CompX(CIX) - 2022 Q1 - Quarterly Report

Financial Performance - Operating income increased to $6.3 million in Q1 2022, up from $5.8 million in Q1 2021, primarily due to higher sales in both Security Products and Marine Components segments [44]. - Net sales rose by $6.1 million in Q1 2022 to $42.1 million, driven by a 14% increase in Security Products sales and a 24% increase in Marine Components sales [45][52][53]. - Gross margin percentage decreased to 28.7% in Q1 2022 from 30.7% in Q1 2021, attributed to increased production costs across both segments [46]. - Operating costs increased to $5.8 million in Q1 2022, up from $5.2 million in Q1 2021, due to higher salary, benefit costs, and increased expenses in advertising and travel [47]. - The company expects strong demand to continue in 2022, projecting increased net sales and operating income compared to 2021 [57]. Sales Performance - Security Products net sales increased by $1.4 million in the government security market and $0.9 million to distributors in Q1 2022 compared to Q1 2021 [52]. - Marine Components net sales increased by $2.0 million to original equipment boat manufacturers in the towboat market in Q1 2022 [53]. Cash Flow and Liquidity - The company reported a net cash used by operating activities decrease of $0.2 million in Q1 2022 compared to Q1 2021, primarily due to increased operating income [60]. - As of March 31, 2022, the company had $70.2 million in cash and cash equivalents, all held in the U.S. [71]. - The company plans to use cash generated from operations and cash on hand to meet liquidity needs for the next 12 months and five years [70]. - The company evaluated liquidity requirements and may seek to raise additional capital or restructure indebtedness in the future [68]. Capital Expenditures and Investments - Capital expenditures for the first three months of 2022 were $1.7 million, compared to $0.6 million in the same period of 2021 [64]. - Firm purchase commitments for capital projects in process at March 31, 2022, totaled $0.6 million [71]. - The company has 602,547 shares available for repurchase under an authorized stock repurchase program as of March 31, 2022 [72]. - The company acquired 50,000 shares of its Class A common stock for $0.8 million during the first quarter of 2021 [66]. Inventory and Efficiency - Average days sales outstanding for Security Products improved to 42 days in Q1 2022 from 46 days in Q1 2021, indicating better collection efficiency [63]. - Days in inventory for consolidated CompX decreased from 96 days in December 2021 to 85 days in March 2022 [64]. Dividends and Shareholder Returns - The board of directors increased the regular quarterly dividend from $0.20 per share to $0.25 per share starting in the first quarter of 2022 [65]. Market Risks - The company is exposed to market risk from changes in interest rates and raw material prices, with no material changes reported since the 2021 Annual Report [75]. Supply Chain Issues - Current global supply chain disruptions are impacting sourcing of raw materials, leading to increased production costs, which the company is addressing through price increases and surcharges [57][58].