CompX International Reports Y/Y Declines in Earnings & Sales in Q3

Core Insights - CompX International Inc. faced significant challenges in Q3 2024, with reduced demand and rising costs impacting its primary segments, particularly Security Products and Marine Components [1][2] Q3 Earnings & Revenue Performances - The company reported Q3 2024 earnings per share of 28 cents, a decline of 39.6% from 47 cents in the same quarter last year, primarily due to lower sales volume and increased expenses [3] - Net sales for the quarter were $33.67 million, down 16.6% from $40.36 million in Q3 2023 [3] Segment Analysis - Security Products: Sales were $26.57 million, down 15% from $31.38 million in the prior-year quarter, with operating income decreasing by 30% to $4.55 million [5][6] - Marine Components: Sales were $7.10 million, a 21% year-over-year decrease from $8.98 million, with operating income down 64% to $0.60 million [7][8] Profitability Metrics - Gross margin decreased by 3.2% to 28.1% from 31.3% in Q3 2023, driven by lower sales volumes and increased material and labor costs [9] - Operating income for the quarter was $3.35 million, a 48.8% decrease from $6.55 million in Q3 2023 [10] - Net income was $3.48 million, down 39.6% from $5.76 million in the same quarter last year [11] Cost Analysis - Cost of sales as a percentage of revenues increased to 71.9% from 68.7% in Q3 2023, contributing to the decline in gross margin [13] - Operating costs rose slightly to $6.12 million from $6.07 million in the prior-year quarter, influenced by higher employee salaries and benefits [13] Cash, Debt & Capital Expenditure - Liquidity improved, with cash and cash equivalents rising to $58.79 million as of September 30, 2024, from $41.39 million at the end of 2023 [14] - The company allocated $1.2 million toward capital expenditure in the first nine months of 2024, with a full-year capex target of $2.1 million [14] Management Guidance - The company anticipates continued challenging conditions in key markets, particularly in government security and recreational marine segments, with expectations of lower recurring sales for Security Products [15] - Demand in the towboat market remains weak due to economic headwinds and higher interest rates affecting consumer spending [15] Other Developments - CompX International declared a special dividend of $2 per share in August 2024, distributing $24.6 million in cash to shareholders [16] - The company is actively evaluating inventory adjustments and cost-saving initiatives, particularly within Marine Components [16]