Valhi(VHI) - 2025 Q2 - Quarterly Results

Valhi Inc. Q2 2025 Earnings Release Financial Highlights Net income declined significantly in Q2 and H1 2025, driven by the Chemicals Segment's weaker performance | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Valhi Stockholders) | $0.9M | $19.9M | $17.8M | $27.7M | | Diluted EPS | $0.03 | $0.70 | $0.62 | $0.97 | - The decrease in net income was primarily due to lower operating results from the Chemicals Segment, partially offset by improved results from the Real Estate and Component Products Segments[1] - Effective July 16, 2024, the Chemicals Segment acquired the remaining 50% interest in Louisiana Pigment Company, L.P. (LPC), making it a wholly-owned subsidiary[1] Segment Performance Segment performance was mixed, with Chemicals declining while Component Products and Real Estate showed growth Chemicals Segment The Chemicals Segment's operating income dropped sharply due to lower production rates and unfavorable costs | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $494.4M | $500.5M | $984.2M | $979.3M | | Operating Income | $10.3M | $40.5M | $51.5M | $63.3M | - Q2 sales decreased due to 1% lower average TiO2 selling prices and reduced export sales volumes, partially offset by higher North American volumes[2] - Operating income declined due to approximately $20 million in unabsorbed fixed production costs in Q2 2025 from reduced operating rates, with capacity utilization at 81% versus 99% in Q2 2024[3][5] Component Products Segment The Component Products Segment achieved strong sales and income growth from government and marine markets | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $40.3M | $35.9M | $80.6M | $73.9M | | Operating Income | $6.3M | $5.1M | $12.2M | $8.8M | - The increase in sales and operating income was driven by higher security products sales to the government security market and increased marine components sales[6] Real Estate Management and Development Segment The Real Estate Segment's operating income surged from a one-time reimbursement despite lower land sales | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $5.7M | $23.3M | $14.2M | $37.1M | | Operating Income | $18.9M | $9.2M | $21.9M | $14.2M | - The decrease in land sales revenue was caused by a reduced pace of development activity, primarily due to delays in obtaining city permits and environmental approvals[7] - Operating income was significantly boosted by the recognition of $17.2 million in tax increment infrastructure reimbursements during Q2 2025[7] Corporate Items and Other Financials Corporate expenses fell, while lower interest income and higher interest expense impacted net results - Corporate expenses were 11% lower in Q2 2025 and 5% lower YTD, primarily due to reduced litigation fees and related costs[8] - Interest income fell by $1.8 million in Q2 and $3.2 million YTD, attributed to lower average interest rates and decreased cash balances[8] - Interest expense rose by $1.9 million in Q2 and $3.8 million YTD, mainly due to higher overall debt levels and increased average interest rates[8] Risk Factors and Forward-Looking Statements The company highlights substantial risks and uncertainties that could affect future performance and results - The report contains forward-looking statements that involve substantial risks and uncertainties which could cause actual results to differ materially[9][12] - Key risks include future supply and demand, raw material costs, global economic conditions, operational interruptions, currency fluctuations, and government regulations[10][11][14] Consolidated Financial Statements Consolidated statements show declines in net sales, operating income, and net income for Q2 2025 | (In millions, except EPS) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $540.4 | $559.7 | $1,079.0 | $1,090.3 | | Total operating income | $35.5 | $54.8 | $85.6 | $86.3 | | Income before income taxes | $15.5 | $37.6 | $46.3 | $55.6 | | Net income | $7.5 | $29.7 | $30.3 | $43.3 | | Net income attributable to Valhi stockholders | $0.9 | $19.9 | $17.8 | $27.7 | | Basic and diluted net income per share | $0.03 | $0.70 | $0.62 | $0.97 | Supplemental Data Supplemental data details the drivers of the net sales change for the Chemicals Segment | Percentage change in TiO2 net sales (2025 vs. 2024) | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | | TiO2 sales volumes | (1)% | 2% | | TiO2 product pricing | (1)% | —% | | TiO2 product mix/other | (1)% | (1)% | | Changes in currency exchange rates | 2% | —% | | Total | (1)% | 1% |