of the case with prejudice and the resolution of (i) all pending and future claims by the plaintiffs in the case, and (ii) all potential claims for contribution or indemnity between us and our co-defendants in respect to the case. In the agreement, we expressly denied any and all liability and the dismissal of the case with prejudice was entered by the court without a final judgment of liability entered against us. The settlement agreement fully concludes this matter.
Under the terms of the global settlement agreement, each defendant paid an aggregate $101.7 million to the plaintiffs as follows: $25.0 million within sixty days of the court’s approval of the settlement and dismissal of the case, and the remaining $76.7 million in six annual installments beginning on the first anniversary of the initial payment ($12.0 million for the first five installments and $16.7 million for the sixth installment). Our sixth installment which was paid in October 2025 was funded with amounts that were already on deposit at the court and previously included in current restricted cash on our Consolidated Balance Sheets, as those amounts, together with all accrued interest through the date of payment, had been committed to the settlement. Per the terms of the settlement, any amounts on deposit in excess of the final payment were to be returned to us, and in October 2025 we received accrued interest of approximately $1.6 million from such restricted cash. For financial reporting purposes, we used a discount rate of 1.9% per annum to discount the aggregate $101.7 million settlement to the estimated net present value of $96.3 million. We recognized an aggregate accretion expense of $.7 million, $.5 million and $.2 million in 2023, 2024 and 2025, respectively.
In January 2024, NL was served with a third-party complaint in a matter titled Arrioena Beal v. Hattie Mitchell, et al. (Circuit Court of Milwaukee County, Wisconsin, Case No. 21-cv-3276). The plaintiff in this case sued her former landlords and several former manufacturers of lead paint for injuries allegedly attributable to lead paint, but did not sue NL. Several of the former lead paint manufacturer defendants later filed a third-party complaint against NL, seeking contribution for any damages they may ultimately have to pay to the plaintiff. We believe we have substantial defenses to these claims under Wisconsin law and intend to defend ourselves vigorously.
New cases may continue to be filed against us. We do not know if we will incur liability in the future in respect of any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings. In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against us or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against us as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable. The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.
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Environmental matters and litigation
Certain properties and facilities used in our former operations, including divested primary and secondary lead smelters and former mining locations, are the subject of civil litigation, administrative proceedings or investigations arising under federal and state environmental laws and common law. Additionally, in connection with past operating practices, we are currently involved as a defendant, potentially responsible party (“PRP”) or both, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (“CERCLA”), and similar state laws in various governmental and private actions associated with waste disposal sites, mining locations, and facilities that we or our predecessors, our subsidiaries or their predecessors currently or previously owned, operated or used, certain of which are on the United States Environmental Protection Agency’s (“EPA”) Superfund National Priorities List or similar state lists. These proceedings seek cleanup costs, damages for personal injury or property damage and/or damages for injury to natural resources. Certain of these proceedings involve claims for substantial amounts. Although we may be jointly and severally liable for these costs, in most cases we are only one of a number of PRPs who may also be jointly and severally liable, and among whom costs may be shared or allocated. In addition, we are occasionally named as a party in a number of personal injury lawsuits filed in various jurisdictions alleging claims related to environmental conditions alleged to have resulted from our operations.
Obligations associated with environmental remediation and related matters are difficult to assess and estimate for numerous reasons including the:
| ● | complexity and differing interpretations of governmental regulations, |
| ● | number of PRPs and their ability or willingness to fund such allocation of costs, |
| ● | financial capabilities of the PRPs and the allocation of costs among them, |
| ● | solvency of other PRPs, |
| ● | multiplicity of possible solutions, |
| ● | number of years of investigatory, remedial and monitoring activity required, |
| ● | uncertainty over the extent, if any, to which our former operations might have contributed to the conditions allegedly giving rise to such personal injury, property damage, natural resource and related claims, and |
| ● | number of years between former operations and notice of claims and lack of information and documents about the former operations. |
In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. Actual costs could exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and costs may be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our Consolidated Financial Statements, results of operations and liquidity.
We record liabilities related to environmental remediation and related matters (including costs associated with damages for personal injury or property damage and/or damages for injury to natural resources) when estimated future expenditures are probable and reasonably estimable. We adjust such accruals as further information becomes available to us or as circumstances change. Unless the amounts and timing of such estimated future expenditures are fixed and reasonably determinable, we generally do not discount estimated future expenditures to their present value due to the uncertainty of the timing of the payout. We recognize recoveries of costs from other parties, if any, as assets when their receipt is deemed probable.
We do not know and cannot estimate the exact time frame over which we will make payments for our accrued environmental and related costs. The timing of payments depends upon a number of factors, including but not limited to
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the timing of the actual remediation process; which in turn depends on factors outside of our control. At each balance sheet date, we estimate the amount of our accrued environmental and related costs which we expect to pay within the next twelve months, and we classify this estimate as a current liability. We classify the remaining accrued environmental costs as a noncurrent liability.
On a quarterly basis, we evaluate the potential range of our liability for environmental remediation and related costs at sites where we have been named as a PRP or defendant, including sites for which our wholly-owned environmental management subsidiary, NL Environmental Management Services, Inc., (“EMS”), has contractually assumed our obligations. At December 31, 2025, we had accrued approximately $13 million related to approximately 27 sites associated with remediation and related matters we believe are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to us for remediation and related matters for which we believe it is possible to estimate costs is approximately $26 million, including amounts currently accrued. These accruals have not been discounted to present value.
We believe it is not reasonably possible to estimate the range of costs for certain sites. At December 31, 2025, there were approximately five sites for which we are not currently able to reasonably estimate a range of costs. For these sites, generally the investigation is in the early stages, and we are unable to determine whether or not we actually had any association with the site, the nature of our responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of our control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, we have received general and special notices of liability from the EPA and/or state agencies alleging that we, sometimes with other PRPs, are liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that we, along with any other alleged PRPs, are liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites, which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our Consolidated Financial Statements, results of operations and liquidity.
In June 2008, we received a Directive and Notice to Insurers from the New Jersey Department of Environmental Protection (“NJDEP”) regarding the Margaret’s Creek site in Old Bridge Township, New Jersey. NJDEP alleged that a waste hauler transported waste from one of our former facilities for disposal at the site in the early 1970s. NJDEP referred the site to the EPA, and in November 2009, the EPA added the site to the National Priorities List under the name Raritan Bay Slag Site (“RBS Site”). In 2012, EPA notified NL of its potential liability at this site. In June 2013, NL filed a contribution suit under CERCLA and the New Jersey Spill Act titled NL Industries, Inc. v. Old Bridge Township, et al. (United States District Court for the District of New Jersey, Civil Action No. 3:13-cv-03493-MAS-TJB) against the current owner, Old Bridge Township, several federal and state entities, and a number of private companies.
In February 2025, the United States District Court for the District of New Jersey entered an order approving a consent decree relating to the RBS Site in Middlesex County, New Jersey. The consent decree requires the United States Army Corps of Engineers (and other federal agencies), the State of New Jersey, the Township of Old Bridge, NL, and twenty-two other private companies to pay a total of $151.1 million, plus interest, to resolve all federal and state law claims for past and future response costs under CERCLA and the New Jersey Spill Act, including natural resource damages, contribution, and indemnification, relating to the RBS Site. The consent decree is a global settlement of all such claims relating to the RBS Site and resolves a lawsuit captioned United States of America, et al. v. NL Industries, Inc., et al. (United States District Court for the District of New Jersey, Civil Action No. 3:24-cv-08946) as well as all claims asserted by NL and the other settling parties in NL’s previously filed contribution lawsuit, NL Industries, Inc. v. Old Bridge Township, et al., discussed above.
Under the terms of the consent decree, in the first quarter of 2025 we paid $56.1 million, plus $.5 million interest, toward the global settlement and received approximately $9.6 million from the other private companies participating in the settlement. We recognized aggregate income of approximately $31.4 million in 2024 related to the adjustment of our environmental accrual related to this matter and the recording of a $9.6 million receivable for the funds which we received in the first quarter of 2025 from the other private companies participating in the settlement. See Note 3 to the Consolidated Financial Statements. The satisfaction of our obligations under the consent decree fully concludes this matter.
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In August 2009, we were served with a complaint in Raritan Baykeeper, Inc. d/b/a NY/NJ Baykeeper et al. v. NL Industries, Inc. et al. (United States District Court, District of New Jersey, Case No. 3:09-cv-04117). This is a citizen’s suit filed by two local environmental groups pursuant to the Resource Conservation and Recovery Act and the Clean Water Act against NL, current owners, developers and state and local government entities. The complaint alleges that hazardous substances were and continue to be discharged from our former Sayreville, New Jersey property into the sediments of the adjacent Raritan River. The former Sayreville site is currently being remediated by owner/developer parties under the oversight of the NJDEP. The plaintiffs seek a declaratory judgment, injunctive relief, imposition of civil penalties and an award of costs. In June 2022, NL received a letter from the NJDEP informing NL that remediation of contaminated sites upriver of the former Sayreville site had progressed to the point that it was now appropriate for NL to resume investigating the sediments adjacent to the Sayreville site. NL has been diligently conducting that investigation in compliance with NJDEP regulations. The lawsuit remains pending. NL continues to deny liability and will defend vigorously against all claims.
In 2011, we were served in ASARCO LLC v. NL Industries, Inc., et al. (United States District Court, Western District of Missouri, Case No. 4:11-cv-00138-DGK) and ASARCO LLC v. NL Industries, Inc., et al. (United States District Court, Eastern District of Missouri, Case No. 4:11-cv-00864). Both cases are CERCLA contribution actions brought against several defendants to recover a portion of the amount the plaintiff paid in settlement with the U.S. Government during its Chapter 11 bankruptcy. The court in each case entered indefinite stays of the litigation in 2013 and 2015, which remain in place.
In July 2012, we were served in EPEC Polymers, Inc., v. NL Industries, Inc., (United States District Court for the District of New Jersey, Case 3:12-cv-03842-PGS-TJB). The plaintiff, a landowner of property located across the Raritan River from our former Sayreville, New Jersey operation, claims that contaminants from NL’s former Sayreville operation came to be located on its land. The complaint seeks compensatory and punitive damages and alleges, among other things, trespass, private nuisance, negligence, strict liability, and claims under CERCLA and the New Jersey Spill Act. We have denied liability and will defend vigorously against all claims.
In September 2013, EPA issued to NL and 34 other PRPs general notice of potential liability and a demand for payment of past costs and performance of a Remedial Design for the Gowanus Canal Superfund Site in Brooklyn, New York. In March 2014, EPA issued a unilateral administrative order (“UAO”) to NL and approximately 27 other PRPs for performance of the Remedial Design at the site. EPA contends that NL is liable as the alleged successor to the Doehler Die Casting Company, and therefore responsible for any potential contamination at the site resulting from Doehler’s ownership/operation of a warehouse and a die casting plant it owned 90 years ago. In April 2019, the EPA issued a second UAO to NL and approximately 27 other PRPs for performance of certain work related to the Remedial Design at the site. In October 2024, we were served in Brooklyn Union Gas Co. v. Consolidated Edison Co. of New York, et al. (United States District Court for the Eastern District of New York, Case No. 1:24-cv-06993). This complaint asserts claims under CERCLA and New York law against NL and a number of other private parties, federal and state agencies, and agencies of the City of New York. The plaintiff, a former gas manufacturer, seeks to recover a portion of investigation and remediation costs it allegedly incurred to address contamination at the Gowanus Canal Superfund Site. NL has denied liability and will defend vigorously against all claims.
In January 2020, we were sued in Atlantic Richfield, Co. v. NL Industries, Inc., (United States District Court for the District of Colorado, Case 1:20-cv-00234). This is a CERCLA cost recovery action brought by a past owner and operator of certain mining properties located in Rico, Colorado. In 2023, the trial court granted partial summary judgment for NL based on the statute of limitations and the plaintiff appealed that decision to the Court of Appeals for the Tenth Circuit. In January 2025, the Court of Appeals reversed the trial court’s grant of partial summary judgment and returned the matter to the trial court. We continue to deny liability and will defend vigorously against all claims.
In December 2020, NL and several other defendants were sued in California Department of Toxic Substances v. NL Industries, Inc., (United States District Court for the Central District of California, Case 2:20-cv-11293). This complaint by a California state agency asserts claims under CERCLA, a state environmental statute, and the common law relating to lead contamination allegedly connected to a secondary lead smelter located in Vernon, California. In October 2022, the trial court issued an order finding that NL and the other defendants are not liable under CERCLA for lead
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contamination in residential neighborhoods surrounding, but at a distance from, the former secondary lead smelter. In August 2023, the trial court issued orders finding that NL and several other defendants are jointly liable for contamination on areas where operations were previously conducted, but are not liable for contamination outside those former operating areas. Neither the amount of damages owed, nor any party’s allocated share of such damages, has yet been determined. We have denied liability and will continue to defend vigorously against all claims.
Other litigation
We have been named as a defendant in various lawsuits in several jurisdictions, alleging personal injuries as a result of occupational exposure primarily to products manufactured by our former operations containing asbestos, silica and/or mixed dust. In addition, some plaintiffs allege exposure to asbestos from working in various facilities previously owned and/or operated by us. There are 120 of these types of cases pending, involving a total of approximately 598 plaintiffs. In addition, the claims of approximately 8,715 plaintiffs have been administratively dismissed or placed on the inactive docket in Ohio state courts. We do not expect these claims will be re-opened unless the plaintiffs meet the courts’ medical criteria for asbestos-related claims. We have not accrued any amounts for this litigation because of the uncertainty of liability and inability to reasonably estimate the liability, if any. To date, we have not been adjudicated liable in any of these matters.
Based on information available to us, including:
| ● | facts concerning historical operations, |
| ● | the rate of new claims, |
| ● | the number of claims from which we have been dismissed, and |
| ● | our prior experience in the defense of these matters, |
we believe the range of reasonably possible outcomes of these matters will be consistent with our historical costs (which are not material). Furthermore, we do not expect any reasonably possible outcome would involve amounts material to our consolidated financial position, results of operations or liquidity. We have sought and will continue to vigorously seek, dismissal and/or a finding of no liability from each claim. In addition, from time to time, we have received notices regarding asbestos or silica claims purporting to be brought against former subsidiaries, including notices provided to insurers with which we have entered into settlements extinguishing certain insurance policies. These insurers may seek indemnification from us.
In addition to the matters described above, we and our affiliates are also involved in various other environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to present and former businesses. In certain cases, we have insurance coverage for these items, although we do not expect additional material insurance coverage for environmental matters. We currently believe that the disposition of all of these various other claims and disputes (including asbestos-related claims), individually or in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals already provided.
Insurance coverage claims
We are involved in certain legal proceedings with a number of our former insurance carriers regarding the nature and extent of the carriers’ obligations to us under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for our lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available.
We have agreements with certain of our former insurance carriers pursuant to which the carriers reimburse us for a portion of our future lead pigment litigation defense costs, and one such carrier reimburses us for a portion of our future asbestos litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers
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for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. While we continue to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.
In January 2014, we were served with a complaint in Certain Underwriters at Lloyds, London, et al v. NL Industries, Inc. (Supreme Court of the State of New York, County of New York, Index No. 14/650103). The plaintiff, a former insurance carrier of ours, is seeking a declaratory judgment of its obligations to us under insurance policies issued to us by the plaintiff with respect to certain lead pigment lawsuits. Other insurers have been added as parties to the case and have also sought a declaratory judgment regarding their obligations under certain insurance policies. NL has filed a counterclaim seeking a declaratory judgment that all of the insurers are obligated to provide NL with certain coverage and seeking damages for breach of contract. In December 2020, the trial court denied the insurers’ motion for summary judgment, finding that the arguments raised by the insurers did not bar NL from coverage under the relevant policies. We intend to defend NL’s rights and prosecute NL’s claims in this action vigorously.
We have settled insurance coverage claims concerning environmental claims with certain of our principal former insurance carriers. We do not expect further material settlements relating to environmental remediation coverage.
Litigation – CompX
In 2024, CompX was served with four lawsuits by public water companies in South Carolina that seek recovery of future costs to remove perfluoroalkyl and polyfluoroalkyl substances (known as “PFAS”) from their water supplies. The lawsuits have been consolidated with other PFAS cases before a single judge in Spartanburg, South Carolina and were subsequently removed to federal court. The defendants in the lawsuits include the manufacturers of PFAS products, as well as companies that allegedly used PFAS-containing products in their manufacturing operations. The four lawsuits naming CompX allege that CompX was one of many companies that used products containing PFAS in its manufacturing operations, and that such operations have collectively impacted drinking water supplies used by the water companies. The plaintiffs do not allege that CompX has failed to comply with, or has violated, any environmental regulation, permit or statute. The plaintiffs instead assert claims under common law theories of negligence, nuisance, trespass, failure to warn, and unfair trade practices. CompX intends to deny liability and will defend vigorously against all claims.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable
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PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
Our common stock is listed and traded on the New York Stock Exchange (NYSE: NL). As of February 27, 2026, there were approximately 1,371 holders of record of our common stock.
Performance graph
Set forth below is a table and line graph comparing the yearly change in our cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Composite Stock Price Index and the S&P 500 Industrial Conglomerates Index for the period from December 31, 2020 through December 31, 2025. The graph shows the value at December 31 of each year assuming an original investment of $100 at December 31, 2020 and the reinvestment of dividends.
| December 31, | |||||||||||||||||
| 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | |||||||
NL common stock | $ | 100 | $ | 160 | $ | 160 | $ | 139 | $ | 212 | $ | 163 | ||||||
S&P 500 Composite Stock Index |
| 100 |
| 129 |
| 105 |
| 133 |
| 166 |
| 196 | ||||||
S&P 500 Industrial Conglomerates Index |
| 100 |
| 105 |
| 96 |
| 120 |
| 165 |
| 172 | ||||||
The information contained in the performance graph shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, except to the extent we specifically request that the material be treated as soliciting material or specifically incorporate this performance graph by reference into a document filed under the Securities Act or the Securities Exchange Act.
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Equity compensation plan information
We have an equity compensation plan, which was approved by our shareholders, pursuant to which an aggregate of 200,000 shares of our common stock can be awarded to non-employee members of our board of directors. At December 31, 2025, 170,750 shares are available for award under this plan. See Note 15 to our Consolidated Financial Statements.
ITEM 6.RESERVED
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
RESULTS OF OPERATIONS
Business overview
We are primarily a holding company. We operate in the component products industry through our majority-owned subsidiary, CompX International Inc. We also own a noncontrolling interest in Kronos Worldwide, Inc. Both CompX (NYSE American: CIX) and Kronos (NYSE: KRO) file periodic reports with the SEC.
CompX is a leading manufacturer of engineered components utilized in a variety of applications and industries. Through its Security Products operations, CompX manufactures mechanical and electronic cabinet locks and other locking mechanisms used in postal, recreational transportation, office and institutional furniture, cabinetry, tool storage and healthcare applications. CompX also manufactures wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries through its Marine Components operations.
We account for our 31% non-controlling interest in Kronos by the equity method. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments. TiO2 is used for a variety of manufacturing applications including coatings, plastics, paper and other industrial products.
Net income overview
Our net loss attributable to NL stockholders was $37.8 million, or $.77 per share, in 2025 compared to net income of $67.2 million, or $1.38 per share, in 2024 and a net loss of $2.3 million, or $.05 per share, in 2023.
As more fully described below, the decrease in our earnings attributable to NL stockholders from 2024 to 2025 is primarily due to the net effects of:
| ● | equity in losses from Kronos in 2025 of $33.9 million compared to equity in earnings of $26.4 million in 2024; |
| ● | aggregate income of $31.4 million in 2024 related to the settlement of a liability for an environmental remediation site; |
| ● | an unrealized loss in the relative value of marketable equity securities of $13.6 million in 2025 compared to an unrealized gain of $9.8 million in 2024; |
| ● | a non-cash settlement loss related to the termination and buy-out of our U.S. pension plan of $19.7 million in 2025; |
| ● | higher CompX segment profit of $22.6 million in 2025 compared to $17.0 million in 2024; |
| ● | lower interest and dividend income of $7.0 million in 2025 compared to $11.0 million in 2024; and |
| ● | insurance recoveries of nil in 2025 compared to $1.4 million in 2024. |
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Our 2025 net income per share attributable to NL includes:
| ● | a settlement loss of $.32 per share, net of tax, related to the termination and buy-out of our U.S. pension plan recognized in the fourth quarter; |
| ● | a loss of $.10 per share, net of tax, related to Kronos’ non-cash deferred income tax expense reflecting the impact of the rate reduction on its net German deferred tax asset; |
| ● | a loss of $.04 per share, net of tax, due to Kronos’ settlement loss related to the termination and buy-out of its U.S. pension plan recognized in the fourth quarter; |
| ● | a loss of $.04 per share, net of tax, due to Kronos’ recognition of a valuation allowance on its German interest deduction limitation deferred tax asset recognized in the fourth quarter; |
| ● | a loss of $.03 per share, net of tax, related to Kronos’ restructuring costs associated with workforce reductions recognized in the fourth quarter; and |
| ● | income of $.02 per share, net of tax, due to Kronos’ recognition of a non-cash gain resulting from the remeasurement of its earn-out liability related to the acquisition of the remaining interest in its TiO2 manufacturing joint venture. |
Our 2024 net income per share attributable to NL includes:
| ● | aggregate income of $.51 per share, net of tax in the fourth quarter of 2024 related to the settlement of a liability for an environmental remediation site; |
| ● | income of $.25 per share, net of tax, due to Kronos’ recognition of a non-cash gain resulting from the remeasurement of its investment in the TiO2 manufacturing joint venture; |
| ● | a loss of $.08 per share, net of tax, due to Kronos’ recognition of a non-cash deferred income tax expense related to final tax regulations on the treatment of certain currency translation gains and losses recognized in the fourth quarter; |
| ● | a loss of $.04 per share, net of tax, due to Kronos’ recognition of a non-cash deferred income tax expense related to the recognition of a deferred income tax asset valuation allowance related to its Belgian net deferred tax assets recognized in the fourth quarter, and |
| ● | income of $.02 per share, net of tax, related to insurance recoveries; and |
| ● | a loss of $.01 per share due to Kronos’ recognition of an aggregate charge related to a write-off of deferred financing costs. |
As more fully described below, the increase in our earnings attributable to NL stockholders from 2023 to 2024 is primarily due to the net effects of:
| ● | equity in earnings from Kronos in 2024 of $26.4 million compared to equity in losses of $15.0 million in 2023; |
| ● | aggregate income of $31.4 million in 2024 related to the settlement of a liability for an environmental remediation site; |
| ● | an unrealized gain in the relative value of marketable equity securities of $9.8 million in 2024 compared to an unrealized loss of $8.1 million in 2023; |
| ● | lower CompX segment profit of $17.0 million in 2024 compared to $25.4 million in 2023; |
| ● | a non-cash loss on the termination of our U.K. pension plan of $4.9 million in 2023; |
| ● | higher interest and dividend income of $11.0 million in 2024 compared to $9.6 million in 2023; and |
| ● | higher insurance recoveries of $1.4 million in 2024 compared to $.5 million in 2023. |
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Our 2024 net income per share attributable to NL includes:
| ● | aggregate income of $.51 per share, net of tax in the fourth quarter of 2024 related to the settlement of a liability for an environmental remediation site; |
| ● | income of $.25 per share, net of tax, due to Kronos’ recognition of a non-cash gain resulting from the remeasurement of its investment in the TiO2 manufacturing joint venture; |
| ● | a loss of $.08 per share, net of tax, due to Kronos’ recognition of a non-cash deferred income tax expense related to final tax regulations on the treatment of certain currency translation gains and losses recognized in the fourth quarter; |
| ● | a loss of $.04 per share, net of tax, due to Kronos’ recognition of a non-cash deferred income tax expense related to the recognition of a deferred income tax asset valuation allowance related to its Belgian net deferred tax assets recognized in the fourth quarter, and |
| ● | income of $.02 per share, net of tax, related to insurance recoveries; and |
| ● | a loss of $.01 per share due to Kronos’ recognition of an aggregate charge related to a write-off of deferred financing costs. |
Our 2023 net loss per share attributable to NL stockholders includes:
| ● | a loss of $.08 per share, net of tax, due to the termination and buy-out of our U.K. pension plan recognized in the second quarter, |
| ● | a loss of $.02 per share, net of tax, due to Kronos’ recognition, primarily in the fourth quarter, of restructuring costs related to workforce reductions, |
| ● | income of $.01 per share, net of tax, due to Kronos’ recognition in the first, second and third quarters of a pre-tax insurance settlement gain related to a business interruption insurance claim arising from Hurricane Laura in 2020, and |
| ● | a loss of $.01 per share, net of tax, due to Kronos’ recognition in the fourth quarter of a fixed asset impairment related to the write-off of certain costs resulting from a capital project termination. |
Outlook
Excluding any potential effects from changes in the relative value of marketable equity securities, we currently expect our net income attributable to NL stockholders in 2026 to be higher than 2025 primarily due to higher equity in earnings of Kronos in 2026 as well as the non-recurring loss on pension plan settlement in 2025, partially offset by higher expected litigation fees and related costs in 2026. See also Item 3 – “Legal Proceedings – Environmental matters and litigation” and Note 17 to our Consolidated Financial Statements.
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Income from operations
The following table shows the components of our income from operations.
Years ended December 31, | | % Change |
| ||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 |
| ||||
(Dollars in millions) | |||||||||||||
CompX segment profit | $ | 25.4 | $ | 17.0 | $ | 22.6 |
| (33) | % | 33 | % | ||
Insurance recoveries | .5 | 1.4 | — | 195 | n.m. | ||||||||
Corporate income (expense), net |
| (11.8) |
| 19.5 |
| (11.9) |
| (266) |
| (161) | |||
Income from operations | $ | 14.1 | $ | 37.9 | $ | 10.7 |
| 168 |
| (72) | |||
n.m. not meaningful
The following table shows the components of our income (loss) before income taxes exclusive of our income from operations.
Years ended December 31, | | % Change |
| ||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 | | ||||
(Dollars in millions) |
| ||||||||||||
Equity in earnings (losses) of Kronos | $ | (15.0) | $ | 26.4 | $ | (33.9) |
| 276 | % | (229) | % | ||
Marketable equity securities |
| (8.1) |
| 9.8 |
| (13.6) |
| 220 |
| (238) | |||
Settlement loss on pension plan termination and buy-out | (4.9) | — | (19.7) | n.m. | n.m. | ||||||||
Other components of net periodic pension |
| (1.4) |
| (1.2) |
| (1.1) |
| (12) |
| (6) | |||
Interest and dividend income |
| 9.6 |
| 11.0 |
| 7.0 |
| 14 |
| (36) | |||
Interest expense |
| (.7) |
| (.6) |
| (.8) |
| (29) |
| 45 | |||
n.m. not meaningful
CompX International Inc.
Years ended December 31, | | % Change | |||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 | |||||
(Dollars in millions) | | ||||||||||||
Net sales | $ | 161.3 | $ | 145.9 | $ | 158.3 |
| (10) | % | 8 | % | ||
Cost of sales |
| 112.1 |
| 104.6 |
| 110.1 |
| (7) |
| 5 | |||
Gross margin |
| 49.2 |
| 41.3 |
| 48.2 |
| (16) |
| 16 | |||
Selling, general and administrative expenses |
| 23.8 |
| 24.3 |
| 25.6 |
| 2 |
| 5 |
| ||
Segment profit (1) | $ | 25.4 | $ | 17.0 | $ | 22.6 |
| (33) |
| 33 |
| ||
| |||||||||||||
Percentage of net sales: |
| |
| ||||||||||
Cost of sales |
| 69.5 | % |
| 71.7 | % |
| 69.6 | % | |
| | |
Gross margin |
| 30.5 |
| 28.3 |
| 30.4 |
| |
| |
| ||
Selling, general and administrative expenses |
| 14.7 |
| 16.7 |
| 16.2 |
| |
| |
| ||
Segment profit | 15.8 |
| 11.7 |
| 14.3 |
|
| ||||||
| (1) | We use segment profit to assess the performance of CompX. Segment profit is defined as gross margin less selling, general and administrative expenses directly attributable to CompX’s operations. |
-39-
Net sales – CompX’s net sales increased $12.4 million in 2025 compared to 2024 primarily due to higher Security Products sales to the government security market and higher Marine Components sales to various markets including the towboat, government and industrial markets.
CompX’s net sales decreased $15.4 million in 2024 compared to 2023 due to lower Marine Components sales to the towboat market and lower Security Products sales to the government security market as a result of sales related to a pilot project that shipped in the third and fourth quarters of 2023 and for which there were no related sales in 2024.
Cost of sales and gross margin – CompX’s cost of sales increased in 2025 compared to 2024 primarily due to the effects of higher sales at both Security Products and Marine Components as well as increased production costs across both reporting units. However, CompX’s cost of sales as a percentage of net sales declined over the same period driven by a more favorable customer and product mix, particularly within Security Products, and increased coverage of fixed costs due to higher sales across both reporting units. As a result, CompX’s gross margin as a percentage of net sales increased in 2025 compared to 2024.
CompX’s cost of sales decreased in 2024 compared to 2023 primarily due to the effects of lower sales at both Security Products and Marine Components partially offset by higher production costs across both reporting units. As a result, CompX’s cost of sales as a percentage of net sales increased over the same period. CompX’s gross margin as a percentage of sales decreased in 2024 compared to 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales.
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 businesses and its corporate management activities, as well as gains and losses on property and equipment. CompX’s selling, general and administrative expenses increased $1.3 million in 2025 compared to 2024 predominantly due to higher employee-related costs including salaries, benefits, and medical expenses at both reporting units. As a percentage of net sales, selling, general and administrative expenses decreased in 2025 compared to 2024 primarily due to higher coverage of selling, general and administrative expenses as a result of higher sales, partially offset by the increased employee-related costs discussed above.
CompX’s selling, general and administrative expenses increased $.5 million in 2024 compared to 2023 predominantly due to higher employee salary and benefit costs at Security Products. As a percentage of sales, CompX’s selling, general and administrative expenses increased in 2024 compared to 2023 primarily due to increased selling, general and administrative expenses and decreased coverage of selling, general and administrative expenses on lower sales.
Segment profit – As a percentage of net sales, CompX’s segment profit increased in 2025 compared to 2024 and decreased in 2024 compared to 2023. CompX’s segment profit margins were primarily impacted by the factors impacting net sales, cost of sales, gross margin and selling, general and administrative expenses discussed above.
General – CompX’s profitability primarily depends on its ability to utilize its production capacity effectively, which is affected by, among other things, the demand for its products and its ability to control its manufacturing costs, primarily comprised of labor costs and materials. The materials used in CompX’s products consist of purchased components and raw materials some of which are subject to fluctuations in the commodity markets such as zinc, brass, aluminum and stainless steel. Total material costs represented approximately 43% of CompX’s cost of sales in 2025, with commodity-related raw materials representing approximately 14% of its cost of sales. During 2025, CompX experienced increases in the cost of certain raw materials. Throughout the year, market prices for brass and aluminum experienced a general upward trend. Stainless steel prices were relatively stable in the first part of 2025 but began increasing during the latter half of the year. Zinc pricing was relatively stable in 2025, and CompX was able to mitigate increases through strategic spot buy purchases. In most cases, commodity raw materials CompX purchases include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation and energy. Processing and conversion costs are not expected to decrease. Based on current economic conditions, CompX expects the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2026 to be more volatile compared to 2025. In addition to supply and demand, governmental actions such as tariffs may impact raw material markets.
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CompX occasionally enters into short-term commodity-related raw material supply arrangements to mitigate the impact of future increases in commodity related raw material costs. See Item 1 – “Business- Raw Materials.”
Results by reporting unit
The key performance indicator for CompX’s reporting units is the level of their reporting unit profit (see discussion below).
Years ended December 31, | % Change | ||||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 | | ||||
(Dollars in millions) | |||||||||||||
Security Products: | |
| |
| |
| |
| |
| |||
Net sales | $ | 121.2 | $ | 115.2 | $ | 120.7 |
| (5) | % | 5 | % | ||
Cost of sales |
| 82.8 |
| 80.5 |
| 83.8 |
| (3) |
| 4 |
| ||
Gross margin |
| 38.4 |
| 34.7 |
| 36.9 |
| (10) |
| 6 |
| ||
Operating costs and expenses |
| 13.5 |
| 13.9 |
| 14.4 |
| 3 |
| 4 |
| ||
Reporting unit profit (2) | $ | 24.9 | $ | 20.8 | $ | 22.5 |
| (16) |
| 8 |
| ||
Gross margin |
| 31.7 | % |
| 30.1 | % |
| 30.6 | % | |
| ||
Reporting unit profit margin |
| 20.6 |
| 18.1 |
| 18.6 |
| |
| |
| ||
| (2) | Reporting unit profit includes reporting unit sales less cost of sales and operating costs and expenses directly attributable to the reporting unit. Interunit sales are not material. |
Security Products – Security Products net sales increased 5% to $120.7 million in 2025 compared to $115.2 million in 2024. Relative to prior year, the increase in sales was primarily due to $9.9 million higher sales to the government security market and $.6 million higher sales to the gas station security market, partially offset by lower sales to a variety of other markets including $2.3 million lower sales to the healthcare market, $1.3 million lower sales to the transportation market and $.5 million lower sales to the tool storage market. Gross margin as a percentage of net sales increased in 2025 as compared to 2024 primarily due to increased coverage of fixed costs due to higher sales and a more favorable customer and product mix. These factors were partially offset by higher cost associated with inventory sold during the second half of the year and increased employee-related expenses including salaries, benefits and medical costs, of $2.6 million. Security Products reporting unit profit margin increased for 2025 compared to 2024 primarily due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses from higher sales partially offset by higher operating costs and expenses, including increased employee-related expenses of $.5 million.
Security Products net sales decreased 5% to $115.2 million in 2024 compared to $121.2 million in 2023 primarily due to lower sales to the government security market as a result of sales related to a pilot project for a government security customer that shipped in the third and fourth quarters of 2023 and for which there were no related sales in 2024. Relative to prior year, sales were $8.3 million lower to the government security market, $2.0 million lower to the transportation market and $.9 million lower to distributors, partially offset by $4.1 million higher sales to the healthcare market and $.7 million higher sales to the tool storage market. Gross margin as a percentage of net sales for 2024 decreased as compared to 2023 primarily due to lower sales, a less favorable customer and product mix, higher employee related costs (primarily increased medical costs), higher materials costs (primarily brass and electronics) in the latter half of the year and decreased coverage of fixed costs due to lower sales. Security Products reporting unit profit margin decreased for 2024 compared to 2023 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales and increased operating costs and expenses, including higher employee salaries and benefit costs of $.5 million, primarily in the first half of the year.
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Years ended December 31, | % Change | ||||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 | | ||||
(Dollars in millions) |
| |
| ||||||||||
Marine Components: | |||||||||||||
Net sales | $ | 40.1 | $ | 30.7 | $ | 37.6 | (23) | % | 22 | % | |||
Cost of sales |
| 29.3 |
| 24.1 |
| 26.3 |
| (18) |
| 9 |
| ||
Gross margin |
| 10.8 |
| 6.6 |
| 11.3 |
| (39) |
| 70 |
| ||
Operating costs and expenses |
| 3.6 |
| 3.3 |
| 3.8 |
| (8) |
| 14 |
| ||
Reporting unit profit (2) | $ | 7.2 | $ | 3.3 | $ | 7.5 |
| (54) |
| 126 |
| ||
Gross margin |
| 27.0 | % |
| 21.6 | % |
| 29.9 | % | |
| ||
Reporting unit profit margin |
| 18.0 |
| 10.8 |
| 19.8 |
| |
| |
| ||
Marine Components – Marine Components net sales increased 22% in 2025 as compared to 2024 primarily due to $2.7 million higher sales to the towboat market (including a one-time stocking event for a towboat OEM customer), $2.5 million higher sales to the government market and $2.2 million higher sales to the industrial market, partially offset by $1.1 million lower sales to the center console market. Gross margin as a percentage of sales increased in 2025 compared to 2024 primarily due to increased coverage of fixed costs as a result of higher sales partially offset by higher employee-related expenses including salaries, benefits and medical costs of $1.7 million. Marine Components reporting unit profit margin as a percentage of net sales increased in 2025 compared to 2024 due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses on higher sales, partially offset by higher operating costs and expenses, including increased employee-related expenses of $.4 million.
Marine Components net sales decreased 23% in 2024 as compared to 2023 primarily due to $8.7 million lower sales to the towboat market through the first three quarters of 2024, partially offset by higher sales in the fourth quarter of 2024, including $1.1 million higher sales to the towboat market and $1.0 million higher sales to the government market. Relative to the full year of 2023, sales were $7.6 million lower to the towboat market (primarily to original equipment boat manufacturers), $1.4 million lower to the industrial market and $.6 million lower to each of the engine builder market and distributors, partially offset by $1.4 million higher sales to the government market. Gross margin as a percentage of sales decreased in 2024 compared to 2023 primarily due to higher cost inventory produced during the fourth quarter of 2023 and sold in the first quarter of 2024 and decreased coverage of fixed costs as a result of lower sales, partially offset by a more favorable customer and product mix, lower employee salaries and benefits of approximately $1.8 million primarily related to headcount reductions and decreased labor costs of $1.2 million due to lower production volumes. Reporting unit profit as a percentage of net sales decreased in 2024 compared to 2023 due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses on lower sales, partially offset by reduced operating costs and expenses, including lower employee related expenses of $.2 million.
Outlook – CompX’s sales for 2025 were strong across both reporting units, exceeding 2024 levels. At CompX’s Marine Components reporting unit, improved demand in the government and industrial markets — combined with the one-time stocking event noted above — drove sales and reporting unit profit significantly above prior-year levels. At CompX’s Security Products reporting unit, sales increased compared to 2024 primarily due to higher demand from the government security market, partially offset by continued softness across a variety of markets including transportation, healthcare, and tool storage.
CompX expects modest growth in both Security Products and Marine Components net sales in 2026 as it aligns pricing, product features, and service levels with market conditions and customer requirements. At Security Products, CompX anticipates sales increases in most markets, partially offset by ongoing softness in the transportation market. At Marine Components, net sales growth in 2026 is expected to come primarily from the industrial market. Recreational marine sales appear to have largely stabilized, and (excluding the one-time restocking event noted above) sales to the towboat market in 2026 are expected to be comparable to 2025.
CompX expects gross margin and reporting unit profit percentages across both reporting units in 2026 to remain generally comparable to 2025, as price increases are planned to largely offset higher raw material costs and tariff-related surcharges on certain raw materials, as discussed below. During 2025, inventory levels increased across both reporting
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units, driven by higher raw material and production costs as well as actions taken to support anticipated customer demand. These actions included an insourcing initiative at Security Products and a shift in customer mix at Marine Components. As a result, CompX expects inventory levels in 2026 to remain approximately at current levels, consistent with ongoing operating requirements.
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 suppliers located in 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 and other components to mitigate the potential near-term tariff impacts. Late in the second quarter CompX began incurring tariff-related surcharges on certain raw materials, primarily electronic components. In addition, some of CompX’s U.S.-based suppliers have recently started applying tariff-related surcharges on certain U.S.-based purchases. Where possible, CompX is increasing selling prices to its customers to recover these higher 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.
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 experienced global and domestic supply chain challenges in the past, 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.
General corporate items, interest and dividend income, interest expense, provision for income taxes, noncontrolling interest and related party transactions
Insurance recoveries – We have agreements with certain insurance carriers pursuant to which the carriers reimburse us for a portion of our past lead pigment and asbestos litigation defense costs. Insurance recoveries include amounts we received from these insurance carriers.
The agreements with certain of our insurance carriers also include reimbursement for a portion of our future litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. Accordingly, these insurance recoveries are recognized when receipt is probable and the amount is determinable. In this regard we received $.5 million, $1.4 million and nil in insurance recoveries in 2023, 2024 and 2025, respectively. See Note 17 to our Consolidated Financial Statements.
Corporate income (expense), net – Corporate expense was $11.9 million in 2025 compared to corporate income of $19.5 million in 2024 due to income of $31.4 million recognized in the fourth quarter of 2024 as a result of the settlement of a liability for an environmental remediation site, including income of $9.6 million received from private companies participating in the settlement. Included in corporate (income) expenses are:
| ● | litigation fees and related costs of $2.9 million in 2025 compared to $3.0 million in 2024, and |
| ● | environmental remediation and related cost of $1.7 million in 2025 compared to income of $20.3 million in 2024. |
Corporate income was $19.5 million in 2024 compared to corporate expense of $11.8 million in 2023 due to income of $31.4 million recognized in the fourth quarter of 2024 as a result of the settlement of a liability for an environmental remediation site, including income of $9.6 million received from private companies participating in the settlement. Included in corporate (income) expenses are:
| ● | litigation fees and related costs of $3.0 million in 2024 compared to $4.4 million in 2023, and |
-43-
| ● | income from environmental remediation and related cost of $20.3 million in 2024 compared to expenses of $.6 million in 2023. |
Overall, we currently expect that our general corporate expenses in 2026 will be higher than in 2025 primarily due to expected increases in litigation fees and related costs. See also Item 3 – “Legal Proceedings – Environmental matters and litigation” and Note 17 to our Consolidated Financial Statements.
The level of our litigation fees and related costs varies from period to period depending upon, among other things, the number of cases in which we are currently involved, the nature of such cases and the current stage of such cases (e.g. discovery, pre-trial motions, trial or appeal, if applicable). See Note 17 to our Consolidated Financial Statements. If our current expectations regarding the number of cases in which we expect to be involved during 2026 or the nature of such cases were to change, our corporate expenses could be higher than we currently estimate.
Obligations for environmental remediation and related costs are difficult to assess and estimate and it is possible that actual costs for environmental remediation will exceed accrued amounts or that costs will be incurred in the future for sites in which we cannot currently estimate our liability. If these events were to occur in 2026, our corporate expenses would be higher than we currently estimate. In addition, we adjust our environmental accruals as further information becomes available to us or as circumstances change. Such further information or changed circumstances could result in an increase in our accrued environmental costs. See Note 17 to our Consolidated Financial Statements.
Interest and dividend income –Interest income decreased $4.0 million in 2025 compared to 2024 primarily due to lower interest rates and decreased average investment balances. Interest income increased $1.4 million in 2024 compared to 2023 primarily due to higher interest rates and increased investment balances, somewhat offset by lower average balances on CompX’s revolving promissory note receivable from Valhi.
Marketable equity securities – Unrealized gains or losses on our marketable equity securities are recognized in Marketable equity securities on our Consolidated Statements of Operations. See Note 5 to our Consolidated Financial Statements.
Income tax expense (benefit) – We recognized an income tax benefit of $7.0 million in 2023, income tax expense of $14.1 million in 2024 and an income tax benefit of $16.1 million in 2025.
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 aggregate dividends from Kronos of $26.8 million in 2023, $16.9 million in 2024 and $7.0 million in 2025. Our effective tax rate attributable to our equity in earnings (losses) of Kronos, including the effect of non-taxable dividends we received from Kronos, was 58.5% in 2023, 7.5% in 2024 and 25.4% in 2025. The decrease in our effective rate from 2023 to 2024 is attributable to the combined effects of Kronos’ earnings in 2024 as compared to loss in 2023 and the lower non-taxable dividend income we received from Kronos in 2024 as compared to 2023. The increase in our effective rate from 2024 to 2025 is attributable to the combined effects of Kronos’ loss in 2025 as compared to earnings in 2024 and the lower non-taxable dividend income we received from Kronos in 2025 as compared to 2024.
See Note 14 to our Consolidated Financial Statements for more information about our 2025 income tax items, including a tabular reconciliation of our statutory tax expense to our actual tax expense (benefit).
Noncontrolling interest – Noncontrolling interest in net income is directly attributable to CompX’s net income and reflects CompX’s earnings in 2023, 2024 and 2025.
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Related party transactions – We are a party to certain transactions with related parties. See Notes 1 and 16 to our Consolidated Financial Statements. It is our policy to engage in transactions with related parties on terms, in our opinion, no less favorable to us than we could obtain from unrelated parties.
Equity in earnings of Kronos Worldwide, Inc.
Years ended December 31, | % Change | ||||||||||||
2023 | | 2024 | | 2025 | | 2023-24 | | 2024-25 | | ||||
(Dollars in millions) | | | |||||||||||
Net sales | $ | 1,666.5 | $ | 1,887.1 | $ | 1,859.4 |
| 13 | % | (1) | % | ||
Cost of sales |
| 1,501.6 |
| 1,527.8 |
| 1,646.4 |
| 2 | 8 | ||||
Gross margin | $ | 164.9 | $ | 359.3 | $ | 213.0 |
| | |
| |||
Income (loss) from operations | $ | (56.0) | $ | 122.9 | $ | (36.5) |
| 319 | (130) | ||||
Gain on remeasurement of investment in TiO2 manufacturing joint venture | — | 64.5 | — | ||||||||||
Gain on remeasurement of earn-out liability | — | — | 4.6 | ||||||||||
Other gain (loss), net | .2 | 5.1 | (12.5) | ||||||||||
Interest expense |
| (17.1) |
| (42.9) |
| (53.0) |
| ||||||
Income (loss) before income taxes |
| (72.9) |
| 149.6 |
| (97.4) |
| ||||||
Income tax expense (benefit) |
| (23.8) |
| 63.4 |
| 13.5 |
| |
| |
| ||
Net income (loss) | $ | (49.1) | $ | 86.2 | $ | (110.9) |
| |
| |
| ||
Percentage of net sales: |
| |
| |
| |
| |
| |
| ||
Cost of sales |
| 90 | % |
| 81 | % |
| 89 | % |
| |||
Income (loss) from operations |
| (3) |
| 7 |
| (2) |
| ||||||
Equity in earnings (losses) of | $ | (15.0) | $ | 26.4 | $ | (33.9) |
| |
| |
| ||
TiO2 operating statistics: |
| |
| |
| |
| |
| |
| ||
Sales volumes* |
| 419 |
| 504 |
| 512 |
| 20 | % | 2 | % | ||
Production volumes* |
| 401 |
| 535 |
| 480 |
| 33 | (10) | ||||
Percentage change in TiO2 net sales: |
| |
| |
| |
| |
| |
| ||
TiO2 sales volumes |
|
| |
| 20 | % | 2 | % | |||||
TiO2 product pricing |
|
| |
| (5) | (4) | |||||||
TiO2 product mix/other |
|
| |
| (2) | — | |||||||
Changes in currency exchange rates |
|
| |
| — | 1 | |||||||
Total |
|
| 13 | % | (1) | % | |||||||
| * | Thousands of metric tons |
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. In 2025, Kronos merged LPC into Kronos’ wholly-owned subsidiary Kronos Louisiana, Inc. (the combined company is referred to as “Kronos Louisiana “). 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 Consolidated Financial Statements.
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Industry conditions and 2025 overview – Throughout 2025, the market faced significant global uncertainty driven by evolving U.S. trade policies and sustained geopolitical tensions. These factors, combined with continued market weakness compared to historical periods, contributed to additional global capacity reductions by TiO2 producers in 2025, including both announced plant closures and lower operating rates. While Kronos has seen some incremental benefit as a result of certain plant closures, primarily in Europe and particularly in the fourth quarter of 2025, the prolonged market downturn has negatively impacted its sales volume and led to pricing degradation as the year progressed. Kronos started 2025 with average TiO2 selling prices 2% higher than at the beginning of 2024 but ended 2025 with average TiO2 selling prices 10% lower. Overall, Kronos’ sales volumes have increased slightly in 2025 as compared to 2024 with higher overall sales volumes in both the European and North American markets offset by lower sales volumes to the export market.
Kronos operated its production facilities at 96% of practical capacity utilization in 2024 and continued operating at similar rates in early 2025. When the demand outlook began to soften, Kronos adjusted its production operating rates downward in the second and third quarters of 2025 and Kronos implemented a more significant production curtailment in the fourth quarter of 2025 to reduce finished goods inventory levels and preserve liquidity.
The following table shows Kronos’ capacity utilization rates during 2024 and 2025.
| Production Capacity Utilization Rates | |||||
2024 | 2025 | |||||
First Quarter |
| 87 | % | 93 | % | |
Second Quarter |
| 99 | % | 81 | % | |
Third Quarter |
| 92 | % | 80 | % | |
Fourth Quarter |
| 97 | % | 55 | % | |
Overall |
| 96 | % | 77 | % | |
Excluding the effect of changes in currency exchange rates and unabsorbed fixed costs, Kronos’ cost of sales per metric ton of TiO2 sold in 2025 was lower as compared to 2024 primarily due to decreases in per metric ton production costs (primarily raw materials).
In response to the extended period of reduced demand in 2025, discussed above, Kronos has taken measures to further reduce its operating costs and improve its long-term cost structure. In the fourth quarter of 2025, Kronos implemented certain voluntary and involuntary workforce reductions across its operating locations impacting both manufacturing and selling, general and administrative costs. Kronos recognized a total of approximately $10 million in restructuring charges in the fourth quarter of 2025 related to workforce reductions impacting approximately 226 positions.
Net sales – Kronos’ net sales in 2025 decreased 1%, or $27.7 million, compared to 2024 primarily due to a 4% decrease in average TiO2 selling prices (which decreased net sales by approximately $75 million) somewhat offset by a 2% increase in sales volumes (which increased net sales by approximately $38 million). Additionally, Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $24 million in 2025 as compared to 2024. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.
Kronos’ net sales in 2024 increased 13%, or $220.6 million, compared to 2023 primarily due to the effects of a 20% increase in sales volumes resulting from improved overall demand across all major markets (which increased net sales by approximately $333 million) partially offset by a 5% decrease in average TiO2 selling prices (which decreased net sales by approximately $83 million). Changes in product mix negatively contributed to net sales, primarily due to changes in product sales mix in export markets in 2024 as compared to 2023. Additionally, Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $5 million in 2024 as compared to 2023. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs. Incremental sales volumes resulting from the LPC acquisition did not significantly impact comparisons to the prior year.
Kronos’ sales volumes increased 2% as compared to 2024 primarily due to market share gains in its European, North American and Latin American markets related to its 2024 acquisition of LPC. Kronos’ sales volumes were 7%
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higher in the fourth quarter of 2025 as compared to the fourth quarter of 2024 primarily due to incremental market share increases in the European market as a result of competitor plant closures in Europe.
Cost of sales and gross margin – Kronos’ cost of sales increased $118.6 million, or 8%, in 2025 compared to 2024 due to the net effects of approximately $111 million in unabsorbed fixed production costs (including $54 million in the fourth quarter) recognized as a result of reduced operating rates at its production facilities, lower production costs of approximately $14 million (primarily raw materials) and favorable currency fluctuations (primarily the euro). Kronos’ unabsorbed fixed production costs in 2024 were $12 million. Kronos’ cost of sales in 2025 includes a charge in the fourth quarter of 2025 of approximately $4 million related to workforce reductions noted above. Kronos’ cost of sales in 2024 include a charge of approximately $2 million related to workforce reductions and approximately $14 million in non-cash charges related to the closure of its sulfate process line in Canada.
Kronos’ cost of sales as a percentage of net sales increased to 89% in 2025 compared to 81% in 2024 primarily due to the unfavorable fixed cost absorption and currency fluctuations, as discussed above.
Kronos’ gross margin as a percentage of net sales decreased to 11% in 2025 compared to 19% in 2024. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales decreased primarily due to lower average TiO2 selling prices and lower production volumes resulting in unfavorable fixed cost absorption.
Kronos’ cost of sales increased $26.2 million, or 2%, in 2024 compared to 2023 due to the net effects of a 20% increase in sales volumes, a 33% increase in production rates resulting in reduced unabsorbed fixed production costs, and lower production costs of approximately $115 million (primarily energy and raw materials). Kronos’ unabsorbed fixed production costs in 2024 were $12 million (incurred in the first quarter) compared to $96 million in 2023 related to curtailments that began in 2022 and continued into the first quarter of 2024, as discussed above. Kronos’ cost of sales in 2024 include a charge of approximately $2 million related to workforce reductions and approximately $14 million in non-cash charges related to the closure of its sulfate process line in Canada. Sales and production volumes resulting from the LPC acquisition did not materially impact comparisons to the prior year.
Kronos’ cost of sales as a percentage of net sales decreased to 81% in 2024 compared to 90% in 2023 primarily due to the favorable effects of increased sales, lower production costs and higher production volumes resulting in increased coverage of fixed production costs.
Kronos’ gross margin as a percentage of net sales increased to 19% in 2024 compared to 10% in 2023. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales increased primarily due to higher sales and production volumes as well as lower production costs, partially offset by lower average TiO2 selling prices.
Other operating income and expense, net – Kronos’ selling, general and administrative expense increased $19.6 million, or 9%, in 2025 compared to 2024 primarily due to an increase in warehousing costs related to carrying higher overall levels of finished goods inventory volumes in 2025 compared to 2024 as well as incremental warehousing costs incurred during the first quarter of 2025 to position inventory produced in Canada into the U.S. in response to anticipated U.S federal government tariff announcements. Kronos’ selling, general and administrative expense in 2025 includes approximately $6 million related to workforce reductions recognized in the fourth quarter as noted above. Kronos’ selling, general and administrative expense in 2024 includes $2.2 million of transaction costs incurred in connection with the LPC acquisition. Selling, general and administrative expense as a percentage of net sales increased 1% in 2025 as compared to 2024 as a result of the factors described above.
Kronos’ selling, general and administrative expenses increased $14.4 million, or 7%, in 2024 compared to 2023. This increase was primarily due to higher distribution costs related to higher overall sales volumes compared to 2023. Kronos’ selling, general and administrative expense in 2024 also includes $2.2 million of transaction costs incurred in connection with the LPC acquisition. Selling, general and administrative expense also decreased due to lower costs related to workforce reductions in 2024 compared to 2023.
Income (loss) from operations – Kronos had loss from operations of $36.5 million in 2025 compared to income from operations of $122.9 million in 2024 as a result of the factors impacting gross margin discussed above. Kronos
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estimates that changes in currency exchange rates decreased its segment loss by approximately $8 million in 2025 as compared to 2024, as discussed in the effects of currency exchange rates section below.
Kronos had income from operations of $122.9 million in 2024 compared to a loss from operations of $56.0 million in 2023 as a result of the factors impacting gross margin discussed above. Kronos recognized a gain of $2.5 million in 2023 related to cash received from the settlement of a business interruption insurance claim. Kronos estimates that changes in currency exchange rates increased income from operations by approximately $10 million in 2024 as compared to 2023, as further discussed below.
Other non-operating income (expense) – Kronos’ interest expense in 2025 increased $10.1 million compared to 2024 primarily due to higher average debt balances and higher average interest rates. Kronos recognized a loss of $1.6 million on the change in value of its marketable equity securities in 2025 compared to a gain of $1.2 million in 2024. In 2025, Kronos recognized a non-cash gain of $4.6 million due to the remeasurement of its earn-out liability. In 2024, Kronos recognized a gain on the remeasurement of its investment in LPC of $64.5 million as a result of the acquisition. Kronos’ other components of net periodic pension and OPEB cost in 2025 increased $10.5 million compared to 2024 primarily due to a $9 million settlement loss incurred in the fourth quarter of 2025 related to the termination of its U.S. pension plan.
Kronos recognized a gain on the remeasurement of its investment in LPC of $64.5 million in 2024 as a result of the acquisition. Kronos’ interest expense in 2024 increased $25.8 million compared to 2023 primarily due to higher interest rates on the debt exchange and the issuance of new notes discussed below and higher average debt balances as a result of the LPC acquisition. As a result of the exchange, Kronos’ interest expense for 2024 also includes a charge of $1.5 million for the write-off of deferred financing costs. Kronos recognized a gain of $1.2 million on the change in value of its marketable equity securities in 2024 compared to a loss of $1.0 million in 2023. Kronos’ other components of net periodic pension and OPEB cost in 2024 decreased $4.1 million compared to 2023 primarily due to a higher expected return on plan assets, lower discount rates impacting interest costs 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.
Income tax expense (benefit) – Kronos recognized income tax expense of $13.5 million in 2025 compared to income tax expense of $63.4 million in 2024. The difference is primarily due to lower earnings in 2025 and the jurisdictional mix of such earnings, partially offset by the following:
| ● | a non-cash deferred income tax expense of $19.3 million in the third quarter of 2025 to reduce its net German deferred tax asset as a result of the reduction of the German corporate tax rate, |
| ● | a non-cash deferred income tax expense of $9.2 million in 2025 ($5.7 million in 2024) related to the valuation allowance recorded against the portion of its U.S. federal carryforwards of the nondeductible portion of its interest expense, |
| ● | a non-cash deferred income tax expense of $8.5 million in 2025 with respect to the valuation allowance recorded against its German corporate and trade tax carryforwards of the nondeductible portion of its German interest expense, |
| ● | a non-cash deferred income tax expense of $8.6 million in 2025 ($8.2 million in 2024) related to the recognition of a deferred income tax asset valuation allowance related to its Belgian net deferred tax assets, and |
| ● | a non-cash deferred income tax expense of $16.5 million recognized in the fourth quarter of 2024 related to the pretransition gain computed on currency translation related to the operations, assets and liabilities of its non-U.S. qualified business units. |
Kronos recognized income tax expense of $63.4 million in 2024 compared to an income tax benefit of $23.8 million in 2023. The difference is primarily due to higher earnings in 2024 and the jurisdictional mix of such earnings. Kronos’ earnings 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
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decrease in its deferred income tax asset valuation allowance, or the effect of any increase or decrease in its deferred income tax asset valuation allowance or tax rate changes, to be higher than the U.S. federal statutory tax rate of 21% primarily because of its sizeable non-U.S. operations.
Kronos’ income tax expense in 2024 includes a non-cash deferred income tax expense of $8.2 million, recognized in the fourth quarter, related to the recognition of a deferred income tax asset valuation allowance related to its Belgian net deferred tax assets. Kronos continues to believe it will ultimately realize the full benefit of its Belgian NOL carryforwards, in part because of their indefinite carryforward period. However, Kronos’ ability to reverse all or a portion of such valuation allowance in the future is dependent on the presence of sufficient positive evidence, such as the existence of cumulative profits in the most recent twelve consecutive quarters, and the ability to demonstrate future profitability for a sustainable period. Until such time as Kronos is able to reverse the valuation allowance in full, to the extent it generates additional losses in Belgium in the intervening periods, its effective income tax rate will be negatively impacted because any further losses will effectively be recognized without the net income tax benefit.
Effects of currency exchange rates
Kronos has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada). The majority of its 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 its 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 its 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 Kronos would recognize from the first two items described above.
Kronos fluctuations in currency exchange rates had the following effects on its sales and income from operations for the periods indicated.
Impact of changes in currency exchange rates - 2025 vs 2024 | |||||||||||||||
| | Translation | | ||||||||||||
gains - | Total currency | ||||||||||||||
Transaction gains recognized | impact of | impact | |||||||||||||
| 2024 | | 2025 | | Change | | rate changes | | 2025 vs 2024 | ||||||
(In millions) | |||||||||||||||
Impact on: | | | | | | ||||||||||
Net sales | $ | — | $ | — | $ | — | $ | 24 | $ | 24 | |||||
Income (loss) from operations |
| 2 |
| 5 |
| 3 |
| 5 |
| 8 | |||||
The $24 million increase in net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as Kronos’ euro-denominated sales were translated into more U.S. dollars in 2025 as compared to 2024. The strengthening of the U.S. dollar relative to the Canadian dollar and the weakening of the U.S. dollar relative to 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.
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The $8 million decrease in Kronos’ loss from operations was comprised of the following:
| ● | Higher net currency transaction gains of approximately $3 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by Kronos’ non-U.S. operations, and in Norwegian krone denominated receivables and payables held by its non-U.S. operations. In order to manage currency exchange rate risk associated with the maturity in September 2025 of Kronos’ €75 million 3.75% Senior Secured Notes due 2025, in the first quarter of 2025 Kronos entered into a currency forward contract to purchase €25 million at an exchange rate of €1.05 per U.S. dollar. The contract was settled in August 2025, resulting in an overall transaction gain of $2.8 million, and |
| ● | Approximately $5 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2025 as compared to 2024. Additionally, the effect of the weakening of the U.S. dollar relative to the Norwegian krone caused net translation losses as local currency-denominated costs were translated into more U.S. dollars in 2025 as compared to 2024, combined with the effect of the weakening of the U.S. dollar relative to the euro caused further net translation losses as the positive effects of the weaker U.S. dollar on euro-denominated sales was more than offset by the unfavorable effects on euro-denominated operating costs being translated into more U.S. dollars in 2025 as compared to 2024. |
Impact of changes in currency exchange rates - 2024 vs 2023 | |||||||||||||||
Translation | |||||||||||||||
gains - | Total currency | ||||||||||||||
Transaction gains recognized | impact of | impact | |||||||||||||
| 2023 | | 2024 | | Change | | rate changes | | 2024 vs 2023 | ||||||
(In millions) | |||||||||||||||
Impact on: |
| |
| |
| |
| |
| | |||||
Net sales | $ | — | $ | — | $ | — | $ | 5 | $ | 5 | |||||
Income from operations |
| 1 |
| 2 |
| 1 |
| 9 |
| 10 | |||||
The $5 million increase in Kronos’ net sales (translation gains) was caused primarily by a weakening of the U.S. dollar relative to the euro, as Kronos’ euro-denominated sales were translated into more 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.
The $10 million increase in Kronos’ income from operations was comprised of the following:
| ● | Higher net currency transaction gains of approximately $1 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by Kronos’ non-U.S. operations, and in Norwegian krone denominated receivables and payables held by its non-U.S. operations, and |
| ● | Approximately $9 million from net currency translation gains primarily caused by a strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S. dollars in 2024 as compared to 2023. The effect of the weakening of the U.S. dollar relative to the euro caused additional net translation gains as the positive effects of the weaker U.S. dollar on euro-denominated sales more than offset the unfavorable effects on euro-denominated operating costs being translated into more U.S. dollars in 2024 as compared to 2023. |
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Outlook
Overall customer demand remained weaker than expected throughout 2025, driven by ongoing economic uncertainty related to tariffs and global trade tensions, as well as persistently high interest rates and elevated home prices which are impacting housing mobility. Customers were reluctant to build inventories, resulting in shorter order lead times and greater demand forecasting challenges. In the fourth quarter of 2025, Kronos further reduced operating rates to align production with demand and to reduce its inventory levels to support cash generation. In 2025, the TiO2 industry experienced significant capacity reductions including curtailments and previously announced plant closures by multiple producers, primarily in China and Europe. In combination with ongoing tariff and anti-dumping measures, these factors created targeted opportunities for improved sales volumes and mix in select markets, most notably in Europe during the fourth quarter of 2025.
Entering 2026, Kronos expects demand improvement from 2025 levels, supported by low customer inventories and seasonal restocking, particularly in North America. The pace and sustainability of recovery remain uncertain and will be influenced by macroeconomic factors, including interest rates, inflation, and consumer confidence. Demand in Europe continues to lag historical levels; however, Kronos expects European volumes to increase from 2025 levels, supported by industry capacity reductions, including the Venator bankruptcy and associated plant closures. To improve operating margins, Kronos will need to realize price increases and execute on its operating cost structural realignment.
Kronos remains focused on permanently realigning its operating costs, improving capital efficiency, and preserving liquidity. Following the workforce reductions implemented in late 2025, Kronos is pursuing additional cost savings through restructuring supplier agreements, improving asset utilization and enhancing processes to support a leaner organization capable of operating efficiently during extended periods of lower production rates.
Liquidity and capital resources remain sufficient to support Kronos’ operations and planned investments. In 2025, Kronos increased the maximum availability under its revolving credit facility from $300 million to $350 million and refinanced its €75 million 3.75% Senior Secured Notes due September 2025 with €75 million of additional 9.50% Senior Secured Notes due 2029 (effective rate 7.8% at issuance), resulting in no near-term debt maturities. Kronos expects cash on hand to improve over the next several quarters, and it will continue to actively manage working capital, including inventories and receivables, to bolster operating cash flows and maintain financial flexibility. Kronos believes its revolver availability, combined with having no near-term debt maturities and improved operating cash flows, will provide adequate liquidity for expected working capital needs and capital allocation requirements.
Kronos is pursuing targeted market share opportunities in regions where competitors have announced permanent or temporary shutdowns or curtailments and in markets where tariffs or duties have reduced the impact of low-cost imports. Overall, while Kronos expects operating results in 2026 to improve relative to 2025, its results will remain sensitive to demand variability, pricing competition, and the successful execution of its cost, capital and liquidity initiatives.
Kronos’ expectations for the TiO2 industry and its operations are based on a number of 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 effect newly enacted tariffs in jurisdictions where it or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact economic conditions, consumer confidence, and geopolitical events on its operations or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
Operations outside the United States
As discussed above, Kronos has substantial operations located outside the United States for which the functional currency is not the U.S. dollar. As a result, the reported amount of Kronos’ assets and liabilities related to its non-U.S. operations, and therefore its consolidated net assets, will fluctuate based upon changes in currency exchange rates. At December 31, 2025, Kronos had substantial net assets denominated in the euro, Canadian dollar and Norwegian krone.
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Critical accounting policies and estimates
Our significant accounting policies are more fully described in Note 1 to our Consolidated Financial Statements. Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financials statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expense during the reporting period. On an ongoing basis we evaluate our estimates, including those related to the recoverability of long-lived assets, goodwill, pension and other postretirement benefit obligations and the underlying actuarial assumptions related thereto, the realization of deferred income tax assets and accruals for litigation, income tax and other contingencies. We base our estimates on historical experience and on various other assumptions which we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ significantly from previously-estimated amounts under different assumptions or conditions.
We believe the most critical accounting policies and estimates involving significant judgment primarily relate to contingencies, certain long-lived assets, considerations in the recoverability and impairment assessments for goodwill and defined benefit pension plans. We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors.
| ● | Contingencies – We record accruals for environmental, legal and other contingencies and commitments when estimated future expenditures associated with such contingencies become probable, and the amounts can be reasonably estimated. However, new information may become available, or circumstances (such as applicable laws and regulations) may change, thereby resulting in an increase or decrease in the amount required to be accrued for such matters (and therefore a decrease or increase in reported net income in the period of such change). |
Obligations for environmental remediation costs are difficult to assess and it is possible that actual costs for environmental remediation will exceed accrued amounts or that costs will be incurred in the future for sites in which we cannot currently estimate our liability. If these events were to occur in 2026, our corporate expenses would be higher than we currently estimate. In addition, we adjust our environmental remediation and related costs accruals (and potential range of our liabilities) as further information becomes available to us or as circumstances change which involves our judgment regarding current facts and circumstances for each site and is subject to various assumptions and estimates. Such further information or changed circumstances could result in an increase in our accrued environmental costs. See Note 17 to our Consolidated Financial Statements.
| ● | Long-lived assets – The net book value of our property and equipment totaled $23.7 million at December 31, 2025, all of which relates to CompX. We assess property and equipment for impairment only when circumstances indicate an impairment may exist. Our determination is based upon, among other things, our estimates of the amount of future net cash flows to be generated by the long-lived asset (Level 3 inputs) and our estimates of the current fair value of the asset. |
Significant judgment is required in estimating such cash flows. Adverse changes in such estimates of future net cash flows or estimates of fair value could result in an inability to recover the carrying value of the long-lived asset, thereby possibly requiring an impairment charge to be recognized in the future. We do not assess our property and equipment for impairment unless certain impairment indicators are present. We did not evaluate any long-lived assets for impairment during 2025 because no such impairment indicators were present.
| ● | Goodwill – Our net goodwill totaled $27.2 million at December 31, 2025, all related to CompX’s Security Products reporting unit. Goodwill is required to be tested annually or at other times whenever an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. CompX performs its annual goodwill impairment test in the third quarter of each year or at other times whenever an event occurs or circumstances change that would more-likely-than-not reduce the |
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| fair value of a reporting unit below its carrying value. Such events or circumstances may include: adverse industry or economic trends, lower projections of profitability, or a sustained decline in CompX’s market capitalization. These events or circumstances, among other items, may be indications of potential impairment issues which are triggering events requiring the testing of an asset’s carrying value for recoverability. An entity may first assess qualitative factors to determine whether it is necessary to complete a quantitative impairment test using a more-likely-than-not criteria. If an entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed. Alternatively, an entity has an unconditional option to bypass the qualitative assessment and proceed directly to performing the quantitative impairment test. |
When performing a qualitative assessment considerable management judgment is necessary to evaluate the qualitative impact of events and circumstances on the fair value of a reporting unit. Events and circumstances considered in our impairment evaluations, such as CompX’s historical profits and stability of the markets served, are consistent with factors utilized with our internal projections and operating plan. However, future events and circumstances could result in materially different findings which could result in the recognition of a material goodwill impairment.
In 2025, CompX used the qualitative assessment for its annual impairment test and determined it was not necessary to perform the quantitative goodwill impairment test, as it concluded it is more-likely-than-not the fair value of the Security Products reporting unit exceeded its carrying amount. See Notes 1 and 7 to our Consolidated Financial Statements.
| ● | Defined benefit pension plans – We maintain a defined benefit pension plan in the U.S. As a result of the spin-off of Kronos in 2003, Kronos participates in our pension plan. Using participant data, we account for our portion of the combined pension plan as if it were a separate pension plan from the portion in which Kronos participates. As a result of the LPC acquisition in July 2024 (see Note 6 to our Consolidated Financial Statements), Kronos acquired the LPC defined benefit pension plan, which was overfunded on the Acquisition Date. Effective December 31, 2024, the LPC defined benefit pension plan was merged into our combined U.S. pension plan. Because we account for our portion of the combined pension plan separately, the plan merger did not impact our Consolidated Financial Statements. |
In accordance with applicable U.S. pension regulations, effective June 30, 2025, we began the process of terminating the U.S. pension plan, which includes the purchase of annuity contracts from third-party insurance companies for the purpose of paying benefits to plan participants. The annuity contracts were purchased on December 16, 2025 from “A” rated third-party insurance companies in settlement of all remaining obligations to the pension plan participants. The annuity purchase was funded with existing plan assets. In connection with the settlement, we recognized a non-cash settlement loss on the pension plan termination and buy-out of approximately $19.7 million in our Consolidated Statements of Operations for the year ended December 31, 2025. This charge represents the previously unrecognized actuarial losses and prior service costs that were accumulated in other comprehensive loss. See Note 11 to our Consolidated Financial Statements.
We previously maintained a plan in the United Kingdom (U.K.) related to a former disposed U.K. business unit. In accordance with applicable U.K. pension regulations, we entered into an agreement in March 2021 for the bulk annuity purchase, or “buy-in”, with a specialist insurer of defined benefit pension plans. Following the buy-in, individual policies replaced the bulk annuity policy in a “buy-out” which was completed as of May 1, 2023. The buy-out was completed with existing plan funds. At the completion of the buy-out, the assets and liabilities of the U.K. pension plan were removed from our Consolidated Financial Statements and a non-cash pension plan termination loss of $4.9 million was recognized in the second quarter of 2023. See Note 11 to our Consolidated Financial Statements.
We recognized consolidated defined benefit pension plan expense of $6.5 million in 2023, including the loss on the termination of the U.K. pension plan of $4.9 million discussed above, $1.4 million in 2024 and $20.9 million in 2025, including the loss on the termination of the U.S. pension plan of $19.7 million discussed
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above. The funding requirements for these defined benefit pension plans are generally based upon applicable regulations (such as ERISA in the U.S.) and will generally differ from pension expense recognized under GAAP for financial reporting purposes. In 2023, we made a net contribution of $.2 million to our plans (a contribution of approximately $1.1 million to our U.S. plan and a refund of approximately $.9 million as a result of the termination of the U.K. plan). In 2024, we made a contribution of $1.0 to our U.S. plan. We were not required, and therefore did not make, any contributions to our U.S. plan in 2025 but as a result of the allocated asset shortfall we will be required to fund an additional approximately $2 million into the U.S. pension plan asset trust during 2026 to fulfill our final funding obligation.
Under defined benefit pension plan accounting, defined benefit pension plan expense and prepaid and accrued pension costs are each recognized based on certain actuarial assumptions, principally the assumed discount rate and the assumed long-term rate of return on plan assets. We recognize the full funded status of our defined benefit pension plans as either an asset (for overfunded plans) or a liability (for underfunded plans) in our Consolidated Balance Sheets.
The discount rates we use for determining defined benefit pension expense and the related pension obligations are based on current interest rates earned on long-term bonds that receive one of the two highest ratings given by recognized rating agencies in the applicable country where the defined benefit pension benefits are being paid. In addition, we receive third-party advice about appropriate discount rates, and these advisors may in some cases use their own market indices. Prior to the settlement of our pension plans, we adjusted these discount rates as of each December 31 valuation date to reflect then-current interest rates on such long-term bonds. We used these discount rates to determine the actuarial present value of the pension obligations as of December 31 of that year. We also used these discount rates to determine the interest component of defined benefit pension expense for the following year.
Prior to the U.S. pension plan settlement, we used the following discount rates for our defined benefit pension plans:
Discount rates used for: | |||||
| Obligations at | | Obligations at | | |
December 31, | December 31, | ||||
2023 and | 2024 and | ||||
expense in 2024 | expense in 2025 | ||||
United States (through date of plan termination) |
| 5.0 | % | 5.5 | % |
The assumed long-term rate of return on plan assets represents the estimated average rate of earnings expected to be earned on the funds invested or to be invested from the plans’ assets provided to fund the benefit payments inherent in the projected benefit obligations. Unlike the discount rate, which is adjusted each year based on changes in current long-term interest rates, the assumed long-term rate of return on plan assets will not necessarily change based upon the actual short-term performance of the plan assets in any given year. Defined benefit pension expense each year is based upon the assumed long-term rate of return on plan assets for each plan, the actual fair value of the plan assets as of the beginning of the year and an estimate of the amount of contributions to and distributions from the plan during the year. Differences between the expected return on plan assets for a given year and the actual return are deferred and amortized over future periods based on the average remaining life expectancy of the inactive participants.
We used different long-term rates of return on plan asset assumptions for our previously maintained U.S. and U.K. defined benefit pension plan expense because the respective plan assets were invested in a different mix of investments and the long-term rates of return for different investments differ from country to country.
In determining the expected long-term rate of return on plan asset assumptions, we considered the long-term asset mix (e.g., equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we received third-party advice about appropriate long-term rates of return. See Note 11 to our Consolidated Financial Statements.
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Our assumed long-term rates of return on plan assets for 2023, 2024 and 2025 were as follows:
| 2023 | | 2024 | | 2025 |
| |
United States |
| 5.0 | % | 5.0 | % | 5.0 | % |
United Kingdom (through date of plan termination) |
| 4.3 | % | N/A | N/A |
LIQUIDITY AND CAPITAL RESOURCES
Consolidated cash flows
Operating activities
Trends in cash flows from operating activities, excluding the impact of deferred taxes and relative changes in assets and liabilities, are generally similar to trends in our income from operations. Changes in working capital are primarily related to changes in receivables and inventories (as discussed below) and payables and accrued liabilities. Net cash used in operating activities was $36.4 million in 2025 compared to cash provided of $25.6 million in 2024. The $62.0 million decrease in cash flows from operating activities includes the net effects of:
| ● | higher cash paid for environmental remediation and related costs in 2025 of $56.7 million primarily due to the payment of a settlement for an environmental remediation site (see Note 17 to our Consolidated Financial Statements); |
| ● | lower dividends received from Kronos in 2025 of $9.9 million; |
| ● | lower net cash used for relative changes in receivables, inventories, prepaid expenses, payables and accrued liabilities in 2025 of $9.6 million; |
| ● | higher segment profit from CompX in 2025 of $5.6 million; and |
| ● | a $3.2 million decrease in interest received in 2025 due to lower interest rates and decreased cash balances. |
Net cash provided by operating activities was $25.6 million in 2024 compared to $37.0 million in 2023. The $11.4 million decrease in cash provided by operating activities includes the net effects of:
| ● | lower dividends received from Kronos in 2024 of $9.9 million; |
| ● | lower segment profit from CompX in 2024 of $8.4 million; |
| ● | a $4.1 million increase in interest received in 2024 due to higher interest rates and increased investment balances, offset by lower average balances on CompX’s revolving promissory note receivable from affiliate; |
| ● | lower net cash used for relative changes in receivables, inventories, prepaid expenses, payables and accrued liabilities in 2024 of $3.2 million; and |
| ● | a $.4 million increase in cash paid for taxes in 2024 due to the relative timing of payments. |
We do not have complete access to CompX’s cash flows in part because we do not own 100% of CompX. A detail of our consolidated cash flows from operating activities is presented in the table below. Intercompany dividends have been eliminated. The reference to NL Parent in the tables below is a reference to NL Industries, Inc., as the parent company of CompX and our other wholly-owned subsidiaries.
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| Years ended December 31, | ||||||||
| 2023 | | 2024 | | 2025 | ||||
(In millions) | |||||||||
Net cash provided by (used in) operating activities: |
| |
| |
| | |||
CompX | $ | 25.8 | $ | 22.9 | $ | 22.9 | |||
NL Parent and wholly-owned subsidiaries |
| 21.9 |
| 37.1 |
| (35.6) | |||
Eliminations |
| (10.7) |
| (34.4) |
| (23.7) | |||
Total | $ | 37.0 | $ | 25.6 | $ | (36.4) | |||
Relative changes in working capital can have a significant effect on cash flows from operating activities and is primarily impacted by the timing of sales and collections in the last month of the year. As shown below, our total average days sales outstanding at December 31, 2025 was comparable to December 31, 2024. As shown below, our average number of days in inventory increased from December 31, 2024 to December 31, 2025 primarily due to an increased inventory at each of CompX’s Security Products and Marine Components reporting units as a result of higher raw material and production costs and to meet expected customer demand. For comparative purposes, we have provided 2023 numbers below.
| ||||||
| 2023 | | 2024 | | 2025 | |
Days sales outstanding |
| 36 days |
| 33 days |
| 33 days |
Days in inventory |
| 95 days |
| 94 days |
| 108 days |
Investing activities
Capital expenditures in 2025, all of which relate to CompX, were focused primarily on improving manufacturing facilities and investing in manufacturing equipment, including utilizing new technologies and increased automation. These investments were made to improve productivity and operational efficiency, support expected customer demand and ensure the ongoing maintenance and reliability of CompX’s facilities and technology infrastructure. Capital expenditures were $1.1 million in 2023, $1.4 million in 2024 and $3.7 million in 2025. In 2023 and 2024, CompX limited investments primarily to those expenditures required to support its existing demand and to properly maintain its facilities and technology infrastructure.
Investing activities also include net collections of $2.6 million ($27.9 million of gross borrowings and $30.5 million of gross repayments) in 2023, net collections of $1.3 million ($25.0 million of gross borrowings and $26.3 million of gross repayments) in 2024 and net collections of $1.3 million ($15.7 million of gross borrowings and $17.0 million of gross repayments) in 2025 under a promissory note receivable from an affiliate. See Note 16 to our Consolidated Financial Statements.
During 2023, we purchased U.S. treasury marketable securities totaling $61.4 million, and received gross proceeds totaling $82.0 million related to U.S. treasury bill maturities. During 2024, we received gross proceeds of $54.0 million related to U.S. treasury bill maturities.
During 2024, we had proceeds from the sale of land not used in our operations of $5.0 million.
Financing activities
Quarterly dividends paid totaled $13.7 million ($.28 per share, or $.07 per share per quarter) in 2023, $15.6 million ($.32 per share, or $.08 per share per quarter) in 2024 and $17.6 million ($.36 per share, or $.09 per share per quarter) in 2025. In addition, our board of directors declared special dividends which totaled $21.0 million ($.43 per share) paid in August 2024 and $10.3 million ($.21 per share) in August 2025. In February 2026 our board of directors declared a first quarter 2026 dividend of $.10 per share, to be paid on March 26, 2026 to NL stockholders of record as of March 10, 2026. 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
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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.
Cash flows from financing activities include CompX dividends paid to its stockholders other than us aggregating, $1.6 million in 2023, $5.0 million in 2024 ($3.1 million of which relates to a special dividend) and $3.4 million in 2025 ($1.6 million of which relates to a special dividend).
Outstanding debt obligations
At December 31, 2025, NLKW had outstanding debt obligations of $.5 million under its secured revolving credit facility with Valhi, and CompX did not have any outstanding debt obligations. We are in compliance with all of the covenants contained in our secured revolving credit facility with Valhi at December 31, 2025. See Note 10 to our Consolidated Financial Statements.
Future cash requirements
Liquidity
Our primary source of liquidity on an ongoing basis is our cash flow from operating activities and credit facilities with affiliates and banks as further discussed below. We generally use these amounts to fund capital expenditures (substantially all of which relate to CompX), pay ongoing environmental remediation and litigation costs, and provide for the payment of dividends (if declared).
At December 31, 2025, we had aggregate restricted and unrestricted cash and cash equivalents of $114.1 million, substantially all of which was held in the U.S. A detail (in millions) by entity is presented in the table below.
Amount | |||
(In millions) | |||
CompX | | $ | 54.1 |
NL Parent and wholly-owned subsidiaries |
| 60.0 | |
Total | $ | 114.1 | |
In addition, at December 31, 2025 we owned 1.2 million shares of Valhi common stock with an aggregate market value of $14.4 million. See Note 5 to our Consolidated Financial Statements. We also owned 35.2 million shares of Kronos common stock at December 31, 2025 with an aggregate market value of $155.7 million. See Note 6 to our Consolidated Financial Statements.
We routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows we expect to receive from our subsidiaries and affiliates. As a result of this process, we have in the past and may in the future seek to raise additional capital, incur debt, repurchase indebtedness in the market or otherwise, modify our dividend policies, consider the sale of our interests in our subsidiaries, affiliates, business, marketable securities or other assets, or take a combination of these and other steps, to increase liquidity, reduce indebtedness and fund future activities. Such activities have in the past and may in the future involve related companies.
We periodically evaluate acquisitions of interests in or combinations with companies (including related companies) perceived by management to be undervalued in the marketplace. These companies may or may not be engaged in businesses related to our current businesses. We intend to consider such acquisition activities in the future and, in connection with this activity, may consider issuing additional equity securities and increasing indebtedness. From time to time, we also evaluate the restructuring of ownership interests among our respective subsidiaries and related companies.
Based upon our expectations of operating performance, and the anticipated demands on our cash resources we expect to have sufficient liquidity to meet our short-term obligations (defined as the twelve-month period ending
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December 31, 2026). If actual developments differ materially from our expectations, our liquidity could be adversely affected. In this regard, Valhi has agreed to loan us up to $50 million on a revolving basis. At December 31, 2025, we had $.5 million in outstanding borrowings under this facility, and we had $49.5 million available for future borrowing under the facility. See Note 10 to our Consolidated Financial Statements.
Capital expenditures
Capital expenditures for 2026 are estimated at approximately $4.3 million, substantially all of which relate to CompX. CompX’s 2026 capital investments are primarily to support its expected customer demand and maintain and improve its facilities and technology infrastructure.
Dividends
Because our operations are conducted primarily through subsidiaries and affiliates, our long-term ability to meet parent company-level corporate obligations is largely dependent on the receipt of dividends or other distributions from our subsidiaries and affiliates. A detail of annual dividends we expect to receive from our subsidiaries and affiliates in 2026, based on the number of shares of common stock of these affiliates we own as of December 31, 2025 and their current regular quarterly dividend rate, is presented in the table below.
| Shares held | | Quarterly | | Annual expected | ||||
December 31, 2025 | dividend rate | dividend | |||||||
| (In millions) | | | (In millions) | |||||
Kronos |
| 35.2 | $ | .05 | $ | 7.0 | |||
CompX |
| 10.8 |
| .30 |
| 12.9 | |||
Valhi |
| 1.2 |
| .08 |
| .4 | |||
Total expected annual dividends |
| | $ | 20.3 | |||||
Investments in our subsidiaries and affiliates and other acquisitions
We have in the past and may in the future, purchase the securities of our subsidiaries and affiliates or third-parties in market or privately-negotiated transactions. We base our purchase decisions on a variety of factors, including an analysis of the optimal use of our capital, taking into account the market value of the securities and the relative value of expected returns on alternative investments. In connection with these activities, we may consider issuing additional equity securities or increasing our indebtedness. We may also evaluate the restructuring of ownership interests of our businesses among our subsidiaries and related companies.
Commitments and contingencies
We are subject to certain commitments and contingencies, as more fully described in Note 17 to our Consolidated Financial Statements or in Part I, Item 3 of this report. In addition to those legal proceedings described in Note 17 to our Consolidated Financial Statements, various legislation and administrative regulations have, from time to time, been proposed that seek to (i) impose various obligations on present and former manufacturers of lead pigment and lead-based paint (including us) with respect to asserted health concerns associated with the use of such products and (ii) effectively overturn court decisions in which we and other pigment manufacturers have been successful. Examples of such proposed legislation include bills which would permit civil liability for damages on the basis of market share, rather than requiring plaintiffs to prove that the defendant’s product caused the alleged damage and bills which would revive actions barred by the statute of limitations. While no legislation or regulations have been enacted to date that are expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity, enactment of such legislation could have such an effect.
As more fully described in the Notes to our Consolidated Financial Statements, we are party to various debt, leases and other agreements which contractually and unconditionally commit us to pay certain amounts in the future. See Note 10 to our Consolidated Financial Statements. See Notes 1 and 14 to our Consolidated Financial Statements for a
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description of certain income tax contingencies. Additionally, CompX has purchase obligations of $13.9 million ($13.4 million payable in 2026 and $.5 million payable in 2027/2028) which consists of open purchase orders and contractual obligations, primarily commitments to purchase raw materials and for capital projects in process at December 31, 2025. The timing and amount for purchase obligations is based on the contractual payment amount and the contractual payment date for those commitments.
Recent accounting pronouncements
See Note 19 to our Consolidated Financial Statements.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
General – We are exposed to market risk from changes in currency exchange rates, interest rates, raw materials and equity security prices.
Interest rates – We are exposed to market risk from changes in interest rates, primarily related to our indebtedness and CompX’s note receivable from affiliate. We have an outstanding principal amount of indebtedness of $.5 million at December 31, 2025 bearing interest at prime plus 1.875% (8.6% at December 31, 2025) with a maturity date of December 31, 2030. The carrying value of such outstanding indebtedness approximates its fair value.
The outstanding principal amount of the note receivable from affiliate of $8.0 million at December 31, 2025 bears interest at prime plus 1.0% (7.8% at December 31, 2025). We received interest income of $.9 million from the note during 2025.
Marketable equity security prices – We are exposed to market risk due to changes in prices of the marketable equity securities which we own. The fair value of our equity securities at December 31, 2024 and 2025 was $28.0 million and $14.4 million, respectively. The potential change in the aggregate fair value of these investments, assuming a 10% change in prices, would be $2.8 million and $1.4 million at December 31, 2024 and 2025, respectively.
Raw materials – CompX will occasionally enter into short-term commodity-related raw material supply arrangements to mitigate the impact of future increases in commodity-related raw material costs. CompX does not have long-term supply agreements for its raw material requirements because either it believes the risk of unavailability of those raw materials is low and it believes the downside risk of price volatility to be too great or because long-term supply agreements for those materials are generally not available. CompX does not engage in commodity raw material hedging programs.
Other – The discussion and sensitivity analysis presented above include forward-looking statements of market risk which assume hypothetical changes in market prices. Actual future market conditions will likely differ materially from such assumptions. Accordingly, such forward-looking statements should not be considered to be projections of future events, gains or losses. Such forward-looking statements are subject to certain risks and uncertainties, some of which are listed in “Business."
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is contained in a separate section of this Annual Report. See “Index of Financial Statements” (page F-1).
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None
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ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures which, as defined in Exchange Act Rule 13a-15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the Act), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Courtney J. Riley, our President and Chief Executive Officer and Amy Allbach Samford, our Executive Vice President and Chief Financial Officer, have evaluated the design and effectiveness of our disclosure controls and procedures as of December 31, 2025. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of this evaluation.
Management’s report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, as defined by Exchange Act Rule 13a-15(f) means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”), and includes those policies and procedures that:
| ● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and |
| ● | provide reasonable assurance regarding prevention or timely detection of an unauthorized acquisition, use or disposition of assets that could have a material effect on our Consolidated Financial Statements. |
Our evaluation of the effectiveness of internal control over financial reporting is based upon the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (commonly referred to as the “2013 COSO” framework). Based on our evaluation under that framework, we have concluded that our internal control over financial reporting was effective as of December 31, 2025.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.
Other
As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of equity method investees and (ii) internal control over the preparation of any financial statement schedules which would be required by Article 12 of Regulation S-X. However, our assessment of internal control over financial reporting with respect to equity method investees did include controls over the recording of amounts related to our investment that are recorded in the Consolidated Financial Statements, including controls over the selection of accounting methods for our investments, the recognition of equity method earnings and losses and the determination, valuation and recording of our investment account balances.
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Changes in internal control over financial reporting
There has been no change to our internal control over financial reporting during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Certifications
Our chief executive officer is required to annually file a certification with the New York Stock Exchange (NYSE), certifying our compliance with the corporate governance listing standards of the NYSE. During 2025, our chief executive officer filed such annual certification with the NYSE. The 2025 certification was unqualified.
Our chief executive officer and chief financial officer are also required to, among other things, quarterly file certifications with the SEC regarding the quality of our public disclosures, as required by Section 302 of the Sarbanes-Oxley Act of 2002. We have filed the certifications for the quarter ended December 31, 2025 as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K.
ITEM 9B.OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
PART III
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item is incorporated by reference to our 2026 definitive proxy statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.
ITEM 11.EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to our 2026 proxy statement.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this Item is incorporated by reference to our 2026 proxy statement.
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required by this Item is incorporated by reference to our 2026 proxy statement. See also Note 16 to our Consolidated Financial Statements.
ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
The Information required by this Item is incorporated by reference to our 2026 proxy statement.
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PART IV
ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) and (c)Financial Statements
The Registrant
The Consolidated Financial Statements of the Registrant listed on the accompanying Index of Financial Statements (see page F-1) are filed as part of this Annual Report.
50%-or-less persons
The Consolidated Financial Statements of Kronos (31%-owned at December 31, 2025) are incorporated by reference in Exhibit 99.1 of this Annual Report pursuant to Rule 3-09 of Regulation S-X. Management’s Report on Internal Control Over Financial Reporting of Kronos is not included as part of Exhibit 99.1. The Registrant is not required to provide any other Consolidated Financial Statements pursuant to Rule 3-09 of Regulation S-X.
(b)Exhibits
We have included as exhibits the items listed in the Exhibit Index. We will furnish a copy of any of the exhibits listed below upon payment of $4.00 per exhibit to cover our cost to furnish the exhibits. Pursuant to Item 601(b)(4)(iii) of Regulation S-K, any instrument defining the rights of holders of long-term debt issues and other agreements related to indebtedness which do not exceed 10% of consolidated total assets as of December 31, 2025 will be furnished to the Commission upon request.
Item No. | | Exhibit Index | |
|---|---|---|---|
3.1 | | Certificate of Amended and Restated Certificate of Incorporation dated May 22, 2008 – incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on May 23, 2008. | |
3.2 | | Amended and Restated Bylaws of NL Industries, Inc. as of October 26, 2023 – incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 26, 2023. | |
4.1 | Description of the Registrant’s Capital Stock – incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019. | ||
10.1 | | Lease Contract dated June 21, 1952, between Farbenfabriken Bayer Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German language version and English translation thereof) – incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 1985. (P) | |
10.2 | | Form of Assignment and Assumption Agreement, dated as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc. – incorporated by reference to Exhibit 10.9 to Kronos International, Inc.’s Registration Statement on Form S-4 (File No. 333-100047). (P) | |
10.3 | | Form of Cross License Agreement, effective as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc. – incorporated by reference to Exhibit 10.10 to Kronos International, Inc.’s Registration Statement on Form S-4 (File No. 333-100047). | |
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Item No. | | Exhibit Index | |
|---|---|---|---|
10.4 | Restated and Amended Agreement by and between Richards Bay Titanium (Proprietary) Limited (acting through its sales agent Rio Tinto Iron & Titanium Limited) and Kronos (US), Inc. effective January 1, 2016 – incorporated by reference to Exhibit 10.26 to the Kronos Worldwide, Inc. Annual Report on Form 10-K for the year ended December 31, 2015. | ||
10.5 * | | Kronos Worldwide, Inc. 2012 Director Stock Plan – incorporated by reference to Exhibit 4.4 of Kronos Worldwide, Inc. Registration statement on Form S-8. | |
10.6 * | | CompX International Inc. 2012 Director Stock Plan – incorporated by reference to Exhibit 10.2 of CompX International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012. | |
10.7 * | | NL Industries, Inc. 2023 Non-Employee Director Stock Plan – incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly Report on Form 10Q for the quarter ended June 30, 2023. | |
10.8 |
| Second Amended and Restated Agreement Regarding Shared Insurance among CompX International Inc., Contran Corporation, Kronos Worldwide, Inc., NL Industries, Inc. and Valhi, Inc. dated January 25, 2019 – incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018. | |
10.9 |
| Intercorporate Services Agreement by and between Contran Corporation and Kronos Worldwide, Inc. – incorporated by reference to Exhibit 10.1 to the Kronos Worldwide, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. | |
10.10 |
| Intercorporate Services Agreement between CompX International Inc. and Contran Corporation effective as of January 1, 2004 – incorporated by reference to Exhibit 10.2 to the CompX International Inc. Annual Report on Form 10-K for the year ended December 31, 2003. | |
10.11 |
| Intercorporate Services Agreement by and between Contran Corporation and NL Industries, Inc. effective as of January 1, 2004 – incorporated by reference to Exhibit 10.1 to the NL Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. | |
10.12 |
| Tax Agreement between Valhi, Inc. and Kronos Worldwide, Inc. dated as of January 1, 2020 – incorporated by reference to Exhibit 10.1 to the Kronos Worldwide, Inc. Annual Report on Form 10-K for the year ended December 31, 2019. | |
10.13 |
| Tax Agreement among NL Industries, Inc., Valhi, Inc. and Contran Corporation dated as of January 1, 2020 – incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K (for the year ended December 31, 2019. | |
10.14 |
| Unsecured Revolving Demand Promissory Note dated December 31, 2025 in the principal amount of $25.0 million executed by Valhi, Inc. and payable to the order of CompX International Inc. – incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K of CompX International Inc. for the year ended December 31, 2025. | |
10.15 | Loan Agreement between NLKW Holding, LLC, as Borrower, and Valhi, Inc., as Lender, dated as of November 14, 2016 – incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrant dated November 14, 2016 and filed on November 15, 2016. | ||
10.15.1 | First Amendment to Loan Agreement between NLKW Holding, LLC, as Borrower, and Valhi, Inc. as Lender, dated as of November 9, 2022 –incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registration dated November 9, 2022. | ||
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Item No. | | Exhibit Index | |
|---|---|---|---|
10.16 | Pledge and Security Agreement made by and between NLKW Holding, LLC in favor of Valhi, Inc., dated as of November 14, 2016 – incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Registrant dated November 14, 2016 and filed on November 15, 2016. | ||
10.17 | Back-to-Back Loan Agreement between the registrant, as Borrower, and NLKW Holding, LLC, as Lender, dated as of November 14, 2016 – incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Registrant dated November 14, 2016 and filed on November 15, 2016. | ||
10.17.1 | First Amendment to Back-to-Back Loan Agreement between NL Industries, Inc., as Borrower, and NLKW Holding, LLC, as Lender, dated as of November 9, 2022 – incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Registrant dated November 9, 2022. | ||
10.18 | Back-to-Back Pledge and Security Agreement made by and between the registrant in favor of Valhi, Inc., dated as of November 14, 2016 – incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of the Registrant dated November 14, 2016 and filed on November 15, 2016. | ||
10.19 | Indenture, dated as of February 12, 2024, among Kronos International, Inc., the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee, collateral agent, paying agent, transfer agent and registrar – incorporated by reference to Exhibit 4.2 to Kronos Worldwide Inc.’s Current Report on Form 8-K filed on February 12, 2024. | ||
10.19.1 | First Supplemental Indenture dated as of July 30, 2024, by and among Kronos International, Inc., the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee, collateral agent, paying agent, transfer agent and registrar – incorporated by reference to Exhibit 10.1 to Kronos Worldwide, Inc.’s Current Report on Form 8-K filed on July 30, 2024. | ||
10.19.2 | Second Supplemental Indenture dated as of August 8, 2024, among Louisiana Pigment Company, L.P. and Kronos LPC, LLC (as new guarantors under the Indenture dated as of February 12, 2024, as amended), Kronos International, Inc., and Deutsche Bank Trust Company Americas, as trustee, collateral agent, paying agent, transfer agent and registrar – incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. | ||
10.19.3 | Third Supplement Indenture dated as of September 15, 2025, by and among Kronos International, Inc., the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee, collateral agent, paying agent, transfer agent and registrar – incorporated by reference to Exhibit 10.1 to Kronos Worldwide Inc.’s Current Report on Form 8-K filed on September 15, 2025. | ||
10.20 | Pledge Agreement, dated as of September 13, 2017, among Kronos International, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as collateral agent – incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Kronos Worldwide, Inc. dated September 13, 2017 and filed on September 13, 2017. | ||
10.20.1 | Additional Notes Priority Joinder Agreement dated February 12, 2024, executed by Deutsche Bank Trust Company Americas, as trustee and collateral agent for the holders of Kronos International, Inc.’s 9.50% Senior Secured Notes due 2029 and as existing agent under the Pledge Agreement dated September 13, 2017 entered into in connection with Kronos International Inc.’s 3.75% Senior Secured Notes due 2025 – incorporated by reference to Exhibit 4.4 to Kronos Worldwide Inc.’s Current Report on Form 8-K filed on February 12, 2024. | ||
10.20.2 | Additional Notes Priority Joinder Agreement dated July 30, 2024, executed by Deutsche Bank Trust Company Americas, as trustee and collateral agent. – incorporated by reference to Exhibit 10.2 to Kronos Worldwide, Inc.’s Current Report on Form 8-K filed July 30, 2024. | ||
-64-
Item No. | | Exhibit Index | |
|---|---|---|---|
10.20.3 | Pledge Amendment dated as of August 8, 2024, to the Pledge Agreement dated as of September 13, 2017, executed by Kronos Louisiana, Inc. and Kronos LPC, LLC regarding additional pledged securities – incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on form 10-Q for the quarter ended September 30, 2024. | ||
10.20.4 | Additional Notes Priority Joinder Agreement dated September 15, 2025, executed by Deutsche Bank Trust Company Americas, as trustee and collateral agent – incorporated by reference to Exhibit 10.2 to Kronos Worldwide, Inc.’s Current Report on Form 8-K filed on September 15, 2025. | ||
10.21 | Credit Agreement dated as of April 20, 2021 by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH and Wells Fargo Bank, National Association as administrative agent and lender – incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. | ||
10.21.1 | First Amendment to Credit Agreement dated May 8, 2023, among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmgH, Wells Fargo Bank, National Association, as administrative agent, and the lenders a party thereto – incorporated by reference to Exhibit 10.1 of Kronos Worldwide, Inc.’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on May 9, 2023. | ||
10.21.2 | Second Amendment to Credit Agreement dated July 17, 2024 among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH, Wells Fargo Bank, National Association as administrative agent and the lenders a party thereto – incorporated by reference to Exhibit 10.2 to Kronos Worldwide, Inc.’s Current Report on Form 8-K filed July 17, 2024. | ||
10.21.3 | Third Amendment to Credit Agreement dated December 19, 2024 among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH, Wells Fargo Bank, National Association, as administrative agent, and the lenders a party thereto – incorporated by reference to Exhibit 10.1 to Kronos Worldwide’s Current Report on Form 8-K filed on December 19, 2024. | ||
10.21.4 | Fourth Amendment to Credit Agreement dated July 17, 2025 among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH, Wells Fargo Bank, National Association, as administrative agent, and the lenders a party thereto – incorporated by reference to Exhibit 10.1 to Kronos Worldwide Inc.’s Current Report on Form 8-K filed on July 17, 2025. | ||
10.21.5 | Fifth Amendment to Credit Agreement dated December 2, 2025 among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH, Wells Fargo Bank, National Association, as administrative agent, and the lenders a party thereto – incorporated by reference to Exhibit 10.11.5 to Kronos Worldwide Inc.’s Annual Report on Form 10K for the year ended December 31, 2025 filed on March 9, 2026. | ||
10.22 | Guaranty and Security Agreement dated as of April 20, 2021, by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos International, Inc. and Wells Fargo Bank, National Association as administrative agent and lender – incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. | ||
-65-
Item No. | | Exhibit Index | |
|---|---|---|---|
10.22.1 | First Amendment to Guaranty and Security Agreement, entered into as of July 17, 2024, by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos International, Inc. and Wells Fargo Bank, National Association as administrative agent and lender, amending Guaranty and Security Agreement dated as of April 20, 2021 – incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on form 10-Q for the quarter ended September 30, 2024. | ||
10.22.2 | Joinder No. 1 dated as of August 7, 2024, joining Louisiana Pigment Company, L.P. and Kronos LPC, LLC to the Guaranty and Security Agreement dated as of April 20, 2021, as amended – incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on form 10-Q for the quarter ended September 30, 2024. | ||
10.23 | Unsecured Subordinated Term Promissory Note dated February 12, 2024 in the principal amount of $53,705,000 executed by Kronos Worldwide, Inc. and the guarantors named therein and payable to the order of Contran Corporation – incorporated by reference to Exhibit 4.5 to Kronos Worldwide Inc.’s Current Report on Form 8-K filed on February 12, 2024. | ||
10.23.1 | First Amendment to Unsecured Subordinated Term Promissory Note dated February 12, 2024, executed by Kronos Worldwide, Inc. and Contran Corporation as of August 7, 2024 – incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. | ||
10.24 | Purchase and Sale Agreement dated July 16, 2024 by and between Kronos Louisiana, Inc., Kronos Worldwide, Inc., Venator Investments, Ltd. and Venator Materials PLC – incorporated by reference to Exhibit 10.1 to Kronos Worldwide, Inc.’s Current Report on Form 8-K filed July 17, 2024. | ||
10.24.1 | Amendment to Purchase and Sale Agreement dated August 13, 2024, by and between Kronos Louisiana, Inc., Kronos Worldwide, Inc., Venator Investments, Ltd., Venator Materials PLC. and Louisiana Pigment Company, L.P, amending Purchase Agreement dated as of July 16, 2024 – incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on form 10-Q for the quarter ended September 30, 2024. | ||
10.25 | Consent Decree effective February 10, 2025, among NL Industries, Inc., the United States of America (on behalf of several agencies – incorporated by reference to Exhibit 10.26 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 6, 2025) and certain other plaintiff parties and defendant parties, relating to the Raritan Bay Slag Superfund Site. | ||
| NL Industries, Inc. Insider Trading Policy – incorporated by reference to Exhibit 19.1 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 6, 2025. | ||
21.1 ** |
| Subsidiaries of the Registrant | |
23.1 ** |
| Consent of PricewaterhouseCoopers LLP with respect to NL’s consolidated financial statements. | |
23.2 ** |
| Consent of PricewaterhouseCoopers LLP with respect to Kronos’ consolidated financial statements. | |
31.1 ** |
| Certification | |
31.2 ** |
| Certification | |
32.1 ** | Certification | ||
97* | Policy for the Recovery of Erroneously Awarded Compensation – incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023. | ||
-66-
Item No. | | Exhibit Index | |
|---|---|---|---|
99.1 | Consolidated Financial Statements of Kronos Worldwide, Inc. – incorporated by reference to Kronos’ Annual Report on Form 10-K for the year ended December 31, 2025. | ||
101.INS** |
| Inline XBRL Instance – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH** |
| Inline XBRL Taxonomy Extension Schema | |
101.CAL** |
| Inline XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF** |
| Inline XBRL Taxonomy Extension Definition Linkbase | |
101.LAB** |
| Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE** |
| Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 |
| Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
* | Management contract, compensatory plan or arrangement. |
** | Filed herewith |
(P)Paper exhibits
-67-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NL Industries, Inc. | ||
(Registrant) | ||
By: | /s/Courtney J. Riley | |
Courtney J. Riley, March 9, 2026 | ||
(President and Chief Executive Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
/s/ Loretta J. Feehan | | /s/ John E. Harper |
Loretta J. Feehan, March 9, 2026 | | John E. Harper, March 9, 2026 |
(Chair of the Board (non-executive)) | | (Director) |
/s/ Michael S. Simmons | | /s/ Meredith W. Mendes |
Michael S. Simmons, March 9, 2026 | | Meredith W. Mendes, March 9, 2026 |
(Vice Chairman and Director) | | (Director) |
/s/ Amy Allbach Samford | /s/ Kevin B. Kramer | |
Amy Allbach Samford, March 9, 2026 | Kevin B. Kramer, March 9, 2026 | |
(Executive Vice President and Chief Financial Officer, | (Director) | |
/s/ Amy E. Ruf | | /s/ Cecil H. Moore, Jr. |
Amy E. Ruf, March 9, 2026 | | Cecil H. Moore, Jr., March 9, 2026 |
(Vice President and Controller, Principal Accounting Officer) | | (Director) |
/s/ R. Gerald Turner | ||
R. Gerald Turner, March 9, 2026 | ||
(Director) | ||
-68-
NL INDUSTRIES, INC.
Annual Report on Form 10-K
Items 8, 15(a) and 15(c)
Index of Financial Statements
Financial Statements | | Page |
|---|---|---|
Report of Independent Registered Public Accounting Firm (PCAOB ID | F-2 | |
Consolidated Balance Sheets – December 31, 2024 and 2025 | F-4 | |
Consolidated Statements of Operations – Years ended December 31, 2023, 2024 and 2025 | F-6 | |
Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2023, 2024 and 2025 | F-7 | |
Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2023, 2024 and 2025 | F-8 | |
Consolidated Statements of Cash Flows – Years ended December 31, 2023, 2024 and 2025 | F-9 | |
Notes to Consolidated Financial Statements | F-11 |
All financial statement schedules have been omitted either because they are not applicable or required, or the information that would be required to be included is disclosed in the Notes to the Consolidated Financial Statements.
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of NL Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of NL Industries, Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition
As described in Note 1 to the consolidated financial statements, the Company’s net sales were $158.3 million for the year ended December 31, 2025. The Company’s sales involve single performance obligations to ship products pursuant to customer purchase orders. The Company records revenue when performance
F-2
obligations are satisfied by transferring control of products to its customers, which generally occurs at point of shipment or upon delivery. Revenue is recorded in an amount that reflects the net consideration the Company expects to receive in exchange for its products.
The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others, testing revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as purchase orders, invoices, proof of shipment, and cash receipts.
/s/
March 9, 2026
We have served as the Company’s auditor since 1924.
F-3
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, | ||||||
| 2024 | | 2025 | |||
ASSETS | ||||||
Current assets: |
| |
| | ||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash and cash equivalents |
| |
| | ||
Accounts and other receivables, net |
| |
| | ||
Inventories, net |
| |
| | ||
Prepaid expenses and other |
| |
| | ||
Total current assets |
| |
| | ||
Other assets: |
| |
| | ||
Restricted cash and cash equivalents |
| |
| | ||
Note receivable from affiliate |
| |
| | ||
Marketable securities |
| |
| | ||
Investment in Kronos Worldwide, Inc. |
| |
| | ||
Goodwill |
| |
| | ||
Other assets, net |
| |
| | ||
Total other assets |
| |
| | ||
Property and equipment: |
| |
| |||
Land |
| |
| | ||
Buildings |
| |
| | ||
Equipment |
| |
| | ||
Construction in progress |
| |
| | ||
| |
| | |||
Less accumulated depreciation |
| |
| | ||
Net property and equipment |
| |
| | ||
Total assets | $ | | $ | | ||
F-4
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except per share data)
December 31, | ||||||
| 2024 | | 2025 | |||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued litigation settlement |
| |
| — | ||
Accrued and other current liabilities |
| |
| | ||
Accrued environmental remediation and related costs |
| |
| | ||
Payables to affiliates |
| |
| | ||
Total current liabilities |
| |
| | ||
Noncurrent liabilities: | ||||||
Long-term debt from affiliate |
| |
| | ||
Accrued environmental remediation and related costs |
| |
| | ||
Deferred income taxes |
| |
| | ||
Other |
| |
| | ||
Total noncurrent liabilities |
| |
| | ||
Equity: | ||||||
NL stockholders' equity: | ||||||
Preferred stock, | ||||||
Common stock; $ |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Retained earnings |
| |
| | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total NL stockholders' equity |
| |
| | ||
Noncontrolling interest in subsidiary |
| |
| | ||
Total equity |
| |
| | ||
Total liabilities and equity | $ | | $ | | ||
Commitments and contingencies (Notes 14 and 17)
See accompanying Notes to Consolidated Financial Statements.
F-5
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
Net sales | $ | | $ | | $ | | |||
Cost of sales |
| |
| |
| | |||
Gross margin |
| |
| |
| | |||
Selling, general and administrative expense |
| |
| |
| | |||
Other operating income (expense): | |||||||||
Insurance recoveries | | | — | ||||||
Corporate income (expense), net |
| ( |
| |
| ( | |||
Income from operations |
| |
| |
| | |||
Equity in earnings (losses) of Kronos Worldwide, Inc. |
| ( |
| |
| ( | |||
Other income (expense): |
| |
| |
| | |||
Interest and dividend income |
| |
| |
| | |||
Marketable equity securities |
| ( |
| |
| ( | |||
Settlement loss on pension plan termination and buy-out | ( | — | ( | ||||||
Other components of net periodic pension and OPEB cost |
| ( |
| ( |
| ( | |||
Interest expense |
| ( |
| ( |
| ( | |||
Income (loss) before income taxes |
| ( |
| |
| ( | |||
Income tax expense (benefit) |
| ( |
| |
| ( | |||
Net income (loss) |
| |
| |
| ( | |||
Noncontrolling interest in net income of subsidiary |
| |
| |
| | |||
Net income (loss) attributable to NL stockholders | $ | ( | $ | | $ | ( | |||
Amounts attributable to NL stockholders: |
| |
| |
| | |||
Basic and diluted net income (loss) per share | $ | ( | $ | | $ | ( | |||
Weighted average shares used in the calculation of |
| |
| |
| | |||
See accompanying Notes to Consolidated Financial Statements.
F-6
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
Net income (loss) | $ | | $ | | $ | ( | |||
Other comprehensive income (loss), net of tax: |
|
|
| ||||||
Currency translation |
| |
| ( |
| | |||
Defined benefit pension plans |
| |
| |
| | |||
Marketable debt securities | | | — | ||||||
Other postretirement benefit plans |
| ( |
| ( |
| | |||
Total other comprehensive income (loss), net |
| |
| ( |
| | |||
Comprehensive income (loss) |
| |
| |
| ( | |||
Comprehensive income attributable to noncontrolling interest |
| |
| |
| | |||
Comprehensive income (loss) attributable to NL stockholders | $ | | $ | | $ | ( | |||
See accompanying Notes to Consolidated Financial Statements.
F-7
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31, 2023, 2024 and 2025
(In thousands)
| | Accumulated | | | ||||||||||||||
Additional | other | Noncontrolling | ||||||||||||||||
Common | paid-in | Retained | comprehensive | interest in | Total | |||||||||||||
| stock | | capital | | earnings | | loss | | subsidiary | | equity | |||||||
Balance at December 31, 2022 | $ | | $ | | $ | | $ | ( | $ | | $ | | ||||||
Net income (loss) |
| — |
| — |
| ( |
| — |
| |
| | ||||||
Other comprehensive income, |
| — |
| — |
| — |
| |
| |
| | ||||||
Issuance of NL common stock |
| |
| |
| — |
| — |
| — |
| | ||||||
Dividends paid - $ |
| — |
| — |
| ( |
| — |
| — |
| ( | ||||||
Dividends paid to noncontrolling |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Other, net |
| — |
| |
| — |
| — |
| — |
| | ||||||
Balance at December 31, 2023 |
| |
| |
| |
| ( |
| |
| | ||||||
Net income |
| — |
| — |
| |
| — |
| |
| | ||||||
Other comprehensive loss, |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Issuance of NL common stock |
| |
| |
| — |
| — |
| — |
| | ||||||
Dividends paid - $ |
| — |
| — |
| ( |
| — |
| — |
| ( | ||||||
Dividends paid to noncontrolling |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Other, net |
| — |
| |
| — |
| — |
| |
| | ||||||
Balance at December 31, 2024 |
| |
| |
| |
| ( |
| |
| | ||||||
Net income (loss) |
| — |
| — |
| ( |
| — | |
| ( | |||||||
Other comprehensive income, |
| — |
| — |
| — |
| |
| — |
| | ||||||
Issuance of NL common stock |
| |
| |
| — |
| — |
| — |
| | ||||||
Dividends paid - $ |
| — |
| — |
| ( |
| — |
| — |
| ( | ||||||
Dividends paid to noncontrolling |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Other, net |
| — |
| |
| — |
| — |
| |
| | ||||||
Balance at December 31, 2025 | $ | | $ | | $ | | $ | ( | $ | | $ | | ||||||
See accompanying Notes to Consolidated Financial Statements.
F-8
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Years ended December 31, | ||||||||
| 2023 | | 2024 | | 2025 | ||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | | $ | | $ | ( | |||
Depreciation and amortization |
| |
| |
| | |||
Deferred income taxes |
| ( |
| |
| ( | |||
Equity in (earnings) losses of Kronos Worldwide, Inc. |
| |
| ( |
| | |||
Dividends received from Kronos Worldwide, Inc. |
| |
| |
| | |||
Marketable equity securities (gain) loss |
| |
| ( |
| | |||
Settlement loss on pension plan termination and buy-out |
| |
| — |
| | |||
Benefit plan expense greater than cash funding | | | | ||||||
Noncash interest income | ( | ( | — | ||||||
Noncash interest expense |
| |
| |
| | |||
Other, net |
| |
| |
| | |||
Change in assets and liabilities: |
|
|
| ||||||
Accounts and other receivables, net |
| |
| ( |
| | |||
Inventories, net |
| |
| |
| ( | |||
Prepaid expenses and other |
| |
| |
| | |||
Accounts payable and accrued liabilities |
| ( |
| ( |
| ( | |||
Accounts with affiliates |
| |
| |
| | |||
Accrued environmental remediation and related costs |
| ( |
| ( |
| ( | |||
Other noncurrent assets and liabilities, net |
| ( |
| ( |
| | |||
Net cash provided by (used in) operating activities |
| |
| |
| ( | |||
Cash flows from investing activities: |
| |
| |
| | |||
Capital expenditures |
| ( |
| ( |
| ( | |||
Marketable securities: | |||||||||
Purchases | ( | — | — | ||||||
Proceeds from maturities | | | — | ||||||
Note receivable from affiliate: |
|
|
| ||||||
Collections |
| |
| |
| | |||
Loans |
| ( |
| ( |
| ( | |||
Proceeds from land sale |
| — |
| |
| — | |||
Other, net |
| — |
| — |
| | |||
Net cash provided by (used in) investing activities |
| |
| |
| ( | |||
Cash flows from financing activities: |
| |
| |
| | |||
Dividends paid |
| ( |
| ( |
| ( | |||
Dividends paid to noncontrolling interests in subsidiary |
| ( |
| ( |
| ( | |||
Net cash used in financing activities |
| ( |
| ( |
| ( | |||
F-9
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
Cash and cash equivalents and restricted cash and cash | |||||||||
Operating, investing and financing activities | $ | | $ | | $ | ( | |||
Balance at beginning of year |
| |
| |
| | |||
Balance at end of year | $ | | $ | | $ | | |||
Supplemental disclosures: |
| |
| |
| | |||
Cash paid (received) for: | |||||||||
Interest | $ | | $ | | $ | | |||
Income taxes, net |
| ( |
| |
| | |||
Noncash investing activities - | |||||||||
Change in accruals for capital expenditures | | | ( | ||||||
See accompanying Notes to Consolidated Financial Statements.
F-10
NL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
Note 1 – Summary of significant accounting policies:
Nature of our business – NL Industries, Inc. (NYSE: NL) is primarily a holding company. We operate in the component products industry through our majority-owned subsidiary, CompX International Inc. (NYSE American: CIX). We operate in the chemicals industry through our noncontrolling interest in Kronos Worldwide, Inc. (NYSE: KRO).
Organization – At December 31, 2025, Valhi, Inc. (NYSE: VHI) held approximately
Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to NL Industries, Inc. and its subsidiaries and affiliate, Kronos, taken as a whole.
Management’s estimates – In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), we are required to make estimates and assumptions that affect the reported amounts of our assets and liabilities and disclosures of contingent assets and liabilities at each balance sheet date and the reported amounts of our revenues and expenses during each reporting period. Actual results may differ significantly from previously-estimated amounts under different assumptions or conditions.
Principles of consolidation – Our Consolidated Financial Statements include the financial position, results of operations and cash flows of NL and our wholly-owned and majority-owned subsidiaries, including CompX. We account for the
Currency translation – The financial statements of Kronos’ non-U.S. subsidiaries are translated to U.S. dollars. The functional currency of Kronos’ non-U.S. subsidiaries is generally the local currency of their country. Accordingly, Kronos translates the assets and liabilities at year-end rates of exchange, while it translates its revenues and expenses at average exchange rates prevailing during the year. We accumulate the resulting translation adjustments in stockholders’ equity as part of accumulated other comprehensive loss, net of related deferred income taxes. Kronos recognizes currency transaction gains and losses in income which is reflected as part of our equity in earnings (losses) of Kronos.
Cash and cash equivalents – We classify bank time deposits and highly liquid investments, including government and commercial notes and bills, with original maturities of three months or less as cash equivalents.
Restricted cash and cash equivalents – We classify cash equivalents that have been segregated or are otherwise limited in use as restricted. Such restrictions include cash pledged as collateral with respect to performance obligations or letters of credit required by regulatory agencies for certain environmental remediation sites and cash pledged as collateral with respect to certain workers compensation liabilities or legal settlements. To the extent the restricted amount relates to
F-11
a recognized liability, we classify such restricted amount as either a current or noncurrent asset to correspond with the classification of the liability. To the extent the restricted amount does not relate to a recognized liability, we classify restricted cash as a current asset. Restricted cash equivalents classified as a current asset or a noncurrent asset are presented separately on our Consolidated Balance Sheets.
Marketable securities and securities transactions – We carry marketable securities at fair value. Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, establishes a consistent framework for measuring fair value and (with certain exceptions) this framework is generally applied to all financial statement items required to be measured at fair value. The standard requires fair value measurements to be classified and disclosed in one of the following three categories:
| ● | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
| ● | Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the assets or liability; and |
| ● | Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. |
We classify all of our marketable securities as available-for-sale. We recognize unrealized gains or losses on the marketable equity securities in Marketable equity securities on our Consolidated Statements of Operations. We base realized gains and losses upon the specific identification of the securities sold. See Note 5.
Accounts receivable – We provide an allowance for doubtful accounts for known and estimated potential losses arising from sales to customers based on a periodic review of these accounts. See Note 3.
Inventories and cost of sales – We state inventories at the lower of cost or net realizable value. We record a provision for obsolete and slow-moving inventories. We generally base inventory costs for all inventory categories on average cost that approximates the first-in, first-out method. Inventories include the costs for raw materials, the cost to manufacture the raw materials into finished goods and overhead. Depending on the inventory’s stage of completion, our manufacturing costs can include the costs of packing and finishing, utilities, maintenance and depreciation, shipping and handling, and salaries and benefits associated with our manufacturing process. We allocate fixed manufacturing overhead costs based on normal production capacity. Unallocated overhead costs resulting from periods with abnormally low production levels are charged to expense as incurred. As inventory is sold to third parties, we recognize the cost of sales in the same period that the sale occurs. We periodically review our inventory for estimated obsolescence or instances when inventory is no longer marketable for its intended use and we record any write-down equal to the difference between the cost of inventory and its estimated net realizable value based on assumptions about alternative uses, market conditions and other factors. See Note 4.
Investment in Kronos Worldwide, Inc. – We account for our
Goodwill – Goodwill represents the excess of cost over fair value of individual net assets acquired in business combinations. Goodwill is not subject to periodic amortization. We evaluate goodwill for impairment annually, or when circumstances indicate the carrying value may not be recoverable. See Note 7.
Leases – We enter into various arrangements (or leases) that convey the rights to use and control identified underlying assets for a period of time in exchange for consideration. We lease various facilities and equipment. From time to time, we may also enter into an arrangement in which the right to use and control an identified underlying asset is embedded in another type of contract. We determine if an arrangement is a lease (including leases embedded in another
F-12
type of contract) at inception. All of our leases are classified as operating leases under ASC Topic 842 Leases. Operating leases are not material.
Property and equipment; depreciation expense – We state property and equipment, including purchased computer software for internal use, at cost. We compute depreciation of property and equipment for financial reporting purposes principally by the straight-line method over the estimated useful lives of
We perform impairment tests when events or changes in circumstances indicate the carrying value may not be recoverable. We consider all relevant factors. We perform impairment tests by comparing the estimated future undiscounted cash flows associated with the asset to the asset’s net carrying value to determine whether impairment exists.
Employee benefit plans – Accounting and funding policies for our defined benefit pension and defined contribution retirement plans are described in Note 11. We also provide certain postretirement benefits other than pensions (“OPEB”), consisting of health care and life insurance benefits, to certain U.S. retired employees, which are not material. See Note 12.
Income taxes – We, Valhi and our qualifying subsidiaries are members of Contran’s consolidated U.S. federal income tax group (the “Contran Tax Group”) and we and certain of our qualifying subsidiaries also file consolidated unitary state income tax returns with Contran in qualifying U.S. jurisdictions. As a member of the Contran Tax Group, we are jointly and severally liable for the federal income tax liability of Contran and the other companies included in the Contran Tax Group for all periods in which we are included in the Contran Tax Group. See Note 16. As a member of the Contran Tax Group, we are party to a tax sharing agreement with Valhi and Contran which provides that we compute our provision for income taxes on a separate-company basis using the tax elections made by Contran. Pursuant to our tax sharing agreement, we make payments to or receive payments from Valhi in amounts that we would have paid to or received from the U.S. Internal Revenue Service or the applicable state tax authority had we not been a member of the Contran Tax Group. We received net refunds from Valhi of $
We recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the income tax and financial reporting carrying amounts of assets and liabilities, including investments in our subsidiaries and affiliates who are not members of the Contran Tax Group and undistributed earnings of non-U.S. subsidiaries which are not deemed to be permanently reinvested. In addition, we recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid recognition of such deferred income taxes is not available to us. Deferred income tax assets and liabilities for each tax-paying jurisdiction in which we operate are netted and presented as either a noncurrent deferred income tax asset or liability, as applicable. We periodically evaluate our deferred tax assets in the various taxing jurisdictions in which we operate and adjust any related valuation allowance based on the estimate of the amount of such deferred tax assets that we believe does not meet the more-likely-than-not recognition criteria.
We account for the tax effects of a change in tax law as a component of the income tax provision related to continuing operations in the period of enactment, including the tax effects of any deferred income taxes originally established through a financial statement component other than continuing operations (i.e. other comprehensive income (loss). Changes in applicable income tax rates over time as a result of changes in tax law, or times in which a deferred income tax asset valuation allowance is initially recognized in one year and subsequently reversed in a later year, can give rise to “stranded” tax effects in accumulated other comprehensive income in which the net accumulated income tax expense (benefit) remaining in accumulated other comprehensive income does not correspond to the then-applicable income tax rate applied to the pre-tax amount which resides in accumulated other comprehensive income (loss). As
F-13
permitted by GAAP, our accounting policy is to remove any such stranded tax effect remaining in accumulated other comprehensive income, by recognizing an offset to our provision for income taxes related to continuing operations, only at the time when there is no remaining pre-tax amount in accumulated other comprehensive income. For accumulated other comprehensive income related to currency translation, this would occur only upon the sale or complete liquidation of one of our non-U.S. subsidiaries. For defined pension benefit plans and OPEB plans, this would occur whenever one of our subsidiaries which previously sponsored a defined benefit pension or OPEB plan had terminated such a plan and had no future obligation or plan asset associated with such a plan (such as in 2023 when we terminated our U.K. pension plan and in 2025 when we terminated our U.S. pension plan).
We record a reserve for uncertain tax positions (“UTPs”) for tax positions where we believe it is more-likely-than-not our position will not prevail with the applicable tax authorities. The amount of the benefit associated with our UTPs that we recognize is limited to the largest amount for which we believe the likelihood of realization is greater than
Environmental remediation costs – We record liabilities related to environmental remediation obligations when estimated future expenditures are probable and reasonably estimable. We adjust these accruals as further information becomes available to us or as circumstances change. We generally do not discount estimated future expenditures to present value. We recognize any recoveries of remediation costs from other parties when we deem their receipt probable. We expense any environmental remediation related legal costs as incurred. See Note 17.
Net sales – Our sales involve single performance obligations to ship our products pursuant to customer purchase orders. In some cases, the purchase order is supported by an underlying master sales agreement, but our purchase order verification notice generally evidences the contract with our customer by specifying the key terms of product and quantity ordered, price and delivery and payment terms. In accordance with ASC Topic 606, Revenue from Contracts with Customers, we record revenue when we satisfy our performance obligations to our customers by transferring control of our products to them, which generally occurs at point of shipment or upon delivery. Such transfer of control is also evidenced by transfer of legal title and other risks and rewards of ownership (giving the customer the ability to direct the use of, and obtain substantially all of the benefits of, the product), and our customers becoming obligated to pay us and it is probable we will receive payment. In certain arrangements we provide shipping and handling activities after the transfer of control to our customer (e.g., when control transfers prior to delivery). In such arrangements shipping and handling are considered fulfillment activities, and accordingly, such costs are accrued when the related revenue is recognized.
Revenue is recorded in an amount that reflects the net consideration we expect to receive in exchange for our products. Prices for our products are based on terms specified in published list prices and purchase orders, which generally do not include financing components, noncash consideration or consideration paid to our customers. As our standard payment terms are less than one year, we have elected the practical expedient under ASC 606 and we have not assessed whether a contract has a significant financing component. We state sales net of price, early payment and distributor discounts as well as volume rebates (collectively, variable consideration). Variable consideration, to the extent present, is not material and is recognized as the amount to which we are most-likely to be entitled, using all information (historical, current and forecasted) that is reasonably available to us, and only to the extent that a significant reversal in the amount of the cumulative revenue recognized is not probable of occurring in a future period. Differences, if any, between estimates of the amount of variable consideration to which we will be entitled and the actual amount of such variable consideration have not been material in the past. We occasionally receive partial or full consideration from our customers prior to the completion of our performance obligation (shipment of product). We record estimated deferred revenue on the amount to which we are most likely to be entitled and deferred revenue is recognized into revenue as our performance obligation has been satisfied. Deferred revenue has not been material in the past. We report any tax assessed by a governmental authority that we collect from our customers that is both imposed on and concurrent with our revenue-producing activities (such as sales, use, value added and excise taxes) on a net basis (meaning we do not recognize these taxes either in our revenues or in our costs and expenses).
F-14
Frequently, we receive orders for products to be delivered over dates that may extend across reporting periods. We invoice for each delivery upon shipment and recognize revenue for each distinct shipment when all sales recognition criteria for that shipment have been satisfied. As scheduled delivery dates for these orders are within a one year period, under the optional exemption provided by ASC 606, we do not disclose sales allocated to future shipments of partially completed contracts.
Selling, general and administrative expenses; advertising costs; research and development costs – Selling, general and administrative expenses include costs related to marketing, sales, distribution, research and development, and administrative functions such as accounting, treasury and finance, as well as costs for salaries and benefits, travel and entertainment, promotional materials and professional fees. We expense advertising costs and research and development costs as incurred. Advertising costs were approximately $
Corporate expenses – Corporate expenses include environmental, legal and other costs attributable to formerly-owned business units.
Note 2 – Business, segment and geographic information:
We have
Our chief operating decision maker (“CODM”) is our Vice Chairman of the Board. Our CODM is responsible for determining how to allocate resources and assessing performance. The CODM evaluates segment performance based on net income and segment profit (a non-GAAP measure), which we define as gross margin less selling, general and administrative expenses directly attributable to CompX. The CODM considers current-period segment profit compared to plan and prior-period on a monthly and/or quarterly basis for evaluating segment performance and making decisions about allocating capital and other resources. The accounting policies of the reportable operating segment are the same as those described in Note 1.
Differences between segment profit and the amounts included in net income are included in the table below. Asset information is not regularly provided to the CODM and therefore is not considered to be used by the CODM in making key operating decisions, allocating resources or assessing segment performance. Depreciation and amortization amounts included in the calculation of segment profit all relate to CompX and were $
F-15
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Net sales | $ | | $ | | $ | | |||
Segment profit | $ | | $ | | $ | | |||
Insurance recoveries |
| |
| |
| — | |||
Corporate income (expenses), net | ( | | ( | ||||||
Equity in earnings (losses) of Kronos Worldwide, Inc. | ( | | ( | ||||||
Interest and dividend income | | | | ||||||
Marketable equity securities gain (loss) | ( | | ( | ||||||
Settlement loss on pension plan termination and buy-out | ( | — | ( | ||||||
Other components of net periodic pension and OPEB cost | ( | ( | ( | ||||||
Interest expense | ( | ( | ( | ||||||
Income tax (expense) benefit | | ( | | ||||||
Net income (loss) | $ | | $ | | $ | ( | |||
See the Consolidated Financial Statements for other financial information regarding the Company’s operating segment.
For geographic information, the point of origin (place of manufacture) for all net sales is the U.S., the point of destination for net sales is based on the location of the customer.
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Net sales - point of destination: | |||||||||
United States | $ | | $ | | $ | | |||
Canada |
| |
| |
| | |||
Mexico |
| |
| |
| | |||
Other |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
Note 3 – Accounts and other receivables, net:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Trade receivables - CompX | $ | | $ | | ||
Other receivables |
| |
| | ||
Allowance for doubtful accounts |
| ( |
| ( | ||
Total | $ | | $ | | ||
Other receivables are discussed in Note 17.
F-16
Note 4 – Inventories, net:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Raw materials | $ | | $ | | ||
Work in process |
| |
| | ||
Finished products |
| |
| | ||
Total | $ | | $ | | ||
Note 5 – Marketable securities:
Our noncurrent marketable securities consist of investments in the publicly-traded shares of our immediate parent company Valhi, Inc. Our shares of Valhi common stock are accounted for as available-for-sale securities, which are carried at fair value using quoted market prices in active markets and represent a Level 1 input within the fair value hierarchy.
Fair value | |||||||||||
measurement | Market | Cost | Unrealized | ||||||||
| level | | value | | basis | | gain (loss) | ||||
(In thousands) | |||||||||||
December 31, 2024 | |||||||||||
Noncurrent assets | |||||||||||
Valhi common stock |
| 1 | $ | $ | $ | | |||||
December 31, 2025 | |||||||||||
Noncurrent assets | |||||||||||
Valhi common stock |
| 1 | $ | | $ | | $ | ( | |||
At December 31, 2024 and 2025, we held approximately
The Valhi common stock we own is subject to the restrictions on resale pursuant to certain provisions of the SEC Rule 144. In addition, as a majority-owned subsidiary of Valhi we cannot vote our shares of Valhi common stock under Delaware General Corporation Law, but we do receive dividends from Valhi on these shares, when declared and paid.
F-17
Note 6 – Investment in Kronos Worldwide, Inc.:
At December 31, 2024 and 2025, we owned approximately
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In millions) | |||||||||
Balance at the beginning of the period | $ | | $ | | $ | | |||
Equity in earnings (losses) of Kronos |
| ( |
| |
| ( | |||
Dividends received from Kronos |
| ( |
| ( |
| ( | |||
Equity in Kronos' other comprehensive income (loss): | |||||||||
Currency translation | |
| ( |
| | ||||
Defined benefit pension plans | ( |
| |
| | ||||
Other postretirement benefit plans | ( | — | | ||||||
Other | |
| — |
| — | ||||
Balance at the end of the period | $ | | $ | | $ | | |||
Selected financial information of Kronos is summarized below:
December 31, | ||||||
| 2024 | | 2025 | |||
(In millions) | ||||||
Current assets | $ | | $ | | ||
Property and equipment, net |
| |
| | ||
Other noncurrent assets |
| |
| | ||
Total assets | $ | | $ | | ||
Current liabilities | $ | | $ | | ||
Long-term debt |
| |
| | ||
Accrued pension costs |
| |
| | ||
Other noncurrent liabilities |
| |
| | ||
Stockholders’ equity |
| |
| | ||
Total liabilities and stockholders’ equity | $ | | $ | | ||
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In millions) | |||||||||
Net sales | $ | | $ | | $ | | |||
Cost of sales |
| |
| |
| | |||
Income (loss) from operations |
| ( |
| |
| ( | |||
Income tax expense (benefit) |
| ( |
| |
| | |||
Net income (loss) |
| ( |
| |
| ( | |||
Effective July 16, 2024 (“Acquisition Date”), Kronos acquired the
F-18
acquisition is remeasured at fair value at each reporting date. The estimated fair value of the earn-out as of December 31, 2024 was $
Note 7 – Goodwill:
All of our goodwill is related to our component products operations and was generated from CompX’s acquisitions of certain business units. There have been
We assign goodwill based on the reporting unit (as that term is defined in ASC Topic 350-20-20 Goodwill) which corresponds to CompX’s security products operations. We test for goodwill impairment at the reporting unit level. In accordance with ASC 350-20-35, we test for goodwill impairment during the third quarter of each year or when circumstances arise that indicate an impairment might be present.
In 2023, 2024 and 2025, our goodwill was tested for impairment only in the third quarter of each year in connection with our annual testing.
Note 8 – Other assets, net:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Pension asset | $ | | $ | — | ||
Other |
| |
| | ||
Total | $ | | $ | | ||
Note 9 – Accrued and other current liabilities:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Employee benefits | $ | | $ | | ||
Other |
| |
| | ||
Total | $ | | $ | | ||
Note 10 – Long-term debt:
In November 2016, we entered into a financing transaction with Valhi. Previously, and in contemplation of the financing transaction described herein, we formed NLKW Holding, LLC (“NLKW”) and capitalized it with
F-19
The financing transaction consisted of two steps. Under the first step, NLKW entered into a $
Contemporaneously with the entering into the Valhi Credit Facility, NLKW entered into a $
Prior to 2023, NLKW and Valhi entered into a first amendment to the Valhi Credit Facility to extend the latest maturity date (and consequently the latest borrowing date) under the Valhi Credit Facility from December 31, 2023 to December 31, 2030; and NLKW and NL entered into a first amendment to the Back-to-Back Credit Facility to extend the latest maturity date (and consequently the latest borrowing date) under the Back-to-Back Credit Facility from December 31, 2023 to December 31, 2030. The related collateral arrangements remained unchanged by these amendments.
We had outstanding borrowings under the Valhi Credit Facility of $
Note 11 – Employee benefit plans:
Defined contribution plans – We maintain various defined contribution pension plans. Company contributions are based on matching or other formulas. Defined contribution plan expense approximated $
Defined benefit pension plans – We maintain a defined benefit pension plan in the U.S. As a result of the spin-off of Kronos in 2003, Kronos participated in our pension plan. Using participant data, we accounted for our portion of
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the combined pension plan as if it were a separate pension plan from the portion in which Kronos participated. The benefits under our defined benefit pension plan were based upon years of service and employee compensation. The plan was closed to new participants, and no additional benefits accrued to existing plan participants.
As a result of the LPC acquisition in July 2024 (see Note 6), Kronos acquired the LPC defined benefit pension plan, which was overfunded on the Acquisition Date. Effective December 31, 2024, the LPC defined benefit pension plan was merged into our combined U.S. pension plan. See Note 16. Because we account for our portion of the combined pension plan separately, the plan merger did not impact our Consolidated Financial Statements. The benefits under our defined benefit pension plan were based upon years of service and employee compensation. The plan was closed to new participants, and no additional benefits accrue to existing plan participants.
In accordance with applicable U.S. pension regulations, effective June 30, 2025, we began the process of terminating the pension plan, which includes the purchase of annuity contracts from third-party insurance companies for the purpose of paying benefits to plan participants. The annuity contracts were purchased on December 16, 2025, from “A” rated third-party insurance companies in settlement of all remaining obligations to the pension plan participants. The annuity purchase was funded with existing plan assets. In connection with the settlement, we recognized a non-cash settlement loss on pension plan termination and buy-out of approximately $
We previously maintained a defined benefit pension plan in the U.K. related to a former disposed U.K. business unit. In accordance with applicable U.K. pension regulations, we entered into an agreement in March 2021 for the bulk annuity purchase, or “buy-in”, with a specialist insurer of defined benefit pension plans. Following the buy-in, individual policies replaced the bulk annuity policy in a “buy-out” which was completed as of May 1, 2023. The buy-out was completed with existing plan funds. At the completion of the buy-out, the assets and liabilities of the U.K. pension plan were removed from our Consolidated Financial Statements and a non-cash pension plan termination loss of $
F-21
The funded status of our defined benefit pension plans is presented in the table below.
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Change in projected benefit obligations ("PBO"): | ||||||
Benefit obligations at beginning of the year | $ | | $ | | ||
Interest cost |
| |
| | ||
Plan settlement | — | ( | ||||
Actuarial (gains) losses |
| ( |
| | ||
Benefits paid |
| ( |
| ( | ||
Benefit obligations at end of the year |
| |
| | ||
Change in plan assets: |
| |
| | ||
Fair value of plan assets at beginning of the year |
| |
| | ||
Actual return on plan assets |
| |
| | ||
Employer contributions |
| |
| | ||
Plan settlement | — | ( | ||||
Benefits paid |
| ( |
| ( | ||
Other | — | | ||||
Fair value of plan assets at end of year |
| |
| — | ||
Funded status | $ | | $ | ( | ||
Amounts recognized in the balance sheet: |
| |
| | ||
Noncurrent pension asset | $ | | $ | — | ||
Accrued pension costs: |
|
| ||||
Current |
| ( |
| ( | ||
Noncurrent |
| ( |
| ( | ||
Total |
| |
| ( | ||
Accumulated other comprehensive loss - actuarial losses, net |
| |
| — | ||
Total | $ | | $ | ( | ||
Accumulated benefit obligations ("ABO") | $ | | $ | | ||
The amounts shown in the table above for actuarial (gains) losses at December 31, 2024 have not been recognized as components of our periodic defined benefit pension cost as of that date. Actuarial gains (losses) are recognized as components of our periodic defined benefit cost in future years. Because we terminated our remaining U.S. pension plan, all remaining actuarial losses were recognized in the fourth quarter of 2025.
We were not required, and therefore did not make, any contributions to our U.S. plan in 2025 but as a result of the allocated asset shortfall we will be required to fund an additional approximate $
F-22
The table below details the changes in other comprehensive income (loss) during 2023, 2024 and 2025.
| Years ended December 31, | ||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Changes in plan assets and benefit obligations recognized in | |||||||||
Net actuarial gain (loss) arising during the year | $ | ( | $ | | $ | ( | |||
Pension plan settlement loss | | — | | ||||||
Amortization of unrecognized net actuarial gain |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
The components of our net periodic defined benefit pension cost are presented in the table below. The amounts shown below for recognized actuarial losses in 2023, 2024 and 2025, net of deferred income taxes, were recognized as a component of our accumulated other comprehensive loss at December 31, 2022, 2023 and 2024, respectively, and through the pension plan settlement loss in 2025.
Years ended December 31, | ||||||||||
| 2023 | | 2024 | 2025 | ||||||
(In thousands) | ||||||||||
Net periodic pension cost: | ||||||||||
$ | | $ | | $ | | |||||
| ( |
| ( |
| ( | |||||
| — | | ||||||||
| | | ||||||||
Total | $ | | $ | | $ | | ||||
Certain information concerning our defined benefit pension plans (including information concerning certain plans for which ABO exceeds the fair value of plan assets as of the indicated date) is presented in the table below.
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Plans for which the ABO exceeds plan assets: | ||||||
PBO | $ | | $ | | ||
ABO |
| |
| | ||
Fair value of plan assets |
| — |
| — | ||
The weighted-average discount rate assumptions used in determining the actuarial present value of our benefit obligations as of December 31, 2024 was
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The weighted-average rate assumptions used in determining the net periodic pension cost for 2023, 2024 and 2025 are presented in the table below. Such weighted-average discount rates were determined using the projected benefit obligations as of the beginning of each year and the weighted-average long-term return on plan assets was determined using the fair value of plan assets as of the beginning of each year.
Years ended December 31, | |||||||
Rate | | 2023 | | 2024 | | 2025 |
|
Discount rate |
| | % | | % | | % |
Long-term rate of return on plan assets |
| | % | | % | — | % |
Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods.
In determining the expected long-term rate of return on our U.S. and our previously maintained non-U.S. plan asset assumptions, we consider the long-term asset mix (e.g., equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we receive third-party advice about appropriate long-term rates of return. As a result of the annuity purchase in December 2025, we did not have any plan assets at December 31, 2025.
The composition of our pension plan assets by fair value level at December 31, 2024 is shown in the table below.
Fair Value Measurements | |||||||||||||||
Quoted prices | Significant other | Significant | |||||||||||||
in active | observable | unobservable | Assets measured | ||||||||||||
| Total | | markets (Level 1) | | inputs (Level 2) | | inputs (Level 3) | | at NAV | ||||||
(In thousands) | |||||||||||||||
December 31, 2024: |
| |
| |
| |
| |
| | |||||
U.S.: |
| |
| |
| |
| |
| | |||||
Equities | $ | | $ | — | $ | — | $ | — | $ | | |||||
Fixed income |
| | — | — | — | | |||||||||
Cash and other |
| | | — | | | |||||||||
Total | $ | | $ | | $ | — | $ | | $ | | |||||
Note 12 – Other noncurrent liabilities:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Reserve for uncertain tax positions | $ | | $ | — | ||
OPEB |
| |
| | ||
Insurance claims and expenses |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | | ||
Our reserve for uncertain tax positions is discussed in Note 14.
F-24
Note 13 – Revenue recognition:
The following table disaggregates our net sales by reporting unit, which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (as required by ASC 606).
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Net sales: | |||||||||
Security Products | $ | | $ | | $ | | |||
Marine Components |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
Note 14 – Income taxes:
The provision for income taxes and the difference between the provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate are presented below. All of our pre-tax income relates to operations in the United States.
Years ended December 31, | ||||||||||||||||||
| 2023 | | 2024 | 2025 | ||||||||||||||
(In thousands) | ||||||||||||||||||
Amount | Percent | Amount |
| Percent | Amount |
| Percent | |||||||||||
U.S. federal statutory tax rate | $ | ( | | % | $ | |
| | % | $ | ( |
| | % | ||||
Nontaxable dividends received from Kronos | ( | | ( | ( | ( | | ||||||||||||
Other adjustments: | ||||||||||||||||||
Reclass for pension termination | ( | | — | — | ( | | ||||||||||||
Other | | ( | | | | ( | ||||||||||||
Income tax expense (benefit) | $ | ( | | % | $ | | | % | $ | ( | | % | ||||||
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Components of income tax expense (benefit): |
| |
| |
| | |||
Current income tax expense | |||||||||
U.S. federal | $ | | $ | | $ | | |||
State |
| |
| |
| | |||
| | | |||||||
Deferred income taxes (benefit) |
|
|
| ||||||
U.S. federal | ( | | ( | ||||||
State | ( | ( | ( | ||||||
( | | ( | |||||||
Income tax expense (benefit) | $ | ( | $ | | $ | ( | |||
Comprehensive provision (benefit) for income taxes allocable to: |
| |
| |
| | |||
Net income (loss) | $ | ( | $ | | $ | ( | |||
Other comprehensive income (loss): |
|
|
| ||||||
Currency translation |
| |
| ( |
| | |||
Defined benefit pension plans |
| ( |
| |
| | |||
Other |
| ( |
| ( |
| | |||
Comprehensive income tax expense (benefit) | $ | ( | $ | | $ | ( | |||
F-25
In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings (losses) 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. We received aggregate dividends from Kronos of $
The components of the net deferred tax liability at December 31, 2024 and 2025 are summarized in the following table.
December 31, | ||||||||||||
2024 | 2025 | |||||||||||
| Assets | | Liabilities | | Assets | | Liabilities | |||||
(In thousands) | ||||||||||||
Tax effect of temporary differences related to: | ||||||||||||
Marketable securities | $ | — | $ | ( | $ | — | $ | ( | ||||
Goodwill |
| — |
| ( |
| — |
| ( | ||||
Accrued environmental liabilities |
| |
| — |
| |
| — | ||||
Other accrued liabilities and deductible differences |
| |
| — |
| |
| — | ||||
Other taxable differences |
| — |
| ( |
| — |
| ( | ||||
Investment in Kronos Worldwide, Inc. |
| — |
| ( |
| — |
| ( | ||||
Tax loss carryforwards | — | — | | — | ||||||||
Adjusted gross deferred tax assets (liabilities) |
| |
| ( |
| |
| ( | ||||
Netting of items by tax jurisdiction |
| ( |
| |
| ( |
| | ||||
Net noncurrent deferred tax liability | $ | — | $ | ( | $ | — | $ | ( | ||||
At December 31, 2025, we have a deferred tax asset relating to our NOL carryforwards for federal income tax purposes of $
At December 31, 2023, 2024 and 2025, the gross amount of our UTPs (exclusive of the effect of interest and penalties) was $
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA, among other provisions, provides for bonus depreciation of qualified property, permanently modifies the interest expense deduction to use an adjusted taxable income based on a calculation similar to EBITDA, and makes changes to international tax provisions including Foreign-Derived Intangible Income (“FDII”) (renamed Foreign-derived Deduction Eligible Income (FDDEI)). The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact on our 2025 consolidated financial statements, and we are in the process of evaluating the impact to future years as additional provisions take effect.
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We and Contran file income tax returns in U.S. federal and various state and local jurisdictions. Our U.S. income tax returns prior to 2022 are generally considered closed to examination by applicable tax authorities.
Note 15- Stockholders’ equity:
Long-term incentive compensation plan – Prior to 2023, our board of directors adopted a plan that provided for the award of stock to our board of directors, and up to a maximum of
Long-term incentive compensation plans of subsidiaries and affiliates – CompX and Kronos each have a share-based incentive compensation plan pursuant to which an aggregate of up to
Dividends – Our board of directors approved and we paid quarterly dividends per share to stockholders of $
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Accumulated other comprehensive loss – Changes in accumulated other comprehensive loss attributable to NL stockholders, including amounts resulting from our investment in Kronos Worldwide (see Note 6), are presented in the table below.
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
Accumulated other comprehensive loss, net of tax: | |||||||||
Currency translation: | |||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income (loss) |
| |
| ( |
| | |||
Balance at end of period | $ | ( | $ | ( | $ | ( | |||
Defined benefit pension plans: | |||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income (loss): | |||||||||
Amortization of prior service cost and net losses included in |
| |
| |
| | |||
Net actuarial gain (loss) arising during the year |
| ( |
| |
| | |||
Plan settlement |
| |
| |
| | |||
Balance at end of period | $ | ( | $ | ( | $ | ( | |||
OPEB plans: | |||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income (loss): | |||||||||
Amortization of net gain included in net periodic |
| ( |
| ( |
| ( | |||
Net actuarial gain arising during the year | |
| | | |||||
Balance at end of period | $ | ( | $ | ( | $ | ( | |||
Marketable debt securities: | |||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | — | |||
Other comprehensive income - unrealized gain |
| |
| |
| — | |||
Balance at end of period | $ | ( | $ | — | $ | — | |||
Total accumulated other comprehensive loss: | |||||||||
Balance at beginning of period | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income (loss) |
| |
| ( |
| | |||
Balance at end of period | $ | ( | $ | ( | $ | ( | |||
See Note 11 for amounts related to our defined benefit pension plans.
Note 16 – Related party transactions:
We may be deemed to be controlled by Ms. Simmons and the Family Trust. See Note 1. Corporations that may be deemed to be controlled by or affiliated with such individuals sometimes engage in (a) intercorporate transactions such as guarantees, management and expense sharing arrangements, shared fee arrangements, joint ventures, partnerships, loans, options, advances of funds on open account, and sales, leases and exchanges of assets, including securities issued by both related and unrelated parties and (b) common investment and acquisition strategies, business combinations, reorganizations, recapitalizations, securities repurchases, and purchases and sales (and other acquisitions and dispositions)
F-28
of subsidiaries, divisions or other business units, which transactions have involved both related and unrelated parties and have included transactions which resulted in the acquisition by one related party of a publicly-held noncontrolling interest in another related party. While no transactions of the type described above are planned or proposed with respect to us other than as set forth in these financial statements, we continuously consider, review and evaluate, and understand that Contran and related entities consider, review and evaluate such transactions. Depending upon the business, tax and other objectives then relevant, it is possible that we might be a party to one or more such transactions in the future. While we do not consolidate our equity method investment in Kronos in our Consolidated Financial Statements, because we share a common parent company we do consolidate Kronos’ related party transactions with both CompX and our transactions for purposes of this footnote.
Current payables to affiliates are summarized in the table below:
December 31, | ||||||
| 2024 | | 2025 | |||
(In thousands) | ||||||
Current payables to affiliates: | ||||||
Other payables to affiliates | $ | | $ | | ||
Income taxes payable to Valhi | | | ||||
$ | | $ | | |||
From time to time, we may have loans and advances outstanding between us and various related parties, pursuant to term and demand notes. We generally enter into these loans and advances for cash management purposes. When we loan funds to related parties, we are generally able to earn a higher rate of return on the loan than the lender would earn if the funds were invested in other instruments and when we borrow from related parties, we are generally able to pay a lower rate of interest than we would pay if we borrowed from unrelated parties. While certain of such loans may be of a lesser credit quality than cash equivalent instruments otherwise available to us, we believe that we have evaluated the credit risks involved and reflected those credit risks in the terms of the applicable loans. NLKW had borrowings outstanding of $
Under the terms of various intercorporate services agreements (ISAs) we enter into with Contran, employees of Contran will provide certain management, tax planning, financial and administrative services to the Company on a fee basis. Such fees are based on the compensation of individual Contran employees providing services for us and/or estimates of time devoted to our affairs by such persons. Because of the number of companies affiliated with Contran, we believe we benefit from cost savings and economies of scale gained by not having certain management, financial and administrative staffs duplicated at each entity, thus allowing certain Contran employees to provide services to multiple companies but only be compensated by Contran. We, CompX and Kronos negotiate fees annually and agreements renew quarterly. The net ISA fees charged to us by Contran, (including amounts attributable to Kronos for all periods) aggregated approximately $
Contran and certain of its subsidiaries and affiliates, including us, purchase certain of their insurance policies and risk management services as a group, with the costs of the jointly-owned policies and services being apportioned among the participating companies. Tall Pines Insurance Company, a subsidiary of Valhi, underwrites certain insurance policies for Contran and certain of its subsidiaries and affiliates, including us. Tall Pines purchases reinsurance from highly rated
F-29
(as determined by A.M. Best or other internationally recognized ratings agency) third-party insurance carriers for substantially all of the risks it underwrites. Consistent with insurance industry practices, Tall Pines receives commissions from the reinsurance underwriters and/or assesses fees for certain of the policies that it underwrites. During 2023, 2024 and 2025 we paid $
With respect to certain of such jointly-owned policies, it is possible that unusually large losses incurred by one or more insured party during a given policy period could leave the other participating companies without adequate coverage under that policy for the balance of the policy period. As a result, and in the event that the available coverage under a particular policy would become exhausted by one or more claims, Contran and certain of its subsidiaries and affiliates, including us, have entered into a loss sharing agreement under which any uninsured loss arising because the available coverage had been exhausted by one or more claims will be shared ratably by those entities that had submitted claims under the relevant policy. We believe the benefits in the form of reduced premiums and broader coverage associated with the group coverage for such policies justifies the risk associated with the potential for any uninsured loss.
Contran and certain of its subsidiaries, including us, participate in a combined information technology data services program that Contran provides for primary data processing and failover. The program apportions its costs among the participating companies. The aggregate amount Kronos paid to Contran for such services was $
We are a party to a tax sharing agreement with Contran and Valhi providing for the allocation of tax liabilities and tax payments as described in Note 1. Under applicable law, we, as well as every other member of the Contran Tax Group, are each jointly and severally liable for the aggregate federal income tax liability of Contran and the other companies included in the Contran Tax Group for all periods in which we are included in the Contran Tax Group. Valhi has agreed, however, to indemnify us for any liability for income taxes of the Contran Tax Group in excess of our tax liability computed in accordance with the tax sharing agreement.
Effective December 31, 2024, the LPC defined benefit pension plan was merged into our U.S. combined defined benefit pension plan. Under the terms of the merger, each of us and Kronos are contractually obligated to bear our respective share of the merged plan costs, including any funding obligations, and we and Kronos each continue to account for our respective portions of the merged plan as if it were a separate employee benefit plan. Upon the termination of the merged plan, Kronos is entitled to all funding surplus attributable to its participants in the plan. In February 2025, our board of directors approved the termination of the merged plan, with an effective date of June 30, 2025. As a result of the U.S. plan termination, a plan deficit of approximately $
Note 17 – Commitments and contingencies:
Lead pigment litigation
Our former operations included the manufacture of lead pigments for use in paint and lead-based paint. We, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have previously been named as defendants in various legal proceedings seeking damages for personal injury, property damage
F-30
and governmental expenditures allegedly caused by the use of lead-based paints. Certain of these actions were filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others were asserted as class actions. We currently have no pending lead paint class action cases or pending lead paint cases brought by housing authorities, school districts or other government entities.
In the matter titled County of Santa Clara v. Atlantic Richfield Company, et al. (Superior Court of the State of California, County of Santa Clara, Case No. 1-00-CV-788657)
Under the terms of the global settlement agreement, each defendant paid an aggregate $
New cases may continue to be filed against us. We do not know if we will incur liability in the future in respect of any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings. In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against us or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against us as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable. The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.
Environmental matters and litigation
Our operations are governed by various environmental laws and regulations. Certain of our businesses are and have been engaged in the handling, manufacture or use of substances or compounds that may be considered toxic or hazardous within the meaning of applicable environmental laws and regulations. As with other companies engaged in similar businesses, certain of our past and current operations and products have the potential to cause environmental or other damage. We have implemented and continue to implement various policies and programs in an effort to minimize these risks. Our policy is to maintain compliance with applicable environmental laws and regulations at all of our plants and to strive to improve environmental performance. From time to time, we may be subject to environmental regulatory enforcement under U.S. statutes, the resolution of which typically involves the establishment of compliance programs. It is possible that future developments, such as stricter requirements of environmental laws and enforcement policies, could adversely affect our production, handling, use, storage, transportation, sale or disposal of such substances. We believe all of our facilities are in substantial compliance with applicable environmental laws.
F-31
Certain properties and facilities used in our former operations, including divested primary and secondary lead smelters and former mining locations, are the subject of civil litigation, administrative proceedings or investigations arising under federal and state environmental laws and common law. Additionally, in connection with past operating practices, we are currently involved as a defendant, potentially responsible party (PRP) or both, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (CERCLA), and similar state laws in various governmental and private actions associated with waste disposal sites, mining locations, and facilities that we or our predecessors, our subsidiaries or their predecessors currently or previously owned, operated or used, certain of which are on the United States Environmental Protection Agency’s (EPA) Superfund National Priorities List or similar state lists. These proceedings seek cleanup costs, damages for personal injury or property damage and/or damages for injury to natural resources. Certain of these proceedings involve claims for substantial amounts. Although we may be jointly and severally liable for these costs, in most cases we are only one of a number of PRPs who may also be jointly and severally liable, and among whom costs may be shared or allocated. In addition, we are occasionally named as a party in a number of personal injury lawsuits filed in various jurisdictions alleging claims related to environmental conditions alleged to have resulted from our operations.
Obligations associated with environmental remediation and related matters are difficult to assess and estimate for numerous reasons including the:
| ● | complexity and differing interpretations of governmental regulations, |
| ● | number of PRPs and their ability or willingness to fund such allocation of costs, |
| ● | financial capabilities of the PRPs and the allocation of costs among them, |
| ● | solvency of other PRPs, |
| ● | multiplicity of possible solutions, |
| ● | number of years of investigatory, remedial and monitoring activity required, |
| ● | uncertainty over the extent, if any, to which our former operations might have contributed to the conditions allegedly giving rise to such personal injury, property damage, natural resource and related claims, and |
| ● | number of years between former operations and notice of claims and lack of information and documents about the former operations. |
In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. Actual costs could exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and costs may be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our Consolidated Financial Statements, results of operations and liquidity.
We record liabilities related to environmental remediation and related matters (including costs associated with damages for personal injury or property damage and/or damages for injury to natural resources) when estimated future expenditures are probable and reasonably estimable. We adjust such accruals as further information becomes available to us or as circumstances change. Unless the amounts and timing of such estimated future expenditures are fixed and reasonably determinable, we generally do not discount estimated future expenditures to their present value due to the uncertainty of the timing of the payout. We recognize recoveries of costs from other parties, if any, as assets when their receipt is deemed probable.
We do not know and cannot estimate the exact time frame over which we will make payments for our accrued environmental and related costs. The timing of payments depends upon a number of factors, including but not limited to
F-32
the timing of the actual remediation process; which in turn depends on factors outside of our control. At each balance sheet date, we estimate the amount of our accrued environmental and related costs which we expect to pay within the next twelve months, and we classify this estimate as a current liability. We classify the remaining accrued environmental costs as a noncurrent liability.
The table below presents a summary of the activity in our accrued environmental costs during the past three years. The amount charged to expense is included in corporate expense on our Consolidated Statements of Operations.
Years ended December 31, | |||||||||
| 2023 | | 2024 | | 2025 | ||||
(In thousands) | |||||||||
$ | | $ | | $ | | ||||
Additions (deductions), net |
| |
| ( |
| | |||
Payments, net |
| ( |
| ( |
| ( | |||
Balance at the end of the period | $ | | $ | | $ | | |||
Amounts recognized in the balance sheet: | |||||||||
Current liability | $ | | $ | | $ | | |||
Noncurrent liability | | | | ||||||
Balance at the end of the period | $ | | $ | | $ | | |||
On a quarterly basis, we evaluate the potential range of our liability for environmental remediation and related costs at sites where we have been named as a PRP or defendant, including sites for which our wholly-owned environmental management subsidiary, NL Environmental Management Services, Inc. (EMS), has contractually assumed our obligations. At December 31, 2025, we had accrued approximately $
In February 2025, the United States District Court for the District of New Jersey entered an order approving a consent decree relating to the Raritan Bay Slag Superfund Site (“RBS Site”) in Middlesex County, New Jersey. The consent decree required the United States Army Corps of Engineers (and other federal agencies), the State of New Jersey, the Township of Old Bridge, NL, and twenty-two other private companies to pay a total of $
Under the terms of the consent decree, in the first quarter of 2025 we paid $
We believe it is not reasonably possible to estimate the range of costs for certain sites. At December 31, 2025, there were approximately
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sites, generally the investigation is in the early stages, and we are unable to determine whether or not we actually had any association with the site, the nature of our responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of our control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, we have received general and special notices of liability from the EPA and/or state agencies alleging that we, sometimes with other PRPs, are liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that we, along with any other alleged PRPs, are liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our Consolidated Financial Statements, results of operations and liquidity.
Insurance coverage claims
We are involved in certain legal proceedings with a number of our former insurance carriers regarding the nature and extent of the carriers’ obligations to us under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for our lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available.
We have agreements with certain of our former insurance carriers pursuant to which the carriers reimburse us for a portion of our future lead pigment litigation defense costs, and one such carrier reimburses us for a portion of our future asbestos litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. While we continue to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery. In this regard we received $
Other litigation
In addition to the litigation described above, we and our affiliates are also involved in various other environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to present and former businesses. In certain cases, we have insurance coverage for these items, although we do not expect additional material insurance coverage for environmental matters. We currently believe the disposition of all of these various other claims and disputes (including asbestos-related claims), individually and in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals already provided.
Concentrations of credit risk
Component products are sold primarily in North America to original equipment manufacturers. The ten largest customers related to our Component Products operations accounted for approximately
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Note 18 – Financial instruments:
See Note 5 for information on how we determine fair value of our marketable securities.
The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2024 and 2025:
December 31, 2024 | December 31, 2025 | |||||||||||
Carrying | Fair | Carrying | Fair | |||||||||
| amount | | value | | amount | | value | |||||
(In thousands) | ||||||||||||
Cash, cash equivalents and restricted cash | $ | | $ | | $ | | $ | | ||||
Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value.
Note 19 – Recent accounting pronouncements:
Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures. The ASU requires additional annual disclosure and disaggregation for the rate reconciliation, income taxes paid and income tax expense by federal, state and non-U.S. tax jurisdictions. In addition, the standard increases the disclosure requirements for items included in the rate reconciliation that meet a quantitative threshold. We adopted the ASU during the year ended December 31, 2025 on a retrospective basis. See Note 14.
Pending Adoption
In November 2024, the FASB issued ASU No. 2024-03, Reporting Comprehensive Income – Expense Disaggregation Disclosures. The ASU requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. The ASU is effective for us beginning with our 2027 Annual Report, and for interim reporting, in the first quarter of 2028, with early adoption permitted. We are in the process of evaluating the additional disclosure requirements.
F-35
FAQ
What are the main businesses owned by NL (NYSE: NL)?
How significant is Kronos Worldwide to NL Industries’ results?
What customer concentration risks does CompX International present to NL (NYSE: NL)?
How is NL Industries exposed to raw material and energy cost volatility?
What was NL Industries’ public float and share count in 2025–2026?
What legal and environmental risks does NL Industries face from legacy operations?
How did acquiring the remaining LPC interest affect Kronos and NL?
