Shares of Valhi, Inc. (VHI Quick QuoteVHI - Free Report) have risen 6.7% since reporting third-quarter 2026 results, outperforming the S&P 500 index’s decline of 3.8%. Over the past month, VHI shares have gained 13.4% compared with the S&P 500’s 6.3% decline.

Earnings & Revenue Performance

Valhi reported third-quarter 2026 net sales of $589 million, up 17% from $503.5 million in the year-ago quarter. The company posted earnings of $1.06 per share against a loss of 78 cents per share a year earlier. Net income attributable to stockholders reached $30.2 million against a loss of $22.2 million in the prior-year period. Total segment operating income increased to $67.4 million from $8.6 million, primarily reflecting improved Chemicals performance, partially offset by weaker Real Estate results.

VHI's Chemicals Segment Drives Earnings Recovery

The Chemicals segment generated revenues of $541.1 million, increasing 18% year over year from $456.9 million. Operating income reached $60.5 million, reversing the prior-year operating loss of $15.9 million.

Titanium dioxide (TiO2) sales volumes increased 14% year over year, while average selling prices improved 5%. Market share gains across Europe and North America, supported by anti-dumping duties and changing supply conditions, contributed to stronger sales.

Higher production rates, reduced unabsorbed fixed costs and lower feedstock expenses supported profitability. Cost-reduction initiatives implemented in late 2025 provided additional benefits, although higher energy and distribution expenses remained headwinds.

Component Products Records Improved Performance

The Component Products segment reported revenues of $44 million, increasing 10% from $40 million a year earlier. Operating income advanced 33.3% to $6.4 million from $4.8 million.

Growth reflected higher marine components sales to towboat and industrial customers, alongside increased security products sales to healthcare and tool storage markets.

Security products revenues increased year over year to $31.7 million from $30.3 million, while marine components revenues rose to $12.3 million from $9.7 million. Improved sales and gross margins across both businesses supported operating income growth.

Real Estate Operations Face Development Slowdown

The Real Estate Management and Development segment reported revenues of $3.9 million, declining 40.9% from $6.6 million in the year-ago quarter.

Segment operating income dropped to $0.5 million from $19.7 million, reflecting significantly lower infrastructure reimbursements and reduced development activity.

Management attributed weaker land sales revenues to slower development spending on previously sold residential parcels as the company approaches completion of its development obligations.

VHI's Profitability Reflects Operational & Tax Benefits

Valhi's earnings recovery benefited from improvements in Chemicals operations alongside favorable tax developments.

Third-quarter results included a non-cash deferred income tax benefit of $12.1 million, equivalent to 28 cents per share attributable to Valhi stockholders, arising from proposed U.S. currency regulations.

Conversely, the prior-year quarter included $19.3 million deferred tax expenses related to German legislation and $4.6 million non-cash earn-out liability remeasurement gain.

Currency fluctuations reduced Chemicals operating income by approximately $5 million during the quarter. However, corporate expenses declined 13%, while interest expenses decreased $1.1 million because of lower average debt balances.

Valhi Outlines Chemicals Outlook for 2026

Management expects 2026 Chemicals net sales and sales volumes to exceed the 2025 reported levels, alongside improved gross and operating income margins.

The company anticipates higher average TiO2 selling prices in the fourth quarter, supported by previously announced price increases. However, actual pricing remains dependent on customer negotiations and competition.

Management also noted persistent weakness in overall TiO2 demand, particularly in North America, amid housing market challenges and economic uncertainty.

Despite seasonal demand moderation, the Chemicals segment entered the fourth quarter with a more favorable order backlog than a year earlier.

Other Developments

Valhi continued implementing restructuring measures initiated at Kronos in the fourth quarter of 2025, involving approximately 226 positions.

During the first nine months of 2026, Kronos paid out $7.3 million in workforce-reduction costs, leaving $1.3 million in accrued restructuring liabilities as of Sept. 30.

Management expects the remaining severance obligations to be substantially settled during 2026, with no further material workforce-reduction charges anticipated.