NL Industries (NL)

Risks

• Demand for, and prices of, certain of Kronos’ products are influenced by changing market conditions for its products, which may result in reduced earnings or in operating losses.
• CompX operates in mature and highly competitive markets, resulting in pricing pressure and the need to continuously reduce costs.
• CompX’s development of innovative features for current products is critical to sustaining and growing its sales.
• Higher costs or unavailability of CompX’s raw materials could negatively impact our financial results.
• Higher costs or limited availability of Kronos’ raw materials may reduce its earnings and decrease its liquidity. In addition, many of Kronos’ raw material contracts contain fixed quantities it is required to purchase.
• COVID-19 has affected Kronos’ and CompX’s operations and may continue to affect operations.
• Our assets consist primarily of investments in our operating subsidiaries and affiliate, and we are dependent upon distributions from our subsidiaries and affiliate.
• Kronos’ leverage may impair our financial condition.
• We could incur significant costs related to legal and environmental matters.
• If Kronos’ or CompX’s intellectual property were to be declared invalid, or copied by or become known to competitors, or if Kronos’ and CompX’s competitors were to develop similar or superior intellectual property or technology, their ability to compete could be adversely impacted.
• Environmental, health and safety laws and regulations, particularly as it relates to Kronos, may result in increased regulatory scrutiny which could decrease demand for Kronos’ products, increase Kronos’ manufacturing and compliance costs or obligations and result in unanticipated losses which could negatively impact its financial results or limit its ability to operate its business.
• Global climate change legislation could negatively impact our financial results or limit Kronos’ and CompX’s ability to operate their businesses.
• Technology failures or cybersecurity breaches could have a material adverse effect on our operations.