Business and geographic segments

12 Months Ended

Dec. 31, 2025

Business and geographic segments

Business and geographic segments

Note 2 – Business and geographic segments:

		% controlled at
Business segment	Entity	December 31, 2025
Chemicals	Kronos	81%
Component products	CompX	87%
Real estate management and development	BMI and LandWell	63% - 77%

Our control of Kronos includes 50% we hold directly and 31% held directly by NL. We own 83% of NL. Our control of CompX is through NL. We own 63% of BMI. Our control of LandWell includes the 27% we hold directly and 50% held by BMI.

We are organized based upon our operating subsidiaries. Each operating segment is separately managed, and each operating segment represents a strategic business unit offering different products. Our chief operating decision maker (“CODM”) is our President and CEO. Our CODM is responsible for determining how to allocate resources and assessing performance. The CODM evaluates segment performance based on each segment’s operating income (loss), which is defined as income (loss) before income taxes and interest expense, exclusive of certain non-recurring items (such as gains or losses on disposition of business units and other long-lived assets outside the ordinary course of business and certain legal settlements) and certain general corporate income and expense items (including securities transactions gains and losses and interest and dividend income), which are not attributable to the operations of the reportable operating segments. The CODM considers current-period operating income (loss) compared to plan and prior-period on a monthly and/or quarterly basis for evaluating performance of each segment and making decisions about allocating capital and other resources. The accounting policies of the reportable operating segments are the same as those described in Note 1. Segment results we report may differ from amounts separately reported by our various subsidiaries and affiliates due to purchase accounting adjustments and related amortization or differences in how we define operating income (loss). Intersegment sales are not material. Our CODM is not regularly provided financial information related to the assets of the reportable segments, including capital expenditures, and he does not evaluate the reportable segments’ performance or allocate resources to them based on assets. Therefore, total assets by reportable segment are not included in our segment disclosures.

We have the following three consolidated reportable operating segments.

● Chemicals – Our Chemicals Segment is operated through our majority control of Kronos. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments (“TiO₂”). TiO₂ is used to impart whiteness, brightness, opacity and durability to a wide variety of products, including paints, plastics, paper, fibers and ceramics. Additionally, TiO₂ is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, cosmetics and pharmaceuticals.

● Component Products – We operate in the component products industry through our majority control of CompX. CompX is a leading manufacturer of security products used in the postal, recreational transportation,  office and institutional furniture, cabinetry, tool storage, healthcare applications and a variety of other industries. CompX is also a leading manufacturer of wake enhancement systems, stainless steel exhaust systems, custom metal fabricated parts, gauges, throttle controls, trim tabs and related hardware and accessories primarily for the recreational marine and other industries. All CompX production facilities are in the United States.

● Real Estate Management and Development – We operate in real estate management and development through our majority control of BMI and LandWell. BMI and LandWell own real property in Henderson, Nevada. LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada. Prior to 2023, BMI, through wholly-owned subsidiaries, was responsible for the delivery of water to the City of Henderson and various other users and provided utility services to certain industrial customers prior to December 2023.

Interest income included in the calculation of segment operating income (loss) is not significant in 2023, 2024 or 2025. Depreciation and amortization related to each reportable operating segment includes amortization of any intangible assets attributable to the segment. Amortization of deferred financing costs and any premium or discount associated with the issuance of indebtedness is included in interest expense.

	Years ended December 31,
	2023		2024		2025
	(In millions)
Net sales:
Chemicals	$	1,666.5	$	1,887.1	$	1,859.4
Component products		161.3		145.9		158.3
Real estate management and development		93.9		71.8		59.3
Total net sales	$	1,921.7	$	2,104.8	$	2,077.0
Cost of sales:
Chemicals	$	1,502.7	$	1,530.1	$	1,648.4
Component products		112.1		104.6		110.1
Real estate management and development		61.7		45.6		23.1
Total cost of sales	$	1,676.5	$	1,680.3	$	1,781.6
Gross margin:
Chemicals	$	163.8	$	357.0	$	211.0
Component products		49.2		41.3		48.2
Real estate management and development		32.2		26.2		36.2
Total gross margin	$	245.2	$	424.5	$	295.4
Operating income (loss):
Chemicals	$	(41.1)	$	138.5	$	(24.5)
Component products		25.4		17.0		22.6
Real estate management and development		49.9		55.2		65.2
Total operating income		34.2		210.7		63.3
General corporate items:
Interest income and other		21.3		22.0		16.6
Gain on remeasurement of investment in TiO2 manufacturing joint venture		—		64.5		—
Gain on remeasurement of earn-out liability		—		—		4.6
Insurance recoveries		.5		1.4		—
Gain on land sales		1.5		.5		—
Other components of net periodic pension and OPEB expense		(11.8)		(2.6)		(32.7)
Changes in market value of Valhi common stock held by subsidiaries		(1.7)		1.9		(2.7)
General expenses, net		(35.2)		(4.3)		(35.0)
Interest expense		(28.3)		(49.9)		(57.1)
Income (loss) before income taxes	$	(19.5)	$	244.2	$	(43.0)

Included in the determination of the Chemicals Segment’s operating income (loss) are restructuring costs related to workforce reductions of $5.8 million, $2.0 million and $10.3 million in 2023, 2024 and 2025, respectively, (see Note 20) and a fixed asset impairment related to the write-off of certain costs resulting from a capital project termination of $3.8 million recognized in 2023.

Included in the determination of the Real Estate Management and Development Segment’s operating income in 2024 is income related to the resolution of the Basic Water Company (“BWC”) bankruptcy filing. See Note 3. Also included in the determination of the Real Estate Management and Development Segment’s operating income are infrastructure reimbursements and land related income. See Notes 7 and 13.

	Years ended December 31,
	2023		2024		2025
	(In millions)
Depreciation and amortization:
Chemicals	$	49.9	$	62.9	$	62.7
Component products		4.0		3.7		3.7
Real estate management and development		.2		.1		—
Total	$	54.1	$	66.7	$	66.4

Geographic information. We attribute net sales to the place of manufacture (point-of-origin) and the location of the customer (point-of-destination); we attribute property and equipment to their physical location. At December 31, 2024 and 2025 the net assets of our non-U.S. subsidiaries included in consolidated net assets approximated $532 million and $514 million, respectively.

	Years ended December 31,
	2023		2024		2025
	(In millions)
Net sales - point of origin:
United States	$	1,284.4	$	1,396.1	$	1,390.4
Germany		726.4		826.6		839.1
Canada		351.0		351.5		289.3
Norway		252.1		278.6		250.3
Belgium		217.1		237.8		236.7
Eliminations		(909.3)		(985.8)		(928.8)
Total	$	1,921.7	$	2,104.8	$	2,077.0
Net sales - point of destination:
North America	$	871.0	$	914.0	$	929.0
Europe		738.5		842.2		861.8
Other		312.2		348.6		286.2
Total	$	1,921.7	$	2,104.8	$	2,077.0

	December 31,
	2023		2024		2025
	(In millions)
Net property and equipment:
United States	$	40.0	$	302.1	$	293.3
Germany		213.0		190.9		208.2
Belgium		98.5		88.6		95.0
Norway		83.5		73.6		81.5
Canada		82.3		68.2		73.6
Total	$	517.3	$	723.4	$	751.6