NL Industries, Inc. Financial Performance - NL Industries reported a net income attributable to stockholders of $36.0 million, or $0.74 per share, in Q3 2024, compared to a net loss of $0.1 million, or nil per share, in Q3 2023 [1] - For the first nine months of 2024, net income attributable to NL stockholders was $50.7 million, or $1.04 per share, compared to a net loss of $9.9 million, or $0.20 per share, in the same period of 2023 [1] - The results included an unrealized gain of $18.6 million in Q3 2024 related to marketable equity securities, compared to $0.4 million in Q3 2023 [1] CompX Financial Performance - CompX's net sales were $33.6 million in Q3 2024, down from $40.3 million in Q3 2023, and $107.5 million for the first nine months of 2024, compared to $118.1 million in the same prior year period [2] - Income from operations attributable to CompX was $3.3 million in Q3 2024, down from $6.6 million in Q3 2023, and $12.1 million for the first nine months of 2024, compared to $18.0 million in the same period of 2023 [2] Kronos Financial Performance - Kronos recognized equity in earnings of $21.9 million in Q3 2024, compared to losses of $6.2 million in Q3 2023, and $30.4 million in the first nine months of 2024, compared to losses of $13.4 million in the same period of 2023 [3] - Kronos' net sales were $484.7 million in Q3 2024, an increase of $87.8 million, or 22%, compared to Q3 2023, and $1.5 billion for the first nine months of 2024, up $197.6 million, or 16%, from the same period in 2023 [5] - TiO2 sales volumes were 21% higher in Q3 2024 and 26% higher in the first nine months of 2024 compared to the same periods in 2023 [5] Acquisition Impact - Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (LPC) on July 16, 2024, which is now a wholly-owned subsidiary [4] - The acquisition resulted in a non-cash gain of $64.5 million associated with the remeasurement of its investment in LPC [4] Production and Cost Efficiency - Kronos' income from operations in Q3 2024 was $38.9 million, compared to a loss of $25.3 million in Q3 2023, and $94.3 million for the first nine months of 2024, compared to a loss of $50.3 million in the same period of 2023 [6] - Production volumes for TiO2 were 37% higher in Q3 2024 and 35% higher in the first nine months of 2024 compared to the same periods in 2023 [6] - Kronos achieved a capacity utilization rate of 93% in the first nine months of 2024, compared to 71% in the same period of 2023 [6] Corporate Expenses and Other Income - Corporate expenses decreased by $0.9 million in Q3 2024 compared to Q3 2023, primarily due to lower litigation and environmental remediation costs [7] - Interest and dividend income increased in Q3 2024 and for the first nine months of 2024 compared to the same periods in 2023, driven by higher average interest rates and investment balances [7]

Core Viewpoint - NL Industries, Inc. has declared a quarterly dividend of $0.08 per share, reflecting the company's ongoing commitment to returning value to shareholders [1] Company Summary - The dividend is payable on December 17, 2024, to shareholders of record as of November 29, 2024 [1] - NL Industries, Inc. operates in the component products sector, specifically in security products and recreational marine components, as well as in the chemicals sector focusing on TiO2 [1]

Financial Performance - NL Industries reported net income attributable to stockholders of $7.9 million, or $0.16 per share, in Q2 2024, compared to a net loss of $3.1 million, or $0.06 per share, in Q2 2023[1]. - For the first six months of 2024, NL Industries reported net income of $14.7 million, or $0.30 per share, compared to a net loss of $9.8 million, or $0.20 per share, in the same period of 2023[1]. - CompX reported net sales of $35.9 million in Q2 2024, a slight decrease from $36.6 million in Q2 2023[2]. - Net sales for the three months ended June 30, 2024, were $35.9 million, a decrease of 4.0% compared to $36.6 million for the same period in 2023[10]. - The company reported a loss of $2.6 million for the three months ended June 30, 2024, compared to a profit of $8.5 million in the same period of 2023[10]. Sales and Operations - Kronos' net sales reached $500.5 million in Q2 2024, a 13% increase from $443.2 million in Q2 2023[3]. - Kronos' TiO2 sales volumes were 29% higher in Q2 2024 compared to Q2 2023, and 28% higher in the first six months of 2024 compared to the same period in 2023[3]. - Kronos' income from operations in Q2 2024 was $35.9 million, compared to a loss of $6.7 million in Q2 2023[4]. - Kronos' production volumes increased by 54% in Q2 2024 compared to Q2 2023, with capacity utilization reaching 99% in Q2 2024[4]. - Total net sales increased by 13% for both the three and six months ended June 30, 2024, compared to the same periods in 2023[12]. - TiO2 sales volume increased by 29% for the three months ended June 30, 2024, compared to the same period in 2023[12]. Expenses and Costs - Corporate expenses increased by $1.3 million in Q2 2024 primarily due to higher environmental remediation costs[5]. - Selling, general, and administrative expenses for the six months ended June 30, 2024, were $12.0 million, up from $11.6 million in the same period of 2023[10]. - Gross margin for the six months ended June 30, 2024, was 20.8%, down from 23.0% in the same period of 2023[10]. Earnings and Losses - Net income attributable to NL stockholders for the three months ended June 30, 2024, was a loss of $3.1 million, compared to a profit of $7.9 million in the same period of 2023[10]. - Equity in earnings (losses) of Kronos Worldwide, Inc. was a loss of $2.6 million for the three months ended June 30, 2024, compared to earnings of $6.0 million in the same period of 2023[10]. - Interest and dividend income for the three months ended June 30, 2024, was $2.1 million, down from $2.6 million in the same period of 2023[10].

Dallas, Texas, Aug. 07, 2024 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) today announced that its board of directors has declared a special cash dividend of forty-three cents ($0.43) per share and a quarterly dividend of eight cents ($0.08) per share, in each case on its common stock. The special dividend, which is being funded from excess cash flows, is payable on August 29, 2024 to shareholders of record at the close of business on August 19, 2024. The quarterly dividend of $.08 per share is payabl ...

Core Points - NL Industries, Inc. has declared a special cash dividend of $0.43 per share and a quarterly dividend of $0.08 per share [1] - The special dividend will be funded from excess cash flows and is payable on August 29, 2024, to shareholders of record as of August 19, 2024 [1] - The quarterly dividend is payable on September 24, 2024, to shareholders of record as of September 6, 2024 [1] Company Overview - NL Industries, Inc. operates in the component products sector, including security products and recreational marine components, as well as in the chemicals sector, specifically TiO2 [2]

Dallas, Texas, Aug. 07, 2024 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) today reported net income attributable to NL stockholders of $7.9 million, or $.16 per share, in the second quarter of 2024 compared to a net loss attributable to NL stockholders of $3.1 million, or $.06 per share, in the second quarter of 2023. NL results include an unrealized gain of $.8 million in the second quarter of 2024 related to the change in value of marketable equity securities compared to an unrealized loss of $5.4 m ...

Dallas, Texas, May 16, 2024 (GLOBE NEWSWIRE) -- NL Industries, Inc. (NYSE: NL) announced that its board of directors has declared a quarterly dividend of eight cents ($0.08) per share on its common stock, payable on June 25, 2024 to shareholders of record at the close of business on June 10, 2024. NL Industries also announced that at its 2024 annual shareholder meeting held today its shareholders had: elected each of Loretta J. Feehan, John E. Harper, Kevin B. Kramer, Meredith W. Mendes, Cecil H. Moore, Jr. ...

[First Quarter 2024 Financial Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) This section highlights NL Industries' financial performance in Q1 2024, noting a significant turnaround from a net loss to net income [NL Industries Overall Performance](index=1&type=section&id=NL%20Industries%20Overall%20Performance) NL Industries reported a significant turnaround in Q1 2024, moving from a net loss to net income attributable to stockholders, primarily driven by an unrealized gain on marketable equity securities NL Industries Key Financial Metrics | Metric (in $M, except per share amounts) | Q1 2024 | Q1 2023 | | :-------------------------------------- | :------ | :------ | | Net income (loss) attributable to NL stockholders | $6.8M | -$6.7M | | Net income (loss) per share attributable to NL stockholders | $0.14 | -$0.14 | | Unrealized gain (loss) on marketable equity securities | $2.4M | -$5.5M | [Segment Performance Analysis](index=1&type=section&id=Segment%20Performance%20Analysis) This section analyzes the performance of CompX and Kronos segments, highlighting sales trends, operational income, and key contributing factors [CompX Segment Results](index=1&type=section&id=CompX%20Segment%20Results) CompX experienced a decrease in net sales and income from operations in Q1 2024, mainly due to lower Marine Components sales, despite some offset from higher Security Products sales CompX Segment Financials | Metric (in $M) | Q1 2024 | Q1 2023 | Change | | :-------------------------- | :------ | :------ | :----- | | Net Sales | $38.0M | $41.2M | -$3.2M | | Income from Operations | $3.7M | $7.0M | -$3.3M | - Decrease in net sales primarily due to lower Marine Components sales to the towboat market, partially offset by higher Security Products sales to the government security market[3](index=3&type=chunk) - Decrease in income from operations predominantly due to lower Marine Components sales and gross margin[3](index=3&type=chunk) [Kronos Segment Results](index=1&type=section&id=Kronos%20Segment%20Results) Kronos segment results show significant improvements in net sales and operational income, driven by increased TiO2 sales volumes and lower production costs [Kronos Net Sales Drivers](index=1&type=section&id=Kronos%20Net%20Sales%20Drivers) Kronos' net sales increased by **12%** in Q1 2024, primarily due to a **28%** rise in TiO2 sales volumes driven by strengthening demand, which more than offset an **11%** decline in average TiO2 selling prices. Favorable currency exchange rates also contributed Kronos Net Sales Performance | Metric (in $M) | Q1 2024 | Q1 2023 | Change | | :---------------- | :------ | :------ | :----- | | Net Sales | $478.8M | $426.3M | +$52.5M | | Equity in Earnings (Losses) | $2.5M | -$4.6M | +$7.1M | Kronos Net Sales Change Breakdown | Factor | Percentage Change in Net Sales (Q1 2024 vs. Q1 2023) | | :-------------------------- | :------------------------------------------------ | | TiO2 sales volume | 28% | | TiO2 product pricing | (11)% | | Product mix/other TiO2 | (6)% | | Changes in currency exchange rates | 1% | | **Total** | **12%** | - Average TiO2 selling prices were **11%** lower in Q1 2024 compared to Q1 2023, and declined **2%** during Q1 2024[4](index=4&type=chunk) [Kronos Operational Performance](index=1&type=section&id=Kronos%20Operational%20Performance) Kronos' income from operations significantly improved to **$19.5 million** in Q1 2024 from a loss of **$18.3 million** in Q1 2023, driven by higher sales and production volumes, lower production costs (energy, raw materials), and increased capacity utilization Kronos Operational Metrics | Metric (in $M) | Q1 2024 | Q1 2023 | Change | | :----------------------- | :------ | :------ | :----- | | Income (Loss) from Operations | $19.5M | -$18.3M | +$37.8M | - TiO2 production volumes were **15%** higher in Q1 2024 compared to Q1 2023[5](index=5&type=chunk) - Capacity utilization increased from **76%** in Q1 2023 to **87%** in Q1 2024 due to improved demand and a more favorable production cost environment[5](index=5&type=chunk) [Other Financial and Operational Details](index=1&type=section&id=Other%20Financial%20and%20Operational%20Details) This section details corporate expenses, interest and dividend income, and specific income/loss adjustments impacting NL Industries' financial results [Corporate Expenses and Other Income](index=1&type=section&id=Corporate%20Expenses%20and%20Other%20Income) Corporate expenses decreased in Q1 2024 due to lower litigation fees, partially offset by higher environmental remediation costs. Interest and dividend income increased due to higher interest rates and investment balances - Corporate expenses decreased by **$0.4 million** in Q1 2024, primarily due to lower litigation fees and related costs, somewhat offset by higher environmental remediation and related costs[6](index=6&type=chunk) - Interest and dividend income increased by **$0.6 million** in Q1 2024, primarily due to higher average interest rates and increased investment balances[6](index=6&type=chunk) [Specific Income/Loss Adjustments](index=1&type=section&id=Specific%20Income%2FLoss%20Adjustments) NL Industries' Q1 2024 net income included a loss of **$0.3 million** from Kronos' write-off of deferred financing costs, contrasting with Q1 2023 which included income from Kronos' insurance settlement gain - Q1 2024 net income attributable to NL stockholders includes a loss of **$0.3 million** (net of tax) due to Kronos' recognition of an aggregate charge related to a write-off of deferred financing costs[7](index=7&type=chunk) - Q1 2023 net loss attributable to NL stockholders included income of **$0.4 million** (net of tax) due to Kronos' recognition of a pre-tax insurance settlement gain related to a business interruption insurance claim from Hurricane Laura in 2020[7](index=7&type=chunk)[8](index=8&type=chunk) [Business Overview and Future Outlook](index=2&type=section&id=Business%20Overview%20and%20Future%20Outlook) This section provides an overview of NL Industries' business segments and outlines forward-looking statements and key risk factors affecting future performance [NL Industries Business Description](index=5&type=section&id=NL%20Industries%20Business%20Description) NL Industries, Inc. operates in two main business areas: component products (security products and recreational marine components) and chemicals (TiO2) - NL Industries, Inc. is engaged in component products (security products and recreational marine components) and chemicals (TiO2) businesses[12](index=12&type=chunk) [Forward-Looking Statements and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The report includes forward-looking statements based on management's beliefs, acknowledging substantial risks and uncertainties that could cause actual future results to differ materially. Key risk factors include supply/demand fluctuations, cyclicality, raw material costs, global economic conditions, operating interruptions, technology disruptions, competition, and regulatory changes - Forward-looking statements represent management's beliefs and assumptions, but actual future results could differ materially due to substantial risks and uncertainties[9](index=9&type=chunk) - Factors that could cause actual future results to differ materially include future supply and demand for products, business cyclicality (such as Kronos' TiO2 operations), changes in raw material and other operating costs, general global economic and political conditions, operating interruptions, technology related disruptions, competitive products and substitute products, and government laws and regulations[10](index=10&type=chunk)[13](index=13&type=chunk) [Condensed Financial Information](index=6&type=section&id=Condensed%20Financial%20Information) This section presents condensed consolidated financial statements, detailing operational income components and the breakdown of Kronos' net sales changes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements show NL Industries' shift from a net loss to net income in Q1 2024, with significant improvements in equity in earnings of Kronos and marketable equity securities, despite a decrease in net sales and gross margin Condensed Consolidated Statements of Operations | Metric (In millions, except EPS) | Q1 2024 | Q1 2023 | | :----------------------------------- | :------ | :------ | | Net sales | $38.0 | $41.2 | | Cost of sales | $28.3 | $28.5 | | Gross margin | $9.7 | $12.7 | | Selling, general and administrative expense | $6.0 | $5.7 | | Corporate expense | $2.4 | $2.8 | | Income from operations | $1.3 | $4.2 | | Equity in earnings (losses) of Kronos | $2.5 | ($4.6) | | Interest and dividend income | $2.6 | $2.0 | | Marketable equity securities | $2.4 | ($5.5) | | Income (loss) before income taxes | $8.3 | ($4.5) | | Income tax expense | $1.0 | $1.4 | | Net income (loss) | $7.3 | ($5.9) | | Noncontrolling interest | $0.5 | $0.8 | | Net income (loss) attributable to NL stockholders | $6.8 | ($6.7) | | Net income (loss) per share attributable to NL stockholders | $0.14 | ($0.14) | | Weighted average shares | 48.8 | 48.8 | [Components of Income from Operations](index=7&type=section&id=Components%20of%20Income%20from%20Operations) This table provides a breakdown of NL Industries' income from operations, showing a decrease in CompX's contribution and a reduction in corporate expenses, leading to a lower overall income from operations Income from Operations Components | Metric (In millions) | Q1 2024 | Q1 2023 | | :------------------------- | :------ | :------ | | CompX - component products | $3.7 | $7.0 | | Corporate expense | ($2.4) | ($2.8) | | **Income from operations** | **$1.3** | **$4.2** | [Change in Kronos' Net Sales Breakdown](index=7&type=section&id=Change%20in%20Kronos'%20Net%20Sales%20Breakdown) This table details the specific factors contributing to the **12%** increase in Kronos' net sales in Q1 2024, primarily highlighting the positive impact of TiO2 sales volume growth and the negative effect of product pricing Kronos Net Sales Change Breakdown | Factor | Percentage Change in Net Sales (Q1 2024 vs. Q1 2023) | | :-------------------------- | :------------------------------------------------ | | TiO2 sales volume | 28% | | TiO2 product pricing | (11)% | | Product mix/other TiO2 | (6)% | | Changes in currency exchange rates | 1% | | **Total** | **12%** |

Part I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents NL Industries' unaudited condensed consolidated financial statements, showing a Q1 2024 net income turnaround driven by equity earnings from Kronos and marketable securities, despite slightly decreased assets and sales [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Dec 31, 2023 (in thousands) | Mar 31, 2024 (in thousands) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Total Assets | $576,662 | $568,816 | $(7,846) | | Total Liabilities | $184,900 | $178,732 | $(6,168) | | Total Equity | $391,762 | $390,084 | $(1,678) | | Cash and cash equivalents | $111,522 | $138,257 | $26,735 | | Marketable securities (current) | $53,149 | $29,662 | $(23,487) | | Investment in Kronos Worldwide, Inc. | $247,582 | $237,221 | $(10,361) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Q1 2023 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :------------------------------------- | :--------------------- | :--------------------- | :----------- | | Net sales | $41,151 | $37,971 | $(3,180) | | Gross margin | $12,704 | $9,667 | $(3,037) | | Income from operations | $4,197 | $1,356 | $(2,841) | | Equity in earnings (losses) of Kronos | $(4,637) | $2,476 | $7,113 | | Marketable equity securities | $(5,498) | $2,383 | $7,881 | | Net income (loss) | $(5,939) | $7,315 | $13,254 | | Net income (loss) attributable to NL stockholders | $(6,716) | $6,839 | $13,555 | | Basic and diluted net income (loss) per share | $(0.14) | $0.14 | $0.28 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric | Q1 2023 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :------------------------------------------------ | :--------------------- | :--------------------- | :----------- | | Net income (loss) | $(5,939) | $7,315 | $13,254 | | Total other comprehensive loss, net | $(1,381) | $(4,620) | $(3,239) | | Comprehensive income (loss) | $(7,320) | $2,695 | $10,015 | | Comprehensive income (loss) attributable to NL stockholders | $(8,093) | $2,220 | $10,313 | [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) | Metric | Dec 31, 2023 (in thousands) | Mar 31, 2024 (in thousands) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Total NL stockholders' equity | $369,812 | $368,126 | $(1,686) | | Noncontrolling interest in subsidiary | $21,950 | $21,958 | $8 | | Total equity | $391,762 | $390,084 | $(1,678) | | Retained earnings (Dec 31, 2023 to Mar 31, 2024) | $284,462 | $287,395 | $2,933 | | Accumulated other comprehensive loss (Dec 31, 2023 to Mar 31, 2024) | $(219,621) | $(224,240) | $(4,619) | | Dividends paid - $.08 per share (Q1 2024) | N/A | $(3,906) | N/A | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Q1 2023 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :--------------------- | :--------------------- | :----------- | | Net cash provided by operating activities | $7,278 | $6,744 | $(534) | | Net cash provided by (used in) investing activities | $(24,094) | $24,495 | $48,589 | | Net cash used in financing activities | $(3,805) | $(4,373) | $(568) | | Cash and cash equivalents and restricted cash - net change | $(20,621) | $26,866 | $47,487 | | Balance at end of period | $76,881 | $168,248 | $91,367 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - NL Industries, Inc. is primarily a holding company, with **Valhi, Inc.** holding approximately **83%** of its common stock. NL also owns approximately **31%** of **Kronos Worldwide, Inc.** and has a majority-owned subsidiary, **CompX International Inc.**[22](index=22&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - The company's noncurrent marketable securities include an investment in **Valhi, Inc.** common stock, valued at **$20.577 million** at March 31, 2024, up from **$18.194 million** at December 31, 2023[29](index=29&type=chunk)[30](index=30&type=chunk) - NL owned approximately **35.2 million shares** of **Kronos** common stock, with an aggregate market value of **$415.6 million** at March 31, 2024, an increase from **$350.1 million** at December 31, 2023[32](index=32&type=chunk) | Metric | Q1 2023 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Security Products Net Sales | $27,342 | $29,887 | $2,545 | | Marine Components Net Sales | $13,809 | $8,084 | $(5,725) | | Total Net Sales | $41,151 | $37,971 | $(3,180) | - The company is involved in significant lead pigment litigation, with **two annual installment payments** remaining for the Santa Clara global settlement agreement (**$12.0 million** due in September 2024 and **$16.7 million** for the final installment due in September 2025). The company believes it has substantial defenses and has not accrued liability for other pending lead pigment cases[47](index=47&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) - Accrued environmental remediation and related costs totaled **$90.947 million** at March 31, 2024, with a reasonably possible upper range of approximately **$118 million** for estimable sites. There are approximately **five sites** for which costs cannot be reasonably estimated yet[62](index=62&type=chunk)[63](index=63&type=chunk) - The FASB issued **ASU 2023-07 (Segment Reporting)** and **ASU 2023-09 (Income Taxes)**, requiring additional disclosures. **ASU 2023-07** is effective for NL's **2024 Annual Report** and **Q1 2025 interim reporting**, while **ASU 2023-09** is effective for its **2025 Annual Report**[70](index=70&type=chunk)[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) NL Industries' Q1 2024 net income significantly increased, driven by marketable equity securities gains and Kronos' equity earnings, despite lower CompX operating income. The company maintains strong liquidity, supported by affiliate dividends and credit facilities - Net income attributable to NL stockholders increased significantly from a loss of **$6.7 million** in Q1 2023 to a gain of **$6.8 million** in Q1 2024[78](index=78&type=chunk) - This improvement was driven by an unrealized gain on marketable equity securities and a positive swing in equity in earnings from Kronos, partially offset by lower income from CompX operations[83](index=83&type=chunk) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :------------------------------------- | :-------------------- | :-------------------- | :----------- | | Equity in earnings (losses) of Kronos | $(4.6) | $2.5 | $7.1 | | Marketable equity securities unrealized gain (loss) | $(5.5) | $2.4 | $7.9 | | Interest and dividend income | $2.0 | $2.6 | $0.6 | | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :-------------------- | :-------------------- | :-------------------- | :----------- | | CompX Income from operations | $7.0 | $3.7 | $(3.3) | | Corporate expense | $(2.8) | $(2.4) | $0.4 | | Total Income from operations | $4.2 | $1.3 | $(2.9) | [Business overview](index=24&type=section&id=Business%20overview) - **NL** is a holding company with a majority-owned subsidiary, **CompX International Inc.**, and a **31%** non-controlling interest in **Kronos Worldwide, Inc.**[72](index=72&type=chunk)[74](index=74&type=chunk) - **CompX** manufactures mechanical and electronic cabinet locks (**Security Products**) and wake enhancement systems, exhaust systems, gauges, and related hardware for recreational marine (**Marine Components**)[73](index=73&type=chunk) - **Kronos** is a leading global producer and marketer of titanium dioxide pigments (**TiO2**) used in paints, plastics, and paper[74](index=74&type=chunk) [Forward-looking information](index=24&type=section&id=Forward-looking%20information) - Forward-looking statements are subject to substantial risks and uncertainties that could significantly impact expected results[75](index=75&type=chunk) - Key risk factors include future supply and demand, business cyclicality (e.g., **Kronos' TiO2** operations), raw material and operating costs, global economic and political conditions, operating interruptions, technology disruptions, competitive pressures, currency fluctuations, and pending litigation (lead pigment and environmental matters)[75](index=75&type=chunk)[77](index=77&type=chunk) [Results of operations](index=27&type=section&id=Results%20of%20operations) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :-------------------- | :-------------------- | :-------------------- | :----------- | | Net sales | $41.2 | $38.0 | $(3.2) | | Cost of sales | $28.5 | $28.3 | $(0.2) | | Gross margin | $12.7 | $9.7 | $(3.0) | | Income from operations | $7.0 | $3.7 | $(3.3) | | Gross margin % | 31% | 25% | -6% | | Income from operations % | 17% | 10% | -7% | - The decrease in income from operations was primarily due to lower **Marine Components** sales and gross margin[84](index=84&type=chunk) - Operating costs and expenses increased by **$0.3 million** due to higher employee salaries and benefits at **Security Products**[87](index=87&type=chunk) [CompX International Inc.](index=28&type=section&id=CompX%20International%20Inc.) [Security Products](index=29&type=section&id=Security%20Products) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :-------------------- | :-------------------- | :-------------------- | :----------- | | Net sales | $27.4 | $29.9 | $2.5 | | Gross margin | $8.5 | $8.8 | $0.3 | | Operating income | $5.4 | $5.5 | $0.1 | | Gross margin % | 31% | 29% | -2% | | Operating income margin % | 20% | 18% | -2% | - Sales increased primarily due to **$1.8 million** higher sales to the government security market[91](index=91&type=chunk) [Marine Components](index=29&type=section&id=Marine%20Components) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :-------------------- | :-------------------- | :-------------------- | :----------- | | Net sales | $13.8 | $8.1 | $(5.7) | | Gross margin | $4.2 | $0.9 | $(3.3) | | Operating income | $3.3 | $0.0 | $(3.3) | | Gross margin % | 31% | 11% | -20% | | Operating income margin % | 24% | 0% | -24% | - Sales decreased by **$4.3 million** to the towboat market, **$0.7 million** to the industrial market, **$0.3 million** to the engine builder market, and **$0.3 million** to distributors[92](index=92&type=chunk) - Gross margin percentage decreased primarily due to higher cost inventory produced in Q4 2023 (due to lower production volumes) and decreased coverage of fixed overhead on lower sales[92](index=92&type=chunk) [Outlook](index=29&type=section&id=Outlook) - **CompX** expects **Security Products** sales in **2024** to be lower than **2023**, with comparable gross margin but declining operating income margin due to limited pricing power and reduced coverage of SG&A costs[95](index=95&type=chunk) - **Marine Components** net sales for **2024** are expected to be lower than **2023** due to anticipated further decline in the towboat market, leading to lower gross and operating income margins[95](index=95&type=chunk) - **CompX** is aligning **Marine Components** inventory balances with current demand, expecting completion by mid-**2024**, after elevated balances at the end of **2023**[95](index=95&type=chunk) [General corporate and other items](index=31&type=section&id=General%20corporate%20and%20other%20items) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :------------------------------------- | :-------------------- | :-------------------- | :----------- | | Corporate expenses | $2.8 | $2.4 | $(0.4) | | Litigation fees and related costs | $1.4 | $0.7 | $(0.7) | | Environmental remediation and related costs | $0.0 | $0.2 | $0.2 | | Interest and dividend income | $2.0 | $2.6 | $0.6 | | Marketable equity securities (unrealized gain/loss) | $(5.5) | $2.4 | $7.9 | | Income tax expense | $1.4 | $1.0 | $(0.4) | - The effective tax rate attributable to equity in earnings of **Kronos** was **negative 10.6%** in Q1 2024 (vs. **negative 28.7%** in Q1 2023) due to nontaxable dividends from **Kronos** and anticipated higher full-year earnings for **Kronos** in **2024**[102](index=102&type=chunk)[103](index=103&type=chunk) [Equity in earnings (losses) of Kronos Worldwide, Inc.](index=33&type=section&id=Equity%20in%20earnings%20(losses)%20of%20Kronos%20Worldwide,%20Inc.) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :------------------------------------- | :-------------------- | :-------------------- | :----------- | | Net sales | $426.3 | $478.8 | $52.5 | | Gross margin | $30.8 | $71.5 | $40.7 | | Income (loss) from operations | $(18.3) | $19.5 | $37.8 | | Net income (loss) | $(15.2) | $8.1 | $23.3 | | Equity in earnings (losses) of Kronos | $(4.6) | $2.5 | $7.1 | | Cost of sales % of net sales | 93% | 85% | -8% | | Income (loss) from operations % of net sales | -4% | 4% | +8% | | Metric | Q1 2023 (in thousands of metric tons) | Q1 2024 (in thousands of metric tons) | Change (YoY) | | :-------------------- | :------------------------------------ | :------------------------------------ | :----------- | | TiO2 Sales volumes | 102 | 130 | 28% | | TiO2 Production volumes | 105 | 121 | 15% | [Current industry conditions](index=35&type=section&id=Current%20industry%20conditions) - **TiO2** demand improved in Q1 2024 across all major markets, though still below historical levels[107](index=107&type=chunk) - **Kronos'** production facility utilization increased to **87%** in Q1 2024 from **76%** in Q1 2023 due to increased demand and more favorable production costs[108](index=108&type=chunk) - Average **TiO2** selling prices in Q1 2024 were **11% lower** than Q1 2023 and declined **2%** during Q1 2024[107](index=107&type=chunk) - Cost of sales per metric ton of **TiO2** sold significantly decreased due to lower feedstock costs and reduced unabsorbed fixed costs[109](index=109&type=chunk) - **Kronos** plans to close its sulfate process line in Varennes, Canada, by Q3 2024, expecting a **$2 million** charge for workforce reductions and approximately **$15 million** in non-cash charges related to the closure[111](index=111&type=chunk) [Net sales](index=35&type=section&id=Net%20sales) - Net sales increased by **$52.5 million (12%)** in Q1 2024 compared to Q1 2023[112](index=112&type=chunk) - This increase was primarily due to a **28% increase** in sales volumes (contributing approximately **$119 million**), partially offset by an **11% decrease** in average **TiO2** selling prices (decreasing net sales by approximately **$47 million**)[112](index=112&type=chunk) - Changes in currency exchange rates (primarily the euro) increased net sales by approximately **$4 million**[112](index=112&type=chunk) [Cost of sales and gross margin](index=35&type=section&id=Cost%20of%20sales%20and%20gross%20margin) - Cost of sales increased by **$11.8 million (3%)** in Q1 2024, driven by higher sales and production volumes[114](index=114&type=chunk) - Production costs decreased by approximately **$64 million**, primarily due to lower energy and raw material costs[114](index=114&type=chunk) - Unabsorbed fixed production costs decreased by **$10 million**, from **$22 million** in Q1 2023 to **$12 million** in Q1 2024[114](index=114&type=chunk) - Cost of sales as a percentage of net sales improved to **85%** (from **93%**), and gross margin as a percentage of net sales increased to **15%** (from **7%**)[115](index=115&type=chunk)[118](index=118&type=chunk) [Selling, general and administrative expense](index=37&type=section&id=Selling,%20general%20and%20administrative%20expense) - SG&A expense increased by **$1.0 million (2%)** in Q1 2024, mainly due to variable costs from higher sales volumes[119](index=119&type=chunk) - SG&A as a percentage of net sales decreased to **11%** in Q1 2024 from **12%** in Q1 2023[119](index=119&type=chunk) [Income (loss) from operations](index=37&type=section&id=Income%20(loss)%20from%20operations) - Income from operations increased by **$37.8 million**, from a loss of **$18.3 million** in Q1 2023 to an income of **$19.5 million** in Q1 2024[120](index=120&type=chunk) - Q1 2023 included a **$1.7 million** gain from a business interruption insurance claim settlement[120](index=120&type=chunk) [Other non-operating income (expense)](index=37&type=section&id=Other%20non-operating%20income%20(expense)) - Unrealized gain on marketable equity securities was **$0.3 million** in Q1 2024, compared to a **$0.7 million loss** in Q1 2023[121](index=121&type=chunk) - Interest expense increased by **$5.0 million** due to a debt exchange in February 2024, involving new **9.50% Senior Secured Notes** and an **11.5% subordinated term loan**[121](index=121&type=chunk) - A **$1.5 million** charge for the write-off of deferred financing costs was included in Q1 2024 interest expense[121](index=121&type=chunk) [Income tax expense (benefit)](index=37&type=section&id=Income%20tax%20expense%20(benefit)) - Income tax expense was **$3.5 million** in Q1 2024, compared to a **$6.9 million benefit** in Q1 2023, driven by higher earnings and jurisdictional mix[122](index=122&type=chunk) - **Kronos'** consolidated effective income tax rate in Q1 2024 was lower than the U.S. federal statutory rate of **21%** due to lower earnings and tax benefits from losses in certain high-tax jurisdictions[122](index=122&type=chunk) - The **OECD's Pillar Two** initiative is not anticipated to have a material impact on **Kronos'** financial statements based on currently enacted legislation[123](index=123&type=chunk) [Effects of currency exchange rates](index=37&type=section&id=Effects%20of%20currency%20exchange%20rates) - Currency exchange rate fluctuations increased **Kronos'** net sales by **$4 million** in Q1 2024, mainly due to a weakening U.S. dollar relative to the euro[127](index=127&type=chunk)[129](index=129&type=chunk) - The impact of currency exchange rates on **Kronos'** income from operations was nominal[130](index=130&type=chunk) - **Kronos'** non-U.S. operations generate currency transaction gains and losses from differences in exchange rates between accrual and settlement of non-local currency transactions and holding non-local currency[125](index=125&type=chunk) [Outlook](index=39&type=section&id=Outlook) - **Kronos** expects sales volumes in **2024** to exceed **2023** levels due to improved customer demand across all major markets[131](index=131&type=chunk) - Production rates are expected to be higher than comparable periods in **2023**, and implemented **TiO2** selling price increases are aimed at achieving historical margin levels[131](index=131&type=chunk) - Gross margins are expected to improve as higher-cost inventory from late **2023** is replaced with lower-cost inventory produced in **2024**, coupled with realized price increases and cost reduction efforts[132](index=132&type=chunk) - Overall, **Kronos** expects higher operating results for the full year **2024** compared to **2023** due to improved demand, higher selling prices, and lower production costs[132](index=132&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) | Metric | Q1 2023 (in millions) | Q1 2024 (in millions) | Change (YoY) | | :------------------------------------ | :-------------------- | :-------------------- | :----------- | | Net cash provided by operating activities | $7.3 | $6.7 | $(0.6) | | Net cash provided by (used in) investing activities | $(24.1) | $24.5 | $48.6 | | Net cash used in financing activities | $(3.8) | $4.4 | $(0.6) | - At March 31, 2024, the company had **$197.9 million** in aggregate restricted and unrestricted cash, cash equivalents, and current marketable securities[148](index=148&type=chunk)[149](index=149&type=chunk) - **NL** also held investments in **Valhi** common stock (**$20.6 million** market value) and **Kronos** common stock (**$415.6 million** market value) at March 31, 2024[150](index=150&type=chunk) - The company expects to have sufficient liquidity for short-term and long-term obligations, supported by a **$50 million** revolving credit facility with **Valhi**, of which **$49.5 million** was available at March 31, 2024[153](index=153&type=chunk) | Affiliate | Shares held (millions) | Quarterly Dividend Rate | Annual Expected Dividend (millions) | | :-------- | :--------------------- | :---------------------- | :---------------------------------- | | Kronos | 35.2 | $0.19 | $26.8 | | CompX | 10.8 | $0.30 | $12.9 | | Valhi | 1.2 | $0.08 | $0.4 | | Total | | | $40.1 | [Consolidated cash flows](index=40&type=section&id=Consolidated%20cash%20flows) - Net cash provided by operating activities decreased by **$0.5 million** to **$6.7 million** in Q1 2024[136](index=136&type=chunk) - Investing activities provided **$24.5 million** in Q1 2024, a significant increase from a **$24.1 million** use in Q1 2023, primarily due to **$24.0 million** in proceeds from U.S. treasury bill maturities[140](index=140&type=chunk) - Financing activities used **$4.4 million** in Q1 2024, up from **$3.8 million** in Q1 2023, mainly due to higher dividends paid (**$0.08 per share** in 2024 vs. **$0.07** in 2023)[143](index=143&type=chunk) [Operating activities](index=40&type=section&id=Operating%20activities) - Net cash provided by operating activities was **$6.7 million** in Q1 2024, down from **$7.3 million** in Q1 2023[136](index=136&type=chunk) - Key factors for the decrease include lower income from **CompX** operations (**$3.3 million**) and higher interest income received (**$0.9 million**)[141](index=141&type=chunk) | Metric | Dec 31, 2023 | Mar 31, 2024 | Change | | :------------------ | :----------- | :----------- | :----- | | Days sales outstanding | 36 days | 42 days | +6 days | | Days in inventory | 95 days | 89 days | -6 days | [Investing activities](index=40&type=section&id=Investing%20activities) - Net cash provided by investing activities was **$24.5 million** in Q1 2024, compared to a net use of **$24.1 million** in Q1 2023[20](index=20&type=chunk) - Proceeds from U.S. treasury bill maturities totaled **$24.0 million** in Q1 2024 (vs. **$8.0 million** in Q1 2023)[140](index=140&type=chunk) - Capital expenditures remained stable at **$0.3 million** in both Q1 2024 and Q1 2023[139](index=139&type=chunk) [Financing activities](index=42&type=section&id=Financing%20activities) - Net cash used in financing activities increased to **$4.373 million** in Q1 2024 from **$3.805 million** in Q1 2023[20](index=20&type=chunk) - Dividends paid to **NL** stockholders increased from **$0.07 per share** in Q1 2023 to **$0.08 per share** in Q1 2024[143](index=143&type=chunk) [Outstanding debt obligations](index=42&type=section&id=Outstanding%20debt%20obligations) - **NLKW** had **$0.5 million** outstanding and **$49.5 million** available under its **$50 million** secured revolving credit facility with **Valhi** at March 31, 2024[145](index=145&type=chunk) - **Kronos** had no outstanding borrowings on its **$225 million** global revolving credit facility, with full availability[146](index=146&type=chunk) - **Kronos** completed a debt exchange in February 2024, issuing **€276.174 million** of **9.50% Senior Secured Notes** due March 2029 and a new **$53.7 million** subordinated term loan from **Contran**[146](index=146&type=chunk) - Both **NL** and **Kronos** are in compliance with all debt covenants[145](index=145&type=chunk)[146](index=146&type=chunk) [Future cash requirements](index=42&type=section&id=Future%20cash%20requirements) - Primary liquidity sources are operating cash flows and credit facilities with affiliates[147](index=147&type=chunk) - At March 31, 2024, **NL** had **$197.9 million** in cash, cash equivalents, and current marketable securities, and expects sufficient liquidity for short-term and long-term obligations[148](index=148&type=chunk)[149](index=149&type=chunk)[153](index=153&type=chunk) - **CompX** expects **$2.8 million** in capital expenditures for **2024**[154](index=154&type=chunk) | Affiliate | Annual Expected Dividend (millions) | | :-------- | :---------------------------------- | | Kronos | $26.8 | | CompX | $12.9 | | Valhi | $0.4 | | Total | $40.1 | [Liquidity](index=42&type=section&id=Liquidity) - Primary liquidity sources are cash flow from operating activities and credit facilities with affiliates[147](index=147&type=chunk) - At March 31, 2024, the company had **$197.9 million** in cash, cash equivalents, and current marketable securities, all held in the U.S.[148](index=148&type=chunk)[149](index=149&type=chunk) - **NL** also owned approximately **1.2 million shares** of **Valhi** common stock (**$20.6 million** market value) and **35.2 million shares** of **Kronos** common stock (**$415.6 million** market value)[150](index=150&type=chunk) - The company expects sufficient liquidity for short-term (**12 months**) and long-term (**5 years**) obligations, supported by a **$50 million** revolving loan from **Valhi** (**$49.5 million** available)[153](index=153&type=chunk) [Capital expenditures](index=44&type=section&id=Capital%20expenditures) - Firm purchase commitments for capital projects totaled **$0.4 million** at March 31, 2024[154](index=154&type=chunk) - **CompX** expects to spend **$2.8 million** on capital investments in **2024**, mainly for customer demand and facility/technology maintenance[154](index=154&type=chunk) [Repurchases of common stock](index=44&type=section&id=Repurchases%20of%20common%20stock) - **CompX** had **523,647 shares** available for repurchase under its stock repurchase program at March 31, 2024[155](index=155&type=chunk) [Dividends](index=44&type=section&id=Dividends) - **NL's** long-term ability to meet parent company obligations depends on dividends from subsidiaries and affiliates[156](index=156&type=chunk) | Affiliate | Annual Expected Dividend (millions) | | :-------- | :---------------------------------- | | Kronos | $26.8 | | CompX | $12.9 | | Valhi | $0.4 | | Total | $40.1 | - The declaration and payment of future dividends are discretionary and depend on financial condition, cash requirements, and other factors[143](index=143&type=chunk) [Investments in our subsidiaries and affiliates and other acquisitions](index=44&type=section&id=Investments%20in%20our%20subsidiaries%20and%20affiliates%20and%20other%20acquisitions) - **NL** periodically evaluates acquisitions of interests in or combinations with companies, including related companies, and may issue additional equity or increase indebtedness for such activities[152](index=152&type=chunk)[158](index=158&type=chunk) - The company also evaluates restructuring ownership interests among its subsidiaries and related companies[152](index=152&type=chunk)[158](index=158&type=chunk) [Commitments and contingencies](index=46&type=section&id=Commitments%20and%20contingencies) - No material changes in contractual obligations since the **2023 Annual Report**[159](index=159&type=chunk) - The company is subject to various commitments and contingencies, including legal proceedings related to lead pigment and environmental matters[160](index=160&type=chunk) - Proposed legislation that could impose civil liability based on market share or revive barred actions for lead pigment litigation could have a material adverse effect, though none has been enacted[160](index=160&type=chunk) [Recent accounting pronouncements](index=46&type=section&id=Recent%20accounting%20pronouncements) - Refer to **Note 15** for details on recent accounting pronouncements, including **ASU 2023-07 (Segment Reporting)** and **ASU 2023-09 (Income Taxes)**[161](index=161&type=chunk) [Critical accounting policies and estimates](index=46&type=section&id=Critical%20accounting%20policies%20and%20estimates) - No changes in critical accounting policies during Q1 2024[162](index=162&type=chunk) - Refer to the **2023 Annual Report** for a discussion of critical accounting policies[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company is exposed to market risks related to currency exchange rates, interest rates, and equity security prices. There have been no material changes in these market risks since the 2023 Annual Report - The company is exposed to market risks including currency exchange rates, interest rates, and equity security prices[163](index=163&type=chunk) - No material changes in market risks since the **2023 Annual Report**[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting, excluding equity method investees but including investment recording controls - Disclosure controls and procedures were evaluated as effective as of March 31, 2024, by the principal executive and financial officers[164](index=164&type=chunk) - No material changes to internal control over financial reporting occurred during Q1 2024[168](index=168&type=chunk) - The assessment of internal control over financial reporting excludes equity method investees and financial statement schedules but includes controls over recording investment amounts related to equity method investees[167](index=167&type=chunk) Part II. OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the Condensed Consolidated Financial Statements and the 2023 Annual Report for a discussion of legal proceedings - Refer to **Note 13** to the Condensed Consolidated Financial Statements and the **2023 Annual Report** for information on legal proceedings[170](index=170&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section refers to Part I, Item 1A, "Risk Factors," in the 2023 Annual Report for a discussion of business-related risk factors - Refer to **Part I, Item 1A, "Risk Factors,"** in the **2023 Annual Report** for a discussion of business-related risk factors[171](index=171&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications (31.1, 31.2, 32.1) and Inline XBRL documents - The report includes certifications (**31.1, 31.2, 32.1**) and **Inline XBRL** documents as exhibits[174](index=174&type=chunk) SIGNATURES - The report was signed on **May 8, 2024**, by **Amy Allbach Samford (EVP & CFO)** and **Amy E. Ruf (VP & Controller)**[176](index=176&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-640 NL INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) New Jersey 13-5267260 (State or other jurisdiction of incorporation ...