CompX(US:CIX)2024-08-06 20:15Financial Performance - Operating income for Q2 2024 was $5.1 million, up from $4.4 million in Q2 2023, driven by higher Security Products sales[37] - Net sales for Q2 2024 decreased by $0.7 million to $35.9 million compared to Q2 2023, primarily due to lower Marine Components sales[40] - Gross margin as a percentage of sales increased to 31.1% in Q2 2024 from 28.1% in Q2 2023, attributed to improved Security Products gross margin[39] - Operating income margin for Q2 2024 was 14.1%, up from 12.0% in Q2 2023, reflecting improved sales and gross margin[39] - Operating costs and expenses for Q2 2024 rose by $0.2 million compared to Q2 2023, mainly due to higher employee salaries and benefits[43] - Interest income increased by $0.3 million in Q2 2024 compared to Q2 2023, driven by higher average interest rates and investment balances[44] Sales Performance - Security Products net sales increased by 10% in both Q2 and the first six months of 2024 compared to the same periods in 2023, largely due to higher sales to the government security market[48] - Marine Components net sales decreased by 30% in Q2 2024 compared to Q2 2023, primarily due to a $3.1 million drop in sales to the towboat market[50] - Security Products net sales in 2024 are expected to be lower than in 2023, with anticipated declines in government security sales in the second half of the year[53] - Marine Components net sales for the full year of 2024 are projected to be lower than in 2023 due to declining demand in the towboat market, influenced by higher interest rates and broader market weakness[54] Cost and Margin Analysis - Cost of sales as a percentage of sales improved by 3.0% in Q2 2024 compared to Q2 2023, contributing to the increase in gross margin[42] - Gross margin as a percentage of net sales improved in Q2 2024 compared to Q2 2023, primarily due to a favorable customer and product mix, despite lower sales impacting fixed cost coverage[51] - Operating income as a percentage of net sales increased in Q2 2024 compared to Q2 2023, attributed to factors affecting gross margin and reduced operating costs, including a decrease in employee salaries and benefits by approximately $0.1 million[51] - For the first six months of 2024, gross margin as a percentage of net sales declined compared to the same period in 2023, mainly due to higher inventory costs from Q4 2023 and lower sales[51] Operational Efficiency - The average days sales outstanding for Security Products increased from 37 days at December 31, 2023, to 40 days at June 30, 2024[57] - The average days in inventory for Security Products increased from 77 days at December 31, 2023, to 88 days at June 30, 2024, while Marine Components decreased from 175 days to 144 days in the same period[60] - Net cash provided by operating activities for the first six months of 2024 increased by $1.7 million compared to the same period in 2023, primarily due to changes in working capital[56] Capital and Dividend - Capital expenditures for 2024 are expected to be approximately $2.2 million, primarily to meet existing customer demand and maintain facilities[66] - The board of directors increased the quarterly dividend from $0.25 per share to $0.30 per share starting in Q1 2024, with total dividends paid in the first six months of 2024 amounting to $7.4 million[62] Risks and Challenges - The company anticipates potential risks including changes in raw material costs and competition from low-cost manufacturing sources[34]