NL Industries: A Deep Dive into Q3 2024 Results

NL Industries, Inc. (NYSE: NL) recently reported its third quarter 2024 financial results, showcasing a significant turnaround in its performance. The company's net income attributable to NL stockholders surged to $36.0 million, or $0.74 per share, compared to a net loss of $0.1 million, or nil per share, in the same period last year. This remarkable improvement was driven by an unrealized gain of $18.6 million in the third quarter of 2024 related to the change in value of marketable equity securities.


The company's marketable equity securities portfolio contributed significantly to its third quarter 2024 results. The unrealized gain of $18.6 million was primarily driven by the change in value of these securities, which included a $64.5 million non-cash gain associated with the remeasurement of its investment in Louisiana Pigment Company (LPC) following Kronos' acquisition of Venator Investments' 50% joint venture interest in LPC.


The shift in government security customer projects significantly impacted CompX's Security Products sales, with a 25% decrease in the third quarter of 2024 compared to the same period in 2023. This decline was primarily due to the absence of a pilot project that did not continue in 2024. However, the long-term prospects for this segment remain positive, as the government continues to invest in security infrastructure.

Lower Marine Component sales to the towboat market also contributed to the overall decrease in CompX net sales. In the third quarter of 2024, net sales decreased by 17% year-over-year, with Marine Components accounting for a substantial portion of this decline. This trend is likely to persist in the coming quarters, as the towboat market continues to face headwinds, such as regulatory pressures and fluctuating demand.

CompX's income from operations decreased in the third quarter of 2024 due to lower sales and gross margin at both Security Products and Marine Components reporting units. Gross margin at Security Products and Marine Components declined, leading to a $3.3 million income from operations, down from $6.6 million in the same period last year. To improve margins, CompX should focus on cost reduction strategies, such as optimizing supply chain, improving operational efficiency, and negotiating better terms with suppliers.

In conclusion, NL Industries' third quarter 2024 results demonstrated a remarkable turnaround, driven by the performance of its marketable equity securities portfolio. Despite the challenges faced by its CompX segment, the company's overall performance remains strong, and its long-term prospects remain positive. Investors should closely monitor NL Industries' future financial performance and its ability to adapt to market conditions.