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NL Q3 Earnings Turn Positive as Kronos Drives Profit Rebound
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Shares of NLI Holdings, Inc. (NL - Free Report) have lost 2.9% since reporting results for the third quarter of 2026. This compares with the S&P 500 index’s 1.7% decline over the same period. Over the past month, the stock has risen 6.1% against the S&P 500’s 4.1% decline.
NLI reported third-quarter net income attributable to stockholders of $12.7 million, or 26 cents per share, against a net loss of $7.8 million, or 16 cents per share, a year earlier. Consolidated net sales, generated by CompX, increased 10% to $44 million from $40 million. Income from operations rose to $3.2 million from $1.8 million in the prior-year quarter, reflecting stronger CompX profitability despite higher corporate expenses.
NLI Holdings, Inc. Price, Consensus and EPS Surprise
CompX’s segment profit increased 34% to $6.4 million in the third quarter of 2026, while its segment profit margin expanded to 14.5% from 11.9%. The gross margin improved to 29.6% from 27.6%, indicating that higher sales translated into better cost absorption.
Security Products sales rose 5% to $31.7 million, supported by healthcare and tool storage demand, partly offset by weaker government security sales. Reporting unit profit increased 21% to $6 million. Lower-cost inventory and higher sales supported its margin improvement.
Marine Components sales increased 27% to $12.3 million, primarily reflecting stronger towboat and industrial demand. Reporting unit profit rose 40% to $2.2 million. Higher sales improved fixed-cost coverage, although a less favorable customer and product mix limited the gross margin gain.
Kronos Recovery Drives Earnings Turnaround
NLI recognized $10.6 million in equity earnings from Kronos against an $11.3-million equity loss a year earlier. This reversal was the largest contributor to NLI’s earnings recovery.
Kronos’ sales increased 18% to $541.1 million. Titanium dioxide sales volumes rose 14%, while average selling prices increased 5%. Market share gains in Europe and North America reflected anti-dumping duties in certain markets and changing supply conditions.
Kronos posted operating income of $57.9 million against an operating loss of $19.2 million. The gross margin increased to 24% from 10%. Higher production reduced unabsorbed fixed costs, which were immaterial compared with approximately $27 million a year earlier. Lower feedstock costs and benefits from cost reductions implemented in late 2025 also supported profitability.
Higher energy and distribution costs partly offset these improvements. Currency movements reduced Kronos’ operating income by approximately $5 million.
Tax & Investment Items Affect Comparability
NLI’s earnings included a $2.9-million after-tax benefit, or 6 cents per share, attributable to Kronos’ non-cash deferred tax benefit related to proposed currency regulations released in August 2026.
The prior-year quarter included a $4.7-million after-tax expense from a German deferred tax adjustment and a $0.9-million after-tax gain from an acquisition-related earn-out remeasurement.
NLI also recorded a $0.9-million unrealized gain on marketable equity securities compared with a $0.5-million loss. Corporate expenses increased $0.2 million to $3.2 million, primarily because of higher environmental remediation costs.
Interest and dividend income declined to $1.2 million from $2.1 million as lower interest rates reduced returns, partially offsetting the gains elsewhere in the quarter.
Management Flags Demand & Supply Risks
Management said that overall titanium dioxide demand remained below historical levels, particularly in North America, amid housing weakness, elevated interest rates and subdued consumer spending. Shorter customer order lead times suggested the usual fourth-quarter seasonal slowdown.
CompX continued investing in capacity and efficiency, particularly at Marine Components. However, elevated tariff and raw material costs, alongside difficulties sourcing certain electronic components, remained pressures. Its ability to recover higher costs through pricing depends on competition and customer demand.
Guidance
CompX expects 2026 sales, gross margin and segment profit to exceed the 2025 reported levels, with healthcare and industrial demand supporting activity. Government security sales are expected to remain slightly below the prior-year levels.
Kronos expects full-year sales and volumes to exceed 2025, alongside improved gross and operating margins. It anticipates better fourth-quarter average selling prices, although customer negotiations and competitive conditions remain uncertain. Recently restarted European competitor production presents an additional market uncertainty.
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NL Q3 Earnings Turn Positive as Kronos Drives Profit Rebound
Shares of NLI Holdings, Inc. (NL - Free Report) have lost 2.9% since reporting results for the third quarter of 2026. This compares with the S&P 500 index’s 1.7% decline over the same period. Over the past month, the stock has risen 6.1% against the S&P 500’s 4.1% decline.
NLI reported third-quarter net income attributable to stockholders of $12.7 million, or 26 cents per share, against a net loss of $7.8 million, or 16 cents per share, a year earlier. Consolidated net sales, generated by CompX, increased 10% to $44 million from $40 million. Income from operations rose to $3.2 million from $1.8 million in the prior-year quarter, reflecting stronger CompX profitability despite higher corporate expenses.
NLI Holdings, Inc. Price, Consensus and EPS Surprise
NLI Holdings, Inc. price-consensus-eps-surprise-chart | NLI Holdings, Inc. Quote
CompX Benefits From Stronger Sales & Margins
CompX’s segment profit increased 34% to $6.4 million in the third quarter of 2026, while its segment profit margin expanded to 14.5% from 11.9%. The gross margin improved to 29.6% from 27.6%, indicating that higher sales translated into better cost absorption.
Security Products sales rose 5% to $31.7 million, supported by healthcare and tool storage demand, partly offset by weaker government security sales. Reporting unit profit increased 21% to $6 million. Lower-cost inventory and higher sales supported its margin improvement.
Marine Components sales increased 27% to $12.3 million, primarily reflecting stronger towboat and industrial demand. Reporting unit profit rose 40% to $2.2 million. Higher sales improved fixed-cost coverage, although a less favorable customer and product mix limited the gross margin gain.
Kronos Recovery Drives Earnings Turnaround
NLI recognized $10.6 million in equity earnings from Kronos against an $11.3-million equity loss a year earlier. This reversal was the largest contributor to NLI’s earnings recovery.
Kronos’ sales increased 18% to $541.1 million. Titanium dioxide sales volumes rose 14%, while average selling prices increased 5%. Market share gains in Europe and North America reflected anti-dumping duties in certain markets and changing supply conditions.
Kronos posted operating income of $57.9 million against an operating loss of $19.2 million. The gross margin increased to 24% from 10%. Higher production reduced unabsorbed fixed costs, which were immaterial compared with approximately $27 million a year earlier. Lower feedstock costs and benefits from cost reductions implemented in late 2025 also supported profitability.
Higher energy and distribution costs partly offset these improvements. Currency movements reduced Kronos’ operating income by approximately $5 million.
Tax & Investment Items Affect Comparability
NLI’s earnings included a $2.9-million after-tax benefit, or 6 cents per share, attributable to Kronos’ non-cash deferred tax benefit related to proposed currency regulations released in August 2026.
The prior-year quarter included a $4.7-million after-tax expense from a German deferred tax adjustment and a $0.9-million after-tax gain from an acquisition-related earn-out remeasurement.
NLI also recorded a $0.9-million unrealized gain on marketable equity securities compared with a $0.5-million loss. Corporate expenses increased $0.2 million to $3.2 million, primarily because of higher environmental remediation costs.
Interest and dividend income declined to $1.2 million from $2.1 million as lower interest rates reduced returns, partially offsetting the gains elsewhere in the quarter.
Management Flags Demand & Supply Risks
Management said that overall titanium dioxide demand remained below historical levels, particularly in North America, amid housing weakness, elevated interest rates and subdued consumer spending. Shorter customer order lead times suggested the usual fourth-quarter seasonal slowdown.
CompX continued investing in capacity and efficiency, particularly at Marine Components. However, elevated tariff and raw material costs, alongside difficulties sourcing certain electronic components, remained pressures. Its ability to recover higher costs through pricing depends on competition and customer demand.
Guidance
CompX expects 2026 sales, gross margin and segment profit to exceed the 2025 reported levels, with healthcare and industrial demand supporting activity. Government security sales are expected to remain slightly below the prior-year levels.
Kronos expects full-year sales and volumes to exceed 2025, alongside improved gross and operating margins. It anticipates better fourth-quarter average selling prices, although customer negotiations and competitive conditions remain uncertain. Recently restarted European competitor production presents an additional market uncertainty.