What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-07 compared with 2023-03-09 · 103 added, 108 removed, 540 unchanged (28% of the section changed)

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● 1987 – LLC and another Contran controlled company merge to form Valhi, our current corporate structure;

● 1995 – WCS begins start-up operations;

● 2003 – NL completes the spin-off of Kronos through the pro-rata distribution of Kronos shares to its shareholders including us;

● 2004 through 2005 – NL distributes Kronos shares to its shareholders, including us, through quarterly dividends;

● 2008 – WCS receives a license for the disposal of byproduct material and begins construction of the byproduct facility infrastructure;

● 2009 – WCS receives a license for the disposal of Class A, B and C low-level radioactive waste (“LLRW”) and completes construction of the byproduct facility;

● 2010 – Kronos completes a secondary offering of its common stock lowering our ownership of Kronos to 80%;

● 2011 – WCS begins construction on its Compact and Federal LLRW and mixed LLRW disposal facilities;

● 2012 – WCS completes construction of its Compact and Federal LLRW disposal facilities and commences operations at the Compact facility;

● 2012 – In December CompX completes the sale of its furniture components business;

● 2013 – WCS commences operations at the Federal LLRW facility;

● 2013 – In December we purchased an additional ownership interest in and became the majority owner of Basic Management, Inc.

and The LandWell Company;

both companies are now included in our Consolidated Financial Statements effective December 31, 2013;

● 2015 – The first homes in our Cadence planned community were completed by third-party builders and sold to the public;

● 2018 – In January we completed the sale of WCS;

● 2020 – In December LandWell completed the first bulk sale of land within the Cadence planned community;

● 2022 – In July 2022 Basic Water Company ceased water delivery due to a decline in water levels at Lake Mead in Nevada.

● 2022 – In July Basic Water Company (BWC) ceased water delivery due to a decline in water levels at Lake Mead in Nevada and in September BWC filed for bankruptcy protection;

● 2023 – In November, upon the Bankruptcy Court’s approval of BWC’s plan of reorganization, BWC sold substantially all of its assets.

In December BMI sold Basic Power Company.

Unless otherwise indicated, references in this report to “we”, “us” or “our” refer to Valhi, Inc.

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In some cases, you can identify forward-looking statements by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expects” or comparable terminology, or by discussions of strategies or trends.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we do not know if these expectations will be correct.

Although we believe the expectations reflected in such forward-looking statements are reasonable, we do not know if these expectations will be correct.

Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results.

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● Changes in the availability of raw materials (such as ore);

● General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material and energy costs, reduce demand or perceived demand for TiO 2, component products and land held for development or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises such as COVID-19);

● Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime such as disruptions in energy supplies, transportation interruptions, cyber-attacks and public health crises such as COVID-19);

● Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises);

● Technology related disruptions (including, but not limited to, cyber-attacks;

software implementation, upgrades or improvements;

technology processing failures;

or other events) related to our technology infrastructure that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders;

● Competitive products and substitute products;

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● Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities, or new developments regarding environmental remediation or decommissioning obligations at sites related to our former operations);

● Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on former manufacturers of lead pigment and lead-based paint, including NL, with respect to asserted health concerns associated with the use of such products) including new environmental health and safety or other regulations such as those seeking to limit or classify TiO 2 or its use;

● Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on former manufacturers of lead pigment and lead-based paint, including NL, with respect to asserted health concerns associated with the use of such products) including new environmental, health, safety, sustainability or other regulations (such as those seeking to limit or classify TiO 2 or its use);

● The ultimate resolution of pending litigation (such as NL’s lead pigment and environmental matters);

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● Changes in real estate values and construction costs in Henderson, Nevada;

● Possible future litigation.

● Pending or possible future litigation or other actions.

Should one or more of these risks materialize (or the consequences of such development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected.

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We operate in real estate management and development through our majority control of BMI and LandWell.

BMI owns real property in Henderson, Nevada and through its wholly-owned subsidiaries provides utility services to certain industrial and municipal customers.

BMI and LandWell own real property in Henderson, Nevada.

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.

For additional information about our segments and equity investments see “Part II – Item 7.

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TiO 2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals.

TiO 2 is widely considered to

be superior to alternative white pigments in large part due to its hiding power (or opacity), which is the ability to cover or mask other materials effectively and efficiently.

TiO 2 is widely considered to be superior to alternative white pigments in large part due to its hiding power (or opacity), which is the ability to cover or

mask other materials effectively and efficiently.

TiO 2 is designed, marketed and sold based on specific end-use applications.

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Per capita consumption of TiO 2 in Western Europe and North America far exceeds that in other areas of the world, and these regions are expected to continue to be the largest consumers of TiO 2 on a per capita basis for the foreseeable future.

We believe Western Europe and North America currently each account for approximately 16% of global TiO 2 consumption.

We believe Western Europe and North America currently account for approximately 14% and 15% of global TiO 2 consumption, respectively.

Markets for TiO 2 are generally increasing in China, the Asia Pacific region, South America and Eastern Europe and we believe these are significant markets which will continue to grow as economies in these regions develop and quality-of-life products, including TiO 2 , experience greater demand.

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Including its predecessors, Kronos has produced and marketed TiO 2 in North America and Europe, its primary markets, for over 100 years.

We believe Kronos is the largest TiO 2 producer in Europe with 45% of its 2022 sales volumes attributable to markets in Europe.

We believe Kronos is the largest chloride process TiO 2 producer in Europe with 44% of its 2023 sales volumes attributable to markets in Europe.

The table below shows Kronos’ estimated market share for its significant markets, Europe and North America, for the last three years.

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We believe Kronos is the leading seller of TiO 2 in several countries, including Germany.

Overall, Kronos is one of the top five producers of TiO 2 in the world, with an estimated 7% share of worldwide TiO 2 sales volume in 2022.

Overall, Kronos is one of the top five producers of TiO 2 in the world.

Kronos offers its customers a broad portfolio of products that include over 50 different TiO 2 pigment grades under the KRONOS ® trademark, which provide a variety of performance properties to meet customers’ specific requirements.

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TiO 2 for paper – Kronos’ TiO 2 is used in the production of several types of paper, including laminate (decorative) paper, filled paper and coated paper to provide whiteness, brightness, opacity and color stability.

Although Kronos sells its TiO 2 to all segments of the paper end-use market, its primary focus is on the TiO 2 grades used in paper laminates, where several layers of paper are laminated together using melamine resin under high temperature and pressure.

Although Kronos sells its TiO 2 to all segments of the paper end-use market, its primary focus is on the TiO 2 grades used in coated board and paper laminates, where several layers of paper are laminated together using melamine resin under high temperature and pressure.

The top layer of paper contains TiO 2 and plastic resin and is the layer that is printed with decorative patterns.

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Ilmenite is a raw material used directly as a feedstock by some sulfate-process TiO 2 plants.

Kronos supplies ilmenite to its sulfate plants in Europe.

Kronos also sells ilmenite ore to third parties, some of whom are its competitors.

Kronos also sells an ilmenite-based specialty product to the oil and gas industry.

The mine has estimated ilmenite reserves that are expected to last at least 50 years.

● Kronos manufactures and sells iron-based chemicals, which are co-products and processed co-products of sulfate and chloride process TiO 2 pigment production.

Along with supplying ilmenite ore to its sulfate plants in Europe, Kronos also sells ilmenite ore to third parties, some of whom are its competitors.

The mine has estimated ilmenite reserves that Kronos expects, based on internal estimates, to last approximately 50 years.

● Kronos manufactures and sells iron-based chemicals, which are co-products and processed co-products of the sulfate and chloride process TiO 2 pigment production.

These co-product chemicals are marketed through its Ecochem division and are primarily used as treatment and conditioning agents for industrial effluents and municipal wastewater as well as in the manufacture of iron pigments, cement and agricultural products.

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The chloride process produces an intermediate base pigment with a wide range of properties.

The chloride process produces a product with a blueish undertone and is the preferred form to produce TiO 2 pigments for use in coatings and plastics, the two largest end-use markets.

● Sulfate process – The sulfate process is a batch process in which sulfuric acid is used to extract the TiO 2 from ilmenite or titanium slag.

After separation from the impurities in the ore (mainly iron), the TiO 2 is precipitated and calcined to form an intermediate base pigment ready for sale or can be upgraded through finishing treatments.

The sulfate process produces a warmer undertone and is preferred for use in selected paper products, ceramics, rubber tires, man-made fibers, food products, pharmaceuticals and cosmetics, some of which generate higher profit margins.

Kronos produced 545,000, 492,000 and 401,000 metric tons of TiO 2 in 2021, 2022 and 2023, respectively.

Kronos’ production volumes include its share of the output produced by its TiO 2 manufacturing joint venture discussed below.

Kronos’ average production capacity utilization rates were approximately 92% in 2020, full practical capacity in 2021 and 89% in 2022.

Kronos’ production rates in 2020 were impacted by the COVID-19 pandemic (primarily in the third quarter).

In the fourth quarter of 2022 Kronos adjusted production levels to correspond with reduced customer demand in its European and export markets resulting from challenging economic conditions and geopolitical uncertainties.

Kronos’ average production capacity utilization rates were approximately full practical capacity in 2021, 89% in 2022 and 72% in 2023.

Beginning in the fourth quarter of 2022 and continuing throughout 2023, Kronos adjusted production levels to correspond with reduced customer demand resulting from challenging economic conditions and geopolitical uncertainties.

Kronos operates facilities throughout North America and Europe, including the only sulfate process plant in North America and four TiO 2 plants in Europe (one in each of Leverkusen, Germany;

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In North America, Kronos has a TiO 2 plant in Varennes, Quebec, Canada and, through the manufacturing joint venture described below, a 50% interest in a TiO 2 plant near Lake Charles, Louisiana.

As part of Kronos’ long-term strategy to increase chloride process production, Kronos phased-out sulfate production at its Leverkusen facility during 2020.

Kronos’ chloride process production and remaining sulfate production capacity has increased by approximately 5% over the past ten years due to debottlenecking programs, with only moderate capital expenditures.

Kronos operated its facilities at reduced capacities in the fourth quarter of 2022 and into 2023.

Based on current assumptions about market performance and demand, Kronos expects to operate its TiO 2 plants at 80% to 90% capacity in the first half of 2023 and near full practical capacity levels by the second half of 2023.

Kronos operated its facilities at reduced capacities in the fourth quarter of 2022 and through 2023.

The following table presents the division of Kronos’ expected 2024 manufacturing capacity by plant location and type of manufacturing process:

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TiO 2 production, chloride process

(1) The Leverkusen facility is located within an extensive manufacturing complex owned by Bayer AG.

Kronos owns the Leverkusen facility, which represents about one-third of its current TiO 2 production capacity, but Kronos leases the land under the facility from Bayer under a long-term agreement which expires in 2050.

Lease payments are periodically negotiated with Bayer for periods of at least two years at a time.

A majority-owned subsidiary of Bayer provides some raw materials including chlorine, auxiliary and operating materials, utilities and services necessary to operate the Leverkusen facility under separate supplies and services agreements.

(1) The Leverkusen facility is located within a more extensive manufacturing complex.

Kronos owns its Leverkusen facility, which represents about one-third of its current TiO 2 production capacity, but Kronos leases the land under the facility under a long-term agreement which expires in 2050.

Lease payments are periodically negotiated for periods of at least two years at a time.

A third-party operator of the manufacturing complex provides some raw materials including chlorine, auxiliary and operating materials, utilities and services necessary to operate the Leverkusen facility under separate supplies and services agreements.

(2) The Fredrikstad facility is located on public land and is leased until 2063.

(3) Kronos operates the facility near Lake Charles through a joint venture with Venator Investments LLC (Venator Investments), a wholly-owned subsidiary of Venator Group, of which Venator Materials PLC (Venator) owns 100% and the amount indicated in the table above represents the share of TiO 2 produced by the joint venture to which Kronos is entitled.

(3) Kronos operates the facility near Lake Charles, Louisiana through a joint venture with Venator Investments LLC (Venator Investments), a wholly-owned subsidiary of Venator Group, of which Venator Materials PLC (Venator) owns 100% and the amount indicated in the table above represents the share of TiO 2 produced by the joint venture to which Kronos is entitled.

See Note 7 to our Consolidated Financial Statements and “TiO 2 manufacturing joint venture.” The joint venture owns the land and facility.

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Renewal terms upon negotiation

In the past Kronos has been, and it expects that it will continue to be, successful in obtaining short-term and long-term extensions to these and other existing supply contracts prior to their expiration.

Kronos expects the raw materials purchased under these contracts, and contracts that it may enter into, will meet its chloride process feedstock requirements over the next several years.

Contracts may be terminated with a 12-month written notice (generally for multi-year agreement terms) or based on certain defaults by either party or failure to agree on pricing as noted in the agreements.

In the past Kronos has been, and it expects that it will continue to be, successful in obtaining short-term and long-term extensions to these and other existing supply contracts.

Kronos expects the raw materials purchased under these contracts, and contracts it may enter into, will meet its chloride process feedstock requirements over the next several years.

Multi-year contracts generally may be terminated with a 12-month written notice or based on certain defaults by either party or failure to agree on pricing as noted in the agreements.

The primary raw materials used in sulfate process TiO 2 are titanium-containing feedstock, primarily ilmenite or purchased sulfate grade slag and sulfuric acid.

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Purchased slag

Purchased ilmenite ore

Sales and marketing

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However, TiO 2 sales are generally higher in the second and third quarters of the year, due in part to the increase in coatings production in the spring to meet demand during the spring and summer painting seasons.

With certain exceptions, such as during the third quarter of 2020 as a result of the COVID-19 pandemic, and during the fourth quarter of 2022 as a result of reduced customer demand and unprecedentedly high energy costs, Kronos has historically operated its production facilities at near full capacity rates throughout the entire year, which among other things helps to minimize its per-unit production costs.

As a result, Kronos normally builds inventories during the first and fourth quarters of each year in order to maximize its product availability during the higher demand periods normally experienced in the second and third quarters.

Kronos normally builds inventories during the first and fourth quarters of each year in order to maximize its product availability during the higher demand periods normally experienced in the second and third quarters.

The TiO 2 industry is highly competitive.

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Chemours has approximately one-half of total North American TiO 2 production capacity and is Kronos’ principal North American competitor.

previously announced it plans to add an additional 200,000 tons of chloride capacity which we expect will be added incrementally over the next several years.

previously announced it plans to add an additional 200,000 tons of chloride process capacity which we expect will be added incrementally over the next several years.

In addition, several of Kronos’ competitors have recently closed or announced plans to close facilities or otherwise reduce capacity, including Chemours which closed its Taiwan facility with an estimated 160,000 tons of chloride process capacity in 2023 and Venator which announced plans in 2024 to close its Duisburg, Germany facility with an estimated 50,000 tons of sulphate process capacity.

The TiO 2 industry is characterized by high barriers to entry consisting of high capital costs, proprietary technology and significant lead times required to construct new facilities or to expand existing capacity.

Therefore, over the past ten years, Kronos and its competitors increased industry capacity through debottlenecking projects, although this increase only partly compensated for the shut-down of various TiO 2 plants throughout the world.

Therefore, over the past ten years, Kronos and its competitors increased industry capacity through debottlenecking projects;

however, this increase only partly compensated for the shut-down of various TiO 2 plants throughout the world.

Although overall industry demand is expected to increase in 2024, other than through debottlenecking projects and the LB Group Co.

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Kronos continually seeks to improve the quality of its grades and has been successful at developing new grades for existing and new applications to meet the needs of its customers and increase product life cycles.

Since the beginning of 2017, Kronos has added nine new grades for pigments and other applications.

Since the beginning of 2019, Kronos has added seven new grades for pigments and other applications.

Patents, trademarks, trade secrets and other intellectual property rights

Kronos has a comprehensive intellectual property protection strategy that includes obtaining, maintaining and enforcing its patents, primarily in the United States, Canada and Europe.

Kronos also protects its trademark and trade secret rights and has entered into license agreements with third parties concerning various intellectual property matters.

Kronos also registers, maintains and protects its trademark rights.

Kronos maintains the secrecy of its trade secret rights and protects them by means of security protocols and confidentiality agreements.

In some instances, Kronos has entered into license agreements with third parties concerning various intellectual property matters.

Kronos has also from time to time been involved in disputes over intellectual property.

Patents – Kronos has obtained patents and has numerous patent applications pending that cover its products and the technology used in the manufacture of its products.

Patents – Kronos has obtained patents and has numerous patent applications pending that cover certain aspects of its products and the technology used in the manufacture of its products.

Kronos’ patent strategy is important to it and its continuing business activities.

In addition to maintaining its patent portfolio, Kronos seeks patent protection for its technical developments, principally in the United States, Canada and Europe.

patents are generally in effect for 20 years from the date of filing.

patents are generally in effect from the time that they issue as patents and then extend for 20 years from the date of filing.

patent portfolio includes patents having remaining terms ranging from one year to 18 years.

Trademarks and trade secrets – Kronos’ trademarks, including KRONOS ® , are covered by issued and/or pending registrations, including in Canada and the United States.

Trademarks – Kronos’ trademarks, including KRONOS ® , are covered by issued and/or pending registrations, including in Canada and the United States.

Kronos protects the trademarks it uses in connection with the products it manufactures and sells and has developed goodwill in connection with its long-term use of its trademarks.

Kronos conducts research activities in secret and it protects the confidentiality of its trade secrets through reasonable measures, including confidentiality agreements and security procedures, including data security.

Trade secrets – Kronos conducts research activities in secret and it protects the confidentiality of its trade secrets through reasonable measures, including confidentiality agreements and security procedures, including data security.

Kronos relies upon unpatented proprietary knowledge and continuing technological innovation and other trade secrets to develop and maintain its competitive position.

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During 2021, Kronos was notified by government authorities in Norway that the classification of a dam at its mine facilities was changed to the highest level for Norwegian classification of dam structures.

As a result, Kronos’ mine operations are subject to a higher degree of oversight and regulation than existed prior to this change in classification, and Kronos has increased its capital expenditures to adapt to the higher classification standards.

As a result, Kronos’ mine operations are subject to a higher degree of oversight and regulation than existed prior to this change in classification.

In 2023, Kronos completed capital projects for improvements to the dam and related areas necessary to meet the new classification standards.

Kronos has a history of identifying new ways to reduce consumption and waste by converting byproducts to co-products through its KRONOS ecochem® products.

Annually Kronos updates and publishes its Safety, Environment, Energy and Quality Policy which is translated into local languages and distributed to all its employees and shared publicly via its website.

Annually Kronos updates and publishes its Safety, Environment, Energy and Quality Policy which is translated into local languages and distributed to all its employees and shared publicly

via its website.

Kronos has implemented rigorous procedures for incident reporting and investigation, including root cause analysis of environmental and safety incidents and near misses.

Because TiO 2 production requires significant energy input, Kronos is focused on energy efficiency at all production locations.

Three of its five production facilities maintain certifications to the ISO 50001:2018 Energy Management standard and all locations have local energy teams in place.

Four of its five production facilities maintain certifications to the ISO 50001:2018 Energy Management standard and all locations have local energy teams in place.

These teams are responsible for maintaining ISO 50001:2018 certifications (where applicable), performing regular reviews of local energy consumption, making recommendations regarding capital projects that reduce energy consumption and associated Greenhouse Gas (GHG) emissions or enhance efficiency.

When possible, Kronos looks for opportunities to partner with local government authorities through grant opportunities to reduce energy consumption and associated GHG

When possible, Kronos looks for opportunities to partner with local government authorities through grant opportunities to reduce energy consumption and associated GHG emissions.

Kronos also actively manages potential water-related risks, including flooding and water shortages.

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On November 23, 2022 the Court of Justice of the European Union annulled the classification of TiO 2 as a suspected carcinogen in its entirety.

That decision is currently under appeal.

Kronos’ capital expenditures related to ongoing environmental compliance, protection and improvement programs, including capital expenditures which are primarily focused on increasing operating efficiency but also result in improved environmental protection such as lower emissions from its manufacturing facilities, were $11.2 million in 2023 and are currently expected to be approximately $28 million in 2024.

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CompX also manufactures wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries.

CompX continuously seeks to diversify into new markets and

identify new applications and features for its products, which it believes provides a greater potential for higher rates of earnings growth as well as diversification of risk.

CompX continuously seeks to diversify into new markets and identify new applications and features for its products, which it believes provides a greater potential for higher rates of earnings growth as well as diversification of risk.

Manufacturing, operations and products

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● disc tumbler locks which provide moderate security and generally represent the lowest cost lock CompX produces;

● pin tumbler locking mechanisms which are more costly to produce and are used in applications requiring higher levels of security, including KeSet ® and System 64 ® (which each allow the user to change the keying on a single lock 64 times without removing the lock from its enclosure), TuBar ® and Turbine™ ;

● pin tumbler locks which are more costly to produce and are used in applications requiring higher levels of security, including KeSet ® and System 64 ® (which each allow the user to change the keying on a single lock 64 times without removing the lock from its enclosure), TuBar ® and Turbine™ ;

● CompX’s innovative CompX eLock ® and StealthLock ® electronic locks which provide stand-alone or networked security and audit trail capability for drug storage and other valuables through the use of a proximity card, magnetic stripe, radio frequency or other keypad credential.

A substantial portion of security products’ sales consist of products with specialized adaptations to an individual customer’s specifications, some of which are listed above.

CompX also has a standardized product line suitable for many customers, which is offered through a North American distribution network to locksmith and smaller original equipment manufacturer distributors via its STOCK LOCKS ® distribution program.

CompX also has a standardized product line suitable for many customers, which is offered through a North American distribution network to locksmith and smaller original equipment manufacturer (OEM) distributors via its STOCK LOCKS ® distribution program.

Marine Components .

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Total material costs, including purchased components, represented approximately 48% of our Component Products Segment’s cost of sales in 2023.

CompX occasionally enters into short-term commodity-related raw material supply arrangements to mitigate the impact of future price increases in commodity-related raw materials, including zinc, brass and stainless steel.

These arrangements generally provide for stated unit prices based upon specified purchase volumes, which help CompX to stabilize its commodity-related raw material costs to a certain extent.

At other times CompX may make spot market buys of larger quantities of raw materials to take advantage of favorable pricing or volume-based discounts.

Prices for the primary commodity-related raw materials used in the manufacture of locking mechanisms, primarily zinc and brass, generally increased throughout 2021 and the first half of 2022.

Prices began to stabilize in the latter half of 2022, although at elevated levels.

The prices for stainless steel, the primary raw material used for the manufacture of marine exhaust headers and pipes and wake enhancement systems, experienced significant volatility during 2021 and 2022.

Based on current economic conditions, CompX expects the prices for zinc, brass, stainless steel and other manufacturing materials in 2023 to be relatively stable, although at the elevated levels it experienced in the second half of 2022.

After increasing in 2021 and the first half of 2022, prices for the primary commodity-related raw materials used in the manufacture of locking mechanisms, primarily zinc and brass, generally began to stabilize in the latter half of 2022 and into 2023 and generally began to soften in the latter half of 2023.

Prices for aluminum and stainless steel, the primary raw material used for the manufacture of marine components including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs experienced significant volatility during 2021 and 2022 but were more stable in 2023.

Although raw commodity costs declined during 2023 from elevated levels experienced in 2021 and 2022, in most cases materials CompX purchases also include processing and conversion costs such as alloying, extrusion and rolling, which continue to be elevated due to costs of labor, transportation and energy.

Based on current economic conditions, CompX expects the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2024 to be relatively stable.

When purchased on the spot market, each of these raw materials may be subject to sudden and unanticipated price increases.

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In the event CompX is unable to offset raw material cost increases with other cost reductions, it may be difficult to recover those cost increases through increased product selling prices or raw material surcharges due to the competitive nature of the markets in which it competes.

Consequently, overall operating margins can be affected by commodity-related raw material cost pressures.

Consequently, overall operating margins can be negatively affected by commodity-related raw material cost pressures.

Commodity market prices are cyclical, reflecting overall economic trends, specific developments in consuming industries and speculative investor activities.

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Patents generally have a term of 20 years, and CompX’s patents have remaining

terms ranging from 1 year to 18 years at December 31, 2022.

terms ranging from less than 1 year to 17 years at December 31, 2023.

CompX’s major trademarks and brand names in addition to CompX ® include:

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These products are packaged and merchandised for easy availability and handling by distributors and end users.

Our Component Products Segment sells to a diverse customer base with only two customers representing 10% or more of our Component Products Segment’s sales in 2022 (United States Postal Service – 14% and Malibu Boats, LLC –12%).

Our Component Products Segment sells to a diverse customer base with only one customer representing 10% or more of our Component Products Segment’s sales in 2023 (United States Postal Service representing 24% of which 11% related to a pilot project).

Our Component Products Segment’s largest ten customers accounted for approximately 52% of its sales in 2023.

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CompX operates three low-emission manufacturing facilities and CompX’s production processes requiring waste-water discharge are consolidated at its Mauldin, South Carolina facility.

This facility has received a ReWa Gold Award from Renewable Water Resources, an organization which sets regulatory and water policies for the Mauldin facility’s geographic region, for multiple years for its exemplary performance.

This facility has received a ReWa Compliance Excellence Award multiple years for its exemplary performance from Renewable Water Resources, an organization which sets regulatory and water policies for the Mauldin facility’s geographic region.

In addition, CompX operates extensive scrap metal recycling programs to reduce landfill waste.

CompX’s operations are subject to federal, state and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, discharge, disposal, remediation of and exposure to hazardous

and non-hazardous substances, materials and wastes.

CompX’s operations are also subject to federal, state, and local laws and regulations relating to worker health and safety.

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Our Real Estate Management and Development Segment consists of our majority owned subsidiaries, BMI and LandWell.

BMI provides certain utility services, among other things, to an industrial park located in Henderson, Nevada and prior to the bankruptcy filing on September 10, 2022 of Basic Water Company (“BWC”), a wholly-owned subsidiary of BMI, 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.

See Note 2 to our Consolidated Financial Statements and also Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Real Estate Management and Development”.

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 and approximately 400 acres zoned for commercial and light industrial use.

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 Basic Water Company (BWC), a wholly-owned subsidiary of BMI, prior to BWC’s bankruptcy filing and deconsolidation on September 10, 2022.

BMI also provided certain utility services to an industrial park located in Henderson, Nevada prior to the sale of Basic Power Company (BPC), a wholly-owned subsidiary of BMI, on December 1, 2023.

See Notes 2 and 3 to our Consolidated Financial Statements and also Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Real Estate Management and Development”.

Operations and services

Over the years, LandWell and BMI have focused on developing and selling the land transferred to LandWell as part of its formation in the early 1950’s as well as additional land holdings acquired by LandWell in the surrounding area subsequent to LandWell’s formation (although BMI and LandWell have not had significant real property acquisitions since 2004).

Since LandWell’s formation, LandWell and BMI have a history of successfully developing and selling retail, light industrial, commercial and residential projects in the Henderson, Nevada area.

Since LandWell’s formation, LandWell and BMI have had a history of successfully developing and selling retail, light industrial, commercial and residential projects in the Henderson, Nevada area.

LandWell is focused primarily on the development of a large tract of land in Henderson zoned for residential/planned community purposes (approximately 2,100 acres).

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LandWell supports the builders’ efforts to market and sell specific residential homes within its residential/planned community through joint marketing campaign and community wide education efforts.

In addition, BMI provides certain utility services to an industrial park located in Henderson, Nevada and prior to BWC’s bankruptcy filing on September 10, 2022 also delivered water to the City of Henderson and various other users through a water delivery system owned and operated by BWC.

In addition, BMI, prior to BWC’s bankruptcy filing and deconsolidation on September 10, 2022, delivered water to the City of Henderson and various other users through a water delivery system owned and operated by BWC, and prior to the sale of BPC on December 1, 2023, provided certain utility services to an industrial park located in Henderson, Nevada.

Upon approval of the plan of reorganization by the bankruptcy court, substantially all 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.

LandWell began marketing land for sale in the residential/planned community in December 2013 and at December 31, 2023 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, 2022 approximately 20 saleable acres remain.

In addition, LandWell has been actively marketing and selling land zoned for commercial and light industrial use and at December 31, 2023 approximately 15 saleable acres remain.

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.

Although land may be under contract, we do not recognize revenue until we have satisfied the criteria for revenue recognition.

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

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

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

Our Real Estate Management and Development Segment’s sales consist principally of land sales and to a lesser extent water (for the first half of 2022) and electric delivery fees.

During 2022 we had sales to two customers that exceeded

10% of our Real Estate Management and Development Segment’s net sales (CCR 270 – 30% and Richmond American Homes – 19%) related to land sales.

Although land may be under contract or land sales may be completed, we do not recognize revenue until we have satisfied the criteria for revenue recognition.

In some instances, LandWell will receive cash proceeds at the time the contract closes

and record deferred revenue for some or all of the cash amount received, with 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 three to four years to complete.

Our Real Estate Management and Development Segment’s sales consist principally of land sales and to a lesser extent water (through September 2022) and electric delivery fees (prior to December 2023).

During 2023 we had sales to five customers that exceeded 10% of our Real Estate Management and Development Segment’s net sales (CCR 270 – 17%, Taylor Morrison – 13%, Beazer Homes – 11%, Richmond American Homes – 11% and Sand Hill Venture – 11%) related to land sales.

There are multiple new construction residential communities in the greater Las Vegas, Nevada area.

LandWell competes with these communities on the basis of location;

planned community amenities and features;

proximity to major retail and recreational activities;

and the perception of quality of life within the new community.

LandWell competes with these communities on the basis of location, planned community amenities and features, proximity to major retail and recreational activities, and the perception of quality of life within the new community.

We believe LandWell’s residential/planned community is unique within the greater Las Vegas area due to its location and planned amenities which include 490 acres of community and neighborhood parks and open space interconnected with major regional trails and parks.

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All manufacturing facilities have detailed, site-specific emergency response procedures we believe adequately address regulatory compliance, vulnerability to potential hazards, emergency response and action plans, employee training, alarms and warning systems and crisis communication.

At a corporate level, we engage in periodic reviews of our cybersecurity programs, including cybersecurity risk and threats.

Our cybersecurity programs are built on operations and compliance foundations.

Operations focus on continuous detection, prevention, measurement, analysis, and response to cybersecurity alerts and incidents and on emerging threats.

Compliance establishes oversight of our cybersecurity programs by creating risk-based controls to protect the integrity, confidentiality, accessibility and availability of company data stored, processed, or transferred.

We periodically update our board of directors on our cyber-related risks and cybersecurity programs.

In an effort to align our non-employee directors’ financial interests with those of our stockholders, our Board established share ownership guidelines for our non-management directors.

government and various non-U.S.

governmental agencies of countries in which Kronos operates have adopted or are contemplating regulatory changes relating to certain ESG topics, such as the Corporate Social Responsibility Directive adopted by the European Union on November 28, 2022 (EU CSRD).

European jurisdictions in which Kronos operates have not yet adopted local legislation to implement the EU CSRD.

Kronos is evaluating and will continue to evaluate the applicability of the EU CSRD as regulatory guidance is issued and as the European countries in which it operates adopt implementing legislation and Kronos will establish a compliance program to address any applicable requirements.

In an effort to align our non-employee directors’ financial interests with those of our stockholders, our board of directors established share ownership guidelines for our non-management directors.

Kronos has taken steps to integrate ESG considerations into operating decisions with other critical business factors.

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Kronos voluntarily developed these internal metrics and benchmarks, which Kronos uses to identify progress and opportunities for improvement.

These metrics are not intended to be directly

comparable to similar metrics utilized by other companies to track ESG performance, as the standards, methodologies and assumptions used to determine these metrics vary by company and jurisdiction.

These metrics are not intended to be directly comparable to similar metrics utilized by other companies to track ESG performance, as the standards, methodologies and assumptions used to determine these metrics vary by company and jurisdiction.

HUMAN CAPITAL RESOURCES

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Our businesses provide competitive compensation and benefits to our employees, some of which are offered under collective bargaining agreements.

In addition to salaries, these programs, which vary by segment and by country/region, can include annual bonuses, a defined benefit pension plan, a defined contribution plan with employer matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, employee assistance programs, and tuition assistance.

In addition to salaries, these programs, which vary by segment and by country/region, can include annual bonuses, a defined benefit pension plan, a defined contribution plan with employer matching, a profit sharing plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, employee assistance programs, and tuition assistance.

As of December 31, 2023, our Chemicals Segment employed the following number of people:

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Protecting the health and safety of our workforce, our customers, our business partners and the natural environment is one of our core values.

We are committed to maintaining a strong safety culture where all workers meet or exceed required industry performance standards and continuously seek to improve occupational and process safety performance.

We are conducting our businesses in ways that provide all personnel with a safe and healthy work environment and have established safety and environmental programs and goals to achieve such results.

We expect our manufacturing facilities to produce our products safely and in compliance with local regulations, policies, standards and practices intended to protect the environment and people and have established global policies designed to promote such compliance.

We are committed to maintaining a strong safety culture where all workers meet or exceed required industry performance standards, and we continuously seek to improve occupational and process safety performance.

We conduct our businesses in ways intended to provide all personnel with a safe and healthy work environment and have established safety and environmental programs and goals to achieve these results.

We expect our manufacturing facilities to produce our products safely and in compliance with local regulations, policies, standards and practices intended to protect the environment and our people and have established global policies designed to promote compliance.

We require our employees to comply with such requirements.

We provide our workers with the tools and training necessary to make the appropriate decisions to prevent accidents and injuries.

We provide our workers with the tools and

training necessary to make the appropriate decisions to prevent accidents and injuries.

Each of our operating facilities develops, maintains and implements safety programs encompassing key aspects of their operations.

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Each Kronos operating location is subject to local laws and regulations that dictate what injuries are required to be recorded and reported, which may differ from location to location and result in different methods of injury rate calculation.

For internal global tracking, benchmarking and identification of

opportunities for improvement, Kronos collects the location specific information and applies a U.S.-based injury rate calculation to arrive at a global total frequency rate, which is expressed as the number of incidents at its operating locations per 200,000 hours.

For internal global tracking, benchmarking and identification of opportunities for improvement, Kronos collects the location specific information and applies a U.S.-based injury rate calculation to arrive at a global total frequency rate, which is expressed as the number of incidents at its operating locations per 200,000 hours.

This internal safety metric may not be directly comparable to a recordable incident rate calculated under U.S.

Kronos’ global total frequency rate aggregating information about employees and contractors was 1.61 in 2020 (1.54 of the aggregate represents employees only), 1.08 in 2021 (0.90 of the aggregate represents employees only) and 1.01 in 2022 (0.86 of the aggregate represents employees only).

Kronos’ global total frequency rate aggregating information about employees and contractors was 1.08 in 2021 (0.90 was the frequency rate for employees only), 1.01 in 2022 (0.86 was the frequency rate for employees only) and 0.95 in 2023 (0.74 was the frequency rate for employees only).

CompX uses lost time incidents as a key measure of worker safety.

CompX defines lost time incidents as work-related accidents where a worker sustains an injury that results in time away from work.

CompX had lost time incidents of nil in 2020, one in 2021 and three in 2022.

CompX had one lost time incident in 2021, three in 2022 and one in 2023.

Diversity and inclusion

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In addition, we also own real property related to certain of our former business units.

Discontinued Operations – On January 26, 2018, we completed the sale of our former Waste Management Segment to JFL-WCS Partners, LLC (“JFL Partners”), an entity sponsored by certain investment affiliates of J.F.

Lehman & Company, for consideration consisting of the assumption of all of the Waste Management Segment’s third-party indebtedness and other liabilities.

We recognized a pre-tax gain of approximately $4.9 million in the fourth quarter of 2020 related to proceeds received from JFL Partners in final settlement of an earn-out provision in the sale agreement.

Amounts associated with the sale of our former Waste Management Segment are classified as part of discontinued operations.

See Note 3 to our Consolidated Financial Statements.

Business Strategy – We routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows to be received from our subsidiaries and unconsolidated affiliates, and the estimated sales value of those businesses.

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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 1. Business