CompX International Reports Lower Earnings Amid Sales Drop
CompX International Inc. (CIX) recently experienced a 2.6% rise in its stock price following the announcement of its fourth-quarter 2024 results. This positive movement contrasts with the S&P 500 index, which saw a slight decrease of 0.1% during the same period. However, over the past month, CompX shares have fallen by 7.9%, compared to a 5% decline in the broader index.
Year-Over-Year Decline in Sales and Earnings
The company reported earnings per share of 37 cents for the fourth quarter of 2024, a substantial drop of 31.5% from the previous year’s 54 cents.
Net sales during this quarter stood at $38.4 million, reflecting an 11.1% decrease from $43.2 million in the same timeframe of 2023. This decline was largely attributed to reduced sales within the Security Products segment, particularly sales to a government security customer. However, the Marine Components segment provided some relief, with increased demand from towboat and government markets partially offsetting the losses.
Additionally, operating income fell by 33.8% year-over-year to $4.9 million, down from $7.4 million. This decline in profitability stemmed from decreased sales volume and lower gross margins within the Security Products segment.
Earnings, Price Consensus, and EPS Surprise Insights
CompX International Inc. price-consensus-eps-surprise-chart | CompX International Inc. Quote
Segment Performance Analysis
Security Products Segment: This segment faced significant sales challenges. CompX reported lower sales to its government security customer, primarily due to the absence of a continued pilot project from 2023. The segment also encountered margin pressures that contributed to an overall decline in profitability.
Marine Components Segment: Conversely, this segment showed resilience with increased sales attributed to towboat and government clients. Improved gross margins in Marine Components helped mitigate some losses experienced in Security Products.
The overall gross margin for the fourth quarter decreased to 28.6% from 31.5% the year prior, mainly due to reduced margins in the Security Products segment. Operating expenses remained relatively unchanged, with selling, general, and administrative expenses at $6.1 million, slightly down from $6.2 million year-over-year.
Factors Influencing Performance
Several factors impacted the results, particularly fluctuations in demand from key customers in the Security Products segment. Changes in the product mix and lower sales volumes adversely affected the gross margin. Furthermore, cost pressures, especially from raw material costs—including zinc, brass, aluminum, and steel—were noted. Management also highlighted competitive market challenges that limited pricing power.
Dividend Declaration
Despite the downturn in earnings, CompX International announced a quarterly dividend of $0.30 per share, payable on March 25, 2025, for stockholders on record as of March 17, 2025. This commitment to maintaining its dividend showcases management’s confidence in the company’s financial health and commitment to returning value to shareholders.
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