CIX Earnings Drop Y/Y in Q4 as Security Products Sales Decline

Shares of CompX International Inc. CIX have gained 2.6% since reporting results for the fourth quarter of 2024. This compares to the S&P 500 index’s 0.1% dip over the same time frame. Over the past month, the stock has lost 7.9% compared with the S&P 500’s 5% decline.

Sales & Earnings Decline Y/Y

CompX International posted fourth-quarter 2024 earnings per share of 37 cents, which declined 31.5% from 54 cents in the year-ago quarter.

The company reported net sales of $38.4 million in the fourth quarter of 2024, down 11.1% from $43.2 million in the same period of 2023. It attributed the quarterly decline primarily to reduced sales in its Security Products segment, particularly lower sales to a government security customer. This was partially offset by stronger sales in the Marine Components segment, driven by demand from towboat and government markets.

Fourth-quarter operating income fell 33.8% year over year to $4.9 million from $7.4 million. The decline in profitability was attributed to reduced sales volume and a lower gross margin percentage in the Security Products segment.

CompX International Inc. Price, Consensus and EPS Surprise

CompX International Inc. price-consensus-eps-surprise-chart | CompX International Inc. Quote

Segment Performance & Business Metrics

Security Products Segment:This segment was the primary driver behind CompX International's sales decline. The company cited lower sales to a government security customer as a key factor, noting that the fourth quarter of 2023 had included sales for a pilot project that did not continue in 2024. In addition to volume reductions, the segment experienced margin pressure, contributing to the decline in overall profitability.

Marine Components Segment:In contrast, the Marine Components business performed relatively well, with sales increasing to towboat and government customers. Higher sales and an improved gross margin percentage in this segment helped offset some of the losses in Security Products.

The gross margin for the fourth quarter was 28.6%, down from 31.5% in the same period last year, reflecting lower margins in Security Products. Operating expenses remained stable, with selling, general and administrative expenses of $6.1 million in the quarter, slightly lower than $6.2 million in the prior-year quarter.

Factors Impacting Results

The company cited multiple factors influencing its results, including fluctuations in demand from key customers, particularly in the Security Products segment. Additionally, the gross margin was impacted by product mix changes and lower sales volumes.

Cost pressures also played a role in the company’s earnings performance. While CompX International did not specify the impacts of raw material inflation, it acknowledged the broader influence of material costs, including that of zinc, brass, aluminum and steel. Management also pointed to competitive pressures in the market, which may have limited pricing flexibility.

Dividend Announcement

Despite lower earnings, CompX International declared a quarterly dividend of $0.30 per share, payable March 25, 2025, to stockholders of record as of March 17, 2025. The company’s ability to sustain its dividend indicates confidence in its financial position and commitment to returning value to shareholders.

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