NL Industries (NL 1.69%), a holding company with major operations in specialty chemicals and engineered components, released results for Q2 2025 on Aug. 6, 2025. The most significant news was a sharp drop in GAAP net profit, driven by weakness in the Kronos Worldwide (NYSE:KRO) chemical segment, despite growth in its components business. Reported GAAP earnings per share were only $0.01, compared to analyst GAAP EPS estimates of $0.19 and last year’s $0.16 (GAAP) in Q2 2024, marking a 94.7% miss versus the analysts' GAAP EPS estimate. Net income attributable to NL stockholders (GAAP) dropped to $0.3 million from $7.9 million in Q2 2024. The quarter fell short of expectations, as NL Industries reported GAAP EPS of $0.01, missing the analyst estimate of $0.188, with pronounced pressure on the bottom line due to operational and market headwinds in its core titanium dioxide business.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.01 | $0.19 | $0.16 | (93.8%) |
| Net Income Attributable to NL Stockholders | $0.3 million | $7.9 million | (96.2%) | |
| Income from Operations | $2.8 million | $0.8 million | 250.0% | |
| Net Sales – CompX Segment | $40.3 million | $35.9 million | 12.3% | |
| Equity in Earnings (Losses) of Kronos Worldwide, Inc. | $(2.8) million | $6.0 million | (146.7%) |
Source: Analyst estimates for the quarter provided by FactSet.
Business overview and focus areas
NL Industries is structured around two principal subsidiaries: Kronos Worldwide, a global producer of titanium dioxide (TiO2) used as a pigment in coatings, plastics, and paper, and CompX, a supplier of security products and marine hardware components. The company's long-term success depends on demand for TiO2, trends in raw material costs, competitive market positioning, and its ability to operate its production facilities efficiently.
Over the last several quarters, TiO2 demand has softened amid global uncertainty related to U.S. trade policies, geopolitical tensions, and general hesitancy by customers to build inventories. The company’s results are particularly sensitive to changes in price and production volume in the TiO2 business. For CompX, key growth drivers include government security and marine markets, with profit linked to sales volume and cost controls. Maintaining high capacity utilization, managing environmental and regulatory costs, and adapting to industry cyclicality remain core factors influencing performance.
Quarterly highlights and key segment performance
Kronos, which accounts for most of NL Industries’ value, faced a challenging Q2 2025. Net sales from Kronos dropped 1% compared to the prior year, with the company noting, “Kronos’ net sales of $494.4 million in Q2 2025 were $6.1 million, or 1%, lower than in Q2 2024.” The decline stemmed from both lower average TiO2 selling prices and reduced sales volumes in export markets. North American demand helped limit sales pressure, but it was not enough to offset the softness abroad.
Income from operations dropped from $35.9 million in Q2 2024 to $7.4 million. Management attributed this mostly to reduced utilization rates and the impact of $20 million of unabsorbed fixed costs. Kronos ran its plants at 81% capacity, compared to nearly full utilization at 99% in Q2 2024. This dramatic decrease in utilization was driven by industry-wide inventory caution and weak demand, especially outside North America. The consequences were clear -- a substantial hit to quarterly profit even as sales fell only modestly.
NL Industries’ share of Kronos profit turned negative, with an equity loss of $2.8 million compared to a $6.0 million profit in Q2 2024. As management described, “NL recognized equity in losses of Kronos of $2.8 million in the second quarter of 2025 compared to equity in earnings of $6.0 million in the second quarter of 2024,” reflecting persistent operational strain at Kronos from both the cost and demand side.
The company noted that additional factors – including unrealized losses on marketable equity securities and lower financial income due to reduced interest rates and cash balances – contributed to weaker net income. However, these effects were smaller in magnitude than the hit from Kronos’ TiO2 business. CompX, on the other hand, delivered a strong quarter, showing both top-line and bottom-line growth. CompX’s net sales rose 12.3% compared to $35.9 million in Q2 2024, reaching $40.3 million, and segment profit improved from $5.1 million in Q2 2024 to $6.3 million. This was driven by higher security product sales to the government market and increased marine component sales for towboat applications. Gross margin gains also played a role, with margins expanding across both product families.
Products, operational factors, and industry context
The core product for Kronos is titanium dioxide pigment, a white pigment used in coatings, plastics, and papers. This material’s sales volume and price are closely tied to global economic activity and customer inventory trends. During the quarter, NL Industries reported that “average TiO2 selling prices declined 4% during the first six months of 2025,” and that, “selling prices were 1% lower in Q2 2025 as compared to Q2 2024.” Sales volumes outside North America remained weak, and there was no evidence of a pricing recovery on the horizon.
Kronos’ income from operations decreased in the first six months of 2025 compared to the first six months of 2024, primarily due to additional unabsorbed fixed production costs and higher production costs, mainly for raw materials. This cost pressure, combined with low capacity utilization (81% versus 99% in Q2 2024), caused $20 million in additional unabsorbed fixed overhead. Kronos’ quarter was further complicated by global uncertainty related to U.S. trade policy, geopolitical tensions, and customer reluctance to rebuild inventories. Management stated, “During the first six months of 2025, Kronos and the TiO2 industry have been operating in a market impacted by global uncertainty related to U.S. trade policies.”
CompX, comprising security products and marine hardware components, was able to grow in both end markets. Security product sales benefited from stronger government demand, while marine components saw increased orders for towboats. Segment profit increased as both product lines delivered higher sales and expanded margins, helping offset the weakness in the group’s chemical business.
Lower corporate expenses, driven by a reduction in legal and environmental remediation costs, marginally supported the bottom line but did not meaningfully shift the overall quarter’s profile. The acquisition of the remaining 50% of Louisiana Pigment Company LP was completed in July 2024, giving Kronos increased control of this pigment plant, but its immediate impact on the quarter was limited.
Outlook and what to watch ahead
NL Industries did not offer forward guidance for the coming quarters or the full fiscal year. Management comments focused on ongoing risks related to market conditions, raw material costs, customer inventory trends, and the integration of Kronos’ new pigment facility. The lack of guidance reflects continued uncertainty about demand growth and profitability recovery, especially for the chemical segment. No adjusted targets or updated financial projections were provided in this release.
Looking ahead, investors should monitor trends in titanium dioxide demand and pricing, changes in capacity utilization, and the impact of any sustained raw material cost increases. The business’s performance remains tightly linked to global economic dynamics and market conditions for this key input pigment. Watch for developments in integration progress at Louisiana Pigment Company, as Kronos seeks operational synergies. Dividend policy was not addressed.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
