CompX Stock Gains 17% Since Posting Q2 Earnings & Special Dividend

Shares of CompX International Inc. CIX have risen 17% since reporting results for the second quarter of 2025. This compares with the S&P 500 index’s 0.5% decline over the same time frame. Over the past month, the stock has gained 4.9% compared with the S&P 500’s 1.6% rally, reflecting a strong market reaction and growing investor confidence in the company’s financial performance and strategic positioning.

For the quarter ended June 30, 2025, CompX reported net sales of $40.4 million, up 12.4% from $35.9 million in the year-ago period. Net income rose 12.2% on a per-share basis to $5.5 million, or 44 cents per diluted share, from $4.9 million, or 39 cents per share, in the second quarter of 2024. Operating income also improved 23.5% to $6.3 million from $5.1 million a year earlier. These gains were attributed to stronger sales in both Security Products and Marine Components segments, coupled with an improved gross margin, which rose year over year to 31.9% from 31.1%.

CompX International Inc. Price, Consensus and EPS Surprise

 

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

Segment Performance & Other Key Metrics

Security Products: This was the company’s core revenue contributor, with net sales of $30.7 million in the second quarter of 2025, up 9% year over year. This growth was driven primarily by a $3.3-million increase in sales to the government security market and a $0.5-million boost from the healthcare market. These gains were partially offset by declines in transportation, tool storage and distributor sales. The gross margin for this segment slightly declined to 31.1% from 31.7%, while operating income increased 6% to $5.8 million.

Marine Components: The segment registered a robust 26% year-over-year increase in net sales to $9.7 million. This was largely fueled by strong demand from the government and towboat markets. Notably, the gross margin expanded from 28.8% to 34.5%, and operating income soared 73% year over year to $2.4 million, reflecting operating leverage on higher sales and a favorable product mix.

Management Commentary

Management emphasized continued robust demand across both business segments, highlighting especially strong growth in Marine Components. The segment benefited from a one-time stocking order from a towboat OEM in the first quarter of 2025 and persistent demand from government clients throughout the first half of the year. Security Products also saw consistent gains due to increased procurement from the government and healthcare sectors.

However, executives noted margin pressure resulting from higher employee-related costs, particularly salaries, benefits and medical expenses, which impacted both segments. While these costs slightly eroded margins in Security Products, they were more than offset in Marine Components due to increased volumes and cost absorption efficiencies.

Factors Influencing Headline Numbers

The improved top-line performance was underpinned by favorable macro and sector-specific demand trends. In particular, government spending supported elevated order volumes in both divisions. Gross margin improvements stemmed from higher volume throughput and better absorption of fixed overhead costs.

That said, challenges persist. Management pointed to ongoing cost inflation in raw materials, especially electronic components, driven by tariff-related surcharges. These pressures began in the third quarter of 2024 and intensified in the second quarter of 2025. In response, the company has begun efforts to pass along cost increases to customers, although full recovery remains uncertain.

On the financing side, interest income declined 34.6% to $846,000 due to reduced average cash balances and lower interest rates, dampening overall pre-tax income growth.

Guidance

Looking ahead, CompX expects Security Products revenues to remain elevated for the rest of 2025, supported by strong demand from the government security and healthcare sectors. However, management warned that margins in this segment may be challenged in the second half due to increased inventory costs and continued tariffs on electronic components sourced from Asia.

For Marine Components, the company projects continued growth in both revenues and margins for the remainder of the year. Higher anticipated demand from the industrial and government markets is expected to further enhance operating leverage and profitability.

Overall, CompX anticipates 2025 will close with a stronger gross margin and operating income in the Marine Components division and stable performance in Security Products, with continued vigilance over inflationary pressures.

Other Developments

In a notable shareholder-friendly move, CompX’s board declared a special dividend of $1 per share, payable Aug. 27, 2025, to shareholders of record as of Aug. 18, 2025. This is in addition to the regular quarterly dividend of 30 cents per share, scheduled for payment on Sept. 16, 2025. The company’s strong balance sheet and consistent cash flow generation enabled this distribution, which management characterized as a strategic return of excess capital while maintaining sufficient flexibility for future investments.

No acquisitions, divestitures or restructuring activities were reported during the quarter. The company reaffirmed its focus on organic growth and capital discipline, with $3.4 million in expected capital expenditure for 2025 and no debt on the balance sheet as of June 30, 2025.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research