CompX Q1 Earnings Grow 39% Y/Y on Marine Sales Growth

Shares of CompX International Inc. CIX have declined 2.2% since reporting first-quarter 2025 results, underperforming the S&P 500 index’s 0.4% rise over the same period. However, on a broader horizon, CIX has shown robust momentum, gaining 18% over the past month compared with the S&P 500’s more modest 2.9% growth. This divergence reflects near-term investor caution despite longer-term optimism.

Earnings & Sales Performance

For the first quarter ended March 31, 2025, CompX reported net sales of $40.3 million, up 6.1% from $38 million in the prior-year period. Net income grew 38.6% year over year to $5.1 million, or 42 cents per share, from $3.7 million, or 31 cents per share. The gross margin expanded to $12.2 million from $9.7 million, translating to a margin improvement of 470 basis points from 25.5% to 30.2%. Operating income rose 58% year over year to $5.9 million, driven by the stronger Marine Components performance.

CompX International Inc. Price, Consensus and EPS Surprise

 

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

Segment Performance & Key Business Metrics

Security Products, the company’s largest segment, posted a 1% year-over-year increase in net sales to $30.2 million. This was largely fueled by higher sales to the government security and healthcare markets, which offset declines in the transportation, tool storage and other OEM sectors. Operating income for the segment inched up to $5.5 million, maintaining an operating margin of 18.3%, nearly flat with the prior year.

In contrast, Marine Components delivered a standout quarter. Sales jumped 24% year over year to $10 million, reflecting heightened demand from the towboat and government markets. This translated into a sharp increase in the gross margin from $895,000 to $3.2 million and an operating income leap from $34,000 to $2.2 million. The segment’s operating margin ballooned to 22.3% from just 0.4%, driven by a more favorable product mix and fixed-cost leverage.

CIX’s consolidated interest income declined to $0.8 million from $1.2 million due to lower average rates and reduced cash balances. Effective tax expenses rose in line with higher pretax income, totaling $1.6 million versus $1.2 million a year earlier.

Management Commentary

CompX credited its strong quarterly performance to rising sales volumes in its Marine Components business, particularly for towboat-related products, which benefited from a one-time stocking event. The company also noted modest sales growth in its Security Products segment, especially in the government channel. Despite rising raw material expenses, especially for commodity metals like brass and steel, margin improvement was achieved through better product mix and selective price increases.

CIX emphasized its continued ability to adapt to tariff-related cost pressures, citing proactive raw material sourcing strategies and price adjustments. Management views the current supply-chain environment as stable, with minimal logistical disruptions.

Drivers Behind Financial Upside

The sharp increase in profitability was driven largely by the Marine Components segment. Specifically, the towboat market contributed $1.7 million in incremental sales, and the government market added another $1.2 million. This demand surge not only increased the top line but also improved cost absorption across manufacturing operations.

Security Products sales were boosted by $1.6 million in increased government demand, though this was nearly offset by softness in the transportation and vending markets. Margins in this segment remained stable due to effective cost controls and pricing discipline.

Outlook & Guidance

Management expects 2025 sales in Security Products to rise modestly, underpinned by a stronger product mix and price adjustments. Marine Components sales are expected to benefit from continued government demand and improved industrial sector activity, though towboat sales may normalize after the first-quarter stocking event.

CompXanticipates gross margin and operating income percentages in both segments to remain slightly above the 2024 levels, assuming stable market conditions and continued pricing power. However, management flagged the ongoing impacts of raw material cost increases and tariff surcharges as a potential headwind for the remainder of the year.

Other Developments

CIX maintained a steady capital expenditure rhythm, spending $0.8 million in the first quarter, with full-year guidance at $3.4 million. CompX also reiterated its commitment to returning capital to shareholders through dividends, paying out 30 cents per share in the first quarter, consistent with prior distributions.

In summary, CompX’s first-quarter results reflect solid execution, particularly in Marine Components. Despite near-term stock underperformance following earnings, operational trends and segment-level strength point to a firm footing for growth.

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

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