NLI Holdings (NL) Q3 2026 earnings review
NLI returns to profit, and its pigment affiliate raises prices
NLI Holdings, which owns a lock maker and part of a paint-pigment producer, returned to profit as pigment sales recovered. The swing came from Kronos, the 31%-owned maker of titanium dioxide, the white pigment in paint. Kronos sold 14% more of it than a year ago, at prices 5% higher. CompX, the lock and boat-parts maker NLI controls, also sold more.
| Net sales (CompX) | $44.0M +10% from a year ago |
|---|---|
| Profit per share | $0.26 loss of $0.16 a year ago |
| NLI's share of Kronos profit | $10.6M loss of $11.3M a year ago |
| Full-year outlook | Unchanged CompX and Kronos sales to top 2025 |
⚖️ Verdict: 🟢 Bullish
The story got better, because Kronos now charges more than a year ago and expects prices to improve again in the fourth quarter. Weak prices were the main gap three months ago. One caution: Kronos said some idled European rival plants have restarted, while pigment demand stays below historical levels.
The question now is whether Kronos keeps its new customers once rival supply returns. If import duties hold and the European restarts stay small, the gains last; if not, tonnage and prices could both slip. Fourth-quarter prices and volumes, due with the annual results, will tell.
🐂 Bull Case
Kronos Returned to Profit on Higher Volume
Kronos makes titanium dioxide, the white pigment in paint and plastics, and NLI owns about 31% of it. NLI books its share of Kronos's profit or loss, so the pigment business drives most of the holding company's earnings swings.
The pigment maker sold 14% more tonnes than a year ago. Kronos credits share gains in Europe and North America, "reflecting the effect of anti-dumping duties that remain in effect in certain markets". Those duties are extra taxes on imports sold below fair value.
- Kronos operating profit: $57.9 million, against a $19.2 million loss a year ago
- NLI's share of Kronos profit: $10.6 million, against an $11.3 million loss
- Cost of idle capacity: about $27 million a year ago, not material now
Fuller plants explain most of the gain, because fixed costs now spread over more tonnes. Kronos also cut jobs in late 2025 to "permanently improve its cost structure", and cheaper ore helped. Currency moves took away about $5 million of operating profit.
What to watch: Kronos's fourth-quarter tonnage, reported with the annual results in early 2027. An increase over last year's fourth quarter would show that the new customers stayed through the seasonal slowdown.
Kronos Prices Now Top Last Year's
Prices were the weak point in Kronos's recovery. Its average pigment price fell about 10% during 2025 and was still 3% below a year earlier in the second quarter. Kronos said it "successfully implemented price increases and surcharges in response to rising operating costs".
In the third quarter, the average price ran 5% above a year earlier, the first gain since early 2025. Prices have climbed 11% since January. The pigment maker also expects its fourth-quarter average to improve, based on increases it has already announced.
Because the outlook points the same way as the quarter, weak pricing no longer looks like the main risk. But last year's third quarter set an easy base, with prices down 7%. Over nine months, Kronos's prices still sit 1% below 2025.
What to watch: the fourth-quarter price change, due with the annual results in early 2027. A gain from a year ago through the seasonal slowdown would show that customers accept the new price level.
CompX Boat-Parts Sales Rose 27%
CompX, NLI's majority-owned manufacturing arm, makes cabinet locks in its Security Products unit and boat parts such as exhausts and throttles in Marine Components. Both units sold more this quarter, led by boat parts.
- Marine Components sales: $12.3 million, up 27% from a year ago
- Extra Marine sales: $1.1 million to towboats, $0.9 million to industrial buyers
- Security Products sales: $31.7 million, up 5%
- Healthcare buyers: $1.4 million more
The buyer mix matters because towboat orders vary a lot from year to year. CompX expects towboat sales to stay "relatively consistent with prior year levels", so further growth rests on industrial and healthcare customers.
What to watch: Marine Components sales in the fourth quarter, reported in early 2027. Growth without extra towboat orders would show that industrial demand carries the unit.
🐻 Bear Case
European Rivals Restart Idle Pigment Plants
Kronos ties its share gains to import duties and to "changing supply conditions" among rivals. Customers that switched because a competitor was short of pigment can switch back once that competitor runs again.
That shift may have started. Kronos said "certain previously idled third-party European production facilities have recently resumed some production". It added that "Customer order lead times have recently begun to decline", which it linked to the usual fourth-quarter slowdown.
- Kronos price change, first nine months: 1% below 2025
- Kronos output: 140,000 tonnes made, 144,000 tonnes sold
- North American demand: still weak on high interest rates and housing, Kronos said
This matters for NLI because Kronos returned to profit only once its plants ran near capacity. If rivals win back tonnage, Kronos may have to choose between price cuts and idle plants. The pigment maker said it "cannot predict the effect of any such production on market conditions".
What to watch: Kronos's fourth-quarter tonnage and price change, due in early 2027. Falling tonnage while import duties stay in place would point to the restarted European plants.
CompX Margin Fell Back From Its Second-Quarter Peak
CompX said it "expects these favorable trends to continue throughout the remainder of 2026", and it dropped an earlier warning about second-half margins. Yet segment profit, its profit before NLI's head-office costs, fell to 14.5% of sales from 20.4% in the second quarter.
The cost of making the products rose to 70.4% of sales from 64.4% in the second quarter. That quarter included a "one-time recovery of prior-period import costs". This quarter still leaned on "lower cost inventory produced during the second quarter of 2026". CompX also reported delays in buying electronic components, some from China.
What to watch: CompX's fourth-quarter segment margin, due in early 2027. A level near this quarter's, without cheap inventory behind it, would show that the gain over last year's 11.9% can last.
Old Lead Paint and Cleanup Claims Keep Costing
NLI once made lead pigment, and it still faces lawsuits over lead paint and cleanup bills at old mining and smelting sites. The holding company has set aside $12.7 million for about 27 sites. It puts the top of the possible cost at $38 million.
Head-office costs rose 12% to $3.2 million this quarter, mainly because cleanup work cost more. For about five further sites, NLI cannot estimate a cost at all. It expects higher legal fees "predominantly in the fourth quarter of the year", so the latest quarter does not show the full bill.
What to watch: fourth-quarter head-office costs and the cleanup reserve, both in the annual report in early 2027. A larger reserve or a newly costed site would show the old liabilities growing.
Risks this quarter didn't answer
Three other standing risks drew only small readings this quarter. Each item below gives the latest figure and the disclosure that would move the risk either way.
- Ties to parent Valhi: CompX lent Valhi $12.3 million this year and received $14.4 million back. A larger or longer loan would deepen the concern.
- Kronos debt: long-term borrowing fell to $539.9 million from $557.4 million in December. A cut to Kronos's dividend, now $0.05 a quarter, would revive it.
- Interest income: $1.3 million, down 39% from a year ago as rates fell. Further rate cuts would extend the decline.
👓 Other Themes
A Tax Rule Change Added Six Cents
Kronos booked a non-cash tax benefit under proposed US currency regulations for foreign operations, known as section 987, released in August. NLI's portion added $0.06 a share after tax. Excluding it, NLI earned $0.20 a share by our math, against a loss of $0.08 a year earlier excluding one-offs.
CompX Adds Capacity for Boat Parts
CompX is hiring and buying machinery, mainly for Marine Components, "to expand capacity, enhance operational capabilities and improve overall efficiency". In March the lock and boat-parts maker also leased a distribution center in Southern California for about seven years. CompX said it still watches customer orders for "signs of slowing activity in certain sectors".
💲 Other KPIs
Customers owed CompX $19.2 million at the end of September, against $13.8 million in December. NLI said the timing of CompX's month-end close explains the rise. Days sales outstanding, the average time customers take to pay, stood at 40 days, against 41 a year earlier.
The components business spent 15.1% of sales on selling and overhead, down from 15.7% a year ago. Salaries, benefits and travel cost more, but sales grew faster. The ratio has eased every quarter this year, from 17.2% at the end of last year.
NLI paid shareholders $4.9 million this quarter, against $14.7 million a year ago. Last year's figure included a one-off special dividend of $0.21 a share. The regular quarterly payout went up to $0.10 from $0.09. Dividends from Kronos, CompX and Valhi should bring the holding company about $20.3 million this year, by its own estimate.
The group's operations brought in $17.4 million in nine months, against an outflow of $32.3 million a year earlier. Most of the change came from a 2025 settlement payment for an old waste site. Higher CompX profit helped, while receivables and inventory absorbed $10.3 million more cash.
🔮 Guidance
Unchanged. The lock and boat-parts maker still plans full-year sales above 2025. After $128.2 million in nine months, the fourth quarter needs only $30.1 million, by our math. That would be 20% below last year's fourth quarter, so the floor sits far under the current pace. The latest plan no longer mentions excluding last year's one-time towboat order.
Unchanged. CompX still expects gross margin and segment profit, its profit before head-office costs, to top 2025. By our math, nine months already cover all but $0.2 million of last year's segment profit. Gross margin so far runs at 32.6% of sales. The company no longer warns that second-half margins could suffer.
Unchanged. Kronos still expects 2026 sales and tonnage to top 2025, with wider margins. Nine months of sales reached $1,609 million, so the fourth quarter needs only $250 million, by our math. That is 40% under last year's fourth quarter, so the plan sets a floor rather than a target. Kronos also expects its inventories to stay below normal because of planned plant maintenance.
Unchanged in direction. The pigment maker expects its average price to improve in the fourth quarter, based on increases it has announced and continuing cost pressure. It said actual prices depend on talks with customers. Pricing cut Kronos's sales by 8% in last year's fourth quarter, so the comparison with a year ago stays easy.
Cut. CompX trimmed its plan for spending on equipment and buildings this year to about $5.2 million. Nine-month spending reached $3.1 million, so about $2.1 million falls in the fourth quarter, by our math. That is double the quarterly pace so far, as the lock maker adds machinery and automation.
Unchanged. NLI still expects head-office costs to top 2025 because of higher legal fees, now mostly in the fourth quarter. Nine months came to $9.0 million, so the fourth quarter needs more than $2.9 million, by our math. Last year's fourth quarter cost $2.7 million. The plan sets only a floor, so the legal bill could run well above it.
❓ Key Questions
How big was CompX's one-time import-cost recovery?
CompX's second-quarter margin included a refund of earlier import costs, but the company never gave its size. Without it, readers cannot tell how much of the third-quarter margin drop was normal.
How much European rival capacity has restarted?
Kronos said idled European plants resumed some production. The amount decides whether Kronos keeps the tonnage it won while those plants stood idle.
What is Kronos's new normal production range?
Kronos stopped reporting how full its plants run after it reset its capacity range in 2026. Utilization was 55% in late 2025; a comparable figure would show how much spare capacity remains.
How large will fourth-quarter legal fees be?
NLI expects higher litigation fees mostly in the fourth quarter but gave no amount. Fees ran at $1.1 million in the third quarter, so the step-up decides how far head-office costs top last year.
What return does CompX earn on loans to Valhi?
CompX lent Valhi, NLI's parent, $12.3 million this year. NLI owns only part of CompX, so outside CompX shareholders need the rate and peak balance to judge these loans.