10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarter ended September 30, 2017

Commission file number 1-13905

COMPX INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Delaware	57-0981653
(State or other jurisdiction of Incorporation or organization)	(IRS Employer Identification No.)
5430 LBJ Freeway, Suite 1700, Three Lincoln Centre, Dallas, Texas	75240-2697
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (972) 448-1400

Indicate by checkmark:

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 (or for such a shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

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

Large accelerated filer  ☐    Accelerated filer  ☐    Non-accelerated filer  ☒  (Do not check if a smaller reporting company)  

Smaller reporting company  ☐Emerging growth company  ☐

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.☐

Whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒.

Number of shares of common stock outstanding on October 26, 2017:

Class A: 2,426,107 Class B: 10,000,000

COMPX INTERNATIONAL INC.

Index

Part I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets – December 31, 2016 and September 30, 2017 (unaudited)	- 3 -
	Condensed Consolidated Statements of Income (unaudited) – Three and nine months ended September 30, 2016 and 2017	- 4 -
	Condensed Consolidated Statements of Cash Flows (unaudited) - Nine months ended September 30, 2016 and 2017	- 5 -
	Condensed Consolidated Statement of Stockholders’ Equity (unaudited) – Nine months ended September 30, 2017	- 6 -
	Notes to Condensed Consolidated Financial Statements (unaudited)	- 7 -
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	- 11 -
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	- 15 -
Item 4.	Controls and Procedures	- 16 -
Part II.	OTHER INFORMATION
Item 1A.	Risk Factors	- 17 -
Item 6.	Exhibits	- 17 -
Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

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COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,		September 30,
	2016		2017
ASSETS			(unaudited)
Current assets:
Cash and cash equivalents	$	33,153	$	28,790
Accounts receivable, net		10,347		11,717
Inventories, net		14,974		15,313
Prepaid expenses and other		701		741
Total current assets		59,175		56,561
Other assets:
Note receivable from affiliate		27,400		36,700
Goodwill		23,742		23,742
Other noncurrent		590		590
Total other assets		51,732		61,032
Property and equipment:
Land		4,935		4,935
Buildings		22,541		22,767
Equipment		65,570		66,868
Construction in progress		1,098		680
		94,144		95,250
Less accumulated depreciation		61,071		62,661
Net property and equipment		33,073		32,589
Total assets	$	143,980	$	150,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	11,882	$	11,422
Income taxes payable to affiliates		1,441		857
Total current liabilities		13,323		12,279
Noncurrent liabilities -
Deferred income taxes		4,887		4,949
Stockholders' equity:
Preferred stock		—		—
Class A common stock		24		24
Class B common stock		100		100
Additional paid-in capital		55,515		55,612
Retained earnings		70,131		77,218
Total stockholders' equity		125,770		132,954
Total liabilities and stockholders’ equity	$	143,980	$	150,182

Commitments and contingencies (Note 1)

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2017		2016		2017
	(unaudited)				(unaudited)
Net sales	$	28,404	$	26,992	$	82,586	$	86,943
Cost of goods sold		19,005		18,794		56,496		59,552
Gross profit		9,399		8,198		26,090		27,391
Selling, general and administrative expense		4,926		4,830		14,547		14,897
Operating income		4,473		3,368		11,543		12,494
Interest income		88		546		161		1,363
Income before taxes		4,561		3,914		11,704		13,857
Provision for income taxes		1,592		1,418		4,097		4,906
Net income	$	2,969	$	2,496	$	7,607	$	8,951
Basic and diluted net income per common share	$	0.24	$	0.20	$	0.61	$	0.72
Cash dividends per share	$	0.05	$	0.05	$	0.15	$	0.15
Basic and diluted weighted average shares outstanding		12,419		12,426		12,415		12,422

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine months ended
	September 30,
	2016			2017
	(unaudited)
Cash flows from operating activities:
Net income	$	7,607		$	8,951
Depreciation and amortization		2,790			2,747
Deferred income taxes		(77	)		62
Other, net		348			252
Change in assets and liabilities:
Accounts receivable, net		(4,289	)		(1,386	)
Inventories, net		280			(475	)
Accounts payable and accrued liabilities		438			(599	)
Accounts with affiliates		817			(584	)
Prepaids and other, net		17			(40	)
Net cash provided by operating activities		7,931			8,928
Cash flows from investing activities:
Capital expenditures		(2,344	)		(2,127	)
Note receivable from affiliate:
Collections		4,400			40,400
Advances		(15,100	)		(49,700	)
Net cash used in investing activities		(13,044	)		(11,427	)
Cash flows from financing activities -
Dividends paid		(1,863	)		(1,864	)
Cash and cash equivalents - net change from:
Operating, investing and financing activities		(6,976	)		(4,363	)
Balance at beginning of period		52,347			33,153
Balance at end of period	$	45,371		$	28,790
Supplemental disclosures -
Cash paid for income taxes	$	3,355		$	5,431

See accompanying Notes to Condensed Consolidated Financial Statements.

- 5 -

COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Nine months ended September 30, 2017

(In thousands)

(unaudited)

					Additional					Total
	Common stock				paid-in		Retained			stockholders'
	Class A		Class B		capital		earnings			equity
Balance at December 31, 2016	$	24	$	100	$	55,515	$	70,131		$	125,770
Net income		—		—		—		8,951			8,951
Issuance of common stock		—		—		97		—			97
Cash dividends		—		—		—		(1,864	)		(1,864	)
Balance at September 30, 2017	$	24	$	100	$	55,612	$	77,218		$	132,954

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMPX INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(unaudited)

Note 1 – Organization and basis of presentation:

Organization. We (NYSE MKT: CIX) are 87% owned by NL Industries, Inc. (NYSE: NL) at September 30, 2017.  We manufacture and sell component products (security products and recreational marine components).  At September 30, 2017, Valhi, Inc. (NYSE: VHI) owns 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owns 93% of Valhi’s outstanding common stock.  All of Contran’s outstanding voting stock is held by a family trust established for the benefit of Lisa K. Simmons and Serena Simmons Connelly and their children, for which Ms. Simmons and Ms. Connelly are co-trustees, or is held directly by Ms. Simmons and Ms. Connelly or entities related to them.  Consequently, Ms. Simmons and Ms. Connelly may be deemed to control Contran, Valhi, NL and us.

Basis of presentation. Consolidated in this Quarterly Report are the results of CompX International Inc. and its subsidiaries. The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 that we filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017 (the “2016 Annual 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, 2016 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, 2016) 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 periods ended September 30, 2017 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 2016 Consolidated Financial Statements contained in our 2016 Annual Report.  

Our operations are reported on a 52 or 53-week year.  For presentation purposes, annual and quarterly information in the Condensed Consolidated Financial Statements and accompanying notes are presented as ended September 30, 2016, December 31, 2016 and September 30, 2017.  The actual dates of our annual and quarterly periods are October 2, 2016, January 1, 2017 and October 1, 2017, respectively.  Unless otherwise indicated, references in this report to “we”, “us” or “our” refer to CompX International Inc. and its subsidiaries, taken as a whole.

Note 2 – Business segment information:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2017			2016			2017
	(In thousands)						(In thousands)
Net sales:
Security Products	$	24,680		$	22,854		$	71,289		$	74,903
Marine Components		3,724			4,138			11,297			12,040
Total net sales	$	28,404		$	26,992		$	82,586		$	86,943
Operating income (loss):
Security Products	$	5,421		$	4,249		$	14,676		$	15,301
Marine Components		547			417			1,436			1,284
Corporate operating expenses		(1,495	)		(1,298	)		(4,569	)		(4,091	)
Total operating income		4,473			3,368			11,543			12,494
Interest income		88			546			161			1,363
Income before taxes	$	4,561		$	3,914		$	11,704		$	13,857

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Intersegment sales are not material.

Note 3 – Accounts receivable, net:

	December 31,			September 30,
	2016			2017
	(In thousands)
Accounts receivable, net:
Security Products	$	9,329		$	10,153
Marine Components		1,088			1,634
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	10,347		$	11,717

Note 4 – Inventories, net:

	December 31,		September 30,
	2016		2017
	(In thousands)
Raw materials:
Security Products	$	2,365	$	2,298
Marine Components		378		569
Total raw materials		2,743		2,867
Work-in-process:
Security Products		7,387		8,154
Marine Components		1,601		1,530
Total work-in-process		8,988		9,684
Finished goods:
Security Products		2,440		2,076
Marine Components		803		686
Total finished goods		3,243		2,762
Total inventories, net	$	14,974	$	15,313

Note 5 – Accounts payable and accrued liabilities:

	December 31,		September 30,
	2016		2017
	(In thousands)
Accounts payable	$	2,614	$	2,911
Accrued liabilities:
Employee benefits		7,644		6,826
Customer tooling		346		378
Taxes other than on income		300		620
Other		978		687
Total accounts payable and accrued liabilities	$	11,882	$	11,422

- 8 -

Note 6 – Provision for income taxes:

	Nine months ended
	September 30,
	2016			2017
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 35%	$	4,096		$	4,850
Domestic production activities deduction		(362	)		(420	)
State income taxes		339			400
Other, net		24			76
Total income tax expense	$	4,097		$	4,906

Note 7 – Financial instruments:

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

	December 31,				September 30,
	2016				2017
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	33,153	$	33,153	$	28,790	$	28,790
Accounts receivable, net		10,347		10,347		11,717		11,717
Accounts payable		2,614		2,614		2,911		2,911

Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value.

Note 8 – Related party transactions:

From time to time, we may have loans and advances outstanding between us and various related parties pursuant to term and demand notes.  We generally enter into these loans and advances for cash management purposes.  When we loan funds to related parties, we are generally able to earn a higher rate of return on the loan than we would earn if we invested the funds in other instruments, and when we borrow from related parties, we are generally able to pay a lower rate of interest than we would pay if we had incurred third-party indebtedness.  While certain of these loans to affiliates may be of a lesser credit quality than cash equivalent instruments otherwise available to us, we believe we have considered the credit risks in the terms of the applicable loans.  In this regard, in August 2016 we entered into an unsecured revolving demand promissory note with Valhi whereby we agreed to loan Valhi up to $40 million.  Our loan to Valhi, as amended,  bears interest at prime plus 1.00%, payable quarterly, with all principal due on demand, but in any event no earlier than December 31, 2018.  The amount of our outstanding loans to Valhi at any time is at our discretion.  At September 30, 2017, the outstanding principal balance receivable from Valhi under the promissory note was $36.7 million. Interest income (including unused commitment fees) on our loan to Valhi was $0.5 million and $1.3 million for the third quarter and nine months ended September 30, 2017, respectively.

Note 9 – Recent accounting pronouncements:

Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles— Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment, which aims to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Previously, Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Instead, under the new ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and a goodwill impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. In no circumstances would the loss recognized exceed the total amount of goodwill allocated to that reporting unit. We have elected to adopt this ASU beginning with our goodwill impairment test performed in the third quarter of 2017. The application of ASU 2017-04 did not have a material effect on our Condensed Consolidated Financial Statements.

- 9 -

Pending Adoption

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606).  This standard replaces existing revenue recognition guidance, which in many cases was tailored for specific industries, with a uniform accounting standard applicable to all industries and transactions.  The new standard, as amended, is currently effective for us beginning with the first quarter of 2018.  Entities may elect to adopt ASU No. 2014-09 retrospectively for all periods for all contracts and transactions which occurred during the period (with a few exceptions for practical expediency) or retrospectively with a cumulative effect recognized as of the date of adoption.  We expect to adopt the standard in the first quarter of 2018 using the modified retrospective approach to adoption. Our sales generally involve single performance obligations to ship goods pursuant to customer purchase orders without further underlying contracts, and as such we expect adoption of this standard will have minimal effect on our revenues. We are in the process of evaluating the additional disclosure requirements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is a comprehensive rewriting of the lease accounting guidance which aims to increase comparability and transparency with regard to lease transactions.   The primary change will be the recognition of lease assets for the right-of–use of the underlying asset and lease liabilities for the obligation to make payments by lessees on the balance sheet for leases currently classified as operating leases.   The ASU also requires increased qualitative disclosure about leases in addition to quantitative disclosures currently required.  Companies are required to use a modified retrospective approach to adoption with a practical expedient which will allow companies to continue to account for existing leases under the prior guidance unless a lease is modified, other than the requirement to recognize the right-of-use asset and lease liability for all operating leases. The changes indicated above will be effective for us beginning in the first quarter of 2019, with early adoption permitted. We have not yet evaluated the effect this ASU will have on our Consolidated Financial Statements, but given the amount of our future minimum payments under non-cancellable operating leases at December 31, 2016 totaling $0.6 million, we do not expect the adoption of this standard to have a material effect on our Consolidated Balance Sheet.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

We are a leading manufacturer of engineered components utilized in a variety of applications and industries.  Through our Security Products segment we manufacture mechanical and electronic cabinet locks and other locking mechanisms used in recreational transportation, postal, office and institutional furniture, cabinetry, tool storage and healthcare applications.  We also manufacture stainless steel exhaust systems, gauges, throttle controls and trim tabs for the recreational marine and other non-marine industries through our Marine Components segment.

General

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements in this Quarterly Report that are not historical facts are forward-looking in nature and represent 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 that the expectations reflected in such 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 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 and include, but are not limited to, the following:

• Future demand for our products,

• Changes in our raw material and other operating costs (such as zinc, brass, aluminum, steel and energy costs) and our ability to pass those costs on to our customers or offset them with reductions in other operating costs,

• Price and product competition from low-cost manufacturing sources (such as China),

• The impact of pricing and production decisions,

• Customer and competitor strategies including substitute products,

• Uncertainties associated with the development of new product features,

• Future litigation,

• Potential difficulties in integrating future acquisitions,

• Decisions to sell operating assets other than in the ordinary course of business,

• Environmental matters (such as those requiring emission and discharge standards for existing and new facilities),

• The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters,

• The impact of current or future government regulations (including employee healthcare benefit related regulations),

• Potential difficulties in upgrading or implementing new manufacturing and accounting software systems,

• General global economic and political conditions that introduce instability into the U.S. economy (such as changes in the level of gross domestic product in various regions of the world),

• Operating interruptions (including, but not limited to labor disputes, hazardous chemical leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions and cyber-attacks); and

• Possible disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts.

Should one or more of these risks materialize (or the consequences of such 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.

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Operations Overview

We reported operating income of $3.4 million in the third quarter of 2017 compared to $4.5 million in the same period of 2016.  As expected, the decrease in operating income for the period is primarily the result of Security Products sales volumes to a single government security customer during 2016 that did not recur in 2017. Operating income for the first nine months of 2017 was $12.5 million compared to $11.5 million for the comparable period in 2016. The increase in operating income from 2016 to 2017 primarily resulted from higher Security Products sales volumes to existing government customers principally during the first half of 2017.

Our product offerings consist of a significantly large number of products that have a wide variation in selling price and manufacturing cost, which results in certain practical limitations on our ability to quantify the impact of changes in individual product sales quantities and selling prices on our net sales, cost of goods sold and gross profit.  In addition, small variations in period-to-period net sales, cost of goods sold and gross profit can result from changes in the relative mix of our products sold.

Results of Operations

	Three months ended
	September 30,
	2016		%			2017		%
	(Dollars in thousands)
Net sales	$	28,404		100.0	%	$	26,992		100.0	%
Cost of goods sold		19,005		66.9	%		18,794		69.6	%
Gross profit		9,399		33.1	%		8,198		30.4	%
Operating costs and expenses		4,926		17.3	%		4,830		17.9	%
Operating income	$	4,473		15.7	%	$	3,368		12.5	%
	Nine months ended
	September 30,
	2016		%			2017		%
	(Dollars in thousands)
Net sales	$	82,586		100.0	%	$	86,943		100.0	%
Cost of goods sold		56,496		68.4	%		59,552		68.5	%
Gross profit		26,090		31.6	%		27,391		31.5	%
Operating costs and expenses		14,547		17.6	%		14,897		17.1	%
Operating income	$	11,543		14.0	%	$	12,494		14.4	%

Net sales. Net sales decreased $1.4 million in the third quarter of 2017 relative to the same period in 2016 primarily as a result of Security Products sales in the third quarter of 2016 to a single government security customer that, as expected, did not recur in the third quarter of 2017. Net sales increased $4.4 million in the first nine months of 2017 compared to the respective period of 2016 primarily due to higher Security Products sales volumes to existing government security customers predominately during the first half of 2017, partially offset by a decrease in sales of security products to an original equipment manufacturer of recreational transportation products. Relative changes in selling prices did not have a material impact on net sales comparisons.

Cost of goods sold and gross profit. Cost of goods sold as a percentage of sales increased 2.7% in the third quarter of 2017 compared to the same period in 2016. Consequently, gross profit as a percentage of sales decreased over the same period. Gross profit dollars decreased due primarily to lower sales in the Security Products segment. The decrease in gross profit percentage is primarily due to unfavorable relative changes in customer and product mix in the Security Products segment as well as higher manufacturing costs at the Marine Components segment. Cost of goods sold and gross profit as a percentage of sales for the first nine months of 2017 were comparable to the same period in 2016. Gross profit dollars increased for the year-to-date period due to higher sales at Security Products.   

Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses.  Operating costs and expenses for the third quarter and first nine months of 2017 were comparable to the same periods in 2016.

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Operating income. As a percentage of net sales, operating income comparisons for the third quarter and first nine months of 2017 compared to the same periods of 2016 was primarily impacted by the factors impacting cost of goods sold, gross margin and operating costs discussed above.

Provision for income taxes. A tabular reconciliation of our actual tax provision to the U.S. federal statutory income tax rate is included in Note 6 to the Condensed Consolidated Financial Statements. Our operations are wholly within the U.S. and therefore our effective income tax rate is primarily reflective of the U.S. federal statutory rate.  

Segment Results

The key performance indicator for our segments is operating income.

	Three months ended									Nine months ended
	September 30,									September 30,
	2016			2017			% Change			2016			2017			% Change
	(Dollars in thousands)									(Dollars in thousands)
Net sales:
Security Products	$	24,680		$	22,854			-7	%	$	71,289		$	74,903			5	%
Marine Components		3,724			4,138			11	%		11,297			12,040			7	%
Total net sales	$	28,404		$	26,992			-5	%	$	82,586		$	86,943			5	%
Gross profit:
Security Products	$	8,311		$	7,216			-13	%	$	22,980		$	24,380			6	%
Marine Components		1,088			982			-10	%		3,110			3,011			-3	%
Total gross profit	$	9,399		$	8,198			-13	%	$	26,090		$	27,391			5	%
Operating income:
Security Products	$	5,421		$	4,249			-22	%	$	14,676		$	15,301			4	%
Marine Components		547			417			-24	%		1,436			1,284			-11	%
Corporate operating expenses		(1,495	)		(1,298	)		13	%		(4,569	)		(4,091	)		10	%
Total operating income	$	4,473		$	3,368			-25	%	$	11,543		$	12,494			8	%
Gross profit margin:
Security Products		33.7	%		31.6	%					32.2	%		32.5	%
Marine Components		29.2	%		23.7	%					27.5	%		25.0	%
Total gross profit margin		33.1	%		30.4	%					31.6	%		31.5	%
Operating income margin:
Security Products		22.0	%		18.6	%					20.6	%		20.4	%
Marine Components		14.7	%		10.1	%					12.7	%		10.7	%
Total operating income margin		15.7	%		12.5	%					14.0	%		14.4	%

Security Products. Security Products net sales decreased 7% in the third quarter of 2017 compared to the same period last year. The decrease in sales is primarily due to approximately $1.9 million in sales of products to a single government security customer during the third quarter of 2016 that, as expected, did not recur in the third quarter of 2017. In addition, lower sales of approximately $0.9 million to a customer serving the recreational transportation market during the third quarter of 2017 were offset by higher sales to other Security Products customers. Gross profit margin as a percentage of sales for the third quarter of 2017 decreased compared to the same period in 2016 due to unfavorable relative changes in customer and product mix and higher fixed costs as a percentage of sales due to lower production volumes. Operating income as a percentage of sales was also impacted by administrative costs, which although comparable to the prior period, represent a larger percentage of the reduced sales.

Security Products net sales increased 5% for the first nine months of 2017 compared to the same period last year primarily due to approximately $4.5 million in higher sales volumes to existing government security customers, partially offset by a decrease of approximately $2.5 million in sales to a customer serving the recreational transportation market. Gross profit margin and operating income as a percentage of sales for the first nine months of 2017 were comparable to the same period in the prior year.

Marine Components. Marine Components net sales increased 11% and 7% in the third quarter and first nine months of 2017, respectively, as compared to the same periods last year. The increase in sales for the first nine months of 2017 reflects generally improved demand for products sold to various markets. Gross profit margin and operating income as a percentage of net sales

- 13 -

decreased in the third quarter and first nine months of 2017 compared to the same periods last year due principally to unfavorable relative changes in customer and product mix andhigher manufacturing costs resulting from temporary personnel turnover in key departments.

Outlook. As expected, third quarter sales did not match the levels achieved in the first half of 2017 as government security sales moderated and softness in recreational transportation sales continued due to a significant customer experiencing weakened sales volumes. Nevertheless, we believe full year sales of security products for 2017 should meet or exceed 2016 levels. Similarly, we expect 2017 sales of marine products to meet or exceed 2016, as our growing Marine Components segment continues to benefit from innovation and diversification in our product offerings to the recreational boat market. We believe we have resolved the production challenges caused by temporary personnel turnover and expect margins to improve in the last quarter of the year. As in prior periods, we will continue to monitor general economic conditions and sales order rates and respond to fluctuations in customer demand through continuous evaluation of staffing levels and consistent execution of our lean manufacturing and cost improvement initiatives. Additionally, we continue to seek opportunities to gain market share in markets we currently serve, to expand into new markets and to develop new product features in order to mitigate the impact of changes in demand as well as broaden our sales base.

Liquidity and Capital Resources

Consolidated cash flows –

Operating activities. Trends in cash flows from operating activities, excluding changes in assets and liabilities have generally been similar to the trends in operating earnings. Changes in assets and liabilities result primarily from the timing of production, sales and purchases. Changes in assets and liabilities generally tend to even out over time. However, period-to-period relative changes in assets and liabilities can significantly affect the comparability of cash flows from operating activities.

Net cash provided by operating activities for the first nine months of 2017 increased by $1.0 million as compared to the first nine months of 2016.  The increase is primarily due to the net effects of:

• The positive impact of higher operating income in 2017 of $1.0 million;

• The positive impact of lower net cash used by relative changes in our inventories, receivables, prepaids, payables and non-tax related accruals attributable to our operations of approximately $1.1 million in 2017;

• The positive impact of higher interest income received of $1.2 million in 2017; and

• The negative impact of higher cash paid for taxes of $2.1 million in 2017, due to higher earnings in 2017.

Relative changes in working capital can have a significant effect on cash flows from operating activities.  As shown below, the change in our average days sales outstanding from December 31, 2016 to September 30, 2017 varied by segment.  Generally, we expect our average days sales outstanding to increase from December to September as the result of seasonally higher sales during the third quarter as compared to the fourth quarter. Overall, our September 30, 2017 days sales outstanding compared to December 31, 2016 is in line with our expectations. For comparative purposes, we have provided December 31, 2015 and September 30, 2016 numbers below.

Days Sales Outstanding:	December 31, 2015	September 30, 2016	December 31, 2016	September 30, 2017
Security Products	32 Days	42 Days	36 Days	40 Days
Marine Components	26 Days	37 Days	33 Days	35 Days
Consolidated CompX	31 Days	42 Days	36 Days	40 Days

As expected, our total average number of days in inventory decreased from December 31, 2016 to September 30, 2017 primarily as a result of seasonally higher sales during the third quarter 2017 as compared to the fourth quarter of 2016.  The variability in days in inventory among our segments primarily relates to the differences in the complexity of the production processes and therefore the length of time it takes to produce and sell end-products.  For comparative purposes, we have provided December 31, 2015 and September 30, 2016 numbers below. 

Days in Inventory:	December 31, 2015	September 30, 2016	December 31, 2016	September 30, 2017
Security Products	70 Days	68 Days	73 Days	73 Days
Marine Components	120 Days	83 Days	122 Days	80 Days
Consolidated CompX	76 Days	70 Days	79 Days	74 Days

- 14 -

Investing activities.Our capital expenditures were $2.1 million in the first nine months of 2017 compared to $2.3 million in the first nine months of 2016. Capital expenditures for 2016 include approximately $1.0 million related to the expansion of our Grayslake facility which was completed in April 2016. In addition, we loaned a net $9.3 million to Valhi in the first nine months of 2017 under the terms of our unsecured revolving demand promissory note receivable entered into in August 2016 ($49.7 million of gross borrowings by Valhi and $40.4 million of gross repayments). See Note 8 to the Condensed Consolidated Financial Statements.  

Financing activities.  Financing activities consisted only of quarterly cash dividends ($0.05 per share) and were comparable for the noted periods.

Future cash requirements –

Liquidity. Our primary source of liquidity on an on-going basis is our cash flow from operating activities, which is generally used to (i) fund capital expenditures, (ii) repay short-term or long-term indebtedness incurred primarily for capital expenditures, investment activities or reducing our outstanding stock, (iii) provide for the payment of dividends (if declared), and (iv) lend to affiliates. From time-to-time, we will incur indebtedness, primarily to fund capital expenditures or business combinations.

Periodically, we evaluate liquidity requirements, alternative uses of capital, capital needs and available resources in view of, among other things, our capital expenditure requirements, dividend policy and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to raise additional capital, refinance or restructure indebtedness, issue additional securities, modify our dividend policy or take a combination of such steps to manage our liquidity and capital resources. In the normal course of business, we may review opportunities for acquisitions, joint ventures or other business combinations in the component products industry. In the event of any such transaction, we may consider using available cash, issuing additional equity securities or increasing our indebtedness or that of our subsidiaries.

We believe that cash generated from operations together with cash on hand, as well as our ability to obtain external financing, will be sufficient to meet our liquidity needs for working capital, capital expenditures, debt service, dividends (if declared) and any amounts we might loan from time to time under the terms of our revolving loan to Valhi discussed in Note 8 to our Condensed Consolidated Financial Statements (which loans would be solely at our discretion) for both the next 12 months and five years. To the extent that our actual operating results or other developments differ from our expectations, our liquidity could be adversely affected.

All of our $28.8 million aggregate cash and cash equivalents at September 30, 2017 were held in the U.S.

Capital Expenditures. Firm purchase commitments for capital projects in process at September 30, 2017 totaled $0.6 million.  Our 2017 capital investments are limited to those expenditures required to meet our expected customer demand and those required to properly maintain our facilities and technology infrastructure.

Commitments and Contingencies. There have been no material changes in our contractual obligations since we filed our 2016 Annual Report and we refer you to that report for a complete description of these commitments.

Off-balance sheet financing arrangements –

We do not have any off-balance sheet financing agreements other than the operating leases discussed in our 2016 Annual Report.

Recent accounting pronouncements –

See Note 9 to our Condensed Consolidated Financial Statements.

Critical accounting policies –

There have been no changes in the first nine months of 2017 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2016 Annual Report.

ITEM  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risk from changes in interest rates and raw material prices. There have been no material changes in these market risks since we filed our 2016 Annual Report, and we refer you to Part I, Item 7A – “Quantitative and Qualitative Disclosure About Market Risk” in our 2016 Annual Report. See also Note 7 to the Condensed Consolidated Financial Statements.

- 15 -

ITEM  4. CONTROLS AND PROCEDURES.

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 that 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. Our management with the participation of Scott C. James, our President and Chief Executive Officer, and James W. Brown, our Vice President, Chief Financial Officer and Controller, has evaluated the design and operating effectiveness of our disclosure controls and procedures as of September 30, 2017. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of such evaluation.

Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, as defined in 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 our 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:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets,

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

• Provide reasonable assurance regarding prevention or timely detection of an unauthorized acquisition, use or disposition of our assets that could have a material effect on our Condensed Consolidated Financial Statements.

Changes in Internal Control Over Financial Reporting.  There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 16 -

Part II. OTHER INFORMATION

ITEM  1A. Risk Factors.

Reference is made to the 2016 Annual Report for a discussion of the risk factors related to our businesses. There have been no material changes in such risk factors during the first nine months of 2017.

ITEM  6. Exhibits.

Item No.	Exhibit Index
31.1	Certification
31.2	Certification
32.1	Certification
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

We have retained a signed original of any of the above exhibits that contains signatures, and we will provide such exhibit to the Commission or its staff upon request. We will also furnish, without charge, a copy of our Code of Business Conduct and Ethics, and Audit Committee Charter, each as adopted by our board of directors on June 3, 2015, upon request. Such requests should be directed to the attention of our Corporate Secretary at our corporate offices located at 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240.

- 17 -

SIGNATURES

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.

	COMPX INTERNATIONAL INC.
	(Registrant)
Date:  November 1, 2017	By:	/s/ James W. Brown
		James W. Brown
		Vice President, Chief Financial Officer and Controller

- 18 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Scott C. James, certify that:

1) I have reviewed this quarterly report on Form 10-Q of CompX International Inc.;

2) Based on my knowledge, this reportdoes not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  November 1, 2017

By:	/s/ Scott C. James
	Scott C. James
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James W. Brown, certify that:

1) I have reviewed this quarterly report on Form 10-Q of CompX International Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 13d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 1, 2017

By:	/s/ James W. Brown
	James W. Brown
	Vice President, Chief Financial Officer
	and Controller
	(Principal Accounting and Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CompX International Inc. (the Company) on Form 10-Q for the period ending September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Scott C. James, President and Chief Executive Officer of the Company and I, James W. Brown, Vice President, Chief Financial Officer and Controller of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ Scott C. James
	Scott C. James
	President and Chief Executive Officer
By:	/s/ James W. Brown
	James W. Brown
	Vice President, Chief Financial Officer and Controller

Date: November 1, 2017

Note:  The certification the registrant furnishes in this exhibit is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.  Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 26, 2017
Document And Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	CIX
Entity Registrant Name	COMPX INTERNATIONAL INC
Entity Central Index Key	0001049606
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Class A Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		2,426,107
Class B Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		10,000,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 28,790	$ 33,153
Accounts receivable, net	11,717	10,347
Inventories, net	15,313	14,974
Prepaid expenses and other	741	701
Total current assets	56,561	59,175
Other assets:
Note receivable from affiliate	36,700	27,400
Goodwill	23,742	23,742
Other noncurrent	590	590
Total other assets	61,032	51,732
Property and equipment:
Land	4,935	4,935
Buildings	22,767	22,541
Equipment	66,868	65,570
Construction in progress	680	1,098
Gross property and equipment	95,250	94,144
Less accumulated depreciation	62,661	61,071
Net property and equipment	32,589	33,073
Total assets	150,182	143,980
Current liabilities:
Accounts payable and accrued liabilities	11,422	11,882
Income taxes payable to affiliates	857	1,441
Total current liabilities	12,279	13,323
Noncurrent liabilities -
Deferred income taxes	4,949	4,887
Stockholders' equity:
Preferred stock
Additional paid-in capital	55,612	55,515
Retained earnings	77,218	70,131
Total stockholders' equity	132,954	125,770
Total liabilities and stockholders’ equity	150,182	143,980
Commitments and contingencies (Note 1)
Class A Common Stock
Stockholders' equity:
Common stock	24	24
Total stockholders' equity	24	24
Class B Common Stock
Stockholders' equity:
Common stock	100	100
Total stockholders' equity	$ 100	$ 100

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Net sales	$ 26,992	$ 28,404	$ 86,943	$ 82,586
Cost of goods sold	18,794	19,005	59,552	56,496
Gross profit	8,198	9,399	27,391	26,090
Selling, general and administrative expense	4,830	4,926	14,897	14,547
Operating income	3,368	4,473	12,494	11,543
Interest income	546	88	1,363	161
Income before taxes	3,914	4,561	13,857	11,704
Provision for income taxes	1,418	1,592	4,906	4,097
Net income	$ 2,496	$ 2,969	$ 8,951	$ 7,607
Basic and diluted net income per common share	$ 0.20	$ 0.24	$ 0.72	$ 0.61
Cash dividends per share	$ 0.05	$ 0.05	$ 0.15	$ 0.15
Basic and diluted weighted average shares outstanding	12,426	12,419	12,422	12,415

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 8,951	$ 7,607
Depreciation and amortization	2,747	2,790
Deferred income taxes	62	(77)
Other, net	252	348
Change in assets and liabilities:
Accounts receivable, net	(1,386)	(4,289)
Inventories, net	(475)	280
Accounts payable and accrued liabilities	(599)	438
Accounts with affiliates	(584)	817
Prepaids and other, net	(40)	17
Net cash provided by operating activities	8,928	7,931
Cash flows from investing activities:
Capital expenditures	(2,127)	(2,344)
Note receivable from affiliate:
Collections	40,400	4,400
Advances	(49,700)	(15,100)
Net cash used in investing activities	(11,427)	(13,044)
Cash flows from financing activities -
Dividends paid	(1,864)	(1,863)
Cash and cash equivalents - net change from:
Operating, investing and financing activities	(4,363)	(6,976)
Balance at beginning of period	33,153	52,347
Balance at end of period	28,790	45,371
Supplemental disclosures -
Cash paid for income taxes	$ 5,431	$ 3,355

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands	Total	Class A Common Stock	Class B Common Stock	Additional paid-in Capital	Retained Earnings
Balance at Dec. 31, 2016	$ 125,770	$ 24	$ 100	$ 55,515	$ 70,131
Net income	8,951				8,951
Issuance of common stock	97			97
Cash dividends	(1,864)				(1,864)
Balance at Sep. 30, 2017	$ 132,954	$ 24	$ 100	$ 55,612	$ 77,218

XML

Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

Note 1 – Organization and basis of presentation:

Organization. We (NYSE MKT: CIX) are 87% owned by NL Industries, Inc. (NYSE: NL) at September 30, 2017.  We manufacture and sell component products (security products and recreational marine components).  At September 30, 2017, Valhi, Inc. (NYSE: VHI) owns 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owns 93% of Valhi’s outstanding common stock.  All of Contran’s outstanding voting stock is held by a family trust established for the benefit of Lisa K. Simmons and Serena Simmons Connelly and their children, for which Ms. Simmons and Ms. Connelly are co-trustees, or is held directly by Ms. Simmons and Ms. Connelly or entities related to them.  Consequently, Ms. Simmons and Ms. Connelly may be deemed to control Contran, Valhi, NL and us.

Basis of presentation. Consolidated in this Quarterly Report are the results of CompX International Inc. and its subsidiaries. The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 that we filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017 (the “2016 Annual 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, 2016 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, 2016) 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 periods ended September 30, 2017 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 2016 Consolidated Financial Statements contained in our 2016 Annual Report.  

Our operations are reported on a 52 or 53-week year.  For presentation purposes, annual and quarterly information in the Condensed Consolidated Financial Statements and accompanying notes are presented as ended September 30, 2016, December 31, 2016 and September 30, 2017.  The actual dates of our annual and quarterly periods are October 2, 2016, January 1, 2017 and October 1, 2017, respectively.  Unless otherwise indicated, references in this report to “we”, “us” or “our” refer to CompX International Inc. and its subsidiaries, taken as a whole.

XML

Business Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segment Information

Note 2 – Business segment information:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2017			2016			2017
	(In thousands)						(In thousands)
Net sales:
Security Products	$	24,680		$	22,854		$	71,289		$	74,903
Marine Components		3,724			4,138			11,297			12,040
Total net sales	$	28,404		$	26,992		$	82,586		$	86,943
Operating income (loss):
Security Products	$	5,421		$	4,249		$	14,676		$	15,301
Marine Components		547			417			1,436			1,284
Corporate operating expenses		(1,495	)		(1,298	)		(4,569	)		(4,091	)
Total operating income		4,473			3,368			11,543			12,494
Interest income		88			546			161			1,363
Income before taxes	$	4,561		$	3,914		$	11,704		$	13,857

Intersegment sales are not material.

XML

Accounts Receivable, Net

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Accounts Receivable, Net

Note 3 – Accounts receivable, net:

	December 31,			September 30,
	2016			2017
	(In thousands)
Accounts receivable, net:
Security Products	$	9,329		$	10,153
Marine Components		1,088			1,634
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	10,347		$	11,717

XML

Inventories, Net

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventories, Net

Note 4 – Inventories, net:

	December 31,		September 30,
	2016		2017
	(In thousands)
Raw materials:
Security Products	$	2,365	$	2,298
Marine Components		378		569
Total raw materials		2,743		2,867
Work-in-process:
Security Products		7,387		8,154
Marine Components		1,601		1,530
Total work-in-process		8,988		9,684
Finished goods:
Security Products		2,440		2,076
Marine Components		803		686
Total finished goods		3,243		2,762
Total inventories, net	$	14,974	$	15,313

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Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2017

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

Note 5 – Accounts payable and accrued liabilities:

	December 31,		September 30,
	2016		2017
	(In thousands)
Accounts payable	$	2,614	$	2,911
Accrued liabilities:
Employee benefits		7,644		6,826
Customer tooling		346		378
Taxes other than on income		300		620
Other		978		687
Total accounts payable and accrued liabilities	$	11,882	$	11,422

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Provision for Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Note 6 – Provision for income taxes:

	Nine months ended
	September 30,
	2016			2017
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 35%	$	4,096		$	4,850
Domestic production activities deduction		(362	)		(420	)
State income taxes		339			400
Other, net		24			76
Total income tax expense	$	4,097		$	4,906

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Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Financial Instruments

Note 7 – Financial instruments:

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

	December 31,				September 30,
	2016				2017
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	33,153	$	33,153	$	28,790	$	28,790
Accounts receivable, net		10,347		10,347		11,717		11,717
Accounts payable		2,614		2,614		2,911		2,911

Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value.

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

Note 8 – Related party transactions:

From time to time, we may have loans and advances outstanding between us and various related parties pursuant to term and demand notes.  We generally enter into these loans and advances for cash management purposes.  When we loan funds to related parties, we are generally able to earn a higher rate of return on the loan than we would earn if we invested the funds in other instruments, and when we borrow from related parties, we are generally able to pay a lower rate of interest than we would pay if we had incurred third-party indebtedness.  While certain of these loans to affiliates may be of a lesser credit quality than cash equivalent instruments otherwise available to us, we believe we have considered the credit risks in the terms of the applicable loans.  In this regard, in August 2016 we entered into an unsecured revolving demand promissory note with Valhi whereby we agreed to loan Valhi up to $40 million.  Our loan to Valhi, as amended,  bears interest at prime plus 1.00%, payable quarterly, with all principal due on demand, but in any event no earlier than December 31, 2018.  The amount of our outstanding loans to Valhi at any time is at our discretion.  At September 30, 2017, the outstanding principal balance receivable from Valhi under the promissory note was $36.7 million. Interest income (including unused commitment fees) on our loan to Valhi was $0.5 million and $1.3 million for the third quarter and nine months ended September 30, 2017, respectively.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

Note 9 – Recent accounting pronouncements:

Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles— Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment, which aims to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Previously, Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Instead, under the new ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and a goodwill impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. In no circumstances would the loss recognized exceed the total amount of goodwill allocated to that reporting unit. We have elected to adopt this ASU beginning with our goodwill impairment test performed in the third quarter of 2017. The application of ASU 2017-04 did not have a material effect on our Condensed Consolidated Financial Statements.

Pending Adoption

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606).  This standard replaces existing revenue recognition guidance, which in many cases was tailored for specific industries, with a uniform accounting standard applicable to all industries and transactions.  The new standard, as amended, is currently effective for us beginning with the first quarter of 2018.  Entities may elect to adopt ASU No. 2014-09 retrospectively for all periods for all contracts and transactions which occurred during the period (with a few exceptions for practical expediency) or retrospectively with a cumulative effect recognized as of the date of adoption.  We expect to adopt the standard in the first quarter of 2018 using the modified retrospective approach to adoption. Our sales generally involve single performance obligations to ship goods pursuant to customer purchase orders without further underlying contracts, and as such we expect adoption of this standard will have minimal effect on our revenues. We are in the process of evaluating the additional disclosure requirements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is a comprehensive rewriting of the lease accounting guidance which aims to increase comparability and transparency with regard to lease transactions.   The primary change will be the recognition of lease assets for the right-of–use of the underlying asset and lease liabilities for the obligation to make payments by lessees on the balance sheet for leases currently classified as operating leases.   The ASU also requires increased qualitative disclosure about leases in addition to quantitative disclosures currently required.  Companies are required to use a modified retrospective approach to adoption with a practical expedient which will allow companies to continue to account for existing leases under the prior guidance unless a lease is modified, other than the requirement to recognize the right-of-use asset and lease liability for all operating leases. The changes indicated above will be effective for us beginning in the first quarter of 2019, with early adoption permitted. We have not yet evaluated the effect this ASU will have on our Consolidated Financial Statements, but given the amount of our future minimum payments under non-cancellable operating leases at December 31, 2016 totaling $0.6 million, we do not expect the adoption of this standard to have a material effect on our Consolidated Balance Sheet.

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Organization and Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

Organization. We (NYSE MKT: CIX) are 87% owned by NL Industries, Inc. (NYSE: NL) at September 30, 2017.  We manufacture and sell component products (security products and recreational marine components).  At September 30, 2017, Valhi, Inc. (NYSE: VHI) owns 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owns 93% of Valhi’s outstanding common stock.  All of Contran’s outstanding voting stock is held by a family trust established for the benefit of Lisa K. Simmons and Serena Simmons Connelly and their children, for which Ms. Simmons and Ms. Connelly are co-trustees, or is held directly by Ms. Simmons and Ms. Connelly or entities related to them.  Consequently, Ms. Simmons and Ms. Connelly may be deemed to control Contran, Valhi, NL and us.

Basis of Presentation

Basis of presentation. Consolidated in this Quarterly Report are the results of CompX International Inc. and its subsidiaries. The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 that we filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017 (the “2016 Annual 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, 2016 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, 2016) 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 periods ended September 30, 2017 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 2016 Consolidated Financial Statements contained in our 2016 Annual Report.  

Our operations are reported on a 52 or 53-week year.  For presentation purposes, annual and quarterly information in the Condensed Consolidated Financial Statements and accompanying notes are presented as ended September 30, 2016, December 31, 2016 and September 30, 2017.  The actual dates of our annual and quarterly periods are October 2, 2016, January 1, 2017 and October 1, 2017, respectively.  Unless otherwise indicated, references in this report to “we”, “us” or “our” refer to CompX International Inc. and its subsidiaries, taken as a whole.

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Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Business Segment Information

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2017			2016			2017
	(In thousands)						(In thousands)
Net sales:
Security Products	$	24,680		$	22,854		$	71,289		$	74,903
Marine Components		3,724			4,138			11,297			12,040
Total net sales	$	28,404		$	26,992		$	82,586		$	86,943
Operating income (loss):
Security Products	$	5,421		$	4,249		$	14,676		$	15,301
Marine Components		547			417			1,436			1,284
Corporate operating expenses		(1,495	)		(1,298	)		(4,569	)		(4,091	)
Total operating income		4,473			3,368			11,543			12,494
Interest income		88			546			161			1,363
Income before taxes	$	4,561		$	3,914		$	11,704		$	13,857

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Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of Accounts Receivable, Net

	December 31,			September 30,
	2016			2017
	(In thousands)
Accounts receivable, net:
Security Products	$	9,329		$	10,153
Marine Components		1,088			1,634
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	10,347		$	11,717

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Inventories, Net (Tables)

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventories, Net

	December 31,		September 30,
	2016		2017
	(In thousands)
Raw materials:
Security Products	$	2,365	$	2,298
Marine Components		378		569
Total raw materials		2,743		2,867
Work-in-process:
Security Products		7,387		8,154
Marine Components		1,601		1,530
Total work-in-process		8,988		9,684
Finished goods:
Security Products		2,440		2,076
Marine Components		803		686
Total finished goods		3,243		2,762
Total inventories, net	$	14,974	$	15,313

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Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

	December 31,		September 30,
	2016		2017
	(In thousands)
Accounts payable	$	2,614	$	2,911
Accrued liabilities:
Employee benefits		7,644		6,826
Customer tooling		346		378
Taxes other than on income		300		620
Other		978		687
Total accounts payable and accrued liabilities	$	11,882	$	11,422

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Provision for Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Provision for Income Taxes

	Nine months ended
	September 30,
	2016			2017
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 35%	$	4,096		$	4,850
Domestic production activities deduction		(362	)		(420	)
State income taxes		339			400
Other, net		24			76
Total income tax expense	$	4,097		$	4,906

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Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Carrying Value and Estimated Fair Value of Financial Instruments

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

	December 31,				September 30,
	2016				2017
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	33,153	$	33,153	$	28,790	$	28,790
Accounts receivable, net		10,347		10,347		11,717		11,717
Accounts payable		2,614		2,614		2,911		2,911

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Organization and Basis of Presentation - Additional Information (Detail)	Sep. 30, 2017
NL Industries
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of ownership held by parent company	87.00%
NL Industries | Valhi Inc
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of ownership held by parent company	83.00%
Contran Corporation | Valhi Inc
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of ownership held by parent company	93.00%

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Business Segment Information - Schedule of Business Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net sales:
Total net sales	$ 26,992	$ 28,404	$ 86,943	$ 82,586
Operating income (loss):
Total operating income	3,368	4,473	12,494	11,543
Interest income	546	88	1,363	161
Income before taxes	3,914	4,561	13,857	11,704
Operating Segments | Security Products
Net sales:
Total net sales	22,854	24,680	74,903	71,289
Operating income (loss):
Total operating income	4,249	5,421	15,301	14,676
Operating Segments | Marine Components
Net sales:
Total net sales	4,138	3,724	12,040	11,297
Operating income (loss):
Total operating income	417	547	1,284	1,436
Corporate
Operating income (loss):
Total operating income	$ (1,298)	$ (1,495)	$ (4,091)	$ (4,569)

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Accounts Receivable, Net - Schedule of Accounts Receivable, Net (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Allowance for doubtful accounts	$ (70)	$ (70)
Total accounts receivable, net	11,717	10,347
Security Products
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, gross	10,153	9,329
Marine Components
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, gross	$ 1,634	$ 1,088

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Inventories, Net - Inventories, Net (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventory [Line Items]
Total raw materials	$ 2,867	$ 2,743
Total work-in-process	9,684	8,988
Total finished goods	2,762	3,243
Total inventories, net	15,313	14,974
Security Products
Inventory [Line Items]
Total raw materials	2,298	2,365
Total work-in-process	8,154	7,387
Total finished goods	2,076	2,440
Marine Components
Inventory [Line Items]
Total raw materials	569	378
Total work-in-process	1,530	1,601
Total finished goods	$ 686	$ 803

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Accounts Payable and Accrued Liabilities - Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Payables And Accruals [Abstract]
Accounts payable	$ 2,911	$ 2,614
Accrued liabilities:
Employee benefits	6,826	7,644
Customer tooling	378	346
Taxes other than on income	620	300
Other	687	978
Total accounts payable and accrued liabilities	$ 11,422	$ 11,882

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Provision for Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Expected tax expense, at the U.S. federal statutory income tax rate of 35%			$ 4,850	$ 4,096
Domestic production activities deduction			(420)	(362)
State income taxes			400	339
Other, net			76	24
Total income tax expense	$ 1,418	$ 1,592	$ 4,906	$ 4,097

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Provision for Income Taxes - Provision for Income Taxes (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
U.S. federal statutory income tax rate	35.00%	35.00%

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Financial Instruments - Carrying Value and Estimated Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Carrying Amount
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 28,790	$ 33,153
Accounts receivable, net	11,717	10,347
Accounts payable	2,911	2,614
Fair Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	28,790	33,153
Accounts receivable, net	11,717	10,347
Accounts payable	$ 2,911	$ 2,614

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Related Party Transactions - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 31, 2016	Sep. 30, 2017	Sep. 30, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Note receivable from affiliate		$ 36,700,000	$ 36,700,000	$ 27,400,000
Unsecured Revolving Demand Promissory | Valhi Inc
Related Party Transaction [Line Items]
Maximum loan amount	$ 40,000,000
Interest rate on loans repayment	1.00%
Principal due on demand effective date	Dec. 31, 2018
Note receivable from affiliate		36,700,000	36,700,000
Interest income including unused commitment fees on our loan		$ 500,000	$ 1,300,000

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Recent Accounting Pronouncements - Additional Information (Detail) $ in Millions	Dec. 31, 2016 USD ($)
New Accounting Pronouncements And Changes In Accounting Principles [Abstract]
Amount of future minimum payments under non-cancellable operating leases	$ 0.6