NL Industries 2025 Q1 Earnings Misses Targets as Net Income Declines 81.9%

NL Industries (NL) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company's net income for the quarter fell significantly, missing expectations with a sharp decline of 81.9% compared to the previous year. Despite the revenue increase, the earnings results were overshadowed by an unrealized loss on marketable equity securities. NL Industries remains optimistic, providing guidance that aligns with market forecasts, anticipating future growth driven by strategic initiatives and operational efficiencies.

Revenue

NL Industries reported a total revenue increase of 6.1% to $40.27 million in 2025 Q1, compared to $37.97 million in 2024 Q1. The Security Products segment generated $30.2 million, while Marine Components contributed $10.1 million, culminating in a total revenue of $40.3 million for the quarter.

Earnings/Net Income

NL Industries' EPS sharply declined by 92.9% to $0.01 in 2025 Q1 from $0.14 in 2024 Q1, while net income dropped to $1.32 million from $7.32 million in the previous year. The significant fall in EPS indicates poor performance.

Price Action

The stock price of NL Industries has edged up 2.49% during the latest trading day, has climbed 5.71% during the most recent full trading week, and has surged 24.93% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing NL Industries shares following a quarter-over-quarter revenue drop and holding for 30 days yielded a 9.16% annual return, with positive monthly outcomes 66.88% of the time over the past five years. This performance lagged behind the benchmark's 13.81% annual return and 69.38% positive months. The strategy's high risk was highlighted by a maximum drawdown of 23.55% in 2022, with an 18-month recovery period. Despite a robust rebound in 2019, the strategy demonstrated significant volatility and was highly sensitive to NL's individual performance, posing challenges in consistently aligning with broader market returns.

CEO Commentary

NL Industries, Inc. CEO emphasizes the company's resilience and growth potential, noting a net income of $0.7 million in Q1 2025, down from $6.8 million in Q1 2024, largely due to an unrealized loss of $8.5 million on marketable equity securities. He highlights CompX's strong performance with net sales of $40.3 million, driven by increased Marine Components and Security Products sales, reflecting effective market strategies. The CEO expresses optimism about Kronos's improved operational metrics, including an income from operations of $38.4 million, supported by enhanced production volumes and cost efficiencies, despite facing challenges from currency fluctuations.

Guidance

NL Industries anticipates continued growth, with expectations of stabilizing TiO2 selling prices and improved demand in North American and European markets. The company guides to increased sales volumes and operational efficiencies, projecting a positive trajectory for Kronos following its acquisition of Louisiana Pigment Company. Management acknowledges risks related to market conditions and supply chain dynamics but remains committed to strategic initiatives aimed at enhancing profitability and shareholder value. The CEO underscores the importance of monitoring currency exchange impacts and maintaining cost discipline to achieve forecasted outcomes.

Additional News

In recent developments, NL Industries declared a quarterly dividend of $0.09 per share, marking an increase from the previous dividend of $0.08. This decision reflects the company's commitment to returning value to shareholders. Additionally, insider trading activity has been notable, with Director Kevin B. Kramer purchasing 6,500 shares, indicating confidence in the company's future prospects. Lastly, the acquisition of Louisiana Pigment Company by Kronos, a major subsidiary, was completed effectively on July 16, 2024, further integrating the venture into Kronos's operations and expected to bolster its strategic position in the market.