Executive Summary

Valhi reported Q3 2025 consolidated net sales of $503.5M and a net loss attributable to Valhi stockholders of $22.2M (–$0.78 EPS), down versus Q3 2024’s $533.6M and $57.5M ($2.01 EPS) as Chemicals swung to a loss and a German tax-law change drove a $19.3M non‑cash deferred tax expense .
Chemicals (Kronos) revenue fell 6% YoY to $456.9M and posted a $15.9M operating loss on lower TiO2 prices (–7% YoY), weaker Europe/export volumes (–3% YoY), and ~$27M of unabsorbed fixed costs from reduced operating rates; currency translation added ~$14M to sales but did not offset absorption headwinds .
Component Products delivered resilient growth: net sales +19% YoY to $40.0M and operating income +42% YoY to $4.8M on stronger government security and marine components demand .
Management expects 2025 consolidated operating income to be lower than 2024 and is curtailing Chemicals’ Q4 production to reduce inventory amid weak demand; dividend maintained at $0.08 per share (declared Nov 6) .

What Went Well and What Went Wrong

What Went Well
- Component Products delivered revenue growth (+19% YoY) and margin expansion; operating income rose to $4.8M on higher sales to government security and marine markets .
- Real Estate continued to contribute operating income ($19.7M) aided by tax-increment infrastructure reimbursement YTD ($34.2M), supporting consolidated results despite lower land sales recognition pace .
- Liquidity actions at Chemicals: Global Revolver upsized to $350M and €75M of 2025 notes refinanced with additional 2029 notes at an effective ~7.8% rate, extending maturities and flexibility .
What Went Wrong
- Chemicals margin compression: TiO2 ASP –7% YoY and reduced operating rates drove ~$27M unabsorbed fixed costs; operating result swung to a $15.9M loss vs $42.6M income in Q3 2024 .
- Non-cash German tax law impact: $19.3M deferred tax expense in Q3 lowered EPS by ~$0.45 per share (net of NCI), pressuring reported earnings .
- Consolidated operating cash flow was negative YTD (–$136.1M) on working capital, higher environmental payments ($56.7M), and interest, while total debt rose to $662.3M at 9/30/25, increasing interest expense .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue (Net Sales, $M)	$533.6	$538.6	$540.4	$503.5
Diluted EPS ($)	$2.01	$0.59	$0.03	$(0.78)
EBIT Margin %	8.53%*	8.02%*	–0.33%*	–3.56%*
Net Income Margin %	10.78%*	3.14%*	0.17%*	–4.41%*

Values marked with * retrieved from S&P Global.

Segment performance (Net Sales and Operating Income):

Segment	Q3 2024	Q3 2025
Chemicals Net Sales ($M)	$484.7	$456.9
Chemicals Operating Income ($M)	$42.6	$(15.9)
Component Net Sales ($M)	$33.6	$40.0
Component Operating Income ($M)	$3.3	$4.8
Real Estate Net Sales ($M)	$15.3	$6.6
Real Estate Operating Income ($M)	$21.8	$19.7

Chemicals KPIs (Q3 dynamics):

KPI	Q3 2024	Q3 2025
TiO2 ASP YoY change	—	–7%
TiO2 Sales Volumes YoY	—	–3%
Capacity Utilization	92%	80%
Unabsorbed Fixed Costs ($M)	—	~$27
Currency Impact on Sales ($M)	—	+$14

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular Dividend per Share	Ongoing	$0.08 (Aug 7, 2025 declaration)	$0.08 (Nov 6, 2025 declaration)	Maintained
2025 Consolidated Operating Income	FY 2025	Not previously quantified	Expected lower vs 2024	Directional, Lower
Chemicals Production	Q4 2025	Not previously quantified	Additional curtailment to reduce inventory	New action

Narrative color: Management expects Chemicals’ Q4 operating results to be lower than Q3 given weaker demand, pricing pressure and reduced fixed‑cost absorption; cost actions and market capacity reductions/AD duties may support 2026 pricing .

Earnings Call Themes & Trends

Note: No public Q3 2025 earnings call transcript was located after searching company and wire sources; themes reflect the Q3 10‑Q/press release plus Q2 and Q1 releases .

Topic	Previous Mentions (Q2 & Q1 2025)	Current Period (Q3 2025)	Trend
TiO2 pricing/volumes	Q2: ASP ~flat YoY, volumes –1% YoY; absorption headwinds ~$20M; Q1: ASP +2% YoY; volumes +5% YoY	ASP –7% YoY; volumes –3% YoY; ~$27M unabsorbed fixed costs; further Q4 curtailment planned	Deteriorating
Macro/tariffs/customer inventory	Q2: global uncertainty, hesitancy to build inventories; tariffs impacting components (surcharges)	Continued weak demand; high rates; trade tensions; customers to curtail Q4 production	Persistent headwind
Currency	Q2: FX tailwind to Chemicals operating income (+$14M in quarter)	Q3: FX lifted sales ~$14M but increased operating loss by ~$4M	Mixed
German tax/regulatory	—	$19.3M non-cash deferred tax expense from German tax law change	New negative
Real Estate infra reimbursement	Q2: $17.2M recognized in Q2	YTD 2025: $34.2M recognized; Q3 $17.0M; $209M max over 7–10 years	Supportive tailwind
Component Products demand	Q2: Security/government and marine/towboat strength	Q3: Continued strength; operating income +42% YoY	Improving

Management Commentary

“Our Chemicals Segment’s customer demand remained weak in the third quarter… [it] is taking additional actions in the fourth quarter of 2025 to reduce its inventory levels by further lowering its operating rates to better align with current demand levels.” (Q3 10‑Q MD&A) .
“Current profit margins are unsustainable, and our Chemicals Segment will need to achieve price increases, targeted market share gain opportunities, and successfully execute on its cost reduction efforts… to achieve reasonable profit margins.” (Q3 10‑Q MD&A) .
“We currently expect consolidated operating income for 2025 to be lower as compared to 2024…” (Q3 10‑Q MD&A) .
Liquidity positioning: “Kronos increased the maximum borrowings under its credit facility… and successfully refinanced its €75 million… Notes due in September 2025…” (Q3 10‑Q) .

Q&A Highlights

No Q3 2025 earnings call transcript was identified; therefore no Q&A disclosures are available after comprehensive document and web search .

Estimates Context

S&P Global consensus estimates for Q3 2025 EPS and revenue were not available for VHI; the estimates feed returned no consensus values, only the reported revenue actual. As a result, we cannot assess beats/misses versus Street for Q3 2025. Values retrieved from S&P Global.

Key Takeaways for Investors

Chemicals remains the swing factor: ASP declines, absorption penalties, and demand softness drove the Q3 loss; management is curtailing Q4 production to normalize inventory and protect cash .
Structural levers are in motion (workforce and cost reductions, supplier renegotiations, LPC integration), but pricing recovery is needed; market capacity closures and AD duties could aid 2026 pricing .
Component Products’ steady execution provides earnings ballast amid Chemicals volatility; watch government security and marine end‑markets for sustainability .
Real Estate infrastructure reimbursements ($34.2M YTD) and deferred revenue on prior land sales underpin operating income and cash over the next 1–2 years, though revenue recognition timing depends on development pacing .
Balance sheet and liquidity improved in structure (revolver upsized; notes extended) but leverage and interest expense rose; monitor cash generation as Chemicals reduces inventory and works through fixed‑cost absorption .
Dividend held at $0.08 per share, signaling confidence in liquidity; future payouts remain subject to Chemicals’ cash generation trajectory and capital needs .
Near-term setup: Q4 Chemicals likely weaker than Q3; catalysts for 2026 include price increases, cost-out delivery, and demand normalization—position sizing should reflect volatility in TiO2 cycle .

Supporting Details and Prior Quarters

Q2 2025: Net sales $540.4M; EPS $0.03; Chemicals operating income $10.3M with ~$20M unabsorbed fixed costs; Component Products strength; Real Estate recognized $17.2M infra reimbursement .
Q1 2025: Net sales $538.6M; EPS $0.59; Chemicals operating income $41.2M on higher volumes/ASP; Component and Real Estate mixed .

All citations:

Q3 2025 press release/8‑K and exhibits
Q3 2025 10‑Q financials and MD&A
Q2 2025 press release/8‑K
Q1 2025 press release
Company news page and wire confirmations

S&P Global disclaimer: Margin metrics marked with * in the Financial Results table are values retrieved from S&P Global.

VALHI INC /DE/ (VHI)·Q3 2025 Earnings Summary