Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ~~(§232.405 of this chapter)~~ during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Number of shares of the registrant’s common stock, $.125 par value per share, outstanding on ~~May 1, 2020: 48,755,734.~~April 30, 2021: 48,788,984.

Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

	December 31,		March 31,		December 31,		March 31,
	2019		2020		2020		2021
			(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	129,730	$	133,406	$	137,039	$	134,826
Restricted cash and cash equivalents		2,695		2,697		2,695		2,695
Accounts and other receivables, net		11,929		15,294		11,142		17,208
Receivables from affiliates						313		-
Inventories, net		18,348		18,962		18,337		18,153
Receivables from affiliates		581		438
Prepaid expenses and other		1,401		1,272		1,638		2,222

Total current assets		164,684		172,069		171,164		175,104

Other assets:
Restricted cash and cash equivalents		25,445		25,475		25,538		25,540
Note receivable from affiliate		28,100		25,500		29,500		29,200
Marketable securities		26,877		14,804		18,206		24,566
Investment in Kronos Worldwide, Inc.		248,355		238,067		242,374		243,732
Goodwill		27,156		27,156		27,156		27,156
Other assets, net		5,860		5,672		5,262		5,321

Total other assets		361,793		336,674		348,036		355,515

Property and equipment:
Land		4,940		4,940		4,940		4,940
Buildings		23,047		23,047		23,146		23,146
Equipment		67,718		68,443		68,227		68,659
Construction in progress		1,002		463		1,010		935
		96,707		96,893		97,323		97,680
Less accumulated depreciation		65,692		66,531		68,373		69,219

Net property and equipment		31,015		30,362		28,950		28,461

Total assets	$	557,492	$	539,105	$	548,150	$	559,080

	December 31,			March 31,			December 31,			March 31,
	2019			2020			2020			2021
				(unaudited)						(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,438		$	3,300		$	2,647		$	3,060
Accrued litigation settlement		11,830			11,887			11,830			11,887
Accrued and other current liabilities		10,601			7,483			10,253			7,036
Accrued environmental remediation and related costs		3,065			3,357			2,027			2,167
Payables to affiliates		801			757			725			696
Income taxes		73			84			25			32

Total current liabilities		29,808			26,868			27,507			24,878

Noncurrent liabilities:
Long-term debt from affiliate		500			500			500			500
Accrued environmental remediation and related costs		91,443			90,882			91,389			90,848
Long-term litigation settlement		60,081			60,367			49,403			49,637
Deferred income taxes		33,957			28,196			33,830			36,763
Accrued pension costs		8,230			7,894			6,392			5,962
Other		6,260			6,193			3,780			3,673

Total noncurrent liabilities		200,471			194,032			185,294			187,383

Equity:
NL stockholders' equity:
Common stock		6,094			6,094			6,098			6,098
Additional paid-in capital		299,102			298,865			299,093			300,097
Retained earnings		251,000			250,960			257,875			268,205
Accumulated other comprehensive loss		(251,690	)		(260,845	)		(251,189	)		(249,564	)

Total NL stockholders' equity		304,506			295,074			311,877			324,836

Noncontrolling interest in subsidiary		22,707			23,131			23,472			21,983

Total equity		327,213			318,205			335,349			346,819

Total liabilities and equity	$	557,492		$	539,105		$	548,150		$	559,080

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(unaudited)						(unaudited)
Net sales	$	31,176		$	32,311		$	32,311		$	35,924
Cost of sales		21,552			21,880			21,880			24,889

Gross margin		9,624			10,431			10,431			11,035

Selling, general and administrative expense		5,334			5,411			5,411			5,218
Other operating income (expense):
Insurance recoveries		283			22			22			25
Corporate expense		(2,055	)		(2,508	)		(2,508	)		(1,870	)

Income from operations		2,518			2,534			2,534			3,972

Equity in earnings of Kronos Worldwide, Inc.		9,225			8,207			8,207			5,968

Other income (expense):
Interest and dividend income		1,519			1,131			1,131			440
Marketable equity securities		5,462			(12,073	)		(12,073	)		6,360
Other components of net periodic pension and OPEB cost		(428	)		(208	)		(208	)		(71	)
Interest expense		(9	)		(352	)		(352	)		(298	)

Income (loss) before income taxes		18,287			(761	)		(761	)		16,371

Income tax expense (benefit)		2,561			(3,263	)		(3,263	)		2,505

Net income		15,726			2,502			2,502			13,866
Noncontrolling interest in net income of subsidiary		522	��		592			592			609

Net income attributable to NL stockholders	$	15,204		$	1,910		$	1,910		$	13,257

Amounts attributable to NL stockholders:
Basic and diluted net income per share	$	.31		$	.04		$	.04		$	.27

Weighted average shares used in the calculation of net income per share		48,727			48,756			48,756			48,789

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(unaudited)						(unaudited)
Net income	$	15,726		$	2,502		$	2,502		$	13,866

Other comprehensive income (loss), net of tax:
Currency translation		(25	)		(10,118	)		(10,118	)		545
Defined benefit pension plans		828			1,043			1,043			1,151
Other postretirement benefit plans		(70	)		(80	)		(80	)		(71	)

Total other comprehensive income (loss), net		733			(9,155	)		(9,155	)		1,625

Comprehensive income (loss)		16,459			(6,653	)		(6,653	)		15,491
Comprehensive income attributable to noncontrolling interest		522			592			592			609

Comprehensive income (loss) attributable to NL stockholders	$	15,937		$	(7,245	)	$	(7,245	)	$	14,882

	Three months ended March 31, 2019 (unaudited)
									Accumulated
			Additional						other			Noncontrolling
	Common		paid-in			Retained			comprehensive			interest in			Total
	stock		capital			earnings			income (loss)			subsidiary			equity
Balance at December 31, 2018	$	6,090	$	301,139		$	225,156		$	(248,270	)	$	19,443		$	303,558

Net income		-		-			15,204			-			522			15,726
Other comprehensive income, net of tax		-		-			-			733			-			733
Dividends paid to noncontrolling interest		-		-			-			-			(117	)		(117	)

Balance at March 31, 2019	$	6,090	$	301,139		$	240,360		$	(247,537	)	$	19,848		$	319,900



																		Three months ended March 31, 2020 and 2021 (unaudited)
	Three months ended March 31, 2020 (unaudited)																									Accumulated
									Accumulated											Additional						other			Noncontrolling
			Additional						other			Noncontrolling						Common		paid-in			Retained			comprehensive			interest in			Total
	Common		paid-in			Retained			comprehensive			interest in			Total			stock		capital			earnings			loss			subsidiary			equity
	stock		capital			earnings			loss			subsidiary			equity
Balance at December 31, 2019	$	6,094	$	299,102		$	251,000		$	(251,690	)	$	22,707		$	327,213		$	6,094	$	299,102		$	251,000		$	(251,690	)	$	22,707		$	327,213

Net income		-		-			1,910			-			592			2,502			-		-			1,910			-			592			2,502
Other comprehensive loss, net of tax		-		-			-			(9,155	)		-			(9,155	)		-		-			-			(9,155	)		-			(9,155	)
Dividends paid - $.04 per share		-		-			(1,950	)		-			-			(1,950	)		-		-			(1,950	)		-			-			(1,950	)
Dividends paid to noncontrolling interest		-		-			-			-			(168	)		(168	)		-		-			-			-			(168	)		(168	)
Other, net		-		(237	)		-			-			-			(237	)		-		(237	)		-			-			-			(237	)

Balance at March 31, 2020	$	6,094	$	298,865		$	250,960		$	(260,845	)	$	23,131		$	318,205		$	6,094	$	298,865		$	250,960		$	(260,845	)	$	23,131		$	318,205

Balance at December 31, 2020																		$	6,098	$	299,093		$	257,875		$	(251,189	)	$	23,472		$	335,349
Net income																			-		-			13,257			-			609			13,866
Other comprehensive income, net of tax																			-		-			-			1,625			-			1,625
Dividends paid - $.06 per share																			-		-			(2,927	)		-			-			(2,927	)
Dividends paid to noncontrolling interest																			-		-			-			-			(339	)		(339	)
Equity transactions with noncontrolling interest, net and other																			-		1,004			-			-			(1,759	)		(755	)

Balance at March 31, 2021																		$	6,098	$	300,097		$	268,205		$	(249,564	)	$	21,983		$	346,819

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(unaudited)						(unaudited)
Cash flows from operating activities:
Net income	$	15,726		$	2,502		$	2,502		$	13,866
Depreciation and amortization		901			950			950			949
Deferred income taxes		2,552			(3,278	)		(3,278	)		2,498
Equity in earnings of Kronos Worldwide, Inc.		(9,225	)		(8,207	)		(8,207	)		(5,968	)
Dividends received from Kronos Worldwide, Inc.		6,339			6,339			6,339			6,339
Marketable equity securities		(5,462	)		12,073			12,073			(6,360	)
Cash funding of benefit plans in excess of net benefit plan expense		9			244
Noncash interest expense								342			291
Benefit plan expense greater (less) than cash funding								244			(111	)
Other, net		39			225			(117	)		(101	)
Change in assets and liabilities:
Accounts and other receivables, net		(3,244	)		(3,364	)		(3,364	)		(6,096	)
Inventories, net		(1,475	)		(673	)		(673	)		151
Prepaid expenses and other		181			129			129			(584	)
Accounts payable and accrued liabilities		(3,949	)		(3,196	)		(3,196	)		(2,586	)
Income taxes		9			15			15			37
Accounts with affiliates		559			99			99			284
Accrued environmental remediation and related costs		(1,194	)		(269	)		(269	)		(401	)
Other noncurrent assets and liabilities, net		(16	)		(3	)		(3	)		(130	)

Net cash provided by operating activities		1,750			3,586			3,586			2,078

Cash flows from investing activities:
Capital expenditures		(439	)		(360	)		(360	)		(568	)
Note receivable from affiliate:
Collections		11,400			18,228			18,228			11,900
Loans		(17,400	)		(15,628	)		(15,628	)		(11,600	)

Net cash provided by (used in) investing activities		(6,439	)		2,240			2,240			(268	)

Cash flows from financing activities:
Dividends paid		-			(1,950	)		(1,950	)		(2,927	)
Subsidiary treasury stock acquired								-			(755	)
Distributions to noncontrolling interests in subsidiary		(117	)		(168	)		(168	)		(339	)

Net cash used in financing activities		(117	)		(2,118	)		(2,118	)		(4,021	)

Cash and cash equivalents and restricted cash and cash equivalents - net change from:
Operating, investing and financing activities		(4,806	)		3,708			3,708			(2,211	)
Balance at beginning of period		120,989			157,870			157,870			165,272

Balance at end of period	$	116,183		$	161,578		$	161,578		$	163,061

Supplemental disclosures - cash paid (received) for:
Interest	$	9		$	8		$	8		$	6
Income taxes, net		(16	)		(9	)		(9	)		(1	)

Organization – At March 31, ~~2020,~~2021, Valhi, Inc. (NYSE: VHI) held approximately 83% of our outstanding common stock and a wholly-owned subsidiary of Contran Corporation held approximately 92% of Valhi’s outstanding common stock. ~~At March 31, 2020, a~~A majority of ~~Contran’s~~Contran's outstanding voting stock ~~was~~is held directly by Lisa K. Simmons ~~and Serena Simmons Connelly~~ and various family trusts established for the benefit of Ms. Simmons, ~~and~~Thomas C. Connelly (the husband of Ms. ~~Connelly~~Simmons’ late sister) and their children and for which Ms. Simmons or ~~Ms.~~Mr. Connelly, as applicable, ~~served~~serve as trustee (collectively, the “Other Trusts”). ~~In addition, each~~With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held by such trusts in the same manner as Ms. Simmons. Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. ~~Connelly served as co-chair of the Contran board of directors.~~Simmons. The remainder of Contran’s outstanding voting stock ~~was~~is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and ~~Ms. Connelly~~her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at March 31, ~~2020, Ms. Simmons, Ms. Connelly 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 and us.~~

Following the death of Ms. Connelly on April 22, 2020, Ms. Simmons and the Family Trust continue to directly hold their shares of Contran voting stock. Under the terms of the Contran Corporation Amended and Restated Stockholders Agreement dated September 9, 2019 (the “Contran Stockholders Agreement”), and with respect to the shares of Contran voting stock held directly by Ms. Connelly at the time of her death (the “Connelly Direct Shares”), the independent executor of the estate of Ms. Connelly (prior to the completion of the probate of such estate) and the legatee of the Connelly Direct Shares (following completion of the probate of such estate) is required to vote the Connelly Direct Shares in the same manner as Ms. Simmons. Also under the terms of the Contran Stockholders Agreement, and with respect to the shares of Contran voting stock held by the Other Trusts for which Ms. Connelly previously served as trustee and for which her successor trustee is someone other than Ms. Simmons (the “Connelly Indirect Shares”), such successor trustee is also required to vote the Connelly Indirect Shares in the same manner as Ms. Simmons. ~~Such voting rights of Ms. Simmons with respect to the Connelly Direct Shares and the Connelly Indirect Shares last~~ ~~through April 22, 2030~~ ~~and are personal to Ms. Simmons.~~ ~~Consequently, at April 22, 2020,~~2021 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 and us.

Basis of presentation – Consolidated in this Quarterly Report are the results of our majority-owned subsidiary, CompX International Inc. We also own approximately 30% of Kronos Worldwide, Inc. (Kronos). CompX (NYSE American: CIX) and Kronos (NYSE: KRO) each file periodic reports with the Securities and Exchange Commission (SEC).

The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 that we filed with the SEC on March ~~11, 2020~~10, 2021 (the ~~2019~~“2020 Annual ~~Report)~~Report”). In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments) in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. We have condensed the Consolidated Balance Sheet at December 31, ~~2019~~2020 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, ~~2019)~~2020) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Our results of operations for the interim period ended March 31, ~~2020~~2021 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our ~~2019~~2020 Consolidated Financial Statements contained in our ~~2019~~2020 Annual Report.

Unless otherwise indicated, references in this report to “NL,” “we,” “us” or “our” refer to NL Industries, Inc. and its subsidiaries and affiliate, Kronos, taken as a whole.

	December 31,		March 31,		December 31,		March 31,
	2019		2020		2020		2021
	(In thousands)				(In thousands)
Raw materials	$	2,941	$	3,104	$	3,220	$	3,650
Work in process		11,771		12,237		11,668		11,504
Finished products		3,636		3,621		3,449		2,999
Total	$	18,348	$	18,962	$	18,337	$	18,153

Our marketable securities consist of investments in the publicly-traded shares of our immediate parent company Valhi, Inc. Our shares of Valhi common stock are accounted for as available-for-sale securities, which are carried at fair value using quoted market prices in active markets and represent a Level 1 input within the fair value hierarchy. Any unrealized gains or losses on the securities are recognized in Marketable equity securities on our Condensed Consolidated Statements of Income.

At December 31, ~~2019~~2020 and March 31, ~~2020,~~2021, we held approximately ~~14.4~~1.2 million shares of common stock of our immediate parent company, Valhi, Inc. At December 31, ~~2019~~2020 and March 31, ~~2020,~~2021, the quoted per share market price of Valhi common stock was ~~$1.87~~$15.20 and ~~$1.03,~~$20.51, respectively.

The Valhi common stock we own is subject to ~~the~~ restrictions on resale pursuant to certain provisions of the SEC Rule 144. In addition, as a majority-owned subsidiary of Valhi, we cannot vote our shares of Valhi common stock under Delaware General Corporation Law, but we do receive dividends from Valhi on these shares, when declared and paid.

At December 31, ~~2019~~2020 and March 31, ~~2020,~~2021, we owned approximately 35.2 million shares of Kronos common stock. At March 31, ~~2020,~~2021, the quoted market price of Kronos’ common stock was ~~$8.44~~$15.30 per share, or an aggregate market value of ~~$297.3~~$538.9 million. At December 31, ~~2019,~~2020, the quoted market price was ~~$13.40~~$14.91 per share, or an aggregate market value of ~~$471.9~~$525.1 million.

The change in the carrying value of our investment in Kronos during the first three months of ~~2020~~2021 is summarized below.

	December 31,		March 31,		December 31,		March 31,
	2019		2020		2020		2021
	(In millions)				(In millions)
Current assets	$	1,219.7	$	1,163.4	$	1,218.3	$	1,200.2
Property and equipment, net		490.6		459.0		524.6		507.1
Investment in TiO₂ joint venture		90.2		92.4		103.3		106.7
Other noncurrent assets		165.3		160.0		190.5		182.6
Total assets	$	1,965.8	$	1,874.8	$	2,036.7	$	1,996.6

Current liabilities	$	270.6	$	231.2	$	260.2	$	255.2
Long-term debt		444.0		436.3		486.7		465.9
Accrued pension costs		307.4		301.4		372.6		355.8
Other noncurrent liabilities		127.7		123.6		120.7		118.8
Stockholders' equity		816.1		782.3		796.5		800.9
Total liabilities and stockholders' equity	$	1,965.8	$	1,874.8	$	2,036.7	$	1,996.6


	Three months ended March 31,				Three months ended March 31,
	2019		2020		2020		2021
	(In millions)				(In millions)
Net sales	$	436.5	$	421.0	$	421.0	$	465.0
Cost of sales		327.2		332.9		332.9		369.3
Income from operations		49.0		43.5		43.5		34.0
Income tax expense		12.8		8.4		8.4		6.0
Net income		30.3		27.0		27.0		19.6

	December 31,		March 31,		December 31,		March 31,
	2019		2020		2020		2021
	(In thousands)				(In thousands)
Pension asset	$	4,294	$	4,106	$	3,881	$	3,947
Other		1,566		1,566		1,381		1,374
Total	$	5,860	$	5,672	$	5,262	$	5,321

During the first three months of ~~2020,~~2021, our ~~wholly owned~~wholly-owned subsidiary, NLKW Holding, LLC ~~had no~~had0 borrowings or repayments under its $50 million secured revolving credit facility with Valhi. At March 31, ~~2020,~~2021, $.5 million was outstanding and $49.5 million was available for future borrowing under this facility. Outstanding borrowings bear interest at the prime rate plus 1.875% per annum, and the average interest rate for the three months ended March 31, ~~2020~~2021 was ~~6.31%~~5.13%. The interest rate ~~was 5.13% at~~under this facility as of March 31, ~~2020.~~2021 was 5.13%. We are in compliance with all covenants at March 31, ~~2020.~~ 2021.

	December 31,		March 31,		December 31,		March 31,
	2019		2020		2020		2021
	(In thousands)				(In thousands)
Reserve for uncertain tax positions	$	4,053	$	4,053	$	1,717	$	1,717
OPEB		1,129		1,068		985		900
Insurance claims and expenses		665		686		653		593
Other		413		386		425		463
Total	$	6,260	$	6,193	$	3,780	$	3,673

The following table disaggregates our net sales by reporting unit, which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three months ended				Three months ended
	March 31,				March 31,
	2019		2020		2020		2021
	(In thousands)				(In thousands)
Net sales:
Security Products	$	24,704	$	25,469	$	25,469	$	25,885
Marine Components		6,472		6,842		6,842		10,039
Total	$	31,176	$	32,311	$	32,311	$	35,924

The components of net periodic defined benefit pension cost are presented in the table below.

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(In thousands)						(In thousands)
Interest cost	$	474		$	355		$	355		$	153
Expected return on plan assets		(477	)		(461	)		(461	)		(398	)
Recognized actuarial losses		406			380			380			376
Total	$	403		$	274		$	274		$	131

We currently expect our ~~2020~~2021 contributions to our defined benefit pension plans to be approximately ~~$2.0~~$1.2 million.

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(In millions)						(In millions)
Expected tax expense (benefit), at U.S. federal statutory income tax rate of 21%	$	3.8		$	(.2	)	$	(.2	)	$	3.4
Rate differences on equity in earnings of Kronos		(1.4	)		(3.2	)
Rate differences on equity in earnings of Kronos, net of dividends								(3.2	)		(1.0	)
Nontaxable income								-			(.6	)
Nondeductible expenses								-			.5
U.S. state income taxes and other, net		.2			.1			.1			.2
Income tax expense (benefit)	$	2.6		$	(3.3	)	$	(3.3	)	$	2.5

Comprehensive provision (benefit) for income taxes allocable to:
Net income (loss)	$	2.6		$	(3.3	)	$	(3.3	)	$	2.5
Additional paid-in capital		-			(.1	)		(.1	)		-
Other comprehensive income (loss):
Currency translation		-			(2.7	)		(2.7	)		.1
Pension plans		.2			.3			.3			.3
Total	$	2.8		$	(5.8	)	$	(5.8	)	$	2.9

In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings (losses) of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. We received aggregate dividends from Kronos of $6.3 million in each of the first three months of ~~2019~~2020 and ~~2020.~~2021. The amounts shown in the above table of our income tax rate reconciliation for rate differences on equity in earnings of Kronos ~~are primarily attributable to the net effects of Kronos’ earnings and~~represent the income tax benefit ~~related to~~associated with the nontaxable dividends we ~~receive~~received from Kronos ~~as it relates~~compared to the amount of deferred income taxes we ~~recognize~~recognized on our undistributed equity in earnings (losses) of Kronos. Our equity in earnings of Kronos in ~~2020~~2021 is expected to be ~~lower~~higher than our equity in earnings of Kronos in ~~2019.~~2020.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, includes ~~provisions relating to refundable payroll tax credits, deferment of employer side social security payments, modifications to net operating loss carryovers and carrybacks,~~ modifications to the limitation of business interest for tax years beginning in 2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property. We have evaluated the relevant provisions of the CARES Act and do not expect the NOL carryback provisions to result in a cash tax benefit to us because we do not have any prior year refundable income taxes and other provisions of the CARES Act will not have a material impact on our tax provision.

~~Under the CARES Act, the modification to the business interest provisions increases~~increasing the business interest limitation from 30% of adjusted taxable income to 50% of adjusted taxable income which ~~increases~~increased Kronos’ allowable interest expense deduction for 2019 and 2020. Consequently, in the first quarter of 2020 Kronos recognized a cash tax benefit of $.5 million related to the reversal of the valuation allowance recognized in 2019 for the portion of the disallowed interest expense Kronos did not expect to fully utilize at December 31, 2019. Pursuant to the business interest modification provisions, Kronos does not expect its deductible interest expense in 2020 to be limited and, accordingly, Kronos has considered such modifications in its estimate of the effective tax rate. Kronos has determined other provisions of the CARES Act will not have a material impact on its provision for income taxes in 2020.

loss - Changes in accumulated other comprehensive loss attributable to NL stockholders, including amounts resulting from our investment in Kronos Worldwide (see Note 5), are presented in the table below.

	Three months ended						Three months ended
	March 31,						March 31,
	2019			2020			2020			2021
	(In thousands)						(In thousands)
Accumulated other comprehensive loss, net of tax:
Currency translation:
Balance at beginning of period	$	(172,434	)	$	(172,843	)	$	(172,843	)	$	(169,575	)
Other comprehensive loss		(25	)		(10,118	)
Other comprehensive income (loss)								(10,118	)		545
Balance at end of period	$	(172,459	)	$	(182,961	)	$	(182,961	)	$	(169,030	)

Defined benefit pension plans:
Balance at beginning of period	$	(75,286	)	$	(78,257	)	$	(78,257	)	$	(80,704	)
Other comprehensive income - amortization of net losses included in net periodic pension cost		828			1,043			1,043			1,151
Balance at end of period	$	(74,458	)	$	(77,214	)	$	(77,214	)	$	(79,553	)

OPEB plans:
Balance at beginning of period	$	(550	)	$	(590	)	$	(590	)	$	(910	)
Other comprehensive loss - amortization of net gains included in net periodic OPEB cost		(70	)		(80	)		(80	)		(71	)
Balance at end of period	$	(620	)	$	(670	)	$	(670	)	$	(981	)

Total accumulated other comprehensive loss:
Balance at beginning of period	$	(248,270	)	$	(251,690	)	$	(251,690	)	$	(251,189	)
Other comprehensive income (loss)		733			(9,155	)		(9,155	)		1,625
Balance at end of period	$	(247,537	)	$	(260,845	)	$	(260,845	)	$	(249,564	)

Other – During the first quarter of 2021, CompX purchased 50,000 shares of its Class A common stock in a market transaction for approximately $755,000. At March 31, 2021, 627,547 shares were available for purchase under CompX’s prior repurchase authorizations.

We are involved in various environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our current and former businesses. At least quarterly our management discusses and evaluates the status of any pending litigation or claim to which we are a party or which has been asserted against us. The factors considered in such evaluation include, among other things, the nature of such pending cases and claims, the status of such pending cases and claims, the advice of legal counsel and our experience in similar cases and claims (if any). Based on such evaluation, we make a determination as to whether we believe (i) it is probable a loss has been incurred, and if so if the amount of such loss (or a range of loss) is reasonably estimable, or (ii) it is reasonably possible but not probable a loss has been incurred, and if so, if the amount of such loss (or a range of loss) is reasonably estimable, or (iii) the probability a loss has been incurred is remote.

Our former operations included the manufacture of lead pigments for use in paint and lead-based paint. We, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment

manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints. Certain of these actions have been filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others have been asserted as class actions. These lawsuits seek recovery under a variety of theories, including public

and private nuisance, negligent product design, negligent failure to warn, strict liability, breach of warranty, conspiracy/concert of action, aiding and abetting, enterprise liability, market share or risk contribution liability, intentional tort, fraud and misrepresentation, violations of state consumer protection statutes, supplier negligence and similar claims.

The plaintiffs in these actions generally seek to impose on the defendants responsibility for lead paint abatement and health concerns associated with the use of lead-based paints, including damages for personal injury, contribution and/or indemnification for medical expenses, medical monitoring expenses and costs for educational programs. To the extent the plaintiffs seek compensatory or punitive damages in these actions, such damages are generally unspecified. In some cases, the damages are unspecified pursuant to the requirements of applicable state law. A number of cases are inactive or have been dismissed or withdrawn. Most of the remaining cases are in various pre-trial stages. Some are on appeal following dismissal or summary judgment rulings or a trial verdict in favor of either the defendants or the plaintiffs.

We believe ~~that~~ these actions are without merit, and we intend to continue to deny all allegations of wrongdoing and liability and to defend against all actions vigorously. Other than with respect to the Santa Clara, California public nuisance case discussed below, we do not believe it is probable ~~that~~ we have incurred any liability with respect to all of the lead pigment litigation cases to which we are a party, and with respect to all ~~such~~other lead pigment litigation cases to which we are a party, we believe liability to us that may result, if any, in this regard cannot be reasonably estimated, because:

Accordingly, other than with respect to the Santa Clara case discussed below, we have not accrued any amounts for any of the pending lead pigment and lead-based paint litigation cases filed by or on behalf of states, counties, cities or their public housing authorities and school districts, or those asserted as class actions. In addition, we have determined that liability to us which may result, if any, cannot be reasonably estimated at this time because there is no prior history of a loss of this nature on which an estimate could be made and there is no substantive information available upon which an estimate could be based.

InUnder the ~~matter titled~~ terms of the County of Santa Clara v. Atlantic Richfield Company, et al~~. (Superior~~al. (Superior Court of the State of California, County of Santa Clara, Case No. 1-00-CV-788657) ~~on July 24, 2019, an order approving a~~ global settlement agreement, ~~entered into among all of the plaintiffs and the three defendants~~we have five annual installment payments remaining in the case (the Sherwin Williams Company, ConAgra Grocery Products and us) was entered by the court and the case was dismissed with prejudice. The global settlement agreement provides that an aggregate $305 million will be paid collectively by the three co-defendants in full satisfaction of all claims resulting in a dismissal of the case with prejudice and the resolution of (i) all pending and future claims by the plaintiffs in the case, and (ii) all potential claims for contribution or indemnity between us and our co-defendants in respect to the case. In the agreement, we expressly deny any and all liability and the dismissal of the case with prejudice was entered by the court without a final judgment of liability entered against us. The settlement agreement fully concludes this matter.

Under the terms of the global settlement agreement, each defendant must pay an aggregate $101.7 million to the plaintiffs as follows: $25.0 million within sixty days of the court’s approval of the settlement and dismissal of the case, and the remaining $76.7 million in six annual installments beginning on the first anniversary of the initial payment ($12.0 million for the ~~first five~~next four installments and $16.7 million for the ~~sixth~~final installment). Our ~~sixth~~final installment will be made with funds already on deposit at the court, which is included in noncurrent restricted cash on our Condensed Consolidated Balance Sheets, that are committed to the settlement, including all accrued interest at the date of payment, with any remaining balance to be paid by us (and any amounts on deposit in excess of the final payment would be returned to us). ~~For financial reporting purposes we used a discount rate of 1.9% per annum~~See Note 17 to ~~discount the settlement to the estimated net present value. We recognized additional litigation settlement expense during 2019 of $19.3 million (primarily in the second quarter).~~our 2020 Annual Report.

New cases may continue to be filed against us. We ~~do not know if~~cannot assure you we will not incur liability in the future ~~with~~in respect toof any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings. In the future, if new information regarding such matters becomes available to us (such as a final, ~~non-~~

~~appealable~~non-appealable adverse verdict against us or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against us as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable. The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual

period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.

Our operations are governed by various environmental laws and regulations. Certain of our businesses are and have been engaged in the handling, manufacture or use of substances or compounds that may be considered toxic or hazardous within the meaning of applicable environmental laws and regulations. As with other companies engaged in similar businesses, certain of our past and current operations and products have the potential to cause environmental or other damage. We have implemented and continue to implement various policies and programs in an effort to minimize these risks. Our policy is to maintain compliance with applicable environmental laws and regulations at all of our plants and to strive to improve environmental performance. From time to time, we may be subject to environmental regulatory enforcement under U.S. ~~and non-U.S.~~ statutes, the resolution of which typically involves the establishment of compliance programs. It is possible that future developments, such as stricter requirements of environmental laws and enforcement policies, could adversely affect our production, handling, use, storage, transportation, sale or disposal of such substances. We believe ~~that~~ all of our facilities are in substantial compliance with applicable environmental laws.

Certain properties and facilities used in our former operations, including divested primary and secondary lead smelters and former mining locations, are the subject of civil litigation, administrative proceedings or investigations arising under federal and state environmental laws and common law. Additionally, in connection with past operating practices, we are currently involved as a defendant, potentially responsible party (PRP) or both, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (CERCLA), and similar state laws in various governmental and private actions associated with waste disposal sites, mining locations, and facilities that we or our predecessors, our subsidiaries or their predecessors currently or previously owned, operated or used, certain of which are on the United States Environmental Protection Agency’s (EPA) Superfund National Priorities List or similar state lists. These proceedings seek cleanup costs, damages for personal injury or property damage and/or damages for injury to natural resources. Certain of these proceedings involve claims for substantial amounts. Although we may be jointly and severally liable for these costs, in most cases we are only one of a number of PRPs who may also be jointly and severally liable, and among whom costs may be shared or allocated. In addition, we are occasionally named as a party in a number of personal injury lawsuits filed in various jurisdictions alleging claims related to environmental conditions alleged to have resulted from our operations.

Obligations associated with environmental remediation and related matters are difficult to assess and estimate for numerous reasons including the:

In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. ~~It is possible~~We cannot assure you that actual costs will not exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and ~~it is possible~~we cannot assure you that costs will not be incurred for sites

where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our consolidated financial statements, results of operations and liquidity.

We record liabilities related to environmental remediation and related matters (including costs associated with

damages for personal injury or property damage and/or damages for injury to natural resources) when estimated future expenditures are probable and reasonably estimable. We adjust such accruals as further information becomes available to us or as circumstances change. Unless the amounts and timing of such estimated future expenditures are fixed and reasonably determinable, we generally do not discount estimated future expenditures to their present value due to the uncertainty of the timing of the payout. We recognize recoveries of costs from other parties, if any, as assets when their receipt is deemed probable.

We do not know and cannot estimate the exact time frame over which we will make payments for our accrued environmental and related costs. The timing of payments depends upon a number of factors, including but not limited to the timing of the actual remediation ~~process;~~process, which in turn depends on factors outside of our control. At each balance sheet date, we estimate the amount of our accrued environmental and related costs which we expect to pay within the next twelve months, and we classify this estimate as a current liability. We classify the remaining accrued environmental costs as a noncurrent liability.

Changes in the accrued environmental remediation and related costs during the first three months of ~~2020~~2021 are as follows:

	Amount			Amount
	(In thousands)			(In thousands)
Balance at the beginning of the period	$	94,508		$	93,416
Additions charged to expense		20
Additions charged (credited) to expense, net					(90	)
Payments, net		(289	)		(311	)
Balance at the end of the period	$	94,239		$	93,015

Amounts recognized in the Condensed Consolidated
Balance Sheet at the end of the period:
Current liability	$	3,357		$	2,167
Noncurrent liability		90,882			90,848
Balance at the end of the period	$	94,239		$	93,015

On a quarterly basis, we evaluate the potential range of our liability for environmental remediation and related costs at sites where we have been named as a PRP or defendant, including sites for which our wholly-owned environmental management subsidiary, NL Environmental Management Services, Inc. (EMS), has contractually assumed our obligations. At March 31, ~~2020,~~2021, we had accrued approximately ~~$94~~ $93million related to approximately 32 sites associated with remediation and related matters ~~that~~ we believe are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to us for remediation and related matters for which we believe it is possible to estimate costs is approximately ~~$115~~$114 million, including the amount currently accrued. These accruals have not been discounted to present value.

We believe ~~that~~ it is not reasonably possible to estimate the range of costs for certain sites. At March 31, ~~2020,~~2021, there were approximately ~~five~~5 sites for which we are not currently able to reasonably estimate a range of costs. For these sites, generally the investigation is in the early stages, and we are unable to determine whether or not we actually had any association with the site, the nature of our responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of our control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, we have received general and special notices of liability from the EPA and/or state agencies alleging that we, sometimes with other PRPs, are liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that we, along with any other alleged PRPs, are liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites, which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our consolidated financial statements, results of operations and liquidity.

We are involved in certain legal proceedings with a number of our former insurance carriers regarding the nature and extent of the carriers’ obligations to us under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to

exist for our lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available.

We have agreements with certain of our former insurance carriers pursuant to which the carriers reimburse us for a portion of our future lead pigment litigation defense costs, and one such carrier reimburses us for a portion of our future asbestos litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. While we continue to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.

For a complete discussion of certain litigation involving us and certain of our former insurance carriers, refer to our ~~2019~~2020 Annual Report.

In addition to the litigation described above, we and our affiliates are also involved in various other environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to present and former businesses. In certain cases, we have insurance coverage for these items, although we do not expect additional material insurance coverage for environmental matters. We currently believe the disposition of all of these various other claims and disputes (including asbestos related claims), individually and in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals already provided.

See Note 4 for information on how we determine fair value of our marketable securities.

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure:

~~The fair value of our noncontrolling interest in CompX stockholders’ equity is based upon its quoted market price at each balance sheet date, which represents a Level 1 input.~~ Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value.

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which changes the accounting for certain income tax transactions and reduces complexity in accounting for income taxes in certain areas. The ASU introduces new guidance including providing a policy election for an entity to not allocate consolidated current and deferred tax expense when a member of a consolidated tax return is not subject to income tax in its separate financial statements and is a disregarded entity by the taxing authority; and providing guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The ASU also changes existing guidance in a number of areas, including: the method of making an intraperiod allocation of total income tax expense if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a non-U.S. entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and

~~determining how to apply the income tax guidance to franchise taxes that are partially based on income.~~ ~~We adopted this ASU as of January 1, 2020. The adoption of this ASU in the first quarter of 2020 did not have a material effect on our Condensed Consolidated Financial Statements.~~

Following the spread of the COVID-19 virus beyond China in late January 2020, various national, state and local governments began to implement a number of increasingly restrictive measures to contain the spread of the virus, including travel restrictions, gathering limitations, event cancellations, border closures and stay-at-home orders, resulting in sharp contractions of vast areas of the global economy beginning in March 2020. While measured efforts are underway to resume commercial activities in most global markets, the impacts of COVID-19, including the efforts to mitigate its spread, are expected to continue to challenge workers, businesses and governments for the foreseeable future. Although the COVID-19 pandemic had limited impact on our operations during the first quarter of 2020, we believe U.S. and worldwide gross domestic product will be significantly impacted for an indeterminate period, including the demand for our products and those of our customers. Consequently, we expect to report lower sales and earnings than would otherwise have been expected for the remainder of 2020. The extent of the impact will depend on numerous factors, including future developments, and therefore is uncertain and cannot be predicted.

We are primarily a holding company. We operate in the component products industry through our majority-owned subsidiary, CompX International Inc. We also own a non-controlling interest in Kronos Worldwide, Inc. Both CompX (NYSE American: CIX ) and Kronos (NYSE: KRO) file periodic reports with the Securities and Exchange Commission (SEC).

CompX is a leading manufacturer of engineered components utilized in a variety of applications and industries. Through its Security Products operations, CompX manufactures mechanical and electronic cabinet locks and other locking mechanisms used in recreational transportation, postal, office and institutional furniture, cabinetry, tool storage and healthcare applications. CompX also manufactures stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems, ~~and~~ trim tabs and related hardware and accessories for the recreational marine and other industries through ~~our~~its Marine Components operations.

We account for our approximate 30% non-controlling interest in Kronos by the equity method. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments (TiO₂). TiO₂ is used for a variety of manufacturing applications including paints, plastics, paper and other industrial and specialty products.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking in nature and represent management’s beliefs and assumptions based on currently available information. Statements in this report including, but not limited to, statements found in Item 2 —- “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements that represent our management’s beliefs and assumptions based on currently available information. In some cases you can identify forward-looking statements by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expects” or comparable terminology, or by discussions of strategies or trends. Although we believe the expectations reflected in forward-looking statements are reasonable, we do not know if these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results. Actual future results could differ materially from those predicted. The factors that could cause our actual future results to differ materially from those described herein are the risks and uncertainties discussed in this Quarterly Report and those described from time to time in our other filings with the SEC including, but are not limited to, the following:

Should one or more of these risks materialize (or if the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those currently forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.

Quarter ended March 31, ~~2020~~2021 compared to the quarter ended March 31, ~~2019~~2020

Our net income attributable to NL stockholders was $13.3 million, or $.27 per share, in the first quarter of 2021 compared to net income attributable to NL stockholders of $1.9 million, or $.04 per share, in the first quarter of ~~2020 compared to net income attributable to NL stockholders of $15.2 million, or $.31 per share, in the first quarter of 2019.~~2020. As more fully described below, the ~~decrease~~increase in our earnings per share attributable to NL stockholders from ~~2019~~2020 to ~~2020~~2021 is primarily due to the net effects of:

Our 2020 net income per share attributable to NL stockholders includes income of $.01 per share related to Kronos’ first quarter recognition of an insurance settlement gain.

	Three months ended March 31,						%				Three months ended March 31,						%
	2019			2020			Change				2020			2021			Change
	(in millions)										(In millions)
CompX	$	4.3		$	5.0			17		%	$	5.0		$	5.8			16		%
Insurance recoveries		.3			-			(92	)
Corporate expense		(2.1	)		(2.5	)		22				(2.5	)		(1.8	)		(25	)
Income from operations	$	2.5		$	2.5			-			$	2.5		$	4.0			57

Amounts attributable to CompX relate ~~primarily~~ to its ~~components~~component products business, while ~~the other amounts~~corporate expense generally ~~relate~~relates to NL. Each of these items is further discussed below.

The following table shows the components of our income (loss) before income taxes exclusive of our income from operations.

~~Net sales~~ –~~Net sales~~In the first quarter of 2021 CompX’s operating income increased ~~$1.1~~to $5.8 million compared to $5.0 million in the first quarter of 2020, before its sales volumes and operations had been significantly affected by the COVID-19 pandemic. The increase in operating income in the first quarter of 2021 compared to 2020 primarily resulted from higher Marine Components sales to the towboat market. CompX sustained the greatest negative operating impact from COVID-19 in the second quarter of 2020 to both of its reporting units. Beginning in the third quarter of 2020 and continuing through the first quarter of 2021, Marine Components experienced a significant recovery in sales, while Security Products sales generally improved sequentially, though not to pre-pandemic levels.

Net sales –Net sales increased $3.6 million in the first quarter of 2021 compared to the same period in ~~2019~~2020 primarily due to higher ~~Security Products~~Marine Component sales and to a lesser extent higher ~~Marine Components~~Security Products sales. Relative changes in selling prices did not have a material impact on net sales comparisons.

Cost of sales and gross margin – Cost of sales as a percentage of sales ~~decreased 1.4%~~increased 1.6% in the first quarter of ~~2020~~2021 compared to the same period in ~~2019 due to the favorable effects of customer and product mix, partially offset by increased medical costs for both Security Products and Marine Components.~~2020. As a result, gross margin as a percentage of sales ~~increased~~decreased over the same period. Gross margin ~~dollars increased~~percentage decreased in the first quarter of 2021 compared to the same period in 2020 due to ~~higher sales for both business segments.~~the decline in the Security Products gross margin percentage partially offset by a slight increase in the Marine Components gross margin percentage. See discussion of reporting units below.

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~~reporting units and corporate management activities, as well as gains and losses on ~~plant,~~ property and equipment. Operating costs and expenses for the first quarter of ~~2020~~2021 were ~~comparable to~~lower than the same period in ~~2019.~~2020 primarily due to lower employer paid medical costs as well as lower travel related expenses. Operating costs and expenses as a percentage of net sales decreased in 2021 due to lower costs and higher sales.

Income from operations –As a percentage of net sales, income from operations for the first quarter of ~~2020~~2021 increased compared to the same period of ~~2019~~2020 and was primarily impacted by the factors impacting cost of ~~sales,~~goods sold, gross margin and operating ~~costs discussed above.~~costs. See discussion of reporting units below.

The key performance indicator for CompX’s reporting units is the level of their income from operations (see discussion below).

	Three months ended
	March 31,						%
	2019			2020			Change			Three months ended March 31,						%
	(in millions)									2020			2021			Change
										(In millions)
Security Products:
Net sales	$	24.7		$	25.5			3	%	$	25.5		$	25.9			2		%
Cost of sales		16.7			16.9			1			16.9			17.7			4
Gross margin		8.0			8.6			7			8.6			8.2			(4	)
Operating costs and expenses		2.9			2.9			(2	)		2.9			2.7			(4	)
Operating income	$	5.1		$	5.7			13		$	5.7		$	5.5			(4	)

Gross margin		32	%		34	%				34		%		32	%
Operating income margin		21			22					22				21

SecurityProducts –Security Products net sales increased 3%2% in the first quarter of ~~2020~~2021 compared to the same period last year. ~~The~~This increase in sales is primarily due to $.7 million of higher sales to ~~existing~~the transportation market and $.5 million of higher sales to the government security ~~customers,~~market, partially offset by lower sales to ~~transportation~~markets that continue to be slower to recover from the effects of the COVID-19 pandemic, including $.4 million of lower sales to distribution customers and ~~distribution customers.~~$.3 million of lower salesto the office furniture market. Gross margin and operating income margin for the first quarter of 2021 declined as compared to 2020 primarily due to higher cost inventory produced during the fourth quarter of 2020 and sold in the first quarter of 2021. Security Products inventory produced during the fourth quarter of 2020 had a ~~percentage of sales increased in 2020~~higher carrying value compared to the same period in 2019 due to ~~favorable customer~~higher cost per unit of production as a result of lower production volumes during the fourth quarter of 2020. This negatively impacted Security Products’ gross margin and ~~product mix on~~operating income margin as this higher ~~sales, partially offset~~cost inventory was sold during the first quarter of 2021. Additionally, gross margin and operating income margin were favorably impacted by ~~increased~~lower employer paid medical ~~costs.~~costs of $.7 million during the first quarter of 2021 compared to 2020.

	Three months ended
	March 31,						%
	2019			2020			Change			Three months ended, March 31,						%
	(in millions)									2020			2021			Change
										(In millions)
Marine Components:
Net sales	$	6.5		$	6.8			6	%	$	6.8		$	10.0			47	%
Cost of sales		4.8			5.0			3			5.0			7.2			46
Gross margin		1.7			1.8			13			1.8			2.8			50
Operating costs and expenses		.8			.7			(5	)		.7			.9			9
Operating income	$	.9		$	1.1			20		$	1.1		$	1.9			80

Gross margin		26	%		27	%					27	%		28	%
Operating income margin		14			16						16			19

Marine Components–Marine Components net sales increased 6%47% in the first quarter of ~~2020~~2021 compared to the same period last year primarily due to increased sales of $2.7 million to the towboat market, primarily wake enhancements systems and ~~center console~~surf pipes to original equipment boat ~~markets, partially offset by lower sales~~manufacturers. Marine Components continues to ~~distribution customers.~~benefit from an overall increase in demand in the recreational marine market which began in late spring 2020. Gross margin and operating income as a percentage of sales increased in the first quarter of ~~2020~~2021 compared to the same period last year due to a favorable customer and product mix and increased coverage of fixed costs on higher sales ~~partially offset by increased medical costs.~~

~~Outlook~~ –We experienced minimal disruptions to our supply chain or customer base from COVID-19 during the first quarter of 2020. First quarter sales reflect continued strong demand for our products, including high-security applications for our existing government customers as well as ~~our marine products. We have been identified as an essential business in~~decreased employer paid medical costs.

Outlook –CompX first began to feel the ~~states where we operate, and we are considered critical in supplying components to many essential and mandatory markets. Beginning~~effects of the COVID-19 pandemic in late March 2020 wewhen CompX began receiving requests from certain customers of both ~~our~~CompX’s Security Products and Marine Components ~~segments~~reporting units to ~~delay or~~ postpone shipments, in some cases because ~~our~~ customers’ production facilities ~~have~~were temporarily closed. ~~We operate three facilities, each~~The second quarter of ~~which specializes in certain manufacturing processes and is therefore dependent upon~~2020 sustained the ~~other facilities~~greatest impact from COVID-19, but its effects continued to ~~some extent~~be felt through most of the remainder of the year. In the second half of 2020, CompX sales began to ~~manufacture finished goods. With~~recover from the onset of COVID-19, within each facility we increased sanitizing, mandated social distancing and implemented other health and safety protocols. In late April 2020, we temporarily closed our facility that is located outside of Chicago, Illinois, which has been considered a COVID-19 “hotspot,” due to an increase of COVID-19 cases in the community. During the closure we completed a deep clean and sanitization within the facility, and we successfully reopened the plant and resumed production after a one week pause. We believe the temporary closure of our Illinois facility will have minimal negative impact on our ability to manufacture and shiphistorically low levels experienced during the second quarter ~~in part due~~of 2020, with sales steadily improving for the remainder of the year and through the first quarter of 2021. In the first quarter of 2021, CompX’s manufacturing operations maintained normal production rates in-line with improved demand, although the Security Products reporting unit still has some markets which continue to be slower to recover, particularly distributors and office furniture. CompX’s supply chains remain intact although CompX has been moderately impacted by recent global and domestic supply chain disruptions. Thus far CompX’s operations team has been able to manage through these disruptions with minimal impact on operations. Most of the ~~anticipated decline in~~markets CompX serves continue to recover, and CompX communicates closely with all its customers to monitor order levels. Marine Components reporting unit sales outpaced prior year as demand for recreational boats increased as people sought socially distanced, outdoor activities. CompX expects this trend to continue during the ~~same period.~~remainder of 2021.

Considerable effort continues at all of CompX’s locations to manage COVID-19 conditions including enhanced health and safety protocols and cleaning and disinfecting efforts. Throughout the course of the COVID-19 pandemic, CompX has focused its efforts on maintaining efficient operations while closely managing its expenses. The advance of the COVID-19 pandemic and the global efforts to mitigate its spread ~~have already resulted in sharp contractions of vast areas of the global economy and~~ are expected to continue to challenge workers, businesses and governments for the foreseeable future. Government actions in various regions to gradually permit the resumption of limited commercial activities following various regional shutdowns are currently in progress, but it is believed that theduring 2021. The success and timing of ~~these~~mitigating actions ~~will depend~~depends in part on continued deployment of effective tools to fight COVID-19, including ~~increased testing, enhanced monitoring, data analysis and~~ effective treatments and vaccine distribution, before ~~economic growth returns~~economies are likely to ~~pre-pandemic levels, particularly in service related sectors~~return to normal. In this regard, as part of ~~the economy. Even as these measures are implemented~~CompX’s health and ~~become effective, they will not directly address the business~~safety protocols, CompX is encouraging its employees to receive a COVID-19 vaccine and ~~employment losses already experienced. As a result, we expect U.S. and worldwide gross domestic product~~has offered paid time off to ~~be significantly impacted for an indeterminate period.~~hourly employees to facilitate participation.

Based on current conditions, ~~we expect~~CompX expects to report ~~reduced~~increased revenue and operating income ~~during the second quarter of 2020~~in 2021 compared to ~~the first quarter of~~ 2020, ~~but the severity~~despite some markets of the ~~decline~~Security Products reporting unit that have not fully recovered to pre-pandemic levels. As a result, CompX expects to continue to experience higher fixed costs per unit of production during 2021 which will continue to challenge gross margins in this reporting unit. The impact of COVID-19 on 2021 will depend on customer demand for ~~our~~CompX’s products, including the timing and extent to which ~~our customers restart their~~its customers’ operations may be impacted, on ~~our~~CompX’s customers’ perception as to ~~when~~ consumer demand for their products ~~will return~~ and on any future disruptions in ~~our~~CompX’s operations or ~~our~~its suppliers’ operations, all of which are difficult to predict. ~~Our~~As noted above, there are global supply chain disruptions and certain of CompX’s customers have experienced temporary pauses in their operations as a result of these disruptions. Thus far these pauses have not had a material negative effect on CompX sales. CompX’s operations teams meet ~~daily~~frequently to ensure wethey are ~~maintaining~~taking appropriate actions to maintain a safe working environment for all ~~of our~~its employees, ~~minimizing~~minimize material or supply related operational disruptions,

manage inventory levels and ~~managing inventory levels. It~~improve operating margins. CompX is ~~possible we may temporarily close one or more of our facilities again for the health~~constantly evaluating staffing levels and ~~safety of our employees before the COVID-19 crisis is over. CompX has significant cash balances of approximately $63.2 million at March 31, 2020,~~believes current staffing levels are aligned with CompX’s sales and ~~we believe we are well positioned to navigate the uncertainty ahead.~~production forecasts.

Insurance recoveries –We have agreements with certain insurance carriers pursuant to which the carriers reimburse us for a portion of our past lead pigment and asbestos litigation defense costs. Insurance recoveries include amounts we received from these insurance carriers.

The agreements with certain of our insurance carriers also include reimbursement for a portion of our future litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. Accordingly, these insurance recoveries are recognized when the receipt is probable and the amount is determinable. See Note 14 to our Condensed Consolidated Financial Statements.

Corporate expense –Corporate expenses were ~~$2.5~~$1.8 million in the first quarter of ~~2020, $.4~~2021, $.7 million ~~higher~~lower than in the first quarter of ~~2019~~2020 primarily due to ~~higher environmental remediation and related costs partially offset by~~ lower litigation fees and related costs and lower administrative expenses in ~~2020.~~2021. Included in corporate expense ~~in the first quarters of 2019 and 2020~~ are:

The level of our litigation fees and related costs varies from period to period depending upon, among other things, the number of cases in which we are currently involved, the nature of such cases and the current stage of such cases (e.g. discovery, pre-trial motions, trial or appeal, if applicable). See Note 14 to our Condensed Consolidated Financial Statements. If our current expectations regarding the number of cases in which we expect to be involved during ~~2020~~2021 or the nature of such cases were to change, our corporate expenses could be higher than we currently estimate.

Obligations for environmental remediation costs are difficult to assess and estimate and it is possible that actual costs for environmental remediation will exceed accrued amounts or that costs will be incurred in the future for sites in which we cannot currently estimate our liability. If these events were to occur in ~~2020,~~2021, our corporate expenses would be higher than we currently estimate. In addition, we adjust our environmental accruals as further information becomes available to us or as circumstances change. Such further information or changed circumstances could result in an increase in our accrued environmental costs. See Note 14 to our Condensed Consolidated Financial Statements.

Overall, we currently expect that our net general corporate expenses in ~~2020~~2021 will be higher than ~~in 2019~~2020 primarily due to higher expected litigation fees and related costs and higher environmental remediation and related costs.

Interest and dividend income –Interest and dividend income decreased ~~$.4~~$.7 million in the first quarter of ~~2020~~2021 compared to the prior year period primarily due to lower dividend income and lower interest income related to lower average interest rates on invested balances and lower average interest rates, and to a lesser extent lower average outstanding balances, under CompX’s revolving promissory note receivable from ~~Valhi and lower average interest rates partially offset by higher cash and cash equivalents and restricted cash and cash equivalents balances available for investment.~~ Valhi.

Marketable equity securities – We recognized a ~~loss~~gain of ~~$12.1~~$6.4 million on the change in value of our marketable equity securities in the first quarter of ~~2020~~2021 compared to a ~~gain~~loss of ~~$5.5~~$12.1 million in the first quarter of ~~2019.~~ 2020.

Income tax expense (benefit) –We recognized an income tax expense of $2.5 million in the first quarter of 2021 compared to an income tax benefit of $3.3 million in the first quarter of ~~2020 compared to income tax expense of $2.6 million in the first quarter of 2019.~~ 2020. In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings (losses) of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us.

Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. Therefore, our full-year effective income tax rate will generally be lower than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in earnings of Kronos. Conversely, our effective income tax rate will generally be higher than the U.S. federal statutory income tax rate in years during which we receive dividends from Kronos and recognize equity in losses of Kronos. During interim periods, our effective income tax rate may not necessarily correspond to the foregoing due to the application of accounting for income taxes in interim periods which requires us to base our effective rate on full year projections. We received dividends from Kronos of $6.3 million in the first three months of ~~2019~~2020 and ~~2020.~~2021.

Our effective tax rate attributable to our equity in earnings of Kronos, including the effect of the nontaxable dividends we received from Kronos was a 4.3% income tax expense in the first three months of 2021 and a 17.5% income tax benefit in the first three months of 2020. The increase in our effective rate from 2020 ~~and 6.3% expense in the first three months of 2019. The decrease~~to 2021 is primarily attributable to ~~the net effects of~~ Kronos’ ~~lower~~anticipated higher full year earnings in ~~the first three months of 2020~~2021 as compared to ~~the first three months of 2019 and the impact of the income tax benefit related to the nontaxable dividends received from Kronos.~~2020. See Note 12 to our Condensed Consolidated Financial Statements for more information about our ~~2020~~2021 income tax items, including a tabular reconciliation of our statutory tax expense (benefit) to our actual expense (benefit).

We record a valuation allowance to reduce our deferred income tax assets to the amount that is expected to be realized under the more-likely-than-not recognition criteria. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, it is possible

that we may change our estimate of the amount of the deferred income tax assets that would more-likely-than-not be realized in the future. This could result in an adjustment to the valuation allowance up to the full deferred tax asset that would either increase or decrease, as applicable, reported net income in the period such change in estimate was made. At December 31, 2020, we had approximately $28.8 million of deferred tax assets primarily related to our litigation and environmental accruals. At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these deferred tax assets.

Noncontrolling interest –Noncontrolling interest in net income of CompX is consistent in the first three months of ~~2019~~2020 and ~~2020.~~2021. The noncontrolling interest we recognize in each period is directly related to the level of earnings at CompX for the period.

	Three months ended March 31,								%				Three months ended March 31,								%
	2019				2020				Change				2020				2021				Change
	(in millions)												(In millions)
Net sales	$	436.5			$	421.0				(4	)	%	$	421.0			$	465.0				10		%
Cost of sales		327.2				332.9				2				332.9				369.3				11
Gross margin	$	109.3			$	88.1							$	88.1			$	95.7

Income from operations	$	49.0			$	43.5				(11	)		$	43.5			$	34.0				(22	)	%
Interest and dividend income		2.1				1.2								1.2				.1
Insurance settlement gain		-				1.5								1.5				-
Marketable equity securities		.6				(1.5	)
Marketable equity securities unrealized gain (loss)														(1.5	)			.8
Other components of net periodic pension and OPEB cost		(3.8	)			(4.7	)							(4.7	)			(4.3	)
Interest expense		(4.8	)			(4.6	)							(4.6	)			(5.0	)
Income before income taxes		43.1				35.4								35.4				25.6
Income tax expense		12.8				8.4								8.4				6.0
Net income	$	30.3			$	27.0							$	27.0			$	19.6

Percentage of net sales:
Cost of sales		75		%		79		%						79		%		79		%
Income from operations		11				10								10				7

Equity in earnings of Kronos Worldwide, Inc.	$	9.2			$	8.2							$	8.2			$	6.0

TiO₂ operating statistics:
Sales volumes*		143				136				(5	)	%		136				141				3		%
Production volumes*		134				132				(1	)			132				130				(1	)

Change in TiO₂ net sales:
TiO₂ sales volumes										(5	)	%										3		%
TiO₂ product pricing										-												(1	)
TiO₂ product mix/other										3												3
Changes in currency exchange rates										(2	)											5
Total										(4	)	%										10		%

* Thousands of metric tons

Kronos’ key performance indicators are its TiO₂ average selling prices, its level of TiO₂ sales and production volumes and the cost of its third-party feedstock. TiO₂selling prices generally follow industry trends and prices will increase or decrease generally as a result of competitive market pressures.

~~At the beginning of 2020, Kronos’~~Kronos started 2021 with average TiO₂selling prices ~~were 1%~~3% lower than at the beginning of ~~2019,~~2020 and ~~its~~Kronos’ average TiO₂selling prices at the end of the first quarter of ~~2020~~2021 were ~~2% lower~~1% higher than at the end of ~~2019.~~2020. Kronos experienced higher sales volumes in its North American and Latin American markets, partially offset by lower sales volumes in ~~the North American, Latin American and export markets partially offset by higher sales volumes in the~~its European market in the first three months of ~~2020~~2021 as compared to the same period of ~~2019.~~2020.

Kronos operated its production facilities at overall average capacity utilization rates of 97% in the first quarter of 2021 compared to 95% in the first quarter of 2020. Due to the phase-out of sulfate production at one of Kronos’ facilities in the fourth quarter of 2020, ~~compared to 97%~~Kronos’ TiO₂ production volumes were 1% lower in the first quarter of ~~2019.~~

~~Primarily due to a moderate rise in the cost of third-party feedstock Kronos procured in 2019, its cost of sales per metric ton of TiO~~₂ ~~sold in the first three months of 2020 was higher~~2021 as compared to the first ~~three months~~quarter of ~~2019 (excluding the effect of changes in currency exchange rates).~~2020.

Net sales –Kronos’ net sales in the first quarter of ~~2020 decreased 4%~~2021 increased 10%, or ~~$15.5~~$44.0 million, compared to the first quarter of ~~2019~~2020 primarily due to a 5%3% increase in sales volumes (which increased net sales by approximately $13 million), partially offset by a 1% decrease in ~~sales volumes~~average TiO₂selling prices (which decreased net sales by approximately ~~$22~~$4 million). ~~Kronos’~~In addition to the net impact of higher sales volumes and lower average ~~TiO~~₂selling prices, Kronos estimates that changes in currency exchange rates (primarily the euro) increased its net sales by approximately $20 million in the first quarter of ~~2020 were comparable~~2021 as compared to ~~its average TiO~~₂~~selling prices in~~ the first quarter of ~~2019.~~2020. TiO₂ selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Kronos’ sales volumes ~~decreased 5%~~increased 3% in the first quarter of ~~2020~~2021 as compared to the first quarter of ~~2019~~2020 primarily due to ~~lower sales volumes~~higher demand in ~~the~~its North American and Latin American ~~and export~~ markets, partially offset by ~~higher sales volumes~~lower demand in ~~the~~its European market. In addition to the impact of lower sales volumes, Kronos estimates that changes in currency exchange rates (primarily the euro) decreased its net sales by approximately $7 million in the first quarter of 2020 as compared to the first quarter of 2019.

Cost of sales and gross margin – Kronos’ cost of sales increased ~~$5.7~~$36.4 million, or 2%11%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019~~2020 due to ~~the net effect of higher raw materials and other~~a 3% increase in sales volumes partially offset by lower production costs of approximately ~~$23 million (including higher cost for third-party feedstock, energy and other raw materials), favorable effects from currency fluctuations (primarily the euro) and a 5% decrease in sales volumes.~~$13 million. Kronos’ cost of sales as a percentage of net sales ~~increased to 79%~~ in the ~~third~~first quarter of ~~2020 compared~~2021 was comparable to ~~75%~~its cost of sales as a percentage of net sales in the ~~same period~~first quarter of ~~2019 primarily due to the unfavorable effects of higher raw materials and other production costs, as discussed above.~~ 2020.

Gross margin as a percentage of net sales ~~decreased to~~was 21% in each of the first ~~quarter~~quarters of ~~2020 compared to 25% in the first quarter of 2019. As discussed~~2021 and ~~quantified above,~~2020. Kronos’ gross margin ~~decreased~~as a percentage of net sales increases or decreases primarily due to the ~~effects~~net effect of ~~lower~~fluctuations in sales volumes, average TiO₂selling prices and ~~higher~~ raw materials and other production costs.

Selling, general and administrative expense – Kronos’ selling, general and administrative expense was approximately 13% of net sales in the first quarters of ~~2019~~2021 and 2020.

Income from operations – Kronos’ income from operations decreased by ~~$5.5~~$9.5 million, or ~~11%~~22%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019.~~2020. Income from operations as a percentage of net sales decreased to ~~10%~~7% in the first quarter of ~~2020~~2021 from ~~11%~~10% in the same period of ~~2019. This decrease was driven by the lower gross margin discussed above.~~2020. Kronos estimates that changes in currency exchange rates ~~increased~~decreased income from operations by approximately ~~$11~~$16 million in the first quarter of ~~2020~~2021 as compared to the same period in ~~2019,~~2020, as discussed below.

Other non-operating income (expense)– Kronos recognized a gain of ~~$.6~~$.8 million on the change in value of its marketable equity securities in the first quarter of ~~2019 and~~2021 compared to a loss of $1.5 million in the first quarter of 2020. Other components of net periodic pension and OPEB cost in the first quarter of ~~2020 increased $.9 million compared~~2021 was comparable to the first quarter of ~~2019 primarily due to increased amortization costs from previously unrecognized actuarial losses as a result of lower discount rates and lower expected returns on plan assets.~~2020. Kronos’ interest expense in the first quarter of ~~2020~~2021 was comparable to the first quarter of ~~2019~~2020 and Kronos currently expects its interest expense for all of ~~2020~~2021 to be comparable to ~~2019.~~ 2020.

Income tax expense – Kronos recognized income tax expense of $6.0 million in the first quarter of 2021 compared to income tax expense of $8.4 million in the first quarter of ~~2020 compared to income tax expense of $12.8 million in the first quarter of 2019.~~2020. The difference is primarily due to lower earnings in ~~2020.~~2021. Kronos’ earnings are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of its non-U.S. operations are generally higher than the income tax rates applicable to its U.S. operations. Kronos would generally ~~expects~~expect its overall effective tax rate to be higher than the U.S. federal statutory tax rate of 21% primarily because of its sizeable non-U.S. operations.

Kronos has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada). The majority of Kronos’ sales from non-U.S. operations are denominated in currencies other than the U.S. dollar, principally the euro, other major European currencies and the Canadian dollar. A portion of Kronos’ sales generated from its non-U.S. operations is denominated in the U.S. dollar (and consequently its non-U.S. operations will generally hold U.S. dollars from time to time). Certain raw materials used in all Kronos’ production facilities, primarily titanium-containing feedstocks, are purchased primarily in U.S. dollars, while

labor and other production and administrative costs are incurred primarily in local currencies. Consequently, the translated U.S. dollar value of Kronos’ non-U.S. sales and operating results are subject to

currency exchange rate fluctuations which may favorably or unfavorably impact reported earnings and may affect the comparability of period-to-period operating results. In addition to the impact of the translation of sales and expenses over time, Kronos’ non-U.S. operations also generate currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, and (ii) changes in currency exchange rates during time periods when its non-U.S. operations are holding non-local currency (primarily U.S. dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time. Kronos periodically uses currency forward contracts to manage a portion of its currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts it holds from time to time serve in part to mitigate the currency transaction gains or losses Kronos would otherwise recognize from the first two items described above..

Overall, Kronos estimates that fluctuations in currency exchange rates had the following effects on ~~the reported amounts of~~ its sales and income from operations for the periods indicated.

Impact of changes in currency exchange rates Three months ended March 31, 2020 vs March 31, 2019

Impact of changes in currency exchange rates Three months ended March 31, 2021 vs March 31, 2020													Impact of changes in currency exchange rates Three months ended March 31, 2021 vs March 31, 2020

	Tramsactions gains recognized						Translation loss - impact of rate changes			Total currency impact 2020 vs 2019			Transaction gains (losses) recognized						Translation gains (losses)– impact of rate changes			Total currency impact 2021 vs 2020
	2019		2020		Change		Translation loss - impact of rate changes			Total currency impact 2020 vs 2019			2020		2021		Change		Translation gains (losses)– impact of rate changes			Total currency impact 2021 vs 2020
	(In millions)												(In millions)
Impact on:
Net sales	$	-	$	-	$	-	$	(7	)	$	(7	)	$	-	$	-	$	-	$	20		$	20
Income from operations		1		12		11		-			11			12		(1)		(13)		(3	)		(16	)

The $7$20 million ~~decrease~~increase in net sales (translation ~~loss)~~gain) was caused primarily by a ~~strengthening~~weakening of the U.S. dollar relative to the euro, as Kronos’ euro-denominated sales were translated into ~~fewer~~more U.S. dollars in ~~2020~~2021 as compared to ~~2019.~~2020. The ~~strengthening~~weakening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in ~~2020~~2021 did not have a significant effect on ~~the reported amount of~~ Kronos’ net sales, as a substantial portion of the sales generated by its Canadian and Norwegian operations are denominated in the U.S. dollar.

The ~~$11~~$16 million ~~increase~~decrease in income from operations ~~from net currency transaction gains~~ was ~~caused primarily by relative changes in currency exchange rates at each applicable balance sheet date between~~comprised of the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations and in Norwegian krone denominated receivables and payables held by our non-U.S. operations.following:

~~To-date,~~Beginning in the second half of 2020 and continuing through the first quarter of 2021, Kronos’ sales volumes have increased from reduced levels experienced in the first half of 2020 resulting from the COVID-19 ~~pandemic, including~~pandemic. Kronos increased production volumes in late 2020 to correspond to increasing demand and has maintained production at those increased levels through the measures employed to mitigate its spread, has had limited impact on Kronos’ operations and financial performance. Kronos’ manufacturing facilities have remained open, operating at near planned capacities, and the availability of raw materials has not been materially impacted. Kronos’ first quarter ~~financial results,~~of 2021. At the beginning of 2021, Kronos’ average TiO₂ selling prices were 3% lower than at the beginning of 2020 and average selling prices increased 1% during the first quarter of 2021, although still below corresponding 2020 levels.

Despite continued challenges and uncertainties related to the pandemic in certain regions and industries, Kronos expects global demand for consumer products, including those of its customers, to remain strong throughout 2021 and Kronos expects that its sales and production volumes ~~have been within~~will reflect the elevated demand. As global economic activity has begun to recover, Kronos has experienced certain disruptions in global supply chains along with increasing production costs, including higher third-party feedstock prices and related shipping costs, which are likely to continue for much of 2021. Due to increased customer demand, Kronos expects sales prices for TiO₂ to continue to rise throughout 2021, mitigating increases in distribution and production costs. As such, Kronos expects its ~~expectations. At~~2021 sales and income from operations will be higher than in 2020, principally due to higher TiO₂ sales prices and higher sales volumes. Kronos continues to monitor current and anticipated near-term customer demand levels and will align its production and inventories accordingly.

Kronos’ expectations for the ~~end~~TiO₂ industry and its operations are based on a number of factors outside its control, including the ongoing economic effects of the ~~first quarter, Kronos had over $341 million~~COVID-19 pandemic. Future impacts of COVID-19 on Kronos’ operations will depend on, among other things, demand for its products, any future disruption in ~~cash~~Kronos’ operations or its suppliers’ operations and ~~cash equivalents,~~the timing and ~~over $200 million available for borrowing under its existing revolving credit facilities.~~

~~Kronos’ products are vital to the production of numerous critically needed end-user products, and therefore its facilities have been designated as essential businesses in each~~effectiveness of the ~~regions in~~global measures deployed to fight COVID-19, all of which ~~it operates.~~remain uncertain and cannot be predicted. Kronos’ manufacturing and administrative facilities are generally located in densely populated regions of Europe and North America which have experienced substantial outbreaks of ~~COVID-19. Some~~COVID-19 and are in varying stages of ~~Kronos’ manufacturing and distribution processes are labor-intensive, and it recognizes the elevated health risk that COVID-19 represents for its employees, contractors and partners.~~recovery. Kronos ~~is using~~continues to employ a variety of methods to protect the health and well-being of its workforce and its customers, ~~including the implementation of social distancing, contact tracing, deep cleaning of facilities, work-from-home strategies~~ and ~~staggered shift deployment, among other health and safety protocols. To-~~

~~date,~~Kronos is encouraging its employees to be vaccinated. To-date, Kronos has had limited cases of COVID-19 among its workforce and all of its facilities have remained ~~in operation.~~

~~The advance of the COVID-19 pandemic~~open and the global efforts to mitigate its spread have already resulted in sharp contractions of vast areas of the global economy and are expected to continue to challenge workers, businesses and governments for the foreseeable future. Government actions in various regions to gradually permit the resumption of limited commercial activities following various regional shutdowns are currently in progress, but it is believed that the success and timing of these actions will depend in part on deployment of effective tools to fight COVID-19, including increased testing, enhanced monitoring, data analysis and effective treatments, before economic growth returns to pre-pandemic levels, particularly in service related sectors of the economy. Even as these measures are implemented and become effective, they will not directly address the business and employment losses already experienced. As a result, Kronos expects worldwide gross domestic product to be significantly impacted for an indeterminate period. While Kronos believes that demand for its products and the products of its customers will be negatively impacted in the coming months, many of Kronos’ products are used by its customers in end-products that to date remain in demand across the world economy. The breadth and depth of the negative impact COVID-19 will have on Kronos’ business remains unknown.

Given the impact of COVID-19 on the global economy, Kronos expects its sales and earnings will be lower than originally planned for 2020. The extent of the impact will depend on numerous factors, including future developments, and therefore is uncertain and cannot be predicted. If significant declines in global demand occur, we would expect a reduction in our sales volumes and potentially, average sales prices, which in turn would cause Kronos to reduce its production volumes, resulting in an increase to per unit costs of production. If this occurs, spending for raw materials and other production costs would be reduced, but not enough to offset the negative impacts of reduced sales. Depending on the length and severity of the impact of COVID-19 on the global economy, Kronos may decide to curtail production or temporarily close manufacturing facilities, or it may be required to temporarily close certain facilities if outbreaks escalate in a particular region. Kronos will continue to monitor current and anticipated near-term customer demand throughout the year and align its production and inventory levels accordingly.

Though it is not possible to predict the impact of the COVID-19 pandemic on future demand for Kronos’ products or those of its customers, Kronos believes that it has sufficient cash on-hand and available borrowing capacity under its revolving credit facilities to meet its obligations, and Kronos is prepared to implement multiple cash-saving strategies if necessary, including reduction of inventories, delays in capital expenditures and other cost saving initiatives.operational.

Trends in cash flows from operating activities, excluding the impact of deferred taxes and relative changes in assets and liabilities, are generally similar to trends in our income from operations.

Net cash provided by operating activities was $2.1 million in the first three months of 2021 compared to $3.6 million in the first three months of ~~2020 compared to $1.7 million in the first three months of 2019.~~2020. The ~~$1.9 million net increase~~decrease in cash provided by operating activities includes the net effects of:

We do not have complete access to CompX’s cash flows in part because we do not own 100% of CompX. A detail of our consolidated cash flows from operating activities is presented in the table below. Intercompany

dividends have been eliminated. The reference to NL Parent in the table below is a reference to NL Industries, Inc., as the parent company of CompX and our wholly-owned subsidiaries.

	Three months ended March 31,						Three months ended March 31,
	2019			2020			2020			2021
	(In millions)						(In millions)
Net cash provided by operating activities:
CompX	$	(2.0	)	$	(1.0	)	$	(1.0	)	$	(2.4	)
NL Parent and wholly-owned subsidiaries		4.5			5.7			5.7			6.6
Eliminations		(.8	)		(1.1	)		(1.1	)		(2.1	)
Total	$	1.7		$	3.6		$	3.6		$	2.1

Relative changes in working capital can have a significant effect on cash flows from operating activities. As shown below, our average days sales outstanding increased from December 31, ~~2019~~2020 to March 31, ~~2020~~2021 primarily as a result of relative changes in the timing of ~~collections.~~collections but is consistent with prior year. Our total average number of days in inventory atdecreased from December 31, 2020 to March 31, ~~2020 was comparable to December 31, 2019.~~2021 primarily as a result of Marine Components’ rapid sales growth in the first quarter of 2021. For comparative purposes, we have provided December 31, ~~2018~~2019 and March 31, ~~2019~~2020 numbers below.

December 31,

March 31,

December 31,

March 31,

December 31,

March 31,

December 31,

March 31,

2018

2019

2020

2019

2020

2021

Days sales outstanding

40 days

45 days

36 days

43 days

36 days

43 days

33 days

43 days

Days in inventory

80 days

78 days

81 days

79 days

81 days

79 days

75 days

66 days

Our capital expenditures, all of which relate to CompX, were ~~$.4~~$.6 million in ~~each of~~ the first three months of ~~2020~~2021 compared to $.4 million in the first three months of 2020. During the first three months of 2021, Valhi repaid a net $.3 million under the promissory note ($11.6 million of gross borrowings and ~~2019.~~$11.9 million of gross repayments). During the first three months of 2020, Valhi repaid a net $2.6 million under the promissory note ($15.6 million of gross borrowings and $18.2 million of gross repayments).

During the first three months of ~~2019, Valhi borrowed a net $6.0 million under the promissory note ($17.4 million~~2020, we paid quarterly dividends of ~~gross borrowings and $11.4 million of gross repayments).~~

On$.04 per share to stockholders aggregating $2.0 million. In February ~~19, 2020~~2021, our board of directors ~~declared a first quarter 2020~~increased our regular quarterly dividend offrom $.04 per share to $.06 per share, and in the first quarter of 2021 we paid dividends aggregating ~~$2.0 million, paid on March 17, 2020 to NL stockholders of record as of March 3, 2020.~~$2.9 million. The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon ~~these~~our financial condition, cash requirements, contractual obligations and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which might be paid. There are currently no contractual restrictions on the amount of dividends which we may pay.

Cash flows from financing activities in the first three months of each of ~~2019~~2020 and ~~2020~~2021 also include CompX dividends paid to its stockholders other than us. In addition, during the first three months of 2021, CompX acquired 50,000 shares of its Class A common stock in a market transaction for $.8 million.

At March 31, ~~2020,~~2021, NLKW had outstanding debt obligations of $.5 million under its secured revolving credit facility with Valhi, and CompX did not have any outstanding debt obligations. We are in compliance with all of the covenants contained in our secured revolving credit facility with Valhi at March 31, ~~2020.~~2021. See Note 8 to our Condensed Consolidated Financial Statements.

~~Kronos’~~On April 20, 2021, Kronos entered into a new $225 million global revolving credit facility (Global Revolver) which matures in April 2026. Kronos had no outstanding borrowings on its previously existing North American and European ~~revolvers~~revolving facilities at March 31, 2021, through the date of their termination. Kronos currently has no outstanding borrowings on the new Global Revolver and the full $225 million was available for borrowings thereunder. Kronos’ Senior Secured Notes and its ~~senior notes~~new Global Revolver contain a number of covenants and restrictions which, among other things, restrict ~~its~~Kronos’ ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and ~~contains~~contain other provisions and restrictive covenants customary in lending transactions of ~~this type. Certain of~~these types. Kronos’ credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants. For example, ~~certain~~the credit agreements allow the lender to accelerate the maturity of the

indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, ~~certain~~the credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. Kronos’ European revolving credit facility also requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to the last twelve months EBITDA of the borrowers. Kronos iswas in compliance with all of its debt covenants at March 31 ~~2020.~~, 2021. Kronos believes ~~that~~ it will be able to continue to comply with the financial covenants contained in its credit facilities through their maturity.

Our primary source of liquidity on an ongoing basis is our cash flow from operating activities and credit facilities with affiliates as further discussed below. We generally use these amounts to fund capital expenditures (substantially all of which relate to CompX), pay ongoing environmental remediation and litigation costs and provide for the payment of dividends (if declared).

At March 31, ~~2020,~~2021, we had aggregate cash, cash equivalents and restricted cash of ~~$161.6~~$163.1 million, substantially all of which was held in the U.S. A detail by entity is presented in the table below.

	Amount		Amount
	(In millions)		(In millions)
CompX	$	63.2	$	64.7
NL Parent and wholly-owned subsidiaries		98.4		98.4
Total	$	161.6	$	163.1

In addition, at March 31, ~~2020~~2021 we owned ~~14.4~~approximately 1.2 million shares of Valhi common stock with an aggregate market value of ~~$14.8~~$24.6 million. See Note 4 to our Condensed Consolidated Financial Statements. We also owned approximately 35.2 million shares of Kronos common stock at March 31, ~~2020~~2021 with an aggregate market value of ~~$297.3~~$538.9 million. See Note 5 to our Condensed Consolidated Financial Statements.

We routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows we expect to receive from our subsidiaries and affiliates. As a result of this process, we have in the past and may in the future seek to raise additional capital, incur debt, repurchase indebtedness in the market or otherwise, modify our dividend policies, consider the sale of our interests in our subsidiaries, affiliates, business, marketable securities or other assets, or take a combination of these and other steps, to increase liquidity, reduce indebtedness and fund future activities. Such activities have in the past and may in the future involve related companies.

We periodically evaluate acquisitions of interests in or combinations with companies (including related companies) perceived by management to be undervalued in the marketplace. These companies may or may not be engaged in businesses related to our current businesses. We intend to consider such acquisition activities in the future and, in connection with this activity, may consider issuing additional equity securities and increasing indebtedness. From time to time, we also evaluate the restructuring of ownership interests among our respective subsidiaries and related companies.

Based upon our expectations of our operating performance, and the anticipated demands on our cash resources we expect to have sufficient liquidity to meet our short-term obligations (defined as the twelve-month period ending March 31, ~~2021)~~2022) including any amounts CompX might loan from time to time under the terms of its revolving loan to Valhi (which loans would be solely at CompX’s discretion). If actual developments differ materially from our expectations, our liquidity could be adversely affected. In this regard, Valhi has agreed to loan us up to $50 million on a revolving basis. At March 31, ~~2020,~~2021, we had $.5 million in outstanding borrowings under this facility, and we had $49.5 million available for future borrowing. See Note 8 to our Condensed Consolidated Financial Statements.

Firm purchase commitments for capital projects in process at March 31, ~~2020~~2021 totaled $.5 million. CompX’s ~~2020~~2021 capital investments are ~~limited to those~~primarily expenditures ~~required~~ to meet ~~our~~its expected customer demand, improve efficiency and ~~those required to~~ properly maintain ~~our~~its facilities and technology infrastructure.

During the first quarter of 2021, CompX purchased 50,000 shares of its Class A common stock in a market transaction. At March 31, 2021, CompX has 627,547 shares available for repurchase under a stock repurchase program authorized by its board of directors.

Because our operations are conducted primarily through subsidiaries and affiliates, our long-term ability to meet parent company-level corporate obligations is largely dependent on the receipt of dividends or other distributions from our subsidiaries and affiliates. A detail of annual dividends we expect to receive from our subsidiaries and affiliates in ~~2020,~~2021, based on the number of shares of common stock of these affiliates we own as of March 31, ~~2020~~2021 and their current regular quarterly dividend rate, is presented in the table below. In this regard, in March 2021 CompX increased its regular quarterly dividend from $.10 per share to $.20 per share, beginning with its dividend payable in March 2021.

	Shares held		Quarterly dividend rate		Annual expected dividend		Shares held		Quarterly dividend rate		Annual expected dividend
	(In millions)				(In millions)		(In millions)				(In millions)
Kronos		35.2	$	.18	$	25.4		35.2	$	.18	$	25.4
CompX		10.8		.10		4.3		10.8		.20		8.6
Valhi		14.4		.02		1.1		1.2		.08		.4
Total expected annual dividends					$	30.8					$	34.4

We have in the past and may in the future, purchase the securities of our subsidiaries and affiliates or third-parties in market or privately-negotiated transactions. We base our purchase decisions on a variety of factors, including an analysis of the optimal use of our capital, taking into account the market value of the securities and the relative value of expected returns on alternative investments. In connection with these activities, we may consider issuing additional equity securities or increasing our indebtedness. We may also evaluate the restructuring of ownership interests of our businesses among our subsidiaries and related companies.

There have been no material changes in our contractual obligations since we filed our ~~2019~~2020 Annual Report and we refer you to that report for a complete description of these commitments.

We are subject to certain commitments and contingencies, as more fully described in our ~~2019~~2020 Annual Report, or in Note 14 to our Condensed Consolidated Financial Statements or in Part II, Item 1 of this report, including certain legal proceedings. In addition to such legal proceedings, various legislation and administrative regulations have, from time to time, been proposed that seek to (i) impose various obligations on present and former manufacturers of lead pigment and lead-based paint (including us) with respect to asserted health concerns associated with the use of such products and (ii) effectively overturn court decisions in which we and other pigment manufacturers have been successful. Examples of such proposed legislation include bills which would permit civil liability for damages on the basis of market share, rather than requiring plaintiffs to prove that the defendant’s product caused the alleged damage and bills which would revive actions barred by the statute of limitations. While no legislation or regulations have been enacted to date that are expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity, enactment of such legislation could have such an effect.

~~See Note 16 to our Condensed Consolidated Financial Statements.~~Not applicable

For a discussion of our critical accounting policies, refer to Part I, — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2019~~2020 Annual Report. There have been no changes in our critical accounting policies during the first three months of ~~2020.~~2021.

We are exposed to market risk, including currency exchange rates, interest rates and security prices. There have been no material changes in these market risks since we filed our ~~2019~~2020 Annual Report, and we refer you to Part I, Item 7A. –“Quantitative and Qualitative Disclosure about Market Risk” in our ~~2019~~2020 Annual Report. See also Note 15 to our Condensed Consolidated Financial Statements.

Evaluation of disclosure controls and procedures –We maintain disclosure controls and procedures which, as defined in Exchange Act Rule 13a-15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange

Act of 1934, as amended (the Act), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Robert D. Graham, our Vice Chairman of the Board and Chief Executive Officer and Amy Allbach Samford, our Vice President and Chief Financial Officer, have evaluated the design and effectiveness of our disclosure controls and procedures as of March 31, ~~2020.~~2021. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of this evaluation.

Internal control over financial reporting –Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, as defined by Exchange Act Rule 13a-15(f) means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

Other –As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of equity method investees and (ii) internal control over the preparation of any financial statement schedules which would be required by Article 12 of Regulation S-X. However, our assessment of internal control over financial reporting with respect to equity method investees did include controls over the recording of amounts related to our investment that are recorded in the consolidated financial statements, including controls over the selection of accounting methods for our investments, the recognition of equity method earnings and losses and the determination, valuation and recording of our investment account balances.

Changes in internal control over financial reporting– There have been no changes to our internal control over financial reporting during the quarter ended March 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the matter discussed below, refer to Note 14 to our Condensed Consolidated Financial Statements and our ~~2019~~2020 Annual Report.

Certain Underwriters atLloyds, London, et al v. NL Industries, ~~Inc~~. Inc. In ~~March 2020, Refined Metals’ state law claims were dismissed with prejudice and~~April 2021, the trial court entered ~~a final~~an order staying the case while the appellate court considers the insurer’s interlocutory appeal of the trial court’s summary judgment ~~in favor of NL.~~ruling.

Reference is made to the ~~2019~~2020 Annual Report for a discussion of ~~additional~~ risk factors related to our businesses.

~~CompX -~~ On March 11, 2020, the World Health Organization declared the coronavirus known as “COVID-19” a pandemic. CompX has approximately 550 employees and operates three facilities in the United States located in Illinois, Wisconsin and South Carolina. The facilities are geographically diverse, and certain areas of the U.S. are experiencing more significant viral outbreaks than other areas. CompX is designated an essential business in the states where it operates and is therefore permitted There have been no material changes to ~~fully operate~~such risk factors during the pandemic, but because the COVID-19 pandemic affected the health and safety of its employees, CompX temporarily closed its Illinois facility for one week beginning in late April. The rate of spread of COVID-19 in a geographic region can change rapidly, and it is possible CompX may have additional temporary closures at one or all of its facilities for the health and safety of its workforce if conditions warrant. In addition, the pandemic has caused the closure of some of its customers’ facilities, and it is possible that more customers will be similarly impacted. Furthermore, the economic effect of the pandemic has impacted the demand for CompX’s products. CompX is actively monitoring its suppliers, customers and facilities to rapidly respond to changing conditions. The extent of the impact of the coronavirus outbreak on CompX’s operational and financial performance will depend on future developments, including the severity, duration and spread of the outbreak and its overall impact to the industries and markets in which CompX operates, all of which are uncertain and cannot be predicted.

~~Kronos -~~ Following the spread of the COVID-19 virus beyond China in late January 2020, various national, state and local governments began to implement a number of increasingly restrictive measures to contain the spread of the virus, including travel restrictions, gathering limitations, event cancellations, border closures and stay-at-home orders, resulting in sharp contractions of vast areas of the global economy beginning inthree months ended March 2020. While measured efforts are underway to resume commercial activities in most global markets, the impacts of COVID-19, including the efforts to mitigate its spread, are expected to continue to challenge workers, businesses and governments for the foreseeable future. Although the COVID-19 pandemic had limited impact on Kronos’ operations during the first quarter of 2020, Kronos believes U.S. and worldwide gross domestic product will be significantly impacted for an indeterminate period, including the demand for its products and those of its customers. The extent of the impact of COVID-19 on Kronos will depend on numerous factors, including future developments, and therefore is uncertain and cannot be predicted.31, 2021.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Page number
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets - December 31, ~~2019; March~~ 2020; March 31, ~~2020~~2021 (unaudited)	3

	Condensed Consolidated Statements of I~~ncome~~Income (unaudited) – - Three months ended March 31, ~~2019~~2020 and ~~2020~~2021	5

	Condensed Consolidated Statements of Comprehensive Income (L~~oss)~~(Loss) (unaudited) – - Three months ended March 31, ~~2019~~2020 and ~~2020~~2021	6

	Condensed Consolidated Statements of Equity (unaudited) – - Three months ended March 31, ~~2019~~2020 and ~~2020~~2021	7

	Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, ~~2019~~2020 and ~~2020~~2021	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2019

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	3432

Item 4.	Controls and Procedures	3432


Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3534

Item 1A.	Risk Factors	3534

Item 6.	Exhibits	3534

	Fair value measurement level	Market value		Cost basis		Unrealized gain (loss)
		(In thousands)
December 31, 2019
Valhi common stock	1	$	26,877	$	24,347	$	2,530

March 31, 2020
Valhi common stock	1	$	14,804	$	24,347	$	(9,543	)


10.1	Credit Agreement dated as of April 20, 2021 by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH and Wells Fargo Bank, National Association as administrative agent and lender.

10.2	Guaranty and Security Agreement dated as of April 20, 2021, by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos International, Inc. and Wells Fargo Bank, National Association as administrative agent and lender.

31.1	Certification

31.2	Certification

32.1	Certification

101.INS	Inline XBRL Instance ~~Document~~– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH	Inline XBRL Taxonomy Extension Schema

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase

104	Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)





Date: May ~~6, 2020~~5, 2021	/s/ Amy Allbach Samford
	Amy Allbach Samford
	(Vice President and Chief Financial Officer, Principal Financial Officer)
Date: May ~~6, 2020~~5, 2021	/s/ Patty S. Brinda
	Patty S. Brinda
	(Vice President and Controller, Principal Accounting Officer)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	NL	NYSE


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

	December 31, 2019				March 31, 2020
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash, cash equivalents and restricted cash	$	157,870	$	157,870	$	161,578	$	161,578
Noncontrolling interest in CompX common stock		22,707		24,627		23,131		25,657

	December 31, 2020				March 31, 2021
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash, cash equivalents and restricted cash	$	165,272	$	165,272	$	163,061	$	163,061