CIX 10-K & 10-Q changes, risk factors and insider trading

Certain components used in our products are manufactured by foreign suppliers located in China and elsewhere. Global economic and political conditions, including natural disasters, terrorist acts, transportation disruptions, global conflicts or trade wars and public health crises such as pandemics, could prevent our vendors from being able to supply these components. Should our vendors not be able to meet their supply obligations or should we be otherwise unable to obtain necessary raw materials or components, we may incur higher supply costs or may be required to reduce productionor levels.suspend production. In addition, the imposition of new tariffs or increases in existing tariffs by the U.S. government on imports from China, Mexico or other countries from which we import raw materials and other components could increase our supply costs. Increases in our supply costs may decrease our liquidity or negatively impact our financial condition or results of operations as we may be unable to offset the higher costs with increases in our selling prices or reductions in other operating costs.

We reported operating income of $22.6 million in 2025 compared to $17.0 million in 2024 and $25.4 million in 2023. The increase in operating income in 2025 compared to 2024 was driven by higher sales and improved gross margin at each of 2023the Security Products and 2022.Marine TheComponents decreasesegments. In contrast, the decline in operating income in 2024 compared to 2023 isresulted due tofrom lower sales and gross margin at both Security Products and Marine Components. Operating income in 2023 was comparable to 2022 as lower Marine Components sales were offset by higher Security Products sales and higherreduced gross margin percentages across both segments. See results of operations discussion below.

Net Sales. Net sales decreasedincreased $15.4$12.4 million in 20242025 compared to 20232024 primarily due to lower Marine Components sales to the towboat market and lowerhigher Security Products sales to the government security market asand ahigher resultMarine ofComponents sales related to avarious pilotmarkets project that shipped inincluding the thirdtowboat, government and fourthindustrial quarters of 2023 and for which there were no related sales in 2024.markets. See segment results discussion below.

Net sales decreased $5.3$15.4 million in 20232024 compared to 20222023 primarily due to lower Marine Components sales primarily to the towboat market,market partiallyand offset by higherlower Security Products sales largelyto the government security market as a result of sales related to a pilot project that shipped in the third and fourth quarterquarters of 2023.2023 and for which there were no related sales in 2024. See segment results discussion below.

Cost of Sales and Gross Margin. Cost of sales decreasedincreased in 20242025 compared to 20232024 primarily due to the effects of lowerhigher sales at both Security Products and Marine Components partiallyas offsetwell byas higherincreased production costs across both business segments. As a result,However, cost of sales as a percentage of net sales increaseddeclined over the same period.period Grossdriven by a more favorable customer and product mix, particularly within Security Products, and increased coverage of fixed costs due to higher sales across both segments. As a result, gross margin as a percentage of net sales decreasedincreased in 20242025 compared to 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales.2024. See segment results discussion below.

Cost of sales decreased in 20232024 compared to 20222023 primarily due to the effects of lower production costssales at both Security Products and Marine Components aspartially welloffset asby lowerhigher Marineproduction Componentscosts sales.across Grossboth marginbusiness segments. As a result, cost of sales as a percentage of net sales increased over the same periodperiod. Gross margin as a percentage of net sales decreased in 2024 compared to 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales. See segment results 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 gains and losses on sales of property and equipment. Operating costs and expenses increased $.5$1.3 million in 20242025 compared to 20232024 predominantly due to higher employeeemployee-related salarycosts including salaries, benefits, and benefitmedical costsexpenses at Securityboth Products.segments. As a percentage of net sales, operating costs and expenses increaseddecreased in 20242025 compared to 20232024 primarily due to increased operating costs and expenses and decreasedhigher coverage of operating cost and expenses dueas toa lowerresult sales.of higher sales, partially offset by the increased employee-related costs discussed above. See segment results discussion below.

Operating costs and expenses increased $.5 million in 20232024 compared to 20222023 predominantly due to higher employee salary and benefit costs at Security Products which increased by $.6 million.Products. As a percentage of net sales, operating costs and expenses increased in 20232024 compared to 20222023 primarily due to the effect of the increased operating costs and expenses onand decreased coverage of operating cost and expenses due to lower sales. See segment results discussion below.

Operating Income. As a percentage of net sales, operating income increased in 2025 compared to 2024 and decreased in 2024 compared to 2023 and increased in 2023 compared to 2022.2023. Operating income margins were primarily impacted by the factors affecting net sales, cost of sales, gross margin and operating costs discussed above. See segment results discussion below.

General. Our profitability primarily depends on our ability to utilize our production capacity effectively, which is affected by, among other things, the demand for our products and our ability to control our manufacturing costs, primarily comprised of labor costs and materials. The materials used in our products consist of purchased components and raw materials some of which are subject to fluctuations in the commodity markets such as zinc, brass, aluminum and stainless steel. Total material costs represented approximately 46%43% of our cost of sales in 2024,2025, with commodity-related raw materials representing approximately 13%14% of our cost of sales. OurDuring 2025, we experienced increases in the cost of certain raw materialmaterials. Throughout the year, market prices for brass and aluminum experienced a general upward trend. Stainless steel prices were generallyrelatively stable throughin the first halfpart of 2024,2025 althoughbut beginningbegan inincreasing during the latter half of the thirdyear. quarterZinc we began to experience moderate increases in certain raw material costs, particularly brass. The zinc marketpricing was volatile in 2024, but we were successful in making strategic spot buys to keep our costs consistent with 2023. Prices for aluminum and stainless steel, the primary raw materials used for the manufacture of marine components (including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs), were relatively stable in 20242025, becauseand we tookwere advantageable ofto volumemitigate purchaseincreases opportunitiesthrough duringstrategic thespot year.buy purchases. In most cases, commodity raw materials we purchase include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation and energy. Processing and conversion costs are not expected to decrease and may negate the benefit of softening commodity prices on our purchases.decrease. Based on current economic conditions, we expect the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 20252026 to be relativelymore stable,volatile althoughcompared to 2025. In addition to supply and demand, governmental actions such as tariffs may impact raw material markets.

Interest Income. Interest income decreased in 2025 compared to 2024 primarily due to lower average interest rates and decreased average investment balances. Interest income increased in 2024 compared to 2023 and increased in 2023 compared to 2022. The increase for both comparative periods is primarily due to higher interest rates and higher average investment balances, somewhat offset by lower average loan balances on our loan to an affiliate. See NotesNote 3 and 109 to our Consolidated Financial Statements.

Our effective income tax rate was 24% in each of 2022, 2023 and 2024.2024 and 25% in 2025. See Notes 87 and 1110 to our Consolidated Financial Statements. We currently expect our effective income tax rate for 20252026 to be comparable to our effective income tax rate for 2024.2025.

Security Products. Security Products net sales decreasedincreased 5% to $120.7 million in 2025 compared to $115.2 million in 20242024. comparedRelative to $121.2prior millionyear, the increase in 2023sales was primarily due to lower$9.9 million higher sales to the government security market asand a$.6 resultmillion ofhigher sales relatedto the gas station security market, partially offset by lower sales to a pilot project for a government security customer that shipped in the third and fourth quartersvariety of 2023other andmarkets forincluding which there were no related sales in 2024. Relative to prior year, sales were $8.3$2.3 million lower sales to the government securityhealthcare market, $2.0$1.3 million lower sales to the transportation market and $.9$.5 million lower to distributors, partially offset by $4.1 million higher sales to the healthcare market and $.7 million higher sales to the tool storage market. Gross margin as a percentage of net sales forincreased 2024in decreased2025 as compared to 20232024 primarily due to lower sales, a less favorable customer and product mix, higher employee related costs (primarily increased medical costs), higher materials costs (primarily brass and electronics) in the latter half of the year and decreased coverage of fixed costs due to lowerhigher sales.sales and a more favorable customer and product mix. These factors were partially offset by higher cost associated with inventory sold during the second half of the year and increased employee-related expenses including salaries, benefits and medical costs, of $2.6 million. Operating income margin decreasedincreased for 20242025 compared to 20232024 primarily due to the factors impacting gross margin, as well as decreasedincreased coverage of operating costs and expenses from lowerhigher sales andpartially increasedoffset by higher operating costs and expenses, including higherincreased employeeemployee-related salaries and benefit costsexpenses of $.5 million, primarily in the first half of the year.million.

Security Products net sales increaseddecreased 6%5% to $115.2 million in 2024 compared to $121.2 million in 2023 compared to $114.5 million in 2022 primarily due to higherlower sales to the government security market as a result of sales related to a pilot project for a government security customer.customer that shipped in the third and fourth quarters of 2023 and for which there were no related sales in 2024. Relative to prior year, sales were $8.3 million higherlower to the government security market, $2.0 million lower to the transportation market and $1.5$.9 million higherlower to distributors, partially offset by $1.7$4.1 million lowerhigher sales to the office furniturehealthcare market and $.7 million lowerhigher sales to the gastool station securitystorage market. Gross margin as a percentage of net sales for 20232024 increaseddecreased as compared to 20222023 primarily due to lower productionsales, a less favorable customer and product mix, higher employee related costs (includingprimarily lowerincreased material,medical overtimecosts), higher materials costs (primarily brass and shippingelectronics) costs)in the latter half of the year and increaseddecreased coverage of fixed costs ondue to lower sales. Operating income margin decreased for 2024 compared to 2023 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales and increased operating costs and expenses, including higher sales,employee salaries and benefit costs of $.5 million, primarily in the fourthfirst quarter.half of the year.

Marine Components. Marine Components net sales decreasedincreased 23%22% in 20242025 as compared to 20232024 primarily due to $8.7 million lower sales to the towboat market through the first three quarters of 2024, partially offset by higher sales in the fourth quarter of 2024, including $1.1$2.7 million higher sales to the towboat market and(including $1.0a one-time stocking event for a towboat OEM customer), $2.5 million higher sales to the government market. Relative to the full year of 2023, sales were $7.6 million lower to the towboat market (primarily to original equipment boat manufacturers), $1.4 million lower to the industrial market and $.6 million lower to each the engine builder market and distributors, partially offset by $1.4$2.2 million higher sales to the governmentindustrial market, partially offset by $1.1 million lower sales to the center console market. Gross margin as a percentage of sales decreasedincreased in 20242025 compared to 20232024 primarily due to higher cost inventory produced during the fourth quarter of 2023 and sold in the first quarter of 2024 and decreasedincreased coverage of fixed costs as a result of lowerhigher sales,sales partially offset by ahigher moreemployee-related favorableexpenses customerincluding salaries, benefits and product mix, lower employee salaries and benefits of approximately $1.8 million primarily related to headcount reductions and decreased labormedical costs of $1.2$1.7 million due to lower production volumes.million. Operating income as a percentage of net sales decreasedincreased in 20242025 compared to 20232024 due to the factors impacting gross margin, as well as decreasedincreased coverage of operating costs and expenses on lowerhigher sales, partially offset by reducedhigher operating costs and expenses, including lowerincreased employee relatedemployee-related expenses of $.2$.4 million.

Marine Components net sales decreased 23% in 20232024 as compared to 2022.2023 primarily due to $8.7 million lower sales to the towboat market through the first three quarters of 2024, partially offset by higher sales in the fourth quarter of 2024, including $1.1 million higher sales to the towboat market and $1.0 million higher sales to the government market. Relative to priorthe year,full year of 2023, sales were $12.8$7.6 million lower to the towboat market (primarily to original equipment boat manufacturers), and $2.0$1.4 million lower to the industrial market and $.6 million lower to each of the engine builder market,market and distributors, partially offset by $1.2 million higher industrial sales and $.8$1.4 million higher sales to the center console boatgovernment market. Gross margin as a percentage of sales increaseddecreased in 20232024 compared to 20222023 primarily due to lowerhigher rawcost materialinventory costsproduced (primarilyduring stainlessthe steelfourth quarter of 2023 and aluminum),sold lowerin suppliesthe costsfirst drivenquarter byof lower volume, lower shipping costs2024 and lower labor costs from reduced employee overtime due to lower sales volumes, partially offset by decreased coverage of fixed costs as a result of lower sales.sales, partially offset by a more favorable customer and product mix, lower employee salaries and benefits of approximately $1.8 million primarily related to headcount reductions and decreased labor costs of $1.2 million due to lower production volumes. Operating income as a percentage of net sales decreased slightly in 20232024 compared to 2022 primarily2023 due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses fromon lower sales.sales, partially offset by reduced operating costs and expenses, including lower employee related expenses of $.2 million.

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,challenges in the past, 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 tariffstariffs, and the impact of economic conditionsconditions, 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.

Operating activities. Trends in cash flows from operating activities, excluding changes in assets and liabilities, for the last three years have generally been similar to the trends in our earnings. Depreciation and amortization in 2025 was comparable to 2024. Depreciation and amortization decreased in 2024 compared to 2023 primarily due to reductions in capital spending in 2023 and 2024 as a result of generally reduced demand levels. Depreciation and amortization in 2023 was comparable to 2022. See Note 1 to our Consolidated Financial Statements.

Changes in assets and liabilities result primarily from the timing of production, sales and purchases. Such changes in assets and liabilities generally tend to even out over time. However, year-to-year relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities. Cash provided by operating activities wasof $22.9 million in 20242025 comparedwas comparable to $25.8 million in 2023. The $2.9 million decrease in cash provided by operating activities was2024 primarily due to the net result of:

Cash provided by operating activities was $22.9 million in 2024 compared to $25.8 million in 20232023. comparedThe to $16.9$2.9 million in 2022. The $8.9 million increasedecrease in cash provided by operating activities was primarily the net result of:

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the total average days sales outstanding decreased from December 31, 2023 to December 31, 2024activities and is primarily impacted by the timing of sales and collections in the last month of the year. As shown below, the total average days sales outstanding at December 31, 2025 was comparable to December 31, 2024. For comparative purposes, we have provided 20222023 numbers below.

Investing activities. Capital expenditures havein 2025 were focused primarily emphasizedon improving our manufacturing facilities and investing in manufacturing equipment, including utilizing new technologies and increased automationautomation. ofThese theinvestments manufacturingwere process,made to provide for increasedimprove productivity and efficiencyoperational inefficiency, order to meetsupport expected customer demand and properlyensure maintainthe ongoing maintenance and reliability of our facilities and technology infrastructure. Capital expenditures were $3.7 million in 2022, $1.1 million in 2023 and2023, $1.4 million in 2024. Our 2022 capital expenditures were higher as we accelerated the timeline for certain projects designed to increase capacity2024 and improve$3.7 our capabilitiesmillion in response2025. toIn strong customer demand. Beginning in the latter half of 20222023 and continuing through 2024, we limited investments primarily to those expenditures required to meetsupport our existing customer demand and to properly maintain our facilities and technology infrastructure. See Note 2 to our Consolidated Financial Statements.

We expect our capital expenditures forin 20252026 willto betotal approximately $3.2$4.3 millionmillion, primarily to meet oursupport expected customer demand and those required to properlymaintain maintainand improve our facilities and technology infrastructure. Capital spending for 20252026 is expected to be funded through cash on hand and cash generated from operations.

During 2022, we had gross purchases of U.S. treasury marketable securities aggregating $33.0 million. During 2023, we had gross purchases of U.S. treasury marketable securities aggregating $36.3 million and received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities. During 2024, we received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities. See Note 3 to our Consolidated Financial Statements.

Financing activities. Regular quarterly dividends paid totaled $12.4 million and $12.3 million ($1.00 per share, or $.25 per share per quarter) in 2022 and 2023, respectively,2023 and $14.8 million ($1.20 per share, or $.30 per share per quarter) in 2024.each of 2024 and 2025. In addition, our board of directors declared special dividends on our Class A common stock which totaled $21.5 million ($1.75 per share) paid in August 2022 and $24.6 million ($2.00 per share) paid in August 2024.2024 and $12.3 million ($1.00 per share) paid in August 2025. On March 5,4, 20252026 our board of directors declared a first quarter 20252026 dividend of $.30 per share, to be paid on March 25,24, 20252026 to CompX stockholders of record as of March 17,16, 2025.2026. 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.

Operating income in the firstsecond quarter of 2026 was $7.1$8.9 million compared to $5.9$6.3 million in the same period of 2025. TheOperating increaseincome infor the first six months of 2026 was $16.0 million compared to $12.2 million for the comparable prior year period. Our operating income increased in the second quarter and for the first quartersix months of 2026 compared to 2025 is primarily due to higher sales and gross marginmargins, predominantly at the Security Products segment and, to a lesser extent, at the impact of higher sales at Marine Components.Components segment.

Net sales. Net sales increased $.3$3.2 million and $3.5 million in the firstsecond quarter and for the first six months of 20262026, respectively, compared to the same periodperiods in 2025 primarily due to higher Security Products sales across a variety of markets and higher Marine Components sales to the industrial marketmarket. partiallySee offsetsegment bydiscussion lower Security Products sales.below.

Cost of sales and gross margin. Cost of sales as a percentage of net sales decreasedimproved 2.5%by 3.7% and 3.1% in the firstsecond quarter and first six months of 20262026, respectively, compared to the same periodperiods in 2025. As a result, gross margin as a percentage of net sales increased over the same period.periods. GrossThe improvement in gross margin percentage increased infor the second quarter and first quartersix months of 2026 compared to the same period in 2025was primarily due to a higher gross margin percentage at Security Products. In addition, improved gross margin performance at Marine Components contributed favorably to the increase in the second-quarter comparative period. 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 andsales, administrative costs relating to business unit and corporate management activities, as well as anyand gains and losses on property and equipment. Operating costs and expenses for the second quarter and first quartersix months of 2026 were comparable to the same periodperiods in 2025. Operating costs and expenses as a percentage of net sales fordecreased in the second quarter and first quartersix months of 2026 decreased slightly due to increasedhigher 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 quartersix months of 2026 increased compared to the same period of 2025 and was primarily impacted by the factors impacting sales, cost of sales, gross margin and operating costs and expenses. See segment discussion below.

Interest income. Interest income decreased $.2 million and $.4 million in the firstsecond quarter and first six months of 20262026, respectively, compared to the same periodperiods in 2025 primarily due to lower average interest rates and decreased average investmentcash balances.

Security Products. Security Products net sales decreasedincreased 1%9% in the firstsecond quarter of 2026 compared to the same period lastin year2025 primarily due to lower sales across a variety of markets. The decrease was driven by $.3$.9 million lowerhigher sales to the healthcare marketmarket, and $.2$.7 million lowerhigher sales to each of the generaltransportation cabinetry,market, electric$.5 controlmillion panel,higher sales to distributors and gas station security markets. These decreases were partially offset by $.3$.4 million higher sales to the tool storage marketmarket. andSecurity $.2Products net sales increased 4% in the first six months of 2026 compared to the same period in 2025 primarily due to $.8 million higher sales to the institutionaltransportation furnituremarket, market.$.7 Grossmillion margin as a percentage of nethigher sales increasedto the tool storage market, $.6 million higher sales to the healthcare market and $.4 million higher sales to distributors. Sales to the government security market in the second quarter and in the first quartersix primarilymonths dueof to2026 awere more favorable customer and product mix. Operating income margin also increased, primarily duecomparable to the improvementsame periods in gross margin discussed above.2025.

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 suppliers in Asia, including China. Beginning in the second quarter of 2025 and continuing through the firstsecond quarter of 2026, we incurredexperienced tariff-relatedcost surchargesincreases tofor certain imported raw materials, primarily electronic components.components, including increases in tariffs and shipping costs. In addition, someinflationary ofpressures ourhave U.S.-basedincreased supplierscosts are applying tariff-related surcharges onfor certain domesticallydomestically-sourced sourcedraw materials. Where possible, we increase selling prices to recover these higher 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, duration of tariffs, and our customers’ ability to substitute alternative products. WeAccordingly, willwe continue to closely monitor raw material costs, including zinc, brass, aluminum, steel and energy, as well as current and anticipated near-term customer demand levelslevels, to ensure our production capabilitiescapacity and inventoriesinventory arelevels remain aligned accordingly.with market conditions.

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, 2025 to MarchJune 31,30, 2026, with changes varying by segmentsegment, primarily as a result of relative changesdifferences in the timing of sales and collections relative to the endquarter-end, ofincluding differences arising from the quarter.fiscal month-end close occurring before calendar month-end, when certain large customers typically remit payments. For comparative purposes, we have provided December 31, 2024 and MarchJune 31,30, 2025 numbers below.

As shown below, our average number of days in inventory decreased from December 31, 2025 to MarchJune 31,30, 2026 primarily due to lowera reduction in days in inventory at MarineSecurity ComponentsProducts, driven by higher sales volumes in the firstsecond quarter of 2026 as compared to the fourth quarter of 2025. This improvement was partially offset by an increase in days in inventory at Marine Components, primarily due to higher work-in-process inventory balances resulting from delays in certain raw material shipments, as well as the timing of customer order fulfillment. For comparative purposes, we have provided December 31, 2024 and MarchJune 31,30, 2025 numbers below.

Investing activities. Our capital expenditures were $.4$1.5 million and $.8$2.2 million in the first threesix months of 2026 and 2025, respectively. During the first threesix months of 2026, Valhi repaid a net $.6$1.2 million under the promissory note ($3.1$7.6 million of gross borrowings and $3.7$8.8 million of gross repayments). During the first threesix months of 2025, Valhi repaid a net $.4 million under the promissory note balance with Valhi had net activity of nil ($.5$6.0 million of gross borrowings and $.5$6.4 million of gross repayments). See Note 10 to our Condensed Consolidated Financial Statements.

Financing activities. Financing activities consisted only of cash dividends. Our board of directors declared a regular quarterly dividend of $.30 per share inDuring each of the first quarterssix months of 20252026 and 2026.2025, 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.

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 loanlend from time to time under the terms of our revolving loan to Valhi discussed in Note 10 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 $49.4$52.4 million aggregate cash and cash equivalents at MarchJune 31,30, 2026 were held in the U.S.

Capital expenditures. Firm purchase commitments for capital projects in process at MarchJune 31,30, 2026 totaled $.4$1.1 million. We expect our capital expenditures for 2026 will be approximately $4.3$5.5 million primarily to improveincrease ourcapacity manufacturingthrough facilities and investinvestments in manufacturing equipment, including new technologies and increased automation.automation and for improvements to our manufacturing facilities.

Stock repurchase program. At MarchJune 31,30, 2026, we have 523,647 shares available for repurchase under a stock repurchase program authorized by our board of directors.

There have been no changes in the first threesix months of 2026 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report.