# Compx International Inc: Form 10-Q for the period ended Jun 30, 2025

- Company: [Compx International Inc](/companies/cix.md) (CIK 1049606)
- Form: 10-Q
- Filed: 2025-08-05
- Accepted by EDGAR: Aug 5, 2025, 16:16 ET
- Period: 2025-06-30
- Accession: 0001558370-25-010298
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1049606/000155837025010298/cix-20250630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1049606/000155837025010298/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $40.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $80.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $27.5m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $55.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $12.9m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $25.1m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $6.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $12.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $6.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $12.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $1.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $3.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $5.5m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $10.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.44 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.86 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.44 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.86 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 12,321,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 12,320,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $4.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $2.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $7.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2025-06-30 | $56.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $107.6m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $164.8m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $14.4m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-06-30 | $149.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,956 characters.

### Business Overview

We are a leading manufacturer of engineered components utilized in a variety of applications and industries. Through our Security Products segment we manufacture mechanical and electrical cabinet locks and other locking mechanisms used in postal, recreational transportation, office and institutional furniture, cabinetry, tool storage and healthcare applications. We also manufacture wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries through our Marine Components segment.

### General

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements in this Quarterly Report that are not historical facts are forward-looking in nature and represent management’s beliefs and assumptions based on currently available information. In some cases, you can identify forward-looking statements by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expects” or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we do not know if these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results. Actual future results could differ materially from those predicted. The factors that could cause actual future results to differ materially from those described herein are the risks and uncertainties discussed in this Quarterly Report and those described from time to time in our other filings with the SEC and include, but are not limited to, the following:

- Future supply and demand for our products;
- Changes in our raw material and other operating costs (such as zinc, brass, aluminum, steel and energy costs), including as a result of additional or changed tariffs on imported raw materials, and our ability to pass those costs on to our customers or offset them with reductions in other operating costs;
- Price and product competition from low-cost manufacturing sources (such as China);
- The impact of pricing and production decisions;
- Customer and competitor strategies including substitute products;
- Uncertainties associated with new product development and the development of new product features;
- Pending or possible future litigation (such as litigation related to our use of certain permitted chemicals in our production process) or other actions;
- Our ability to protect or defend our intellectual property rights;
- Potential difficulties in integrating future acquisitions;
- Decisions to sell operating assets other than in the ordinary course of business;
- Environmental matters (such as those requiring emission and discharge standards for existing and new facilities);
- The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform;
- Government laws and regulations and possible changes therein including new environmental, health and safety, sustainability or other regulations;
- General global economic and political conditions that disrupt our supply chain, reduce demand or perceived demand for component products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises);
- Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions,

unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises);

- The introduction of new, or changes in existing, tariffs, trade barriers or trade disputes (including tariffs imposed by the U.S. government on imports from China and Mexico);
- Technology related disruptions (including, but not limited to, cyber-attacks; software implementation, upgrades or improvements; technology processing failures; or other events) related to our technology infrastructure that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders; and
- Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts.

Should one or more of these risks materialize (or the consequences of such development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.

### Operating Income Overview

Operating income in the second quarter of 2025 was $6.3 million compared to $5.1 million in the same period of 2024. Operating income for the first six months of 2025 was $12.2 million compared to $8.8 million for the comparable prior year period. Our operating income increased in the second quarter and for the first six months of 2025 due to higher sales and gross margin at each of the Security Products and Marine Components segments.

We sell a large number of products that have a wide variation in selling price and manufacturing cost, which results in certain practical limitations on our ability to quantify the impact of changes in individual product sales quantities and selling prices on our net sales, cost of sales and gross margin. In addition, small variations in period-to-period net sales, cost of sales and gross margin can result from changes in the relative mix of our products sold.

### Results of Operations

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2024 | ​ ​ ​ ​% ​ | ​ ​ 2025 | ​ ​ ​ ​% ​ |
| --- | --- | ---: | ---: | ---: | ---: |
| Net sales | ​ | $35,887 | 100.0% | **$40,366** | **100.0%** |
| Cost of sales | ​ | 24,722 | 68.9 **​** | **27,476** | **68.1** **​** |
| Gross margin | ​ | 11,165 | 31.1 **​** | **12,890** | **31.9** **​** |
| Operating costs and expenses | ​ | 6,084 | 17.0 **​** | **6,570** | **16.3** **​** |
| Operating income | ​ | $5,081 | 14.1% | **$6,320** | **15.6%** |

| ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, |
| --- | --- | ---: |
| **​** |  | **2024%** **2025%** **​** |
| **​** | **​** | **(Dollars in thousands)** |
| Net sales | ​ | $73,858 100.0% **$80,638** **100.0%** |
| Cost of sales | ​ | 53,026 71.8 **​** **55,585** **68.9** **​** |
| Gross margin | ​ | 20,832 28.2 **​** **25,053** **31.1** **​** |
| Operating costs and expenses | ​ | 12,036 16.3 **​** **12,864** **16.0** **​** |
| Operating income | ​ | $8,796 11.9% **$12,189** **15.1%** |

*Net sales*. Net sales increased $4.5 million and $6.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 due to higher Security Products sales to the government security market and higher Marine Component sales to the government and towboat markets. See segment discussion below.

*Cost of sales and gross margin.* Cost of sales as a percentage of sales improved .8% in the second quarter of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. Gross margin percentage increased in the second quarter of 2025 compared to the same period in 2024 primarily due to higher Marine Components gross margin percentage partially offset by lower Security Products gross margin percentage. Cost of sales as a percentage of sales improved 2.9% for the first six months of 2025 compared to the same period in 2024. As a result, gross margin as a percentage of sales increased over the same period. The increase in gross margin percentage for the six-month comparative period is primarily due to higher gross margin percentage at Marine Components, primarily in the first quarter. See segment discussion below.

*Operating costs and expenses.* Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as any gains and losses on property and equipment. Operating costs and expenses for the second quarter and the first six months of 2025 increased $.5 million and $.8 million, respectively, compared to the same periods in 2024 primarily due to higher employee related costs including salaries, benefits and medical expenses at both segments. Operating costs and expenses as a percentage of net sales decreased for the second quarter and for the first six months of 2025 due to higher coverage of operating costs and expenses as a result of higher sales.

*Operating income.* As a percentage of net sales, operating income for the second quarter and the first six months of 2025 increased compared to the same periods of 2024 and was primarily impacted by the factors affecting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.

*Interest income.* Interest income decreased $.4 million and $.8 million in the second quarter and for the first six months of 2025, respectively, compared to the same periods in 2024 primarily due to lower average interest rates and decreased cash balances.

*Provision for income taxes.* A tabular reconciliation of our actual tax provision to the U.S. federal statutory income tax rate is included in Note 6 to the Condensed Consolidated Financial Statements. Our operations are wholly within the U.S. and therefore our effective income tax rate is primarily reflective of the U.S. federal statutory rate and applicable state taxes.

### Segment Results

Key performance indicators for our segments are gross margin and operating income.

*(Dollars in thousands)*

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ Security Products: | ​ ​ ​ ​ | ​ ​ ​ Three months ended June 30, 2024 ​ | ​ ​ ​ ​ ​% 2025 ​ ​ | ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ Six months ended June 30, 2024 ​ | ​ ​ ​ ​ ​% 2025 ​ ​ | ​ ​ Change ​ ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | ​ | $28,213 **​** | **$30,683** | 9% | $58,100 **​** | **$60,913** | 5% |
| Cost of sales | ​ | 19,261 **​** | **21,129** | 10 ​ | 40,376 **​** | **42,361** | 5 ​ |
| Gross margin | ​ | 8,952 **​** | **9,554** | 7 ​ | 17,724 **​** | **18,552** | 5 ​ |
| Operating costs and expenses | ​ | 3,510 **​** | **3,786** | 8 ​ | 6,832 **​** | **7,263** | 6 ​ |
| Operating income | ​ | $5,442 **​** | **$5,768** | 6 ​ | $10,892 **​** | **$11,289** | 4 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Gross margin | ​ | 31.7% | **31.1%** | ​ ​ | 30.5% | **30.5%** | ​ |
| Operating income margin | ​ | 19.3 **​** | **18.8** | ​ ​ | 18.7 ​ | **18.5** | ​ |

*Security Products*. Security Products net sales increased 9% and 5% in each of the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. Relative to prior year, the increase in second quarter sales was primarily due to $3.3 million higher sales to the government security market and $.5 million higher sales to the healthcare market, partially offset by $.9 million lower sales to the transportation market, $.3 million lower sales to the tool storage market and $.2 million lower sales to distributors. Relative to prior year, the increase in sales for the first six months was primarily due to $4.9 million higher sales to the government security market and $.8 million higher sales to the healthcare market, partially offset by $1.5 million lower sales to the transportation market, $.6 million lower sales to the tool storage market and $.4 million lower sales to distributors.

Gross margin and operating income as a percentage of net sales for the second quarter of 2025 decreased slightly as compared to the same period in 2024 primarily due to higher employee related costs including salaries, benefits and medical expense partially offset by increased coverage of fixed costs and operating costs and expenses as a result of higher sales. Gross margin as a percentage of net sales in the first six months of 2025 were comparable to the same period in 2024. Operating income as a percentage of net sales in the first six months of 2025 decreased slightly compared to the same period in prior year due to higher employee related costs including salaries, benefits and medical expenses.

*(Dollars in thousands)*

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ Marine Components: | ​ ​ ​ ​ | ​ ​ ​ Three months ended June 30, 2024 ​ | ​ ​ ​ ​ ​% 2025 ​ ​ | ​ ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ Six months ended June 30, 2024 ​ | ​ ​ ​ ​ ​% 2025 ​ ​ | ​ ​ Change ​ ​ |
| --- | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | ​ | $7,674 **​** | **$9,683** | 26% | $15,758 **​** | **$19,725** | 25% |
| Cost of sales | ​ | 5,461 **​** | **6,347** | 16 ​ | 12,650 **​** | **13,224** | 5 ​ |
| Gross margin | ​ | 2,213 **​** | **3,336** | 51 ​ | 3,108 **​** | **6,501** | 109 ​ |
| Operating costs and expenses | ​ | 826 **​** | **942** | 14 ​ | 1,687 **​** | **1,866** | 11 ​ |
| Operating income | ​ | $1,387 **​** | **$2,394** | 73 ​ | $1,421 **​** | **$4,635** | 226 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ |
| Gross margin | ​ | 28.8% | **34.5%** | ​ ​ | 19.7% | **33.0%** | ​ |
| Operating income margin | ​ | 18.1 **​** | **24.7** | ​ **​** | 9.0 ​ | **23.5** | ​ |

*Marine Components*. Marine Components net sales increased 26% in the second quarter of 2025 compared to the same period in 2024. Relative to prior year, the increase in second quarter sales was primarily due to $1.3 million higher sales to the government market and $.6 million higher sales to the towboat market. Marine Components net sales increased 25% in the first six months of 2025 compared to the same period in 2024. Relative to prior year, the increase in sales for the first six months was primarily due to $2.5 million higher sales to the government market and $2.4 million higher sales to the towboat market, partially offset by $.7 million lower sales to the center console market.

Gross margin as a percentage of net sales increased in the second quarter and for the first six months of 2025 compared to the same periods last year primarily due to increased coverage of fixed costs as a result of higher sales and to a lesser extent a more favorable customer and product mix. Operating income margin increased primarily due to increases in gross margin discussed above partially offset by higher employee related costs including salaries, benefits and medical expense.

*Outlook.* Sales for the first half of 2025 reflect continued robust demand across both of our segments, surpassing the first half of 2024 sales. Marine Components sales and operating income for the first six months of 2025 exceeded prior year on the strength of improved demand to the government market as well as increased sales to the towboat market primarily in the first quarter of 2025 related to a one-time stocking event for a towboat OEM customer. Security Products sales improved from prior year predominantly due to increased sales to the government security market and to a lesser extent increased sales to the healthcare market. The raw material price increases we began experiencing in the third quarter of 2024 have continued through the first half of 2025, and we are starting to see some surcharges related to tariffs on certain components, primarily electronic components from Asia.

We expect Security Products net sales in 2025 to improve over 2024 primarily due to continued higher sales to the government security and healthcare markets; however, we expect these increases will be offset somewhat by certain other markets that continue to be challenging including transportation and distribution. Security Products gross margin and operating income percentages will be challenged during the last half of 2025 primarily due to higher cost inventory we began producing late in the second quarter due to higher raw material costs and tariff related surcharges on certain raw materials, primarily electronic components, which we expect to continue in the second half of 2025. As a result, we expect gross margin and operating income margin at Security Products to be in-line with prior year. We expect Marine Components net sales to increase in 2025 predominantly due to higher expected sales to the government market as well as higher expected sales to the industrial market in the second half of the year. Overall, we expect Marine Components to have improved gross margins and operating income percentages in 2025 compared to 2024 due to increased coverage of fixed costs on higher expected sales volumes.

We manufacture substantially all of our products in the U.S. and source a substantial majority of our raw materials from U.S. suppliers. We also source certain components, primarily electronic components from Asia, including China.

Early in the first quarter of 2025, in anticipation of the U.S. federal government tariffs announcements, we increased purchases of certain electronic components and other components to mitigate the potential near-term impact of tariffs. As noted above, late in the second quarter we began incurring tariff related surcharges on certain raw materials, primarily electronic components. We are working to increase selling prices to our customers to recoup these increased raw material costs, although the extent to which we can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, the length of time tariffs are in effect, and the ability of our customers to substitute alternative products. We will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly.

Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal. We have in the past experienced global and domestic supply chain challenges, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs and the impact of economic conditions, consumer confidence and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

### Liquidity and Capital Resources

### Consolidated cash flows –

*Operating activities*. Trends in cash flows from operating activities, excluding changes in assets and liabilities, have generally been similar to the trends in operating earnings. Changes in assets and liabilities result primarily from the timing of production, sales and purchases. Changes in assets and liabilities generally tend to even out over time. However, period-to-period relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities.

Our net cash provided by operating activities for the first six months of 2025 decreased by $6.9 million as compared to the first six months of 2024. The decrease in net cash provided is primarily due to the net effects of:

- A $10.7 million increase in the amount of net cash used by relative changes in our inventories, receivables, prepaids, payables and non-tax related accruals in 2025;
- A $3.4 million increase in operating income in 2025; and
- A $.6 million decrease in cash paid for taxes in 2025 due to the relative timing of payments.

Changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the change in our average days sales outstanding increased from December 31, 2024 to June 30, 2025 primarily as a result of a seasonal increase in sales during the second quarter as compared to the fourth quarter and the timing of sales and collections relative to the end of the quarter. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | **​** | **December 31,** | **​** | **June 30,** | **​** | **December 31,** | **​** | **June 30,** |
| **Days Sales Outstanding:** |  | **2023** |  | **2024** |  | **2024** |  | **2025** |
| Security Products |  | 37 Days |  | 40 Days | ​ | 36 Days |  | 38 Days |
| Marine Components |  | 31 Days |  | 34 Days | ​ | 23 Days |  | 38 Days |
| Consolidated CompX |  | 36 Days |  | 39 Days | ​ | 33 Days |  | 38 Days |

As shown below, our average number of days in inventory increased from December 31, 2024 to June 30, 2025 primarily due to increased inventory as a result of higher raw material and production costs and to meet expected customer demand at both Security Products and Marine Components. For comparative purposes, we have provided December 31, 2023 and June 30, 2024 numbers below.

|  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | **​** | **December 31,** | **​** | **June 30,** | **​** | **December 31,** | **​** | **June 30,** | **​** |
| **Days in Inventory:** |  | **2023** |  | **2024** |  | **2024** |  | **2025** | **​** |
| Security Products |  | 77 Days |  | 88 Days | ​ | 85 Days |  | 97 Days | ​ |
| Marine Components |  | 175 Days |  | 144 Days | ​ | 130 Days |  | 149 Days | ​ |
| Consolidated CompX |  | 95 Days |  | 101 Days | ​ | 94 Days |  | 109 Days | ​ |

\- 16 -

*Investing activities.* Our capital expenditures were $2.2 million and $.7 million in the first six months of 2025 and 2024, respectively. During the first six months of 2025, Valhi repaid a net $.4 million under the promissory note ($6.0 million of gross borrowings and $6.4 million of gross repayments). During the first six months of 2024, Valhi repaid a net $1.4 million under the promissory note ($12.0 million of gross borrowings and $13.4 million of gross repayments). See Note 9 to our Condensed Consolidated Financial Statements.

During the first six months of 2024, we received gross proceeds totaling $24.0 million related to U.S. treasury bill maturities.

*Financing activities.* Financing activities consisted only of cash dividends. During each of the first six months of 2025 and 2024, we paid aggregate quarterly dividends to CompX stockholders of $.60 per share. The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay. In this regard, in August 2025, our board of directors declared a special dividend of $1.00 per share on our Class A common stock, par value $.01 per share. The special dividend is payable on August 27, 2025 to stockholders of record at the close of business on August 18, 2025.

### Future cash requirements –

*Liquidity*. Our primary source of liquidity on an ongoing basis is our cash flow from operating activities, which is generally used to (i) fund capital expenditures, (ii) repay short-term or long-term indebtedness incurred primarily for capital expenditures, investment activities or reducing our outstanding stock, (iii) provide for the payment of dividends (if declared), and (iv) lend to affiliates. From time-to-time, we will incur indebtedness, primarily to fund capital expenditures or business combinations.

Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we may consider using available cash, issuing additional equity securities or increasing our indebtedness or that of our subsidiaries.

We believe that cash generated from operations together with cash on hand, as well as our ability to obtain external financing, will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service, dividends (if declared) and any amounts we might loan from time to time under the terms of our revolving loan to Valhi discussed in Note 9 to our Condensed Consolidated Financial Statements (which loans would be solely at our discretion) for both the next 12 months and five years. To the extent that our actual operating results or other developments differ from our expectations, our liquidity could be adversely affected.

All of our $56.2 million aggregate cash and cash equivalents at June 30, 2025 were held in the U.S.

*Capital expenditures.* Firm purchase commitments for capital projects in process at June 30, 2025 totaled $.6 million. We expect our capital expenditures for 2025 will be approximately $3.4 million primarily to meet our existing customer demand and those required to properly maintain our facilities and technology infrastructure.

*Stock repurchase program.* At June 30, 2025, we have 523,647 shares available for repurchase under a stock repurchase program authorized by our board of directors.

***Commitments and contingencies –***

We are subject to certain commitments and contingencies, as more fully described in our 2024 Annual Report or in Note 7 to our Condensed Consolidated Financial Statements.

### Recent accounting pronouncements –

See Note 10 to our Condensed Consolidated Financial Statements.

### Critical accounting policies –

There have been no changes in the first six months of 2025 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report.

## Market risk

As filed, 375 characters.

We are exposed to market risk from changes in interest rates and raw material prices. There have been no material changes in these market risks since we filed our 2024 Annual Report, and we refer you to Part I, Item 7A – “Quantitative and Qualitative Disclosure About Market Risk” in our 2024 Annual Report. See also Note 8 to our Condensed Consolidated Financial Statements.

## Controls and procedures

As filed, 3,047 characters.

**Evaluation of Disclosure Controls and Procedures.** We maintain disclosure controls and procedures which, as defined in Exchange Act Rule 13a-15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Our management with the participation of Scott C. James, our President and Chief Executive Officer, and Amy A. Samford, our Executive Vice President and Chief Financial Officer, has evaluated the design and operating effectiveness of our disclosure controls and procedures as of June 30, 2025. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of such evaluation.

**Internal Control Over Financial Reporting**. Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, as defined in Exchange Act Rule 13a-15(f), means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets,
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and
- Provide reasonable assurance regarding prevention or timely detection of an unauthorized acquisition, use or disposition of our assets that could have a material effect on our Condensed Consolidated Financial Statements.

**Changes in Internal Control Over Financial Reporting**. There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Aug 5, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-010298. Last ingested by Listed: Nov 4, 2026, 17:29 ET. No prices; not investment advice.