Breaking Down NL Industries, Inc. (NL) Financial Health: Key Insights for Investors

If you're looking at NL Industries, Inc. (NL) right now, you can't just look at the top-line revenue-the financial picture for 2025 is defintely a study in contrasts, so you need to dig deeper than the headline numbers. Honestly, the biggest takeaway is the massive swing in profitability: for the first nine months of 2025, the company reported a net loss attributable to stockholders of $6.8 million (or $0.14 per share), a sharp reversal from the $50.7 million net income a year prior. Here's the quick math: the Component Products business, CompX, actually performed well, with net sales climbing to $120.6 million and segment profit hitting $17.0 million for the nine-month period, driven by government security and marine component demand. But, the Chemicals business, heavily tied to Titanium Dioxide (TiO2) production through its stake in Kronos Worldwide, Inc., dragged the whole thing down with a $19.2 million loss from operations in Q3 2025 alone, plus you have to factor in a $9.1 million unrealized loss on marketable equity securities year-to-date. This isn't a simple growth story; it's a portfolio management challenge. You need to know which segment is driving the bus and which is applying the brakes to make a smart decision.

Revenue Analysis

You need to understand where NL Industries, Inc. (NL) actually makes its money, especially since its structure is a bit unique. The direct revenue, or Net Sales, for NL Industries, Inc. primarily comes from its subsidiary, CompX International, which focuses on component products. The other major financial driver, and the one causing the most volatility in 2025, is its large equity investment in Kronos Worldwide, Inc., which is a chemical company.

For the trailing twelve months (TTM) ending September 30, 2025, NL Industries, Inc.'s total revenue stood at approximately $159.00 million. This represents a modest year-over-year growth of 5.52%, a slight uptick after a challenging 2024. The growth is defintely a result of the strength in the component products segment.

Primary Revenue Sources: Component Products and Equity Earnings

NL Industries, Inc.'s revenue streams are cleanly split between the sales of products from its majority-owned subsidiary and the financial results from its significant minority stake in a chemical producer. You can't just look at the top-line Net Sales to get the full picture.

• CompX Segment (Net Sales): This is the source of nearly all of NL Industries, Inc.'s direct Net Sales. CompX manufactures engineered components, like security products and recreational marine components. For the third quarter of 2025, CompX's net sales were $40.0 million, which essentially matched NL Industries, Inc.'s consolidated Net Sales of $39.95 million for the same period.
• Kronos Worldwide, Inc. (Equity in Earnings/Losses): This investment in the titanium dioxide ($\text{TiO}_2$) producer is a major component of NL Industries, Inc.'s net income, but it's reported as 'Equity in earnings (losses)' below the operating income line, not as Net Sales. This is a crucial distinction for analysts.

Segment Contribution and Growth Dynamics

The CompX segment is the engine of sales growth right now. For the first nine months of 2025, CompX's net sales reached $120.6 million, a solid increase from $107.5 million in the same period of 2024. This growth is driven by higher sales of Security Products, especially to the government security market, and increased Marine Components sales to government and towboat sectors. That's a clear, positive trend.

Here's the quick math on the component products' near-term performance:

The challenge, however, is the Kronos investment. This is where the significant changes in the overall financial health are coming from. In the third quarter of 2025, NL Industries, Inc. recognized an equity in losses of Kronos of $11.3 million, a massive swing from the $21.9 million in equity earnings reported in the third quarter of 2024. This change is due to lower $\text{TiO}_2$ selling prices, reduced sales volumes in European markets, and unfavorable fixed cost absorption at Kronos. This single factor is what drove NL Industries, Inc. to a net loss of $7.8 million for Q3 2025. You can read more in our full analysis: Breaking Down NL Industries, Inc. (NL) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know the core profitability picture for NL Industries, Inc. (NL), and the simple answer is that the consolidated results are under significant pressure in 2025, driven by its investment in Kronos Worldwide, Inc. The holding company structure means you must look past the headline numbers to see the two distinct operational stories.

For the first nine months of 2025, NL Industries, Inc. reported a consolidated net loss attributable to stockholders of $6.8 million (or -$0.14 per share), a sharp reversal from the $50.7 million net income reported in the same period of 2024. This swing is the single most important metric right now.

Here's the quick math on the key margins, using the most recent Trailing Twelve Months (TTM) data available as of October 2025, which can be volatile due to the nature of NL's non-operating income and losses:

• Gross Profit Margin: 19.59%
• Operating Profit Margin: 44.24%
• Net Profit Margin: 6.10%

To be fair, the high TTM Operating Margin of 44.24% is an outlier that reflects the company's structure, not just core operational efficiency, which is why the recent net loss is a better indicator of near-term financial health. The TTM Revenue as of September 30, 2025, stood at approximately $159 million.

Profitability Trends and Operational Efficiency

The trend is a clear deterioration in consolidated profitability from 2024 to 2025. This is defintely a tale of two segments: the stable, growing CompX subsidiary versus the heavy drag from the Kronos Worldwide, Inc. investment (equity in earnings/losses).

The core issue is that NL Industries, Inc. recognized equity in losses of Kronos Worldwide, Inc. of $8.6 million in the first nine months of 2025, compared to equity in earnings of $30.4 million a year prior. Plus, unrealized losses on marketable equity securities of $9.1 million further reduced consolidated earnings.

On the operational side, the CompX segment, which manufactures engineered components, is actually performing well. Its net sales for the first nine months of 2025 rose to $120.6 million, up from $107.5 million in the prior-year period. This segment's profit improved to $17.0 million for the nine months, showing solid cost management and a positive gross margin trend in its own right.

Industry Comparison and Actionable Insight

When you look at the Operating Margin (a measure of operational efficiency before interest and taxes), NL Industries, Inc.'s TTM figure of 44.24% appears vastly superior to peers like Kronos Worldwide, Inc. at 9.42% or Valhi, Inc. at 11.60%. But this comparison is misleading because NL is a holding company whose operating income is primarily derived from its CompX segment and equity in the earnings/losses of Kronos. The true operational efficiency challenge lies with Kronos's titanium dioxide (TiO2) business, which faced approximately $27 million in unabsorbed fixed production costs in Q3 2025 alone due to decreased production volumes.

Your action here is to dissect the source of the net loss. The core component products business is healthy, but the chemicals investment is a massive headwind. You need to focus on the outlook for TiO2 pricing and volumes to gauge when the Kronos drag will ease. If you want to dig deeper into who is holding the stock and why, you can check out Exploring NL Industries, Inc. (NL) Investor Profile: Who's Buying and Why?

Finance: Track Kronos's unabsorbed fixed costs and TiO2 pricing trends quarterly to project a realistic consolidated net income for Q4 2025.

Debt vs. Equity Structure

You're looking at NL Industries, Inc. (NL) and asking the right question: how is this company actually paying for its operations and growth? The direct takeaway is that NL Industries, Inc. (NL) operates with an extremely conservative, almost debt-free capital structure at the parent level, which is a significant outlier in the capital-intensive chemicals industry.

As of the third quarter of 2025, the company's debt profile is remarkably clean. Its long-term debt consists of just $500 thousand-a long-term debt from an affiliate, which is negligible compared to its equity base. To be fair, total current liabilities, which include near-term obligations like accounts payable and accrued environmental costs, stood at $35.174 million as of September 30, 2025, but this isn't traditional interest-bearing debt. That's a very small number for a company of this size.

Here's the quick math on its leverage: the Debt-to-Equity (D/E) ratio for NL Industries, Inc. (NL) is reported as 0.00 for the fiscal quarter ending September 30, 2025. This ratio, which measures how much debt a company uses to finance its assets relative to the value of its shareholders' equity, signals virtually no financial leverage.

This is a stark contrast to the broader industry, where companies utilize debt more aggressively to fund expansion. For context, the average D/E ratio for the Chemicals industry is around 0.78, and for the Specialty Chemicals segment, it sits near 0.61 as of late 2025. NL Industries, Inc. (NL) is defintely not following the crowd.

In terms of recent financing activity, the story is one of stability, not new issuances. NL Industries, Inc. (NL) itself has not engaged in any major debt issuances, credit ratings changes, or refinancing activity because it simply carries so little debt. The complexity lies with its affiliate, Kronos Worldwide, Inc., which completed a significant debt exchange and new notes issuance in 2024. But for NL Industries, Inc. (NL) as the parent, the balance sheet is clean.

This capital structure shows a clear preference for equity funding and retained earnings over debt financing. The total equity stood at $393.272 million in Q3 2025. This balance sheet strength means NL Industries, Inc. (NL) has massive capacity to weather economic downturns or fund a major acquisition without needing to take on new debt. The trade-off, however, is that they aren't using financial leverage (borrowing money to boost returns on equity) like their peers. If you want to dig deeper into who is buying this low-leverage stock, you can check out Exploring NL Industries, Inc. (NL) Investor Profile: Who's Buying and Why?

The key action for you is to understand that NL Industries, Inc. (NL)'s financial risk is low, but its return on equity (ROE) will be less influenced by the 'financial engineering' that debt-laden companies often employ. The focus here is on operational cash flow and the performance of its subsidiaries, particularly CompX and Kronos Worldwide, Inc.

Liquidity and Solvency

You need to know if NL Industries, Inc. (NL) can cover its short-term bills, especially with the recent volatility in their subsidiary, Kronos Worldwide, Inc. The short answer is yes, NL's liquidity position is defintely strong, showing a significant buffer against near-term obligations, but the cash flow statement reveals a major one-time use of cash that you need to understand.

As of September 30, 2025, NL Industries, Inc. (NL) held $174.3 million in total current assets against only $35.2 million in current liabilities. This means the company has a massive cushion. Here's the quick math on their core liquidity metrics:

• Current Ratio: 4.96:1
• Quick Ratio (Acid-Test): 3.50:1
• Working Capital: $139.1 million

A Current Ratio of 4.96:1 is excellent. It shows that for every dollar of current debt, NL has nearly five dollars in assets that can be converted to cash within a year. The Quick Ratio, which strips out less-liquid assets like inventory and prepaid expenses, is still a very strong 3.50:1. This suggests the company can meet its immediate obligations even if it couldn't sell a single unit of its inventory.

Cash Flow Trends: The Environmental Payment Impact

While the balance sheet is rock-solid, the cash flow statement for the first nine months of 2025 tells a more nuanced story. The core trend to watch is the Cash Flow from Operating Activities (CFO), which swung to a significant net use of cash in the first six months of 2025, largely due to a non-recurring event. This is not a sign of fundamental operational weakness, but a planned, large outlay.

The primary driver of the negative CFO was a payment of approximately $56.7 million for environmental remediation and related costs, including a major settlement. This is a crucial distinction: it's a one-time cash drain, not a persistent operating failure. Without that payment, the operating cash flow would have been positive, underscoring the cash generation from the company's core businesses, like CompX.

Here's a snapshot of the cash flow activities for the most recent periods, illustrating the different pressures:

Near-Term Liquidity Strengths and Risks

The clear strength is the sheer size of the cash and equivalents, which stood at $101.9 million as of September 30, 2025. This cash pile, plus the positive working capital, gives NL Industries, Inc. the flexibility to absorb the environmental settlement and continue its shareholder return policy (like the $27.36 million in dividends) without stress.

The main risk isn't liquidity, but the drag from its equity investment in Kronos Worldwide, Inc. (Kronos). The company reported a net loss of $7.8 million in Q3 2025, largely due to a loss from operations at Kronos of $19.2 million. This operational weakness at Kronos is the primary threat to NL's net income and future cash flow generation, not its ability to pay bills today. You can read more about the investment structure and who is buying into this story here: Exploring NL Industries, Inc. (NL) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at NL Industries, Inc. (NL) and seeing a stock with a confusing valuation signal, and honestly, you're right to pause. The quick takeaway is that the company presents a complex picture: it looks undervalued on a book-value basis but potentially overvalued based on recent earnings, which is why the analyst consensus is a cautious Hold.

Let's map out the core metrics to see what's really happening under the hood as of late 2025. The challenge here is distinguishing between the value of its underlying assets and the profitability of its current operations.

Is NL Industries, Inc. (NL) Overvalued or Undervalued?

The traditional valuation ratios for NL Industries, Inc. (NL) tell two very different stories. On one hand, the Price-to-Book (P/B) ratio sits at just 0.68 as of November 2025. This means the market is pricing the stock at less than two-thirds of its net tangible assets, which defintely suggests the stock is undervalued based on asset backing.

But then you look at the profitability multiples, and the story flips. The trailing Price-to-Earnings (P/E) ratio is a high 28.65 as of November 10, 2025. This figure is elevated because the Trailing Twelve Months (TTM) earnings per share (EPS) were low at only $0.20, making each dollar of earnings expensive. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is also high at 17.19, based on the latest data from November 2025, which also suggests a premium relative to its operating profit before non-cash charges.

• P/E Ratio: 28.65 (High, suggests overvaluation on earnings)
• P/B Ratio: 0.68 (Low, suggests undervaluation on assets)
• EV/EBITDA: 17.19 (High, suggests premium on operating profit)

Stock Performance and Analyst View

The stock price trend over the last 12 months shows a lot of volatility. The stock price rose by 29.39% over the last year, but that movement has been wild. The 52-week high was $9.42 back in December 2024, but the price has since dropped significantly, trading near its 52-week low of $5.21 as of mid-November 2025, with a recent closing price of $5.26.

This volatility, coupled with the mixed valuation signals, explains the lack of strong conviction from the Street. Analysts generally rate NL Industries, Inc. (NL) as a Hold, seeing it as fairly valued at its current price. There is simply insufficient data to establish a firm one-year price target, which is a red flag for clear-cut growth investing.

The Dividend Sustainability Question

For income-focused investors, the dividend yield is certainly attractive, sitting at about 10.73% based on an annual dividend of $0.57 per share. That's a huge yield compared to the sector average.

However, you need to look past the yield to the payout ratio. Based on TTM earnings, the dividend payout ratio is an unsustainable 280%. Here's the quick math: the company is paying out nearly three times what it earned in the last year, which is not a long-term model.

What this estimate hides is the cash flow picture. The payout ratio based on cash flow is a much healthier 26.54%. This means the dividend is currently being covered by cash generated, but you are relying on the company's ability to maintain strong operational cash flow, not just reported net income. This is a crucial distinction for a holding company like NL. For a deeper dive into who is buying this stock despite the risks, check out Exploring NL Industries, Inc. (NL) Investor Profile: Who's Buying and Why?

Risk Factors

You need to understand that NL Industries, Inc. (NL)'s financial health is currently dominated by the performance of its majority-owned subsidiary, Kronos Worldwide, Inc., which is dragging down the overall results. The shift from a net income of $50.7 million for the first nine months of 2024 to a net loss of $6.8 million in the same period of 2025 tells the whole story. The biggest risks are clustered around the cyclical chemicals business and significant environmental liabilities.

Operational and Market Risks: The Kronos Drag

The core operational risk for NL Industries, Inc. (NL) is the cyclical nature of the titanium dioxide (TiO2) market, which is Kronos Worldwide, Inc.'s main business. Right now, the cycle is working against them. Kronos's Q3 2025 loss from operations was a steep $19.2 million, a massive swing from the prior year's operating income of $38.9 million. That's a huge headwind.

The pain points are clear:

• Pricing Pressure: Average TiO2 selling prices dropped by 7% in Q3 2025 compared to Q3 2024.
• Unabsorbed Costs: Lower production volumes, driven by reduced customer demand, led to approximately $27 million in unabsorbed fixed production costs for Kronos in Q3 2025 alone. That's a tough number to swallow.
• Currency Volatility: Fluctuations, primarily in the Euro, increased Kronos's Q3 2025 loss from operations by about $4 million.

To be fair, the Component Products segment, CompX International Inc., is holding up its end, with net sales rising to $40.0 million in Q3 2025 from $33.6 million a year ago. But still, the chemicals side is the elephant in the room.

Financial and External Risks

Beyond the core business, two other financial and external risks are defintely impacting the bottom line. First, the volatility in the company's investment portfolio is a factor. For the first nine months of 2025, NL Industries, Inc. (NL) recognized an unrealized loss of $9.1 million related to the change in value of marketable equity securities. That kind of swing in non-core assets can materially compress GAAP earnings.

Second, the long-standing environmental liabilities create a massive cash flow and balance sheet risk. The company paid approximately $56.1 million plus $0.5 million in interest for the Raritan Bay Slag (RBS) global settlement in the first half of 2025. Here's the quick math on the remaining exposure:

Plus, corporate expenses increased by $0.7 million in Q3 2025, primarily due to higher litigation fees and related costs, which is a direct consequence of managing these legacy issues.

Mitigation and Actionable Insight

Management's focus is on navigating global uncertainties and for Kronos, realizing expected cost savings from strategic and operational initiatives, including the integration of the Louisiana Pigment Company, L.P. acquisition. For you, the investor, the key is to watch Kronos's ability to control fixed costs and see if TiO2 pricing stabilizes. If they can't reduce that $27 million in unabsorbed costs, the losses will continue.

Your immediate action is to monitor the next Kronos Worldwide, Inc. earnings report for any sign of a turnaround in the TiO2 cycle, which is the single most important variable for NL Industries, Inc. (NL) right now. For a deeper dive into the full picture, you can check out the full post on Breaking Down NL Industries, Inc. (NL) Financial Health: Key Insights for Investors.

Growth Opportunities

You need to look past the headline numbers for NL Industries, Inc. (NL) because it's a holding company; its future growth is defintely a tale of two very different subsidiaries. The near-term opportunity hinges almost entirely on the cyclical upswing in titanium dioxide ($\text{TiO}_2$) pigments through Kronos Worldwide, Inc. (Kronos), while the component business, CompX International, Inc. (CompX), is fighting secular headwinds with strategic niche gains.

Future Revenue and Earnings Estimates

For the 2025 fiscal year, the analyst consensus suggests a significant top-line figure, but that's a bit misleading. The average revenue forecast from Wall Street analysts is approximately $8.25 billion, but that number largely reflects the full revenue of Kronos, in which NL Industries holds a non-controlling interest. A more direct view of NL's core operations and equity stake shows a challenging picture, with the company reporting a net loss attributable to stockholders of $7.8 million, or $0.16 per share, in the third quarter of 2025 alone.

Here's the quick math on the key segments driving the full-year estimates:

• Kronos' net sales for the first half of 2025 reached $984.2 million, up 1% year-over-year.
• CompX's net sales for the first nine months of 2025 were $120.6 million, up from $107.5 million in the prior year period.

The average earnings estimate for NL Industries in 2025 is around $43.28 million. Still, the Q3 2025 net loss shows the volatility you must account for when dealing with a business so tied to commodity prices and market swings.

Key Growth Drivers and Strategic Actions

The primary growth driver is Kronos picking up its weight, driven by higher production volumes and improving demand in its major markets, especially North America and Europe. The $\text{TiO}_2$ pigment market is cyclical, and Kronos is currently experiencing an upswing, which is the main tailwind for NL Industries' equity earnings, despite a drop in average $\text{TiO}_2$ selling prices.

The most concrete strategic move impacting future growth is Kronos' July 2024 acquisition of the remaining 50% joint venture interest in Louisiana Pigment Company, L.P. (LPC). This move made LPC a wholly-owned subsidiary, and the focus is now on realizing expected synergies and innovations from fully integrating that operation. CompX, on the other hand, is finding growth by focusing on specific, resilient niches:

• Higher sales in Security Products.
• Increased demand for Marine Components, particularly to government and towboat markets.

CompX's segment profit rose to $6.3 million in Q2 2025, up from $5.1 million in Q2 2024, which shows the value of strategic market positioning in a component products business.

Competitive Advantages and Risks

NL Industries' competitive position is a mixed bag, reflecting its dual-business structure. Kronos benefits from its scale as a leading global producer of $\text{TiO}_2$ pigments, but it operates in a highly competitive, low-margin, and cyclical industry. The major risk here is the persistent decline in average $\text{TiO}_2$ selling prices, which can negate gains from higher production volume.

CompX's advantage lies in its specialized, engineered components for specific, high-barrier markets like recreational marine and security. However, it faces intense competition and secular challenges in older product lines, such as components for filing cabinets and traditional fuel dispensers, which are being replaced by digital or electric equivalents. The company's strong balance sheet and cash position are a key advantage for the holding company, limiting the downside risk for investors.

To understand the foundation of these strategies, you should review the company's core principles: Mission Statement, Vision, & Core Values of NL Industries, Inc. (NL).

Here is a summary of the growth drivers and their associated risks: