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What changed in COMPX INTERNATIONAL INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COMPX INTERNATIONAL INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+145 added−145 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in COMPX INTERNATIONAL INC's 2025 10-K

145 paragraphs added · 145 removed · 120 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese arrangements generally provide for stated unit prices based upon specified purchase volumes, which help us to stabilize our commodity-related raw material costs to a certain extent. At other times we may make spot market buys of larger quantities of raw materials to take advantage of favorable pricing or volume-based discounts.
Biggest changeAt other times we may make spot buys of larger quantities of raw materials to take advantage of favorable pricing or volume-based discounts. During 2025, we experienced increases in the cost of certain raw materials. Throughout the year, market prices for brass and aluminum experienced a general upward trend.
Our major trademarks and brand names in addition to CompX ® include: ​ ​ ​ ​ ​ Security Products Security Products Marine Components CompX ® Security Products™ ​ Lockview ® ​ CompX Marine ® National Cabinet Lock ® ​ System 64 ® ​ Custom Marine ® Fort Lock ® ​ SlamCAM ® ​ Livorsi ® Marine Timberline ® Lock ​ RegulatoR ® ​ Livorsi II ® Marine Chicago Lock ® ​ CompXpress ® ​ CMI Industrial ® STOCK LOCKS ® ​ GEM ® ​ Custom Marine ® Stainless Exhaust KeSet ® ​ Turbine ® ​ The #1 Choice in Performance Boating ® TuBar ® ​ NARC iD ® ​ Mega Rim ® StealthLock ® ​ NARC ® ​ Race Rim ® ACE ® ​ ecoForce ® ​ Vantage View ® ACE ® II ​ Pearl ® ​ GEN-X ® CompX eLock ® ​ ​ ​ ​ ​ Sales, Marketing and Distribution A majority of our component sales are direct to large OEM customers through our factory-based sales and marketing professionals supported by engineers working in concert with field salespeople and independent manufacturer’s - 5 - ​ representatives.
Our major trademarks and brand names in addition to CompX ® include: ​ ​ ​ ​ ​ Security Products ​ ​ ​ Security Products ​ ​ ​ Marine Components CompX ® Security Products™ ​ Lockview ® ​ CompX Marine ® National Cabinet Lock ® ​ System 64 ® ​ Custom Marine ® Fort Lock ® ​ SlamCAM ® ​ Livorsi ® Marine Timberline ® Lock ​ RegulatoR ® ​ Livorsi II ® Marine Chicago Lock ® ​ CompXpress ® ​ CMI Industrial ® STOCK LOCKS ® ​ GEM ® ​ Custom Marine ® Stainless Exhaust KeSet ® ​ Turbine ® ​ The #1 Choice in Performance Boating ® TuBar ® ​ NARC iD ® ​ Mega Rim ® StealthLock ® ​ NARC ® ​ Race Rim ® ACE ® ​ ecoForce ® ​ Vantage View ® ACE ® II ​ Pearl ® ​ GEN-X ® CompX eLock ® ​ ​ ​ ​ - 5 - ​ Sales, Marketing and Distribution A majority of our component sales are direct to large OEM customers through our factory-based sales and marketing professionals supported by engineers working in concert with field salespeople and independent manufacturer’s representatives.
Securities and Exchange Commission (the “SEC”) and include, but are not limited to, the following: ● Future supply and demand for our products; ● Changes in our raw material and other operating costs (such as zinc, brass, aluminum, steel and energy costs) or the implementation of tariffs on imported raw materials and our ability to pass those costs on to our customers or offset them with reductions in other operating costs; ● Price and product competition from low-cost manufacturing sources (such as China); ● The impact of pricing and production decisions; ● Customer and competitor strategies including substitute products; - 2 - ​ ​ ● Uncertainties associated with new product development and the development of new product features; ● Pending or possible future litigation (such as litigation related to our use of certain permitted chemicals in our production process) or other actions; ● Our ability to protect or defend our intellectual property rights; ● Potential difficulties in integrating future acquisitions; ● Decisions to sell operating assets other than in the ordinary course of business; ● Environmental matters (such as those requiring emission and discharge standards for existing and new facilities); ● The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform; ● Government laws and regulations and possible changes therein including new environmental, health and safety, sustainability or other regulations; ● General global economic and political conditions that disrupt our supply chain, reduce demand or perceived demand for component products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises); ● Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises); ● The introduction of new, or changes in existing, tariffs, trade barriers or trade disputes (including tariffs imposed by the U.S. government on imports from China and Mexico); ● Technology related disruptions (including, but not limited to, cyber attacks; software implementation, upgrades or improvements; technology processing failures; or other events) related to our technology infrastructure that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders; and ● Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts.
Securities and Exchange Commission (the “SEC”) and include, but are not limited to, the following: ● Future supply and demand for our products; ● Changes in our raw material and other operating costs (such as zinc, brass, aluminum, steel and energy costs) or the implementation of tariffs on imported raw materials and our ability to pass those costs on to our customers or offset them with reductions in other operating costs; ● Price and product competition from low-cost manufacturing sources (such as China); ● The impact of pricing and production decisions; ● Customer and competitor strategies including substitute products; - 2 - ​ ​ ● Our ability to retain key customers; ● Uncertainties associated with new product development and the development of new product features; ● Pending or possible future litigation (such as litigation related to our use of certain permitted chemicals in our production process) or other actions; ● Our ability to protect or defend our intellectual property rights; ● Potential difficulties in integrating future acquisitions; ● Decisions to sell operating assets other than in the ordinary course of business; ● Environmental matters (such as those requiring emission and discharge standards for existing and new facilities); ● The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters, including future tax reform; ● Government laws and regulations and possible changes therein including new environmental, health and safety, sustainability or other regulations; ● General global economic and political conditions that disrupt our supply chain, reduce demand or perceived demand for component products or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises); ● Operating interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, certain regional and world events or economic conditions and public health crises); ● The introduction of new, or changes in existing, tariffs, trade barriers or trade disputes (including tariffs imposed by the U.S. government on imports from China and Mexico); ● Technology related disruptions (including, but not limited to, cyber attacks; software implementation, upgrades or improvements; technology processing failures; or other events) related to our technology infrastructure that could impact our ability to continue operations, or at key vendors which could impact our supply chain, or at key customers which could impact their operations and cause them to curtail or pause orders; and ● Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts.
In addition, we have adopted an insider trading policy that applies to both employees and non-employee directors. Regulatory and Environmental Matters We have a history of incorporating environmental management and compliance in our operations and decision making. We operate three manufacturing facilities and our production processes requiring waste-water discharge are consolidated at our Mauldin, South Carolina facility.
In addition, we have an insider trading policy that applies to both employees and non-employee directors. Regulatory and Environmental Matters We have a history of incorporating environmental management and compliance in our operations and decision making. We operate three manufacturing facilities and our production processes requiring waste-water discharge are consolidated at our Mauldin, South Carolina facility.
Requests should be directed to the attention of the Corporate Secretary at our address on the cover page of this Form 10-K. Additional information, including our Audit Committee Charter, our Code of Business Conduct and Ethics and our Corporate Governance Guidelines, can also be found on our website.
Requests should be directed to the attention of the Corporate Secretary at our address on the cover page of this Form 10-K. - 7 - ​ Additional information, including our Audit Committee Charter, our Code of Business Conduct and Ethics and our Corporate Governance Guidelines, can also be found on our website.
Our operations are subject to federal, state and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, discharge, disposal, remediation of and exposure to hazardous and non-hazardous substances, materials and wastes, some of which are becoming stricter over time.
Our operations are subject to federal, state and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, discharge, disposal, remediation of and exposure to hazardous and non- - 6 - ​ hazardous substances, materials and wastes, some of which are becoming stricter over time.
Information contained on our website is not a part of this Annual Report. The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC. - 7 - ​
Information contained on our website is not a part of this Annual Report. The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC.
See also Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Business Segments We have two operating business segments – Security Products and Marine Components. For additional information regarding our segments, see “Part II – Item 7.
See also Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” - 3 - ​ Business Segments We have two operating business segments – Security Products and Marine Components. For additional information regarding our segments, see “Part II – Item 7.
Simmons and her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at December 31, 2024, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.
Simmons and her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at December 31, 2025, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. - 3 - ​ Manufacturing, Operations and Products Security Products .
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. Manufacturing, Operations and Products Security Products .
At December 31, 2024, NL Industries, Inc. (NYSE: NL) owns approximately 87% of our outstanding common stock, Valhi, Inc. (NYSE: VHI) owns approximately 83% of NL’s outstanding common stock and a subsidiary of Contran Corporation owns approximately 91% of Valhi’s outstanding common stock.
At December 31, 2025, NL Industries, Inc. (NYSE: NL) owns approximately 87% of our outstanding common stock, Valhi, Inc. (NYSE: VHI) owns approximately 83% of NL’s outstanding common stock and a subsidiary of Contran Corporation owns approximately 91% of Valhi’s outstanding common stock.
We promote a respectful, diverse and inclusive workplace in which all individuals are treated with respect and dignity. As of December 31, 2024, we employed 510 people, all in the United States. We believe our labor relations are good.
We promote a respectful, diverse and inclusive workplace in which all individuals are treated with respect and dignity. As of December 31, 2025, we employed 549 people, all in the United States. We believe our labor relations are good.
The actual date of our fiscal years ended December 31, 2022, 2023 and 2024 are January 1, 2023, December 31, 2023, and December 29, 2024, respectively. Each of the years ending December 31, 2022, 2023, and 2024 consisted of 52 weeks. We furnish our stockholders with annual reports containing audited financial statements.
The actual date of our fiscal years ended December 31, 2023, 2024 and 2025 are December 31, 2023, December 29, 2024, and December 28, 2025, respectively. Each of the years ending December 31, 2023, 2024, and 2025 consisted of 52 weeks. We furnish our stockholders with annual reports containing audited financial statements.
We define lost time incidents as work-related accidents where a worker sustains an injury that results in time away from work. We had three lost time incidents in 2022, and one in each of 2023 and 2024.
We define lost time incidents as work-related accidents where a worker sustains an injury that results in time away from work. We had one lost time incident in each of 2023 and 2024 and two in 2025.
These products include: ● wake enhancement devices, trim tabs, steering wheels and billet aluminum accessories; ● original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers and other exhaust components; ● high performance gauges such as GPS speedometers and tachometers; ● mechanical and electronic controls and throttles; ● dash panels, LED indicators and wire harnesses; and ● grab handles, pin cleats and other accessories.
These products include: ● wake enhancement devices, trim tabs, steering wheels and billet aluminum accessories; ● original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers and other exhaust components; ● high performance gauges such as GPS speedometers and tachometers; ● mechanical and electronic controls and throttles; ● dash panels, LED indicators and wire harnesses; ● grab handles, pin cleats and other accessories; and ● made to order fabricated metal products primarily to the industrial market.
We sell to a diverse customer base with only one customer representing 10% or more of our sales in 2024 (United States Postal Service representing 21%). Our largest ten customers accounted for approximately 47% of our sales in 2024. Competition The markets in which we participate are highly competitive.
We sell to a diverse customer base with only one customer representing 10% or more of our consolidated net sales in 2025 (United States Postal Service representing 26%). Our largest ten customers accounted for approximately 52% of our consolidated net sales in 2025. Competition The markets in which we participate are highly competitive.
In most cases, commodity raw materials we purchase include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation, and energy. Processing and conversion costs are not expected to decrease and may negate the benefit of softening commodity prices on our purchases.
In most cases, commodity raw materials we purchase include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation, and energy. Processing and conversion costs are not expected to decrease.
For information regarding our three principal manufacturing facilities, see “Item 2 – Properties.” Raw Materials Our primary raw materials are: ● Security Products - zinc and brass (for the manufacture of locking mechanisms). ● Marine Components - stainless steel (for the manufacture of exhaust headers and pipes and wake enhancement systems), aluminum (for the manufacture of throttles and trim tabs) and other components. - 4 - ​ These raw materials are purchased from several suppliers, are readily available from numerous sources and accounted for approximately 13% of our total cost of sales for 2024.
For information regarding our three principal manufacturing facilities, see “Item 2 – Properties.” - 4 - ​ Raw Materials Our primary raw materials are: ● Security Products - zinc and brass (for the manufacture of locking mechanisms). ● Marine Components - stainless steel (for the manufacture of exhaust headers and pipes and wake enhancement systems), aluminum (for the manufacture of throttles and trim tabs) and other components.
When possible, we seek to mitigate the impact of fluctuations in these raw material costs on our margins through improvements in production efficiencies or other operating cost reductions.
When purchased on the spot market, each of these raw materials may be subject to sudden and unanticipated price increases. When possible, we seek to mitigate the impact of fluctuations in these raw material costs on our margins through improvements in production efficiencies or other operating cost reductions.
Patents generally have a term of 20 years, and our patents have remaining terms ranging from 1 to 16 years at December 31, 2024.
Patents generally have a term of 20 years, and our patents have remaining terms ranging from less than one year to 15 years at December 31, 2025.
To date, the costs of maintaining compliance with such laws and regulations have not significantly impacted our results; however, it is possible future laws and regulations may require us to incur significant additional expenditures. - 6 - ​ Human Capital Resources Employees – Our operating results depend in part on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent.
To date, the costs of maintaining compliance with such laws and regulations have not significantly impacted our results; however, it is possible future laws and regulations may require us to incur significant additional expenditures.
Our Marine Components segment manufactures and distributes wake enhancement systems, stainless steel exhaust components, gauges, throttle controls, trim tabs and related hardware and accessories primarily for ski/wakeboard boats (towboats) and performance boats. Our Marine Components segment has a facility in Neenah, Wisconsin and a facility in Grayslake, Illinois which is shared with Security Products.
Our Marine Components segment manufactures and distributes wake enhancement systems, stainless steel exhaust components, gauges, throttle controls, trim tabs and related hardware and accessories primarily for ski/wakeboard boats (towboats) and performance boats. Our Marine Components segment also manufactures and distributes to the industrial market.
Based on current economic conditions, we expect the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2025 to be relatively stable, although governmental actions such as tariffs may impact markets. When purchased on the spot market, each of these raw materials may be subject to sudden and unanticipated price increases.
Based on current economic conditions, we expect the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2026 to be more volatile compared to 2025. In addition to supply and demand, governmental actions such as tariffs may impact raw material markets.
Our specialty Marine Component products are high precision components designed to operate within tight tolerances in the highly demanding marine environment.
Our Marine Components segment has a facility in Neenah, Wisconsin and a facility in Grayslake, Illinois which is shared with Security Products. Our specialty Marine Components products are high precision components designed to operate within tight tolerances in the highly demanding marine environment.
We have a well-trained labor force with a substantial number of long-tenured employees. We provide competitive compensation and benefits to our employees.
Human Capital Resources Employees – Our operating results depend in part on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent. We have a well-trained labor force with a substantial number of long-tenured employees. We provide competitive compensation and benefits to our employees.
Total material costs, including purchased components, represented approximately 46% of our cost of sales in 2024. We occasionally enter into short-term commodity-related raw material supply arrangements to mitigate the impact of future price increases in commodity-related raw materials, including zinc, brass, aluminum and stainless steel.
We occasionally enter into short-term commodity-related raw material supply arrangements to mitigate the impact of future price increases in commodity-related raw materials, including zinc, brass, aluminum and stainless steel. These arrangements generally provide for stated unit prices based upon specified purchase volumes, which help us to stabilize our commodity-related raw material costs to a certain extent.
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Our raw material prices were generally stable through the first half of 2024, although beginning in the latter half of the third quarter we began to experience moderate increases in certain raw material costs, particularly brass. The zinc market was volatile in 2024, but we were successful in making strategic spot buys to keep our costs consistent with 2023.
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These raw materials are purchased from several suppliers, are readily available from numerous sources and accounted for approximately 14% of our total cost of sales for 2025. Total material costs, including purchased components, represented approximately 43% of our cost of sales in 2025.
Removed
Prices for aluminum and stainless steel, which are the primary raw materials used for the manufacture of marine components (including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs), were relatively stable in 2024 because we took advantage of volume purchase opportunities during the year.
Added
Stainless steel prices were relatively stable in the first part of the year but began increasing during the latter half of the year. Zinc pricing was relatively stable, and we were able to mitigate cost impacts through strategic spot buy purchases.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePhysical impacts of climate change could have a material adverse effect on our costs and operations. ​ Climate change may increase both the frequency and severity of extreme weather conditions and natural disasters such as hurricanes, thunderstorms, tornadoes, drought and snow or ice storms.
Biggest changeDue to the increase in global cybersecurity incidents it has become increasingly difficult to obtain insurance coverage on reasonable pricing terms to mitigate some risks associated with technology failures or cybersecurity breaches, and we are experiencing such difficulties in obtaining insurance coverage. - 10 - ​ Physical impacts of climate change could have a material adverse effect on our costs and operations. ​ Climate change may increase both the frequency and severity of extreme weather conditions and natural disasters such as hurricanes, thunderstorms, tornadoes, drought and snow or ice storms.
While we will continue to emphasize the introduction of innovative new product features that target customer-specific opportunities, we do not know if any new product features we introduce will achieve the same degree of success that we have achieved with our existing products. At times we work with new and existing customers on specific product innovations.
While we will continue to emphasize the introduction of innovative new product features that target customer-specific opportunities, we do not know if any new product features we introduce will achieve the same - 8 - ​ degree of success that we have achieved with our existing products. At times we work with new and existing customers on specific product innovations.
If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business could be adversely impacted. - 9 - ​ Climate change laws and regulations could negatively impact our financial results or limit our ability to operate our businesses.
If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business could be adversely impacted. Climate change laws and regulations could negatively impact our financial results or limit our ability to operate our businesses.
Third parties may independently discover our trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Further, we do not know if any of our pending trademark or patent applications will be approved.
Third parties may - 9 - ​ independently discover our trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Further, we do not know if any of our pending trademark or patent applications will be approved.
Should our vendors not be able to meet their supply obligations or should we be otherwise unable to obtain necessary raw materials or components, we may incur higher supply costs or may be required to reduce production levels.
Should our vendors not be able to meet their supply obligations or should we be otherwise unable to obtain necessary raw materials or components, we may incur higher supply costs or may be required to reduce or suspend production.
The occurrence of any of these factors could result in reduced earnings or operating losses. ● Competitors may be able to drive down prices for our products beyond our ability to adjust costs because their costs are lower than ours, especially products sourced from Asia. ● Competitors’ financial, technological and other resources may be greater than our resources, which may enable them to more effectively withstand changes in market conditions. ● Competitors may be able to respond more quickly than we can to new or emerging technologies and changes in customer requirements. ● Consolidation of our competitors or customers in any of the markets in which we compete may result in reduced demand for our products. ● A reduction of our market share with one or more of our key customers, or a reduction in one or more of our key customers’ market share for their end-use products, may reduce demand for our products. ● New competitors could emerge by modifying their existing production facilities to manufacture products that compete with our products. ● We may not be able to sustain a cost structure that enables us to be competitive. ● Customers may no longer value our product design, quality or durability over the lower cost products of our competitors.
The occurrence of any of these factors could result in reduced earnings or operating losses. ● Competitors may be able to drive down prices for our products beyond our ability to adjust costs because their costs are lower than ours, especially products sourced from Asia. ● Competitors’ financial, technological and other resources may be greater than our resources, which may enable them to more effectively withstand changes in market conditions. ● Competitors may be able to respond more quickly than we can to new or emerging technologies and changes in customer requirements. ● Consolidation of our competitors or customers in any of the markets in which we compete may result in reduced demand for our products. ● New competitors could emerge by modifying their existing production facilities to manufacture products that compete with our products. ● We may not be able to sustain a cost structure that enables us to be competitive. ● Customers may no longer value our product design, quality or durability over the lower cost products of our competitors.
Global economic and political conditions, including natural disasters, terrorist acts, transportation disruptions, global conflicts and public health crises such as pandemics, could prevent our vendors from being able to supply these components.
Global economic and political conditions, including natural disasters, terrorist acts, transportation disruptions, global conflicts or trade wars and public health crises such as pandemics, could prevent our vendors from being able to supply these components.
Increases in our supply costs may decrease our liquidity or negatively impact our financial condition or results of operations as we may be unable to offset the higher costs with increases in our selling prices or reductions in other operating costs.
Increases in our supply costs may decrease our liquidity or negatively impact our financial condition or results of operations as we may be unable to offset the higher costs with increases in our selling prices or reductions in other operating costs. Dependence on significant customers could adversely affect our business and results of operations.
If a customer were to ultimately reject or abandon custom product innovation efforts, we may not be able to recover our development costs. - 8 - ​ Higher costs or limited availability of our raw materials could negatively impact our financial results.
Sometimes we have a cost sharing arrangement for development efforts although we may also fully bear the development costs. If a customer were to ultimately reject or abandon custom product innovation efforts, we may not be able to recover our development costs. Higher costs or limited availability of our raw materials could negatively impact our financial results.
Legal, Compliance and Regulatory Risk Factors We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations. The nature of our operations exposes us to possible litigation claims, including disputes with customers and suppliers and matters relating to, among other things, product liability, intellectual property, employment and environmental claims.
The nature of our operations exposes us to possible litigation claims, including disputes with customers and suppliers and matters relating to, among other things, product liability, intellectual property, employment and environmental claims.
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Sometimes we have a cost sharing arrangement for development efforts although we may also fully bear the development costs.
Added
For the year ended December 31, 2025, our ten largest customers accounted for approximately 52% of our consolidated net sales, with a single customer accounting for 26% of our consolidated net sales.
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Due to the increase in global cybersecurity incidents it has become increasingly difficult to obtain insurance coverage on reasonable pricing terms to mitigate some risks associated with technology failures or cybersecurity breaches, and we are experiencing such difficulties in obtaining insurance coverage.
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Because our customers’ purchases are made through purchase orders rather than long-term contracts or minimum purchase commitments, order levels can fluctuate significantly from period to period based on customer needs. In addition, significant customers may negotiate more favorable pricing or terms, which may pressure our operating margins.
Added
If any significant customer reduces its purchases, loses market share for its end-use products, experiences financial difficulty, changes suppliers, or otherwise alters its relationship with us, demand for our products could decline.
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Any such reduction in sales could potentially have a material adverse effect on our revenues and results of operations. ​ Legal, Compliance and Regulatory Risk Factors We may be subject to litigation, the disposition of which could have a material adverse effect on our results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity program is fully integrated into our enterprise-wide risk management framework. Our cybersecurity program is led by our director of information technology (IT), who is responsible for developing and executing our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
Biggest changeOur cybersecurity program is led by our director of information technology (IT), who is ultimately responsible for developing and executing our overall information security strategy, policies, security engineering, operations and cyber threat detection and response. Our director of IT has extensive information technology and program management experience and leads a team with significant tenure and familiarity with our organization.
We continually enhance our cyber defense strategy with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously bolstering our system resilience in an effort to minimize the business impact should an incident occur. Third parties also play a role in our cybersecurity.
We continually enhance our cyber defense strategy with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while simultaneously bolstering our system resilience in an effort to minimize the business impact should an incident occur. Third parties also play a role in our cybersecurity posture.
Our CIDAC is comprised of our director of IT and senior executives including our chief executive officer, chief financial officer and general counsel, and our executive vice president who is also the Contran chief information officer. Security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation.
Our CIDAC is comprised of our director of IT and senior executives including our chief executive officer, chief financial officer and general counsel, and our executive vice president who is also the Contran chief information officer. Information security events and incidents are evaluated, ranked by severity and prioritized for response and remediation.
As needed, we collaborate with external cybersecurity experts and legal advisors to help ensure a robust response strategy. Our board of directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
As needed, we collaborate with external cybersecurity experts and legal advisors to help ensure a robust response strategy. - 11 - ​ Our board of directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
All employees are required to complete cybersecurity training at least once a year and have access to more frequent cybersecurity training through periodic updates. Employees in certain roles also receive additional role-based, specialized cybersecurity training. We have a Cybersecurity Incident Disclosure and Controls Committee (CIDAC) which is central to the response and evaluation of cybersecurity incidents.
All company employees are required to complete cybersecurity training at least once a year and have access to more frequent cybersecurity training through periodic informational updates. Employees in certain roles also receive additional role-based, specialized cybersecurity training. We have a Cybersecurity Incident Disclosure and Controls Committee (CIDAC) which is central to the response and evaluation of cybersecurity incidents.
ITEM 1C. CYBERSECURITY We recognize the importance of proactively assessing, identifying and managing material risks associated with cybersecurity threats. These risks include, among other things: operational disruptions, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. Our cybersecurity programs are built on both operational and compliance foundations.
ITEM 1C. CYBERSECURITY We recognize the importance of proactively assessing, identifying and managing material risks associated with cybersecurity threats. These risks include, among other things: operational disruptions, intellectual property theft, fraud, extortion, harm to employees or customers and violations of data privacy or security laws. Our cybersecurity program is built on both operational and compliance foundations.
Our full board retains oversight of cybersecurity because of its importance to us and visibility with our customers. ​ In the event of an incident, we follow a structured incident response playbook, which outlines clear and defined steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (such as legal), senior leadership and the board, as appropriate.
In the event of an incident, we follow a structured incident response playbook, which outlines clear and defined steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (such as legal), senior leadership, our CIDAC and the board, as appropriate.
We engage reputable third-party security firms for consultation on industry best practices and regulatory standards and to conduct routine evaluations of our cybersecurity, such as through penetration testing and security audits; these evaluations include testing both the design and operational effectiveness of security controls.
We engage reputable third-party security firms to provide guidance on industry best practices and regulatory standards, to support proactive and reactive cybersecurity efforts, and to conduct periodic evaluations of our cybersecurity posture, such as through penetration testing and security audits; these evaluations include testing both the design and operational effectiveness of our security controls.
For more information about the cybersecurity risks we face, see the risk factor entitled “Technology failures or cybersecurity breaches could have a material adverse effect on our operations.” in Item 1A- Risk Factors. ​ - 11 - ​
To date such incidents have been minor, isolated and promptly contained. For more information about the cybersecurity risks we face, see the risk factor entitled “Technology failures or cybersecurity breaches could have a material adverse effect on our operations.” in Item 1A- Risk Factors. ​
The IT team is responsible for categorizing cybersecurity incidents, and those deemed high-risk or critical are escalated to the CIDAC for review and response coordination. Incidents are evaluated to determine materiality and for operational, financial and reputational impact. Our CIDAC performs simulations and tabletop exercises at a management level to evaluate our readiness and response to cybersecurity incidents.
The IT team is responsible for categorizing cybersecurity incidents, and those deemed high-risk or critical are escalated to the CIDAC for strategic review and response coordination. Incidents are evaluated to determine regulatory requirements, materiality and potential operational, financial and reputational impact.
We also conduct post-incident reviews to identify lessons learned and implement continuous improvements. ​ We face a number of cybersecurity risks. To date, such risks have not materially affected us, including our business strategy, results of operations or financial condition.
We also conduct post-incident reviews to identify lessons learned and implement continuous improvements. ​ We face multiple cybersecurity risks. To date, such risks have not materially affected us, including our business strategy, results of operations or financial condition. While we have not experienced any major breaches, we actively monitor and mitigate cyber threats, including phishing attempts, malware and targeted attacks.
Our cybersecurity risks are also reviewed and tested annually through third party assessments and internal and external information technology audits. Our information technology team reviews cybersecurity risks at least annually, integrating findings into strategic risk assessments.
Our director of IT reports to our vice president in charge of coordinating operational activities within our business segments. Our cybersecurity risks are also reviewed and tested annually through third party assessments and internal and external information technology audits. Our information technology team reviews cybersecurity risks at least annually, integrating findings into strategic risk assessments and applicable corrective action plans.
The operational component focuses on continuous detection, - 10 - ​ prevention, measurement, analysis and response to cybersecurity alerts and incidents, and on emerging threats. The compliance component establishes oversight of our cybersecurity programs by creating risk-based controls to protect the integrity, confidentiality, accessibility and availability of company data stored, processed or transferred.
The operational component focuses on continuous monitoring, detection, prevention, measurement, analysis and response to cybersecurity threats and incidents, including emerging risks. The compliance component provides oversight through risk-based controls designed to protect the confidentiality, integrity and availability of company data stored, processed or transmitted. Our cybersecurity program is fully integrated into our enterprise-wide risk management framework.
The board has delegated some of its primary risk oversight to board committees, including that our audit committee facilitates the board’s process of oversight of our overall risk management approach.
The board has delegated some of its primary risk oversight to board committees, including that our audit committee facilitates the board’s process of oversight of our overall risk management approach. Our full board retains oversight of cybersecurity because of its importance to us and visibility with our customers. ​ We also maintain a documented incident response plan.
Removed
Our director of IT has extensive information technology and program management experience and leads a team that has many years of experience with our organization. Our director of IT reports to our vice president in charge of coordinating operational activities within our business segments.
Added
Our CIDAC performs simulations and tabletop exercises at a management level to evaluate our readiness and response to cybersecurity incidents.
Removed
While we have not experienced any major breaches, we actively monitor and mitigate cyber threats, including phishing attempts, malware and targeted attacks. Thus far all such incidents have been minor, isolated and promptly contained.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe plaintiffs instead assert claims under common law theories of negligence, nuisance, trespass, failure to warn, and unfair trade practices. We intend to deny liability and will defend vigorously against all claims.
Biggest changeThe plaintiffs do not allege that CompX has failed to comply with, or has violated, any environmental regulation, permit or - 12 - ​ statute. The plaintiffs instead assert claims under common law theories of negligence, nuisance, trespass, failure to warn, and unfair trade practices. We intend to deny liability and will defend vigorously against all claims.
ITEM 3. LEGAL PROCEEDINGS We are involved, from time to time, in various environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our business. In addition to the information included below, see Note 11 to our Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS We are involved, from time to time, in various environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our business. In addition to the information included below, see Note 10 to our Consolidated Financial Statements.
The four lawsuits naming CompX allege that CompX was one of many companies that used products containing PFAS in its manufacturing operations, and that such operations have collectively impacted drinking water supplies used by the water companies. The plaintiffs do not allege that CompX has failed to comply with, or has violated, any environmental regulation, permit or statute.
The four lawsuits naming CompX allege that CompX was one of many companies that used products containing PFAS in its manufacturing operations, and that such operations have collectively impacted drinking water supplies used by the water companies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph shows the value at December 31 of each year assuming an original investment of $100 at December 31, 2019 and assumes the reinvestment of our dividends in shares of our stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2019 2020 2021 2022 2023 2024 CompX International Inc. ​ $ 100 ​ $ 100 ​ $ 165 ​ $ 152 ​ $ 218 ​ $ 250 Russell 2000 Index ​ 100 ​ 120 ​ 138 ​ 110 ​ 128 ​ 143 Peer Group ​ 100 ​ 124 ​ 110 ​ 74 ​ 88 ​ 124 ​ ​ The information contained in the performance graph shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, except to the extent we specifically request that the material be treated as soliciting material or specifically incorporate this performance graph by reference into a document filed under the Securities Act or the Securities Exchange Act.
Biggest changeThe graph shows the value at December 31 of each year assuming an original investment of $100 at December 31, 2020 and assumes the reinvestment of our dividends in shares of our stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2020 ​ ​ ​ 2021 ​ ​ ​ 2022 ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 CompX International Inc. ​ $ 100 ​ $ 164 ​ $ 151 ​ $ 217 ​ $ 249 ​ $ 241 Russell 2000 Index ​ 100 ​ 115 ​ 91 ​ 107 ​ 119 ​ 134 Peer Group ​ 100 ​ 89 ​ 60 ​ 71 ​ 100 ​ 130 ​ ​ The information contained in the performance graph shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act, except to the extent we specifically request that the material be treated as soliciting material or specifically incorporate this performance graph by reference into a document filed under the Securities Act or the Securities Exchange Act.
Equity compensation plan information. We have a share based incentive compensation plan, which was approved by our stockholders, pursuant to which an aggregate of 200,000 shares of our Class A common stock can be - 13 - ​ awarded to non-employee members of our board of directors.
Equity compensation plan information. We have a share based incentive compensation plan, which was approved by our stockholders, pursuant to which an aggregate of 200,000 shares of our Class A common stock can be - 14 - ​ awarded to non-employee members of our board of directors.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Dividends. Our Class A common stock is listed and traded on the NYSE American (symbol: CIX). As of February 28, 2025, there were approximately 17 holders of record of CompX Class A common stock. Performance Graph .
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock and Dividends. Our Class A common stock is listed and traded on the NYSE American (symbol: CIX). As of February 27, 2026, there were approximately 17 holders of record of CompX Class A common stock. Performance Graph .
Set forth below is a line graph comparing the yearly change in our cumulative total stockholder returns on our Class A common stock against the cumulative total return of the Russell 2000 Index and an index of a self-selected peer group of companies for the period from December 31, 2019 through December 31, 2024.
Set forth below is a line graph comparing the yearly change in our cumulative total stockholder returns on our Class A common stock against the cumulative total return of the Russell 2000 Index and an index of a self-selected peer group of companies for the period from December 31, 2020 through December 31, 2025.
At December 31, 2024, 119,650 shares are available for future award under this plan. See Note 9 to the Consolidated Financial Statements.
At December 31, 2025, 115,150 shares are available for future award under this plan. See Note 8 to the Consolidated Financial Statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGross margin as a percentage of net sales for 2023 increased as compared to 2022 primarily due to lower production costs (including lower material, overtime and shipping costs) and increased coverage of fixed costs on higher sales, primarily in the fourth quarter. - 16 - ​ Operating income margin increased for 2023 compared to 2022 primarily due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses from higher sales, partially offset by increased operating costs and expenses, including higher employee salaries and benefit costs of $.6 million. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2022 2023 2024 2022-23 2023-24 ​ ​ (In millions) ​ ​ ​ ​ Marine Components: ​ ​ ​ ​ Net sales ​ $ 52.1 ​ $ 40.1 ​ $ 30.7 (23) % (23) % Cost of sales ​ 38.7 ​ 29.3 ​ 24.1 (24) (18) ​ Gross margin ​ 13.4 ​ 10.8 ​ 6.6 (19) (39) ​ Operating costs and expenses ​ 3.8 ​ 3.6 ​ 3.3 (5) (8) ​ Operating income ​ $ 9.6 ​ $ 7.2 ​ $ 3.3 (25) (54) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 25.6 % 27.0 % 21.6 % ​ ​ ​ ​ Operating income margin ​ 18.4 ​ 18.0 ​ 10.8 ​ ​ Marine Components.
Biggest changeOperating income margin decreased for 2024 compared to 2023 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales and - 17 - ​ increased operating costs and expenses, including higher employee salaries and benefit costs of $.5 million, primarily in the first half of the year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2023-24 ​ ​ ​ 2024-25 ​ ​ (In millions) ​ ​ ​ ​ Marine Components: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 40.1 ​ $ 30.7 ​ $ 37.6 (23) % 22 % Cost of sales ​ 29.3 ​ 24.1 ​ 26.3 (18) 9 ​ Gross margin ​ 10.8 ​ 6.6 ​ 11.3 (39) 70 ​ Operating costs and expenses ​ 3.6 ​ 3.3 ​ 3.8 (8) 14 ​ Operating income ​ $ 7.2 ​ $ 3.3 ​ $ 7.5 (54) 126 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 27.0 % 21.6 % 29.9 % ​ ​ ​ ​ Operating income margin ​ 18.0 ​ 10.8 ​ 19.8 ​ ​ ​ ​ Marine Components.
Operating Costs and Expenses . Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as gains and losses on sales of property and equipment.
Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as gains and losses on sales of property and equipment.
Relative to the full year of 2023, sales were $7.6 million lower to the towboat market (primarily to original equipment boat manufacturers), $1.4 million lower to the industrial market and $.6 million lower to each the engine builder market and distributors, partially offset by $1.4 million higher sales to the government market.
Relative to the full year of 2023, sales were $7.6 million lower to the towboat market (primarily to original equipment boat manufacturers), $1.4 million lower to the industrial market and $.6 million lower to each of the engine builder market and distributors, partially offset by $1.4 million higher sales to the government market.
The $2.9 million decrease in cash provided by operating activities was primarily the net result of: ● A $8.4 million decrease in operating income in 2024, ● A higher amount of net cash provided by relative changes in inventories, receivables, payables and non-tax accruals in 2024 of $3.0 million, - 19 - ​ ● A $1.8 million increase in interest received in 2024 due to higher interest rates and increased investment balances, partially offset by lower average loan balances on our loan to an affiliate, ● A $1.1 million decrease in cash paid for taxes in 2024 due to decreased earnings and the relative timing of payments, and ● A $.3 million decrease in depreciation and amortization.
The $2.9 million decrease in cash provided by operating activities was primarily the net result of: ● A $8.4 million decrease in operating income in 2024, ● A higher amount of net cash provided by relative changes in inventories, receivables, payables and non-tax accruals in 2024 of $3.0 million, ● A $1.8 million increase in interest received in 2024 due to higher interest rates and increased investment balances, partially offset by lower average loan balances on our loan to an affiliate, ● A $1.1 million decrease in cash paid for taxes in 2024 due to decreased earnings and the relative timing of payments, and ● A $.3 million decrease in depreciation and amortization.
An entity may first assess qualitative factors to determine whether it is necessary to complete a quantitative impairment test using a more-likely-than-not criteria. If an entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed.
An entity may first assess qualitative factors to determine whether it is necessary to complete a - 19 - ​ quantitative impairment test using a more-likely-than-not criteria. If an entity believes it is more-likely-than-not the fair value of a reporting unit is greater than its carrying value, including goodwill, the quantitative impairment test can be bypassed.
Operating income as a percentage of net sales decreased in 2024 compared to 2023 due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses on lower sales, partially offset by reduced operating costs and expenses, including lower employee related expenses of $.2 million.
Operating income as a percentage of net sales decreased in 2024 compared to 2023 due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses on lower sales, partially offset by reduced operating costs and expenses, including lower employee related expenses of $.2 million. Outlook.
We have in the past experienced global and domestic supply chain challenges, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs and the impact of economic conditions and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
We have experienced global and domestic supply chain challenges in the past, and any future impacts on our operations will depend on, among other things, any future disruption in our operations or our suppliers’ operations, the effect of tariffs, and the impact of economic conditions, consumer confidence, and geopolitical events on demand for our products or our customers’ and suppliers’ operations, all of which remain uncertain and cannot be predicted.
In 2025, we will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly. Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal.
We will continue to monitor current and anticipated near-term customer demand levels to ensure our production capabilities and inventories are aligned accordingly. Our expectations for our operations and the markets we serve are based on a number of factors outside our control. Currently, our supply chains are stable and transportation and logistical delays are minimal.
In 2024, we used the qualitative assessment for our annual impairment test and determined it was not necessary to perform the quantitative goodwill impairment test, as we concluded it is more-likely-than-not the fair value of the Security Products reporting unit exceeded its carrying amount.
In 2025, we used the qualitative assessment for our annual impairment test and determined it was not necessary to perform the quantitative goodwill impairment test, as we concluded it is more-likely-than-not the fair value of the Security Products reporting unit exceeded its carrying amount.
Commitments and contingencies As more fully described in the Notes to the Consolidated Financial Statements, we are a party to various agreements that contractually and unconditionally commit us to pay certain amounts in the future. See Note 11 to our Consolidated Financial Statements.
Commitments and contingencies As more fully described in the Notes to the Consolidated Financial Statements, we are a party to various agreements that contractually and unconditionally commit us to pay certain amounts in the future. See Note 10 to our Consolidated Financial Statements.
Gross margin as a percentage of net sales decreased in 2024 compared to 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales. See segment results discussion below.
Gross margin as a percentage of net sales decreased in 2024 compared to 2023 primarily due to the factors affecting cost of sales and decreased coverage of fixed costs due to lower sales. See segment results discussion below. Operating Costs and Expenses .
Depreciation and amortization decreased in 2024 compared to 2023 primarily due to reductions in capital spending in 2023 and 2024 as a result of generally reduced demand levels. Depreciation and amortization in 2023 was comparable to 2022. See Note 1 to our Consolidated Financial Statements. Changes in assets and liabilities result primarily from the timing of production, sales and purchases.
Depreciation and amortization decreased in 2024 compared to 2023 primarily due to reductions in capital spending in 2023 and 2024 as a result of generally reduced demand levels. See Note 1 to our Consolidated Financial Statements. Changes in assets and liabilities result primarily from the timing of production, sales and purchases.
We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors. ● Goodwill – Our goodwill totaled $23.7 million at December 31, 2024, all relating to our Security Products reporting unit, which corresponds to our Security Products operating segment.
We have discussed the development, selection and disclosure of our critical accounting estimates with the audit committee of our board of directors. ● Goodwill – Our net goodwill totaled $23.7 million at December 31, 2025, all relating to our Security Products reporting unit, which corresponds to our Security Products operating segment.
We did not evaluate any long-lived assets for impairment during 2024 because no such impairment indicators were present.
We did not evaluate any long-lived assets for impairment during 2025 because no such impairment indicators were present.
Cost of sales decreased in 2024 compared to 2023 primarily due to the effects of lower sales at both Security Products and Marine Components partially offset by higher production costs across both business segments. As a result, cost of sales as a percentage of net sales increased over the same period.
See segment results discussion below. Cost of sales decreased in 2024 compared to 2023 primarily due to the effects of lower sales at both Security Products and Marine Components partially offset by higher production costs across both business segments. As a result, cost of sales as a percentage of net sales increased over the same period.
Net sales de creased $15.4 million in 2024 compared to 2023 primarily due to lower Marine Components sales to the towboat market and lower Security Products sales to the government security market as a result - 14 - ​ of sales related to a pilot project that shipped in the third and fourth quarters of 2023 and for which there were no related sales in 2024.
See segment results discussion below. - 15 - ​ Net sales de creased $15.4 million in 2024 compared to 2023 primarily due to lower Marine Components sales to the towboat market and lower Security Products sales to the government security market as a result of sales related to a pilot project that shipped in the third and fourth quarters of 2023 and for which there were no related sales in 2024.
Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, the total average days sales outstanding decreased from December 31, 2023 to December 31, 2024 and is primarily impacted by the timing of sales and collections in the last month of the year.
Relative changes in working capital can have a significant effect on cash flows from operating activities and is primarily impacted by the timing of sales and collections in the last month of the year. As shown below, the total average days sales outstanding at December 31, 2025 was comparable to December 31, 2024.
See Note 9 to our Consolidated Financial Statements. Future Cash Requirements We believe cash generated from operations together with cash on hand will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service and dividends (if declared) for the next twelve months and our long term obligations for the next five years.
Future Cash Requirements We believe cash generated from operations together with cash on hand will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service and dividends (if declared) for the next twelve months and our long term obligations for the next five years.
Results of Operations - 2024 Compared to 2023 and 2023 Compared to 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2022 2023 2024 2022-23 2023-24 ​ ​ (In millions) ​ ​ ​ ​ Net sales ​ $ 166.6 ​ $ 161.3 ​ $ 145.9 (3) % (10) % Cost of sales ​ 117.8 ​ 112.1 ​ 104.6 (5) (7) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 48.8 ​ 49.2 ​ 41.3 1 (16) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs and expenses ​ 23.4 ​ 23.8 ​ 24.3 2 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 25.4 ​ $ 25.4 ​ $ 17.0 — (33) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent of net sales: ​ ​ ​ ​ Cost of sales ​ 70.7 % 69.5 % 71.7 % ​ ​ ​ Gross margin ​ 29.3 ​ 30.5 ​ 28.3 ​ Operating costs and expenses ​ 14.0 ​ 14.7 ​ 16.7 ​ Operating income ​ 15.3 ​ 15.8 ​ 11.7 ​ ​ Net Sales.
Results of Operations - 2025 Compared to 2024 and 2024 Compared to 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2023-24 ​ ​ ​ 2024-25 ​ ​ (In millions) ​ ​ ​ ​ Net sales ​ $ 161.3 ​ $ 145.9 ​ $ 158.3 (10) % 8 % Cost of sales ​ 112.1 ​ 104.6 ​ 110.1 (7) 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 49.2 ​ 41.3 ​ 48.2 (16) 16 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating costs and expenses ​ 23.8 ​ 24.3 ​ 25.6 2 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income ​ $ 25.4 ​ $ 17.0 ​ $ 22.6 (33) 33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ 69.5 % 71.7 % 69.6 % ​ ​ ​ ​ Gross margin ​ 30.5 ​ 28.3 ​ 30.4 ​ ​ ​ Operating costs and expenses ​ 14.7 ​ 16.7 ​ 16.2 ​ ​ ​ Operating income ​ 15.8 ​ 11.7 ​ 14.3 ​ ​ ​ ​ Net Sales.
The materials used in our products consist of purchased components and raw materials some of which are subject to fluctuations in the commodity markets such as zinc, brass, aluminum and stainless steel. Total material costs represented approximately 46% of our cost of sales in 2024, with commodity-related raw materials representing approximately 13% of our cost of sales.
The materials used in our products consist of purchased components and raw materials some of which are subject to fluctuations in the commodity markets such as zinc, brass, aluminum and stainless steel. Total material costs represented approximately 43% of our cost of sales in 2025, with commodity-related raw materials representing approximately 14% of our cost of sales.
We also manufacture wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries through our Marine Components segment. Operating Income Overview We reported operating income of $17.0 million in 2024 and $25.4 million in each of 2023 and 2022.
We also manufacture wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories for the recreational marine and other industries through our Marine Components segment. Operating Income Overview We reported operating income of $22.6 million in 2025 compared to $17.0 million in 2024 and $25.4 million in 2023.
To the extent that actual operating results or other developments differ materially from our expectations, our liquidity could be adversely affected. All of our $60.8 million aggregate cash and cash equivalents at December 31, 2024 were held in the U.S.
To the extent that actual operating results or other developments differ materially from our expectations, our liquidity could be adversely affected. All of our $54.1 million aggregate cash and cash equivalents at December 31, 2025 were held in the U.S.
The timing and amount - 21 - ​ for purchase obligations are based on the contractual payment amount and the contractual payment date for those commitments. See Note 11 to our Consolidated Financial Statements for legal proceedings and other commitments. Recent accounting pronouncements See Note 13 to our Consolidated Financial Statements.
The timing and amount for purchase obligations are based on the contractual payment amount and the contractual payment date for those commitments. See Note 10 to our Consolidated Financial Statements for legal proceedings and other commitments. Recent accounting pronouncements See Note 12 to our Consolidated Financial Statements. - 22 - ​
See Note 10 to our Consolidated Financial Statements. During 2022, we had gross purchases of U.S. treasury marketable securities aggregating $33.0 million. During 2023, we had gross purchases of U.S. treasury marketable securities aggregating $36.3 million and received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities.
See Note 9 to our Consolidated Financial Statements. During 2023, we had gross purchases of U.S. treasury marketable securities aggregating $36.3 million and received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities. During 2024, we received gross proceeds totaling $36.0 million related to U.S. treasury bill maturities. Financing activities.
See Notes 1 and 6 to our Consolidated Financial Statements. ● Long-lived assets – The net book value of our property and equipment totaled $24.0 million at December 31, 2024. We assess property and equipment for impairment only when circumstances indicate an impairment may exist.
See Notes 1 and 5 to our Consolidated Financial Statements. ● Long-lived assets – The net book value of our property and equipment totaled $23.7 million at December 31, 2025. We assess property and equipment for impairment only when circumstances indicate an impairment may exist.
Consolidated cash flows Operating activities. Trends in cash flows from operating activities, excluding changes in assets and liabilities, for the last three years have generally been similar to the trends in our earnings.
Consolidated cash flows Operating activities. Trends in cash flows from operating activities, excluding changes in assets and liabilities, for the last three years have generally been similar to the trends in our earnings. Depreciation and amortization in 2025 was comparable to 2024.
For comparative purposes, we have provided 2022 numbers below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, December 31, Days in Inventory: ​ 2022 ​ 2023 ​ 2024 Security Products ​ 101 Days 77 Days 85 Days Marine Components ​ 95 Days 175 Days 130 Days Consolidated CompX ​ 99 Days 95 Days 94 Days Investing activities .
For comparative purposes, we have provided 2023 numbers below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ ​ December 31, Days in Inventory: ​ 2023 ​ 2024 ​ 2025 Security Products ​ 77 Days 85 Days 98 Days Marine Components ​ 175 Days 130 Days 141 Days Consolidated CompX ​ 95 Days 94 Days 108 Days Investing activities .
For additional information regarding our segments refer to Note 2 to our Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2022 2023 2024 2022-23 2023-24 ​ ​ (In millions) ​ ​ ​ ​ Security Products: ​ ​ ​ ​ Net sales ​ $ 114.5 ​ $ 121.2 ​ $ 115.2 6 % (5) % Cost of sales ​ 79.1 ​ 82.8 ​ 80.5 5 (3) ​ Gross margin ​ 35.4 ​ 38.4 ​ 34.7 8 (10) ​ Operating costs and expenses ​ 12.7 ​ 13.5 ​ 13.9 6 3 ​ Operating income ​ $ 22.7 ​ $ 24.9 ​ $ 20.8 10 (16) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 31.0 % 31.7 % 30.1 % ​ ​ Operating income margin ​ 19.9 ​ 20.6 ​ 18.1 ​ ​ Security Products.
For additional information regarding our segments refer to Note 2 to our Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ % Change ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2023-24 ​ ​ ​ 2024-25 ​ ​ (In millions) ​ ​ ​ ​ Security Products: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 121.2 ​ $ 115.2 ​ $ 120.7 (5) % 5 % Cost of sales ​ 82.8 ​ 80.5 ​ 83.8 (3) 4 ​ Gross margin ​ 38.4 ​ 34.7 ​ 36.9 (10) 6 ​ Operating costs and expenses ​ 13.5 ​ 13.9 ​ 14.4 3 4 ​ Operating income ​ $ 24.9 ​ $ 20.8 ​ $ 22.5 (16) 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 31.7 % 30.1 % 30.6 % ​ ​ ​ Operating income margin ​ 20.6 ​ 18.1 ​ 18.6 ​ ​ ​ ​ Security Products.
In addition, our board of directors declared special dividends on our Class A common stock which totaled $21.5 million ($1.75 per share) paid in August 2022 and $24.6 million ($2.00 per share) paid in August 2024.
In addition, our board of directors declared special dividends on our Class A common stock which totaled $24.6 million ($2.00 per share) paid in August 2024 and $12.3 million ($1.00 per share) paid in August 2025.
Additionally, we have purchase obligations of $19.8 million ($19.3 million payable in 2025 and $.5 million payable in 2026/2027) which consists of open purchase orders and contractual obligations, primarily commitments to purchase raw materials and for capital projects in process at December 31, 2024.
Additionally, we have purchase obligations of $13.9 million ($13.4 million payable in 2026 and $.5 million payable in 2027/2028) which consists of open purchase orders and contractual obligations, primarily commitments to purchase raw materials and for capital projects in process at December 31, 2025.
Regular quarterly dividends paid totaled $12.4 million and $12.3 million ($1.00 per share, or $.25 per share per quarter) in 2022 and 2023, respectively, and $14.8 million ($1.20 per share, or $.30 per share per quarter) in 2024.
Regular quarterly dividends paid totaled $12.3 million ($1.00 per share, or $.25 per share per quarter) in 2023 and $14.8 million ($1.20 per share, or $.30 per share per quarter) in each of 2024 and 2025.
Cash provided by operating activities was $25.8 million in 2023 compared to $16.9 million in 2022.
Cash provided by operating activities was $22.9 million in 2024 compared to $25.8 million in 2023.
Under the promissory note, Valhi repaid a net $5.5 million in 2022 ($24.3 million of gross borrowings and $29.8 million of gross repayments), repaid a net $2.6 million in 2023 ($27.9 million of gross borrowings and $30.5 million of gross repayments) and repaid a net $1.3 million in 2024 ($25.0 million of gross borrowings and $26.3 million of gross repayments).
Under the promissory note, Valhi repaid a net $2.6 million in 2023 ($27.9 million of gross borrowings and $30.5 million of gross repayments), repaid a net $1.3 million in 2024 ($25.0 million - 21 - ​ of gross borrowings and $26.3 million of gross repayments) and repaid a net $1.3 million in 2025 ($15.7 million of gross borrowings and $17.0 million of gross repayments).
As a member of the group of companies consolidated for U.S. federal income tax purposes with Contran, the parent of our consolidated U.S. federal income tax group, we compute our provision for income taxes on a separate company basis, using the tax elections made by Contran. Our effective income tax rate was 24% in each of 2022, 2023 and 2024.
As a member of the group of companies consolidated for U.S. federal income tax purposes with Contran, the parent of our consolidated U.S. federal income tax group, we compute our provision for income taxes on a separate company basis, using the tax elections made by Contran.
See Notes 3 and 10 to our Consolidated Financial Statements. Income tax expense. A tabular reconciliation of our actual tax provision to the U.S. federal statutory income tax rate of 21% is included in Note 8 to the Consolidated Financial Statements.
A tabular reconciliation of our actual tax provision to the U.S. federal statutory income tax rate of 21% is included in Note 7 to the Consolidated Financial Statements.
On March 5, 2025 our board of directors declared a first quarter 2025 dividend of $.30 per share, to be paid on March 25, 2025 to CompX stockholders of record as of March 17, 2025.
On March 4, 2026 our board of directors declared a first quarter 2026 dividend of $.30 per share, to be paid on March 24, 2026 to CompX stockholders of record as of March 16, 2026.
Such changes in assets and liabilities generally tend to even out over time. However, year-to-year relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities. Cash provided by operating activities was $22.9 million in 2024 compared to $25.8 million in 2023.
Such changes in assets and liabilities generally tend to even out over time. However, year-to-year relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities.
Operating income margins were primarily impacted by the factors affecting net sales, cost of sales, gross margin and operating costs discussed above. See segment results discussion below. General .
See segment results discussion below. Operating Income. As a percentage of net sales, operating income increased in 2025 compared to 2024 and decreased in 2024 compared to 2023. Operating income margins were primarily impacted by the factors affecting net sales, cost of sales, gross margin and operating costs discussed above. See segment results discussion below. General .
Events and circumstances considered in our impairment evaluations, such as historical profits and stability of the markets served, are consistent with factors utilized with our internal projections and operating plan.
Events and circumstances considered in our impairment evaluations, such as historical profits and stability of the markets served, are consistent with factors utilized with our internal projections and operating plan. However, future events and circumstances could result in materially different findings which could result in the recognition of a material goodwill impairment.
Operating income margin decreased for 2024 compared to 2023 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales and increased operating costs and expenses, including higher employee salaries and benefit costs of $.5 million, primarily in the first half of the year.
Operating income margin increased for 2025 compared to 2024 primarily due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses from higher sales partially offset by higher operating costs and expenses, including increased employee-related expenses of $.5 million.
Cost of sales decreased in 2023 compared to 2022 primarily due to the effects of lower production costs at both Security Products and Marine Components as well as lower Marine Components sales. Gross margin as a percentage of net sales increased over the same period primarily due to the factors affecting cost of sales. See segment results discussion below.
See segment results discussion below. Cost of Sales and Gross Margin. Cost of sales increased in 2025 compared to 2024 primarily due to the effects of higher sales at both Security Products and Marine Components as well as increased production costs across both business segments.
The decrease in operating income in 2024 compared to 2023 is due to lower sales and gross margin at both Security Products and Marine Components. Operating income in 2023 was comparable to 2022 as lower Marine Components sales were offset by higher Security Products sales and higher gross margin percentages across both segments. See results of operations discussion below.
The increase in operating income in 2025 compared to 2024 was driven by higher sales and improved gross margin at each of the Security Products and Marine Components segments. In contrast, the decline in operating income in 2024 compared to 2023 resulted from lower sales and reduced gross margin across both segments. See results of operations discussion below.
Based on current economic conditions, we expect the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2025 to be relatively stable, although governmental actions such as tariffs may impact markets. - 15 - ​ We occasionally enter into short-term commodity-related raw material supply arrangements to mitigate the impact of future increases in commodity related raw material costs.
Based on current economic conditions, we expect the prices for zinc, brass, aluminum, stainless steel and other manufacturing materials in 2026 to be more volatile compared to 2025. In addition to supply and demand, governmental actions such as tariffs may impact raw material markets.
In most cases, commodity raw materials we purchase include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation and energy. Processing and conversion costs are not expected to decrease and may negate the benefit of softening commodity prices on our purchases.
Zinc pricing was relatively stable in 2025, and we were able to mitigate increases through strategic spot buy purchases. In most cases, commodity raw materials we purchase include processing and conversion costs, such as alloying, extrusion and rolling, which remain elevated due to costs of labor, transportation and energy. Processing and conversion costs are not expected to decrease.
Our loan to Valhi, as amended, bears interest at prime rate plus 1.00%, payable quarterly, with all principal due on demand, but in any event no earlier than December 31, 2026. Loans made to Valhi at any time under the agreement are at our discretion.
We have entered into an unsecured revolving demand promissory note with Valhi under which, as amended, we have agreed to loan Valhi up to $25 million. Our loan to Valhi, as amended, bears interest at prime rate plus 1.00%, payable quarterly, with all principal due on demand, but in any event no earlier than December 31, 2027.
As a percentage of net sales, operating costs and expenses increased in 2023 compared to 2022 primarily due to the effect of the increased operating costs and expenses on lower sales. See segment results discussion below. Operating Income. As a percentage of net sales, operating income decreased in 2024 compared to 2023 and increased in 2023 compared to 2022.
As a percentage of net sales, operating costs and expenses decreased in 2025 compared to 2024 primarily due to higher coverage of operating cost and expenses as a result of higher sales, partially offset by the increased employee-related costs discussed above. See segment results discussion below.
The $8.9 million increase in cash provided by operating activities was primarily the result of: ● A higher amount of net cash provided by relative changes in inventories, receivables, payables and non-tax accruals in 2023 of $7.8 million, ● A $.5 million decrease in cash paid for taxes in 2023 due to the relative timing of tax payments, and ● A $.5 million increase in interest received in 2023 due to higher interest rates and increased investment balances, partially offset by lower average loan balances on our loan to an affiliate.
Cash provided by operating activities of $22.9 million in 2025 was comparable to 2024 primarily due to the net result of: ● A $5.6 million increase in operating income in 2025, ● A lower amount of net cash provided by relative changes in inventories, receivables, payables and non-tax accruals in 2025 of $4.9 million, and - 20 - ​ ● A $.8 million decrease in interest received in 2025 due to lower interest rates and decreased cash balances.
See Item 1 - “Business- Raw Materials.” Interest Income. Interest income increased in 2024 compared to 2023 and increased in 2023 compared to 2022. The increase for both comparative periods is primarily due to higher interest rates and higher average investment balances, somewhat offset by lower average loan balances on our loan to an affiliate.
Interest income increased in 2024 compared to 2023 primarily due to higher interest rates and higher average investment balances, somewhat offset by lower average loan balances on our loan to an affiliate. See Note 9 to our Consolidated Financial Statements. Income tax expense.
For comparative purposes, we have provided 2022 numbers below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, December 31, Days Sales Outstanding: ​ 2022 ​ 2023 ​ 2024 Security Products ​ 45 Days 37 Days 36 Days Marine Components ​ 30 Days 31 Days 23 Days Consolidated CompX ​ 41 Days 36 Days 33 Days ​ As shown below, our average number of days in inventory at December 31, 2024 was comparable to December 31, 2023 as the increase at Security Products was offset by the decline at Marine Components.
For comparative purposes, we have provided 2023 numbers below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ ​ December 31, Days Sales Outstanding: ​ 2023 ​ 2024 ​ 2025 Security Products ​ 37 Days 36 Days 35 Days Marine Components ​ 31 Days 23 Days 26 Days Consolidated CompX ​ 36 Days 33 Days 33 Days ​ As shown below, our average number of days in inventory increased from December 31, 2024 to December 31, 2025 primarily due to increased inventory at both Security Products and Marine Components as a result of higher raw material and production costs and to meet expected customer demand.
Capital expenditures have primarily emphasized improving our manufacturing facilities and investing in manufacturing equipment, utilizing new technologies and increased automation of the manufacturing process, to provide for increased productivity and efficiency in order to meet expected customer demand and properly maintain our facilities and technology infrastructure.
Capital expenditures in 2025 were focused primarily on improving our manufacturing facilities and investing in manufacturing equipment, including utilizing new technologies and increased automation. These investments were made to improve productivity and operational efficiency, support expected customer demand and ensure the ongoing maintenance and reliability of our facilities and technology infrastructure.
Operating income as a percentage of net sales decreased slightly in 2023 compared to 2022 primarily due to the factors impacting gross margin, as well as decreased coverage of operating costs and expenses from lower sales. Outlook.
Operating income as a percentage of net sales increased in 2025 compared to 2024 due to the factors impacting gross margin, as well as increased coverage of operating costs and expenses on higher sales, partially offset by higher operating costs and expenses, including increased employee-related expenses of $.4 million.
We expect our capital expenditures for 2025 will be approximately $3.2 million primarily to meet our expected customer demand and those required to properly maintain our facilities and technology infrastructure.
Capital expenditures were $1.1 million in 2023, $1.4 million in 2024 and $3.7 million in 2025. In 2023 and 2024, we limited investments primarily to those expenditures required to support our existing customer demand and to properly maintain our facilities and technology infrastructure.
Relative to prior year, sales were $8.3 million higher to the government security market and $1.5 million higher to distributors, partially offset by $1.7 million lower sales to the office furniture market and $.7 million lower sales to the gas station security market.
Relative to prior year, the increase in sales was primarily due to $9.9 million higher sales to the government security market and $.6 million higher sales to the gas station security market, partially offset by lower sales to a variety of other markets including $2.3 million lower sales to the healthcare market, $1.3 million lower sales to the transportation market and $.5 million lower sales to the tool storage market.
See Notes 8 and 11 to our Consolidated Financial Statements. We currently expect our effective income tax rate for 2025 to be comparable to our effective income tax rate for 2024. Segment Results The key performance indicator for our segments is operating income (see discussion below).
Our effective income tax rate was 24% in each of 2023 and 2024 and 25% in 2025. See Notes 7 and 10 to our Consolidated Financial Statements. We currently expect our effective income tax rate for 2026 to be comparable to our effective income tax rate for 2025.
We expect Marine Components net sales to increase in 2025 due to higher expected sales to the government and industrial markets. We believe the recreational marine market has stabilized, and we expect Marine Components sales to the towboat market in 2025 will be comparable to 2024.
Net sales in creased $12.4 million in 2025 compared to 2024 primarily due to higher Security Products sales to the government security market and higher Marine Components sales to various markets including the towboat, government and industrial markets.
Gross margin as a percentage of sales increased in 2023 compared to 2022 primarily due to lower raw material costs (primarily stainless steel and aluminum), lower supplies costs driven by lower volume, lower shipping costs and lower labor costs from reduced employee overtime due to lower sales volumes, partially offset by decreased coverage of fixed costs as a result of lower sales.
Gross margin as a percentage of sales increased in 2025 compared to 2024 primarily due to increased coverage of fixed costs as a result of higher sales partially offset by higher employee-related expenses including salaries, benefits and medical costs of $1.7 million.
Marine Components net sales decreased 23% in 2023 as compared to 2022. Relative to prior year, sales were $12.8 million lower to the towboat market (primarily to original equipment boat manufacturers) and $2.0 million lower to the engine builder market, partially offset by $1.2 million higher industrial sales and $.8 million higher sales to the center console boat market.
Marine Components net sales increased 22% in 2025 as compared to 2024 primarily due to $2.7 million higher sales to the towboat market (including a one-time stocking event for a towboat OEM customer), $2.5 million higher sales to the government market and $2.2 million higher sales to the industrial market, partially offset by $1.1 million lower sales to the center console market.
The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay. During 2022, we acquired 78,900 shares of our Class A common stock (8,900 shares from affiliates and 70,000 shares in a single market transaction) for an aggregate purchase price of $1.7 million.
The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which we might pay.
Excluding these sales in 2023, Security Products sales would have increased in 2024 as compared to 2023 due to increased sales across a variety of markets, particularly increased sales of mechanical locks to the government security market.
At Security Products, sales increased compared to 2024 primarily due to higher demand from the government security market, partially offset by continued softness across a variety of markets including transportation, healthcare, and tool storage.
Security Products net sales increased 6% to $121.2 million in 2023 compared to $114.5 million in 2022 primarily due to higher sales related to a pilot project for a government security customer.
Security Products net sales increased 5% to $120.7 million in 2025 compared to $115.2 million in 2024.
Removed
See segment results discussion below. Net sales de creased $5.3 million in 2023 compared to 2022 due to lower Marine Components sales primarily to the towboat market, partially offset by higher Security Products sales largely in the fourth quarter of 2023. See segment results discussion below. Cost of Sales and Gross Margin.
Added
However, cost of sales as a percentage of net sales declined over the same period driven by a more favorable customer and product mix, particularly within Security Products, and increased coverage of fixed costs due to higher sales across both segments. As a result, gross margin as a percentage of net sales increased in 2025 compared to 2024.
Removed
See segment results discussion below. Operating costs and expenses increased in 2023 compared to 2022 predominantly due to higher salary and benefit costs at Security Products which increased by $.6 million.
Added
Operating costs and expenses increased $1.3 million in 2025 compared to 2024 predominantly due to higher employee-related costs including salaries, benefits, and medical expenses at both segments.
Removed
Our raw material prices were generally stable through the first half of 2024, although beginning in the latter half of the third quarter we began to experience moderate increases in certain raw material costs, particularly brass. The zinc market was volatile in 2024, but we were successful in making strategic spot buys to keep our costs consistent with 2023.
Added
During 2025, we experienced increases in the cost of certain raw materials. Throughout the year, market prices for brass and aluminum experienced a general upward trend. Stainless steel prices were relatively stable in the first part of 2025 but began increasing during the latter half of the year.
Removed
Prices for aluminum and stainless steel, the primary raw materials used for the manufacture of marine components (including marine exhaust headers and pipes, wake enhancement systems, throttles and trim tabs), were relatively stable in 2024 because we took advantage of volume purchase opportunities during the year.
Added
We occasionally enter into short-term commodity-related raw material supply arrangements to mitigate the impact of future increases in commodity related raw material costs. See Item 1 - “Business- Raw Materials.” - 16 - ​ Interest Income. Interest income decreased in 2025 compared to 2024 primarily due to lower average interest rates and decreased average investment balances.
Removed
As noted above, in the second half of 2023 Security Products had significant sales related to a pilot project for a government security customer.
Added
Segment Results The key performance indicator for our segments is operating income (see discussion below).
Removed
At Marine Components, the decline in sales to the towboat market as a result of the contraction in the recreational marine industry that began in the second quarter of 2023 continued through the third quarter of 2024.
Added
Gross margin as a percentage of net sales increased in 2025 as compared to 2024 primarily due to increased coverage of fixed costs due to higher sales and a more favorable customer and product mix.
Removed
Marine Components net sales increased in the fourth quarter of 2024 compared to the fourth quarter of 2023 as a result of stabilizing demand in the towboat market as well as increased sales to the government market.
Added
These factors were partially offset by higher cost associated with inventory sold during the second half of the year and increased employee-related expenses including salaries, benefits and medical costs, of $2.6 million.
Removed
Raw material prices remained relatively stable through the first half of the year; however, beginning in the third quarter of 2024 we experienced price increases in certain commodity raw materials, primarily brass and electronic components at Security Products.
Added
Sales for 2025 were strong across both operating segments, exceeding 2024 levels. At Marine Components, improved demand in the government and industrial markets—combined with the one-time stocking event noted above—drove sales and operating income significantly above prior-year levels.
Removed
We expect Security Products net sales in 2025 to improve modestly over 2024, and we expect gross margin and operating income percentages in 2025 to be slightly above 2024 due to pricing improvements on the Security Products - 17 - ​ product mix.
Added
We expect modest growth in both Security Products and Marine Components net sales in 2026 as we align pricing, product features, and service levels with market conditions and customer requirements. At Security Products, we anticipate sales increases in most markets, partially offset by ongoing softness in the transportation market.
Removed
Overall we expect Marine Components to have improved gross margins and operating income percentages in 2025 compared to 2024 due to higher expected sales volumes. During 2024 we were aggressive in aligning our production capabilities and inventories to demand levels.
Added
At Marine Components, net sales growth in 2026 is expected to come primarily from the industrial market.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General . We are exposed to market risk from changes in interest rates and raw materials prices. Interest rates . We are exposed to market risk from changes in interest rates, primarily related to our note receivable from affiliate and or investment in marketable debt securities.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General . We are exposed to market risk from changes in interest rates and raw materials prices. Interest rates . We are exposed to market risk from changes in interest rates, primarily related to our note receivable from affiliate.
The outstanding principal amount of the note receivable from affiliate of $9.3 million at December 31, 2024 bears interest at prime plus 1.0% (8.5% at December 31, 2024). We received interest income of $1.0 million from the note during 2024. Raw materials.
The outstanding principal amount of the note receivable from affiliate of $8.0 million at December 31, 2025 bears interest at prime plus 1.0% (7.8% at December 31, 2025). We received interest income of $.9 million from the note during 2025. Raw materials.

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