10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES       EXCHANGE ACT OF 1934

For the quarter ended March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _________ to _________

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	75240-2620
(Address of principal executive offices)	(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	CIX	NYSE American

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 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 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  ☒   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.☐

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

As of April 30, 2020, the registrant had 12,443,057 shares of Class A common stock, $.01 par value per share, outstanding.

COMPX INTERNATIONAL INC.

Index

Part I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets – December 31, 2019 and March 31, 2020 (unaudited)	- 3 -
	Condensed Consolidated Statements of Income (unaudited) – Three months ended March 31, 2019 and 2020	- 4 -
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – Three months ended March 31, 2019 and 2020	- 5 -
	Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2019 and 2020	- 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	- 16 -
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.

- 2 -

COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,		March 31,
	2019		2020
ASSETS			(unaudited)
Current assets:
Cash and cash equivalents	$	63,255	$	64,046
Accounts receivable, net		11,870		15,232
Inventories, net		18,348		18,962
Prepaid expenses and other		1,624		1,414
Total current assets		95,097		99,654
Other assets:
Note receivable from affiliate		28,100		25,500
Goodwill		23,742		23,742
Other noncurrent		590		590
Total other assets		52,432		49,832
Property and equipment:
Land		4,940		4,940
Buildings		23,047		23,047
Equipment		67,718		68,443
Construction in progress		1,002		463
		96,707		96,893
Less accumulated depreciation		65,692		66,531
Net property and equipment		31,015		30,362
Total assets	$	178,544	$	179,848
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	12,078	$	9,007
Income taxes payable to affiliates		984		2,239
Total current liabilities		13,062		11,246
Noncurrent liabilities -
Deferred income taxes		3,287		3,380
Stockholders' equity:
Preferred stock		—		—
Class A common stock		124		124
Additional paid-in capital		55,869		55,869
Retained earnings		106,202		109,229
Total stockholders' equity		162,195		165,222
Total liabilities and stockholders’ equity	$	178,544	$	179,848

Commitments and contingencies (Note 1)

See accompanying Notes to Condensed Consolidated Financial Statements.

- 3 -

COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	Three months ended
	March 31,
	2019		2020
	(unaudited)
Net sales	$	31,176	$	32,311
Cost of sales		21,552		21,880
Gross margin		9,624		10,431
Selling, general and administrative expense		5,334		5,411
Operating income		4,290		5,020
Interest income		837		607
Income before taxes		5,127		5,627
Provision for income taxes		1,141		1,356
Net income	$	3,986	$	4,271
Basic and diluted net income per common share	$	0.32	$	0.34
Basic and diluted weighted average shares outstanding		12,436		12,443

See accompanying Notes to Condensed Consolidated Financial Statements.

- 4 -

COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(unaudited)

	For the three months ended March 31, 2019
	Class A		Additional					Total
	common		paid-in		Retained			stockholders'
	stock		capital		earnings			equity
Balance at December 31, 2018	$	124	$	55,751	$	93,687		$	149,562
Net income		—		—		3,986			3,986
Cash dividends ($0.07 per share)		—		—		(870	)		(870	)
Balance at March 31, 2019	$	124	$	55,751	$	96,803		$	152,678

	For the three months ended March 31, 2020
	Class A		Additional					Total
	common		paid-in		Retained			stockholders'
	stock		capital		earnings			equity
Balance at December 31, 2019	$	124	$	55,869	$	106,202		$	162,195
Net income		—		—		4,271			4,271
Cash dividends ($0.10 per share)		—		—		(1,244	)		(1,244	)
Balance at March 31, 2020	$	124	$	55,869	$	109,229		$	165,222

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMPX INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three months ended
	March 31,
	2019			2020
	(unaudited)
Cash flows from operating activities:
Net income	$	3,986		$	4,271
Depreciation and amortization		901			950
Deferred income taxes		144			93
Other, net		153			62
Change in assets and liabilities:
Accounts receivable, net		(3,221	)		(3,362	)
Inventories, net		(1,475	)		(673	)
Accounts payable and accrued liabilities		(3,216	)		(3,011	)
Accounts with affiliates		541			1,389
Prepaids and other, net		151			76
Net cash used in operating activities		(2,036	)		(205	)
Cash flows from investing activities:
Capital expenditures		(439	)		(360	)
Note receivable from affiliate:
Collections		11,400			18,228
Advances		(17,400	)		(15,628	)
Net cash provided by (used in) investing activities		(6,439	)		2,240
Cash flows from financing activities -
Dividends paid		(870	)		(1,244	)
Cash and cash equivalents - net change from:
Operating, investing and financing activities		(9,345	)		791
Balance at beginning of period		45,414			63,255
Balance at end of period	$	36,069		$	64,046
Supplemental disclosures -
Cash paid for income taxes	$	993		$	-

- 6 -

COMPX INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(unaudited)

Note 1 – Organization and basis of presentation:

Organization. We (NYSE American: CIX) were 86% owned by NL Industries, Inc. (NYSE: NL) at March 31, 2020. We manufacture and sell component products (security products and recreational marine components). At March 31, 2020, Valhi, Inc. (NYSE: VHI) owned 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owned 92% of Valhi’s outstanding common stock. At March 31, 2020, a majority of Contran’s outstanding voting stock was held directly by Lisa K. Simmons and Serena Simmons Connelly and various family trusts established for the benefit of Ms. Simmons and Ms. Connelly and their children and for which Ms. Simmons or Ms. Connelly, as applicable, served as trustee (collectively, the “Other Trusts”). In addition, each of Ms. Simmons and Ms. Connelly served as co-chair of the Contran board of directors. The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and Ms. Connelly 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, NL 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, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

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, 2019 that we filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020 (the “2019 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, 2019 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) 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 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 Consolidated Financial Statements contained in our 2019 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 March 31, 2019, December 31, 2019 and March 31, 2020.  The actual dates of our annual and quarterly periods are March 31, 2019, December 29, 2019 and March 29, 2020, 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.

- 7 -

Note 2 – Business segment information:

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Net sales:
Security Products	$	24,704		$	25,469
Marine Components		6,472			6,842
Total net sales	$	31,176		$	32,311
Operating income (loss):
Security Products	$	5,076		$	5,713
Marine Components		901			1,082
Corporate operating expenses		(1,687	)		(1,775	)
Total operating income		4,290			5,020
Interest income		837			607
Income before taxes	$	5,127		$	5,627

Intersegment sales are not material.

Note 3 – Accounts receivable, net:

	December 31,			March 31,
	2019			2020
	(In thousands)
Accounts receivable, net:
Security Products	$	10,321		$	12,830
Marine Components		1,619			2,472
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	11,870		$	15,232

Note 4 – Inventories, net:

	December 31,		March 31,
	2019		2020
	(In thousands)
Raw materials:
Security Products	$	2,134	$	2,397
Marine Components		807		707
Total raw materials		2,941		3,104
Work-in-process:
Security Products		9,138		9,549
Marine Components		2,633		2,688
Total work-in-process		11,771		12,237
Finished goods:
Security Products		2,582		2,526
Marine Components		1,054		1,095
Total finished goods		3,636		3,621
Total inventories, net	$	18,348	$	18,962

- 8 -

Note 5 – Accounts payable and accrued liabilities:

	December 31,		March 31,
	2019		2020
	(In thousands)
Accounts payable:
Security Products	$	1,975	$	2,106
Marine Components		539		672
Accrued liabilities:
Employee benefits		8,331		4,552
Customer tooling		264		239
Taxes other than on income		350		578
Other		619		860
Total accounts payable and accrued liabilities	$	12,078	$	9,007

Note 6 – Provision for income taxes:

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 21%	$	1,077		$	1,182
State income taxes		179			197
FDII benefit		(119	)		(28	)
Other, net		4			5
Total income tax expense	$	1,141		$	1,356

We qualify for the foreign derived intangible income deduction.  We recognized a current cash tax benefit of $28,000 in the first quarter of 2020 and $119,000 in the first quarter of 2019 ($98,000 of our 2019 current cash tax benefit is related to 2018).

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 the limitation of business interest for 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 determined the impact is not material to our tax provision.

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,				March 31,
	2019				2020
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	63,255	$	63,255	$	64,046	$	64,046
Accounts receivable, net		11,870		11,870		15,232		15,232
Accounts payable		2,514		2,514		2,778		2,778

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

- 9 -

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, we have 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, 2021.  Loans made to Valhi at any time under the agreement are at our discretion.  At March 31, 2020, the outstanding principal balance receivable from Valhi under the promissory note was $25.5 million. Interest income (including unused commitment fees) on our loan to Valhi was $0.6 million and $0.4 million for the three months ended March 31, 2019 and 2020, respectively. On March 31, 2020 (two days after our fiscal quarterly period, but on the last day of the fiscal period for Valhi), we loaned $5.0 million to Valhi, increasing the outstanding principal balance receivable from Valhi under the promissory note to $30.5 million.

We made a cash payment of $0.9 million to NL in lieu of state tax one day after our fiscal quarterly period, but one day prior to the end of the fiscal quarterly period for NL.

Note 9 – Recent accounting pronouncements:

Adopted

In December 2019, the Financial Accounting Standards Board issued 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; 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 in the first quarter of 2020 and the adoption of this standard did not have a material effect on our condensed consolidated financial statements.

Note 10 – Subsequent Events:

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.

- 10 -

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, wake enhancement systems and trim tabs for the recreational marine and other 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 products and product features,

• Future litigation,

• Our ability to protect or defend our intellectual property rights,

• Potential difficulties in integrating future acquisitions,

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

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

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

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

• General global economic and political conditions that disrupt or introduce instability into our supply chain, impact our customers’ level of demand or our customers’ perception regarding demand or impair our ability to operate our facilities (including changes in the level of gross domestic product in various regions of the world, natural disasters, terrorist acts, global conflicts and public health crises such as COVID-19),

• Operating interruptions (including, but not limited to labor disputes, hazardous chemical leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime, transportation interruptions, cyber-attacks and public health crises such as COVID-19); 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 if the consequences worsen, or if 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.

- 11 -

Operating Income Overview

We reported operating income of $5.0 million in the first quarter of 2020 compared to $4.3 million in the same period of 2019. The increase in operating income from 2019 to 2020 primarily resulted from higher Security Products sales volumes to existing government security customers and to a lesser extent higher Marine Components sales to the towboat and center console boat markets.

We sell a 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
	March 31,
	2019		%			2020		%
	(Dollars in thousands)
Net sales	$	31,176		100.0	%	$	32,311		100.0	%
Cost of sales		21,552		69.1			21,880		67.7
Gross margin		9,624		30.9			10,431		32.3
Operating costs and expenses		5,334		17.1			5,411		16.8
Operating income	$	4,290		13.8	%	$	5,020		15.5	%

Net sales. Net sales increased $1.1 million in the first quarter of 2020 compared to the same period in 2019 primarily due to higher Security Products sales and to a lesser extent higher Marine Components 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% in the first quarter of 2020 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.  As a result, gross margin as a percentage of sales increased over the same period. Gross margin dollars increased due to higher sales for both business segments.

Operating costs and expenses. Operating costs and expenses consist primarily of sales and administrative-related personnel costs, sales commissions and advertising expenses directly related to product sales and administrative costs relating to business unit and corporate management activities, as well as gains and losses on plant, property and equipment.  Operating costs and expenses for first quarter of 2020 were comparable to the same period in 2019.

Operating income. As a percentage of net sales, operating income for the first quarter of 2020 increased compared to the same period of 2019 and was primarily impacted by the factors impacting cost of sales, 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 and applicable state taxes.  

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Segment Results

The key performance indicator for our segments is operating income.

	Three months ended
	March 31,
	2019			2020			% Change
	(Dollars in thousands)
Security Products:
Net sales	$	24,704		$	25,469			3	%
Cost of sales		16,733			16,911			1
Gross margin		7,971			8,558			7
Operating costs and expenses		2,895			2,845			-2
Operating income	$	5,076		$	5,713			13
Gross margin		32.3	%		33.6	%
Operating income margin		20.5			22.4

Security Products. Security Products net sales increased 3% in the first quarter of 2020 compared to the same period last year.  The increase in sales is primarily due to higher sales to existing government security customers, partially offset by lower sales to transportation and distribution customers. Gross margin and operating income as a percentage of sales increased in 2020 compared to the same period in 2019 due to favorable customer and product mix on higher sales, partially offset by increased medical costs.

	Three months ended
	March 31,
	2019			2020			% Change
	(Dollars in thousands)
Marine Components:
Net sales	$	6,472		$	6,842			6	%
Cost of sales		4,819			4,969			3
Gross margin		1,653			1,873			13
Operating costs and expenses		752			791			5
Operating income	$	901		$	1,082			20
Gross margin		25.5	%		27.4	%
Operating income margin		13.9			15.8

Marine Components. Marine Components net sales increased 6% in the first quarter of 2020 compared to the same period last year primarily due to increased sales to the towboat and center console boat markets, partially offset by lower sales to distribution customers. Gross margin and operating income as a percentage of sales increased in the first quarter of 2020 compared to the same period last year due to a favorable customer and product mix 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 the states where we operate, and are considered critical in supplying components to many essential and mandatory markets. Beginning in late March 2020, we began receiving requests from certain customers of both our Security Products and Marine Components segments to delay or postpone shipments, in some cases because our customers’ production facilities have temporarily closed. We operate three facilities, each of which specializes in certain manufacturing processes and is therefore dependent upon the other facilities to some extent to manufacture finished goods. With 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

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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 ship during the second quarter, in part due to the anticipated decline in demand during the same period.

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 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, we expect U.S. and worldwide gross domestic product to be significantly impacted for an indeterminate period.

Based on current conditions, we expect to report reduced revenue and operating income during the second quarter of 2020 compared to the first quarter of 2020, but the severity of the decline will depend on customer demand for our products, including the timing and extent to which our customers restart their operations, on our customers’ perception as to when consumer demand for their products will return and on any future disruptions in our operations or our suppliers’ operations, all of which are difficult to predict. Our operations teams meet daily to ensure we are maintaining a safe working environment for all of our employees, minimizing operational disruptions and managing inventory levels. It is possible we may temporarily close one or more of our facilities again for the health and safety of our employees before the COVID-19 crisis is over.  We have significant cash balances of approximately $64.0 million at March 31, 2020, and we believe we are well positioned to navigate the uncertainty ahead.

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.

We generally report a net use of cash from operating activities in the first three months of each year due to seasonal changes in the level of our working capital. Our net cash used by operating activities for the first three months of 2020 decreased by $1.8 million as compared to the first three months of 2019.  The decrease in net cash used is primarily due to the net effects of:

• A $0.7 million increase in operating income in 2020,

• A $0.6 million decrease in interest received in 2020 due to the relative timing of interest received,

• A $1.0 million decrease in cash paid for taxes in 2020 due to the relative timing of payments; and

• A lower amount of net cash used by relative changes in our inventories, receivables, prepaids, payables and non-tax related accruals of approximately $0.8 million in 2020.

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, 2019 to March 31, 2020 varied by segment, primarily as a result of relative changes in the timing of collections.  For comparative purposes, we have provided December 31, 2018 and March 31, 2019 numbers below.

Days Sales Outstanding:	December 31, 2018	March 31, 2019	December 31, 2019	March 31, 2020
Security Products	43 Days	48 Days	38 Days	46 Days
Marine Components	30 Days	34 Days	27 Days	33 Days
Consolidated CompX	40 Days	45 Days	36 Days	43 Days

Our total average number of days in inventory is comparable from December 31, 2019 to March 31, 2020. The variability in days in inventory among our segments relates to the differences in the average length of time it takes to produce and sell end-products. For comparative purposes, we have provided December 31, 2018 and March 31, 2019 numbers below. Marine Components days in inventory was unusually low at March 31, 2019 as a result of rapid sales growth for Marine Components which increased average days sales while temporarily limiting opportunities to strategically restock.

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Days in Inventory:	December 31, 2018	March 31, 2019	December 31, 2019	March 31, 2020
Security Products	77 Days	81 Days	76 Days	78 Days
Marine Components	91 Days	68 Days	100 Days	82 Days
Consolidated CompX	80 Days	78 Days	81 Days	79 Days

Investing activities.Our capital expenditures were $0.4 million in the first three months of 2020 and 2019. 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 of gross borrowings and $11.4 million of gross repayments). See Note 8 to the Condensed Consolidated Financial Statements.  

Financing activities.  Financing activities consisted only of quarterly cash dividends. In February 2020, our board of directors increased our regular quarterly dividend from $.07 per share to $.10 per share beginning in the first quarter of 2020. The declaration and payment of future dividends and the amount thereof, if any, is discretionary and is dependent upon our results of operations, financial condition, cash requirements for our businesses, contractual requirements 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 we might pay.

Future cash requirements –

Liquidity. Our primary source of liquidity on an ongoing 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 $64.0 million aggregate cash and cash equivalents at March 31, 2020 were held in the U.S.

Capital Expenditures. Firm purchase commitments for capital projects in process at March 31, 2020 totaled $0.5 million.  Our 2020 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 2019 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.

Recent accounting pronouncements –

See Note 9 to our Condensed Consolidated Financial Statements.

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Critical accounting policies –

There have been no changes in the first three months of 2020 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 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 2019 Annual Report, and we refer you to Part I, Item 7A – “Quantitative and Qualitative Disclosure About Market Risk” in our 2019 Annual Report. See also Note 7 to the Condensed Consolidated Financial Statements.

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 Amy A. Samford, our Vice President and Chief Financial Officer, has evaluated the design and operating effectiveness of our disclosure controls and procedures as of March 31, 2020. 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 March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

ITEM  1A. Risk Factors.

Reference is made to the 2019 Annual Report for a discussion of risk factors related to our businesses. On March 11, 2020, the World Health Organization declared the coronavirus known as “COVID-19” a pandemic. We have approximately 550 employees and operate 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.  We are designated an essential business in the states where we operate and are therefore permitted to fully operate during the pandemic, but because the COVID-19 pandemic affected the health and safety of our employees, we temporarily closed our 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 we may have additional temporary closures at one or all of our facilities for the health and safety of our workforce if conditions warrant. In addition, the pandemic has caused the closure of some of our 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 our products. We are actively monitoring our suppliers, customers and facilities to rapidly respond to changing conditions. The extent of the impact of the coronavirus outbreak on our 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 we operate, all of which are uncertain and cannot be predicted.

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

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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:  May 5, 2020	By:	/s/ Amy A. Samford
		Amy A. Samford
		Vice President and Chief Financial Officer
	By:	/s/ Amy E. Ruf
		Amy E. Ruf
		Vice President 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:  May 5, 2020

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

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Amy A. Samford, 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: May 5, 2020

By:	/s/ Amy A. Samford
	Amy A. Samford
	Vice President and Chief Financial Officer
	(Principal 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 March 31, 2020 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, Amy A. Samford, Vice President and Chief Financial Officer 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/ Amy A. Samford
	Amy A. Samford
	Vice President and Chief Financial Officer

Date: May 5, 2020

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

Organization and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

Organization. We (NYSE American: CIX) were 86% owned by NL Industries, Inc. (NYSE: NL) at March 31, 2020. We manufacture and sell component products (security products and recreational marine components). At March 31, 2020, Valhi, Inc. (NYSE: VHI) owned 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owned 92% of Valhi’s outstanding common stock. At March 31, 2020, a majority of Contran’s outstanding voting stock was held directly by Lisa K. Simmons and Serena Simmons Connelly and various family trusts established for the benefit of Ms. Simmons and Ms. Connelly and their children and for which Ms. Simmons or Ms. Connelly, as applicable, served as trustee (collectively, the “Other Trusts”). In addition, each of Ms. Simmons and Ms. Connelly served as co-chair of the Contran board of directors. The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and Ms. Connelly 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, NL 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, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

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, 2019 that we filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020 (the “2019 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, 2019 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) 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 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 Consolidated Financial Statements contained in our 2019 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 March 31, 2019, December 31, 2019 and March 31, 2020.  The actual dates of our annual and quarterly periods are March 31, 2019, December 29, 2019 and March 29, 2020, 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

Financial Instruments

3 Months Ended

Mar. 31, 2020

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,				March 31,
	2019				2020
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	63,255	$	63,255	$	64,046	$	64,046
Accounts receivable, net		11,870		11,870		15,232		15,232
Accounts payable		2,514		2,514		2,778		2,778

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

XML

Provision for Income Taxes - Provision for Income Taxes (Parenthetical) (Detail)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
U.S. federal statutory income tax rate	21.00%	21.00%

XML

Business Segment Information

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Business Segment Information

Note 2 – Business segment information:

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Net sales:
Security Products	$	24,704		$	25,469
Marine Components		6,472			6,842
Total net sales	$	31,176		$	32,311
Operating income (loss):
Security Products	$	5,076		$	5,713
Marine Components		901			1,082
Corporate operating expenses		(1,687	)		(1,775	)
Total operating income		4,290			5,020
Interest income		837			607
Income before taxes	$	5,127		$	5,627

Intersegment sales are not material.

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Class A Common Stock	Additional paid-in Capital	Retained Earnings
Balance at Dec. 31, 2018	$ 149,562	$ 124	$ 55,751	$ 93,687
Net income	3,986			3,986
Cash dividends	(870)			(870)
Balance at Mar. 31, 2019	152,678	124	55,751	96,803
Balance at Dec. 31, 2019	162,195	124	55,869	106,202
Net income	4,271			4,271
Cash dividends	(1,244)			(1,244)
Balance at Mar. 31, 2020	$ 165,222	$ 124	$ 55,869	$ 109,229

XML

Provision for Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Expected tax expense, at the U.S. federal statutory income tax rate of 21%	$ 1,182	$ 1,077
State income taxes	197	179
FDII benefit	(28)	(119)	$ (98)
Other, net	5	4
Total income tax expense	$ 1,356	$ 1,141

XML

Business Segment Information - Schedule of Business Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net sales:
Total net sales	$ 32,311	$ 31,176
Operating income (loss):
Total operating income	5,020	4,290
Interest income	607	837
Income before taxes	5,627	5,127
Operating Segments | Security Products
Net sales:
Total net sales	25,469	24,704
Operating income (loss):
Total operating income	5,713	5,076
Operating Segments | Marine Components
Net sales:
Total net sales	6,842	6,472
Operating income (loss):
Total operating income	1,082	901
Corporate
Operating income (loss):
Total operating income	$ (1,775)	$ (1,687)

XML

Accounts Payable and Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

	December 31,		March 31,
	2019		2020
	(In thousands)
Accounts payable:
Security Products	$	1,975	$	2,106
Marine Components		539		672
Accrued liabilities:
Employee benefits		8,331		4,552
Customer tooling		264		239
Taxes other than on income		350		578
Other		619		860
Total accounts payable and accrued liabilities	$	12,078	$	9,007

XML

Organization and Basis of Presentation - Additional Information (Detail)	Mar. 31, 2020
NL Industries | CompX International Inc
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of ownership held by parent company	86.00%
Valhi Inc | NL Industries
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	92.00%

XML

Inventories, Net (Tables)

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventories, Net

	December 31,		March 31,
	2019		2020
	(In thousands)
Raw materials:
Security Products	$	2,134	$	2,397
Marine Components		807		707
Total raw materials		2,941		3,104
Work-in-process:
Security Products		9,138		9,549
Marine Components		2,633		2,688
Total work-in-process		11,771		12,237
Finished goods:
Security Products		2,582		2,526
Marine Components		1,054		1,095
Total finished goods		3,636		3,621
Total inventories, net	$	18,348	$	18,962

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Accounts Payable and Accrued Liabilities - Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued liabilities:
Employee benefits	$ 4,552	$ 8,331
Customer tooling	239	264
Taxes other than on income	578	350
Other	860	619
Total accounts payable and accrued liabilities	9,007	12,078
Security Products
Accounts payable:
Accounts payable	2,106	1,975
Marine Components
Accounts payable:
Accounts payable	$ 672	$ 539

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 10 – Subsequent Events:

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.

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Provision for Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Note 6 – Provision for income taxes:

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 21%	$	1,077		$	1,182
State income taxes		179			197
FDII benefit		(119	)		(28	)
Other, net		4			5
Total income tax expense	$	1,141		$	1,356

We qualify for the foreign derived intangible income deduction.  We recognized a current cash tax benefit of $28,000 in the first quarter of 2020 and $119,000 in the first quarter of 2019 ($98,000 of our 2019 current cash tax benefit is related to 2018).

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 the limitation of business interest for 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 determined the impact is not material to our tax provision.

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Provision for Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Foreign-derived intangible income benefit	$ 28	$ 119	$ 98

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement Of Stockholders Equity [Abstract]
Cash dividends per share	$ 0.10	$ 0.07

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
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
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		12,443,057
Document Quarterly Report	true
Document Transition Report	false
City Area Code	972
Entity Address, Address Line One	5430 LBJ Freeway
Entity Address, Address Line Two	Suite 1700
Entity Address, Address Line Three	Three Lincoln Centre
Entity Address, City or Town	Dallas
Entity Address, Postal Zip Code	75240
Entity Address, State or Province	TX
Entity Current Reporting Status	Yes
Entity File Number	1-13905
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Tax Identification Number	57-0981653
Local Phone Number	448-1400
Title of 12(b) Security	Class A common stock
Security Exchange Name	NYSEAMER

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Accounts Receivable, Net

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Accounts Receivable, Net

Note 3 – Accounts receivable, net:

	December 31,			March 31,
	2019			2020
	(In thousands)
Accounts receivable, net:
Security Products	$	10,321		$	12,830
Marine Components		1,619			2,472
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	11,870		$	15,232

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Accounts Receivable, Net - Schedule of Accounts Receivable, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Allowance for doubtful accounts	$ (70)	$ (70)
Total accounts receivable, net	15,232	11,870
Security Products
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, gross	12,830	10,321
Marine Components
Accounts Notes And Loans Receivable [Line Items]
Accounts receivable, gross	$ 2,472	$ 1,619

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Provision for Income Taxes (Tables)

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Provision for Income Taxes

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Expected tax expense, at the U.S. federal statutory    income tax rate of 21%	$	1,077		$	1,182
State income taxes		179			197
FDII benefit		(119	)		(28	)
Other, net		4			5
Total income tax expense	$	1,141		$	1,356

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Related Party Transactions - Additional Information (Detail) - USD ($)		1 Months Ended	3 Months Ended
	Apr. 02, 2020	Aug. 31, 2016	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Related Party Transaction [Line Items]
Note receivable from affiliate			$ 25,500,000		$ 28,100,000
Amount loaned			15,628,000	$ 17,400,000
NL Industries
Related Party Transaction [Line Items]
Cash payment to NL in lieu of state tax			900,000
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, 2021
Note receivable from affiliate			25,500,000
Interest income including unused commitment fees on our loan			$ 400,000	$ 600,000
Unsecured Revolving Demand Promissory | Valhi Inc | Subsequent Event
Related Party Transaction [Line Items]
Note receivable from affiliate	$ 30,500,000
Amount loaned	$ 5,000,000

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Business Segment Information (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Business Segment Information

	Three months ended
	March 31,
	2019			2020
	(In thousands)
Net sales:
Security Products	$	24,704		$	25,469
Marine Components		6,472			6,842
Total net sales	$	31,176		$	32,311
Operating income (loss):
Security Products	$	5,076		$	5,713
Marine Components		901			1,082
Corporate operating expenses		(1,687	)		(1,775	)
Total operating income		4,290			5,020
Interest income		837			607
Income before taxes	$	5,127		$	5,627

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

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, we have 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, 2021.  Loans made to Valhi at any time under the agreement are at our discretion.  At March 31, 2020, the outstanding principal balance receivable from Valhi under the promissory note was $25.5 million. Interest income (including unused commitment fees) on our loan to Valhi was $0.6 million and $0.4 million for the three months ended March 31, 2019 and 2020, respectively. On March 31, 2020 (two days after our fiscal quarterly period, but on the last day of the fiscal period for Valhi), we loaned $5.0 million to Valhi, increasing the outstanding principal balance receivable from Valhi under the promissory note to $30.5 million.

We made a cash payment of $0.9 million to NL in lieu of state tax one day after our fiscal quarterly period, but one day prior to the end of the fiscal quarterly period for NL.

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Inventories, Net

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventories, Net

Note 4 – Inventories, net:

	December 31,		March 31,
	2019		2020
	(In thousands)
Raw materials:
Security Products	$	2,134	$	2,397
Marine Components		807		707
Total raw materials		2,941		3,104
Work-in-process:
Security Products		9,138		9,549
Marine Components		2,633		2,688
Total work-in-process		11,771		12,237
Finished goods:
Security Products		2,582		2,526
Marine Components		1,054		1,095
Total finished goods		3,636		3,621
Total inventories, net	$	18,348	$	18,962

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Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

Note 1 – Organization and basis of presentation:

Organization. We (NYSE American: CIX) were 86% owned by NL Industries, Inc. (NYSE: NL) at March 31, 2020. We manufacture and sell component products (security products and recreational marine components). At March 31, 2020, Valhi, Inc. (NYSE: VHI) owned 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation owned 92% of Valhi’s outstanding common stock. At March 31, 2020, a majority of Contran’s outstanding voting stock was held directly by Lisa K. Simmons and Serena Simmons Connelly and various family trusts established for the benefit of Ms. Simmons and Ms. Connelly and their children and for which Ms. Simmons or Ms. Connelly, as applicable, served as trustee (collectively, the “Other Trusts”). In addition, each of Ms. Simmons and Ms. Connelly served as co-chair of the Contran board of directors. The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and Ms. Connelly 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, NL 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, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

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, 2019 that we filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020 (the “2019 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, 2019 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) 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 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 Consolidated Financial Statements contained in our 2019 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 March 31, 2019, December 31, 2019 and March 31, 2020.  The actual dates of our annual and quarterly periods are March 31, 2019, December 29, 2019 and March 29, 2020, 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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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 32,311	$ 31,176
Cost of sales	21,880	21,552
Gross margin	10,431	9,624
Selling, general and administrative expense	5,411	5,334
Operating income	5,020	4,290
Interest income	607	837
Income before taxes	5,627	5,127
Provision for income taxes	1,356	1,141
Net income	$ 4,271	$ 3,986
Basic and diluted net income per common share	$ 0.34	$ 0.32
Basic and diluted weighted average shares outstanding	12,443	12,436

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Financial Instruments - Carrying Value and Estimated Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Carrying Amount
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 64,046	$ 63,255
Accounts receivable, net	15,232	11,870
Accounts payable	2,778	2,514
Fair Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	64,046	63,255
Accounts receivable, net	15,232	11,870
Accounts payable	$ 2,778	$ 2,514

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2020

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

Note 9 – Recent accounting pronouncements:

Adopted

In December 2019, the Financial Accounting Standards Board issued 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; 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 in the first quarter of 2020 and the adoption of this standard did not have a material effect on our condensed consolidated financial statements.

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Accounts Payable and Accrued Liabilities

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

Note 5 – Accounts payable and accrued liabilities:

	December 31,		March 31,
	2019		2020
	(In thousands)
Accounts payable:
Security Products	$	1,975	$	2,106
Marine Components		539		672
Accrued liabilities:
Employee benefits		8,331		4,552
Customer tooling		264		239
Taxes other than on income		350		578
Other		619		860
Total accounts payable and accrued liabilities	$	12,078	$	9,007

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Accounts Receivable, Net (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of Accounts Receivable, Net

	December 31,			March 31,
	2019			2020
	(In thousands)
Accounts receivable, net:
Security Products	$	10,321		$	12,830
Marine Components		1,619			2,472
Allowance for doubtful accounts		(70	)		(70	)
Total accounts receivable, net	$	11,870		$	15,232

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 4,271	$ 3,986
Depreciation and amortization	950	901
Deferred income taxes	93	144
Other, net	62	153
Change in assets and liabilities:
Accounts receivable, net	(3,362)	(3,221)
Inventories, net	(673)	(1,475)
Accounts payable and accrued liabilities	(3,011)	(3,216)
Accounts with affiliates	1,389	541
Prepaids and other, net	76	151
Net cash used in operating activities	(205)	(2,036)
Cash flows from investing activities:
Capital expenditures	(360)	(439)
Note receivable from affiliate:
Collections	18,228	11,400
Advances	(15,628)	(17,400)
Net cash provided by (used in) investing activities	2,240	(6,439)
Cash flows from financing activities -
Dividends paid	(1,244)	(870)
Cash and cash equivalents - net change from:
Operating, investing and financing activities	791	(9,345)
Balance at beginning of period	63,255	45,414
Balance at end of period	$ 64,046	36,069
Supplemental disclosures -
Cash paid for income taxes		$ 993

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 64,046	$ 63,255
Accounts receivable, net	15,232	11,870
Inventories, net	18,962	18,348
Prepaid expenses and other	1,414	1,624
Total current assets	99,654	95,097
Other assets:
Note receivable from affiliate	25,500	28,100
Goodwill	23,742	23,742
Other noncurrent	590	590
Total other assets	49,832	52,432
Property and equipment:
Land	4,940	4,940
Buildings	23,047	23,047
Equipment	68,443	67,718
Construction in progress	463	1,002
Gross property and equipment	96,893	96,707
Less accumulated depreciation	66,531	65,692
Net property and equipment	30,362	31,015
Total assets	179,848	178,544
Current liabilities:
Accounts payable and accrued liabilities	9,007	12,078
Income taxes payable to affiliates	2,239	984
Total current liabilities	11,246	13,062
Noncurrent liabilities -
Deferred income taxes	3,380	3,287
Stockholders' equity:
Preferred stock
Additional paid-in capital	55,869	55,869
Retained earnings	109,229	106,202
Total stockholders' equity	165,222	162,195
Total liabilities and stockholders’ equity	179,848	178,544
Commitments and contingencies (Note 1)
Class A Common Stock
Stockholders' equity:
Common stock	124	124
Total stockholders' equity	$ 124	$ 124

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Inventories, Net - Inventories, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventory [Line Items]
Total raw materials	$ 3,104	$ 2,941
Total work-in-process	12,237	11,771
Total finished goods	3,621	3,636
Total inventories, net	18,962	18,348
Security Products
Inventory [Line Items]
Total raw materials	2,397	2,134
Total work-in-process	9,549	9,138
Total finished goods	2,526	2,582
Marine Components
Inventory [Line Items]
Total raw materials	707	807
Total work-in-process	2,688	2,633
Total finished goods	$ 1,095	$ 1,054

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

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,				March 31,
	2019				2020
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(In thousands)
Cash and cash equivalents	$	63,255	$	63,255	$	64,046	$	64,046
Accounts receivable, net		11,870		11,870		15,232		15,232
Accounts payable		2,514		2,514		2,778		2,778