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

The global market in which Kronos operates its business is concentrated, with the top fivefour TiO2 producers accounting for approximately 51%42% of the world’s production capacity and is highly competitive. Competition is based on a number of factors, such as price, product quality and service. Kronos faces significant competition from international and regional competitors, including increasing competition from TiO2 producers in China, who have significant sulfate production process capacity. Chinese producers have also continued to develop chloride process technology, and the risk of substitution of Kronos’ products with products made by Chinese producers could increase if Chinese producers increase the use of chloride process technology and improve the quality of their sulfate and chloride products. Some of Kronos’ competitors may be able to drive down prices for Kronos’ products if their costs are lower than Kronos’ costs, including its competitors with vertically integrated sources of raw materials for the chloride process who may have a competitive advantage during periods of high or rising raw material costs or who operate in regions with less stringent regulatory requirements. For example, Chinese competition generally has lower operating costs due to less stringent regulatory and environmental compliance requirements and less expensive energy prices. China has dumped lower cost sulfate process TiO2 into markets Kronos serves. In some cases, Western TiO2 producers have been successful in obtaining anti-dumping duties on Chinese imports such as duties recently enacted in the European Union, Brazil, Saudi Arabia, and other jurisdictions. In addition, some of Kronos’ competitors’ financial, technological and other resources may be greater than its resources and such competitors may be better able to withstand extended periods of reduced demand or other changes in market conditions. Kronos’ competitors may be able to respond more quickly than it can to new or emerging technologies and changes in customer requirements. Further, consolidation of Kronos’ competitors or customers may result in reduced demand for its products or make it more difficult for Kronos to compete with its competitors. The occurrence of any of these events could result in reduced earnings or operating losses.

Certain components used in CompX’s 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 CompX’s vendors from being able to supply these components. Should CompX’s vendors not be able to meet their supply obligations or should CompX be otherwise unable to obtain necessary raw materials or components, CompX may incur higher supply costs or may be required to reduce productionor levels,suspend eitherproduction. 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 CompX imports raw materials and other components could increase its supply costs. Increases in CompX’s supply costs may decrease our liquidity or negatively impact our financial condition or results of operations as CompX may be unable to offset the higher costs with increases in its selling prices or reductions in other operating costs.

For Kronos, the number of sources for and availability of certain raw materials is specific to the particular geographical region in which its facilities are located. Titanium-containing feedstocks suitable for use in Kronos’ TiO2 facilities are available from a limited number of suppliers around the world. Political and economic instability or increased regulations in the countries from which Kronos purchases or mines its raw material supplies could adversely affect raw material availability. If Kronos or Kronos’ worldwide vendors are unable to meet their planned or contractual obligations and Kronos was unable to obtain necessary raw materials, Kronos could incur higher costs for raw materials or may be required to reduce production levels. For example, Kronos experienced increases in feedstock costs in 2023 and 2024, forwhich example, whichnegatively affected its margins. Kronos has also experienced higher operating costs such as energy costs. Future variations in the cost of energy, which primarily reflect market prices for oil and natural gas, and for raw materials may significantly affect its operating results and decrease liquidity as Kronos may not always be able to increase its selling prices to offset the impact of any higher costs or reduced production levels.

Kronos has supply contracts that provide for its TiO2 feedstock requirements. While Kronos believes it will be able to renew these contracts, as necessary, Kronos does not know if it will be successful in renewing them or in obtaining long-term extensions to them prior to expiration. Kronos’ current agreements have minimum purchase requirements, targeted purchases or require it to purchase certain minimum percentage-based quantities of feedstock withbased minimumupon purchaseits commitmentsannual aggregatingpurchasing requirements. Kronos estimates purchases under these feedstock agreements will be between approximately $542$375 million beginningand $450 million in 2025 and extending through 2026. In addition, Kronos has other long-term supply and service contracts that provide for various raw materials and services.services Thesewhich agreementsmay require Kronos to purchase certain minimum quantities or services with minimum purchase commitments aggregating approximately $67 million at December 31, 2024.quantities. Kronos’ commitmentsobligations under these contracts could adversely affect our financial results if Kronos significantly reduces its production and was unable to modify the contractual commitments.

Kronos’ recent acquisition of the remaining 50% interest in LPC may not generate benefits it anticipates and may otherwise affect its business and prospects.

In July 2024, Kronos recently completed the LPC acquisition in which it purchased the 50% ownership interest in LPC it did not previously own.own and Kronos subsequently merged LPC into Kronos’ wholly-owned subsidiary, Kronos Louisiana. If Kronos experiences unforeseen technological, operationoperational or other difficulties in managingintegrating the integrationKronos ofLouisiana LPCfacility into its operations as itsKronos’ wholly-owned subsidiary, it may not be able to implement the process innovations at the facility that it expects. In addition, Kronos may not be able to achieve the anticipated synergies or improveimprovements in efficiency and product quality that it expects. With or without such difficulties, the integration of the LPCKronos Louisiana facility into Kronos’ operations may divert significant management time and attention from its other operations. If Kronos fails to successfully integrate LPCthe Kronos Louisiana facility into its operations, or if the LPC acquisition does not provide expected synergies or sales increases, or if LPCKronos Louisiana has unexpected legal or financialsfinancial liabilities, its business, financial condition, resultresults of operations and prospects could be adversely affected.

Kronos has a significant amount of debt, primarily related to its 9.50% Senior Secured Notes due 2029 and its 3.75% Senior Secured Notes due 2025,2029, its term loan from Contran, and borrowings on its global revolving credit facility (“Global Revolver”). As of December 31, 2024,2025, Kronos’ total consolidated debt was approximately $507.4$557.4 million. Kronos’ level of debt could have important consequences to our stockholders and creditors, including:

In addition to Kronos’ indebtedness, Kronos is party to various lease and other agreements (including feedstock purchase contracts with minimum commitments and other long-term supply and service contracts, as discussed above) pursuant to which, along with its indebtedness, Kronos is committed to pay approximately $701$193 million in 2025.2026. Kronos’ ability to make payments on and refinance its debt and to fund planned capital expenditures depends on its ability to generate cash flow in the future. To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. In addition, Kronos’ ability to borrow funds under its Global Revolver in the future, in some instances, will depend in part on its ability to maintain specified financial ratios and satisfy certain financial covenants contained in the credit agreement governing the Global Revolver.

Kronos operates its businesses in several different countries and sells its products worldwide. For example, during both 20232024 and 2024,2025, approximately 44% and 45% of Kronos’ sales volumesvolumes, respectively, were sold into European markets. The majority (but not all) of Kronos’ sales from its operations outside the United States are denominated in currencies other than the United States dollar, primarily the euro, other major European currencies and the Canadian dollar. Therefore, Kronos is exposed to risks related to the need to convert currencies weit receivereceives from the sale of its products into the currencies required to pay for certain of its operating costs and expenses and other liabilities (including indebtedness), all of which could result in future losses depending on fluctuations in currency exchange rates and affect the comparability of Kronos’ results of operations between periods.

If some or all of Kronos’ or CompX’s intellectual property were to be declared invalid, held to be unenforceable or copied by competitors, or some or all of Kronos’ or CompX’s confidential information becomebecomes known to competitors, or if Kronos’ or CompX’s competitors were to develop similar or superior intellectual property or technology, their ability to compete could be adversely impacted.

CompX operates production facilities in the United States and Kronos operates production facilities in North America and Europe. Many of Kronos’ and CompX’s facilities require large amounts of energy, including electricity and natural gas, in order to conduct operations. The U.S. government and various non-U.S. governmentalGovernmental agencies of countries in which Kronos and CompX operate have determineddetermined, or may determine in the future the consumption of energy derived from fossil fuels is a major contributor to climate change and have adopted or are contemplating regulatory changes in response to the potential impact of climate change, including laws and regulations requiring enhanced reporting (such as the Corporate Social Responsibility Directive adopted by the European Union on November 28, 2022) as well as legislation regardingregulating carbon emissionand costs,other GHG emissions and the use of renewable energy targets.energy. International treaties or agreements may also result in increasing regulation of GHG emissions, including emissions permits and/or energy taxes or the introduction of carbon emissions trading mechanisms. To date, the existing GHG laws and regulations in effect in the various countries in which Kronos or CompX operates have not had a material adverse effect on financial results. Until the timing, scope and extent of any new or future regulation becomes known, we cannot predict the effect on Kronos’ or CompX’s business, results of operations or financial condition. However, if further GHG laws and regulations were to be enacted in one or more countries, it could negatively impact Kronos or CompX future results of operations through increased costs of production, particularly as it relates to their energy requirements or their need to obtain emissions permits. If such increased costs of production were to materialize, Kronos or CompX may be unable to pass price increases on to their customers to compensate for increased production costs, which may decrease their liquidity, operating income and results of operations. In addition, any adopted future laws and regulations focused on climate change and/or GHG emissions could negatively impact Kronos’ or CompX’s ability (or that of its customers and suppliers) to compete with companies situated in areas not subject to such laws and regulations.

The U.S. federal government has recently implemented tariffs on certain foreign goods and may implement additional tariffs on foreign goods. For example, on March 4, 2025, the U.S. government implemented a 25% tariff on all imports from Mexico and Canada into the U.S. As Kronos currently manufactures a significant portion of its North American TiO2 in Canada, if sustained for an extended period of time, the 25%a tariff on Kronos’ imports into the U.S. from Canada, without exclusion, willwould make its products manufactured in Canada and sold into the U.S. more expensive. As a result, demand for these products could be reduced, or Kronos could be required to absorb the increased costs or increase prices of such products. Tariff mitigation strategies, such as those Kronos undertook in the first quarter of 2025 which included building and positioning inventory from its Canadian facility into the U.S., may result in increased shipping and warehousing costs. Future mitigation strategies may offer only temporary relief from the effect of these tariffs. Such tariffs and, if enacted, any further legislation or actions taken by the U.S. government that restrict trade, such as additional tariffs, trade barriers and other protectionist or retaliatory measures taken in response, could adversely impact Kronos’ ability to sell its products in the U.S. or reduce its revenues and gross margins. These measures may also increase Kronos’ costs of Canadian feedstock imported into the U.S. and could adversely impact its gross margins or require Kronos to raise prices thereby making its products less competitive. Additional tariffs imposed by the U.S or any retaliatory or reciprocal tariffs imposed by other countries could also increase the cost of feedstock and other raw materials that go into making TiO2, the extent of which is unknown. The ultimate impact of any tariffs will depend on various factors, including the length of time tariffs are ultimately implemented and the amount, scope and nature of the tariffs.

Our net incomeloss attributable to NL stockholders was $37.8 million, or $.77 per share, in 2025 compared to net income of $67.2 million, or $1.38 per share, in 2024 compared toand a net loss of $2.3 million, or $.05 per share, in 2023 and net income of $33.8 million, or $.69 per share, in 2022.2023.

Excluding any potential effects from changes in the relative value of marketable equity securities, we currently expect our net income attributable to NL stockholders in 20252026 to be lowerhigher than 20242025 primarily due to incomehigher relatedequity toin earnings of Kronos in 2026 as well as the non-recurring loss on pension plan settlement of a liability for an environmental remediation site recognized in the fourth quarter of 20242025, partially offset by higher expected CompXlitigation segmentfees profit.and related costs in 2026. See also Item 3 – “Legal Proceedings – Environmental matters and litigation” and Note 17 to our Consolidated Financial Statements.

Net sales – CompX’s 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.

CompX’s net sales decreased approximately $5.3$15.4 million in 20232024 compared to 20222023 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.

Cost of sales and gross margin – CompX’s 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 reporting units. As a result,However, CompX’s cost of sales as a percentage of net sales increaseddeclined over the same period.period driven by a more favorable customer and product mix, particularly within Security Products, and increased coverage of fixed costs due to higher sales across both reporting units. As a result, CompX’s 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.

CompX’s 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 by higher production costs across both reporting units. As a result, CompX’s cost of sales as lowera Marinepercentage Componentsof sales.net sales increased over the same period. CompX’s gross margin as a percentage of sales increaseddecreased overin the2024 samecompared periodto 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales.

Selling, general and administrative expenses – CompX’s selling, general and administrative expenses consist primarily of personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to CompX’s businesses and its corporate management activities, as well as gains and losses on property and equipment. CompX’s selling, general and administrative 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.reporting units. As a percentage of net sales, CompX’s selling, general and administrative expenses increaseddecreased in 20242025 compared to 20232024 primarily due to increased selling, general and administrative expenses and decreasedhigher coverage of selling, general and administrative expenses onas lowera sales.result of higher sales, partially offset by the increased employee-related costs discussed above.

CompX’s selling, general and administrative 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 sales, CompX’s selling, general and administrative expenses increased in 20232024 compared to 20222023 primarily due to theincreased effectselling, general and administrative expenses and decreased coverage of the increased selling, general and administrative expenses on lower sales.

Segment profit – As a percentage of net sales, CompX’s segment profit increased in 2025 compared to 2024 and decreased in 2024 compared to 2023 and increased in 2023 compared to 2022.2023. CompX’s segment profit margins were primarily impacted by the factors impacting net sales, cost of sales, gross margin and selling, general and administrative expenses discussed above.

General – CompX’s profitability primarily depends on its ability to utilize its production capacity effectively, which is affected by, among other things, the demand for its products and its ability to control its manufacturing costs, primarily comprised of labor costs and materials. The materials used in CompX’s 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 CompX’s cost of sales in 2024,2025, with commodity-related raw materials representing approximately 13%14% of its cost of sales. CompX’sDuring 2025, CompX 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 Beginningbut inbegan increasing during the latter half of the thirdyear. quarterZinc CompX began to experience moderate increases in certain raw material costs, particularly brass. The zinc marketpricing was volatile in 2024, but CompX was successful in making strategic spot buys to keep its costs consistent with 2023. Prices for aluminum and stainless steel, which are the primary raw materials used for the manufacture of CompX’s marine components (including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs), were relatively stable in 20242025, becauseand itCompX tookwas advantageable ofto volumemitigate purchaseincreases opportunitiesthrough duringstrategic thespot year.buy purchases. In most cases, commodity raw materials CompX purchases 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 CompX’s purchases.decrease. Based on current economic conditions, CompX expects 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.

Security Products – Security Products net sales increased 6%5% to $121.2$120.7 million in 20232025 compared to $114.5$115.2 million in 2022 primarily due to higher sales related to a pilot project for a government security customer.2024. Relative to prior year, the increase in sales werewas $8.3primarily due to $9.9 million higher sales to the government security market and $1.5$.6 million higher to distributors, partially offset by $1.7 million lower sales to the office furniture market and $.7 million lower sales to the gas station security market, partially offset by lower sales to a variety of other markets including $2.3 million lower sales to the healthcare market, $1.3 million lower sales to the transportation market and $.5 million lower sales to the tool storage market. Gross margin as a percentage of net sales forincreased 2023in increased2025 as compared to 20222024 primarily due to lower production costs (including lower material, overtime and shipping costs) and increased coverage of fixed costs ondue to higher sales,sales primarilyand ina more favorable customer and product mix. These factors were partially offset by higher cost associated with inventory sold during the fourthsecond quarter.half Reportingof the year and increased employee-related expenses including salaries, benefits and medical costs, of $2.6 million. Security Products reporting unit profit margin increased for 20232025 compared to 20222024 primarily due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses from higher sales,sales partially offset by increasedhigher operating costs and expenses, including higherincreased employeeemployee-related salaries and benefit costsexpenses of $.6$.5 million.

MarineSecurity ComponentsProducts net sales decreased 23%5% to $115.2 million in 2024 compared to $121.2 million in 2023 asprimarily compareddue to 2022.lower sales to the government security market as a result of sales related to a pilot project for a government security 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 $12.8$8.3 million lower to the towboatgovernment marketsecurity (primarily to original equipment boat manufacturers) andmarket, $2.0 million lower to the enginetransportation buildermarket market,and $.9 million lower to distributors, partially offset by $1.2 million higher industrial sales and $.8$4.1 million higher sales to the centerhealthcare consolemarket boatand $.7 million higher sales to the tool storage market. Gross margin as a percentage of net sales increasedfor in2024 2023decreased as compared to 20222023 primarily due to lower rawsales, materiala less favorable customer and product mix, higher employee related costs (primarily stainlessincreased steelmedical costs), higher materials costs (primarily brass and aluminumelectronics), lowerin suppliesthe costslatter drivenhalf byof lowerthe volume, lower shipping costsyear and lower labor costs from reduced employee overtime due to lower sales volumes, partially offset by decreased coverage of fixed costs asdue a result ofto lower sales. ReportingSecurity Products reporting unit profit as a percentage of net salesmargin decreased slightlyfor in 20232024 compared to 20222023 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales.sales and increased operating costs and expenses, including higher employee salaries and benefit costs of $.5 million, primarily in the first half of the year.

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

The agreements with certain of our insurance carriers also include reimbursement for a portion of our future litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. Accordingly, these insurance recoveries are recognized when receipt is probable and the amount is determinable. In this regard we received $.5 million, $1.4 million and $1.4 millionnil in insurance recoveries in 20232023, 2024 and 2024,2025, respectively. Recoveries in 2022 were nominal. See Note 17 to our Consolidated Financial Statements.

Corporate income (expense), net – Corporate expense was $11.9 million in 2025 compared to corporate income wasof $19.5 million in 2024 compared to corporate expense of $11.8 million in 2023 due to income of $31.4 million recognized in the fourth quarter of 2024 as a result of the settlement of a liability for an environmental remediation site, including income of $9.6 million received from private companies participating in the settlement. Included in corporate (income) expenses are:

Overall, we currently expect that our general corporate expenses in 20252026 will be higher than in 20242025 primarily due to incomeexpected recognizedincreases in 2024litigation fees and related to the settlement of a liability for an environmental remediation site in the fourth quarter of 2024.costs. See also Item 3 – “Legal Proceedings – Environmental matters and litigation” and Note 17 to our Consolidated Financial Statements.

Interest and dividend income –Interest income decreased $4.0 million in 2025 compared to 2024 primarily due to lower interest rates and decreased average investment balances. Interest income increased $1.4 million in 2024 compared to 2023 and increased $5.8 million in 2023 compared to 2022 primarily due to higher interest rates and increased investment balances, somewhat offset by lower average balances on CompX’s revolving promissory note receivable from Valhi.

Income tax expense (benefit) – We recognized income tax expense of $2.8 million in 2022, an income tax benefit of $7.0 million in 2023 and2023, income tax expense of $14.1 million in 2024.2024 and an income tax benefit of $16.1 million in 2025.

In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. Therefore, our full-year effective income tax rate will generally be lower than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in earnings of Kronos. Conversely, our effective income tax rate will generally be higher than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in losses of Kronos. During interim periods, our effective income tax rate may not necessarily correspond to the foregoing due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections. We received aggregate dividends from Kronos of $26.8 million in each of 2022 and 2023 and2023, $16.9 million in 2024.2024 and $7.0 million in 2025. Our effective tax rate attributable to our equity in earnings (losses) of Kronos, including the effect of non-taxable dividends we received from Kronos, was a 3.4% expense58.5% in 2022,2023, a 58.5% expense7.5% in 20232024 and a 7.5% expense25.4% in 2024. The increase in our effective rate from 2022 to 2023 is attributable to the effects of Kronos’ loss in 2023 as compared to earnings in 2022.2025. The decrease in our effective rate from 2023 to 2024 is attributable to the combined effects of Kronos’ earnings in 2024 as compared to loss in 2023 and the lower non-taxable dividend income we received from Kronos in 2024 as compared to 2023. The increase in our effective rate from 2024 to 2025 is attributable to the combined effects of Kronos’ loss in 2025 as compared to earnings in 2024 and the lower non-taxable dividend income we received from Kronos in 2025 as compared to 2024.

As previously reported, effective the Acquisition Date, of July 16, 2024 (“Acquisition Date”), Kronos acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator.Venator Investments, Ltd. Prior to the acquisition, Kronos held a 50% joint venture interest in LPC through a wholly-owned subsidiary. LPC was operated as a manufacturing joint venture between Kronos and Venator.LPC. Following the acquisition, LPC became a wholly-owned subsidiary of Kronos. In 2025, Kronos acquiredmerged LPC into Kronos’ wholly-owned subsidiary Kronos Louisiana, Inc. (the 50%combined jointcompany ventureis interest that it did not already own for consideration of $185 million less a working capital adjustment. An additional earn-out payment of upreferred to $15as million“Kronos basedLouisiana on Kronos’ aggregate consolidated net income before interest expense, income taxes and depreciation and amortization expense, or EBITDA, during a two-year period comprising calendar years 2025 and 2026 may be required. The acquisition was financed through borrowings of $132.1 million under Kronos’ Global Revolver and the remainder paid with Kronos’ cash on hand.“). Kronos accounted for the acquisition of the interest in LPC as a business combination. The results of operations of LPC have been included in Kronos’ results of operations beginning as of the Acquisition Date. See Note 6 to our Consolidated Financial Statements.

Excluding the effect of changes in currency exchange rates,rates and unabsorbed fixed costs, Kronos’ cost of sales per metric ton of TiO2 sold in 20242025 was significantly lower as compared to 20232024 primarily due to significant decreases in per metric ton production costs (primarily energy and raw materials).

Net sales – Kronos’ net sales in 20232025 decreased 14%,1%, or $263.7$27.7 million, compared to 20222024 primarily due to a 13% decrease in sales volumes (which decreased net sales by approximately $251 million) and a 4% decrease in average TiO2 selling prices (which decreased net sales by approximately $77$75 million) somewhat offset by a 2% increase in sales volumes (which increased net sales by approximately $38 million). Changes in product mix positively contributed to net sales, primarily due to higher average selling prices and sales volumes in its complementary businesses which somewhat offset declines in TiO2 sales volumes. In addition to the impact of sales volumes and average TiO2 selling prices,Additionally, Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $10$24 million in 20232025 as compared to 2022.2024. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures,pressures and changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Kronos’ sales volumes decreasedincreased 13% in 20232% as compared to 20222024 primarily due to lowermarket overallshare demandgains acrossin allits majorEuropean, North American and Latin American markets notedrelated above.to Theits lower2024 overall demand Kronos began experiencing in the second halfacquisition of 2022 continued throughout most of 2023. However,LPC. Kronos’ sales volumes were 29%7% higher in the fourth quarter of 20232025 as compared to the fourth quarter of 20222024 primarily due to strengtheningincremental demandmarket forshare TiO2increases in itsthe primaryEuropean marketsmarket as a result of Europecompetitor andplant Northclosures America.in Europe.

Cost of sales and gross margin – Kronos’ cost of sales increased $26.2$118.6 million, or 2%,8%, in 20242025 compared to 20232024 due to the net effects of aapproximately 20%$111 increasemillion in sales volumes, a 33% increase in production rates resulting in reduced unabsorbed fixed production costs,costs and(including $54 million in the fourth quarter) recognized as a result of reduced operating rates at its production facilities, lower production costs of approximately $115$14 million (primarily energyraw materials) and rawfavorable materialscurrency fluctuations (primarily the euro). Kronos’ unabsorbed fixed production costs in 2024 were $12 millionmillion. (incurredKronos’ cost of sales in 2025 includes a charge in the firstfourth quarter) comparedof to2025 $96of approximately $4 million in 2023 related to curtailmentsworkforce thatreductions began in 2022 and continued into the first quarter of 2024, as discussednoted above. Kronos’ cost of sales in 2024 include a charge of approximately $2 million related to workforce reductions and approximately $14 million in non-cash charges related to the closure of its sulfate process line in Canada discussed above. Sales and production volumes resulting from the LPC acquisition did not materially impact comparisons to the prior year.Canada.

Other operating income and expense, net – Kronos’ selling, general and administrative expense increased $14.4$19.6 million, or 7%,9%, in 20242025 compared to 2023. This increase was2024 primarily due to higheran distributionincrease in warehousing costs related to carrying higher overall saleslevels of finished goods inventory volumes in 2025 compared to 2023.2024 as well as incremental warehousing costs incurred during the first quarter of 2025 to position inventory produced in Canada into the U.S. in response to anticipated U.S federal government tariff announcements. Kronos’ selling, general and administrative expense in 2025 includes approximately $6 million related to workforce reductions recognized in the fourth quarter as noted above. Kronos’ selling, general and administrative expense in 2024 also includes $2.2 million of transaction costs incurred in connection with the LPC acquisition. Selling, general and administrative expense also decreased due to lower costs related to workforce reductions in 2024 compared to 2023. Kronos’ selling, general and administrative expenses decreased $20.1 million, or 9%, in 2023 compared to 2022 primarily due to lower distribution costs related to lower overall sales volumes during the year. Selling, general and administrative expense as a percentage of net sales increased 1% in 20232025 as compared to 20222024 as a result of lowerthe netfactors salesdescribed and $5.8 million in charges related to workforce reductions.above.

Income (loss) from operations – Kronos had a loss from operations of $56.0$36.5 million in 20232025 compared to income from operations of $159.6$122.9 million in 20222024 as a result of the factors impacting gross margin discussed above. Kronos recognizedestimates a gain of $2.5 million in 2023 and a gain of $2.7 million in 2022 related to cash received from the settlement of a business interruption insurance claim related to Hurricane Laura. Kronos estimatesthat changes in currency exchange rates decreased its segment loss from operations by approximately $16$8 million in 20232025 as compared to 2022,2024, as discussed in the Effectseffects of currency exchange rates section below.

Quarter ended MarchJune 31,30, 2026 compared to the quarter ended MarchJune 31,30, 2025

Our net income attributable to NLNLI stockholders was $4.3$9.0 million, or $0.9$.18 per share, in the firstsecond quarter of 2026 compared to $.7$.3 million, or $.01 per share, in the firstsecond quarter of 2025. As more fully described below, the increase in our net income attributable to NLNLI stockholders from 2025 to 2026 is primarily due to the net effects of:

CompX is our component products business and corporate expense relates to NL.NLI. Each of these items is further discussed below.

CompX’s segment profit 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. The increase inCompX’s segment profit infor the first quartersix months of 2026 was $16.0 million compared to 2025$12.2 ismillion primarilyfor the comparable prior year period. CompX’s segment profit increased in the second quarter and for the first six months of 2026 due to higher sales and gross marginmargins, predominantly at the Security Products reporting unitunit, and,and to a lesser extent, the impact of higher sales at the Marine Components reporting unit.

Net sales – CompX’s net sales increased $.3$3.3 million and $3.6 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 market partially offset by lower Security Products sales.market. See discussion of reporting units below.

Cost of sales and gross margin – CompX’s cost of sales as a percentage of net sales decreasedimproved 3%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, CompX’s gross margin as a percentage of net sales increased over the same period.periods. GrossThe improvement in CompX’s 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 discussion of reporting units below.

Selling, general and administrative expenses – CompX’s selling, general and administrative 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 CompX’s business unit and corporate management activities, as well as anyand gains and losses on property and equipment. CompX’s selling, general and administrative expenses for the second quarter and first quartersix months of 2026 were comparable to the same periodperiods in 2025. CompX’s selling, general and administrative 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 selling,operating generalcosts and administrative expenses as a result of higher sales.

Segment profit – As a percentage of net sales, CompX’s segment profit for the second quarter and the first quartersix months of 2026 increased compared to the same periodperiods of 2025 and was primarily impacted by the factors impacting CompX’s sales, cost of sales, gross margin and selling, general and administrative expenses. See discussion of reporting units below.

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. Reporting unit profit margin also increased primarily duecomparable to the improvementsame periods in gross margin discussed above.2025.

CompX manufactures substantially all of its products in the U.S. and sources a substantial majority of its raw materials from U.S. suppliers. CompX also sources 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, CompX incurredexperienced tariff-relatedcost surchargesincreases onfor certain imported raw materials, primarily electronic components.components, including increases in tariffs and shipping costs. In addition, someinflationary ofpressures CompX’shave U.S.-basedincreased supplierscosts are applying tariff-related surcharges onfor certain domesticallydomestically-sourced sourcedraw materials. Where possible, CompX increases selling prices to recover these higher raw material costs, although the extent to which it can fully recover such costs will depend on a variety of factors including the ultimate tariff rate, duration of tariffs, and itsCompX’s customers’ ability to substitute alternative products. Accordingly, CompX will continuecontinues 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 its production capabilitiescapacity and inventoriesinventory arelevels remain aligned accordingly.with market conditions.

Corporate expense – Corporate expenses were $3.0$2.8 million in the firstsecond quarter of 2026, slightly$.7 highermillion lower than in the firstsecond quarter of 20252025, primarily due to higherlower generalenvironmental remediation and administrativerelated costs. Included in corporate expense in the firstsecond quarter of 2025 and 2026 are:

Overall, we currently expect that our net general corporate expenses in 2026 will be higher than in 2025 primarily due to expected increases in litigation fees and related costs.costs, predominantly in the second half of the year. See Note 14 to our Condensed Consolidated Financial Statements.

Interest and dividend income – Interest and dividend income decreased in the second quarter and first quartersix months of 2026 compared to the same periodperiods of 2025 primarily due to decreased average investment balances and lower average interest rates.

Marketable equity securities – We recognized an unrealized gain of $2.7$.5 million on the change in value of our marketable equity securities in the second quarter of 2026 compared to an unrealized loss of $.1 million in the second quarter of 2025. We recognized an unrealized gain of $3.1 million on the change in value of our marketable equity securities in the first quartersix months of 2026 compared to an unrealized loss of $8.5$8.6 million in the first quartersix months of 2025. See Note 5 to our Condensed Consolidated Financial Statements.

Income tax expense – We recognized income tax expense of $1.5$2.5 million in the firstsecond quarter of 2026 compared to an income tax benefit of less than $.1 million in the second quarter of 2025 and income tax expense of $3.9 million in the first quarterhalf of 2026 compared to an income tax benefit of $.1 million in the first half of 2025. In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. Therefore, our full-year effective income tax rate will generally be lower than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in earnings of Kronos. Conversely, our effective income tax rate will generally be higher than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in losses of Kronos. During interim periods, our effective income tax rate may not necessarily correspond to the foregoing due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections. We received dividends from Kronos of $1.8$3.5 million in each of the first quarterssix months of 2025 and 2026, respectively.

Our effective tax rate attributable to our equity in earnings of Kronos, including the effect of the nontaxable dividends we received from Kronos, was 22.7%an effective tax rate of 12.4% in the first threesix months of 2026 compared to 15.2%a negative effective tax rate of .9% in the first threesix months of 2025. The change in our effective rate from 2025 to 2026 is primarily attributable to Kronos’ anticipated higher full year earnings in 2026 as compared to 2025. See Note 12 to our Condensed Consolidated Financial Statements for more information about our 2026 income tax items, including a tabular reconciliation of our statutory tax expense to our actual expense.

Noncontrolling interest – Noncontrolling interest in net income of CompX increased during the second quarter and first quartersix months of 2026 compared to the same prior year period. The noncontrolling interest we recognize in each period is directly related to the level of earnings at CompX for the period.

Kronos started 2026 with average TiO2 selling prices lower than at the beginning of 2025; however, its average TiO2 selling prices increased 2%4% during the first six months of 2026. During the second quarter of 2026.2026, Kronos announced and implemented various price increases and surcharges in response to higher operating costs. Kronos’ average TiO2 selling prices infor the first quartersix months of 2026 were 6%4% lower than its average TiO2 selling prices duringfor the first quartersix months of 2025. Overall, Kronos’ sales volumes increased in the first quartersix months of 2026 compared to the same period in 2025 primarily due to highermarket overallshare salesgains volumesacross all markets resulting from changing competitive and supply conditions and the continued effect of anti-dumping duties which remain in the North American, Latin American and export markets partially offset by lower sales volumeseffect in itscertain European market.markets.

During the fourth quarter of 2025, Kronos implemented cost reduction initiatives, including workforce reductions and other measures, to permanently improve its cost structure and enable more efficient operation of its facilities at lower production rates for extended periods. As a result, beginningKronos inadjusted the first quarter of 2026, Kronos’its normal production capacity range hasin been adjusted2026 to reflect its production capabilities under this new cost structure.

Excluding the effect of changes in currency exchange rates, Kronos’ cost of sales per metric ton of TiO2 sold in the first quarterhalf of 2026 was lower as compared tothan the firstcomparable quarterperiod of 2025 due to decreases in per metric ton production costs driven primarily by the cost reduction initiatives discussed above, as well as lower raw material costs (primarily feedstock costs) and energylower unabsorbed fixed costs.

Net sales – Kronos’ net sales in the firstsecond quarter of 2026 increased 4%,13%, or $20.0$63.7 million, compared to the firstsecond quarter of 2025 primarily due to the effects of a 4%16% increase in sales volumes (which increased net sales by approximately $20$79 million) and the favorable impact of changes in currency exchange rates (primarily the euro) which Kronosit estimates increased its net sales by approximately $30$10 million. These increases were partially offset by a 6%3% decrease in average TiO2 selling prices (which decreased net sales by approximately $30$15 million). and by changes in product mix, primarily due to lower average selling prices and lower sales volumes in Kronos’ complementary businesses. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures, changeschange in the relative level of supply and demand as well as changeschange in raw material and other manufacturing costs.

Cost of sales and gross margin – Kronos’ cost of sales increased by $43.5$23.7 million, or 11%,5%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 due to the effects of a 4%16% increase in sales volumes and the unfavorable impact from changes in currency exchange ratesrates. These increases were partially offset by lower production costs drivenresulting primarily byfrom the cost reduction initiatives asimplemented wellin asthe fourth quarter of 2025, lower raw material costs (primarily feedstock) and energylower unabsorbed fixed costs. In addition, unabsorbedUnabsorbed fixed costs were not material in the firstsecond quarter of 2026 compared to $10approximately $20 million of unabsorbed fixed costs in the firstsecond quarter of 2025.

Kronos’ cost of sales as a percentage of net sales increasedimproved to 84%82% in the firstsecond quarter of 2026 compared to 78%87% in the same period of 2025, asprimarily due to the favorable effects of higher sales volumes and lower production costs, discussed above. These favorable impacts were partially offset by lower average TiO2 selling prices and the unfavorable impact of lower average TiO2 selling prices moreand thansales offsetvolumes thewithin favorableKronos’ effectscomplementary of lower production costs.businesses.

Kronos’ gross margin as a percentage of net sales decreasedincreased to 16%18% in the firstsecond quarter of 2026 compared to 22%13% in the firstsecond quarter of 2025. As discussed and quantified above, Kronos’ gross margin as a percentage of net sales decreasedincreased primarily due to the net effects of higher sales volumes, lower average TiO2 selling prices, lower production costs as discussed above, and the unfavorable impact from changes in currency exchange rates.

Selling, general and administrative expense – Kronos’ selling, general and administrative expense increased $2.0$2.4 million, or 3%,4%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 20252025, as the negativeunfavorable impact of changes in currency exchange rates exceededand thehigher benefits of lowerdistribution costs duringmore thethan quarter. Excluding the effects of currency exchange rates, Kronos realized lower selling, general and administrative expenses as a result of its (i) realization ofoffset cost savings asrealized a result offrom the fourth quarter of 2025 restructuring,restructuring. (ii)Excluding lowerthe warehousingeffects of changes in currency exchange rates, Kronos’ distribution costs increased primarily due to lowerhigher average finished products inventorysales volumes and (iii)elevated non-recurringU.S. distributionfreight costsrates incurredbeginning early in the firstsecond quarter of 20252026. associatedKronos’ with tariff mitigation strategies. Selling,selling, general and administrative expense as a percentage of net sales decreased to 12% in the firstsecond quarter of 2026 compared to 13% in the firstsecond quarter of 20252025, primarily due to the effects of higher sales.

Income (loss) from operations – Kronos’ income from operations decreasedincreased by $25.8$30.2 million to $12.6$37.6 million in the firstsecond quarter of 2026 compared to $38.4$7.4 million in the firstsecond quarter of 2025, primarily as a result of the factors impacting gross margin discussed above. Kronos estimates that changes in currency exchange rates decreased its income from operations by approximately $6$12 million in the firstsecond quarter of 2026 compared to the same period in 2025, as discussed in the effects of currency exchange rates section below.

Other non-operating income (expense) – Kronos’ interest expense in the firstsecond quarter of 2026 increased $2.7by $1.4 million compared to the firstsecond quarter of 2025 primarily due to higher average debt balances and higher interest rates. KronosOther recognized an unrealized gaincomponents of $.3net millionperiodic pension and OPEB cost in the firstsecond quarter of 2026 relatedincreased $.2 million compared to the changesecond inquarter marketableof equity2025 securitiesprimarily compareddue to anlower unrealizedexpected lossreturn ofon $1.0plan million in the same period of 2025.assets.

Income tax expense – Kronos recognized income tax expense of $2.8$7.7 million in the firstsecond quarter of 2026 compared to income tax expense of $7.6$3.5 million in the firstsecond quarter of 2025. The decreaseincrease is primarily due to lowerhigher earnings in the firstsecond quarter of 2026 and the jurisdictional mix of such earnings somewhat offset by a net uncertain tax position of $2.0 million recognized in the first quarter of 2026.earnings. Kronos’ earnings and losses are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of itsKronos’ non-U.S. operations are generally higher than the income tax rates applicable to its U.S. operations. Kronos would generally expect its overall effective tax rate, excluding the effect of any increase or decrease in its deferred income tax asset valuation allowance,allowances, changes in its reserve for uncertain tax positions, or tax rate changes to be higher than the U.S. federal statutory tax rate of 21% primarily because of itsKronos’ sizeable non-U.S. operations.