NL Industries(NL) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and detailed notes for NL Industries, Inc. Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and detailed notes for NL Industries, Inc. Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, at specific dates | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------------------------- | :------------------ | :-------------- | | ASSETS | | | | Cash and cash equivalents | $163,154 | $111,469 | | Total current assets | $237,958 | $183,688 | | Investment in Kronos Worldwide, Inc. | $250,278 | $259,405 | | Total assets | $578,258 | $523,704 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $91,062 | $33,981 | | Total noncurrent liabilities | $71,293 | $72,712 | | Total equity | $415,903 | $417,011 | | Total liabilities and equity | $578,258 | $523,704 | - Total assets decreased by $54.55 million from December 31, 2024, to June 30, 2025, primarily driven by a reduction in cash and cash equivalents and total current assets[9] - Total current liabilities significantly decreased from $91.06 million to $33.98 million, mainly due to a substantial reduction in accrued environmental remediation and related costs[11] Condensed Consolidated Statements of Income This section reports the company's financial performance, detailing revenues, expenses, and net income | (In thousands, except per share data) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $35,887 | $40,366 | $73,858 | $80,638 | | Gross margin | $11,165 | $12,890 | $20,832 | $25,053 | | Income from operations | $791 | $2,801 | $2,147 | $5,949 | | Equity in earnings (losses) of Kronos Worldwide, Inc. | $5,973 | $(2,811) | $8,449 | $2,714 | | Net income attributable to NL stockholders | $7,835 | $355 | $14,674 | $1,022 | | Basic and diluted net income per share | $.16 | $.01 | $.30 | $.02 | - Net income attributable to NL stockholders significantly decreased for both the three-month period (from $7.835 million to $0.355 million) and the six-month period (from $14.674 million to $1.022 million) ended June 30, 2025, compared to the prior year[13] - Basic and diluted net income per share dropped from $0.16 to $0.01 for the three months and from $0.30 to $0.02 for the six months ended June 30, 2025[13] Condensed Consolidated Statements of Comprehensive Income This section presents total equity changes from non-owner sources, including net income and other comprehensive income items | (In thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $8,453 | $1,054 | $15,768 | $2,376 | | Total other comprehensive income (loss), net | $807 | $3,729 | $(3,813) | $8,198 | | Comprehensive income attributable to NL stockholders | $8,641 | $4,084 | $10,861 | $9,220 | - Comprehensive income attributable to NL stockholders decreased from $8.641 million to $4.084 million for the three months ended June 30, 2025, but increased from $10.861 million to $9.220 million for the six months ended June 30, 2025, primarily due to significant positive currency translation adjustments in 2025[15] Condensed Consolidated Statements of Equity This section details changes in the company's equity accounts over specific periods, including common stock, retained earnings, and accumulated other comprehensive loss | (In thousands) | Balance at December 31, 2024 | Balance at June 30, 2025 | | :------------------------------------ | :--------------------------- | :----------------------- | | Common stock | $6,105 | $6,107 | | Additional paid-in capital | $299,099 | $299,349 | | Retained earnings | $315,056 | $307,284 | | Accumulated other comprehensive loss | $(223,356) | $(215,158) | | Total NL stockholders' equity | $396,904 | $397,582 | | Noncontrolling interest in subsidiary | $18,999 | $19,429 | | Total equity | $415,903 | $417,011 | - Total NL stockholders' equity increased slightly from $396.904 million to $397.582 million from December 31, 2024, to June 30, 2025, despite a decrease in retained earnings, primarily due to a reduction in accumulated other comprehensive loss[18][19] - Dividends paid to NL stockholders for the six months ended June 30, 2025, totaled $8.794 million, an increase from $7.814 million in the same period of 2024[19] Condensed Consolidated Statements of Cash Flows This section summarizes cash inflows and outflows from operating, investing, and financing activities | (In thousands) | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $22,278 | $(40,188) | | Net cash provided by (used in) investing activities | $42,670 | $(1,755) | | Net cash used in financing activities | $(8,750) | $(9,733) | | Balance at beginning of year | $141,382 | $184,190 | | Balance at end of period | $197,580 | $132,514 | - The company experienced a significant shift in operating cash flow, moving from $22.278 million provided in the first six months of 2024 to $40.188 million used in the same period of 2025, largely due to higher cash paid for environmental remediation and lower dividends from Kronos[20][169][170] - Cash and cash equivalents at the end of the period decreased by $65.066 million, from $197.580 million in June 2024 to $132.514 million in June 2025[20] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information for various accounts and transactions Note 1 – Organization and basis of presentation This note describes the company's corporate structure and the accounting principles used in financial statements - NL Industries, Inc. is controlled by Valhi, Inc. (83% ownership), which in turn is controlled by Contran Corporation, ultimately controlled by Lisa K. Simmons and family trusts[22] - The company consolidates its majority-owned subsidiary, CompX International Inc., and accounts for its approximately 31% interest in Kronos Worldwide, Inc. using the equity method[23] Note 2 – Segment information This note provides financial data for the company's operating segments, detailing their revenues and profits | (In thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $35,887 | $40,366 | $73,858 | $80,638 | | Segment profit | $5,081 | $6,320 | $8,796 | $12,189 | | Equity in earnings (losses) of Kronos Worldwide, Inc. | $5,973 | $(2,811) | $8,449 | $2,714 | | Net income | $8,453 | $1,054 | $15,768 | $2,376 | - Segment profit for CompX increased by 24% for the three months and 39% for the six months ended June 30, 2025, compared to the prior year, reaching $6.320 million and $12.189 million, respectively[28] Note 3 – Accounts and other receivables, net This note details the composition and changes in the company's accounts and other receivables | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Trade receivables - CompX | $14,183 | $16,984 | | Other receivables | $9,626 | $60 | | Total | $23,739 | $16,974 | - Total accounts and other receivables, net, decreased from $23.739 million to $16.974 million from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in other receivables[29] Note 4 – Inventories, net This note provides a breakdown of the company's inventory components and their valuation | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Raw materials | $5,652 | $5,773 | | Work in process | $17,638 | $22,213 | | Finished products | $5,076 | $4,915 | | Total | $28,366 | $32,901 | - Total inventories, net, increased from $28.366 million to $32.901 million from December 31, 2024, to June 30, 2025, mainly driven by an increase in work in process inventory[30] Note 5 – Marketable securities This note describes the company's marketable securities, including market value and unrealized gains or losses | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Market value | $28,015 | $19,356 | | Cost or amortized cost | $24,347 | $24,347 | | Unrealized gain (loss), net | $3,668 | $(4,991) | - The company holds approximately 1.2 million shares of Valhi, Inc. common stock, which are accounted for as available-for-sale securities[31] - The market value decreased from $28.015 million to $19.356 million, resulting in an unrealized loss of $4.991 million at June 30, 2025, compared to an unrealized gain of $3.668 million at December 31, 2024[31][32] Note 6 – Investment in Kronos Worldwide, Inc. This note details the company's equity method investment in Kronos Worldwide, Inc., including its carrying value and transactions - NL Industries owned approximately 35.2 million shares of Kronos common stock at June 30, 2025, with an aggregate market value of $218.4 million, down from $343.4 million at December 31, 2024[34] | (In millions) | Amount | | :------------------------------------ | :----- | | Balance at the beginning of the period | $250.3 | | Equity in earnings of Kronos | $2.7 | | Dividends received from Kronos | $(3.5) | | Equity in Kronos' other comprehensive income: | | | Currency translation | $9.6 | | Defined benefit pension plans | $.3 | | Balance at the end of the period | $259.4 | - Kronos acquired the remaining 50% joint venture interest in Louisiana Pigment Company, L.P. (LPC) on July 16, 2024, for $185 million, gaining full control and recognizing a pre-tax gain of approximately $64.5 million[37] Note 7 – Other assets, net This note provides information on other non-current assets held by the company | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Pension asset | $354 | $300 | | Other | $680 | $631 | | Total | $1,034 | $931 | Note 8 – Accrued and other current liabilities This note details the composition of the company's accrued and other current liabilities | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Employee benefits | $10,302 | $8,254 | | Other | $1,730 | $1,683 | | Total | $12,032 | $9,937 | Note 9 – Long-term debt This note describes the company's long-term debt obligations, including credit facilities and balances - NLKW Holding, LLC had $0.5 million outstanding under its $50 million secured revolving credit facility with Valhi at June 30, 2025, with $49.5 million available for future borrowing[40] - The average interest rate for the six months ended June 30, 2025, was 9.38%[40] Note 10 – Other noncurrent liabilities This note provides details on other noncurrent liabilities, such as tax position reserves and OPEB | (In thousands) | December 31, 2024 | June 30, 2025 | | :--------------- | :------------------ | :-------------- | | Reserve for uncertain tax positions | $4,778 | $— | | OPEB | $451 | $427 | | Insurance claims and expenses | $685 | $649 | | Other | $269 | $193 | | Total | $6,183 | $1,269 | - Total other noncurrent liabilities decreased significantly from $6.183 million to $1.269 million, primarily due to the elimination of the reserve for uncertain tax positions[41] Note 11 – Revenue recognition This note explains the company's policies and disaggregation of revenue from customer contracts | (In thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Security Products | $28,213 | $30,683 | $58,100 | $60,913 | | Marine Components | $7,674 | $9,683 | $15,758 | $19,725 | | Total | $35,887 | $40,366 | $73,858 | $80,638 | - Net sales increased across both reporting units, with Security Products growing 9% (QoQ) and 5% (YoY), and Marine Components growing 26% (QoQ) and 25% (YoY) for the periods ended June 30, 2025[43] Note 12 – Employee benefit plans This note provides information on the company's pension and other post-employment benefit plans - NL Industries began the process of terminating its U.S. pension plan, closed to new participants since 1996, effective June 30, 2025[44] - The termination is expected to take six to twelve months and will involve purchasing annuity contracts for participants, with a plan settlement gain or loss to be recognized[44] | (In thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest cost | $365 | $356 | $730 | $712 | | Expected return on plan assets | $(335) | $(317) | $(670) | $(634) | | Recognized actuarial losses | $333 | $284 | $666 | $568 | | Total | $363 | $323 | $726 | $646 | Note 13 – Income taxes This note details the company's income tax expense or benefit and related deferred tax assets and liabilities | (In thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $1,302 | $(43) | $2,290 | $(66) | - The company recognized an income tax benefit of $0.043 million for the three months and $0.066 million for the six months ended June 30, 2025, a significant change from income tax expenses of $1.302 million and $2.290 million, respectively, in the prior year periods[47] - Kronos expects to record deferred income tax expense of $20 million to $23 million in Q3 2025 due to a reduction in the German corporate tax rate, effective starting in 2028[49][50] Note 14 – Stockholders' equity This note provides a breakdown of the components of stockholders' equity and changes therein | (In thousands) | Six months ended June 30, 2024 | Six months ended June 30, 2025 | | :--------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period (Accumulated other comprehensive loss) | $(219,621) | $(223,356) | | Other comprehensive income (loss) | $(3,813) | $8,198 | | Balance at end of period (Accumulated other comprehensive loss) | $(223,434) | $(215,158) | - Accumulated other comprehensive loss attributable to NL stockholders decreased from $(223.356) million to $(215.158) million at June 30, 2025, primarily due to $8.198 million in other comprehensive income, net of tax[52] Note 15 – Commitments and contingencies This note describes the company's legal and environmental commitments and potential liabilities - NL Industries has one remaining installment payment of $16.7 million due in September 2025 for the County of Santa Clara v. Atlantic Richfield Company, et al. global settlement agreement, which will be paid from funds already on deposit[56] - Accrued environmental remediation and related costs decreased significantly from $69.278 million to $13.301 million at June 30, 2025, primarily due to $57.456 million in payments, including a $56.1 million payment for the Raritan Bay Slag Superfund Site settlement[64][69] - The estimated upper end of the range of reasonably possible costs for environmental remediation and related matters is approximately $38 million, including currently accrued amounts[65][67][70] - For about five sites, costs cannot be reasonably estimated due to early investigation stages[65][67][70] Note 16 – Financial instruments This note provides information on the fair value of the company's financial instruments | (In thousands) | December 31, 2024 (Carrying amount) | December 31, 2024 (Fair value) | June 30, 2025 (Carrying amount) | June 30, 2025 (Fair value) | | :--------------- | :---------------------------------- | :----------------------------- | :------------------------------ | :------------------------- | | Cash, cash equivalents and restricted cash | $184,190 | $184,190 | $132,514 | $132,514 | - The carrying amounts of cash, cash equivalents, and restricted cash are considered equivalent to their fair values due to their near-term maturities[77] Note 17 – Recent Accounting Pronouncements This note discusses recently issued accounting standards and their potential impact on financial statements - ASU 2023-09 (Income Taxes) is effective for the company's 2025 Annual Report, requiring additional annual disclosure and disaggregation for rate reconciliation and income taxes paid[78] - ASU No. 2024-03 (Reporting Comprehensive Income - Expense Disaggregation Disclosures) is effective for the company's 2027 Annual Report, requiring additional information about specific expense categories[79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operating results, segment performance, and liquidity Business overview This section provides an overview of NL Industries' primary operations, including CompX and its investment in Kronos - NL Industries is primarily a holding company, operating in the component products industry through its majority-owned subsidiary, CompX International Inc., and holding a non-controlling interest (approx. 31%) in Kronos Worldwide, Inc.[81] - CompX manufactures engineered components, including mechanical and electronic cabinet locks (Security Products) and wake enhancement systems, exhaust systems, and related marine hardware (Marine Components)[82] - Kronos is a leading global producer and marketer of titanium dioxide pigments (TiO2) used in paints, plastics, and paper[83] Forward-looking information This section highlights statements about future events and financial performance, emphasizing inherent risks - The report contains forward-looking statements subject to substantial risks and uncertainties, including future supply and demand, Kronos' ability to realize cost savings and integrate acquisitions, cyclicality of businesses, raw material costs, global economic conditions, operating interruptions, technology disruptions, and competitive pressures[84][85][86] - Other risks include fluctuations in currency exchange rates, interest rates, ability to maintain liquidity, ultimate outcome of litigation (lead pigment and environmental matters), and changes in government laws and regulations[86] Results of operations This section analyzes the company's financial performance, detailing changes in net income, segment profits, and key metrics Net income overview This section summarizes key factors influencing the company's net income and earnings per share - Net income attributable to NL stockholders decreased significantly to $0.3 million ($.01 per share) in Q2 2025 from $7.9 million ($.16 per share) in Q2 2024, and to $1.0 million ($.02 per share) in H1 2025 from $14.7 million ($.30 per share) in H1 2024[89] - The decrease is primarily due to equity in losses of Kronos ($2.8 million in Q2 2025 vs. $6.0 million earnings in Q2 2024), an unrealized loss on marketable equity securities ($8.6 million in H1 2025 vs. $3.2 million gain in H1 2024), and lower interest and dividend income, partially offset by higher CompX segment profit[92] Income from operations This section analyzes the company's operating income, highlighting segment contributions and corporate expenses | (In millions) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | % Change | Six months ended June 30, 2024 | Six months ended June 30, 2025 | % Change | | :-------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | CompX segment profit | $5.1 | $6.3 | 24 % | $8.8 | $12.2 | 39 % | | Corporate expense | $(4.3) | $(3.5) | (18) | $(6.7) | $(6.2) | (6) | | Income from operations | $0.8 | $2.8 | 254 | $2.1 | $6.0 | 177 | - Income from operations increased significantly by 254% to $2.8 million in Q2 2025 and by 177% to $6.0 million in H1 2025, driven by higher CompX segment profit and lower corporate expenses[91] CompX International Inc. This section provides a detailed analysis of CompX's financial performance, including net sales, gross margin, and profit | (In millions) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | % Change | Six months ended June 30, 2024 | Six months ended June 30, 2025 | % Change | | :-------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net sales | $35.9 | $40.3 | 12 % | $73.9 | $80.6 | 9 % | | Gross margin | $11.1 | $12.9 | 15 | $20.8 | $25.1 | 20 | | Segment profit | $5.1 | $6.3 | 24 | $8.8 | $12.2 | 39 | - CompX's net sales increased by $4.4 million (12%) in Q2 2025 and $6.7 million (9%) in H1 2025, primarily due to higher sales in both Security Products and Marine Components[96] - CompX's gross margin as a percentage of sales improved by 1% in Q2 2025 and 3% in H1 2025, mainly driven by higher Marine Components gross margin percentage[97] Results by reporting unit This section breaks down CompX's performance by its Security Products and Marine Components units | (In millions) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | % Change | Six months ended June 30, 2024 | Six months ended June 30, 2025 | % Change | | :-------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Security Products: | | | | | | |\ | Net sales | $28.2 | $30.7 | 9 % | $58.1 | $60.9 | 5 % | | Reporting unit profit | $5.4 | $5.8 | 6 | $10.9 | $11.3 | 4 | | Marine Components: | | | | | | |\ | Net sales | $7.7 | $9.6 | 26 % | $15.8 | $19.7 | 25 % | | Reporting unit profit | $1.4 | $2.3 | 73 | $1.4 | $4.6 | 226 | - Security Products sales increased due to higher demand from government security and healthcare markets, while Marine Components sales saw significant growth from government and towboat markets[103][106] - Marine Components' gross margin and reporting unit profit margin percentages increased significantly due to higher sales volumes and a more favorable customer/product mix[107] Outlook – CompX This section discusses CompX's future expectations regarding sales, margins, and operational strategies - CompX expects Security Products net sales to improve in 2025, driven by government security and healthcare markets, but gross margin and profit margin percentages will be challenged by higher raw material costs and tariff-related surcharges on electronic components[109] - Marine Components net sales are expected to increase in 2025, primarily from the government and industrial markets, leading to improved gross margin and profit margin percentages due to increased fixed cost coverage[109] - CompX is working to increase selling prices to offset rising raw material costs and tariffs, particularly on electronic components from Asia, and is monitoring customer demand to align production and inventory[110][111] General corporate and other items This section covers corporate expenses, investment income, and other non-segment specific financial items - Corporate expenses decreased in Q2 2025 by $0.8 million due to lower litigation fees and environmental remediation costs, but H1 2025 saw a slight decrease of $0.5 million due to higher environmental remediation costs partially offsetting lower litigation costs[113] - The company recognized an unrealized loss of $0.1 million on marketable equity securities in Q2 2025 (vs. $0.8 million gain in Q2 2024) and an $8.6 million loss in H1 2025 (vs. $3.2 million gain in H1 2024)[117] - Income tax shifted from an expense of $1.3 million in Q2 2024 to a benefit of less than $0.1 million in Q2 2025, and from an expense of $2.3 million in H1 2024 to a benefit of $0.1 million in H1 2025, influenced by nontaxable dividends from Kronos and equity in Kronos' earnings/losses[118][122] Equity in earnings of Kronos Worldwide, Inc. This section details the company's share of Kronos's earnings or losses and its impact on financial results | (In millions) | Three months ended June 30, 2024 | Three months ended June 30, 2025 | % Change | Six months ended June 30, 2024 | Six months ended June 30, 2025 | % Change | | :-------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Net sales | $500.5 | $494.4 | (1)% | $979.3 | $984.2 | 1 % | | Gross margin | $100.2 | $62.8 | (37) | $171.7 | $169.7 | (1) | | Income from operations | $35.9 | $7.4 | (79)% | $55.4 | $45.8 | (17)% | | Net income (loss) | $19.5 | $(9.2) | | $27.6 | $8.9 | | | Equity in earnings (losses) of Kronos Worldwide, Inc. | $6.0 | $(2.8) | | $8.5 | $2.7 | | - Kronos' net income shifted from a $19.5 million gain in Q2 2024 to a $9.2 million loss in Q2 2025, and decreased from $27.6 million to $8.9 million in H1 2025, primarily due to lower average TiO2 selling prices, reduced operating rates, and higher production costs[124][131][132][135] - Currency exchange rate fluctuations had a positive impact on Kronos' income from operations, increasing it by approximately $14 million in Q2 2025 and $9 million in H1 2025[144][145][154][157] Current industry conditions This section describes the prevailing market environment affecting Kronos, particularly the titanium dioxide pigment industry - Kronos experienced unprecedented global uncertainty in H1 2025 due to U.S. trade policies and geopolitical tensions, leading to customer hesitation in building inventories and a prolonged market downturn[128] - Average TiO2 selling prices declined 4% in H1 2025, and production facility utilization decreased to 87% from 93% in H1 2024 due to reduced operating rates[128][129] Outlook – Kronos This section outlines Kronos's future expectations regarding demand, pricing, costs, and strategic initiatives - Kronos expects demand to remain challenging due to tariff uncertainty and economic conditions, leading to lower operating results for the full year 2025 compared to 2024, despite anticipated lower raw material and energy costs in H2 2025[163][164] - The acquisition of full control of LPC in July 2024 is expected to positively impact earnings long-term through synergies and technological improvements, but near-term impact will be limited by soft demand and increased debt service costs[165] - Kronos increased its credit facility to $350 million in July 2025 to provide additional liquidity and support near-term debt maturities, including €75 million Senior Secured Notes due September 2025[166] Liquidity and Capital Resources This section assesses the company's ability to generate and manage cash, covering cash flows, debt, and funding needs Consolidated cash flows This section analyzes the company's cash inflows and outflows from operating, investing, and financing activities - Net cash used in operating activities was $40.2 million in H1 2025, a significant decrease from $22.3 million provided in H1 2024, primarily due to higher cash paid for environmental remediation ($56.8 million) and lower dividends from Kronos ($9.9 million)[169][170] - Net cash used in investing activities was $1.8 million in H1 2025, compared to $42.7 million provided in H1 2024, mainly due to increased capital expenditures and no proceeds from marketable securities maturities[20][174][175] - Net cash used in financing activities increased to $9.7 million in H1 2025 from $8.8 million in H1 2024, driven by higher dividends paid[20][176] Outstanding debt obligations This section details the company's current debt levels, credit facilities, and related terms - At June 30, 2025, NLKW had $0.5 million in outstanding debt under its secured revolving credit facility with Valhi, with $49.5 million available[180] - Kronos had $37.0 million outstanding on its Global Revolver at June 30, 2025, and subsequently increased the maximum borrowing amount to $350 million in July 2025[181] Future cash requirements This section outlines the company's anticipated cash needs for operations, investments, and debt servicing - At June 30, 2025, the company had $132.5 million in aggregate restricted and unrestricted cash and cash equivalents, with $56.2 million held by CompX and $76.3 million by NL Parent and wholly-owned subsidiaries[183][184] - Expected annual dividends from Kronos, CompX, and Valhi total $20.3 million, with an additional $10.8 million special dividend expected from CompX in August 2025[191][192] - CompX expects to spend $3.4 million on capital investments in 2025, primarily for existing customer demand and facility maintenance[189] Recent accounting pronouncements This section discusses new accounting standards and their potential impact on financial reporting - The company is evaluating ASU 2023-09 (Income Taxes) effective for its 2025 Annual Report and ASU No. 2024-03 (Reporting Comprehensive Income - Expense Disaggregation Disclosures) effective for its 2027 Annual Report[198] Critical accounting policies and estimates This section highlights accounting policies requiring significant judgment and estimation by management - There have been no changes in the company's critical accounting policies during the first six months of 2025[199] Item 3. Quantitative and Qualitative Disclosure About Market Risk This section states that there have been no material changes in the company's exposure to market risks, including currency exchange rates, interest rates, and equity security prices, since the filing of its 2024 Annual Report - No material changes in market risks (currency exchange rates, interest rates, equity security prices) since the 2024 Annual Report[200] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and internal control over financial reporting. Management concluded that disclosure controls and procedures were effective as of June 30, 2025, and there were no material changes to internal control over financial reporting during the quarter Evaluation of disclosure controls and procedures This section describes the assessment of the effectiveness of the company's disclosure controls and procedures - The President and CEO, and Executive Vice President and CFO, evaluated the disclosure controls and procedures as of June 30, 2025, and concluded they are effective[201] Internal control over financial reporting This section outlines management's responsibility for establishing and maintaining effective internal control over financial reporting - Management is responsible for establishing and maintaining adequate internal control over financial reporting to ensure reliability of financial reporting and preparation of financial statements in accordance with GAAP[202] Other This section clarifies the scope of the assessment of internal control over financial reporting, including exclusions and inclusions - The assessment of internal control over financial reporting excludes equity method investees and financial statement schedules required by Article 12 of Regulation S-X, but includes controls over recording investment amounts and equity method earnings/losses[203] Changes in internal control over financial reporting This section reports on any material changes to the company's internal control over financial reporting during the period - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[205] PART II. OTHER INFORMATION This section contains additional information not covered in Part I, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section refers to Note 15 of the financial statements and the 2024 Annual Report for descriptions of legal proceedings. It specifically notes the dismissal of the Philip Palmeri v. NL Industries, Inc. case in May 2025 - The case Philip Palmeri v. NL Industries, Inc. was dismissed in May 2025[208] Item 1A. Risk Factors This section directs readers to Part I, Item 1A, 'Risk Factors,' in the company's 2024 Annual Report for a discussion of business-related risk factors - For a discussion of risk factors related to the businesses, refer to Part I, Item 1A, 'Risk Factors,' in the 2024 Annual Report[209] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Fourth Amendment to Credit Agreement for Kronos Worldwide, Inc., certifications, and Inline XBRL documents - Exhibits include the Fourth Amendment to Credit Agreement for Kronos Worldwide, Inc. (dated July 17, 2025), certifications (31.1, 31.2, 32.1), and various Inline XBRL documents[213]