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 quarterly period ended June 30, 2020

OR

☐  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 1-5467

 VALHI, INC.

(Exact name of Registrant as specified in its charter)

Delaware	87-0110150
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

5430 LBJ Freeway, Suite 1700

Dallas, Texas 75240-2620

(Address of principal executive office)

Registrant’s telephone number, including area code: (972) 233-1700

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

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

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

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

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

Number of shares of the registrant’s common stock, $.01 par value per share, outstanding on July 31, 2020: 28,273,093

VALHI, INC. AND SUBSIDIARIES

INDEX

			Page number
Part I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets – December 31, 2019 and June 30, 2020 (unaudited)		3
		Condensed Consolidated Statements of Operations (unaudited) – Three and six months ended June 30, 2019 and 2020		5
		Condensed Consolidated Statements of Comprehensive Income (unaudited) – Three and six months ended June 30, 2019 and 2020		6
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – Three and six months ended June 30, 2019 and 2020		7
		Condensed Consolidated Statements of Cash Flows (unaudited) – Six months ended June 30, 2019 and 2020		8
		Notes to Condensed Consolidated Financial Statements (unaudited)		9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		41
	Item 4.	Controls and Procedures		41
Part II.	OTHER INFORMATION
	Item 1.	Legal Proceedings		42
	Item 1A.	Risk Factors		42
	Item 6.	Exhibits		43

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

VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

	December 31,		June 30,
	2019		2020
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	523.8	$	491.2
Restricted cash equivalents		27.0		9.4
Marketable securities		2.1		1.8
Accounts and other receivables, net		329.2		337.6
Inventories, net		522.1		521.0
Other current assets		21.2		37.6
Total current assets		1,425.4		1,398.6
Other assets:
Investment in TiO2 manufacturing joint venture		90.2		96.5
Goodwill		379.7		379.7
Deferred income taxes		106.0		120.2
Other assets		230.1		219.6
Total other assets		806.0		816.0
Property and equipment:
Land		46.2		46.4
Buildings		248.0		244.2
Equipment		1,166.0		1,162.2
Mining properties		26.2		13.8
Construction in progress		62.7		63.5
		1,549.1		1,530.1
Less accumulated depreciation and amortization		986.1		993.6
Net property and equipment		563.0		536.5
Total assets	$	2,794.4	$	2,751.1

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VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In millions)

	December 31,			June 30,
	2019			2020
				(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	4.9		$	3.1
Accounts payable and accrued liabilities		307.4			245.9
Income taxes		10.2			46.8
Total current liabilities		322.5			295.8
Noncurrent liabilities:
Long-term debt		789.4			783.3
Deferred income taxes		38.1			44.3
Payable to affiliate - income taxes		56.3			50.4
Accrued pension costs		315.6			315.2
Accrued environmental remediation and related costs		95.2			94.5
Other liabilities		197.2			192.1
Total noncurrent liabilities		1,491.8			1,479.8
Equity:
Valhi stockholders' equity:
Preferred stock		667.3			667.3
Common stock		.3			.3
Additional paid-in capital		3.3			1.5
Retained earnings		239.4			247.1
Accumulated other comprehensive loss		(220.7	)		(232.0	)
Treasury stock, at cost		(49.6	)		(49.6	)
Total Valhi stockholders' equity		640.0			634.6
Noncontrolling interest in subsidiaries		340.1			340.9
Total equity		980.1			975.5
Total liabilities and equity	$	2,794.4		$	2,751.1

Commitments and contingencies (Notes 12 and 15)

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

	Three months ended					Six months ended
	June 30,					June 30,
	2019		2020			2019		2020
	(unaudited)
Revenues and other income:
Net sales	$	528.6	$	415.0		$	1,008.2	$	874.3
Other, net		15.4		(3.6	)		22.0		31.3
Total revenues and other income		544.0		411.4			1,030.2		905.6
Costs and expenses:
Cost of sales		405.4		311.0			763.2		670.6
Selling, general and administrative		73.6		69.6			145.0		140.5
Litigation settlement, net		19.6		-			19.6		-
Other components of net periodic pension expense		4.1		5.0			8.2		9.7
Interest		10.1		8.8			20.4		18.5
Total costs and expenses		512.8		394.4			956.4		839.3
Income before income taxes		31.2		17.0			73.8		66.3
Income tax expense		13.0		21.2			27.2		32.6
Net income (loss)		18.2		(4.2	)		46.6		33.7
Noncontrolling interest in net income of subsidiaries		11.1		4.9			21.3		18.4
Net income (loss) attributable to Valhi stockholders	$	7.1	$	(9.1	)	$	25.3	$	15.3
Amounts attributable to Valhi stockholders:
Basic and diluted net income (loss) per share	$	.25	$	(.32	)	$	.89	$	.54
Basic and diluted weighted average shares outstanding		28.5		28.5			28.5		28.5

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(unaudited)
Net income (loss)	$	18.2		$	(4.2	)	$	46.6		$	33.7
Other comprehensive income (loss), net of tax:
Currency translation		6.6			16.3			6.3			(21.4	)
Defined benefit pension plans		2.2			3.0			4.5			6.0
Other		(.2	)		(.1	)		(.4	)		(.2	)
Total other comprehensive income (loss), net		8.6			19.2			10.4			(15.6	)
Comprehensive income		26.8			15.0			57.0			18.1
Comprehensive income attributable to noncontrolling interest		13.3			9.9			24.0			14.1
Comprehensive income attributable to Valhi stockholders	$	13.5		$	5.1		$	33.0		$	4.0

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

	Three months ended June 30, 2019 and 2020 (unaudited)
											Accumulated
					Additional						other						Non-
	Preferred		Common		paid-in			Retained			comprehensive			Treasury			controlling
	stock		stock		capital			earnings			loss			stock			interest			Total
Balance at March 31, 2019	$	667.3	$	.3	$	3.3		$	231.7		$	(204.9	)	$	(49.6	)	$	358.0		$	1,006.1
Net income		-		-		-			7.1			-			-			11.1			18.2
Other comprehensive income, net		-		-		-			-			6.4			-			2.2			8.6
Dividends paid to noncontrolling interest		-		-		-			-			-			-			(8.3	)		(8.3	)
Cash dividends - $.24 per share		-		-		(.3	)		(6.5	)		-			-			-			(6.8	)
Equity transactions with noncontrolling interest, net and other		-		-		.3			(2.1	)		-			-			1.0			(.8	)
Balance at June 30, 2019	$	667.3	$	.3	$	3.3		$	230.2		$	(198.5	)	$	(49.6	)	$	364.0		$	1,017.0
Balance at March 31, 2020	$	667.3	$	.3	$	3.3		$	256.4		$	(246.2	)	$	(49.6	)	$	335.4		$	966.9
Net income (loss)		-		-		-			(9.1	)		-			-			4.9			(4.2	)
Other comprehensive income, net		-		-		-			-			14.2			-			5.0			19.2
Dividends paid to noncontrolling interest		-		-		-			-			-			-			(4.6	)		(4.6	)
Cash dividends - $.08 per share		-		-		(2.2	)		-			-			-			-			(2.2	)
Equity transaction with noncontrolling interest, net and other		-		-		.4			(.2	)		-			-			.2			.4
Balance at June 30, 2020	$	667.3	$	.3	$	1.5		$	247.1		$	(232.0	)	$	(49.6	)	$	340.9		$	975.5

	Six months ended June 30, 2019 and 2020 (unaudited)
											Accumulated
					Additional						other						Non-
	Preferred		Common		paid-in			Retained			comprehensive			Treasury			controlling
	stock		stock		capital			earnings			loss			stock			interest			Total
Balance at December 31, 2018	$	667.3	$	.3	$	3.3		$	220.3		$	(206.2	)	$	(49.6	)	$	353.6		$	989.0
Net income		-		-		-			25.3			-			-			21.3			46.6
Other comprehensive income, net		-		-		-			-			7.7			-			2.7			10.4
Dividends paid to noncontrolling interest		-		-		-			-			-			-			(14.7	)		(14.7	)
Cash dividends - $.48 per share		-		-		(.3	)		(13.3	)		-			-			-			(13.6	)
Equity transaction with noncontrolling interest, net and other		-		-		.3			(2.1	)		-			-			1.1			(.7	)
Balance at June 30, 2019	$	667.3	$	.3	$	3.3		$	230.2		$	(198.5	)	$	(49.6	)	$	364.0		$	1,017.0
Balance at December 31, 2019	$	667.3	$	.3	$	3.3		$	239.4		$	(220.7	)	$	(49.6	)	$	340.1		$	980.1
Net income		-		-		-			15.3			-			-			18.4			33.7
Other comprehensive loss, net		-		-		-			-			(11.3	)		-			(4.3	)		(15.6	)
Dividends paid to noncontrolling interest		-		-		-			-			-			-			(13.2	)		(13.2	)
Cash dividends - $.32 per share		-		-		(2.2	)		(6.8	)		-			-			-			(9.0	)
Equity transaction with noncontrolling interest, net and other		-		-		.4			(.8	)		-			-			(.1	)		(.5	)
Balance at June 30, 2020	$	667.3	$	.3	$	1.5		$	247.1		$	(232.0	)	$	(49.6	)	$	340.9		$	975.5

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Six months ended
	June 30,
	2019			2020
	(unaudited)
Cash flows from operating activities:
Net income	$	46.6		$	33.7
Depreciation and amortization		26.8			34.3
Benefit plan expense greater than cash funding		3.9			7.7
Deferred income taxes		9.1			(9.0	)
Contributions to TiO2 manufacturing joint venture, net		(4.4	)		(6.3	)
Other, net		1.9			6.4
Change in assets and liabilities:
Accounts and other receivables, net		(90.2	)		(9.0	)
Inventories, net		11.1			(7.4	)
Land held for development, net		0.1			(5.0	)
Accounts payable and accrued liabilities		12.1			(59.2	)
Accounts with affiliates		(7.2	)		(13.2	)
Income taxes		(6.5	)		41.1
Other, net		29.5			(8.1	)
Net cash provided by operating activities		32.8			6.0
Cash flows from investing activities:
Capital expenditures		(28.3	)		(26.7	)
Purchases of marketable securities		(2.9	)		(.9	)
Proceeds from disposal of marketable securities		3.1			1.8
Other, net		0.1			2.7
Net cash used in investing activities		(28.0	)		(23.1	)
Cash flows from financing activities:
Principal payments on indebtedness		(4.6	)		(9.0	)
Valhi cash dividends paid		(13.6	)		(9.0	)
Distributions to noncontrolling interest in subsidiaries		(14.7	)		(13.2	)
Subsidiary treasury stock acquired		(1.4	)		(1.0	)
Net cash used in financing activities		(34.3	)		(32.2	)
Cash, cash equivalents and restricted cash and cash equivalents - net change from:
Operating, investing and financing activities		(29.5	)		(49.3	)
Effect of exchange rates on cash		(.6	)		(.4	)
Balance at beginning of period		523.7			583.8
Balance at end of period	$	493.6		$	534.1
Supplemental disclosures:
Cash paid for:
Interest, net of capitalized interest	$	19.5		$	16.8
Income taxes, net		28.5			1.1
Noncash investing activities:
Change in accruals for capital expenditures		1.7			1.4

See accompanying Notes to Condensed Consolidated Financial Statements.

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VALHI, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(unaudited)

Note 1—Organization and basis of presentation:

Organization— We are majority owned by a wholly-owned subsidiary of Contran Corporation (“Contran”), which owns approximately 92% of our outstanding common stock at June 30, 2020.  A majority of Contran's outstanding voting stock is held directly by Lisa K. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serve as trustee (collectively, the “Other Trusts”). With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held in such trusts in the same manner as Ms. Simmons.  Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons. 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 her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at June 30, 2020, Ms. Simmons and the Family Trust may be deemed to control Contran and us.

Basis of Presentation— Consolidated in this Quarterly Report are the results of our wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and The LandWell Company (“LandWell”).  Kronos (NYSE: KRO), NL (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the Securities and Exchange Commission (“SEC”).  

The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 that we filed with the SEC on March 12, 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 periods ended June 30, 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 results of operations for the second quarter of 2020 were significantly impacted by the COVID-19 pandemic due to government mandated closures and reduced demand for many of our segments’ products resulting from the rapid contraction of vast areas of the global economy. The extent of the COVID-19 impact on our future operations will depend on the time period and degree to which the COVID-19 pandemic persists in the global economy thereby reducing customer demand for certain of our segments’ products, including the timing and extent to which our customers’ operations continue to be impacted, our customers’ perception as to when consumer demand for their products will return to pre-pandemic levels and on any future disruptions in our operations or our suppliers’ operations, all of which are difficult to predict.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Valhi, Inc. and its subsidiaries (NYSE: VHI), taken as a whole.

Note 2—Business segment information:

Business segment	Entity	% controlled at June 30, 2020
Chemicals	Kronos	80	%
Component products	CompX	86	%
Real estate management and development	BMI and LandWell	63 - 77	%

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Our control of Kronos includes approximately 50% we hold directly and approximately 30% held directly by NL. We own approximately 83% of NL. Our control of CompX is through NL. We own approximately 63% of BMI.  Our control of LandWell includes the approximately 27% we hold directly and 50% held by BMI.  

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales:
Chemicals	$	484.5		$	386.0		$	921.0		$	807.0
Component products		33.7			23.8			64.9			56.1
Real estate management and development		10.4			5.2			22.3			11.2
Total net sales	$	528.6		$	415.0		$	1,008.2		$	874.3
Cost of sales:
Chemicals	$	375.4		$	291.1		$	703.1		$	624.5
Component products		22.8			16.4			44.3			38.3
Real estate management and development		7.2			3.5			15.8			7.8
Total cost of sales	$	405.4		$	311.0		$	763.2		$	670.6
Gross margin:
Chemicals	$	109.1		$	94.9		$	217.9		$	182.5
Component products		10.9			7.4			20.6			17.8
Real estate management and development		3.2			1.7			6.5			3.4
Total gross margin	$	123.2		$	104.0		$	245.0		$	203.7
Operating income:
Chemicals	$	50.5		$	35.9		$	103.3		$	82.7
Component products		5.6			2.4			10.0			7.4
Real estate management and development		9.8			1.0			13.0			20.2
Total operating income		65.9			39.3			126.3			110.3
General corporate items:
Securities earnings		3.3			1.0			6.4			2.6
Insurance recoveries		4.7			-			5.0			1.6
Changes in market value of Valhi common stock held by subsidiaries		1.9			(.5	)		3.0			(2.9	)
Other components of net periodic pension expense		(4.1	)		(5.0	)		(8.2	)		(9.7	)
Litigation settlement expense, net		(19.6	)		-			(19.6	)		-
General expenses, net		(10.8	)		(9.0	)		(18.7	)		(17.1	)
Interest expense		(10.1	)		(8.8	)		(20.4	)		(18.5	)
Income before income taxes	$	31.2		$	17.0		$	73.8		$	66.3

Segment results we report may differ from amounts separately reported by our various subsidiaries due to purchase accounting adjustments and related amortization or differences in the way we define operating income.  Intersegment sales are not material. Infrastructure reimbursement income is included in the determination of Real Estate Management and Development operating income. See Note 11.

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Note 3—Accounts and other receivables, net:

	December 31,			June 30,
	2019			2020
	(In millions)
Trade accounts receivable:
Kronos	$	270.5		$	287.3
CompX		11.9			11.4
BMI and LandWell		1.6			1.4
VAT and other receivables		31.2			21.1
Refundable income taxes		7.9			4.1
Receivable from affiliates:
Contran - trade items		.4			.3
Louisiana Pigment Company, L.P. ("LPC")		4.7			10.9
Other - trade items		2.2			2.5
Allowance for doubtful accounts		(1.2	)		(1.4	)
Total	$	329.2		$	337.6

Note 4—Inventories, net:

	December 31,		June 30,
	2019		2020
	(In millions)
Raw materials:
Chemicals	$	124.4	$	104.0
Component products		2.9		3.4
Total raw materials		127.3		107.4
Work in process:
Chemicals		39.0		49.8
Component products		11.8		13.6
Total in-process products		50.8		63.4
Finished products:
Chemicals		270.7		276.0
Component products		3.6		4.8
Total finished products		274.3		280.8
Supplies (chemicals)		69.7		69.4
Total	$	522.1	$	521.0

Note 5—Other assets:

	December 31,		June 30,
	2019		2020
	(In millions)
Other noncurrent assets:
Land held for development	$	125.3	$	102.9
Operating lease right-of-use assets		29.0		26.7
Restricted cash and cash equivalents		33.0		33.5
IBNR receivables		8.5		8.1
Marketable securities		6.2		5.4
Pension asset		7.4		8.0
Note receivables - OPA		8.8		27.6
Other		11.9		7.4
Total	$	230.1	$	219.6

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Note 6—Long-term debt:

	December 31,			June 30,
	2019			2020
	(In millions)
Valhi:
Contran credit facility	$	313.0		$	309.2
Subsidiary debt:
Kronos:
Senior Notes		442.6			443.8
Tremont:
Promissory note payable		2.0			-
BMI:
Bank loan - Western Alliance Bank		17.2			16.2
LandWell:
Note payable to Western Alliance Business Trust		15.0		14.5
Note payable to the City of Henderson		1.6			-
Other		2.9			2.7
Total subsidiary debt		481.3			477.2
Total debt		794.3			786.4
Less current maturities		(4.9	)		(3.1	)
Total long-term debt	$	789.4		$	783.3

Valhi – Contran credit facility – During the first six months of 2020, we had no borrowings and repaid $3.8 million under this facility.  The average interest rate on the existing balance for the six months ended June 30, 2020 was 4.8%. At June 30, 2020, the interest rate was 4.25% and $50.8 million was available for borrowing under this facility.

Kronos – Senior Notes -  At June 30, 2020, the carrying value of Kronos’ 3.75% Senior Secured Notes due September 15, 2025 (€400 million aggregate principal amount outstanding) is stated net of unamortized debt issuance costs of $4.8 million.

North American and European revolving credit facilities– During the first six months of 2020, Kronos had no borrowings or repayments under its North American revolving credit facility and its European revolving credit facility.  At June 30, 2020, approximately $125.0 million was available for borrowing under the North American revolving credit facility.  Kronos’ European revolving credit facility requires the maintenance of certain financial ratios and one of such requirements is based on the ratio of net debt to last twelve months earnings before income tax, interest, depreciation and amortization expense (EBITDA) of the borrowers.  Based upon the borrowers’ last twelve months EBITDA as of June 30, 2020 and the net debt to EBITDA financial test, the full €90.0 million of the credit facility ($100.9 million) was available for borrowing at June 30, 2020.    

Tremont – Promissory note payable – During the first six months of 2020, Tremont fully repaid (without penalty) the remaining principal balance of $2.0 million on the promissory note payable.   

LandWell – In January 2020, LandWell fully repaid (without penalty) the remaining $1.6 million principal balance on its promissory note payable to the City of Henderson, Nevada.

Restrictions and other – Certain of the credit facilities with unrelated, third-party lenders described above require the respective borrowers to maintain minimum levels of equity, require the maintenance of certain financial ratios, limit dividends and additional indebtedness and contain other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at June 30, 2020.

- 12 -

Note 7—Accounts payable and accrued liabilities:

	December 31,		June 30,
	2019		2020
	(In millions)
Accounts payable:
Kronos	$	137.2	$	96.9
CompX		2.5		2.8
BMI and LandWell		3.7		4.5
NL		.9		.1
Other		.4		.4
Payable to affiliates:
Contran - income taxes		4.0		9.6
LPC		16.4		15.0
Accrued litigation settlement		11.8		11.9
Employee benefits		30.6		28.6
Operating lease liabilities		6.2		6.1
Accrued sales discounts and rebates		33.7		20.1
Deferred income		10.3		8.1
Environmental remediation and related costs		4.5		4.5
Interest		5.2		5.2
Other		40.0		32.1
Total	$	307.4	$	245.9

Note 8—Other noncurrent liabilities:

	December 31,		June 30,
	2019		2020
	(In millions)
Operating lease liabilities	$	22.2	$	20.1
Reserve for uncertain tax positions		13.6		12.2
Accrued litigation settlement		60.1		60.7
Deferred income		47.4		45.4
Other postretirement benefits		10.5		10.0
Employee benefits		6.0		5.8
Insurance claims and expenses		11.0		10.3
Deferred payment obligation		9.9		10.0
Accrued development costs		8.3		7.9
Other		8.2		9.7
Total	$	197.2	$	192.1

Note 9 – Revenue – disaggregation of sales:

The following table disaggregates the net sales of our Chemicals Segment by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

- 13 -

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales - point of origin:
United States	$	289.3		$	226.6		$	534.6		$	463.6
Germany		248.5			183.1			467.7			412.2
Canada		95.9			85.6			174.4			153.3
Belgium		77.7			50.9			147.4			117.0
Norway		47.7			62.6			99.2			116.9
Eliminations		(274.6	)		(222.8	)		(502.3	)		(456.0	)
Total	$	484.5		$	386.0		$	921.0		$	807.0
Net sales - point of destination:
Europe	$	229.4		$	169.8		$	444.6		$	384.3
North America		161.5			148.9			308.3			281.2
Other		93.6			67.3			168.1			141.5
Total	$	484.5		$	386.0		$	921.0		$	807.0

The following table disaggregates the net sales of our Component Products and Real Estate Management and Development Segments by major product line.

	Three months ended				Six months ended
	June 30,				June 30,
	2019		2020		2019		2020
	(In millions)
Component Products:
Net sales:
Security products	$	26.9	$	18.6	$	51.6	$	44.0
Marine components		6.8		5.2		13.3		12.1
Total	$	33.7	$	23.8	$	64.9	$	56.1
Real Estate Management and Development:
Net sales:
Land sales	$	8.4	$	2.7	$	17.9	$	6.2
Water delivery		1.6		2.1		3.5		4.0
Utility and other		.4		.4		.9		1.0
Total	$	10.4	$	5.2	$	22.3	$	11.2

Note 10—Defined benefit pension plans:

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

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Service cost	$	2.8		$	3.2		$	5.6		$	6.4
Interest cost		4.0			3.0			8.0			5.9
Expected return on plan assets		(3.5	)		(2.8	)		(7.2	)		(5.5	)
Amortization of prior service cost		-			.1			.1			.1
Recognized actuarial losses		3.7			4.7			7.5			9.4
Total	$	7.0		$	8.2		$	14.0		$	16.3

We expect to contribute the equivalent of approximately $19.0 million to all of our defined benefit pension plans during 2020.

- 14 -

Note 11—Other income, net:

	Six months ended
	June 30,
	2019			2020
	(In millions)
Securities earnings:
Dividends and interest	$	6.1		$	2.9
Securities transactions, net		.3			(.3	)
Total		6.4			2.6
Currency transactions, net		(.2	)		6.1
Insurance recoveries		5.0			1.6
Infrastructure reimbursement		9.1			19.1
Gain on land sales		.7			.5
Other, net		1.0			1.4
Total	$	22.0		$	31.3

Insurance recoveries reflect, in part, amounts NL received from certain of its former insurance carriers and relate to the recovery of prior lead pigment and asbestos litigation defense costs incurred by NL.  See Note 15.  In the first quarter of 2020, Kronos recognized a $1.5 million gain related to an insurance settlement for a property damage claim.

Infrastructure reimbursement– As disclosed in Note 7 to our 2019 Annual Report, under an Owner Participation Agreement (“OPA”) entered into by LandWell with the Redevelopment Agency of the City of Henderson, Nevada, as LandWell develops certain real property for commercial and residential purposes in its master planned community in Henderson, Nevada, the cost of certain public infrastructure may be reimbursed to LandWell through tax increment.  During the first six months of 2019, we received approval for additional tax increment reimbursement of $8.8 million (primarily in the second quarter) and during the first six months of 2020 we received $19.1 million (all in the first quarter), which was recognized as other income and is evidenced by a promissory note issued to LandWell by the City of Henderson.

Note 12—Income taxes:

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Expected tax expense, at U.S. federal statutory    income tax rate of 21%	$	6.6		$	3.6		$	15.5		$	13.9
Incremental net tax benefit on earnings and losses of non-U.S., U.S. and non-tax group companies		-			(2.1	)		(.2	)		(3.9	)
Non-U.S. tax rates		2.3			.1			4.6			1.0
Valuation allowance		2.8			7.2			3.8			7.0
Adjustment to the reserve for uncertain tax positions, net		.5			.6			1.0			1.2
Global intangible low-tax income, net		.4			11.9			1.1			13.1
Nondeductible expenses		.3			1.4			.6			1.8
U.S. state income taxes and other, net		.1			(1.5	)		.8			(1.5	)
Income tax expense	$	13.0		$	21.2		$	27.2		$	32.6
Comprehensive provision for income taxes allocable to:
Net income	$	13.0		$	21.2		$	27.2		$	32.6
Other comprehensive income (loss):
Currency translation		.8			2.0			.8			(2.7	)
Pension plans		1.5			1.8			3.1			3.6
Other		(.1	)		0.1			(.2	)		(.1	)
Total	$	15.2		$	25.1		$	30.9		$	33.4

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The amount shown in the above table of our income tax rate reconciliation for non-U.S. tax rates represents the result determined by multiplying the pre-tax earnings or losses of each of our non-U.S. subsidiaries by the difference between the applicable statutory income tax rate for each non-U.S. jurisdiction and the U.S. federal statutory tax rate.  The amount shown on such table for incremental net tax expense (benefit) on earnings and losses on non-U.S., U.S. and non-tax group companies includes, as applicable, (i) deferred state and non-U.S. income taxes (or deferred income tax benefits) and deferred withholding taxes, as applicable, associated with the current-year change in the aggregate amount of undistributed earnings of all of our non-U.S. subsidiaries, which earnings are not permanently reinvested , (ii) current U.S. income taxes (or current income tax benefit) attributable to current-year income (losses) of one of Kronos’ non-U.S. subsidiaries, which subsidiary is treated as a dual resident for U.S. income tax purposes, (iii) deferred income taxes associated with our direct investment in Kronos and (iv) current and deferred income taxes associated with distributions and earnings from our investments in LandWell and BMI. 

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 tax years beginning in 2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property.  The modification to the business interest provisions increases the business interest limitation from 30% of adjusted taxable income to 50% of adjusted taxable income which increases our allowable interest expense deduction for 2019 and 2020.  Consequently, in the first quarter of 2020 we recognized a cash tax benefit of $1.0 million related to an adjustment to the valuation allowance recognized in 2019 for the portion of the disallowed interest expense we did not expect to fully utilize at December 31, 2019.  We have determined other provisions of the CARES Act will not have a material impact on our provision for income taxes in 2020.         

         Tax authorities may in the future propose tax deficiencies, including penalties and interest, related to examinations of our U.S. and non-U.S. income tax returns.  Because of the uncertainties involved in settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters, if any, will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations.  We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity.  We currently estimate that our unrecognized tax benefits will decrease by approximately $5.4 million during the next twelve months primarily due to the expiration of certain statutes of limitations.

Note 13—Noncontrolling interest in subsidiaries:

	December 31,		June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net assets:
Kronos Worldwide	$	216.6	$	213.5
NL Industries		65.8		65.6
CompX International		22.7		23.3
BMI		20.1		20.8
LandWell		14.9		17.7
Total	$	340.1	$	340.9

	Six months ended June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net income of subsidiaries:
Kronos Worldwide	$	11.6	$	8.7
NL Industries		3.6		1.1
CompX International		1.2		.9
BMI		2.0		3.0
LandWell		2.9		4.7
Total	$	21.3	$	18.4

- 16 -

Note 14—Stockholders’ equity:

Accumulated Other Comprehensive Income – Changes in accumulated other comprehensive income (loss) attributable to Valhi stockholders are presented in the table below.

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Accumulated other comprehensive income (loss), net of tax    and noncontrolling interest:
Marketable securities:
Balance at beginning of period	$	1.7		$	1.7		$	1.7		$	1.7
Other comprehensive loss - unrealized losses arising   during the period		-			.1			-			.1
Balance at end of period	$	1.7		$	1.8		$	1.7		$	1.8
Currency translation adjustment:
Balance at beginning of period	$	(75.8	)	$	(104.4	)	$	(75.6	)	$	(76.8	)
Other comprehensive income (loss)		4.9			12.0			4.7			(15.6	)
Balance at end of period	$	(70.9	)	$	(92.4	)	$	(70.9	)	$	(92.4	)
Defined benefit pension plans:
Balance at beginning of period	$	(132.3	)	$	(144.3	)	$	(134.0	)	$	(146.6	)
Other comprehensive income - amortization of   prior service cost and net losses included in net   periodic pension cost		1.7			2.2			3.4			4.5
Balance at end of period	$	(130.6	)	$	(142.1	)	$	(130.6	)	$	(142.1	)
OPEB plans:
Balance at beginning of period	$	1.5		$	.8		$	1.7		$	1.0
Other comprehensive loss - amortization of prior service credit and net losses included in net periodic OPEB cost		(.2	)		(.1	)		(.4	)		(.3	)
Balance at end of period	$	1.3		$	.7		$	1.3		$	.7
Total accumulated other comprehensive income (loss):
Balance at beginning of period	$	(204.9	)	$	(246.2	)	$	(206.2	)	$	(220.7	)
Other comprehensive income (loss)		6.4			14.2			7.7			(11.3	)
Balance at end of period	$	(198.5	)	$	(232.0	)	$	(198.5	)	$	(232.0	)

Reverse stock split – On May 28, 2020 following stockholder approval at our annual meeting, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-12, which was effective on June 1, 2020. All share and per-share disclosures for all periods presented in our consolidated financial statements have been adjusted to give effect to the reverse stock split and we have adjusted our stockholders’ equity at December 31, 2018, March 31, 2019, December 31, 2019 and March 31, 2020 to reflect the split by reclassifying $3.3 million from common stock to additional paid-in capital representing $.01 per share par value of each share of common stock eliminated as a result of the reverse stock split. 

Other – During the first six months of 2019 and 2020, Kronos acquired 110,303 and 122,489 shares, respectively, of its common stock in market transactions for an aggregate purchase price of $1.4 million and $1.0 million, respectively, and subsequently cancelled all such shares.  At June 30, 2020, 1.6 million shares are available for repurchase under Kronos’ previously authorized stock repurchase program.

- 17 -

Note 15 – Commitments and contingencies:

Lead pigment litigation – NL

NL’s former operations included the manufacture of lead pigments for use in paint and lead-based paint.  NL, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints.  Certain of these actions have been filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others have been asserted as class actions.  These lawsuits seek recovery under a variety of theories, including public and private nuisance, negligent product design, negligent failure to warn, strict liability, breach of warranty, conspiracy/concert of action, aiding and abetting, enterprise liability, market share or risk contribution liability, intentional tort, fraud and misrepresentation, violations of state consumer protection statutes, supplier negligence and similar claims.

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

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

• NL has never settled any of the market share, intentional tort, fraud, nuisance, supplier negligence, breach of warranty, conspiracy, misrepresentation, aiding and abetting, enterprise liability, or statutory cases (other than the Santa Clara case discussed below),

• no final, non-appealable adverse judgments have ever been entered against NL, and

• NL has never ultimately been found liable with respect to any such litigation matters, including over 100 cases over a thirty-year period for which NL was previously a party and for which NL has been dismissed without any finding of liability.  

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

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

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

- 18 -

New cases may continue to be filed against NL.  We do not know if we will incur liability in the future with respect to any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings.  In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against NL or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against NL as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable.  The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.

Environmental matters and litigation

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

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

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

• complexity and differing interpretations of governmental regulations,

• number of PRPs and their ability or willingness to fund such allocation of costs,

• financial capabilities of the PRPs and the allocation of costs among them,

• solvency of other PRPs,

• multiplicity of possible solutions,

• number of years of investigatory, remedial and monitoring activity required,

• uncertainty over the extent, if any, to which our former operations might have contributed to the conditions allegedly giving rise to such personal injury, property damage, natural resource and related claims, and

• number of years between former operations and notice of claims and lack of information and documents about the former operations.

In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. It is possible that actual costs will exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and it is possible that costs will be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our consolidated financial statements, results of operations and liquidity.

- 19 -

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

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

The table below presents a summary of the activity in our accrued environmental costs during the first six months of 2020.

	Amount
	(In millions)
Balance at the beginning of the year	$	99.7
Additions charged to expense		.4
Payments, net		(1.0	)
Other, net		(.1	)
Balance at the end of the period	$	99.0
Amounts recognized in our Condensed Consolidated Balance Sheet at the end of the period:
Current liabilities	$	4.5
Noncurrent liabilities		94.5
Total	$	99.0

NL – On a quarterly basis, NL evaluates the potential range of its liability for environmental remediation and related costs at sites where it has been named as a PRP or defendant. At June 30, 2020, NL had accrued approximately $94 million related to approximately 32 sites associated with remediation and related matters that it believes are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to NL for remediation and related matters for which we believe it is possible to estimate costs is approximately $115 million, including the amount currently accrued.

NL believes that it is not reasonably possible to estimate the range of costs for certain sites. At June 30, 2020, there were approximately five sites for which NL is not currently able to estimate a range of costs. For these sites, generally the investigation is in the early stages, and NL is unable to determine whether or not NL actually had any association with the site, the nature of its responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of NL’s control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, NL has received general and special notices of liability from the EPA and/or state agencies alleging that NL, sometimes with other PRPs, is liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that NL, along with any other alleged PRPs, is liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our financial position, results of operations and liquidity.

Other – We have also accrued approximately $5 million at June 30, 2020 for other environmental cleanup matters.

Insurance coverage claims – NL

NL is involved in certain legal proceedings with a number of its former insurance carriers regarding the nature and extent of the carriers’ obligations to NL under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for NL’s lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available.

NL has agreements with certain of its former insurance carriers pursuant to which the carriers reimburse it for a portion of its future lead pigment litigation defense costs, and one such carrier reimburses NL for a portion of its future asbestos litigation defense costs. We are not able to determine how much NL will ultimately recover from these carriers for defense costs incurred by NL because of certain issues that arise regarding which defense costs qualify for reimbursement. While NL continues to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we

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recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.  In this regard, NL recognized $4.7 million in insurance recoveries in the second quarter of 2019 which represented recovery of past and future litigation defense costs related to a single insurance recovery settlement.

For additional discussion of certain litigation involving NL and certain of its former insurance carriers, please refer to our 2019 Annual Report.

Other litigation

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

Note 16—Fair value measurements and financial instruments:  

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

	December 31, 2019				June 30, 2020
	Carrying amount		Fair value		Carrying amount		Fair value
	(In millions)
Cash, cash equivalents and restricted cash equivalents	$	583.8	$	583.8	$	534.1	$	534.1
Deferred payment obligation		9.9		9.9		10.0		10.0
Long-term debt (excluding capitalized leases):
Kronos Senior Notes		442.6		457.0		443.8		441.6
Valhi credit facility with Contran		313.0		313.0		309.2		309.2
Tremont promissory note payable		2.0		2.0		-		-
BMI bank note payable		17.2		17.9		16.2		16.9
LandWell note payable to the City of Henderson		1.6		1.6		-		-
LandWell bank note payable		15.0		15.0		14.5		14.5

At June 30, 2020, the estimated market price of Kronos’ Senior Notes was €984 per €1,000 principal amount.  The fair value of Kronos’ Senior Notes was based on quoted market prices; however, these quoted market prices represent Level 2 inputs because the markets in which the term loan trades were not active. The fair value of variable interest rate debt and other fixed-rate debt, which represents Level 2 inputs, is deemed to approximate carrying values.  See Note 6.  Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. See Notes 3 and 7.

Note 17—Recent accounting pronouncements:

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which changes the accounting for certain income tax transactions and reduces complexity in accounting for income taxes in certain areas.  The ASU introduces new guidance including providing a policy election for an entity to not allocate consolidated current and deferred tax expense when a member of a consolidated tax return is not subject to income tax in its separate financial statements and is a disregarded entity by the taxing authority; and providing guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The ASU also changes existing guidance in a number of areas, including: the method of making an intraperiod allocation of total income tax expense if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a non-U.S. entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income.  We adopted this ASU as of January 1, 2020.  The adoption of this ASU in the first quarter of 2020 did not have a material effect on our Condensed Consolidated Financial Statements.

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

RESULTS OF OPERATIONS

Business Overview

We are primarily a holding company. We operate through our wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International, Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and the LandWell Company (“LandWell”).   Kronos (NYSE: KRO), NL (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the SEC.  

We have three consolidated reportable operating segments:

• Chemicals—Our Chemicals Segment is operated through our majority control of Kronos. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments (“TiO₂”). TiO₂ is used to impart whiteness, brightness, opacity and durability to a wide variety of products, including paints, plastics, paper, fibers and ceramics. Additionally, TiO₂ is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, foods and cosmetics.

• Component Products—We operate in the component products industry through our majority control of CompX. CompX is a leading manufacturer of security products used in the recreational transportation, postal, office and institutional furniture, cabinetry, tool storage, healthcare and a variety of other industries.  CompX also manufactures  stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems and trim tabs for the recreational marine and other industries.   

• Real Estate Management and Development—We operate in real estate management and development through our majority control of BMI and LandWell. BMI provides utility services to certain industrial and municipal customers and owns real property in Henderson, Nevada. LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada.  

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 supply and demand for our products;

• The extent of the dependence of certain of our businesses on certain market sectors;

• The cyclicality of certain of our businesses (such as Kronos’ TiO₂ operations);

• Customer and producer inventory levels;

• Unexpected or earlier-than-expected industry capacity expansion (such as the TiO₂ industry);

• Changes in raw material and other operating costs (such as ore, zinc, brass, aluminum, steel and energy costs);

• Changes in the availability of raw materials (such as ore);

• General global economic and political conditions that harm the worldwide economy, disrupt our supply chain, increase material costs, reduce demand or perceived demand for TiO_2, component products and land held for development 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);

• Competitive products and substitute products;  

• Customer and competitor strategies;

• Potential difficulties in integrating future acquisitions;

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

• Potential consolidation of our competitors;

• Potential consolidation of our customers;

• The impact of pricing and production decisions;

• Competitive technology positions;

• Our ability to protect or defend intellectual property rights;

• The introduction of trade barriers or trade disputes;

• The ability of our subsidiaries to pay us dividends;

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

• Uncertainties associated with new product development and the development of new product features;

• Fluctuations in currency exchange rates (such as changes in the exchange rate between the U.S. dollar and each of the euro, the Norwegian krone and the Canadian dollar) or possible disruptions to our business resulting from uncertainties associated with the euro or other currencies;

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

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

• The timing and amounts of insurance recoveries;

• Our ability to renew, amend, refinance or establish credit facilities;

• Our ability to maintain sufficient liquidity;

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

• Our ability to utilize income tax attributes, the benefits of which may or may not have been recognized under the more-likely-than-not recognition criteria;

• Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities, or new developments regarding environmental remediation at sites related to our former operations);

• Government laws and regulations and possible changes therein (such as changes in government regulations which might impose various obligations on former manufacturers of lead pigment and lead-based paint, including NL, with respect to asserted health concerns associated with the use of such products) including new environmental health and safety regulations such as those seeking to limit or classify TiO₂ or its use;

• The ultimate resolution of pending litigation (such as NL’s lead pigment and environmental matters);

• Our ability to comply with covenants contained in our revolving bank credit facilities;

• Our ability to complete and comply with the conditions of our licenses and permits;

• Changes in real estate values and construction costs in Henderson, Nevada;

• Water levels in Lake Mead; and

• Possible future litigation.

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

Quarter Ended June 30, 2020 Compared to the Quarter Ended June 30, 2019 —

We reported a net loss attributable to Valhi stockholders of $9.1 million or $.32 per diluted share in the second quarter of 2020 compared to net income of $7.1 million or $.25 per diluted share in the second quarter of 2019.  As discussed more fully below, our net income attributable to Valhi stockholders decreased from 2019 to 2020 primarily due to the net effects of:

• lower operating income from all of our segments in 2020 compared to 2019;

• a pre-tax litigation settlement expense of $19.6 million recognized in the second quarter of 2019;

• insurance recoveries related to a single insurance recovery settlement of $4.7 million in the second quarter of 2019; and

• income from tax increment infrastructure reimbursement of $7.7 million in the second quarter of 2019.

Our diluted net income per share in the second quarter of 2019 includes:

• a charge of $.45 per share related to a litigation settlement expense recognized;

• income of $.14 per share related to the infrastructure reimbursement recognized; and

• a gain of $.10 per share related to the insurance recoveries recognized.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019 —

We reported net income attributable to Valhi stockholders of $ 15.3 million or $.54 per diluted share in the first six months of 2020 compared to $25.3 million or $.89 per diluted share in the first six months of 2019.   As discussed more fully below, our net income  attributable to Valhi stockholders decreased from 2019 to 2020 primarily due to the net effects of:

• lower operating income from our Chemicals and Component Products segments in 2020 compared to 2019;

• a pre-tax litigation settlement expense of $19.6 million recognized in the second quarter of 2019;

• income from infrastructure reimbursement of $19.1 million in 2020 compared to $8.8 million in 2019; and

• insurance recoveries related to a single insurance recovery settlement of $4.7 million in the second quarter of 2019.

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Our diluted net income per share in the first six months of 2020 includes:

• income of $.35 per share related to the tax increment infrastructure reimbursement; and

• a gain of $.03 per share related to an insurance recovery for a property damage claim at our Chemicals Segment.

Our diluted net income per share in the first six months of 2019 includes:

• a charge of $.45 per share related to the litigation settlement expense recognized in the second quarter;

• income of $.16 per share related to the infrastructure reimbursement primarily recognized in the second quarter; and

• a gain of $.10 per share related to the insurance recovery recognized in the second quarter.

Current Forecast for 2020—

We currently expect to report lower consolidated operating income for 2020 as compared to 2019 primarily due to the net effects of:

• lower operating income from our Chemicals Segment and our Component Products Segment in 2020 due to the unfavorable impact of the COVID -19 pandemic on sales and earnings as further discussed below; and

• higher operating income from our Real Estate Management and Development Segment in 2020 as the recognition of tax increment infrastructure reimbursement will more than offset lower anticipated land sales due to the impact of the COVID-19 pandemic.  

The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have 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 have generally permitted the resumption of commercial activities following various regional shutdowns, 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 before economic growth is likely to return to pre-pandemic levels. As a result, we expect U.S. and worldwide gross domestic product to be significantly impacted for an indeterminate period which in turn would impact 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. See additional discussion on the impact of the COVID-19 pandemic on each of our operating segments below.

Segment Operating Results—2020 Compared to 2019 –

Chemicals –

We consider TiO₂ to be a “quality of life” product, with demand affected by gross domestic product, or GDP, and overall economic conditions in our markets located in various regions of the world. Over the long-term, we expect demand for TiO₂ to be consistent with our expectations for the long-term growth in GDP. However, even if we and our competitors maintain consistent shares of the worldwide market, demand for TiO₂ in any interim or annual period may not change in the same proportion as the change in GDP, in part due to relative changes in the TiO₂ inventory levels of our customers. We believe that our customers’ inventory levels are influenced in part by their expectations for future changes in market TiO₂ selling prices as well as their expectations for future availability of product. Although certain of our TiO₂ grades are considered specialty pigments, the majority of our grades and substantially all of our production are considered commodity pigment products with price and availability being the most significant competitive factors along with product quality and customer and technical support service.

The factors having the most impact on our Chemicals Segment’s reported operating results are:

• TiO₂ selling prices,

• our TiO₂ sales and production volumes,

• manufacturing costs, particularly raw materials such as third-party feedstock, maintenance and energy-related expenses, and

• currency exchange rates (particularly the exchange rate for the U.S. dollar relative to the euro, the Norwegian krone and the Canadian dollar).

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

	Three months ended June 30,										Six months ended June 30,
	2019			2020			% Change				2019			2020			% Change
	(Dollars in millions)										(Dollars in millions)
Net sales	$	484.5		$	386.0			(20	)	%	$	921.0		$	807.0			(12	)	%
Cost of sales	375.4				291.1			(22	)		703.1				624.5			(11	)
Gross margin	$	109.1		$	94.9			(13	)		$	217.9		$	182.5			(16	)
Operating income	$	50.5		$	35.9			(29	)		$	103.3		$	82.7			(20	)
Percent of net sales:
Cost of sales	77		%	75		%					76		%	77		%
Gross margin	23			25							24			23
Operating income	10			9							11			10
Ti02 operating statistics:
Sales volumes*	158			124				(22	)	%	301			260				(14	)	%
Production volumes*	136			133				(2	)	%	270			265				(2	)	%
Percent change in net sales:
Ti02 sales volumes								(22	)	%								(14	)	%
Ti02 product pricing								(1	)									(1	)
Ti02 product mix/other								4										4
Changes in currency exchange rates								(1	)									(1	)
Total								(20	)	%								(12	)	%

* Thousands of metric tons

Current Industry Conditions— Our Chemicals Segment started 2020 with average TiO₂ selling prices 1% lower than at the beginning of 2019 and 3% higher than at the end of the second quarter of 2020. Average TiO₂ selling prices at the end of the second quarter of 2020 were comparable to average TiO₂ selling prices at the end of the first quarter of 2020.  Our Chemicals Segment experienced lower sales volumes in all major markets in the first six months of 2020 as compared to the same period of 2019.

Our Chemicals Segment operated its production facilities at overall average capacity utilization rates of 95% for the year-to-date period ended June 30, 2020 compared to 97% for the comparable period of 2019.  Our Chemicals Segment has adjusted planned production levels as a result of softening demand and market expectations for the near term as a result of the COVID-19 pandemic.

	Production Capacity Utilization Rates
	2019	2020
First quarter	97%	95%
Second quarter	97%	96%

Primarily due to a moderate rise in the cost of third-party feedstock procured in 2019 and the first half of 2020, our Chemicals Segment’s cost of sales per metric ton of TiO₂ sold in the first six months of 2020 was higher as compared to the first six months of 2019 (excluding the effect of changes in currency exchange rates).

Net Sales— Our Chemicals Segment’s net sales in the second quarter of 2020 decreased 20%, or $98.5 million, compared to the second quarter of 2019 primarily due to a 22% decrease in sales volumes (which decreased net sales by approximately $107 million) and a 1% decrease in average TiO₂ selling prices (which decreased net sales by approximately $5 million).  TiO₂ selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Our Chemicals Segment’s sales volumes decreased 22% in the second quarter of 2020 as compared to the second quarter of 2019 primarily due to lower demand resulting from the COVID-19 pandemic which impacted all major markets, particularly its European and export markets.  In addition to the impact of lower sales volumes and lower average selling prices, we estimate that changes in currency exchange rates (primarily the euro) decreased our Chemicals Segment’s net sales by approximately $4 million in the second quarter of 2020 as compared to the second quarter of 2019.

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Our Chemicals Segment’s net sales in the first six months of 2020 decreased 12%, or $114.0 million, compared to the first six months of 2019 primarily due to a 14% decrease in sales volumes (which decreased net sales by approximately $129 million) and a 1% decrease in average TiO₂ selling prices (which decreased net sales by approximately $9 million).

Our Chemicals Segment’s sales volumes decreased 14% in the first six months of 2020 as compared to the first six months of 2019 primarily due to lower sales volumes (primarily in the second quarter) in all major markets, with a significant portion of the decrease occurring in the second quarter as discussed above.    In addition to the impact of changes in average TiO₂ selling prices and sales volumes, we estimate that changes in currency exchange rates (primarily the euro) decreased our Chemicals Segment’s net sales by approximately $11 million as compared to the first six months of 2019.      

Cost of Sales and Gross Margin— Our Chemicals Segment’s cost of sales decreased 22% in the second quarter of 2020 compared to the second quarter of 2019 due to the net effect of a 22% decrease in sales volumes and higher raw materials and other production costs of approximately $6 million (including higher cost for third-party feedstock and other raw materials).  Our Chemicals Segment’s cost of sales as a percentage of net sales decreased to 75% in the second quarter of 2020 compared to 77% in the same period of 2019 as favorable product mix and improved sales and production volumes from our Chemicals Segment’s ilmenite mine operations offset the effects of lower average TiO₂ selling prices and higher raw materials and other production costs.

Our Chemicals Segment’s gross margin as a percentage of net sales increased to 25% in the second quarter of 2020 compared to 23% in the second quarter of 2019.  As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales increased primarily due to the net effects of improved product mix and ilmenite mine operations offset by lower sales volumes, lower average TiO₂ selling prices and higher raw materials and other production costs.  

Our Chemicals Segment’s cost of sales decreased 11% in the first six months of 2020 compared to the same period in 2019 due to the net effect of a 14% decrease in sales volumes, higher raw materials and other production costs of approximately $29 million (including higher cost for third-party feedstock and other raw materials) and currency fluctuations (primarily the euro).  Our Chemicals Segment’s cost of sales as a percentage of net sales increased to 77% in the first six months of 2020 compared to 76% in the same period of 2019 primarily due to the unfavorable effects of lower average selling prices and higher raw materials and other production costs, as discussed above.

Our Chemicals Segment’s gross margin as a percentage of net sales decreased to 23% in the first six months of 2020 compared to 24% in the first six months of 2019.  As discussed and quantified above, our Chemicals Segment’s gross margin as a percentage of net sales decreased primarily due to the net effect of lower average selling prices, lower sales volumes and higher raw materials and other production costs.

Operating Income— Our Chemicals Segment’s operating income decreased 29% in the second quarter of 2020 compared to the second quarter of 2019, and operating income as a percentage of net sales decreased to 9% in 2020 from 10% in 2019.  The decrease was driven by higher selling, general and administrative expenses relative to net sales partially offset by the higher gross margin discussed above.  We estimate that changes in currency exchange rates had a nominal effect on income from operations in the second quarter of 2020 as compared to the same period in 2019, as discussed in the Effects of Currency Exchange Rates section below.

Our Chemicals Segment’s operating income decreased 20% in the first six months of 2020 compared to the first six months of 2019, and operating income as a percentage of net sales decreased to 10% in 2020 from 11% in 2019.  The decrease was driven by the lower gross margin discussed above. We estimate that changes in currency exchange rates increased our Chemicals Segment’s operating income by approximately $11 million in the first six months of 2020 as compared to the same period in 2019.  

Our Chemicals Segment’s operating income is net of amortization of purchase accounting adjustments made in conjunction with our acquisitions of interests in NL and Kronos. As a result, we recognize additional depreciation expense above the amounts Kronos reports separately, substantially all of which is included within cost of sales. We recognized additional depreciation expense of $1.5 million in the first six months of 2020 and $1.1 million in the same period of 2019, which reduced our reported Chemicals Segment’s operating income as compared to amounts reported by Kronos.

Currency Exchange Rates—– Our Chemicals Segment has substantial operations and assets located outside the United States (primarily in Germany, Belgium, Norway and Canada).  The majority of our Chemicals Segment’s sales from non-U.S. operations are denominated in currencies other than the U.S. dollar, principally the euro, other major European currencies and the Canadian dollar.  A portion of our sales generated from our non-U.S. operations is denominated in the U.S. dollar (and consequently our non-U.S. operations will generally hold U.S. dollars from time to time).  Certain raw materials used worldwide, primarily titanium-containing feedstocks, are purchased primarily in U.S. dollars, while labor and other production costs are purchased primarily in local currencies.  Consequently, the translated U.S. dollar value of our non-U.S. sales and operating results are subject to currency exchange rate fluctuations which may favorably or unfavorably impact reported earnings and may affect the comparability of period-to-period operating results.  In addition to the impact of the translation of sales and expenses over time, our non-U.S. operations also generate

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currency transaction gains and losses which primarily relate to (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, (ii) changes in currency exchange rates during time periods when our non-U.S. operations are holding non-local currency (primarily U.S. dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time.  Our Chemicals Segment periodically uses currency forward contracts to manage a portion of our currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts we hold from time to time serve in part to mitigate the currency transaction gains or losses we would otherwise recognize from the first two items described above.

Overall, we estimate that fluctuations in currency exchange rates had the following effects on the reported amounts of our Chemicals Segment’s sales and operating income for the periods indicated.

Impact of changes in currency exchange rates Three months ended June 30, 2020 vs June 30, 2019
										Translation gains (losses) - impact of rate changes			Total currency impact 2020 vs 2019
	Transaction losses recognized
	2019			2020			Change
	(In millions)
Impact on:
Net sales	$	—		$	—		$	—		$	(4	)	$	(4)
Operating income		(1	)		(6	)		(5	)		5			—

The $4 million decrease in our Chemicals Segment’s net sales (translation loss) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into fewer U.S. dollars in 2020 as compared to 2019.  The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2020 did not have a significant effect on the reported amount of our Chemicals Segment’s net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations are denominated in the U.S. dollar.

The currency effect on our Chemicals Segment’s operating income was comprised of the following:

• The $5 million decrease in operating income from net currency transaction losses was caused primarily by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone, and between the euro and the Norwegian krone, which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our non-U.S. operations and in Norwegian krone denominated receivables and payables held by our non-U.S. operations, and

• Approximately $5 million from net currency translation gains primarily caused by the strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as its local currency-denominated operating costs were translated into fewer U.S. dollars in 2020 as compared to 2019, and such translation, as it related to the U.S. dollar relative to the euro, had a nominal effect on our Chemicals Segment’s operating income in 2020 as compared to 2019.

Impact of changes in currency exchange rates Six months ended June 30, 2020 vs June 30 2019
							Translation gains (losses) - impact of rate changes			Total currency impact 2020 vs 2019
	Transaction gains recognized
	2019		2020		Change
	(In millions)
Impact on:
Net sales	$	—	$	—	$	—	$	(11	)	$	(11	)
Operating income		—		6		6		5			11

The $11 million decrease in net sales (translation loss) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as our Chemicals Segment’s euro-denominated sales were translated into less U.S. dollars in 2020 as compared to 2019.  The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2020 did not have a significant effect on the reported amount of our net sales, as a substantial portion of the sales generated by our Chemicals Segment’s Canadian and Norwegian operations are denominated in the U.S. dollar.

The $11 million increase in our Chemicals Segment’s operating income was comprised of the following:

• Approximately $6 million from net currency transaction gains primarily caused by relative changes in currency exchange rates at each applicable balance sheet date between the U.S. dollar and the euro, Canadian dollar and the Norwegian krone,

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which causes increases or decreases, as applicable, in U.S. dollar-denominated receivables and payables and U.S. dollar currency held by our Chemicals Segment’s non-U.S. operations, and

• Approximately $5 million from net currency translation gains primarily caused by the strengthening of the U.S. dollar relative to the Canadian dollar and Norwegian krone, as its local currency-denominated operating costs were translated into fewer U.S. dollars in 2020 as compared to 2019, partially offset by such translation, as it related to the U.S. dollar relative to the euro, which had a negative effect on our Chemicals Segment’s operating income in 2020 as compared to 2019, as the negative impact of the stronger U.S. dollar on euro-denominated sales more than offset the favorable effect of euro-denominated operating costs being translated into fewer U.S. dollars in 2020 as compared to 2019.

Outlook—The COVID-19 pandemic, including the measures employed to mitigate its spread, has primarily impacted our Chemicals Segment’s operations through reduced demand for its products, resulting in lower sales and earnings than otherwise would have been expected, particularly during the second quarter of 2020.  Our Chemicals Segment’s manufacturing facilities have operated at near planned production rates throughout the pandemic and the availability of raw materials has not been adversely impacted.

Our Chemicals Segment’s manufacturing and administrative facilities are generally located in densely populated regions of Europe and North America which have experienced substantial outbreaks of COVID-19 and are in varying stages of outbreak and recovery. Our Chemicals Segment continues to employ a variety of methods to protect the health and well-being of its workforce and its customers, including the implementation of contact tracing, deep cleaning and disinfecting of facilities, work-from-home strategies and staggered shift deployment, among other health and safety protocols.  To-date, our Chemicals Segment has had limited cases of COVID-19 among its workforce and all of its facilities have remained open and operational.

The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have 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 have generally permitted the resumption of commercial activities following various regional shutdowns, but further government action restricting economic activity is possible in an effort to mitigate increases in COVID-19 in certain regions. As a result, we expect U.S. and worldwide gross domestic product to be significantly impacted for an indeterminate period of time. While many of our Chemicals Segment’s products are used by its customers in end-products that thus far have remained in demand across the world economy, we believe overall demand for our Chemicals Segment’s products and its customers’ products will continue to be negatively impacted by reduced economic activity.

Given the impact of COVID-19 on the global economy, we expect our Chemicals Segment’s sales volumes and resulting earnings for the remainder of 2020 will continue to be lower than prior periods. To-date our Chemicals Segment has made modest adjustments to its production levels in response to near-term market expectations, but the full extent of the COVID-19 impact on its operations will depend on numerous factors, including customer demand for its products, any future disruption in its operations or its suppliers’ operations and the timing and effectiveness of measures deployed to fight COVID-19, all of which are uncertain and cannot be predicted. Our Chemicals Segment will continue to monitor current and anticipated near-term customer demand throughout the year and align its production and inventory levels accordingly.

Though it is not possible to predict the impact of the COVID-19 pandemic on future demand for our Chemicals Segment’s products or those of its customers, we believe that our Chemicals Segment has sufficient liquidity (including cash on-hand of approximately $341 million and borrowing capacity under its revolving credit facilities of approximately $226 million at June 30, 2020) available to meet its obligations, and our Chemicals Segment is prepared to implement multiple cash-saving strategies as necessary, including reduction of inventories, delays in certain capital expenditures and other cost saving initiatives.  

Component Products –

Our Component Products Segment’s 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 the segment’s net sales, cost of sales and gross margin. The key performance indicator for our Component Products Segment is operating income and margins.

Our Component Products Segment experienced normal sales volumes and operations during the first quarter of 2020.  Beginning in late March 2020 as a result of the COVID-19 pandemic, our Component Products Segment began receiving requests from certain customers of both its security products and marine components reporting units to postpone shipments, in some cases because customers’ production facilities were temporarily closed. Our Component Products Segment operates 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 our Component Products Segment enhanced cleaning and sanitization procedures, mandated social distancing and implemented other health and safety protocols. In late April, our Component Products Segment closed its Chicago area location for one week due to COVID-19 activity in the area. The temporary closure of the Illinois facility had a minimal negative impact on its ability to manufacture and ship during the second quarter due to the decline in demand during the same period.

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	Three months ended June 30,										Six months ended June 30,
	2019			2020			% Change				2019			2020			% Change
	(Dollars in millions)										(Dollars in millions)
Net sales:
Security products	$	26.9		$	18.6			(31	)	%	$	51.6		$	44.0			(15	)	%
Marine components		6.8			5.2			(23	)			13.3			12.1			(9	)
Total net sales		33.7			23.8			(29	)			64.9			56.1			(14	)
Cost of sales		22.8			16.4			(28	)			44.3			38.3			(14	)
Gross margin	$	10.9		$	7.4			(32	)		$	20.6		$	17.8			(13	)
Operating income	$	5.6		$	2.4			(57	)		$	10.0		$	7.4			(26	)
Percent of net sales:
Cost of sales		68	%		69	%						68	%		68	%
Gross margin	32			31							32			32
Operating income	17			10							15			13

Net Sales — Our Component Products Segment’s net sales decreased $9.9 million and $8.8 million in the second quarter and for the first six months of 2020, respectively, compared to the same periods in 2019. The significant decrease in sales is due to lower sales volumes for both security products and marine components in the second quarter of 2020 as many of our Component Products Segment’s customers were temporarily closed or reduced production during the quarter due to government ordered closures or reduced demand resulting from the COVID-19 pandemic. Relative changes in selling prices did not have a material impact on net sales comparisons.

Costs of Sales and Gross Margin — As a percentage of net sales, our Component Products Segment’s cost of sales for the second quarter of 2020 was 1% higher than the same period in 2019. As a result, gross margin as a percentage of sales decreased over the same period. The decrease in gross margin percentage is the result of the decline in both security products and marine components gross margin percentage for the second quarter due to less favorable customer and product mix for security products and reduced overhead coverage from lower production and sales volumes for both security products and marine components. Cost of sales and gross margin as a percentage of sales for the first six months of 2020 is comparable to the same period in 2019.

Operating Income — Our Component Products Segment’s operating income as a percentage of net sales for the second quarter and first six months of 2020 decreased compared to the same periods of 2019 and was primarily impacted by the factors impacting cost of sales and gross margin discussed above.

Outlook— In the second quarter of 2020, the COVID-19 pandemic created multiple challenges, both in our Component Products Segment’s reporting units and from the reduced demand for its products. Both global and domestic supply chains remain intact and our Component Products Segment has experienced minimal supply chain disruptions. Our Component Products Segment’s management continues to work closely with all of its customers and monitor their progress as they continue to adjust their operations. While some of our Component Products Segment’s customers expect to recover quickly, others expect to take longer, including transportation, office furniture and cabinetry manufacturers.  

Considerable effort continues at all of our Component Products Segment’s locations to manage current COVID-19 conditions including enhanced health and safety protocols and additional cleaning and disinfecting efforts. After the temporary closure in late April 2020 at its manufacturing facility outside of Chicago, Illinois, our Component Products Segment has been able to operate the facility at normal operating rates. Throughout the course of the COVID-19 pandemic, our Component Products Segment management has focused its efforts on maintaining efficient operations, while closely managing its expenses and capital projects.  In this regard they are constantly evaluating staffing levels and have recently reduced production staffing levels to adjust to anticipated levels of demand for the second half of 2020.

The advance of the COVID-19 pandemic and the global efforts to mitigate its spread have 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 have generally permitted the gradual resumption of commercial activities following various regional shutdowns, but further government action restricting economic activity is possible in an effort to mitigate increases in COVID-19 cases in certain regions. The success and timing of these mitigating actions will depend in part on deployment of effective tools to

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fight COVID-19, including increased testing, enhanced monitoring, data analysis, effective treatments and a safe vaccine, before economic growth is likely to return to pre-pandemic levels. 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 our Component Products Segment to report reduced revenue and operating income in 2020 compared to 2019. We believe the second quarter of 2020 will be the period most impacted by COVID-19 but the severity of the impact on the remainder of the year will depend on customer demand for our Component Products Segment’s products, including the timing and extent to which its customers operations continue to be impacted, on its customers’ perception as to when consumer demand for their products will return to pre-pandemic levels and on any future disruptions in its operations or its suppliers’ operations, all of which are difficult to predict. Our Component Products Segment’s operations team meets daily to ensure it is taking appropriate actions to maintain a safe working environment for all of its employees, minimize operational disruptions and manage inventory levels. Our Component Products Segment  increased inventory of both security products and marine components during the second quarter of 2020 to keep its workforce productive by focusing on high-demand products and components.  We expect inventory balances will decline over the remainder of the year as our Component Products Segment aligns its production to current demand levels.  It is possible our Component Products Segment may temporarily close one or more of its facilities again for the health and safety of its employees before the COVID-19 crisis is over. Our Component Products Segment has significant cash balances of approximately $62.5 million at June 30, 2020, and we believe it is well positioned to navigate the uncertainty ahead.

Real Estate Management and Development  –

	Three months ended				Six months ended
	June 30,				June 30,
	2019		2020		2019		2020
	(In millions)
Net sales:
Land sales	$	8.4	$	2.7	$	17.9	$	6.2
Water delivery sales		1.6		2.1		3.5		4.0
Utility and other		.4		.4		.9		1.0
Total net sales		10.4		5.2		22.3		11.2
Cost of sales		7.2		3.5		15.8		7.8
Gross margin	$	3.2	$	1.7	$	6.5	$	3.4
Operating income	$	9.8	$	1.0	$	13.0	$	20.2

General—Our Real Estate Management and Development Segment consists of BMI and LandWell.  BMI provides utility services, among other things, to an industrial park located in Henderson, Nevada, and is responsible for the delivery of water to the City of Henderson and various other users through a water distribution system owned by BMI. LandWell is actively engaged in efforts to develop certain real estate in Henderson, Nevada including approximately 2,100 acres zoned for residential/planned community purposes and approximately 400 acres zoned for commercial and light industrial use.

Beginning in December 2013 and through the first quarter of 2020, LandWell has closed or entered into escrow on approximately 930 acres of the residential/planned community and approximately 70 acres zoned for commercial and light industrial use. Contracts for land sales are negotiated on an individual basis and sales terms and prices will vary based on such factors as location (including location within a planned community), expected development work, and individual buyer needs. Although land may be under contract or in escrow, in most instances buyers can cancel the escrow agreement with no financial penalties until shortly before the closing date. Land sales may be completed but we do not recognize revenue until we have satisfied the criteria for revenue recognition set forth in ASC Topic 606. In some instances, we will receive cash proceeds at the time the contract closes and record deferred revenue for some or all of the cash amount received, with such deferred revenue being recognized in subsequent periods. We expect the development work to continue for 10 to 15 years on the rest of the land held for development, especially the remainder of the residential/planned community.

Net Sales and Operating Income— A substantial portion of the net sales from our Real Estate Management and Development Segment in the first six months of 2019 and 2020 consisted of revenues from land sales. As noted above we recognize revenue in our residential/planned community over time using cost based input methods (previously known as percentage completion method) and substantially all of the revenue we recognized in 2019 and 2020 was under this method of revenue recognition.  The contracts on these sales (both within the planned community and otherwise) include approximately 645 acres of the residential planned community and certain other acreage which closed in December 2013 and through the second quarter of 2020. Land sales revenues were lower in the  second quarter and first six months of 2020 as compared to the same periods in 2019 primarily due to a decrease in the amount of acreage

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sold in 2020 compared to 2019 and due to higher infrastructure development spending in 2019. Cost of sales related to land sales revenues was $4.0 million in the six months of 2020 compared to $12.5 million in the first six months of 2019. Operating income also includes $19.1 million in the first six months of 2020 (all in the first quarter) and $8.8 million in the first six months of 2019 (primarily in the second quarter) of income related to the recognition of tax increment reimbursement note receivables, as discussed in Note 11 to our Condensed Consolidated Financial Statements.

The remainder of net sales and cost of sales related to this segment primarily relates to water delivery fees and expenses.  We deliver water to several customers under long-term contracts.  

Outlook—Our Real Estate Management and Development Segment experienced minimal impact on operations and financial performance from COVID-19 during the first quarter of 2020.  In April 2020, LandWell began receiving requests from some residential builders to delay or cancel closing on certain parcels in escrow and, as a result, LandWell began delaying or curtailing infrastructure development activities where possible to align with current land sales levels and residential builder output.  BMI continues to provide utility and water delivery services to its customers without interruption. Our Real Estate Management and Development management team is focused on protecting the health and safety of our employees and contractors through implementation of social distancing and work-from-home strategies among other health and safety protocols.

As noted above, land held in escrow can generally be cancelled by builders without financial penalty until shortly before scheduled closing. In addition, several COVID-19 mitigation procedures put into effect by the City of Henderson and utility providers are, in some cases, adding significant time to the typical permitting and mapping process required to be completed before the necessary approvals can be obtained to close a land sale. Given these factors and the impact of COVID-19 on the overall economy, including the greater Las Vegas area, we expect the level of land sales to be negatively impacted in the near term although the extent and timing of the impact will depend on numerous factors, including customer demand, and therefore is uncertain and cannot be predicted. LandWell is continuing to actively develop and market land it manages, primarily to residential builders, for the residential/planned community in Henderson and given the current liquidity of our Real Estate Management and Development Segment, including approximately $14.1 million of cash and cash equivalents at June 30, 2020, we believe it is well positioned to meet its obligations and navigate the uncertainties ahead. Depending on the length and severity of the impact of COVID-19 on the economy and its operations, LandWell may decide to further delay or curtail infrastructure development activities in the near term where possible and implement other cash-saving initiatives. Because we recognize revenue over time using cost based inputs for most of LandWell’s land sales, delays or curtailments in infrastructure development activities will lower the amount of revenue we would recognize on previously closed land sales.  In addition, delays or curtailments in infrastructure development activities will also delay LandWell’s ability to submit completed costs to the City of Henderson for approval of additional tax increment reimbursement note receivables and, as a result, we would not expect LandWell to recognize significant additional note receivables during 2020.

General Corporate Items, Interest Expense, Income Taxes and Noncontrolling Interest—2020 Compared to 2019

Insurance Recoveries—NL has agreements with certain insurance carriers pursuant to which the carriers reimburse NL for a portion of its past lead pigment and asbestos litigation defense costs.  Insurance recoveries include amounts NL received from these insurance carriers.  

The agreements with certain of NL’s insurance carriers also include reimbursement for a portion of its future litigation defense costs.  We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by NL because of certain issues that arise regarding which defense costs qualify for reimbursement.  Accordingly, these insurance recoveries are recognized when the receipt is probable and the amount is determinable.   Substantially all of the $4.7 million insurance recoveries we recognized in the second quarter of 2019 relates to a settlement NL reached with one of its insurance carriers in which they agreed to reimburse NL for a portion of NL’s past and future litigation defense costs.  See Note 15 to our Condensed Consolidated Financial Statements.

Kronos recognized $1.5 million of insurance recoveries in the first quarter of 2020 related to a property damage claim.

Litigation Settlement Expense – We recognized a pre-tax $19.6 million litigation settlement expense in the second quarter of 2019 related to NL’s lead pigment litigation in California. See Note 15 to our Condensed Consolidated Financial Statements.

Other Components of Net Periodic Pension Expense – We recognized other components of net periodic pension and OPEB expense of $5.0 million and $9.7 million in the second quarter and first six months of 2020 compared to $4.1 million and $8.2 million in the same periods of 2019. The expense increased in both periods primarily due to pension costs as a result of actuarial amortizations, discount rates and expected returns on plan assets.

Changes in the Market Value of Valhi Common Stock held by Subsidiaries—Our subsidiaries, Kronos and NL, hold shares of our common stock.  As discussed in the 2019 Annual Report, we account for our proportional interest in these shares of our common stock as treasury stock, at Kronos’ and NL’s historical cost basis.  The remaining portion of these shares of our common stock, which are attributable to the noncontrolling interest of Kronos and NL, are reflected in our Condensed Consolidated Balance Sheet at fair value.  Kronos and NL recognize unrealized gains or losses on these shares of our common stock in the determination of each of their respective

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net income or losses.  Under the principles of consolidation we eliminate any gains or losses associated with our common stock to the extent of our proportional ownership interest in each subsidiary.  We recognized a loss of $.5 million in the second quarter of 2020 compared to a gain of $1.9 million in the same period of 2019 and a loss of $2.9 million in the first six months of 2020 compared to a gain of $3.0 million in the same period of 2019 in our Condensed Consolidated Statements of Income which represents the unrealized gain or loss in respect of these shares during such periods attributable to the noncontrolling interest of Kronos and NL.

Other General Corporate Items— Corporate expenses were 17% lower in the second quarter and 9% lower in the first six months of 2020 compared to the same periods of 2019 primarily due to lower litigation and related costs.  Included in corporate expense are:

• litigation and related costs at NL of $.5 million in the second quarter of 2020 compared to $1.0 million in the second quarter of 2019 and $1.1 million in the first six months of 2020 compared to $1.9 million in the first six months of 2019; and

• environmental remediation and related costs of nil in each of the second quarter of 2020 and 2019 and nil in the first six months of 2020 compared to a benefit of $.7 million in the first six months of 2019.

Overall, we currently expect that our net general corporate expenses in 2020 will be comparable to 2019.

The level of our litigation and related expenses varies from period to period depending upon, among other things, the number of cases in which we are currently involved, the nature of such cases and the current stage of such cases (e.g. discovery, pre-trial motions, trial or appeal, if applicable). See Note 15 to our Condensed Consolidated Financial Statements. If our current expectations regarding the number of cases in which we expect to be involved during 2020, or the nature of such cases, were to change, our corporate expenses could be higher than we currently estimate.

Obligations for environmental remediation and related costs are difficult to assess and estimate, and it is possible that actual costs for environmental remediation and related costs will exceed accrued amounts or that costs will be incurred in the future for sites in which we cannot currently estimate the liability. If these events occur in 2020, our corporate expense could be higher than we currently estimate. In addition, we adjust our accruals for environmental remediation and related costs as further information becomes available to us or as circumstances change. Such further information or changed circumstances could result in an increase or reduction in our accrued environmental remediation and related costs. See Note 15 to our Condensed Consolidated Financial Statements.

Interest Expense—Interest expense decreased to $8.8 million in the second quarter of 2020 from $10.1 million in the second quarter of 2019 and decreased to $18.5 million in the first six months of 2020 from $20.4 million in the first six months of 2019 primarily due to lower average interest rates and lower average balances on variable-rate indebtedness in 2020.  

We expect interest expense will continue to be lower in the remainder of 2020 as compared to 2019 due to lower average rates.

Provision for Income Taxes— We recognized income tax expense of $21.2 million in the second quarter of 2020 compared to income tax expense of $13.0 million in the second quarter of 2019 and $32.6 million in the first six months of 2020 compared to $27.2 million in the first six months of 2019.  The increase is primarily due to higher amounts recognized for global intangible low-tax income (GILTI) in 2020 due to limitations on related deductions and tax credits and an increase in the valuation allowance for the nondeductible amount of business interest expense carryforward not expected to be fully utilized under the more-likely-than-not recognition criteria.  For interim financial reporting purposes, we apply an estimated annual effective tax rate in determining our provision for income taxes and the effects of GILTI and the increase to the valuation allowance relative to our decreased earnings significantly impacted our 2020 estimated annual effective tax rate. Our earnings are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of our non-U.S. operations are generally higher than the income tax rates applicable to our U.S. operations.  Excluding the effect of any increase or decrease in our deferred income tax asset valuation allowance or changes in our reserve for uncertain tax positions, we would generally expect our overall effective tax rate to be higher than the U.S. federal statutory tax rate of 21% primarily because of our non-U.S. operations.  

We recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid such recognition of deferred income taxes is not available to us. At December 31, 2019, we had recognized a deferred income tax liability with respect to our direct investment in Kronos of $37.8 million.  There is a maximum amount (or cap) of such deferred income taxes we are required to recognize with respect to our direct investment in Kronos. The maximum amount of such deferred income tax liability we would be required to have recognized (the cap) is $155.4 million.  During the first six months of 2020, we recognized a non-cash deferred income tax expense with respect to our direct investment in Kronos of $4.4 million for the increase in the deferred income taxes required to be recognized with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock, to the extent such increase related to our equity in Kronos’ net income during such period.  We recognized a similar non-cash deferred income tax expense of $3.0 million in the first six months of 2019.   A portion of the net change with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock during such periods related to our equity in Kronos’ other comprehensive income (loss) items, and the amounts allocated to other comprehensive income (loss) items includes amounts related to our equity in Kronos’ other comprehensive income (loss) items.

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See Note 12 to our Condensed Consolidated Financial Statements for a tabular reconciliation of our statutory income tax provision to our actual tax provision.

Noncontrolling Interest in Net Income (Loss) of Subsidiaries—Noncontrolling interest in operations of subsidiaries decreased from 2019 to 2020 primarily due to decreased earnings at Kronos and CompX. See Note 13 to our Condensed Consolidated Financial Statements.

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LIQUIDITY AND CAPITAL RESOURCES

Consolidated Cash Flows

Operating Activities—

Trends in cash flows from operating activities (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our operating income.  In addition to the impact of the operating, investing and financing cash flows discussed below, changes in the amount of cash, cash equivalents and restricted cash we report from period to period can be impacted by changes in currency exchange rates, since a portion of our cash, cash equivalents and restricted cash is held by our non-U.S. subsidiaries.

Cash flow from operating activities was $6.0 million in the first six months of 2020 compared to $32.8 million in the first six months of 2019. This $26.8 million decrease in cash provided was primarily due to the net effect of the following items:

• consolidated operating income of $110.3 million in the first six months of 2020, a decrease of $16.0 million compared to operating income of $126.3 million in the first six months of 2019;

• lower net cash paid for income taxes in 2020 of $27.4 million due to decreased earnings in 2020 and the timing of tax payments (to provide COVID-19 related tax relief, the U.S. Internal Revenue Service extended the payment deadline for most U.S. federal taxes typically due in the first half of the year until July 15, 2020); and

• a $30.2 million increase in the amount of net cash used in relative changes in receivables, inventories, payables and accrued liabilities in the first six months of 2020.

Changes in working capital were affected by accounts receivable and inventory changes as shown below:

• Kronos’ average days sales outstanding (“DSO”) at June 30, 2020 is comparable to December 31, 2019.

• Kronos’ average days sales in inventory (“DSI”) at June 30, 2020 is comparable to December 31, 2019.

• CompX’s average DSO at June 30, 2020 increased from December 31, 2019 primarily due to relative changes in the timing of collections.

• CompX’s average DSI at June 30, 2020 increased as compared to December 31, 2019 as a result of an intentional inventory build during the second quarter of 2020 to keep trained and tenured employees productive.  

For comparative purposes, we have also provided comparable prior period numbers below.

	December 31, 2018		June 30, 2019		December 31, 2019		June 30, 2020
Kronos:
Days sales outstanding		76 days		72 days		71 days		71 days
Days sales in inventory		113 days		62 days		83 days		85 days
CompX:
Days sales outstanding		40 days		40 days		36 days		43 days
Days sales in inventory		80 days		71 days		81 days		121 days

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We do not have complete access to the cash flows of our majority-owned subsidiaries, due in part to limitations contained in certain credit agreements of our subsidiaries and because we do not own 100% of these subsidiaries. A detail of our consolidated cash flows from operating activities is presented in the table below.  Intercompany dividends have been eliminated.

	Six months ended June 30,
	2019			2020
	(In millions)
Cash provided by (used in) operating activities:
Valhi exclusive of its subsidiaries	$	13.7		$	16.6
Kronos		25.9			18.1
NL exclusive of its subsidiaries		14.2			8.9
CompX		5.4			4.4
BMI		12.5			7.2
LandWell		10.9			(.9	)
Tremont exclusive of its subsidiaries		9.1			4.6
Eliminations and other		(58.9	)		(52.9	)
Total	$	32.8		$	6.0

Investing Activities—

We spent $26.7 million in capital expenditures during the first six months of 2020 including:

• $25.4 million in our Chemicals Segment;

• $.9 million in our Component Products Segment; and

• $.4 million in our Real Estate Management and Development Segment.

Financing Activities—

During the six months ended June 30, 2020, we:

• repaid $3.8 million under the Contran credit facility, repaid $2.0 million under Tremont’s promissory note payable, repaid $1.0 million under BMI’s bank loan and repaid $1.6 million under LandWell’s note payable to the City of Henderson;

• paid aggregate quarterly dividends to Valhi stockholders of $.32 per share ($9.0 million) and;

• Kronos acquired shares of its common stock for an aggregate purchase price of $1.0 million.

The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon a number of factors including our current and future expected results of operations, financial condition, cash requirements for our businesses, contractual and other 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 might be paid.  There are currently no contractual restrictions on the amount of dividends which we may pay.  Distributions to noncontrolling interest in subsidiaries in the first six months of 2020 are comprised of CompX dividends paid to shareholders other than NL and Kronos dividends paid to shareholders other than us and NL.

Outstanding Debt Obligations

At June 30, 2020, our consolidated indebtedness was comprised of:

• Valhi’s $309.2 million outstanding on its $360 million credit facility with Contran which is due no earlier than December 31, 2021;

• €400 million aggregate outstanding on our KII 3.75% Senior Secured Notes ($443.8 million carrying amount, net of unamortized debt issuance costs) due in September 2025;

• $16.9 million on BMI’s bank loan ($16.2 million carrying amount, net of unamortized debt issuance costs) due through September 2032;

• $14.5 million on LandWell’s bank loan due in April 2036; and

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• approximately $2.7 million of other indebtedness.

Certain of our credit facilities require the respective borrowers to maintain a number of covenants and restrictions which, among other things, restrict our ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type. Certain of our credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants. For example, certain credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, certain credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. Kronos’ North American and European revolvers contain a number of covenants and restrictions which, among other things, restrict its ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type.  Kronos’ European revolving credit facility also requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to the last twelve months EBITDA of the borrowers.  The terms of all of our debt instruments (including revolving lines of credit for which we have no outstanding borrowings at June 30, 2020) are discussed in Note 9 to our 2019 Annual Report.  We are in compliance with all of our debt covenants at June 30, 2020.  We believe that we will be able to continue to comply with the financial covenants contained in our credit facilities through their maturity; however, if future operating results differ materially from our expectations we may be unable to maintain compliance.

Future Cash Requirements

Liquidity –

Our primary source of liquidity on an ongoing basis is our cash flows from operating activities and borrowings under various lines of credit and notes. We generally use these amounts to (i) fund capital expenditures, (ii) repay short-term indebtedness incurred primarily for working capital purposes and (iii) provide for the payment of dividends (including dividends paid to us by our subsidiaries) or treasury stock purchases. From time-to-time we will incur indebtedness, generally to (i) fund short-term working capital needs, (ii) refinance existing indebtedness, (iii) make investments in marketable and other securities (including the acquisition of securities issued by our subsidiaries and affiliates) or (iv) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business. Occasionally we sell assets outside the ordinary course of business, and we generally use the proceeds to (i) repay existing indebtedness (including indebtedness which may have been collateralized by the assets sold), (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.

We routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows we expect to receive from our subsidiaries, and the estimated sales value of those units. As a result of this process, we have in the past sought, and may in the future seek, to raise additional capital, refinance or restructure indebtedness, repurchase indebtedness in the market or otherwise, modify our dividend policies, consider the sale of our interests in our subsidiaries, affiliates, business units, marketable securities or other assets, or take a combination of these and other steps, to increase liquidity, reduce indebtedness and fund future activities. Such activities have in the past and may in the future involve related companies. From time to time, we and our subsidiaries may enter into intercompany loans as a cash management tool. Such notes are structured as revolving demand notes and pay and receive interest on terms we believe are generally more favorable than current debt and investment market rates. The companies that borrow under these notes have sufficient liquidity to repay the notes. All of these notes and related interest expense and income are eliminated in our Condensed Consolidated Financial Statements.

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

We believe we will be able to comply with the financial covenants contained in our credit facilities through their maturities; however, if future operating results differ materially from our expectations we may be unable to maintain compliance. Based upon our expectations of our operating performance, and the anticipated demands on our cash resources, we expect to have sufficient liquidity to meet our short-term (defined as the twelve-month period ending June 30, 2021) and long-term obligations (defined as the five-year period ending June 30, 2025). If actual developments differ from our expectations, our liquidity could be adversely affected.

- 37 -

At June 30, 2020, we had credit available under existing facilities of $276.7 million, which was comprised of:

• $100.9⁽¹⁾ million under Kronos’ European revolving credit facility;

• $125.0 million under Kronos’ North American revolving credit facility; and

• $50.8⁽²⁾ million under Valhi’s Contran credit facility.

(1) Based on Kronos’ EBITDA over the last twelve months ending June 30, 2020, the full €90.0 million amount is available for borrowing at such date.

(2) Amounts available under this facility are at the sole discretion of Contran.

At June 30, 2020, we had an aggregate of $541.3 million of restricted and unrestricted cash, cash equivalents and marketable securities, including $159.7 million held by our non-U.S. subsidiaries. Following implementation of a territorial tax system under the 2017 Tax Act, repatriation of any cash and cash equivalents held by our non-U.S. subsidiaries would not be expected to result in any material income tax liability as a result of such repatriation.  A detail by entity is presented in the table below.

	Total		Amount held outside U.S.
	(In millions)
Kronos	$	343.4	$	159.7
CompX		62.5		-
NL exclusive of its subsidiaries		100.0		-
Tremont exclusive of its subsidiaries		8.5		-
LandWell		9.5		-
BMI		17.4		-
Valhi exclusive of its subsidiaries		-		-
Total restricted and unrestricted cash, cash equivalents and    marketable securities	$	541.3	$	159.7

Capital Expenditures and Other –

We currently expect our aggregate capital expenditures for 2020 will be approximately $66 million as follows:

• $60 million by our Chemicals Segment,

• $4 million by our Component Products Segment; and

• $2 million by our Real Estate Management and Development Segment.

Capital spending for 2020 is expected to be funded primarily through cash generated from operations and borrowing under existing credit facilities. Planned capital expenditures in 2020 at Kronos and CompX will primarily be to maintain and improve the cost-effectiveness of our facilities. In addition, Kronos’ capital expenditures in the area of environmental compliance, protection and improvement include expenditures which are primarily focused on increased operating efficiency but also result in improved environmental protection, such as lower emissions from our manufacturing plants. We may further reduce, curtail or delay planned capital spending and land development activities if economic conditions warrant.

Repurchases of Common Stock –

We, Kronos and CompX have programs to repurchase common stock from time to time as market conditions permit. These stock repurchase programs do not include specific price targets or timetables and may be suspended at any time. Depending on market conditions, these programs may be terminated prior to completion. Cash on hand will be used to acquire the shares and repurchased shares will be added to treasury shares and cancelled.  

At June 30, 2020, as adjusted for the 1-for-12 reverse stock split of our common stock effected on June 1, 2020, Valhi had approximately .3 million shares available to repurchase under authorizations made by our board of directors.

Kronos’ board of directors authorized the repurchase of up to 2.0 million shares of its common stock in open market transactions, including block purchases, or in privately-negotiated transactions at unspecified prices and over an unspecified period of time. Kronos may repurchase its common stock from time to time as market conditions permit. During the first six months of 2020, Kronos acquired

- 38 -

122,489 shares of its common stock in open market purchases under such repurchase program for an aggregate purchase price of $1.0 million.  At June 30, 2020, approximately 1.6 million shares are available for repurchase.  

CompX’s board of directors authorized the repurchase of its Class A common stock in open market transactions, including block purchases, or in privately-negotiated transactions at unspecified prices and over an unspecified period of time. At June 30, 2020, approximately .7 million shares were available for purchase under these authorizations.

Dividends –

Because our operations are conducted primarily through subsidiaries and affiliates, our long-term ability to meet parent company level corporate obligations is largely dependent on the receipt of dividends or other distributions from our subsidiaries and affiliates. Kronos paid a regular dividend of $.18 per share in each quarter of 2019. If Kronos were to pay its $.18 per share in each quarter of 2020 based on the 58.0 million shares we held of Kronos common stock at June 30, 2020, we would receive aggregate annual regular dividends from Kronos of $41.8 million.  In February 2020 the NL board of directors approved a quarterly dividend of $.04 per share. If NL were to pay its $.04 per share dividend in each quarter of 2020 based on the 40.4 million shares we hold of NL common stock at June 30, 2020, we would receive aggregate annual dividends from NL of $6.5 million. BMI and LandWell pay cash dividends from time to time, but the timing and amount of such dividends are uncertain. In this regard, we received aggregate dividends from BMI and LandWell of $29.1 million in 2019 and $5.9 million during the first six months of 2020.   We do not know if we will receive additional dividends from BMI and LandWell during 2020.  All of our ownership interest in CompX is held through our ownership in NL; as such we do not receive any dividends from CompX. Instead any dividend paid by CompX is paid to NL.

Our subsidiaries have various credit agreements with unrelated third-party lenders which contain customary limitations on the payment of dividends, typically a percentage of net income or cash flow; however, these restrictions in the past have not significantly impacted their ability to pay dividends.

Reverse stock split –

On May 28, 2020 following stockholder approval at our annual meeting, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-12, which was effective June 1, 2020.  All share and per-share disclosures for all periods presented have been adjusted to give effect to the reverse stock split and we have adjusted our stockholders’ equity at December 31, 2018, March 31, 2019, December 31, 2019 and March 31, 2020 to reflect the split by reclassifying $3.3 million from common stock to additional paid-in capital representing $.01 per share par value of each share of common stock eliminated as a result of the reverse stock split.     

Investment in our Subsidiaries and Affiliates and Other Acquisitions –

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

We generally do not guarantee any indebtedness or other obligations of our subsidiaries or affiliates. Our subsidiaries are not required to pay us dividends. If one or more of our subsidiaries were unable to maintain its current level of dividends, either due to restrictions contained in a credit agreement or to satisfy its liabilities or otherwise, our ability to service our liabilities or to pay dividends on our common stock could be adversely impacted. If this were to occur, we might consider reducing or eliminating our dividends or selling interests in subsidiaries or other assets. If we were required to liquidate assets to generate funds to satisfy our liabilities, we might be required to sell at less than what we believe is the long-term value of such assets.

Prior to 2019, we entered into a $50 million revolving credit facility with a subsidiary of NL secured with approximately 35.2 million shares of the common stock of Kronos held by NL’s subsidiary as collateral.  Outstanding borrowings under the credit facility bear interest at the prime rate plus 1.875% per annum, payable quarterly, with all amounts due on December 31, 2023.   The maximum principal amount which may be outstanding from time-to-time under the credit facility is limited to 50% of the value of the Kronos stock using the most recent closing price.  The credit facility contains a number of covenants and restrictions which, among other things, restrict NL’s subsidiary’s ability to incur additional debt, incur liens, and merge or consolidate with, or sell or transfer substantially all of NL’s subsidiary’s assets to, another entity, and require NL’s subsidiary to maintain a minimum specified level of consolidated net worth.  Upon an event of default (as defined in the credit facility), Valhi will be entitled to terminate its commitment to make further loans to NL’s subsidiary, declare the outstanding loans (with interest) immediately due and payable, and exercise its rights with respect to the collateral under the loan documents.  Such collateral rights include, upon certain insolvency events with respect to NL’s subsidiary or NL, the right to purchase all of the Kronos common stock at a purchase price equal to the aggregate market value, less amounts owing to Valhi under the loan documents, and up to 50% of such purchase price may be paid by Valhi in the form of an unsecured promissory note bearing interest at the prime rate plus 2.75% per annum, payable quarterly, with all amounts due no later than five years from the

- 39 -

date of purchase, with the remainder of such purchase price payable in cash at the date of purchase. We also eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements. Prior to 2019 NL’s subsidiary borrowed $.5 million under this facility, no additional amounts have been borrowed since then, and $.5 million is outstanding under this facility at June 30, 2020. We eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements.

We have an unsecured revolving demand promissory note with Kronos which, as amended, provides for borrowings from Kronos of up to $60 million. We eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements.  The facility, as amended, is due on demand, but in any event no earlier than December 31, 2021.  We had no borrowings from Kronos under this facility during the first six months of 2020, and there was no outstanding balance at June 30, 2020.  We could borrow $60.0 million under our current intercompany facility with Kronos at June 30, 2020.  Kronos’ obligation to loan us money under this note is at Kronos’ discretion.

We also have an unsecured revolving demand promissory note with CompX which, as amended, provides for borrowings from CompX of up to $40 million. We eliminate any such intercompany borrowings in our Condensed Consolidated Financial Statements.  The facility, as amended, is due on demand, but in any event no earlier than December 31, 2021.  We had gross borrowings of $17.3 million and gross repayments of $20.6 million during the first six months of 2020, and $30.5 million was outstanding at June 30, 2020.  We could borrow $9.5 million under our current intercompany facility with CompX at June 30, 2020.  CompX’s obligation to loan us money under this note is at CompX’s discretion.

Off-balance Sheet Financing

We do not have any off-balance sheet financing arrangements.  

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.

We are subject to certain commitments and contingencies, as more fully described in Notes 1, 14 and 18 to our 2019 Annual Report, or in Notes 12 and 15 to our Condensed Consolidated Financial Statements and in Part II, Item 1 of this Quarterly Report, including:

• certain income tax contingencies in various U.S. and non-U.S. jurisdictions;

• certain environmental remediation matters involving NL and BMI;

• certain litigation related to NL’s former involvement in the manufacture of lead pigment and lead-based paint; and

• certain other litigation to which we are a party.

In addition to such legal proceedings, various legislation and administrative regulations have, from time to time, been proposed that seek to (i) impose various obligations on present and former manufacturers of lead pigment and lead-based paint (including NL) with respect to asserted health concerns associated with the use of such products and (ii) effectively overturn court decisions in which NL and other pigment manufacturers have been successful. Examples of such proposed legislation include bills which would permit civil liability for damages on the basis of market share, rather than requiring plaintiffs to prove that the defendant’s product caused the alleged damage, and bills which would revive actions barred by the statute of limitations. While no legislation or regulations have been enacted to date that are expected to have a material adverse effect on our consolidated financial position, results of operations or liquidity, enactment of such legislation could have such an effect.

Recent Accounting Pronouncements

See Note 17 to our Condensed Consolidated Financial Statements.

Critical Accounting Policies

There have been no changes in the first six months of 2020 with respect to our critical accounting policies presented in Management’s Discussion and Analysis of Financial Condition and Results of Operation in our 2019 Annual Report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, including currency exchange rates, interest rates and security prices, and raw material prices. There have been no material changes in these market risks since we filed our 2019 Annual Report, and refer you to Part I, Item 7A.—“Quantitative and Qualitative Disclosure About Market Risk” in our 2019 Annual Report.

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 we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Robert D. Graham, our Vice Chairman of the Board, President and Chief Executive Officer, and James W. Brown, our Executive Vice President and Chief Financial Officer, have evaluated the design and effectiveness of our disclosure controls and procedures as of June 30, 2020. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures were 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 by Exchange Act Rule 13a-15(f) means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

• 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 management and directors, and

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

Other

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

Changes in internal control over financial reporting

There has been no change to our internal control over financial reporting during the quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

Refer to Note 15 to our Condensed Consolidated Financial Statements, our March 31, 2020 Quarterly Report on Form 10-Q, and our 2019 Annual Report for descriptions of certain legal proceedings.

Item 1A. Risk Factors.

For a discussion of the risk factors related to our businesses, please refer to Part I, Item 1A, “Risk Factors,” in our 2019 Annual Report. There have been no material changes to such risk factors during the six months ending June 30, 2020.

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Item 6. Exhibits.

Item No.	Exhibit Index
31.1	Certification
31.2	Certification
32.1	Certification
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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.

		VALHI, INC.
		(Registrant)
Date:	August 6, 2020	/s/ James W. Brown
		James W. Brown (Executive Vice President and Chief Financial Officer)
Date:	August 6, 2020	/s/ Amy Allbach Samford
		Amy Allbach Samford (Vice President and Controller)

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EX-31.1

Exhibit 31.1

I, Robert D. Graham, certify that:

1)	I have reviewed this Quarterly Report on Form 10-Q of Valhi, 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 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 the 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: August 6, 2020

/s/ Robert D. Graham

Robert D. Graham

Vice Chairman of the Board, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, James W. Brown, certify that:

1)	I have reviewed this Quarterly Report on Form 10-Q of Valhi, 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 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 the 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: August 6, 2020

/s/James W. Brown

James W. Brown

Executive Vice President and Chief 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 Valhi, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Robert D. Graham, Vice Chairman of the Board, President and Chief Executive Officer, and James W. Brown, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.

/s/ Robert D. Graham	/s/ James W. Brown
Robert D. Graham Vice Chairman of the Board, President and Chief Executive Officer August 6, 2020	James W. Brown Executive Vice President and Chief Financial Officer August 6, 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

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Trading Symbol	VHI
Entity Registrant Name	VALHI, INC.
Entity Central Index Key	0000059255
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		28,273,093
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	1-5467
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-0110150
Entity Address, Address Line One	5430 LBJ Freeway
Entity Address, Address Line Two	Suite 1700
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75240-2620
City Area Code	972
Local Phone Number	233-1700
Security Exchange Name	NYSE
Title of 12(b) Security	Common stock
Document Quarterly Report	true
Document Transition Report	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 491.2	$ 523.8
Restricted cash equivalents	9.4	27.0
Marketable securities	1.8	2.1
Accounts and other receivables, net	337.6	329.2
Inventories, net	521.0	522.1
Other current assets	37.6	21.2
Total current assets	1,398.6	1,425.4
Other assets:
Investment in TiO2 manufacturing joint venture	96.5	90.2
Goodwill	379.7	379.7
Deferred income taxes	120.2	106.0
Other assets	219.6	230.1
Total other assets	816.0	806.0
Property and equipment:
Land	46.4	46.2
Buildings	244.2	248.0
Equipment	1,162.2	1,166.0
Mining properties	13.8	26.2
Construction in progress	63.5	62.7
Gross property and equipment	1,530.1	1,549.1
Less accumulated depreciation and amortization	993.6	986.1
Net property and equipment	536.5	563.0
Total assets	2,751.1	2,794.4
Current liabilities:
Current maturities of long-term debt	3.1	4.9
Accounts payable and accrued liabilities	245.9	307.4
Income taxes	46.8	10.2
Total current liabilities	295.8	322.5
Noncurrent liabilities:
Long-term debt	783.3	789.4
Deferred income taxes	44.3	38.1
Payable to affiliate - income taxes	50.4	56.3
Accrued pension costs	315.2	315.6
Accrued environmental remediation and related costs	94.5	95.2
Other liabilities	192.1	197.2
Total noncurrent liabilities	1,479.8	1,491.8
Equity: Valhi stockholders' equity:
Preferred stock	667.3	667.3
Common stock	0.3	0.3
Additional paid-in capital	1.5	3.3
Retained earnings	247.1	239.4
Accumulated other comprehensive loss	(232.0)	(220.7)
Treasury stock, at cost	(49.6)	(49.6)
Total Valhi stockholders' equity	634.6	640.0
Noncontrolling interest in subsidiaries	340.9	340.1
Total equity	975.5	980.1
Total liabilities and equity	2,751.1	2,794.4
Commitments and contingencies (Notes 13 and 16)

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues and other income:
Net sales	$ 415.0	$ 528.6	$ 874.3	$ 1,008.2
Other, net	(3.6)	15.4	31.3	22.0
Total revenues and other income	411.4	544.0	905.6	1,030.2
Costs and expenses:
Cost of sales	311.0	405.4	670.6	763.2
Selling, general and administrative	69.6	73.6	140.5	145.0
Litigation settlement, net		19.6		19.6
Other components of net periodic pension expense	5.0	4.1	9.7	8.2
Interest	8.8	10.1	18.5	20.4
Total costs and expenses	394.4	512.8	839.3	956.4
Income before income taxes	17.0	31.2	66.3	73.8
Income tax expense	21.2	13.0	32.6	27.2
Net income (loss)	(4.2)	18.2	33.7	46.6
Noncontrolling interest in net income of subsidiaries	4.9	11.1	18.4	21.3
Net income (loss) attributable to Valhi stockholders	$ (9.1)	$ 7.1	$ 15.3	$ 25.3
Amounts attributable to Valhi stockholders:
Basic and diluted net income (loss) per share	$ (0.32)	$ 0.25	$ 0.54	$ 0.89
Basic and diluted weighted average shares outstanding	28.5	28.5	28.5	28.5

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net income (loss)	$ (4.2)	$ 18.2	$ 33.7	$ 46.6
Other comprehensive income (loss), net of tax:
Currency translation	16.3	6.6	(21.4)	6.3
Total other comprehensive income (loss), net	19.2	8.6	(15.6)	10.4
Comprehensive income	15.0	26.8	18.1	57.0
Comprehensive income attributable to noncontrolling interest	9.9	13.3	14.1	24.0
Comprehensive income attributable to Valhi stockholders	5.1	13.5	4.0	33.0
Defined Benefit Pension Plans
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit plan	3.0	2.2	6.0	4.5
OPEB
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit plan	$ (0.1)	$ (0.2)	$ (0.2)	$ (0.4)

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions	Total	Preferred stock	Common stock	Additional paid-in Capital	Retained earnings	Accumulated other comprehensive loss	Treasury stock	Non-controlling interest
Balance at Dec. 31, 2018	$ 989.0	$ 667.3	$ 0.3	$ 3.3	$ 220.3	$ (206.2)	$ (49.6)	$ 353.6
Net income (loss)	46.6				25.3			21.3
Other comprehensive income (loss), net	10.4					7.7		2.7
Dividends paid to noncontrolling interest	(14.7)							(14.7)
Cash dividends	(13.6)			(0.3)	(13.3)
Equity transactions with noncontrolling interest, net and other	(0.7)			0.3	(2.1)			1.1
Balance at Jun. 30, 2019	1,017.0	667.3	0.3	3.3	230.2	(198.5)	(49.6)	364.0
Balance at Mar. 31, 2019	1,006.1	667.3	0.3	3.3	231.7	(204.9)	(49.6)	358.0
Net income (loss)	18.2				7.1			11.1
Other comprehensive income (loss), net	8.6					6.4		2.2
Dividends paid to noncontrolling interest	(8.3)							(8.3)
Cash dividends	(6.8)			(0.3)	(6.5)
Equity transactions with noncontrolling interest, net and other	(0.8)			0.3	(2.1)			1.0
Balance at Jun. 30, 2019	1,017.0	667.3	0.3	3.3	230.2	(198.5)	(49.6)	364.0
Balance at Dec. 31, 2019	980.1	667.3	0.3	3.3	239.4	(220.7)	(49.6)	340.1
Net income (loss)	33.7				15.3			18.4
Other comprehensive income (loss), net	(15.6)					(11.3)		(4.3)
Dividends paid to noncontrolling interest	(13.2)							(13.2)
Cash dividends	(9.0)			(2.2)	(6.8)
Equity transactions with noncontrolling interest, net and other	(0.5)			0.4	(0.8)			(0.1)
Balance at Jun. 30, 2020	975.5	667.3	0.3	1.5	247.1	(232.0)	(49.6)	340.9
Balance at Mar. 31, 2020	966.9	667.3	0.3	3.3	256.4	(246.2)	(49.6)	335.4
Net income (loss)	(4.2)				(9.1)			4.9
Other comprehensive income (loss), net	19.2					14.2		5.0
Dividends paid to noncontrolling interest	(4.6)							(4.6)
Cash dividends	(2.2)			(2.2)
Equity transactions with noncontrolling interest, net and other	0.4			0.4	(0.2)			0.2
Balance at Jun. 30, 2020	$ 975.5	$ 667.3	$ 0.3	$ 1.5	$ 247.1	$ (232.0)	$ (49.6)	$ 340.9

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement Of Stockholders Equity [Abstract]
Cash dividends per share	$ 0.08	$ 0.24	$ 0.32	$ 0.48

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net income (loss)	$ 33.7	$ 46.6
Depreciation and amortization	34.3	26.8
Benefit plan expense greater than cash funding	7.7	3.9
Deferred income taxes	(9.0)	9.1
Contributions to TiO2 manufacturing joint venture, net	(6.3)	(4.4)
Other, net	6.4	1.9
Change in assets and liabilities:
Accounts and other receivables, net	(9.0)	(90.2)
Inventories, net	(7.4)	11.1
Land held for development, net	(5.0)	0.1
Accounts payable and accrued liabilities	(59.2)	12.1
Accounts with affiliates	(13.2)	(7.2)
Income taxes	41.1	(6.5)
Other, net	(8.1)	29.5
Net cash provided by operating activities	6.0	32.8
Cash flows from investing activities:
Capital expenditures	(26.7)	(28.3)
Purchases of marketable securities	(0.9)	(2.9)
Proceeds from disposal of marketable securities	1.8	3.1
Other, net	2.7	0.1
Net cash used in investing activities	(23.1)	(28.0)
Cash flows from financing activities:
Principal payments on indebtedness	(9.0)	(4.6)
Valhi cash dividends paid	(9.0)	(13.6)
Distributions to noncontrolling interest in subsidiaries	(13.2)	(14.7)
Subsidiary treasury stock acquired	(1.0)	(1.4)
Net cash used in financing activities	(32.2)	(34.3)
Cash, cash equivalents and restricted cash and cash equivalents - net change from:
Operating, investing and financing activities	(49.3)	(29.5)
Effect of exchange rates on cash	(0.4)	(0.6)
Balance at beginning of period	583.8	523.7
Balance at end of period	534.1	493.6
Cash paid for:
Interest, net of capitalized interest	16.8	19.5
Income taxes, net	1.1	28.5
Noncash investing activities:
Change in accruals for capital expenditures	$ 1.4	$ 1.7

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

Note 1—Organization and basis of presentation:

Organization— We are majority owned by a wholly-owned subsidiary of Contran Corporation (“Contran”), which owns approximately 92% of our outstanding common stock at June 30, 2020.  A majority of Contran's outstanding voting stock is held directly by Lisa K. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serve as trustee (collectively, the “Other Trusts”). With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held in such trusts in the same manner as Ms. Simmons.  Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons. 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 her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at June 30, 2020, Ms. Simmons and the Family Trust may be deemed to control Contran and us.

Basis of Presentation— Consolidated in this Quarterly Report are the results of our wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and The LandWell Company (“LandWell”).  Kronos (NYSE: KRO), NL (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the Securities and Exchange Commission (“SEC”).  

The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 that we filed with the SEC on March 12, 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 periods ended June 30, 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 results of operations for the second quarter of 2020 were significantly impacted by the COVID-19 pandemic due to government mandated closures and reduced demand for many of our segments’ products resulting from the rapid contraction of vast areas of the global economy. The extent of the COVID-19 impact on our future operations will depend on the time period and degree to which the COVID-19 pandemic persists in the global economy thereby reducing customer demand for certain of our segments’ products, including the timing and extent to which our customers’ operations continue to be impacted, our customers’ perception as to when consumer demand for their products will return to pre-pandemic levels and on any future disruptions in our operations or our suppliers’ operations, all of which are difficult to predict.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Valhi, Inc. and its subsidiaries (NYSE: VHI), taken as a whole.

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Business Segment Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Business Segment Information

Note 2—Business segment information:

Business segment	Entity	% controlled at June 30, 2020
Chemicals	Kronos	80	%
Component products	CompX	86	%
Real estate management and development	BMI and LandWell	63 - 77	%

Our control of Kronos includes approximately 50% we hold directly and approximately 30% held directly by NL. We own approximately 83% of NL. Our control of CompX is through NL. We own approximately 63% of BMI.  Our control of LandWell includes the approximately 27% we hold directly and 50% held by BMI.  

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales:
Chemicals	$	484.5		$	386.0		$	921.0		$	807.0
Component products		33.7			23.8			64.9			56.1
Real estate management and development		10.4			5.2			22.3			11.2
Total net sales	$	528.6		$	415.0		$	1,008.2		$	874.3
Cost of sales:
Chemicals	$	375.4		$	291.1		$	703.1		$	624.5
Component products		22.8			16.4			44.3			38.3
Real estate management and development		7.2			3.5			15.8			7.8
Total cost of sales	$	405.4		$	311.0		$	763.2		$	670.6
Gross margin:
Chemicals	$	109.1		$	94.9		$	217.9		$	182.5
Component products		10.9			7.4			20.6			17.8
Real estate management and development		3.2			1.7			6.5			3.4
Total gross margin	$	123.2		$	104.0		$	245.0		$	203.7
Operating income:
Chemicals	$	50.5		$	35.9		$	103.3		$	82.7
Component products		5.6			2.4			10.0			7.4
Real estate management and development		9.8			1.0			13.0			20.2
Total operating income		65.9			39.3			126.3			110.3
General corporate items:
Securities earnings		3.3			1.0			6.4			2.6
Insurance recoveries		4.7			-			5.0			1.6
Changes in market value of Valhi common stock held by subsidiaries		1.9			(.5	)		3.0			(2.9	)
Other components of net periodic pension expense		(4.1	)		(5.0	)		(8.2	)		(9.7	)
Litigation settlement expense, net		(19.6	)		-			(19.6	)		-
General expenses, net		(10.8	)		(9.0	)		(18.7	)		(17.1	)
Interest expense		(10.1	)		(8.8	)		(20.4	)		(18.5	)
Income before income taxes	$	31.2		$	17.0		$	73.8		$	66.3

Segment results we report may differ from amounts separately reported by our various subsidiaries due to purchase accounting adjustments and related amortization or differences in the way we define operating income.  Intersegment sales are not material. Infrastructure reimbursement income is included in the determination of Real Estate Management and Development operating income. See Note 11.

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Accounts and Other Receivables, Net

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Accounts and Other Receivables, Net

Note 3—Accounts and other receivables, net:

	December 31,			June 30,
	2019			2020
	(In millions)
Trade accounts receivable:
Kronos	$	270.5		$	287.3
CompX		11.9			11.4
BMI and LandWell		1.6			1.4
VAT and other receivables		31.2			21.1
Refundable income taxes		7.9			4.1
Receivable from affiliates:
Contran - trade items		.4			.3
Louisiana Pigment Company, L.P. ("LPC")		4.7			10.9
Other - trade items		2.2			2.5
Allowance for doubtful accounts		(1.2	)		(1.4	)
Total	$	329.2		$	337.6

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Inventories, Net

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories, Net

Note 4—Inventories, net:

	December 31,		June 30,
	2019		2020
	(In millions)
Raw materials:
Chemicals	$	124.4	$	104.0
Component products		2.9		3.4
Total raw materials		127.3		107.4
Work in process:
Chemicals		39.0		49.8
Component products		11.8		13.6
Total in-process products		50.8		63.4
Finished products:
Chemicals		270.7		276.0
Component products		3.6		4.8
Total finished products		274.3		280.8
Supplies (chemicals)		69.7		69.4
Total	$	522.1	$	521.0

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Other Assets

6 Months Ended

Jun. 30, 2020

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Other Assets

Note 5—Other assets:

	December 31,		June 30,
	2019		2020
	(In millions)
Other noncurrent assets:
Land held for development	$	125.3	$	102.9
Operating lease right-of-use assets		29.0		26.7
Restricted cash and cash equivalents		33.0		33.5
IBNR receivables		8.5		8.1
Marketable securities		6.2		5.4
Pension asset		7.4		8.0
Note receivables - OPA		8.8		27.6
Other		11.9		7.4
Total	$	230.1	$	219.6

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Long-Term Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Note 6—Long-term debt:

	December 31,			June 30,
	2019			2020
	(In millions)
Valhi:
Contran credit facility	$	313.0		$	309.2
Subsidiary debt:
Kronos:
Senior Notes		442.6			443.8
Tremont:
Promissory note payable		2.0			-
BMI:
Bank loan - Western Alliance Bank		17.2			16.2
LandWell:
Note payable to Western Alliance Business Trust		15.0		14.5
Note payable to the City of Henderson		1.6			-
Other		2.9			2.7
Total subsidiary debt		481.3			477.2
Total debt		794.3			786.4
Less current maturities		(4.9	)		(3.1	)
Total long-term debt	$	789.4		$	783.3

Valhi – Contran credit facility – During the first six months of 2020, we had no borrowings and repaid $3.8 million under this facility.  The average interest rate on the existing balance for the six months ended June 30, 2020 was 4.8%. At June 30, 2020, the interest rate was 4.25% and $50.8 million was available for borrowing under this facility.

Kronos – Senior Notes -  At June 30, 2020, the carrying value of Kronos’ 3.75% Senior Secured Notes due September 15, 2025 (€400 million aggregate principal amount outstanding) is stated net of unamortized debt issuance costs of $4.8 million.

North American and European revolving credit facilities– During the first six months of 2020, Kronos had no borrowings or repayments under its North American revolving credit facility and its European revolving credit facility.  At June 30, 2020, approximately $125.0 million was available for borrowing under the North American revolving credit facility.  Kronos’ European revolving credit facility requires the maintenance of certain financial ratios and one of such requirements is based on the ratio of net debt to last twelve months earnings before income tax, interest, depreciation and amortization expense (EBITDA) of the borrowers.  Based upon the borrowers’ last twelve months EBITDA as of June 30, 2020 and the net debt to EBITDA financial test, the full €90.0 million of the credit facility ($100.9 million) was available for borrowing at June 30, 2020.    

Tremont – Promissory note payable – During the first six months of 2020, Tremont fully repaid (without penalty) the remaining principal balance of $2.0 million on the promissory note payable.   

LandWell – In January 2020, LandWell fully repaid (without penalty) the remaining $1.6 million principal balance on its promissory note payable to the City of Henderson, Nevada.

Restrictions and other – Certain of the credit facilities with unrelated, third-party lenders described above require the respective borrowers to maintain minimum levels of equity, require the maintenance of certain financial ratios, limit dividends and additional indebtedness and contain other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at June 30, 2020.

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Accounts Payable and Accrued Liabilities

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

Note 7—Accounts payable and accrued liabilities:

	December 31,		June 30,
	2019		2020
	(In millions)
Accounts payable:
Kronos	$	137.2	$	96.9
CompX		2.5		2.8
BMI and LandWell		3.7		4.5
NL		.9		.1
Other		.4		.4
Payable to affiliates:
Contran - income taxes		4.0		9.6
LPC		16.4		15.0
Accrued litigation settlement		11.8		11.9
Employee benefits		30.6		28.6
Operating lease liabilities		6.2		6.1
Accrued sales discounts and rebates		33.7		20.1
Deferred income		10.3		8.1
Environmental remediation and related costs		4.5		4.5
Interest		5.2		5.2
Other		40.0		32.1
Total	$	307.4	$	245.9

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Other Noncurrent Liabilities

6 Months Ended

Jun. 30, 2020

Other Liabilities Disclosure [Abstract]

Other Noncurrent Liabilities

Note 8—Other noncurrent liabilities:

	December 31,		June 30,
	2019		2020
	(In millions)
Operating lease liabilities	$	22.2	$	20.1
Reserve for uncertain tax positions		13.6		12.2
Accrued litigation settlement		60.1		60.7
Deferred income		47.4		45.4
Other postretirement benefits		10.5		10.0
Employee benefits		6.0		5.8
Insurance claims and expenses		11.0		10.3
Deferred payment obligation		9.9		10.0
Accrued development costs		8.3		7.9
Other		8.2		9.7
Total	$	197.2	$	192.1

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Revenue - Disaggregation of Sales

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue - Disaggregation of Sales

Note 9 – Revenue – disaggregation of sales:

The following table disaggregates the net sales of our Chemicals Segment by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales - point of origin:
United States	$	289.3		$	226.6		$	534.6		$	463.6
Germany		248.5			183.1			467.7			412.2
Canada		95.9			85.6			174.4			153.3
Belgium		77.7			50.9			147.4			117.0
Norway		47.7			62.6			99.2			116.9
Eliminations		(274.6	)		(222.8	)		(502.3	)		(456.0	)
Total	$	484.5		$	386.0		$	921.0		$	807.0
Net sales - point of destination:
Europe	$	229.4		$	169.8		$	444.6		$	384.3
North America		161.5			148.9			308.3			281.2
Other		93.6			67.3			168.1			141.5
Total	$	484.5		$	386.0		$	921.0		$	807.0

The following table disaggregates the net sales of our Component Products and Real Estate Management and Development Segments by major product line.

	Three months ended				Six months ended
	June 30,				June 30,
	2019		2020		2019		2020
	(In millions)
Component Products:
Net sales:
Security products	$	26.9	$	18.6	$	51.6	$	44.0
Marine components		6.8		5.2		13.3		12.1
Total	$	33.7	$	23.8	$	64.9	$	56.1
Real Estate Management and Development:
Net sales:
Land sales	$	8.4	$	2.7	$	17.9	$	6.2
Water delivery		1.6		2.1		3.5		4.0
Utility and other		.4		.4		.9		1.0
Total	$	10.4	$	5.2	$	22.3	$	11.2

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Defined Benefit Pension Plans

6 Months Ended

Jun. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Defined Benefit Pension Plans

Note 10—Defined benefit pension plans:

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

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Service cost	$	2.8		$	3.2		$	5.6		$	6.4
Interest cost		4.0			3.0			8.0			5.9
Expected return on plan assets		(3.5	)		(2.8	)		(7.2	)		(5.5	)
Amortization of prior service cost		-			.1			.1			.1
Recognized actuarial losses		3.7			4.7			7.5			9.4
Total	$	7.0		$	8.2		$	14.0		$	16.3

We expect to contribute the equivalent of approximately $19.0 million to all of our defined benefit pension plans during 2020.

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Other Income, Net

6 Months Ended

Jun. 30, 2020

Other Income And Expenses [Abstract]

Other Income, Net

Note 11—Other income, net:

	Six months ended
	June 30,
	2019			2020
	(In millions)
Securities earnings:
Dividends and interest	$	6.1		$	2.9
Securities transactions, net		.3			(.3	)
Total		6.4			2.6
Currency transactions, net		(.2	)		6.1
Insurance recoveries		5.0			1.6
Infrastructure reimbursement		9.1			19.1
Gain on land sales		.7			.5
Other, net		1.0			1.4
Total	$	22.0		$	31.3

Insurance recoveries reflect, in part, amounts NL received from certain of its former insurance carriers and relate to the recovery of prior lead pigment and asbestos litigation defense costs incurred by NL.  See Note 15.  In the first quarter of 2020, Kronos recognized a $1.5 million gain related to an insurance settlement for a property damage claim.

Infrastructure reimbursement– As disclosed in Note 7 to our 2019 Annual Report, under an Owner Participation Agreement (“OPA”) entered into by LandWell with the Redevelopment Agency of the City of Henderson, Nevada, as LandWell develops certain real property for commercial and residential purposes in its master planned community in Henderson, Nevada, the cost of certain public infrastructure may be reimbursed to LandWell through tax increment.  During the first six months of 2019, we received approval for additional tax increment reimbursement of $8.8 million (primarily in the second quarter) and during the first six months of 2020 we received $19.1 million (all in the first quarter), which was recognized as other income and is evidenced by a promissory note issued to LandWell by the City of Henderson.

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 12—Income taxes:

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Expected tax expense, at U.S. federal statutory    income tax rate of 21%	$	6.6		$	3.6		$	15.5		$	13.9
Incremental net tax benefit on earnings and losses of non-U.S., U.S. and non-tax group companies		-			(2.1	)		(.2	)		(3.9	)
Non-U.S. tax rates		2.3			.1			4.6			1.0
Valuation allowance		2.8			7.2			3.8			7.0
Adjustment to the reserve for uncertain tax positions, net		.5			.6			1.0			1.2
Global intangible low-tax income, net		.4			11.9			1.1			13.1
Nondeductible expenses		.3			1.4			.6			1.8
U.S. state income taxes and other, net		.1			(1.5	)		.8			(1.5	)
Income tax expense	$	13.0		$	21.2		$	27.2		$	32.6
Comprehensive provision for income taxes allocable to:
Net income	$	13.0		$	21.2		$	27.2		$	32.6
Other comprehensive income (loss):
Currency translation		.8			2.0			.8			(2.7	)
Pension plans		1.5			1.8			3.1			3.6
Other		(.1	)		0.1			(.2	)		(.1	)
Total	$	15.2		$	25.1		$	30.9		$	33.4

The amount shown in the above table of our income tax rate reconciliation for non-U.S. tax rates represents the result determined by multiplying the pre-tax earnings or losses of each of our non-U.S. subsidiaries by the difference between the applicable statutory income tax rate for each non-U.S. jurisdiction and the U.S. federal statutory tax rate.  The amount shown on such table for incremental net tax expense (benefit) on earnings and losses on non-U.S., U.S. and non-tax group companies includes, as applicable, (i) deferred state and non-U.S. income taxes (or deferred income tax benefits) and deferred withholding taxes, as applicable, associated with the current-year change in the aggregate amount of undistributed earnings of all of our non-U.S. subsidiaries, which earnings are not permanently reinvested , (ii) current U.S. income taxes (or current income tax benefit) attributable to current-year income (losses) of one of Kronos’ non-U.S. subsidiaries, which subsidiary is treated as a dual resident for U.S. income tax purposes, (iii) deferred income taxes associated with our direct investment in Kronos and (iv) current and deferred income taxes associated with distributions and earnings from our investments in LandWell and BMI. 

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 tax years beginning in 2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property.  The modification to the business interest provisions increases the business interest limitation from 30% of adjusted taxable income to 50% of adjusted taxable income which increases our allowable interest expense deduction for 2019 and 2020.  Consequently, in the first quarter of 2020 we recognized a cash tax benefit of $1.0 million related to an adjustment to the valuation allowance recognized in 2019 for the portion of the disallowed interest expense we did not expect to fully utilize at December 31, 2019.  We have determined other provisions of the CARES Act will not have a material impact on our provision for income taxes in 2020.         

         Tax authorities may in the future propose tax deficiencies, including penalties and interest, related to examinations of our U.S. and non-U.S. income tax returns.  Because of the uncertainties involved in settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters, if any, will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations.  We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity.  We currently estimate that our unrecognized tax benefits will decrease by approximately $5.4 million during the next twelve months primarily due to the expiration of certain statutes of limitations.

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Noncontrolling Interest in Subsidiaries

6 Months Ended

Jun. 30, 2020

Noncontrolling Interest [Abstract]

Noncontrolling Interest in Subsidiaries

Note 13—Noncontrolling interest in subsidiaries:

	December 31,		June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net assets:
Kronos Worldwide	$	216.6	$	213.5
NL Industries		65.8		65.6
CompX International		22.7		23.3
BMI		20.1		20.8
LandWell		14.9		17.7
Total	$	340.1	$	340.9

	Six months ended June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net income of subsidiaries:
Kronos Worldwide	$	11.6	$	8.7
NL Industries		3.6		1.1
CompX International		1.2		.9
BMI		2.0		3.0
LandWell		2.9		4.7
Total	$	21.3	$	18.4

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Stockholders’ Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Stockholders’ Equity

Note 14—Stockholders’ equity:

Accumulated Other Comprehensive Income – Changes in accumulated other comprehensive income (loss) attributable to Valhi stockholders are presented in the table below.

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Accumulated other comprehensive income (loss), net of tax    and noncontrolling interest:
Marketable securities:
Balance at beginning of period	$	1.7		$	1.7		$	1.7		$	1.7
Other comprehensive loss - unrealized losses arising   during the period		-			.1			-			.1
Balance at end of period	$	1.7		$	1.8		$	1.7		$	1.8
Currency translation adjustment:
Balance at beginning of period	$	(75.8	)	$	(104.4	)	$	(75.6	)	$	(76.8	)
Other comprehensive income (loss)		4.9			12.0			4.7			(15.6	)
Balance at end of period	$	(70.9	)	$	(92.4	)	$	(70.9	)	$	(92.4	)
Defined benefit pension plans:
Balance at beginning of period	$	(132.3	)	$	(144.3	)	$	(134.0	)	$	(146.6	)
Other comprehensive income - amortization of   prior service cost and net losses included in net   periodic pension cost		1.7			2.2			3.4			4.5
Balance at end of period	$	(130.6	)	$	(142.1	)	$	(130.6	)	$	(142.1	)
OPEB plans:
Balance at beginning of period	$	1.5		$	.8		$	1.7		$	1.0
Other comprehensive loss - amortization of prior service credit and net losses included in net periodic OPEB cost		(.2	)		(.1	)		(.4	)		(.3	)
Balance at end of period	$	1.3		$	.7		$	1.3		$	.7
Total accumulated other comprehensive income (loss):
Balance at beginning of period	$	(204.9	)	$	(246.2	)	$	(206.2	)	$	(220.7	)
Other comprehensive income (loss)		6.4			14.2			7.7			(11.3	)
Balance at end of period	$	(198.5	)	$	(232.0	)	$	(198.5	)	$	(232.0	)

Reverse stock split – On May 28, 2020 following stockholder approval at our annual meeting, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-12, which was effective on June 1, 2020. All share and per-share disclosures for all periods presented in our consolidated financial statements have been adjusted to give effect to the reverse stock split and we have adjusted our stockholders’ equity at December 31, 2018, March 31, 2019, December 31, 2019 and March 31, 2020 to reflect the split by reclassifying $3.3 million from common stock to additional paid-in capital representing $.01 per share par value of each share of common stock eliminated as a result of the reverse stock split. 

Other – During the first six months of 2019 and 2020, Kronos acquired 110,303 and 122,489 shares, respectively, of its common stock in market transactions for an aggregate purchase price of $1.4 million and $1.0 million, respectively, and subsequently cancelled all such shares.  At June 30, 2020, 1.6 million shares are available for repurchase under Kronos’ previously authorized stock repurchase program.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 15 – Commitments and contingencies:

Lead pigment litigation – NL

NL’s former operations included the manufacture of lead pigments for use in paint and lead-based paint.  NL, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints.  Certain of these actions have been filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others have been asserted as class actions.  These lawsuits seek recovery under a variety of theories, including public and private nuisance, negligent product design, negligent failure to warn, strict liability, breach of warranty, conspiracy/concert of action, aiding and abetting, enterprise liability, market share or risk contribution liability, intentional tort, fraud and misrepresentation, violations of state consumer protection statutes, supplier negligence and similar claims.

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

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

• NL has never settled any of the market share, intentional tort, fraud, nuisance, supplier negligence, breach of warranty, conspiracy, misrepresentation, aiding and abetting, enterprise liability, or statutory cases (other than the Santa Clara case discussed below),

• no final, non-appealable adverse judgments have ever been entered against NL, and

• NL has never ultimately been found liable with respect to any such litigation matters, including over 100 cases over a thirty-year period for which NL was previously a party and for which NL has been dismissed without any finding of liability.  

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

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

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

New cases may continue to be filed against NL.  We do not know if we will incur liability in the future with respect to any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings.  In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against NL or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against NL as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable.  The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity.

Environmental matters and litigation

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

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

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

• complexity and differing interpretations of governmental regulations,

• number of PRPs and their ability or willingness to fund such allocation of costs,

• financial capabilities of the PRPs and the allocation of costs among them,

• solvency of other PRPs,

• multiplicity of possible solutions,

• number of years of investigatory, remedial and monitoring activity required,

• uncertainty over the extent, if any, to which our former operations might have contributed to the conditions allegedly giving rise to such personal injury, property damage, natural resource and related claims, and

• number of years between former operations and notice of claims and lack of information and documents about the former operations.

In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. It is possible that actual costs will exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and it is possible that costs will be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our consolidated financial statements, results of operations and liquidity.

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

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

The table below presents a summary of the activity in our accrued environmental costs during the first six months of 2020.

	Amount
	(In millions)
Balance at the beginning of the year	$	99.7
Additions charged to expense		.4
Payments, net		(1.0	)
Other, net		(.1	)
Balance at the end of the period	$	99.0
Amounts recognized in our Condensed Consolidated Balance Sheet at the end of the period:
Current liabilities	$	4.5
Noncurrent liabilities		94.5
Total	$	99.0

NL – On a quarterly basis, NL evaluates the potential range of its liability for environmental remediation and related costs at sites where it has been named as a PRP or defendant. At June 30, 2020, NL had accrued approximately $94 million related to approximately 32 sites associated with remediation and related matters that it believes are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to NL for remediation and related matters for which we believe it is possible to estimate costs is approximately $115 million, including the amount currently accrued.

NL believes that it is not reasonably possible to estimate the range of costs for certain sites. At June 30, 2020, there were approximately five sites for which NL is not currently able to estimate a range of costs. For these sites, generally the investigation is in the early stages, and NL is unable to determine whether or not NL actually had any association with the site, the nature of its responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of NL’s control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, NL has received general and special notices of liability from the EPA and/or state agencies alleging that NL, sometimes with other PRPs, is liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that NL, along with any other alleged PRPs, is liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our financial position, results of operations and liquidity.

Other – We have also accrued approximately $5 million at June 30, 2020 for other environmental cleanup matters.

Insurance coverage claims – NL

NL is involved in certain legal proceedings with a number of its former insurance carriers regarding the nature and extent of the carriers’ obligations to NL under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for NL’s lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available.

NL has agreements with certain of its former insurance carriers pursuant to which the carriers reimburse it for a portion of its future lead pigment litigation defense costs, and one such carrier reimburses NL for a portion of its future asbestos litigation defense costs. We are not able to determine how much NL will ultimately recover from these carriers for defense costs incurred by NL because of certain issues that arise regarding which defense costs qualify for reimbursement. While NL continues to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we

recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.  In this regard, NL recognized $4.7 million in insurance recoveries in the second quarter of 2019 which represented recovery of past and future litigation defense costs related to a single insurance recovery settlement.

For additional discussion of certain litigation involving NL and certain of its former insurance carriers, please refer to our 2019 Annual Report.

Other litigation

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

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Fair Value Measurements and Financial Instruments

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements and Financial Instruments

Note 16—Fair value measurements and financial instruments:  

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

	December 31, 2019				June 30, 2020
	Carrying amount		Fair value		Carrying amount		Fair value
	(In millions)
Cash, cash equivalents and restricted cash equivalents	$	583.8	$	583.8	$	534.1	$	534.1
Deferred payment obligation		9.9		9.9		10.0		10.0
Long-term debt (excluding capitalized leases):
Kronos Senior Notes		442.6		457.0		443.8		441.6
Valhi credit facility with Contran		313.0		313.0		309.2		309.2
Tremont promissory note payable		2.0		2.0		-		-
BMI bank note payable		17.2		17.9		16.2		16.9
LandWell note payable to the City of Henderson		1.6		1.6		-		-
LandWell bank note payable		15.0		15.0		14.5		14.5

At June 30, 2020, the estimated market price of Kronos’ Senior Notes was €984 per €1,000 principal amount.  The fair value of Kronos’ Senior Notes was based on quoted market prices; however, these quoted market prices represent Level 2 inputs because the markets in which the term loan trades were not active. The fair value of variable interest rate debt and other fixed-rate debt, which represents Level 2 inputs, is deemed to approximate carrying values.  See Note 6.  Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. See Notes 3 and 7.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 17—Recent accounting pronouncements:

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which changes the accounting for certain income tax transactions and reduces complexity in accounting for income taxes in certain areas.  The ASU introduces new guidance including providing a policy election for an entity to not allocate consolidated current and deferred tax expense when a member of a consolidated tax return is not subject to income tax in its separate financial statements and is a disregarded entity by the taxing authority; and providing guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The ASU also changes existing guidance in a number of areas, including: the method of making an intraperiod allocation of total income tax expense if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a non-U.S. entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income.  We adopted this ASU as of January 1, 2020.  The adoption of this ASU in the first quarter of 2020 did not have a material effect on our Condensed Consolidated Financial Statements.

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Organization and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Organization

Organization— We are majority owned by a wholly-owned subsidiary of Contran Corporation (“Contran”), which owns approximately 92% of our outstanding common stock at June 30, 2020.  A majority of Contran's outstanding voting stock is held directly by Lisa K. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serve as trustee (collectively, the “Other Trusts”). With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held in such trusts in the same manner as Ms. Simmons.  Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons. 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 her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at June 30, 2020, Ms. Simmons and the Family Trust may be deemed to control Contran and us.

Basis of Presentation

Basis of Presentation— Consolidated in this Quarterly Report are the results of our wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International Inc., Tremont LLC, Basic Management, Inc. (“BMI”) and The LandWell Company (“LandWell”).  Kronos (NYSE: KRO), NL (NYSE: NL) and CompX (NYSE American: CIX) each file periodic reports with the Securities and Exchange Commission (“SEC”).  

The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 that we filed with the SEC on March 12, 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 periods ended June 30, 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 results of operations for the second quarter of 2020 were significantly impacted by the COVID-19 pandemic due to government mandated closures and reduced demand for many of our segments’ products resulting from the rapid contraction of vast areas of the global economy. The extent of the COVID-19 impact on our future operations will depend on the time period and degree to which the COVID-19 pandemic persists in the global economy thereby reducing customer demand for certain of our segments’ products, including the timing and extent to which our customers’ operations continue to be impacted, our customers’ perception as to when consumer demand for their products will return to pre-pandemic levels and on any future disruptions in our operations or our suppliers’ operations, all of which are difficult to predict.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Valhi, Inc. and its subsidiaries (NYSE: VHI), taken as a whole.

Recent accounting pronouncements

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which changes the accounting for certain income tax transactions and reduces complexity in accounting for income taxes in certain areas.  The ASU introduces new guidance including providing a policy election for an entity to not allocate consolidated current and deferred tax expense when a member of a consolidated tax return is not subject to income tax in its separate financial statements and is a disregarded entity by the taxing authority; and providing guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The ASU also changes existing guidance in a number of areas, including: the method of making an intraperiod allocation of total income tax expense if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a non-U.S. entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income.  We adopted this ASU as of January 1, 2020.  The adoption of this ASU in the first quarter of 2020 did not have a material effect on our Condensed Consolidated Financial Statements.

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Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Holding Percentage of Subsidiaries

Business segment	Entity	% controlled at June 30, 2020
Chemicals	Kronos	80	%
Component products	CompX	86	%
Real estate management and development	BMI and LandWell	63 - 77	%

Segment Operating Performance

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales:
Chemicals	$	484.5		$	386.0		$	921.0		$	807.0
Component products		33.7			23.8			64.9			56.1
Real estate management and development		10.4			5.2			22.3			11.2
Total net sales	$	528.6		$	415.0		$	1,008.2		$	874.3
Cost of sales:
Chemicals	$	375.4		$	291.1		$	703.1		$	624.5
Component products		22.8			16.4			44.3			38.3
Real estate management and development		7.2			3.5			15.8			7.8
Total cost of sales	$	405.4		$	311.0		$	763.2		$	670.6
Gross margin:
Chemicals	$	109.1		$	94.9		$	217.9		$	182.5
Component products		10.9			7.4			20.6			17.8
Real estate management and development		3.2			1.7			6.5			3.4
Total gross margin	$	123.2		$	104.0		$	245.0		$	203.7
Operating income:
Chemicals	$	50.5		$	35.9		$	103.3		$	82.7
Component products		5.6			2.4			10.0			7.4
Real estate management and development		9.8			1.0			13.0			20.2
Total operating income		65.9			39.3			126.3			110.3
General corporate items:
Securities earnings		3.3			1.0			6.4			2.6
Insurance recoveries		4.7			-			5.0			1.6
Changes in market value of Valhi common stock held by subsidiaries		1.9			(.5	)		3.0			(2.9	)
Other components of net periodic pension expense		(4.1	)		(5.0	)		(8.2	)		(9.7	)
Litigation settlement expense, net		(19.6	)		-			(19.6	)		-
General expenses, net		(10.8	)		(9.0	)		(18.7	)		(17.1	)
Interest expense		(10.1	)		(8.8	)		(20.4	)		(18.5	)
Income before income taxes	$	31.2		$	17.0		$	73.8		$	66.3

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Accounts and Other Receivables, Net (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Components of Accounts and Other Receivables

	December 31,			June 30,
	2019			2020
	(In millions)
Trade accounts receivable:
Kronos	$	270.5		$	287.3
CompX		11.9			11.4
BMI and LandWell		1.6			1.4
VAT and other receivables		31.2			21.1
Refundable income taxes		7.9			4.1
Receivable from affiliates:
Contran - trade items		.4			.3
Louisiana Pigment Company, L.P. ("LPC")		4.7			10.9
Other - trade items		2.2			2.5
Allowance for doubtful accounts		(1.2	)		(1.4	)
Total	$	329.2		$	337.6

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Inventories, Net (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories, Net

	December 31,		June 30,
	2019		2020
	(In millions)
Raw materials:
Chemicals	$	124.4	$	104.0
Component products		2.9		3.4
Total raw materials		127.3		107.4
Work in process:
Chemicals		39.0		49.8
Component products		11.8		13.6
Total in-process products		50.8		63.4
Finished products:
Chemicals		270.7		276.0
Component products		3.6		4.8
Total finished products		274.3		280.8
Supplies (chemicals)		69.7		69.4
Total	$	522.1	$	521.0

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Other Assets (Tables)

6 Months Ended

Jun. 30, 2020

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Other Assets

	December 31,		June 30,
	2019		2020
	(In millions)
Other noncurrent assets:
Land held for development	$	125.3	$	102.9
Operating lease right-of-use assets		29.0		26.7
Restricted cash and cash equivalents		33.0		33.5
IBNR receivables		8.5		8.1
Marketable securities		6.2		5.4
Pension asset		7.4		8.0
Note receivables - OPA		8.8		27.6
Other		11.9		7.4
Total	$	230.1	$	219.6

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

	December 31,			June 30,
	2019			2020
	(In millions)
Valhi:
Contran credit facility	$	313.0		$	309.2
Subsidiary debt:
Kronos:
Senior Notes		442.6			443.8
Tremont:
Promissory note payable		2.0			-
BMI:
Bank loan - Western Alliance Bank		17.2			16.2
LandWell:
Note payable to Western Alliance Business Trust		15.0		14.5
Note payable to the City of Henderson		1.6			-
Other		2.9			2.7
Total subsidiary debt		481.3			477.2
Total debt		794.3			786.4
Less current maturities		(4.9	)		(3.1	)
Total long-term debt	$	789.4		$	783.3

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Accounts Payable and Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

	December 31,		June 30,
	2019		2020
	(In millions)
Accounts payable:
Kronos	$	137.2	$	96.9
CompX		2.5		2.8
BMI and LandWell		3.7		4.5
NL		.9		.1
Other		.4		.4
Payable to affiliates:
Contran - income taxes		4.0		9.6
LPC		16.4		15.0
Accrued litigation settlement		11.8		11.9
Employee benefits		30.6		28.6
Operating lease liabilities		6.2		6.1
Accrued sales discounts and rebates		33.7		20.1
Deferred income		10.3		8.1
Environmental remediation and related costs		4.5		4.5
Interest		5.2		5.2
Other		40.0		32.1
Total	$	307.4	$	245.9

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Other Noncurrent Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Other Liabilities Disclosure [Abstract]

Other Noncurrent Liabilities

	December 31,		June 30,
	2019		2020
	(In millions)
Operating lease liabilities	$	22.2	$	20.1
Reserve for uncertain tax positions		13.6		12.2
Accrued litigation settlement		60.1		60.7
Deferred income		47.4		45.4
Other postretirement benefits		10.5		10.0
Employee benefits		6.0		5.8
Insurance claims and expenses		11.0		10.3
Deferred payment obligation		9.9		10.0
Accrued development costs		8.3		7.9
Other		8.2		9.7
Total	$	197.2	$	192.1

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Revenue - Disaggregation of Sales (Tables)

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregates of Net Sales

The following table disaggregates the net sales of our Chemicals Segment by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Net sales - point of origin:
United States	$	289.3		$	226.6		$	534.6		$	463.6
Germany		248.5			183.1			467.7			412.2
Canada		95.9			85.6			174.4			153.3
Belgium		77.7			50.9			147.4			117.0
Norway		47.7			62.6			99.2			116.9
Eliminations		(274.6	)		(222.8	)		(502.3	)		(456.0	)
Total	$	484.5		$	386.0		$	921.0		$	807.0
Net sales - point of destination:
Europe	$	229.4		$	169.8		$	444.6		$	384.3
North America		161.5			148.9			308.3			281.2
Other		93.6			67.3			168.1			141.5
Total	$	484.5		$	386.0		$	921.0		$	807.0

The following table disaggregates the net sales of our Component Products and Real Estate Management and Development Segments by major product line.

	Three months ended				Six months ended
	June 30,				June 30,
	2019		2020		2019		2020
	(In millions)
Component Products:
Net sales:
Security products	$	26.9	$	18.6	$	51.6	$	44.0
Marine components		6.8		5.2		13.3		12.1
Total	$	33.7	$	23.8	$	64.9	$	56.1
Real Estate Management and Development:
Net sales:
Land sales	$	8.4	$	2.7	$	17.9	$	6.2
Water delivery		1.6		2.1		3.5		4.0
Utility and other		.4		.4		.9		1.0
Total	$	10.4	$	5.2	$	22.3	$	11.2

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Defined Benefit Pension Plans (Tables)

6 Months Ended

Jun. 30, 2020

Defined Benefit Pension Plans

Components of Net Periodic Defined Benefit Cost

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

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Service cost	$	2.8		$	3.2		$	5.6		$	6.4
Interest cost		4.0			3.0			8.0			5.9
Expected return on plan assets		(3.5	)		(2.8	)		(7.2	)		(5.5	)
Amortization of prior service cost		-			.1			.1			.1
Recognized actuarial losses		3.7			4.7			7.5			9.4
Total	$	7.0		$	8.2		$	14.0		$	16.3

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Other Income, Net (Tables)

6 Months Ended

Jun. 30, 2020

Other Income And Expenses [Abstract]

Schedule of Components of Other Income

	Six months ended
	June 30,
	2019			2020
	(In millions)
Securities earnings:
Dividends and interest	$	6.1		$	2.9
Securities transactions, net		.3			(.3	)
Total		6.4			2.6
Currency transactions, net		(.2	)		6.1
Insurance recoveries		5.0			1.6
Infrastructure reimbursement		9.1			19.1
Gain on land sales		.7			.5
Other, net		1.0			1.4
Total	$	22.0		$	31.3

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Component of Income Taxes Expenses

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Expected tax expense, at U.S. federal statutory    income tax rate of 21%	$	6.6		$	3.6		$	15.5		$	13.9
Incremental net tax benefit on earnings and losses of non-U.S., U.S. and non-tax group companies		-			(2.1	)		(.2	)		(3.9	)
Non-U.S. tax rates		2.3			.1			4.6			1.0
Valuation allowance		2.8			7.2			3.8			7.0
Adjustment to the reserve for uncertain tax positions, net		.5			.6			1.0			1.2
Global intangible low-tax income, net		.4			11.9			1.1			13.1
Nondeductible expenses		.3			1.4			.6			1.8
U.S. state income taxes and other, net		.1			(1.5	)		.8			(1.5	)
Income tax expense	$	13.0		$	21.2		$	27.2		$	32.6
Comprehensive provision for income taxes allocable to:
Net income	$	13.0		$	21.2		$	27.2		$	32.6
Other comprehensive income (loss):
Currency translation		.8			2.0			.8			(2.7	)
Pension plans		1.5			1.8			3.1			3.6
Other		(.1	)		0.1			(.2	)		(.1	)
Total	$	15.2		$	25.1		$	30.9		$	33.4

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Noncontrolling Interest in Subsidiaries (Tables)

6 Months Ended

Jun. 30, 2020

Noncontrolling Interest [Abstract]

Noncontrolling Interest in Net Assets of Subsidiaries

	December 31,		June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net assets:
Kronos Worldwide	$	216.6	$	213.5
NL Industries		65.8		65.6
CompX International		22.7		23.3
BMI		20.1		20.8
LandWell		14.9		17.7
Total	$	340.1	$	340.9

Schedule of Noncontrolling Interest in Net Income of Subsidiaries

	Six months ended June 30,
	2019		2020
	(In millions)
Noncontrolling interest in net income of subsidiaries:
Kronos Worldwide	$	11.6	$	8.7
NL Industries		3.6		1.1
CompX International		1.2		.9
BMI		2.0		3.0
LandWell		2.9		4.7
Total	$	21.3	$	18.4

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Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income – Changes in accumulated other comprehensive income (loss) attributable to Valhi stockholders are presented in the table below.

	Three months ended						Six months ended
	June 30,						June 30,
	2019			2020			2019			2020
	(In millions)
Accumulated other comprehensive income (loss), net of tax    and noncontrolling interest:
Marketable securities:
Balance at beginning of period	$	1.7		$	1.7		$	1.7		$	1.7
Other comprehensive loss - unrealized losses arising   during the period		-			.1			-			.1
Balance at end of period	$	1.7		$	1.8		$	1.7		$	1.8
Currency translation adjustment:
Balance at beginning of period	$	(75.8	)	$	(104.4	)	$	(75.6	)	$	(76.8	)
Other comprehensive income (loss)		4.9			12.0			4.7			(15.6	)
Balance at end of period	$	(70.9	)	$	(92.4	)	$	(70.9	)	$	(92.4	)
Defined benefit pension plans:
Balance at beginning of period	$	(132.3	)	$	(144.3	)	$	(134.0	)	$	(146.6	)
Other comprehensive income - amortization of   prior service cost and net losses included in net   periodic pension cost		1.7			2.2			3.4			4.5
Balance at end of period	$	(130.6	)	$	(142.1	)	$	(130.6	)	$	(142.1	)
OPEB plans:
Balance at beginning of period	$	1.5		$	.8		$	1.7		$	1.0
Other comprehensive loss - amortization of prior service credit and net losses included in net periodic OPEB cost		(.2	)		(.1	)		(.4	)		(.3	)
Balance at end of period	$	1.3		$	.7		$	1.3		$	.7
Total accumulated other comprehensive income (loss):
Balance at beginning of period	$	(204.9	)	$	(246.2	)	$	(206.2	)	$	(220.7	)
Other comprehensive income (loss)		6.4			14.2			7.7			(11.3	)
Balance at end of period	$	(198.5	)	$	(232.0	)	$	(198.5	)	$	(232.0	)

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Change in Accrued Environmental Remediation and Related Costs

The table below presents a summary of the activity in our accrued environmental costs during the first six months of 2020.

	Amount
	(In millions)
Balance at the beginning of the year	$	99.7
Additions charged to expense		.4
Payments, net		(1.0	)
Other, net		(.1	)
Balance at the end of the period	$	99.0
Amounts recognized in our Condensed Consolidated Balance Sheet at the end of the period:
Current liabilities	$	4.5
Noncurrent liabilities		94.5
Total	$	99.0

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Fair Value Measurements and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Financial Instruments not Carried at Fair Value

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

	December 31, 2019				June 30, 2020
	Carrying amount		Fair value		Carrying amount		Fair value
	(In millions)
Cash, cash equivalents and restricted cash equivalents	$	583.8	$	583.8	$	534.1	$	534.1
Deferred payment obligation		9.9		9.9		10.0		10.0
Long-term debt (excluding capitalized leases):
Kronos Senior Notes		442.6		457.0		443.8		441.6
Valhi credit facility with Contran		313.0		313.0		309.2		309.2
Tremont promissory note payable		2.0		2.0		-		-
BMI bank note payable		17.2		17.9		16.2		16.9
LandWell note payable to the City of Henderson		1.6		1.6		-		-
LandWell bank note payable		15.0		15.0		14.5		14.5

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Organization and Basis of Presentation - Additional Information (Detail)	Jun. 30, 2020
Contran | Valhi Incorporation
Basis Of Presentation And Significant Accounting Policies [Line Items]
Parent company ownership interest	92.00%

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Business Segment Information - Holding Percentage of Subsidiaries (Detail)	Jun. 30, 2020
Chemicals | Kronos Worldwide, Inc.
Segment Reporting Information [Line Items]
Controlling interest in subsidiary	80.00%
Component Products | CompX
Segment Reporting Information [Line Items]
Parent company ownership interest	86.00%
Real Estate Management And Development | BMI
Segment Reporting Information [Line Items]
Parent company ownership interest	63.00%
Real Estate Management And Development | LandWell | Aggregate General And Limited Interests
Segment Reporting Information [Line Items]
Controlling interest in subsidiary	77.00%

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Business Segment Information - Additional Information (Detail)	Jun. 30, 2020
Kronos Worldwide, Inc. | Valhi Incorporation
Segment Reporting Information [Line Items]
Direct ownership percentage by parent	50.00%
Kronos Worldwide, Inc. | NL
Segment Reporting Information [Line Items]
Indirect controlling interest in subsidiary	30.00%
NL | Valhi Incorporation
Segment Reporting Information [Line Items]
Direct ownership percentage by parent	83.00%
LandWell | Valhi Incorporation
Segment Reporting Information [Line Items]
Direct ownership percentage by parent	27.00%
LandWell | BMI
Segment Reporting Information [Line Items]
Indirect controlling interest in subsidiary	50.00%
BMI | Valhi Incorporation
Segment Reporting Information [Line Items]
Direct ownership percentage by parent	63.00%

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Business Segment Information - Segment Operating Performance (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Net sales	$ 415.0	$ 528.6	$ 874.3	$ 1,008.2
Cost of sales	311.0	405.4	670.6	763.2
Gross margin	104.0	123.2	203.7	245.0
Operating income	39.3	65.9	110.3	126.3
Securities earnings	1.0	3.3	2.6	6.4
Insurance recoveries		4.7	1.6	5.0
Changes in market value of Valhi common stock held by subsidiaries	(0.5)	1.9	(2.9)	3.0
Other components of net periodic pension expense	(5.0)	(4.1)	(9.7)	(8.2)
Litigation settlement expense, net		(19.6)		(19.6)
General expenses, net	(9.0)	(10.8)	(17.1)	(18.7)
Interest expense	(8.8)	(10.1)	(18.5)	(20.4)
Income before income taxes	17.0	31.2	66.3	73.8
Chemicals
Segment Reporting Information [Line Items]
Net sales	386.0	484.5	807.0	921.0
Cost of sales	291.1	375.4	624.5	703.1
Gross margin	94.9	109.1	182.5	217.9
Operating income	35.9	50.5	82.7	103.3
Component Products
Segment Reporting Information [Line Items]
Net sales	23.8	33.7	56.1	64.9
Cost of sales	16.4	22.8	38.3	44.3
Gross margin	7.4	10.9	17.8	20.6
Operating income	2.4	5.6	7.4	10.0
Real Estate Management And Development
Segment Reporting Information [Line Items]
Net sales	5.2	10.4	11.2	22.3
Cost of sales	3.5	7.2	7.8	15.8
Gross margin	1.7	3.2	3.4	6.5
Operating income	$ 1.0	$ 9.8	$ 20.2	$ 13.0

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Accounts and Other Receivables, Net - Components of Accounts and Other Receivables (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Trade accounts receivable:
VAT and other receivables	$ 21.1	$ 31.2
Refundable income taxes	4.1	7.9
Allowance for doubtful accounts	(1.4)	(1.2)
Total	337.6	329.2
Trade Accounts Receivable | Kronos Worldwide, Inc.
Trade accounts receivable:
Accounts receivable	287.3	270.5
Trade Accounts Receivable | CompX
Trade accounts receivable:
Accounts receivable	11.4	11.9
Trade Accounts Receivable | BMI and LandWell
Trade accounts receivable:
Accounts receivable	1.4	1.6
Contran | Trade Items
Trade accounts receivable:
Receivable from affiliates	0.3	0.4
LPC
Trade accounts receivable:
Receivable from affiliates	10.9	4.7
Other | Trade Items
Trade accounts receivable:
Receivable from affiliates	$ 2.5	$ 2.2

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Inventories, Net - Inventories, Net (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Inventory [Line Items]
Raw materials	$ 107.4	$ 127.3
Work in process	63.4	50.8
Finished products	280.8	274.3
Supplies (chemicals)	69.4	69.7
Total	521.0	522.1
Chemicals
Inventory [Line Items]
Raw materials	104.0	124.4
Work in process	49.8	39.0
Finished products	276.0	270.7
Component Products
Inventory [Line Items]
Raw materials	3.4	2.9
Work in process	13.6	11.8
Finished products	$ 4.8	$ 3.6

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Other Assets - Other Assets (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Other noncurrent assets:
Land held for development	$ 102.9	$ 125.3
Operating lease right-of-use assets	26.7	29.0
Restricted cash and cash equivalents	33.5	33.0
IBNR receivables	8.1	8.5
Marketable securities	5.4	6.2
Pension asset	8.0	7.4
Note receivables - OPA	27.6	8.8
Other	7.4	11.9
Total	$ 219.6	$ 230.1

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Long-Term Debt - Long-Term Debt (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Long-term debt
Total debt	$ 786.4	$ 794.3
Less current maturities	(3.1)	(4.9)
Total long-term debt	783.3	789.4
VALHI, INC. | Contran Credit Facility
Long-term debt
Total debt	309.2	313.0
Kronos Worldwide, Inc. | 3.75% Senior Secured Notes due September 15, 2025 | Kronos International, Inc
Long-term debt
Total debt	443.8	442.6
Tremont | Promissory Note
Long-term debt
Total debt		2.0
BMI | Bank loan | Western Alliance Bank
Long-term debt
Total debt	16.2	17.2
LandWell | Unsecured Debt
Long-term debt
Total debt		1.6
LandWell | Unsecured Debt | Western Alliance Bank
Long-term debt
Total debt	14.5	15.0
Other Subsidiary | Other
Long-term debt
Total debt	2.7	2.9
Subsidiary
Long-term debt
Total debt	$ 477.2	$ 481.3

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Long-Term Debt - Valhi Contran Credit Facility - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Borrowings of credit facility	$ 0.0
Repaid credit facility	$ 3.8
VALHI, INC. | Contran Credit Facility
Debt Instrument [Line Items]
Debt instrument, Interest rate at period end	4.80%
Debt instrument, Interest rate during period	4.25%
Amount available for borrowing	$ 50.8

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Long-Term Debt - Kronos Senior Secured Notes - Additional Information (Detail) - Kronos Worldwide, Inc. - 3.75% Senior Secured Notes due September 15, 2025 - Kronos International, Inc $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 EUR (€)
Debt Instrument [Line Items]
Debt instrument interest rate	3.75%	3.75%
Debt instrument maturity date	Sep. 15, 2025
Debt instrument principal amount | €		€ 400,000,000
Unamortized debt issuance costs | $	$ 4.8

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Long-Term Debt - Revolving Credit Facility - Additional Information (Detail) - 6 months ended Jun. 30, 2020 € in Millions, $ in Millions	USD ($)	EUR (€)
Line Of Credit Facility [Line Items]
Revolving credit facility, borrowings	$ 0.0
European Revolving Credit Facility | Kronos Worldwide, Inc.
Line Of Credit Facility [Line Items]
Amount available for borrowing	100.9	€ 90.0
Revolving credit facility, borrowings	0.0
Repayment of credit facility	0.0
North American Revolving Credit Facility | Kronos Worldwide, Inc.
Line Of Credit Facility [Line Items]
Amount available for borrowing	125.0
Revolving North American Credit Facility | Kronos Worldwide, Inc.
Line Of Credit Facility [Line Items]
Revolving credit facility, borrowings	0.0
Repayment of credit facility	$ 0.0

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Long-Term Debt - Tremont Promissory Note Payable - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Promissory Note | Tremont
Debt Instrument [Line Items]
Repaid remaining principal balance of note	$ 2.0

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Long-Term Debt - LandWell Promissory Note Payable - Additional Information (Detail) $ in Millions	1 Months Ended
	Jan. 31, 2020 USD ($)
Promissory Note | LandWell
Debt Instrument [Line Items]
Repaid remaining principal balance of note	$ 1.6

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Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Payable to affiliates:
Accrued litigation settlement	$ 11.9	$ 11.8
Employee benefits	28.6	30.6
Operating lease liabilities	6.1	6.2
Accrued sales discounts and rebates	20.1	33.7
Deferred income	8.1	10.3
Environmental remediation and related costs	4.5	4.5
Interest	5.2	5.2
Other	32.1	40.0
Total	245.9	307.4
Kronos Worldwide, Inc.
Accounts payable:
Accounts payable	96.9	137.2
CompX
Accounts payable:
Accounts payable	2.8	2.5
BMI and LandWell
Accounts payable:
Accounts payable	4.5	3.7
NL
Accounts payable:
Accounts payable	0.1	0.9
Other
Accounts payable:
Accounts payable	0.4	0.4
Contran | Income Taxes Payable
Payable to affiliates:
Payable to affiliates	9.6	4.0
LPC
Payable to affiliates:
Payable to affiliates	$ 15.0	$ 16.4

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Other Noncurrent Liabilities - Other Noncurrent Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Other Liabilities Disclosure [Abstract]
Operating lease liabilities	$ 20.1	$ 22.2
Reserve for uncertain tax positions	12.2	13.6
Accrued litigation settlement	60.7	60.1
Deferred income	45.4	47.4
Other postretirement benefits	10.0	10.5
Employee benefits	5.8	6.0
Insurance claims and expenses	10.3	11.0
Deferred payment obligation	10.0	9.9
Accrued development costs	7.9	8.3
Other	9.7	8.2
Total	$ 192.1	$ 197.2

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Revenue - Disaggregation of Sales - Schedule of Disaggregates of Net Sales of our Chemicals Segment (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation Of Revenue [Line Items]
Net sales	$ 415.0	$ 528.6	$ 874.3	$ 1,008.2
Chemicals
Disaggregation Of Revenue [Line Items]
Net sales	386.0	484.5	807.0	921.0
Point of Origin | Chemicals
Disaggregation Of Revenue [Line Items]
Net sales	386.0	484.5	807.0	921.0
Point of Origin | Chemicals | Germany
Disaggregation Of Revenue [Line Items]
Net sales	183.1	248.5	412.2	467.7
Point of Origin | Chemicals | United States
Disaggregation Of Revenue [Line Items]
Net sales	226.6	289.3	463.6	534.6
Point of Origin | Chemicals | Canada
Disaggregation Of Revenue [Line Items]
Net sales	85.6	95.9	153.3	174.4
Point of Origin | Chemicals | Belgium
Disaggregation Of Revenue [Line Items]
Net sales	50.9	77.7	117.0	147.4
Point of Origin | Chemicals | Norway
Disaggregation Of Revenue [Line Items]
Net sales	62.6	47.7	116.9	99.2
Point of Origin | Chemicals | Eliminations
Disaggregation Of Revenue [Line Items]
Net sales	(222.8)	(274.6)	(456.0)	(502.3)
Point of Destination | Chemicals
Disaggregation Of Revenue [Line Items]
Net sales	386.0	484.5	807.0	921.0
Point of Destination | Chemicals | Europe
Disaggregation Of Revenue [Line Items]
Net sales	169.8	229.4	384.3	444.6
Point of Destination | Chemicals | North America
Disaggregation Of Revenue [Line Items]
Net sales	148.9	161.5	281.2	308.3
Point of Destination | Chemicals | Other
Disaggregation Of Revenue [Line Items]
Net sales	$ 67.3	$ 93.6	$ 141.5	$ 168.1

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Revenue - Disaggregation of Sales - Schedule of Disaggregates of Net Sales of our Component Products and Real Estate Management and Development Segments (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation Of Revenue [Line Items]
Net sales	$ 415.0	$ 528.6	$ 874.3	$ 1,008.2
Component Products
Disaggregation Of Revenue [Line Items]
Net sales	23.8	33.7	56.1	64.9
Component Products | Security Products
Disaggregation Of Revenue [Line Items]
Net sales	18.6	26.9	44.0	51.6
Component Products | Marine Components
Disaggregation Of Revenue [Line Items]
Net sales	5.2	6.8	12.1	13.3
Real Estate Management And Development
Disaggregation Of Revenue [Line Items]
Net sales	5.2	10.4	11.2	22.3
Real Estate Management And Development | Land Sales
Disaggregation Of Revenue [Line Items]
Net sales	2.7	8.4	6.2	17.9
Real Estate Management And Development | Water Delivery
Disaggregation Of Revenue [Line Items]
Net sales	2.1	1.6	4.0	3.5
Real Estate Management And Development | Utility and Other
Disaggregation Of Revenue [Line Items]
Net sales	$ 0.4	$ 0.4	$ 1.0	$ 0.9

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Defined Benefit Pension Plans - Components of Net Periodic Defined Benefit Pension Benefit Cost (Detail) - Defined Benefit Pension Plans - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 3.2	$ 2.8	$ 6.4	$ 5.6
Interest cost	3.0	4.0	5.9	8.0
Expected return on plan assets	(2.8)	(3.5)	(5.5)	(7.2)
Amortization of prior service cost	0.1		0.1	0.1
Recognized actuarial losses	4.7	3.7	9.4	7.5
Total	$ 8.2	$ 7.0	$ 16.3	$ 14.0

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Defined Benefit Pension Plans - Additional Information (Detail) $ in Millions	Jun. 30, 2020 USD ($)
Defined Benefit Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Expected contribution	$ 19.0

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Other Income, Net - Schedule of Components of Other Income (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Securities earnings:
Dividends and interest			$ 2.9	$ 6.1
Securities transactions, net			(0.3)	0.3
Total	$ 1.0	$ 3.3	2.6	6.4
Currency transactions, net			6.1	(0.2)
Insurance recoveries		4.7	1.6	5.0
Infrastructure reimbursement			19.1	9.1
Gain on land sales			0.5	0.7
Other, net			1.4	1.0
Total	$ (3.6)	$ 15.4	$ 31.3	$ 22.0

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Other Income, Net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019
Disclosure Other Income Net Additional Information Detail [Line Items]
Infrastructure reimbursement		$ 19.1	$ 9.1
Kronos Worldwide, Inc.
Disclosure Other Income Net Additional Information Detail [Line Items]
Gain on insurance settlement related to property damage claim	$ 1.5
City Of Henderson
Disclosure Other Income Net Additional Information Detail [Line Items]
Infrastructure reimbursement		$ 19.1	$ 8.8

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Income Taxes - Components of Comprehensive Provision for Income Taxes Allocation (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Schedule Of Income Tax [Line Items]
Expected tax expense, at U.S. federal statutory income tax rate of 21%	$ 3.6	$ 6.6	$ 13.9	$ 15.5
Incremental net tax benefit on earnings and losses of non-U.S., U.S. and non-tax group companies	(2.1)		(3.9)	(0.2)
Non-U.S. tax rates	0.1	2.3	1.0	4.6
Valuation allowance	7.2	2.8	7.0	3.8
Adjustment to the reserve for uncertain tax positions, net	0.6	0.5	1.2	1.0
Global intangible low-tax income, net	11.9	0.4	13.1	1.1
Nondeductible expenses	1.4	0.3	1.8	0.6
U.S. state income taxes and other, net	(1.5)	0.1	(1.5)	0.8
Income tax expense	21.2	13.0	32.6	27.2
Comprehensive provision for income taxes allocable to:
Net income	21.2	13.0	32.6	27.2
Other comprehensive income (loss):
Currency translation	2.0	0.8	(2.7)	0.8
Total	25.1	15.2	33.4	30.9
OPEB
Other comprehensive income (loss):
Defined benefit plans	0.1	(0.1)	(0.1)	(0.2)
Pension Plans
Other comprehensive income (loss):
Defined benefit plans	$ 1.8	$ 1.5	$ 3.6	$ 3.1

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Income Taxes - Components of Comprehensive Provision for Income Taxes Allocation (Parenthetical) (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions			3 Months Ended	6 Months Ended
	Mar. 27, 2020	Mar. 26, 2020	Mar. 31, 2020	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Business interest income, adjusted taxable income		30.00%
CARES act of 2020, Business interest income, adjusted taxable income	50.00%
Cash tax benefit recognized			$ 1.0
Decrease in unrecognized tax benefits due to the expiration of certain statutes of limitations				$ 5.4

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Noncontrolling Interest in Subsidiaries - Noncontrolling Interest in Net Assets of Subsidiaries (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	$ 340.9	$ 340.1
Kronos Worldwide, Inc.
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	213.5	216.6
NL Industries
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	65.6	65.8
CompX International
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	23.3	22.7
BMI
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	20.8	20.1
LandWell
Noncontrolling interest in net assets:
Noncontrolling interest in subsidiaries	$ 17.7	$ 14.9

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Noncontrolling Interest in Subsidiaries - Schedule of Noncontrolling Interest in Net Income of Subsidiaries (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries	$ 4.9	$ 11.1	$ 18.4	$ 21.3
Kronos Worldwide, Inc.
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries			8.7	11.6
NL Industries
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries			1.1	3.6
CompX International
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries			0.9	1.2
BMI
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries			3.0	2.0
LandWell
Noncontrolling interest in net income of subsidiaries:
Noncontrolling interest in net income of subsidiaries			$ 4.7	$ 2.9

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Stockholders' Equity - Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period			$ 640.0
Balance at end of period	$ 634.6		634.6
Marketable Securities
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period	1.7	$ 1.7	1.7	$ 1.7
Other comprehensive income (loss)	0.1		0.1
Balance at end of period	1.8	1.7	1.8	1.7
Currency Translation Adjustment
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period	(104.4)	(75.8)	(76.8)	(75.6)
Other comprehensive income (loss)	12.0	4.9	(15.6)	4.7
Balance at end of period	(92.4)	(70.9)	(92.4)	(70.9)
Accumulated Defined Benefit Plans Adjustment | Defined Benefit Pension Plans
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period	(144.3)	(132.3)	(146.6)	(134.0)
Other comprehensive income (loss)	2.2	1.7	4.5	3.4
Balance at end of period	(142.1)	(130.6)	(142.1)	(130.6)
Accumulated Defined Benefit Plans Adjustment | OPEB
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period	0.8	1.5	1.0	1.7
Other comprehensive income (loss)	(0.1)	(0.2)	(0.3)	(0.4)
Balance at end of period	0.7	1.3	0.7	1.3
Total Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at beginning of period	(246.2)	(204.9)	(220.7)	(206.2)
Other comprehensive income (loss)	14.2	6.4	(11.3)	7.7
Balance at end of period	$ (232.0)	$ (198.5)	$ (232.0)	$ (198.5)

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Stockholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Millions		6 Months Ended
	May 28, 2020	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) shares
Equity Class Of Treasury Stock [Line Items]
Reverse stock split, description	Reverse stock split – On May 28, 2020 following stockholder approval at our annual meeting, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-12, which was effective on June 1, 2020.
Reverse stock split, conversion ratio	12
Reclassification from common stock to additional paid-in capital | $		$ 3.3
Common stock par value | $ / shares		$ 0.01
Kronos Worldwide, Inc.
Equity Class Of Treasury Stock [Line Items]
Common stock, Repurchased | shares		122,489	110,303
Stock repurchase, aggregate purchase price | $		$ 1.0	$ 1.4
Shares available for purchase | shares		1,600,000

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Commitments and Contingencies - Lead Pigment Litigation-NL and Environmental Matters and Litigation - Additional Information (Detail) $ in Millions		3 Months Ended	6 Months Ended
	Jul. 24, 2019 USD ($) Defendant Installment	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) Cases site	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Commitments And Contingent Liabilities [Line Items]
Litigation settlement			$ 11.9		$ 11.8
Litigation settlement expense, net		$ 19.6		$ 19.6
Accrual for reasonably estimable environmental remediation and related matters			99.0		$ 99.7
Insurance recoveries		4.7	1.6	$ 5.0
Other Environmental Cleanup Matters
Commitments And Contingent Liabilities [Line Items]
Accrual for reasonably estimable environmental remediation and related matters			5.0
NL
Commitments And Contingent Liabilities [Line Items]
Insurance recoveries		4.7
NL | Environmental Remediation Sites NL Named As PRP Or Defendant
Commitments And Contingent Liabilities [Line Items]
Accrual for reasonably estimable environmental remediation and related matters			$ 94.0
Number of sites associated with remediation and related costs | site			32
Number of sites for which NL not currently able to reasonably estimate range of costs | site			5
NL | Maximum | Environmental Remediation Sites NL Named As PRP Or Defendant
Commitments And Contingent Liabilities [Line Items]
Upper end range, estimate costs for remediation and related matters			$ 115.0
Lead Pigment Litigation | NL
Commitments And Contingent Liabilities [Line Items]
Number of cases settled and dismissed and found not liable | Cases			100
Period by which loss contingency claims settled and dismissed			30 years
California Lead Paint Litigation | NL
Commitments And Contingent Liabilities [Line Items]
Description of defendants			July 24, 2019 an order approving a global settlement agreement entered into among all of the plaintiffs and the three defendants remaining in the case (the Sherwin Williams Company, ConAgra Grocery Products and NL) was entered by the court and the case was dismissed with prejudice.  The global settlement agreement provides that an aggregate $305 million will be paid collectively by the three co-defendants in full satisfaction of all claims resulting in a dismissal of the case with prejudice and the resolution of (i) all pending and future claims by the plaintiffs in the case, and (ii) all potential claims for contribution or indemnity between NL and its co-defendants in respect to the case.
Number of Defendant | Defendant	3
Settlement amount	$ 305.0
Litigation settlement	101.7
Litigation settlement charge upon approval of settlement terms	25.0
Remaining litigation settlement charge	$ 76.7
Number of annual installments | Installment	6
Remaining litigation settlement charge due in first installment	$ 12.0
Remaining litigation settlement charge due in second installment	12.0
Remaining litigation settlement charge due in third installment	12.0
Remaining litigation settlement charge due in fourth installment	12.0
Remaining litigation settlement charge due in fifth installment	12.0
Remaining litigation settlement charge due in sixth installment	$ 16.7
Discounted rate for estimated present value of remaining litigation amount	1.90%
Litigation settlement expense, net		$ 19.3

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Commitments and Contingencies - Changes in Accrued Environmental Remediation and Related Costs (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Environmental Remediation Obligations [Abstract]
Balance at the beginning of the year	$ 99.7
Additions charged to expense	0.4
Payments, net	(1.0)
Other, net	(0.1)
Balance at the end of the period	99.0
Amounts recognized in our Condensed Consolidated Balance Sheet at the end of the period:
Current liabilities		$ 4.5	$ 4.5
Noncurrent liabilities		94.5	95.2
Total	$ 99.0	$ 99.0	$ 99.7

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Fair Value Measurements and Financial Instruments - Financial Instruments not Carried at Fair Value (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Kronos Worldwide, Inc. | 3.75% Senior Secured Notes due September 15, 2025 | Kronos International, Inc
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount	$ 443.8	$ 442.6
Long term debt, fair value	441.6	457.0
VALHI, INC. | Contran Credit Facility
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount	309.2	313.0
Long term debt, fair value	309.2	313.0
Tremont | Promissory Note
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount		2.0
Long term debt, fair value		2.0
BMI | Bank note payable | Meadows Term Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount	16.2	17.2
Long term debt, fair value	16.9	17.9
LandWell | Bank note payable
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount	14.5	15.0
Long term debt, fair value	14.5	15.0
LandWell | Unsecured Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Long term debt, carrying amount		1.6
Long term debt, fair value		1.6
Carrying Amount
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash, cash equivalents and restricted cash equivalents	534.1	583.8
Deferred payment obligation	10.0	9.9
Fair Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash, cash equivalents and restricted cash equivalents	534.1	583.8
Deferred payment obligation	$ 10.0	$ 9.9

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Fair Value Measurements and Financial Instruments - Additional Information (Detail) - Kronos Worldwide, Inc. - 3.75% Senior Secured Notes due September 15, 2025 - Kronos International, Inc	Jun. 30, 2020 EUR (€)
Financial Instrument At Fair Value [Line Items]
Estimated market price of the notes	€ 984
Principal amount of debt instrument	€ 1,000