What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-03-06 · 318 added, 336 removed, 508 unchanged (56% of the section changed)

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CompX is a leading manufacturer of security products used in the postal, recreational transportation, office and institutional furniture, cabinetry, tool storage, healthcare applications and a variety of other industries.

CompX is also a leading manufacturer of wake enhancements systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine industry.

● Real Estate Management and Development – We operate in real estate management and development through our majority control of BMI and LandWell.

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LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada.

BMI previously, through wholly-owned subsidiaries, also was responsible for the delivery of water to the City of Henderson and various other users through September 2022, and provided utility services to certain industrial customers prior to December 2023.

Prior to 2023, BMI was responsible for the delivery of water to the City of Henderson and various other users and provided utility services to certain industrial customers.

Operations Overview

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 –

We reported net income attributable to Valhi stockholders of $108.0 million or $3.79 per diluted share in 2024 compared to a net loss of $9.9 million or $.35 per diluted share in 2023.

Our net income attributable to Valhi stockholders increased from 2023 to 2024 primarily due to the net effects of:

● operating income from our Chemicals Segment of $138.5 million in 2024 compared to an operating loss of $41.1 million in 2023;

● a non-cash gain of $64.5 million in 2024 resulting from the remeasurement of the Chemicals Segment’s investment in the TiO 2 manufacturing joint venture;

We reported a net loss attributable to Valhi stockholders of $57.6 million or $2.02 per diluted share in 2025 compared to net income of $108.0 million or $3.79 per diluted share in 2024.

Our net income attributable to Valhi stockholders decreased from 2024 to 2025 primarily due to the net effects of:

● an operating loss from our Chemicals Segment of $24.5 million in 2025 compared to operating income of $138.5 million in 2024;

● a non-cash gain of $64.5 million resulting from the remeasurement of the Chemicals Segment’s investment in the TiO 2 manufacturing joint venture in 2024;

● aggregate income of $31.4 million in 2024 related to the settlement of a liability for an environmental remediation site;

● a non-cash settlement loss of $28.7 million on the termination and buy-out of our pension plan in the United States in 2025;

● a non-cash deferred income tax expense of $19.3 million to reduce the Chemicals Segment’s net German deferred tax asset as a result of the German tax rate reduction in 2025;

● aggregate charges of $10.3 million related to restructuring costs associated with workforce reductions in our Chemicals Segment in 2025;

● a non-cash deferred income tax expense of $8.5 million related to the recognition of a valuation allowance on our Chemicals Segment’s German interest deduction limitation deferred tax asset recognized in the fourth quarter;

● a non-cash gain of $4.6 million resulting from the remeasurement of the Chemicals Segment’s acquisition earn-out liability in 2025;

● income from tax increment infrastructure reimbursement of $34.2 million in 2025 compared to $30.3 million in 2024.

● a non-cash deferred income tax expense of $16.5 million in 2024 related to final tax regulations on the treatment of certain currency translation gains and losses related to our Chemicals Segment;

● a non-cash deferred income tax expense of $8.2 million in 2024 related to the recognition of a deferred income tax asset valuation allowance related to our Chemicals Segment’s Belgian net deferred tax assets;

● a non-cash loss on the termination of our U.K.

pension plan of $6.2 million in 2023;

● higher interest expense in 2024 as a result of refinancing of the Chemicals Segment’s Senior Secured Notes in the first quarter and debt incurred to finance the LPC acquisition in the third quarter.

Our diluted net loss per share in 2025 includes:

● income of $.62 per share related to tax increment infrastructure reimbursements recognized in the second and third quarters;

● a loss of $.62 per share due to the termination and buy-out of our pension plan in the United States in the fourth quarter;

● a loss of $.45 per share related to the recognition of a non-cash deferred income tax expense to reduce the Chemicals Segment’s net German deferred tax asset as a result of the German tax rate reduction in the third quarter;

● a loss $.18 per share related to restructuring costs related to our Chemicals Segment’s workforce reductions in the fourth quarter;

● a loss of $.20 per share related to the recognition of a non-cash deferred income tax expense related to the recognition of a valuation allowance on our Chemicals Segment’s German net deferred tax asset in the fourth quarter;

● income of $.08 per share due to the recognition of a non-cash gain resulting from the remeasurement of the Chemicals Segment’s acquisition earn-out liability in the third quarter.

Our diluted net income per share in 2024 includes:

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● a loss of $.38 per share due to the recognition of a non-cash deferred income tax expense related to final tax regulations on the treatment of certain currency translation gains and losses related to our Chemicals Segment in the fourth quarter;

● a loss of $.19 per share due to the recognition of a non-cash deferred income tax expense related to the recognition of a deferred income tax asset valuation allowance related to our Chemicals Segment’s Belgian net deferred tax assets in the fourth quarter.

Our diluted net loss per share in 2023 includes:

● income of $.46 per share related to tax increment infrastructure reimbursements recognized in the third and fourth quarters;

● a loss of $.13 per share due to the termination of our U.K.

pension plan recognized in the second quarter;

● a loss of $.10 per share related to workforce reductions by our Chemicals Segment recognized in the fourth quarter;

● a loss of $.06 per share related to the write-off of certain costs resulting from a capital project termination recognized in the fourth quarter;

● a gain of $.05 per share related to a business interruption insurance claim arising from Hurricane Laura in 2020 at our Chemicals Segment recognized in the first, second and third quarters.

● a loss of $.19 per share due to the recognition of a non-cash deferred income tax expense related to the recognition of a valuation allowance on our Chemicals Segment’s Belgian net deferred tax assets in the fourth quarter.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 –

We reported a net loss attributable to Valhi stockholders of $9.9 million or $.35 per diluted share in 2023 compared to net income of $87.2 million or $3.06 per diluted share in 2022.

Our net income attributable to Valhi stockholders decreased from 2022 to 2023 primarily due to the net effects of:

● lower operating income from our Chemicals Segment in 2023 compared to 2022 including 2023 charges of $5.8 million related to workforce reductions and $3.8 million related to the write-off of certain costs resulting from a capital project termination;

● aggregate charges of $19.7 million in our Real Estate Management and Development Segment in 2022 related to the impairment of certain fixed assets and the bankruptcy filing of BWC;

We reported net income attributable to Valhi stockholders of $108.0 million or $3.79 per diluted share in 2024 compared to a net loss of $9.9 million or $.35 per diluted share in 2023.

Our net income attributable to Valhi stockholders increased from 2023 to 2024 primarily due to the net effects of:

● operating income from our Chemicals Segment of $138.5 million in 2024 compared to an operating loss of $41.1 million in 2023;

● a non-cash gain of $64.5 million in 2024 resulting from the remeasurement of the Chemicals Segment’s investment in the TiO 2 manufacturing joint venture;

● aggregate income of $31.4 million in 2024 related to the settlement of a liability for an environmental remediation site;

● income from tax increment infrastructure reimbursement of $30.3 million in 2024 compared to $25.2 million in 2023;

● a non-cash loss on the termination of our U.K.

pension plan of $6.2 million in 2023;

Our diluted net loss per share in 2023 includes:

In addition to the 2024 items noted above, our diluted net loss per share in 2023 includes:

● income of $.46 per share related to tax increment infrastructure reimbursements recognized in the third and fourth quarters;

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● a gain of $.05 per share related to a business interruption insurance claim arising from Hurricane Laura in 2020 at our Chemicals Segment recognized in the first, second and third quarters.

Our diluted net income per share in 2022 includes:

● aggregate charges of $.35 per share related to the bankruptcy filing of BWC, including $.29 per share related to the impairment of the water delivery system fixed assets, primarily recognized in the second quarter, and $.04 per share loss on the deconsolidation of BWC and $.02 per share of bad debt expense related to an intercompany receivable with BWC, both recognized in the third quarter;

● income of $.28 per share related to tax increment infrastructure reimbursements recognized in the third and fourth quarters;

● a gain of $.05 per share related to a business interruption insurance claim arising from Hurricane Laura in 2020 at our Chemicals Segment recognized in the third quarter.

We discuss these amounts more fully below.

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We currently expect consolidated operating income for 2026 to be higher as compared to 2025 primarily due to the net effects of:

● higher operating income from our Chemicals Segment in 2025 primarily due to the positive impact of improved demand;

● higher operating income from our Real Estate Management and Development Segment in 2025 due to higher expected infrastructure reimbursements;

● higher operating income from our Component Products Segment in 2025 as marine sales are expected to improve in 2025.

● higher operating income from our Chemicals Segment in 2026 primarily due to the positive impacts of increased operating rates, higher sales volumes and selling prices, and lower operating costs;

● lower operating income from our Real Estate Management and Development Segment in 2026 due to the wind down of development activities;

● a non-cash settlement loss of $28.7 million related to the termination of the U.S.

pension plan in 2025.

Our expectations for our future operating results are based upon a number of factors beyond our control, including worldwide growth of gross domestic product, competition in the marketplace, continued operation of competitors, technological advances, worldwide production capacity, public health crises, the effect of tariffs, and the impact of economic conditions and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

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We believe our Chemicals Segments’ customers’ inventory levels are influenced in part by their expectation for future changes in TiO 2 selling prices as well as their expectation for future availability of product.

Although certain of our Chemicals Segment’s TiO 2 grades are considered specialty pigments, the majority of its grades and substantially all of its production are considered commodity pigment products with price and availability being the most significant competitive factors along with product quality and customer and technical support services.

Although certain of our Chemicals Segment’s TiO 2 grades are considered specialty pigments, the majority of its grades and substantially all of its production are considered differentiated commodity pigment products with price and availability being the most significant competitive factors along with product quality and customer and technical support services.

The factors having the most impact on our Chemicals Segment’s reported operating results are:

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TiO 2 selling prices generally follow industry trends and selling prices will increase or decrease generally as a result of competitive market pressures.

As previously reported, effective the Acquisition Date of July 16, 2024, Kronos acquired the 50% joint venture interest in LPC previously held by Venator.

Prior to the acquisition, Kronos held a 50% joint venture interest in LPC

through a wholly-owned subsidiary.

As previously reported, effective July 16, 2024 (the “Acquisition Date”), Kronos acquired the 50% joint venture interest in LPC previously held by 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.

Following the acquisition, LPC became a wholly-owned subsidiary of Kronos.

Kronos acquired the 50% joint venture interest that it did not already own for consideration of $185 million less a working capital adjustment.

An additional earn-out payment of up to $15 million based 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 cash on hand.

Kronos accounted for the acquisition of the interest in LPC as a business combination.

For financial reporting purposes, the assets acquired and liabilities assumed of LPC are included in our Consolidated Balance Sheet as of December 31, 2024, and the results of operations and cash flows of LPC are included in our Consolidated Statement of Operations and Cash Flows beginning as of the Acquisition Date.

In 2025, Kronos merged LPC into its wholly-owned subsidiary Kronos Louisiana, Inc.

(the combined company is referred to as “Kronos Louisiana”).

Kronos accounted for the acquisition as a business combination.

The results of operations of LPC are included in our Consolidated Statements of Operations beginning as of the Acquisition Date.

See Note 3 to our Consolidated Financial Statements.

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Thousands of metric tons

Industry Conditions and 2024 Overview – Our Chemicals Segment and the TiO 2 industry experienced an extended period of significantly reduced demand reflected in our Chemicals Segment’s sales volumes beginning in the second half of 2022 and continuing throughout 2023.

While demand improved in 2024 resulting in increased sales volumes across all major markets compared to the prior year, overall demand remained below average historical levels.

After improving in the first half of 2024, demand moderated in the second half of the year, which placed downward pressure on our Chemicals Segment’s TiO 2 pricing with 2024 average TiO 2 selling prices approximately 5% below the average TiO 2 selling prices for 2023.

Our Chemicals Segment operated its production facilities at 72% of practical capacity utilization in 2023 in response to decreased demand and higher production costs.

As a result of the increase in demand experienced in the fourth quarter of 2023 and the first quarter of 2024, along with more favorable production costs, our Chemicals Segment began increasing its production rates during the first quarter of 2024 and it operated at near practical capacity in the second, third and fourth quarters of 2024 resulting in 96% of practical capacity utilization in 2024.

Industry Conditions and 2025 Overview – Throughout 2025, the market faced significant global uncertainty driven by evolving U.S.

trade policies and sustained geopolitical tensions.

These factors, combined with continued market weakness compared to historical periods, contributed to additional global capacity reductions by TiO 2 producers in 2025, including both announced plant closures and lower operating rates.

While our Chemicals Segment has seen some incremental benefit as a result of certain plant closures, primarily in Europe and particularly in the fourth quarter of 2025, the prolonged market downturn has negatively impacted its sales volume and led to pricing degradation as the year progressed.

Our Chemicals Segment started 2025 with average TiO 2 selling prices 2% higher than at the beginning of 2024 but ended 2025 with average TiO 2 selling prices 10% lower.

Overall, our Chemicals Segment’s sales volumes have increased slightly in 2025 as compared to 2024 with higher overall sales volumes in both the European and North American markets offset by lower sales volumes to the export market.

Our Chemicals Segment operated its production facilities at 96% of practical capacity utilization in 2024 and continued operating at similar rates in early 2025.

When the demand outlook began to soften, our Chemicals Segment adjusted its production operating rates downward in the second and third quarters of 2025, and our Chemicals Segment implemented a more significant production curtailment in the fourth quarter of 2025 to reduce finished goods inventory levels and preserve liquidity.

The following table shows our Chemicals Segment’s capacity utilization rates during 2024 and 2025.

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Fourth quarter

Excluding the effect of changes in currency exchange rates, our Chemicals Segment’s cost of sales per metric ton of TiO 2 sold in 2024 was significantly lower as compared to 2023 primarily due to significant decreases in per metric ton production costs (primarily energy and raw materials).

In response to the extended period of reduced demand in 2023, discussed above, our Chemicals Segment took measures to reduce its operating costs and improve its long-term cost structure such as the implementation of certain voluntary and involuntary workforce reductions during the second half of 2023 that primarily impacted its European operations.

A substantial portion of our Chemicals Segment’s workforce reductions were accomplished through voluntary programs, for which eligible workforce reduction costs are recognized at the time both the employee and employer are irrevocably committed to the terms of the separation.

These workforce reductions impacted approximately 100 employees.

Our Chemicals Segment recognized a total of approximately $6 million in charges primarily in the fourth quarter of 2023 related to workforce reductions it implemented during the second half of 2023.

In the third quarter of 2024, our Chemicals Segment closed its sulfate process production line at its plant in Varennes, Canada.

As a result of the process line closure, our Chemicals Segment recognized charges to cost of sales of approximately $2 million during 2024 related to workforce reductions.

Our Chemicals Segment also recognized approximately $14 million in non-cash charges primarily related to accelerated depreciation in the second and third quarters of 2024.

Net Sales – Our Chemicals Segment’s net sales in 2024 increased 13%, or $220.6 million, compared to 2023 primarily due to the effects of a 20% increase in sales volumes due to improved overall demand across all major markets (which increased net sales by approximately $333 million) partially offset by a 5% decrease in average TiO 2 selling prices (which decreased net sales by approximately $83 million).

Excluding the effect of changes in currency exchange rates and unabsorbed fixed costs, our Chemical Segment’s cost of sales per metric ton of TiO 2 sold in 2025 was lower as compared to 2024 primarily due to decreases in per metric ton production costs (primarily raw materials).

In response to the extended period of reduced demand in 2025, discussed above, our Chemicals Segment has taken measures to further reduce its operating costs and improve its long-term cost structure.

In the fourth quarter of 2025, our Chemicals Segment implemented certain voluntary and involuntary workforce reductions across its operating locations impacting both manufacturing and selling, general and administrative costs.

Our Chemicals Segment recognized a total of approximately $10 million in restructuring charges in the fourth quarter of 2025 related to workforce reductions impacting approximately 226 positions.

See Note 20 to our Consolidated Financial Statements.

Net Sales – Our Chemicals Segment’s net sales in 2025 decreased 1%, or $27.7 million, compared to 2024 primarily due to a 4% decrease in average TiO 2 selling prices (which decreased net sales by approximately $75 million) somewhat offset by a 2% increase in sales volumes (which increased net sales by approximately $38 million).

Additionally, we estimate that changes in currency exchange rates (primarily the euro) increased our Chemical Segment’s net sales by approximately $24 million in 2025 as compared to 2024.

TiO 2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Our Chemicals Segment’s sales volumes increased 2% as compared to 2024 primarily due to market share gains in European, North American and Latin American markets related to the 2024 acquisition of LPC.

Our Chemical Segment’s sales volumes were 7% higher in the fourth quarter of 2025 as compared to the fourth quarter of 2024 primarily due to incremental market share increases in the European market as a result of competitor plant closures in Europe.

Our Chemicals Segment’s net sales in 2024 increased 13%, or $220.6 million, compared to 2023 primarily due to the effects of a 20% increase in sales volumes resulting from improved overall demand across all major markets (which increased net sales by approximately $333 million) partially offset by a 5% decrease in average TiO 2 selling prices (which decreased net sales by approximately $83 million).

Changes in product mix negatively contributed to net sales, primarily due to changes in product sales mix in export markets in 2024 as compared to 2023.

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Incremental sales volumes resulting from the LPC acquisition did not significantly impact comparisons to the prior year.

Our Chemicals Segment’s net sales in 2023 decreased 14%, or $263.7 million, compared to 2022 primarily due to a 13% decrease in sales volumes (which decreased net sales by approximately $251 million) and a 4% decrease in average TiO 2 selling prices (which decreased net sales by approximately $77 million).

Changes in product mix positively contributed to net sales, primarily due to higher average selling prices and sales volumes in our Chemicals Segment’s complementary businesses which somewhat offset declines in TiO 2 sales volumes.

In addition to the impact of sales volumes and average TiO 2 selling prices, w e estimate that changes in currency exchange rates (primarily the euro) increased our Chemicals Segment’s net sales by approximately $10 million in 2023 as compared to 2022.

Our Chemicals Segment’s sales volumes decreased 13% in 2023 as compared to 2022 due to lower overall demand across all major markets noted above.

The lower overall demand our Chemicals Segment began experiencing in the second half of 2022 continued throughout most of 2023.

However, o ur Chemicals Segment’s sales volumes were 29% higher in the fourth quarter of 2023 as compared to the fourth quarter of 2022 due to strengthening demand for TiO 2 in its primary markets of Europe and North America.

Cost of Sales and Gross Margin – Cost of sales increased $27.4 million, or 2%, in 2024 compared to 2023 due to the net effects of a 20% increase in sales volumes, a 33% increase in production rates resulting in reduced unabsorbed

fixed production costs, and lower production costs of approximately $115 million (primarily energy and raw materials).

Cost of Sales and Gross Margin – Cost of sales increased $118.3 million, or 8%, in 2025 compared to 2024 due to the net effects of approximately $111 million in unabsorbed fixed production costs (including $54 million in the fourth quarter) recognized as a result of reduced operating rates at our Chemicals Segment’s production facilities, lower production costs of approximately $14 million (primarily raw materials) and favorable currency fluctuations (primarily the euro).

Our Chemicals Segment’s unabsorbed fixed production costs in 2024 were $12 million.

Our Chemical Segment’s cost of sales in 2025 includes a charge in the fourth quarter of 2025 of approximately $4 million related to workforce reductions noted above.

Our Chemical Segment’s 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.

Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 89% in 2025 compared to 81% in 2024 primarily due to the unfavorable fixed cost absorption and currency fluctuations, as discussed above.

Gross margin as a percentage of net sales decreased to 11% in 2025 compared to 19% in 2024.

As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to lower average TiO 2 selling prices and lower production volumes resulting in unfavorable fixed cost absorption.

Cost of sales increased $27.4 million, or 2%, in 2024 compared to 2023 due to the net effects of a 20% increase in sales volumes, a 33% increase in production rates resulting in reduced unabsorbed fixed production costs, and lower production costs of approximately $115 million (primarily energy and raw materials).

Our Chemicals Segment’s unabsorbed fixed production costs in 2024 were $12 million (incurred in the first quarter) compared to $96 million in 2023 related to curtailments that began in 2022 and continued into the first quarter of 2024, as discussed above.

Our Chemicals Segment’s 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.

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As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales increased primarily due to higher sales and production volumes as well as lower production costs, partially offset by lower average TiO 2 selling prices.

Cost of sales decreased $37.5 million, or 2%, in 2023 compared to 2022 due to the net effects of a 13% decrease in sales volumes, a 19% decrease in production volumes at certain of our Chemicals Segment’s manufacturing facilities to align inventory levels to anticipated near-term customer demand (which resulted in $96 million of unabsorbed fixed production costs) and higher production costs of approximately $65 million (primarily raw materials).

Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 90% in 2023 compared to 80% in 2022 primarily due to the unfavorable effects of higher production costs (primarily raw materials) and unabsorbed fixed production costs due to lower production volumes.

Gross margin as a percentage of net sales decreased to 10% in 2023 compared to 20% in 2022.

As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to lower production and sales volumes, lower average TiO 2 selling prices, higher production costs and changes in currency exchange rates.

Operating Income (Loss) – Our Chemicals Segment had operating income of $138.5 million in 2024 compared to an operating loss of $41.1 million in 2023 as a result of the factors impacting gross margin discussed above.

Operating Income (Loss) – Our Chemicals Segment had an operating loss of $24.5 million in 2025 compared to operating income of $138.5 million in 2024 as a result of the factors impacting gross margin discussed above.

We estimate that changes in currency exchange rates decreased our Chemicals Segment’s operating loss by approximately $8 million in 2025 as compared to 2024, as further discussed below.

Our Chemicals Segment had operating income of $138.5 million in 2024 compared to an operating loss of $41.1 million in 2023 as a result of the factors impacting gross margin discussed above.

Our Chemicals Segment recognized a gain of $2.5 million in 2023 related to cash received from the settlement of a business interruption insurance claim.

We estimate that changes in currency exchange rates increased our Chemicals Segment’s operating income by approximately $10 million in 2024 as compared to 2023, as further discussed below.

Our Chemicals Segment had an operating loss of $41.1 million in 2023 compared to operating income of $174.6 million in 2022 as a result of the factors impacting gross margin discussed above .

Our Chemicals Segment recognized 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.

We estimate changes in currency exchange rates decreased our Chemicals Segment’s operating loss by approximately $16 million in 2023 as compared to 2022, as discussed in the Currency Exchange Rates section below.

Our Chemicals Segment’s operating income (loss) is net of amortization of purchase accounting adjustments made in conjunction with our acquisitions of interests in NL and Kronos.

As a result, we recognize additional depreciation expense above the amounts Kronos reports separately, substantially all of which is included within cost of sales.

We recognized additional depreciation expense of $1.3 million in each of 2022 and 2023 and $2.5 million in 2024, which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.

We recognized additional depreciation expense of $1.3 million in 2023, $2.5 million in 2024 and $2.2 million in 2025, which increased our reported Chemicals Segment’s operating loss as compared to amounts reported by Kronos.

Currency Exchange Rates – Our Chemicals Segment has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada).

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dollars from time to time).

Certain raw materials used in all our Chemicals Segment’s production facilities, primarily

titanium-containing feedstocks, are purchased primarily in U.S.

Certain raw materials used in all our Chemicals Segment’s production facilities, primarily titanium-containing feedstocks, are purchased primarily in U.S.

dollars, while labor and other production and administrative costs are incurred primarily in local currencies.

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operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S.

dollar denominated) are initially accrued and when such amounts are settled with the non-local currency and (ii) changes in currency exchange rates during time periods when our Chemicals Segment’s non-U.S.

dollar denominated) are initially accrued and when such amounts are settled with the non-local currency (ii) changes in currency exchange rates during time periods when our Chemicals Segment’s non-U.S.

operations are holding non-local currency (primarily U.S.

dollars) and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time.

Our Chemicals Segment periodically use currency forward contracts to manage a portion of its currency exchange risk, and relative changes in the aggregate fair

value of any currency forward contracts our Chemicals Segment holds from time to time serve in part to mitigate the currency transaction gains or losses we would recognize from the first two items described above.

Fluctuations in currency exchange rates had the following effects on our Chemicals Segment’s sales and operating income (loss) for the periods indicated.

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The strengthening of the U.S.

dollar relative to the Canadian dollar and the Norwegian krone in 2024 did not have a significant effect on the reported amount of net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations is denominated in the U.S.

The $10 million increase in operating income was comprised of the following:

dollar relative to the Canadian dollar and the weakening of the U.S.

dollar relative to the Norwegian krone in 2025 did not have a significant effect on the reported amount of net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations is denominated in the U.S.

The $8 million decrease in loss from operations was comprised of the following:

● Higher net currency transaction gains of approximately $3 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.

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dollar-denominated receivables and payables and U.S.

dollar currency held by our Chemicals Segment’s non-U.S.

dollar currency held by our non-U.S.

operations, and in Norwegian krone denominated receivables and payables held by our Chemicals Segment’s non-U.S.

operations, and

As discussed in Note 19 to our Consolidated Financial Statements, in order to manage currency exchange rate risk associated with the maturity in September 2025 of Kronos’ €75 million 3.75% Senior Secured Notes due 2025, in the first quarter of 2025 — our Chemicals Segment entered into a currency forward contract to purchase €25 million at an exchange rate of €1.05 per U.S.

The contract was settled in August 2025, resulting in an overall transaction gain of $2.8 million included in our Consolidated Statement of Operations for the year ended 2025;

● Approximately $5 million from net currency translation gains primarily caused by a strengthening of the U.S.

dollar relative to the Canadian dollar and Norwegian krone, as local currency-denominated operating costs were translated into fewer U.S.

dollar relative to the Canadian dollar, as local currency-denominated operating costs were translated into fewer U.S.

dollars in 2025 as compared to 2024.

The effect of the weakening of the U.S.

dollar relative to the euro caused additional net translation gains as the positive effects of the weaker U.S.

dollar on euro-denominated sales more than offset the unfavorable effects on euro-denominated operating costs being translated into more U.S.

dollar relative to the Norwegian krone caused net translation losses as local currency-denominated costs were translated into more U.S.

dollars in 2025 as compared to 2024.

Additionally, combined with the effect of the weakening of the U.S.

dollar relative to the euro caused further net translation losses, as the positive effects of the weaker U.S.

dollar on euro-denominated sales was more than offset by the unfavorable effects on euro-denominated operating costs being translated into more U.S.

dollars in 2025 as compared to 2024.

Impact of changes in currency exchange rates - 2024 vs.

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The strengthening of the U.S.

dollar relative to the Canadian dollar and the Norwegian krone in 2023 did not have a significant effect on the reported amount of net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations are denominated in the U.S.

The $16 million decrease in operating loss was comprised of the following:

● Lower net currency transaction gains of approximately $11 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.

The $10 million increase in operating income was comprised of the following:

● Higher net currency transaction gains of approximately $1 million primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S.

dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S.

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operations, and in Norwegian krone denominated receivables and payables held by our Chemicals Segment’s non-U.S.

operations, and

● Approximately $9 million from net currency translation gains primarily caused by a strengthening of the U.S.

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The effect of the weakening of the U.S.

dollar relative to the euro was nominal in 2023 as compared to 2022.

Outlook – Our Chemicals Segment’s overall customer demand improved in 2024 compared to the historical low demand it experienced during 2023, although demand levels remained below historical averages and customer demand moderated in the second half of the year as compared to the first half of the year across all major markets.

Our Chemicals Segment expects demand to improve in 2025, particularly in Europe where the European Commission enacted duties on Chinese imports of TiO 2 in mid-2024;

however, our Chemicals Segment expects overall demand will remain below historical levels due to continued global economic uncertainty caused, in part, by the potential implementation of tariffs by the U.S.

and other countries.

Our Chemicals Segment believes customer inventory levels were low at the end of 2024 due to customer hesitancy to build inventory late in the year and our Chemicals Segment is receiving customer orders on shorter notice than it experienced early in 2024 indicating that customers have a cautious demand outlook and are carefully managing inventory levels.

TiO 2 selling prices softened in the second half of 2024 in response to sluggish demand and competitive pressures.

Our Chemicals Segment expects these pricing pressures to be somewhat mitigated in 2025, particularly in Europe, as a result of the duties enacted on low-cost imports from China.

Our Chemicals Segment is operating its facilities at production rates in line with the current and expected near-term demand and believes its production rates for 2025 will be slightly above 2024 rates.

Our Chemicals Segment is focused on cost reduction initiatives designed to improve its long-term cost structure.

In 2023, our Chemicals Segment implemented targeted workforce reductions and certain ongoing process improvement initiatives.

In the third quarter of 2024, our Chemicals Segment closed its Canadian sulfate process line to improve gross margins through the optimization of production of its purified grades.

Raw material, energy and other input costs generally improved during 2024;

however, energy costs in Europe have trended up in recent months and remain above historical levels.

Our Chemicals Segment expects raw material and other input costs will continue to moderate in 2025.

Overall, primarily due to improved demand, our Chemicals Segment expects to report higher operating results for the full year of 2025 as compared to 2024, although it will need to achieve TiO 2 selling price increases in order to recognize margins more in-line with historical levels.

As noted above, our Chemicals Segment acquired full control of LPC in July 2024.

Our Chemicals Segment believes this acquisition is a unique opportunity to immediately add value to its customers and better serve the North American marketplace by allowing our Chemicals Segment to expand its product offerings and increase sales to new and existing customers while recognizing significant synergies, including commercial, overhead and supply chain optimization.

Our Chemicals Segment is in the process of fully integrating the additional LPC production capacity, and it expects the acquisition will have a positive impact on its earnings in 2025, although the potential positive impact will be limited by competitive pressures and by the additional debt service costs associated with the increase in borrowings to complete the transaction.

With the increased borrowing availability under our Chemicals Segment’s Global Revolver, as well as cash on hand, it was able to finance the required working capital for the improvements needed to fully integrate the acquired LPC production capacity.

Our expectations for the TiO 2 industry and our Chemicals Segment’s operations are based on a number of factors outside our control.

Our Chemicals Segment’s operations are affected by global and regional economic, political and regulatory factors and it has experienced global market disruptions.

As noted above, energy costs in Europe, which spiked when Russia invaded Ukraine, remain above historical levels.

In addition, our Chemicals Segment operates a TiO 2 facility in Canada, and the majority of production from that facility is currently sold into the U.S.

federal government’s recently enacted 25% tariff on our Chemicals Segment’s imports from Canada could harm its ability to compete and adversely impact its earnings and profitability if such tariffs are sustained for an extended period of time without exclusion.

Our Chemicals Segment has begun to implement strategies to minimize the potential impacts.

Future impacts on our Chemicals Segment’s operations will depend on, among other things, future energy costs, the effect newly enacted tariffs have on jurisdictions in which our Chemicals Segment or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact economic conditions and geopolitical events have on its operations or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

dollar relative to the euro caused additional net translation gains as the positive effects of the weaker U.S.

dollar on euro-denominated sales more than offset the unfavorable effects on euro-denominated operating costs being translated into more U.S.

dollars in 2024 as compared to 2023.

Outlook – Our Chemicals Segment’s overall customer demand remained weaker than expected throughout 2025, driven by ongoing economic uncertainty related to tariffs and global trade tensions, as well as persistently high interest rates and elevated home prices which are impacting housing mobility.

Our Chemicals Segment’s customers were reluctant to build inventories, resulting in shorter order lead times and greater demand forecasting challenges.

In the fourth quarter of 2025, our Chemicals Segment further reduced operating rates to align production with demand and to reduce its inventory levels to support cash generation.

In 2025, the TiO 2 industry experienced significant capacity reductions including curtailments and previously announced plant closures by multiple producers, primarily in China and Europe.

In combination with ongoing tariff and anti-dumping measures, these factors created targeted opportunities for improved sales volumes and mix in select markets, most notably in Europe during the fourth quarter of 2025.

Entering 2026, our Chemicals Segment expects demand improvement from 2025 levels, supported by low customer inventories and seasonal restocking, particularly in North America.

The pace and sustainability of recovery remain uncertain and will be influenced by macroeconomic factors, including interest rates, inflation, and consumer confidence.

Demand in Europe continues to lag historical levels;

however, our Chemicals Segment expects its European volumes to increase from 2025 levels, supported by industry capacity reductions, including the Venator bankruptcy and associated plant closures.

To improve operating margins, our Chemicals Segment will need to realize price increases and execute on its operating cost structural realignment.

Our Chemicals Segment remains focused on permanently realigning its operating costs, improving capital efficiency, and preserving liquidity.

Following the workforce reductions implemented in late 2025, our Chemicals Segment is pursuing additional cost savings through restructuring supplier agreements, improving asset utilization and enhancing processes to support a leaner organization capable of operating efficiently during extended periods of lower production rates.

Liquidity and capital resources remain sufficient to support our Chemicals Segment’s operations and planned investments.

In 2025, our Chemicals Segment increased the maximum availability under its revolving credit facility from $300 million to $350 million and refinanced its €75 million 3.75% Senior Secured Notes due September 2025 with €75 million of additional 9.50% Senior Secured Notes due 2029 (effective rate 7.8% at issuance), resulting in no near-term debt maturities.

Our Chemicals Segment expects cash on hand to improve over the next several quarters, and we will continue to actively manage working capital, including inventories and receivables, to bolster operating cash flows and maintain financial flexibility.

Our Chemicals Segment believes its revolver availability, combined with having no near-term debt maturities and improved operating cash flows, will provide adequate liquidity for expected working capital needs and capital allocation requirements.

Our Chemicals Segment is pursuing targeted market share opportunities in regions where competitors have

announced permanent or temporary shutdowns or curtailments and in markets where tariffs or duties have reduced the impact of low-cost imports.

Overall, while our Chemicals Segment expects operating results in 2026 to improve relative to 2025, our results will remain sensitive to demand variability, pricing competition, and the successful execution of our cost, capital and liquidity initiatives.

Our expectations for the TiO 2 industry and our Chemicals Segment’s operations are based on a number of factors outside its control.

Our Chemicals Segment operations are affected by global and regional economic, political and regulatory factors, and it has experienced global market disruptions.

Future impacts on our Chemicals Segment’s operations will depend on, among other things, future energy costs, the effect newly enacted tariffs in jurisdictions where it or its customers and suppliers operate, its success in implementing mitigation strategies, and the impact economic conditions, consumer confidence, and geopolitical events on its operations or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Component Products –

Our Component Products Segment reported operating income of $17.0 million in 2024 and $25.4 million in each of 2023 and 2022.

The decrease in operating income in 2024 compared to 2023 is due to lower sales and gross margin at both security products and marine components reporting units.

Operating income in 2023 was comparable to 2022 as lower marine components sales were offset by higher security products sales and higher gross margin percentages across both reporting units.

Our Component Products Segment reported operating income of $22.6 million in 2025, $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 the security products and marine components reporting units.

In contrast, the decline in operating income in 2024 compared to 2023 resulted from lower sales and reduced gross margin across both security products and marine components reporting units.

Our Component Products Segment’s product offerings consist of a large number of products that have a wide variation in selling price and manufacturing cost, which results in certain practical limitations on its ability to quantify the impact of changes in individual product sales quantities and selling prices on our Component Products Segment’s net sales, cost of sales and gross margin.

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Operating income

Net Sales – Our Component Products Segment’s net sales decreased $15.4 million in 2024 compared to 2023 primarily due to lower marine components sales to the towboat market and lower security products sales to the government security market.

Net Sales – Our Component Products Segment’s net sales increased $12.4 million in 2025 compared to 2024 primarily due to higher security products components sales to the government security market and higher marine components sales to various markets including the towboat, government and industrial market.

Security products net sales increased 5% to $120.7 million in 2025 compared to $115.2 million in 2024.

Relative to prior year, the increase in sales was primarily due to $9.9 million higher sales to the government security market and $.6 million higher 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.

Marine components net sales increased 22% in 2025 as compared to 2024 primarily due to $2.7 million higher sales to the towboat market (including a one-time stocking event for a towboat OEM customer), $2.5 million higher sales to the government market and $2.2 million higher sales to the industrial market, partially offset by $1.1 million lower sales to the center console market.

Our Component Products Segment’s net sales decreased $15.4 million in 2024 compared to 2023 primarily due to lower marine components sales to the towboat market and lower security products sales to the government security market.

Marine components net sales decreased $9.4 million, or 23%, in 2024 as compared to 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.

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Relative to prior year, sales were $8.3 million lower to the government security market, $2.0 million lower to the transportation market and $.9 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.

Our Component Products Segment’s net sales decreased $5.3 million in 2023 compared to 2022 due to lower marine components sales primarily to the towboat market, partially offset by higher security products sales largely in the fourth quarter of 2023.

Marine components net sales decreased $12.0 million, or 23%, in 2023 as compared to 2022.

Relative to prior year, marine components sales were $12.8 million lower to the towboat market (primarily to original equipment boat manufacturers) and $2.0 million lower to the engine builder market, partially offset by $1.2 million higher industrial sales and $.8 million higher sales to the center console boat market.

Security products net sales increased $6.7 million, or 6%, in 2023 as compared to 2022 primarily due to higher sales related to a pilot project for a government security customer.

Relative to prior year, security products sales were $8.3 million higher to the government security market and $1.5 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.

Cost of Sales and Gross Margin – Our Component Products Segment’s cost of sales decreased in 2024 compared to 2023 primarily due to the effects of lower sales at both security products and marine components partially offset by higher production costs across both reporting units.

Cost of Sales and Gross Margin – Our Component Products Segment’s cost of sales increased in 2025 compared to 2024 primarily due to the effects of higher sales at both security products and marine components as well as increased production costs across both reporting units.

However, cost of sales as a percentage of net sales declined over the same 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 segments.

As a result, our Component Products Segment’s gross margin as a percentage of net sales increased in 2025 compared to 2024.

Security products gross margin as a percentage of net sales increased in 2025 as compared to 2024 primarily due to increased coverage of fixed costs due to higher sales and a more favorable customer and product mix.

These factors were partially offset by higher costs 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.

Marine components gross margin as a percentage of sales increased in 2025 compared to 2024 primarily due to increased coverage of fixed costs as a result of higher sales partially offset by higher employee-related expenses including salaries, benefits and medical costs of $1.7 million.

Our Component Products Segment’s cost of sales decreased in 2024 compared to 2023 primarily due to the effects of lower sales at both security products and marine components partially offset by higher production costs across both reporting units.

As a result, our Component Products Segment’s cost of sales as a percentage of net sales increased over the same period.

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Marine components gross margin as a percentage of net sales decreased in 2024 compared to 2023 primarily due to higher cost inventory produced during the fourth quarter of 2023 and sold in the first quarter of 2024 and decreased coverage of fixed costs as a result of lower 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.

Our Component Products Segment’s cost of sales decreased in 2023 compared to 2022 primarily due to the effects of lower production costs at both security products and marine components reporting units as well as lower marine components sales.

Our Component Products Segment’s gross margin as a percentage of net sales increased over the same period primarily due to the factors affecting cost of sales.

Security products gross margin as a percentage of net sales for 2023 increased as compared to 2022 primarily due to lower production costs (including lower material, overtime and shipping costs) and increased coverage of fixed costs on higher sales, primarily in the fourth quarter.

Marine components gross margin as a percentage of net sales increased in 2023 compared to 2022 primarily due to lower raw material costs (primarily stainless steel and aluminum), lower supplies costs driven by lower volume, lower shipping costs 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.

Operating Income – As a percentage of net sales, our Component Products Segment’s operating income decreased in 2024 compared to 2023 and increased in 2023 compared to 2022.

Operating Income – As a percentage of net sales, our Component Products Segment’s operating income increased in 2025 compared to 2024 and decreased in 2024 compared to 2023.

Operating income margins were primarily impacted by the factors affecting net sales, cost of sales and gross margin, discussed above.

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 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 $1.3 million in 2025 compared to 2024 predominantly due to higher employee-related costs including salaries, benefits, and medical expenses at both reporting units.

As a percentage of net sales, our Component Products Segment’s operating income decreased in 2024 compared to 2023.

Operating income margins were primarily impacted by the factors affecting net sales, cost of sales and gross margin, discussed above.

Operating costs and expenses increased $.5 million in 2024 compared to 2023 predominantly due to higher employee salary and benefit costs at security products.

As a percentage of net sales, our Component Products Segment’s operating income increased in 2023 compared to 2022.

The operating margin percentage increased in 2023 compared to 2022 primarily due to the factors impacting net sales, cost of sales and gross margin discussed above.

Operating costs and expenses increased in 2023 compared to 2022 predominantly due to higher salary and benefit costs at the security products reporting unit which increased by $.6 million.

General – Our Component Products Segment’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.

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Total material costs represented approximately 43% of our Component Products Segment’s cost of sales in 2025, with commodity-related raw materials representing approximately 14% of its cost of sales.

Our Component Products Segment’s raw material prices were generally stable through the first half of 2024.

Beginning in the latter half of the third quarter our Component Products Segment began to experience moderate increases in certain raw material costs, particularly brass.

The zinc market was volatile in 2024, but our Component Products Segment 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 marine components (including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs), were relatively stable in 2024 because our Component Products Segment took advantage of volume purchase opportunities during the year.

During 2025, our Component Products Segment experienced increases in the cost of certain raw materials.

Throughout the year, market prices for brass and aluminum experienced a general upward trend.

Stainless steel prices were relatively stable in the first part of 2025 but began increasing during the latter half of the year.

Zinc pricing was relatively stable in 2025, and our Component Products Segment was able to mitigate increases through strategic spot buy purchases.

In most cases, commodity raw materials our Component Products Segment 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 our Component Products Segment’s purchases.

Based on current economic conditions, our Component Products Segment expects the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2025 to be relatively stable, although governmental actions such as tariffs may impact markets.

Processing and conversion costs are not expected to decrease.

Based on current economic conditions, our Component Products Segment expects the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2026 to be more volatile compared to 2025.

In addition to supply and demand, governmental actions such as tariffs may impact markets.

Our Component Products Segment occasionally enters into short-term commodity-related raw material supply arrangements to mitigate the impact of future increases in commodity related raw material costs.

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– Raw Materials.”

Outlook – As noted above, in the second half of 2023 our Component Products Segment’s security products reporting unit had significant sales related to a pilot project for a government security customer.

Excluding these sales in 2023, security products sales would have increased in 2024 as compared to 2023 due to increased sales across a variety of markets, particularly increased sales of mechanical locks to the government security market.

At the marine components reporting unit, the decline in sales to the towboat market as a result of the contraction in the recreational marine industry that began in the second quarter of 2023 continued through the third quarter of 2024.

Marine components net sales increased in the fourth quarter of 2024 compared to the fourth quarter of 2023 as a result of stabilizing demand in the towboat market as well as increased sales to the government market.

Raw material prices remained relatively stable through the first half of the year;

however, beginning in the third quarter of 2024 our Component Products Segment experienced price increases in certain commodity raw materials, primarily brass and electronic components at the security products reporting unit.

Our Component Products Segment expects security products net sales in 2025 to improve modestly over 2024, and our Component Products Segment expects gross margin and operating income percentages in 2025 to be slightly above 2024 due to pricing improvements on the security products product mix.

Our Component Products Segment expects marine components net sales to increase in 2025 due to higher expected sales to the government and industrial markets.

Our Component Products Segment believes the recreational marine market has stabilized, and it expects marine components sales to the towboat market in 2025 will be comparable to 2024.

Overall our Component Products Segment expects marine components to have improved gross margins and operating income percentages in 2025 compared to 2024 due to higher expected sales volumes.

During 2024 our Component Products Segment was aggressive in aligning its production

capabilities and inventories to demand levels.

In 2025, our Component Products Segment will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.

Outlook – Sales for 2025 were strong across both our Component Products Segment’s reporting units, exceeding 2024 levels.

At the marine components reporting unit, improved demand in the government and industrial markets — combined with the one-time stocking event noted above — drove sales and operating income significantly above prior-year levels.

At the security products reporting unit, sales increased compared to 2024 primarily due to higher demand from the government security market, partially offset by continued softness across a variety of markets including transportation, healthcare, and tool storage.

Our Component Products Segment expects modest growth in both the security products and marine components reporting units net sales in 2026 as our Component Products Segment aligns pricing, product features, and service levels with market conditions and customer requirements .

At security products, it anticipates sales increases in most markets, partially offset by ongoing softness in the transportation market.

At the marine components reporting unit, net sales growth in 2026 is expected to come primarily from the industrial market.

Recreational marine sales appear to have largely stabilized, and (excluding the one-time restocking event noted above) sales to the towboat market in 2026 are expected to be comparable to 2025.

Our Component Products Segment expects gross margin and operating income percentages across both the security products and marine components reporting units in 2026 to remain generally comparable to 2025, as planned price increases are expected to offset higher raw material costs and tariff-related surcharges on certain raw materials, as discussed below.

During 2025, inventory levels increased across both the security products and marine components reporting units, driven by higher raw material and production costs as well as actions taken to support anticipated customer demand.

These actions included an insourcing initiative at security products and a shift in customer mix at marine components.

As a result, our Component Products Segment expects inventory levels in 2026 to remain approximately at current levels, consistent with ongoing operating requirements.

Our Component Products Segment manufactures substantially all of its products in the U.S.

and sources a substantial majority of its raw materials from U.S.

Our Component Products Segment also sources certain components, primarily electronic components, from suppliers located in Asia, including China.

Early in the first quarter of 2025, in anticipation of the U.S.

federal government tariffs announcements, our Component Products Segment increased purchases of certain electronic and other components to mitigate the potential near-term tariff impacts.

Late in the second quarter our Component Products Segment began incurring tariff-related surcharges on certain raw materials, primarily electronic components.

In addition, some of our Component Products Segment’s U.S.-based suppliers have recently started applying tariff-related surcharges on certain U.S.-based purchases.

Where possible, our Component Products Segment is

increasing selling prices to its customers to recover these higher raw material costs, although the extent to which our Component Products Segment 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 its customers to substitute alternative products.

Our Component Products Segment will continue to monitor current and anticipated near-term customer demand levels to ensure its production capabilities and inventories are aligned accordingly.

Our Component Products Segment’s expectations for its operations and the markets it serves are based on a number of factors outside its control.

Currently, our Component Products Segment’s supply chains are stable and transportation and logistical delays are minimal.

Our Component Products Segment has in the past experienced global and domestic supply chain challenges, 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 conditions and geopolitical events on demand for its products or its customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.

Our Component Products Segment has experienced global and domestic supply chain 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 conditions, 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.

Real Estate Management and Development –

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Utility and other

Water delivery

Total net sales

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BMI and LandWell own real property in Henderson, Nevada.

LandWell is actively engaged in efforts to develop certain real estate in Henderson, Nevada including approximately 2,100 acres zoned for residential/planned community purposes.

BMI also was responsible for the delivery of water to the City of Henderson and various other users through a water distribution system owned and operated by BWC prior to BWC’s bankruptcy filing and deconsolidation on September 10, 2022.

LandWell is actively engaged in developing certain real estate in Henderson, Nevada including approximately 2,100 acres zoned for residential/planned community purposes.

Prior to 2023, BMI also was responsible for the delivery of water to the City of Henderson and various other users through a water distribution system owned and operated by Basic Water Company (“BWC”), a wholly-owned subsidiary of BMI.

BWC filed for bankruptcy in 2022 and following approval of its plan of reorganization by the bankruptcy court, substantially all of BWC’s assets were sold in November 2023.

BMI also provided certain utility services to an industrial park located in Henderson, Nevada prior to the sale of BPC on December 1, 2023.

With the approval of BWC’s plan of reorganization by the bankruptcy court, substantially all of BWC’s assets were sold in November 2023.

Following the sale of the BWC assets and BPC, BMI no longer provides services to the industrial park which allows us to focus on land sales and development activity for the residential/planned community.

LandWell began marketing land for sale in the residential/planned community in December 2013 and at December 31, 2024 approximately 20 saleable acres remain.

LandWell has been actively marketing and selling the land zoned for commercial and light industrial use and at December 31, 2024 approximately 15 saleable acres remain.

LandWell began marketing land for sale in the residential/planned community in December 2013 and sold the last remaining parcel during 2025.

LandWell has been actively marketing and selling the land zoned for commercial and light industrial use and at December 31, 2025 approximately 8 saleable acres remain adjacent to the residential/planned community.

Contracts for land sales are negotiated on an individual basis, and sales terms and prices will vary based on such factors as location (including location within a planned community), expected development work, and individual buyer needs.

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In some instances, we will receive cash proceeds at the time the contract closes and record deferred revenue for some or all of the cash amount received, with such deferred revenue being recognized in subsequent periods.

Substantially all the land in the residential/planned community has been sold;

however, we expect the development work to take two to three years to complete.

Net Sales and Operating Income – Substantially all the net sales from our Real Estate Management and Development segment in 2024 and 2023 consisted of revenues from land sales.

Although all the land in the residential/planned community has been sold, we continue to complete our development obligations.

We expect the development work be completed by the end of 2027.

Net Sales and Operating Income – All of the net sales from our Real Estate Management and Development segment in 2025 consisted of revenues from land sales, and substantially all of the net sales in 2024 were also from land sales.

We recognized $59.3 million in revenues on land sales during 2025 compared to $71.5 million in 2024.

All of the land sales revenues recognized in 2024 are related to land sold in prior years.

As noted above, we recognize revenue in our residential/planned community over time using cost-based input methods, and substantially all the land sales revenue we recognized in 2024 and 2023 was under this method of revenue recognition.

Land sales revenue in 2024 decreased compared to 2023 due to the decreased pace of

development activity for previously sold parcels within the residential/planned community, primarily due to delays in receiving city permits and delays in environmental related approvals.

The pace of development activities is dictated by a number of factors such as city permit and design approval, approval from the Nevada Department of Environmental Protection and labor and materials availability.

Land sale revenue decreased in 2025 as compared to 2024 primarily due to the net effects of a slower pace of development activity for previously sold parcels within the residential/planned community as our Real Estate Management and Development

segment nears completion of its development work, partially offset by additional land sale revenue in the fourth quarter of 2025 related to the sale of three parcels (including approximately $6.3 million related to parcels with no further development obligations, which was recognized immediately as revenue in the fourth quarter).

As noted above, we recognize revenue in our residential/planned community over time using cost-based input methods.

All land sale revenue recognized in 2024 was recorded under this method, and the significant majority of land sale revenue recognized in 2025 was also recorded under this method.

Cost of sales related to land sales revenues was $23.1 million in 2025 compared to $45.1 million in 2024.

Included in operating income was income related to the tax increment reimbursement note receivables of $30.3 million and $25.2 million in 2024 and 2023, respectively.

The decrease in cost of sales in 2025 compared to 2024 was primarily due to a decrease in infrastructure development spending.

Operating income also included income related to tax increment reimbursement note receivables of $34.2 million in 2025 and $30.3 million in 2024.

See Note 7 to our Consolidated Financial Statements.

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We recognized $71.5 million in revenues on land sales during 2024 compared to $92.6 million in 2023.

All of the land sales revenues recognized in 2024 are related to land sold in prior years.

Land sales revenue in 2023 decreased compared to 2022 due to the decreased pace of development activity dictated by the factors noted above within the residential/planned community.

Land sales revenue in 2024 decreased compared to 2023 due to the decreased pace of development activity for previously sold parcels within the residential/planned community, primarily due to delays in receiving city permits and delays in environmental related approvals.

Cost of sales related to land sales revenues was $45.1 million in 2024 compared to $60.8 million in 2023.

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See Note 7 to our Consolidated Financial Statements.

The remainder of net sales and cost of sales related to this segment primarily relates to water delivery fees and expenses.

Prior to BWC’s bankruptcy filing on September 10, 2022, BMI was responsible for the delivery of water to the City of Henderson and various other users under long-term contracts through a water delivery system owned and operated by BWC.

BWC’s water delivery system operated on Lake Mead in Nevada.

Late in the second quarter of 2022, Lake Mead water levels dropped precipitously to historically low levels.

On June 30, 2022 BWC was no longer able to pump water and consequently ceased operations at its water intake facility.

We considered BWC’s inability to pump water from Lake Mead to be a triggering event under ASC 360 Property, Plant, and Equipment , which caused us to evaluate the water system fixed assets for impairment.

Because BWC was unable to deliver water under its current contracts and therefore unable to generate revenue, we determined the water system’s assets were fully impaired except to the extent certain equipment had alternative use outside of BWC’s operations, in which case those assets were written down to estimated salvage value.

The $16.4 million impairment charge primarily recognized in the second quarter of 2022 represented the write down of the book value to the estimated salvage value of the assets.

Without the ability to pump and deliver water to its customers, BWC’s operating expenses exceeded its revenues, and on September 10, 2022 BWC and its wholly-owned subsidiary (collectively, “Debtors”) voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Nevada.

Because BWC filed for bankruptcy protection, we and BMI could no longer affirmatively assert we control BWC and, as such, in accordance with ASC 810, Consolidation, we deconsolidated BWC as of the date of the bankruptcy filing and recognized a loss of $2.0 million in the third quarter of 2022 on the deconsolidation.

In addition, BMI had an outstanding intercompany accounts receivable balance with BWC on the date of the bankruptcy filing, and we recognized $1.3 million of bad debt expense to fully reserve this balance during the third quarter of 2022.

On November 8, 2023, the Bankruptcy Court for the District of Nevada (“Court”) entered an order approving Debtors’ plan of reorganization, which provided for the sale of substantially all Debtors’ assets and the transfer of substantially all of their operating and other agreements to one of their industrial customers.

The transaction closed on November 17, 2023 at which time Debtors discontinued their water delivery operations.

The proceeds of the sale were used to repay creditors of the Debtors.

On July 10, 2024, the Court approved the closure of the Debtors’ bankruptcy case.

BWC and its wholly-owned subsidiary BWC SPE I, LLC were subsequently dissolved with the remaining cash at BWC of $2.6 million distributed to BMI.

As noted above, BMI sold its subsidiary BPC in 2023.

The sale was for minimal cash consideration and the assumption of liabilities, and upon the closing of the sale we recognized a loss of $2.6 million in 2023.

BWC filed for bankruptcy in 2022 and following approval of its plan of reorganization by the bankruptcy court, substantially all of BWC’s assets were sold in November 2023.

On July 10, 2024, the bankruptcy court for the District of Nevada approved the closure of the bankruptcy case of BWC and its wholly-owned subsidiary, BWC SPE I, LLC.

Both entities were subsequently dissolved, and the remaining cash of $2.6 million was distributed to BMI.

See Note 3 to our Consolidated Financial Statements.

On December 1, 2023, BMI sold its subsidiary BPC, which provided electricity to four customers located in the industrial park, and its sewer system assets to another of its industrial customers.

The sale was for minimal cash consideration and the assumption of liabilities, and upon the closing of the sale we recognized a loss of $2.6 million.

BMI provided transition services to the purchaser of the businesses for a limited time.

With the sale of BPC and the completion of the bankruptcy, we no longer provide services to the industrial park which allows us to focus on land sales and development activity for the residential/planned community.

Outlook – LandWell is focused on developing the land it manages, primarily to residential builders, for the residential/planned community in Henderson.

At December 31, 2024, substantially all of the land in the residential/planned community had been sold with approximately 20 saleable acres remaining.

A contract for the remaining 20 acres is currently in escrow with a home builder, and the sale is scheduled to close by mid-2025.

There are also 15 saleable acres zoned for light industrial and commercial use outside of the 2,100 acre residential/planned community available for sale.

Demand for retail and commercial use in the Las Vegas area is not as strong as residential demand, and we expect it will take more time to sell these remaining acres.

At December 31, 2024 we have deferred revenue of $32.1 million related to post-closing obligations on land sales closed prior to 2024.

Because we recognize revenue over time using cost-based inputs, we will continue to recognize revenue on land previously sold over the development period, although we have already received substantially all the cash proceeds related to these sales.

We currently expect to take two to three years to complete our post-closing obligations.

Any delays or curtailments in infrastructure development related to post-closing obligation activities will delay the amount of revenue we recognize on previously closed land sales.

Under LandWell’s development agreement with the City of Henderson, the issuance of a specified number of housing permits requires LandWell to complete certain large infrastructure projects.

LandWell began construction on several of these community-wide large projects in late 2021 with the construction expected to continue for the next two to three years.

We expect these land development costs in 2025 to be comparable to 2024 due to the timing of planned infrastructure projects and the availability of certain construction materials.

Because these large projects relate to the entirety of the residential/planned community, the costs associated with these large projects are not part of the cost-based inputs used to recognize revenue, and therefore, this spending will not correlate to revenue recognition.

At December 31, 2025, all of the land in the residential/planned community has been sold.

There are also approximately 8 saleable acres zoned for light industrial and commercial use adjacent to the 2,100 acre residential/planned community available for sale.

The remaining 8 acres are currently in escrow and the sale is scheduled to close by the end of the first quarter of 2026.

At December 31, 2025, we had deferred revenue of $23.5 million related to post-closing obligations on land sales closed prior to 2025.

Because we recognize revenue over time using cost-based inputs, we will continue to recognize revenue on land previously sold over the development period, even though we have already received all the cash proceeds related to these sales.

We currently expect to recognize all remaining deferred revenue during 2026.

Any delays or curtailments in infrastructure development related to post-closing obligation activities would delay the timing of revenue recognized on these previously closed land sales.

Under LandWell’s development agreement with the City of Henderson, the issuance of a specified number of housing permits requires LandWell to complete certain large community-wide infrastructure projects.

Construction on several of these large projects began in late 2021 and is expected to be completed in 2027.

We expect 2026 land development costs to be comparable to those in 2025 due to the timing of planned infrastructure projects and the availability of certain construction materials.

Because these large infrastructure projects relate to the entirety of the residential/planned community, the associated costs are not part of the cost-based inputs used to recognize revenue, and therefore, this spending will not correlate to revenue recognition.

However, this spending is expected to be eligible for tax increment reimbursement under our Owner Participation Agreement (“OPA”) with the City of Henderson, and delays or curtailments in eligible infrastructure development activities will also delay LandWell’s ability to submit completed costs to the City for approval of additional OPA note receivables.

The maximum reimbursement under the OPA is $209 million.

We have collected $32.7 million to date and expect to reach the maximum in the next 7 to 10 years.

We currently expect to receive approval for the remaining infrastructure reimbursement notes receivable – up to the $170 million cap – in 2026, and we expect to receive cash payments on the notes for the next 5 to 7 years.

General Corporate Items, Interest Expense, Income Taxes, Noncontrolling Interest and Related Party Transactions

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Insurance recoveries include amounts NL received from these insurance carriers.

NL did not receive any insurance recoveries during 2025.

NL received $1.4 million and $.5 million in insurance recoveries during 2024 and 2023, respectively.

Insurance recoveries in 2022 were nominal.

See Note 13 to our Consolidated Financial Statements.

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See Note 3 to our Consolidated Financial Statements.

Gain on Remeasurement of Earn-out Liability – We recognized a gain on the remeasurement of Kronos’ earn-out liability of $4.6 million in the third quarter of 2025.

See Note 3 to our Consolidated Financial Statements.

Other Components of Net Periodic Pension and OPEB Expense – We recognized other components of net periodic pension and OPEB expense of $32.7 million in 2025, $2.6 million in 2024 and $11.8 million in 2023.

The decrease in 2024 compared to 2023 is primarily due to a higher expected return on plan assets, lower discount rates impacting interest costs and a non-recurring $6.2 million in settlement costs related to the termination and buy-out of our U.K.

The increase in 2025 compared to 2024 is primarily due to a $28.7 million settlement loss incurred in the fourth quarter of 2025 related to the termination and buy-out of our U.S.

pension plan.

The decrease in 2024 compared to 2023 is primarily due to a higher expected return on plan assets, lower discount rates impacting interest costs and a $6.2 million settlement loss related to the termination and buy-out of our U.K.

pension plan in the second quarter of 2023.

The decrease in 2023 compared to 2022 is primarily due to the net effects of higher discount rates impacting interest cost, previously unrecognized actuarial losses and $6.2 million in settlement costs related to the termination and buy-out of our U.K.

pension plan during the second quarter of 2023.

See Note 11 to our Consolidated Financial Statements.

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As discussed in Note 16 to our Consolidated Financial Statements, we account for our proportional interest in these shares of our common stock as treasury stock at Kronos’ and NL’s historical cost basis.

remaining portion of these shares of our common stock, which are attributable to the noncontrolling interest of Kronos and NL, are reflected in our Consolidated Balance Sheets at fair value.

The remaining portion of these shares of our common stock, which are attributable to the noncontrolling interest of Kronos and NL, are reflected in our Consolidated Balance Sheets at fair value.

Any unrealized gains or losses on the shares of our common stock attributable to the noncontrolling interest of Kronos and NL are recognized in the determination of each of Kronos and NL’s respective net income or loss.

Under the principles of consolidation, we eliminate any gains or losses associated with our common stock to the extent of our proportional ownership interest in each subsidiary.

The $1.9 million gain in 2024, the $1.7 million loss in 2023 and the $1.6 million loss in 2022 recognized in our Consolidated Financial Statements represent the unrealized gain (loss) in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.

Interest Income and Other – Interest income and other of $22.0 million in 2024 was comparable to 2023.

Interest income and other increased $10.9 million in 2023 compared to 2022 primarily due to higher average interest rates and increased investment balances.

The $2.7 million loss in 2025, $1.9 million gain in 2024 and the $1.7 million loss in 2023 recognized in our Consolidated Financial Statements represent the unrealized gain (loss) in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.

Interest Income and Other – Interest income and other of $16.6 million in 2025 decreased $5.4 million compared to 2024 primarily due to lower interest rates and decreased average investment balances.

Interest income and other of $22.0 million in 2024 was comparable to 2023.

See Note 13 to our Consolidated Financial Statements.

Other General Corporate Items – Corporate expenses of $4.3 million in 2024 decreased compared to corporate expenses of $35.2 million in 2023 primarily 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.

Other General Corporate Items – Corporate expenses of $35.0 million in 2025 increased compared to corporate expenses of $4.3 million in 2024 primarily 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 expense are:

● litigation and related costs at NL of $2.9 million in 2025 and $3.0 million in 2024;

● income from environmental remediation of $19.2 million in 2024 compared to costs of $2.5 million in 2023.

Corporate expenses were 4% lower at $35.2 million in 2023 compared to corporate expenses of $36.6 million in 2022 due primarily to lower administrative expenses.

● environmental remediation costs of $2.7 million in 2025 compared to income of $19.2 million in 2024.

Corporate expenses of $4.3 million in 2024 decreased compared to corporate expenses of $35.2 million in 2023 primarily 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 expense are:

● litigation and related costs at NL of $3.0 million in 2024 and $4.4 million in 2023;

● environmental remediation and related costs of $2.5 million in 2023 compared to $1.7 million in 2022.

Overall, we currently expect that our net general corporate expenses in 2025 will be higher than 2024 primarily due to income recognized in 2024 related to the settlement of a liability for an environmental remediation site in the fourth quarter of 2024.

● income from environmental remediation of $19.2 million in 2024 compared to costs of $2.5 million in 2023.

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.

The level of our litigation and related expenses varies from period to period depending upon, among other things, the number of cases in which we are currently involved, the nature of such cases and the current stage of such cases (e.g.

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See Note 18 to our Consolidated Financial Statements.

Interest Expense – Interest expense increased $21.6 million in 2024 compared to 2023 primarily due to higher interest rates on Kronos’ new debt issued in February and July of 2024 and higher average debt balances as a result of the LPC acquisition.

Interest Expense – Interest expense in 2025 increased $7.2 million compared to 2024 primarily due to higher average debt balances and higher interest rates.

Interest expense increased $21.6 million in 2024 compared to 2023 primarily due to higher interest rates on Kronos’ debt issued in February and July of 2024 and higher average debt balances as a result of the LPC acquisition.

As a result of the exchange, interest expense in 2024 also includes a charge of $1.5 million for the write-off of deferred financing costs.

Interest expense of $28.3 million in 2023 was comparable to $27.9 million in 2022 .

We expect interest expense will be higher in 2025 as compared to 2024 primarily due to the higher debt balances as a result of the third quarter acquisition of LPC and higher interest rates on Kronos’ new debt issued in February and July of 2024.

We expect interest expense will be higher in 2026 as compared to 2025 primarily due to higher debt balances and higher interest rates on Kronos’ new debt issued in 2025.

See Note 9 to our Consolidated Financial Statements.

Income Tax Expense (Benefit) – We recognized income tax expense of $82.9 million in 2024 compared to an income tax benefit of $24.6 million in 2023.

The increase is primarily due to higher earnings in 2024 and the jurisdictional mix of such earnings.

We recognized an income tax benefit of $24.6 million in 2023 compared to income tax expense of $36.8 million in 2022.

The decrease is primarily due to lower earnings in 2023 and the jurisdictional mix of such earnings.

Our income tax expense in 2024 includes a non-cash deferred income tax expense of $8.2 million in the fourth quarter, related to the recognition of a deferred income tax asset valuation allowance for our Chemicals Segment’s Belgian net deferred tax assets.

We continue to believe we will ultimately realize the full benefit of our Belgian NOL carryforwards, in part because of their indefinite carryforward period.

However, our ability to reverse all or a portion of such valuation allowance in the future is dependent on the presence of sufficient positive evidence, such as the existence of cumulative profits in the most recent twelve consecutive quarters, and the ability to demonstrate future profitability for a sustainable period.

Until such time as we are able to reverse the valuation allowance in full, to the extent we generate additional losses in Belgium in the intervening periods, our effective income tax rate will be negatively impacted, because any further losses will effectively be recognized without the net income tax benefit.

On December 10, 2024, the Department of the Treasury and the Internal Revenue Service released final currency regulations under §987 and related rules (the “2024 Final Regulations”).

The 2024 Final Regulations generally apply to tax years beginning after December 31, 2024, and include transition rules that require us to compute a pretransition gain or loss for currency translation related to the operations, assets and liabilities of our Chemicals Segment’s non-U.S.

Income Tax Expense (Benefit) – We recognized income tax expense of $11.9 million and $82.9 million, in 2025 and 2024, respectively, and we recognized an income tax benefit of $24.6 million in 2023.

The decrease from 2024 to 2025 and the increase from 2023 to 2024 is primarily due to the change in our earnings from year to year and the jurisdictional mix of such earnings, partially offset by the following:

● a non-cash deferred income tax expense of $19.3 million in the third quarter of 2025 to reduce our Chemicals Segment’s net German deferred tax asset as a result of the reduction of the German corporate tax rate,

● a non-cash deferred income tax expense of $8.5 million in 2025 ($2.5 million in 2024) related to the valuation allowance recorded against the portion of our U.S.

federal carryforwards of the nondeductible portion of our interest expense,

● a non-cash deferred income tax expense of $8.5 million in 2025 with respect to the valuation allowance recorded against our Chemicals Segment’s German corporate and trade tax carryforwards of the nondeductible portion of the German interest expense,

● a non-cash deferred income tax expense of $8.6 million in 2025 ($8.2 million in 2024) related to the recognition of a deferred income tax asset valuation allowance related to our Chemicals Segment’s Belgian net deferred tax assets, and

● a non-cash deferred income tax expense of $16.5 million recognized in the fourth quarter of 2024 related to the pretransition gain computed on currency translation related to the operations, assets and liabilities of our Chemicals Segment’s non-U.S.

qualified business units.

Pursuant to the 2024 Final Regulations, we have calculated a pretransition gain of $77.1 million and, accordingly, our income tax expense in 2024 includes a non-cash deferred income tax expense of $16.5 million recognized in the fourth quarter.

Our earnings are subject to income tax in various U.S.

jurisdictions.

Generally, our consolidated effective income tax rate is higher than the U.S.

federal statutory tax rate of 21% primarily because the income tax rates applicable to the pre-tax earnings (losses) of our non-U.S.

operations are generally higher than the income tax rates applicable to our U.S.

However, in 2022 our consolidated effective income tax rate was lower than the U.S.

federal statutory rate of 21% due to the effect of a tax benefit relating to the partial release of our valuation allowance associated with the 2022 utilization of a portion of our business interest expense carryforwards.

We would generally expect our overall effective tax rate, excluding the effect of any increase or decrease in our deferred income tax asset valuation allowance or tax rate changes to be higher than the U.S.

federal statutory tax rate of 21% primarily because of our sizeable non-U.S.

See Note 14 to our Consolidated Financial Statements for more information about our 2025 income tax items, including a tabular reconciliation of our statutory tax expense to our actual tax expense.

Noncontrolling Interest in Net Income of Subsidiaries – Noncontrolling interest in operations of subsidiaries increased in 2024 compared to 2023 primarily due to increased operating income at Kronos.

Noncontrolling interest in operations of subsidiaries decreased from 2022 to 2023 primarily due to lower operating income at Kronos.

Noncontrolling Interest in Net Income of Subsidiaries – Noncontrolling interest in operations of subsidiaries decreased in 2025 compared to 2024 primarily due to decreased operating income at Kronos.

Noncontrolling interest in operations of subsidiaries increased in 2024 compared to 2023 primarily due to increased operating income at Kronos.

See Note 15 to our Consolidated Financial Statements.

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Foreign Operations

We have substantial operations located outside the United States, principally our Chemicals Segment’s operations in Europe and Canada.

As discussed above, we have substantial operations located outside the United States, principally our Chemicals Segment’s operations in Europe and Canada.

The functional currency of these operations is the local currency.

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Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

the date of the financial statements and the reported amount of revenues and expenses during the reported period.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period.

On an ongoing basis we evaluate our estimates, including those related to the recoverability of long-lived assets, pension and other postretirement benefit obligations and the underlying actuarial assumptions related thereto, the realization of deferred income tax assets and accruals for litigation, income tax and other contingencies.

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We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors.

Goodwill – Our net goodwill totaled $382.3 million at December 31, 2024 primarily resulting from our various step acquisitions of Kronos and NL (which occurred before the implementation of the current accounting standards related to noncontrolling interest) and to a lesser extent CompX’s purchase of various businesses and Kronos’ purchase of the remaining 50% interest in LPC in 2024.

Goodwill – Our net goodwill related to our Chemicals Segment totaled $355.2 million at December 31, 2025 primarily resulting from our various step acquisitions of Kronos and NL (which occurred before the implementation of the current accounting standards related to noncontrolling interest) and Kronos’ purchase of the remaining 50% interest in LPC in 2024.

In accordance with the applicable accounting standards for goodwill, we do not amortize goodwill.

We perform a goodwill impairment test annually in the third quarter of each year.

We perform a goodwill impairment test annually in the third quarter of each year by reporting unit.

Goodwill is also evaluated for impairment at other times whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

An entity may first assess qualitative factors to determine whether it is necessary to complete the quantitative impairment test using a more-likely-than-not criteria.

If an entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed.

entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed.

Alternatively, an entity has an unconditional option to bypass the qualitative assessment and proceed directly to performing the quantitative impairment test.

When performing a qualitative assessment considerable management judgment is necessary to evaluate the qualitative impact of events and circumstances on the fair value of a reporting unit.

Events and circumstances considered in our impairment evaluations, such as historical profits and stability of the markets served, are consistent with factors utilized with our internal projections and operating plan.

However, future events and circumstances could result in materially different findings which could result in the recognition of a material goodwill impairment.

Evaluations of possible impairment utilizing the quantitative impairment test require us to estimate, among other factors:

forecasts of future operating results, revenue growth, operating margin, tax rates, capital expenditures, depreciation, working capital, weighted average cost of capital, long-term growth rates, risk premiums, terminal values, and fair values of our reporting units and assets.

The goodwill impairment test is subject to uncertainties arising from such events as changes in competitive conditions, the current general economic environment, material changes in growth rate assumptions that could positively or negatively impact anticipated future operating conditions and cash flows, changes in the discount rate, and the impact of strategic decisions.

If any of these factors were to materially change such change may require revaluation of our goodwill.

Changes in estimates or the application of alternative assumptions could produce significantly different results.

If we choose not to complete a qualitative assessment for a reporting unit or if the initial assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required.

If additional quantitative testing is performed, an impairment loss is recognized when the amount by which the carrying value of the reporting unit exceeds its fair value.

A reporting unit can be a segment or an operating division based on the operations of the segment.

For example, our Chemicals Segment produces a globally coordinated homogeneous product whereas our Component Products Segment operates as two distinct reporting units.

If the fair value of the reporting unit is less than its book value, the goodwill is written down to estimated fair value.

For our Chemicals Segment, we use Level 1 inputs of publicly traded market prices to compare the book value to assess impairment.

We also consider control premiums when assessing fair value.

When we performed our annual goodwill impairment test in the third quarter of 2024 for our Chemicals Segment goodwill, we concluded there was no impairment of such goodwill.

However, future events and circumstances could change (i.e.

a significant decline in quoted market prices) and result in a materially different finding which could result in the recognition of a material impairment with respect to such goodwill.

Substantially all of the goodwill for our Component Products Segment relates to its security products reporting unit.

In 2024, we used the qualitative assessment for our annual impairment test and determined it was not necessary to perform the quantitative goodwill impairment test, as we concluded it is more-likely-than-not that the fair value of the security products reporting unit exceeded its carrying amount.

Our Chemicals Segment is one reporting unit.

In performing a quantitative test for impairment of goodwill, we use the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of the reporting unit.

When performing an income approach method considerable management judgment is necessary to derive the primary assumptions used in estimating fair value under the discounted cash flow model including forecasted revenue, gross margin, operating expenses, capital expenditures, discount rate and the tax rate.

Additionally, management judgment is necessary for the assumptions used to determine fair value under the guideline public company method including the selection of guideline companies and the valuation multiples applied.

We performed our annual goodwill impairment test in the third quarter of 2025 for our Chemicals Segment goodwill and concluded there was no impairment of such goodwill.

Estimating the fair value of a reporting unit requires the use of estimates and significant judgments that are based on a number of factors including actual operating results and future expectations such as global demand, product pricing, input costs and general economic trends.

The judgments and estimates described above could change in future periods or the actual results may differ from the forecast and could result in the recognition of a material goodwill impairment.

Long-lived assets – The net book value of our property and equipment totaled $751.6 million at December 31, 2025.

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We made contributions to all of our defined benefit pension plans of $16.3 million in 2023, $16.4 million in 2024 and $15.9 million in 2025.

In accordance with applicable U.S.

pension regulations, effective June 30, 2025, NL began the process of terminating the U.S.

pension plan, which includes the purchase of annuity contracts from third-party insurance companies for the purpose of paying benefits

to plan participants.

The annuity contracts were purchased on December 16, 2025 from “A” rated third-party insurance companies in settlement of all remaining obligations to the pension plan participants.

The annuity purchase was funded with existing plan assets.

In connection with the settlement, we recognized a non-cash settlement loss on the U.S.

pension plan termination and buy-out of approximately $28.7 million, which is included in our other components of net periodic pension and OPEB cost on our Consolidated Statements of Operations for the year ended December 31, 2025.

This charge represents the previously unrecognized actuarial losses and prior service costs that were accumulated in other comprehensive loss.

Following the settlement, surplus U.S.

pension assets will be used, as permitted by the applicable regulations, to fund obligations associated with our Chemicals Segment’s U.S.

defined contribution profit sharing plan.

Such surplus assets are included in pension assets on our Consolidated Balance Sheet.

Under defined benefit pension plan accounting, defined benefit pension plan expense, pension assets and accrued pension costs are each recognized based on certain actuarial assumptions.

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We also use these discount rates to determine the interest component of defined benefit pension expense for the following year.

At December 31, 2024, approximately 65%, 14%, 7% and 11% of the projected benefit obligations related to our plans in Germany, Canada, Norway and the U.S., respectively.

At December 31, 2025, approximately 72%, 15% and 8% of the projected benefit obligations related to our plans in Germany, Canada, Norway, respectively.

We use several different discount rate assumptions in determining our consolidated defined benefit pension plan obligation and expense.

This is because we maintain defined

benefit pension plans in several different countries in Europe and North America and the interest rate environment differs from country to country.

This is because we maintain defined benefit pension plans in several different countries in Europe and North America and the interest rate environment differs from country to country.

We used the following discount rates for our defined benefit pension plans:

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Differences between the expected return on plan assets for a given year and the actual return are deferred and amortized over future periods based either upon the expected average remaining service life of the active plan participants (for plans for which benefits are still being earned by active employees) or the average remaining life expectancy of the inactive participants (for plans for which benefits are not still being earned by active employees).

At December 31, 2024, the fair value of plan assets for all defined benefit plans comprised $75.7 million related to U.S.

plans and $404.9 million related to non-U.S.

All of plan assets attributable to non-U.S.

plans related to plans maintained by Kronos, and approximately 35% and 65% of the plan assets attributable to U.S.

plans related to plans maintained by NL and Kronos, respectively.

At December 31, 2024, approximately 55%, 17%, 9% and 16% of the plan assets related to our plans in Germany, Canada, Norway and the U.S, respectively.

plans related to plans maintained by Kronos.

At December 31, 2025, approximately 65%, 18% and 11% of the plan assets related to our Kronos plans in Germany, Canada and

Norway, respectively.

We use several different long-term rates of return on plan asset assumptions in determining our consolidated defined benefit pension plan expense.

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Kronos and NL plans:

Our long-term rate of return on plan asset assumptions in 2025 used for purposes of determining our 2025 defined benefit pension plan expense for Germany, Canada, Norway and the U.S.

are 4.8%, 3.7%, 5.3% and 5.0%, respectively.

Our long-term rate of return on plan asset assumptions in 2026 used for purposes of determining our 2026 defined benefit pension plan expense for Germany, Canada and Norway are 4.8%, 3.7% and 5.6%, respectively.

We follow ASC Topic 820, Fair Value Measurements and Disclosures , in determining the fair value of plan assets within our defined benefit pension plans.

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Our effective tax rate is highly dependent upon the geographic distribution of our earnings or losses and the effects of tax laws and regulations in each tax-paying jurisdiction in which we operate.

Significant judgments and estimates are required in determining our consolidated provision for income taxes due to the global nature of our Chemicals Segment’s operations.

Significant judgments and estimates are required in determining our

consolidated provision for income taxes due to the global nature of our Chemicals Segment’s operations.

Our provision (benefit) for income taxes and deferred tax assets and liabilities reflect our best assessment of estimated current and future taxes to be paid, including the recognition and measurement of deferred tax assets and liabilities.

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For example, at December 31, 2025, our Chemicals Segment has significant German corporate and trade net operating loss (“NOL”) carryforwards of $510.8 million (DTA of $57.2 million) and $46.3 million (DTA of $5.0 million), respectively.

and Belgian corporate NOL carryforwards of $72.0 million (DTA of $18.0 million).

Prior to December 31, 2024, and using all available evidence, we had concluded that no deferred income tax asset valuation allowance was required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have lengthy carryforward periods (the German and Belgian carryforwards may be carried forward indefinitely), (ii) we have utilized a portion of

such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term.

With respect to our Belgium carryforwards, at December 31, 2024, given our operating results during the fourth quarter of 2024 and our current expectations for 2025, we do not have sufficient positive evidence to overcome the significant negative evidence of having cumulative losses in the most recent twelve consecutive quarters in Belgium (even considering that the carryforward period of our Belgian NOL carryforwards is indefinite, one piece of positive evidence).

Accordingly, at December 31, 2024, we concluded that we were required to recognize a non-cash deferred income tax asset valuation allowance of $8.2 million under the more-likely-than-not recognition criteria with respect to our Belgian net deferred tax assets.

At December 31, 2024, we continue to conclude no valuation allowance is required to be recognized for our German DTAs although prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

The Organization for Economic Cooperation and Development (the “OECD”), the European Union and other countries have committed to enacting the OECD’s Pillar Two initiative that would provide a global minimum level of taxation for multinational companies to be applied on a country-by-country basis.

Currently, many countries have enacted legislation to implement the Pillar Two rules effective for years beginning on or after December 31, 2023.

Based on legislation currently enacted, we do not anticipate any material impact to our Consolidated Financial Statements;

however, until all the jurisdictions we operate in enact legislation, the full impact of Pillar Two to us is unknown.

We also have U.S.

federal NOL carryforwards of $58.1 million (DTA of $12.2 million).

At December 31, 2025, we have concluded no valuation allowance is required to be recognized for our German and U.S.

DTAs principally because such carryforwards have an indefinite carryforward period and we currently expect to utilize the remainder of such carryforwards over the long term.

Although prior to the complete utilization of such carryforwards, if we were to generate additional losses in our German or U.S.

operations for an extended period of time, or if applicable laws were to change such that the carryforward periods were more limited, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

Acquisition of joint venture – During the third quarter of 2024, Kronos acquired the 50% joint venture interest in LPC previously held by Venator.

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Operating Activities –

Trends in cash flows as a result of our operating income (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our earnings.

Trends in cash flows as a result of our operating activities (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our earnings.

In addition to the impact of the operating, investing and financing cash flows discussed below, changes in the amount of cash, cash equivalents and restricted cash we report from year to year can be impacted by changes in currency exchange rates, since a portion of our cash, cash equivalents and restricted cash is held by our Chemicals Segment’s non-U.S.

subsidiaries.

For example, during 2024, relative changes in currency exchange rates resulted in a $.1 million decrease in the reported amount of our cash, cash equivalents and restricted cash compared to a $1.0 million increase in 2023 and a $5.1 million decrease in 2022.

For example, during 2025, relative changes in currency exchange rates resulted in a $4.5 million increase in the reported amount of our cash, cash equivalents and restricted cash compared to a $.1 million decrease in 2024 and a $1.0 million increase in 2023.

Cash flows from operating activities decreased to a use of $35.5 million in 2025 from cash provided of $44.0 million in 2024.

This $79.5 million decrease in operating cash flows in 2025 includes:

● a consolidated operating income of $63.3 million in 2025, a decrease of $147.4 million compared to operating income of $210.7 million in 2024;

● lower amount of net cash used of $155.7 million associated with relative changes in our receivables, inventories, land held for development, payables and accrued liabilities in 2025;

● higher cash paid for environmental remediation and related costs in 2025 of $56.7 million primarily due to the payment of a settlement for an environmental remediation site (see Note 18 to our Consolidated Financial Statements);

● higher net cash paid for income taxes in 2025 of $10.3 million primarily due to the timing of tax payments;

● higher cash paid for interest in 2025 of $6.7 million;

● lower net contributions to our TiO 2 manufacturing joint venture in 2025 of $2.7 million as the result of obtaining control of LPC in July 2024 .

Cash flows from operating activities increased to $44.0 million in 2024 from $3.9 million in 2023.

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● higher net contributions of $5.8 million to our TiO 2 manufacturing joint venture in 2024 prior to the LPC acquisition.

Cash flows from operating activities decreased to $3.9 million in 2023 from $34.9 million in 2022.

This $31.0 million decrease in cash provided by operations in 2023 includes:

● consolidated operating income of $34.2 million in 2023, a decrease of $205.2 million compared to operating income of $239.4 million in 2022;

● lower amount of net cash used of $84.6 million associated with relative changes in our receivables, inventories, land held for development, payables and accrued liabilities in 2023;

● lower net cash paid for income taxes in 2023 of $16.3 million primarily due to decreased earnings;

● lower net contributions to our TiO 2 manufacturing joint venture in 2023 of $13.6 million.

As noted in our discussion of our Real Estate Management and Development segment above, we have sold the majority of the land in our residential/planned community, and in accordance with our development agreement with the City of Henderson and our contractual obligations with builders, we expect to complete our land development obligations over the next two to three years.

As noted in our discussion of our Real Estate Management and Development segment above, we have sold all of the land in our residential/planned community, and in accordance with our development agreement with the City of Henderson and our contractual obligations with builders, we expect to complete our land development obligations over the next two years.

Because we have largely received cash proceeds from land sales, we expect LandWell to generate negative operating cash flows as it completes its required land development work.

Changes in working capital were affected by accounts receivable and inventory changes, as shown below:

● Kronos’ average days sales outstanding (“DSO”) decreased from December 31, 2023 to December 31, 2024, primarily due to the relative changes in the timing of collections.

● Kronos’ average days sales in inventory (“DSI”) increased from December 31, 2023 to December 31, 2024 primarily due to production volumes exceeding sales volumes in 2024 compared to 2023 when Kronos’ sales volumes exceeded its production volumes.

● CompX’s average DSO decreased from December 31, 2023 to December 31, 2024 and is primarily impacted by the timing of sales and collections in the last month of the year.

● CompX’s average DSI at December 31, 2024 was comparable to December 31, 2023 as the increase at the security products reporting unit due to the fulfillment and shipping of a significant order during the fourth quarter of 2023 was offset by the decline at the marine components reporting unit due to elevated inventory balances at December 31, 2023.

● Kronos’ average days sales outstanding (“DSO”) at December 31, 2025 was comparable to December 31, 2024.

● Kronos’ average days sales in inventory (“DSI”) decreased from December 31, 2024 to December 31, 2025 primarily due to lower inventory volumes attributable to sales volumes exceeding production volumes in the fourth quarter of 2025 compared to the fourth quarter of 2024 when Kronos’ production volumes exceeded its sales volumes.

● CompX’s average DSO at December 31, 2025 was comparable to December 31, 2024.

● CompX’s average DSI increased from December 31, 2024 to December 31, 2025 primarily due to increased inventory at both the security products and marine components reporting units as a result of higher raw material and production costs and to meet expected customer demand.

For comparative purposes, we have also provided comparable prior year numbers below.

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Investing Activities –

We disclose capital expenditures by our business segments in Note 2 to our Consolidated Financial Statements.

● we had net purchases of $1.2 million related to marketable securities.

● Kronos paid $156.8 million, net of cash acquired, for the remaining TiO 2 manufacturing joint venture interest in LPC;

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● we had net proceeds from the sale of land not used in our operations of $1.8 million.

● we had net purchases of $70.7 million of marketable securities;

● $8.6 million of BWC’s cash, cash equivalents and restricted cash was removed as part of its deconsolidation in the third quarter (see Note 3 to our Consolidated Financial Statements).

Financing Activities –

● Kronos had net repayments of $11.3 million on its revolving credit facility;

● Kronos International, Inc.

(“KII”) issued an additional €75 million principal amount of 9.50% Senior Secured Notes due 2029 (the “Additional Notes”), the proceeds of which were used to refinance the 3.75% Senior Secured Notes that matured in September 2025;

● we repaid $21.0 million under the Contran credit facility;

● we repaid $48.8 million on Valhi’s credit facility with Contran;

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(“KII”) 3.75% Senior Secured Notes due September 2025 (the “Old Notes”) for KII’s newly issued €276.174 million 9.50% Senior Secured Notes due March 2029 (the “New Notes”) plus additional cash consideration of $52.6 million to certain eligible holders of the Old Notes and borrowed $53.7 million from Contran.

In the third quarter Kronos issued an additional €75 million principal amount of 9.50% Senior Secured Notes due 2029 (the “Additional New Notes” and together with the Old Notes and the New Notes, the “Senior Secured Notes”).

In the third quarter Kronos issued an additional €75 million principal amount of 9.50% Senior Secured Notes due 2029.

● we repaid $28.0 million on Valhi’s credit facility with Contran;

● Kronos acquired 313,814 shares of its common stock for an aggregate purchase price of $2.8 million.

● we borrowed $.1 million and repaid $51.6 million on Valhi’s credit facility with Contran;

● we repaid $8.4 million on BWC’s loan from Western Alliance Bank;

● Kronos acquired 217,778 shares of its common stock for an aggregate purchase price of $2.3 million;

● CompX acquired 78,900 shares of its Class A common stock for an aggregate purchase price of $ 1.7 million.

We paid aggregate cash dividends on our common stock of $9.0 million in 2022 and $9.1 million in each of 2023 and 2024.

We paid aggregate cash dividends on our common stock of $9.1 million in 2023, 2024 and 2025, respectively.

Distributions to noncontrolling interest in 2023, 2024 and 2025 are primarily comprised of:

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● Valhi’s $23.6 million outstanding on its $125 million amended credit facility with Contran which is due no earlier than December 31, 2027;

● €351.174 million aggregate outstanding on KII’s 9.5% Senior Secured Notes due 2029 plus €5.1 million of unamortized premium ($365.4 million carrying amount, net of unamortized debt issuance costs);

● €75 million aggregate outstanding on KII’s 3.75% Senior Secured Notes due 2025 ($78.3 million carrying amount);

● €426.174 million aggregate outstanding on Kronos’ 9.50% Senior Secured Notes due 2029 ($503.7 million carrying amount, net of unamortized premium and unamortized debt issuance costs) ;

● $53.7 million outstanding on Kronos’ subordinated, unsecured term loan from Contran due September 2029 (the “Contran Term Loan”);

● $10.0 million outstanding on Kronos’ Global Revolver;

● $10.7 million outstanding on LandWell’s bank loan due April 2036.

Availability under the Global Revolver is subject to a borrowing base calculation, as defined in the agreement.

Availability under Kronos’ Global Revolver is subject to a borrowing base calculation, as defined in the agreement.

The borrowing base calculated as of December 31, 2025 was approximately $251 million.

Effective July 17, 2024, Kronos completed an amendment to its Global Revolver (the “Second Amendment”).

Among other things, the Second Amendment increased the maximum borrowing amount from $225 million to $300 million, extended the maturity date to July 2029 and expanded the facility to include LPC and LPC’s receivables and certain of its inventories in the borrowing base.

The LPC acquisition was financed through borrowings of $132.1 million under Kronos’ Global Revolver with the remainder paid with cash on hand.

On July 30, 2024, Kronos’ wholly-owned subsidiary, KII, issued an additional €75 million principal amount of 9.50% Senior Secured Notes due 2029 (the “Additional New Notes”).

The Additional New Notes were issued at a premium of 107.50% of their principal amount, plus accrued interest from February 12, 2024, resulting in net proceeds of approximately $90 million, after fees and expenses.

The Additional New Notes are fungible with the New Notes, are treated as a single series with the New Notes, and have the same terms as the New Notes, other than their date of issuance and issue price.

The proceeds from the Additional New Notes were used to pay down borrowings incurred under the Global Revolver.

Subsequent to the issuance of the Additional New Notes, the Contran Term Loan was amended in August 2024 to change the interest rate from 11.5% (which had been determined by adding an additional spread of 2% to the final interest rate on the New Notes issued in February 2024) to 9.54% (determined by adding a spread of 2% to the effective interest rate of the Additional New Notes issued in July 2024).

In each case, the spread used to determine the rate was based upon comparable debt transactions at the time of the issuance of the applicable notes.

Effective July 17, 2025, Kronos completed an amendment to its Global Revolver (the “Fourth Amendment”).

Among other things, the Fourth Amendment increased the maximum borrowing amount from $300 million to $350 million and increased the Belgian and German sub-limits from €30 million and €60 million to €55 million and €85 million, respectively, allowing greater access

to Euro denominated borrowings.

The maturity date of the Global Revolver remains July 2029.

On September 15, 2025, KII issued the Additional Notes, the proceeds of which were used to refinance the 3.75% Senior Secured Notes (€75 million aggregate principal amount) that matured in September 2025.

The Additional Notes were issued as additional notes to the existing €351.174 million aggregate principal amount of 9.50% Senior Secured Notes due 2029 issued on February 12, 2024 and July 30, 2024 (the “Existing Notes”).

The Additional Notes were issued at a premium of 105.0% of their principal amount, resulting in net proceeds of approximately $90 million after fees and estimated expenses.

The Additional Notes are fungible with the Existing Notes, are treated as a single series and have the same terms as the Existing Notes, other than their date of issuance and issue price.

See Note 9 to our Consolidated Financial Statements.

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however, if future operating results differ materially from our expectations we may be unable to maintain compliance.

of our subsidiaries, whether in the form of dividends, advances or payments on account of intercompany obligations or otherwise.

Our assets consist primarily of investments in operating subsidiaries, and our ability to service our obligations, including the Kronos’ Senior Secured Notes and the Contran Term Loan, depends in part upon the distribution of earnings of our subsidiaries, whether in the form of dividends, advances or payments on account of intercompany obligations or otherwise.

Kronos’ Senior Secured Notes are collateralized by, among other things, a first priority lien on (i) 100% of the common stock or other ownership interests of each existing and future direct domestic subsidiary of KII and the guarantors, and (ii) 65% of the voting common stock or other ownership interests and 100% of the non-voting common stock or other ownership interests of each non-U.S.

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Such activities have in the past and may in the future involve related companies.

From time to time we and our subsidiaries may enter into intercompany loans as a cash management tool.

From time to time we and our subsidiaries may enter into intercompany loans as a cash

management tool.

Such notes are structured as revolving demand notes and pay and receive interest on terms we believe are more favorable than current debt and investment market rates.

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Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending December 31, 2026) and long-term obligations (defined as the five-year period ending December 31, 2030).

In this regard, see the discussion above in “Outstanding Debt Obligations.” With respect to the €75 million KII 3.75% Senior Secured Notes due 2025, we intend to satisfy this obligation through cash generated from operations or to the extent that is not sufficient, a combination of cash generated from operations and borrowings on the Global Revolver.

In this regard, see the discussion above in “Outstanding Debt Obligations.” Kronos’ Global Revolver matures in July 2029, and at December 31, 2025 Kronos had total availability for borrowing of approximately $251 million less any amounts outstanding.

The borrowing base is calculated at least quarterly, and the amount available for borrowing may change based on applicable period end balances.

See Note 9 to our Consolidated Financial Statements.

If actual developments differ from our expectations, our liquidity could be adversely affected.

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Because our operations are conducted primarily through subsidiaries and affiliates, our long-term ability to meet parent company level corporate obligations is largely dependent on the receipt of dividends or other distributions from our subsidiaries and affiliates.

Kronos paid a regular dividend of $.19 per share in the first and second quarters of 2024 for which we received $22.0 million.

In July 2024, Kronos announced a decrease in its regular quarterly dividend from $.19 per share to $.05 per share beginning in the third quarter of 2024.

Kronos paid a regular dividend of $.05 per share in the third and fourth quarters of 2024 for which we received $5.8 million.

Kronos paid a regular dividend of $.05 per share in each quarter of 2025 for which we received $11.6 million.

In February 2026 the Kronos board of directors approved a quarterly dividend of $.05 per share.

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NL paid a quarterly dividend of $.09 per share in 2025 for which we received $14.5 million.

In August 2024, NL’s board of directors declared a special dividend of $.43 per share on its common stock.

We received $17.4 million from this special dividend, which is not expected to be recurring.

In August 2025 the NL board of directors declared a special dividend of $.21 per share on its common stock.

We received $8.5 million from this dividend, which is not expected to be recurring.

In February 2026 the NL board of directors approved a quarterly dividend of $.10 per share.

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In this regard, we received aggregate dividends from BMI and LandWell of $17.6 million in 2023, $4.0 million in 2024 and $19.5 million in 2025.

In addition, we received aggregate dividends from BMI and LandWell of $4.5 million in January 2025.

All of our ownership interest in CompX is held through our ownership in NL, as such we do not receive any dividends from CompX.

All of our ownership interest in CompX is held through our ownership in NL;

as such we do not receive any dividends from CompX.

Instead any dividend paid by CompX is paid to NL.

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The maximum principal amount which may be outstanding from time-to-time under the credit facility is limited to 50% of the amount of the most recent closing price of the Kronos stock.

The credit facility

contains a number of covenants and restrictions which, among other things, restrict NL’s subsidiary’s ability to incur additional debt, incur liens, and merge or consolidate with, or sell or transfer substantially all of NL’s subsidiary’s assets to, another entity, and require NL’s subsidiary to maintain a minimum specified level of consolidated net worth.

The credit facility contains a number of covenants and restrictions which, among other things, restrict NL’s subsidiary’s ability to incur additional debt, incur liens, and merge or consolidate with, or sell or transfer substantially all of NL’s subsidiary’s assets to, another entity, and require NL’s subsidiary to maintain a minimum specified level of consolidated net worth.

Upon an event of default (as defined in the credit facility), Valhi will be entitled to terminate its commitment to make further loans to NL’s subsidiary, declare the outstanding loans (with interest) immediately due and payable, and exercise its rights with respect to the collateral under the loan documents.

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There is $.5 million outstanding under this facility at December 31, 2025.

We had an unsecured revolving demand promissory note with Kronos which, as amended, provided for borrowings from Kronos of up to $25 million.

We had no borrowings with Kronos in 2022, 2023 and 2024.

Kronos’ obligation to loan us money under this note was at Kronos’ discretion.

In February 2024, this note was cancelled by mutual agreement between us and Kronos.

We have an unsecured revolving demand promissory note with CompX which, as amended, provides for borrowings from CompX of up to $25 million.

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We had gross borrowings of $25.0 million and gross repayments of $26.3 million with CompX for a total outstanding balance of $9.3 million at December 31, 2024.

We could borrow an additional $15.7 million under our current intercompany facility with CompX at December 31, 2024.

We had gross borrowings of $15.7 million and gross repayments of $17.0 million with CompX for a total outstanding balance of $8.0 million at December 31, 2025.We could borrow an additional $17.0 million under our current intercompany facility with CompX at December 31, 2025.

CompX’s obligation to loan us money under this note is at CompX’s discretion.

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As described in the Notes 7, 9 and 18 to our Consolidated Financial Statements, we are a party to various debt, lease and other agreements which contractually and unconditionally commit us to pay certain amounts in the future.

obligations related to the long-term supply contracts for the purchase of TiO 2 feedstock are more fully described in Note 18 to our Consolidated Financial Statements and above in “Business – Chemicals Segment – Kronos Worldwide, Inc.

Our obligations related to the long-term supply contracts for the purchase of TiO 2 feedstock are more fully described in Note 18 to our Consolidated Financial Statements and above in “Business – Chemicals Segment – Kronos Worldwide, Inc.

– Raw Materials.” CompX has purchase obligations of $13.9 million ($13.4 million payable in 2026 and $.5 million payable in 2027/2028) which consist of open purchase orders and contractual obligations, primarily commitments to purchase raw materials and for capital projects in process at December 31, 2025.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis