Valhi Inc /De/ (NYSE: VHI)

Valhi Inc /De/ is a holding company that derives its value from a portfolio of majority owned subsidiaries. The firm does not produce goods or services directly but instead oversees operations in three core areas through its subsidiaries. These areas comprise the production of titanium dioxide pigments the manufacture of security and marine components and the development and management of real estate assets. By maintaining controlling interests in Kronos Worldwide CompX International Basic Management Inc and LandWell the company gains exposure to diversified industrial markets while relying on subsidiary performance for its financial results.

The company generates revenue primarily through the sales of products and services offered by its subsidiaries. Kronos sells titanium dioxide pigment to manufacturers of paints plastics paper fibers ceramics and specialty items such as inks cosmetics and pharmaceuticals. CompX derives income from security products used in postal equipment office furniture healthcare cabinets tool storage and from marine components including wake enhancement systems exhaust systems gauges throttle controls and trim tabs for recreational boats. BMI and LandWell earn proceeds from the sale of land in Henderson Nevada and from reimbursements received under tax increment infrastructure agreements with the City of Henderson.

The company operates through the following reportable segments: Chemicals Component Products and Real Estate Management and Development.

• Chemicals: This segment represents the company's majority control of Kronos Worldwide a leading global producer of titanium dioxide pigment. The pigment provides whiteness brightness opacity and durability to a wide range of products including paints plastics paper fibers ceramics and specialty applications such as inks cosmetics and pharmaceuticals. Kronos also manufactures the pigment through facilities located in the United States Europe and Canada and recently acquired full ownership of the Louisiana Pigment Company partnership to expand its North American production capacity.

• Component Products: This segment reflects the company's majority control of CompX International a manufacturer of security products and marine components. Security products serve postal systems office and institutional furniture healthcare equipment cabinetry tool storage and other industrial applications. Marine components include wake enhancement systems stainless steel exhaust systems gauges throttle controls trim bars and related hardware for recreational boats. The company serves markets in North America and abroad with a focus on government and industrial customers.

• Real Estate Management and Development: This segment consists of Basic Management Inc and LandWell which own and develop real property in Henderson Nevada. LandWell is engaged in the development of land for commercial industrial and residential purposes and has been marketing parcels for sale since 2013. Basic Management holds the underlying land assets while LandWell carries out development activities and receives tax increment reimbursements from the City of Henderson for qualifying infrastructure work.

In the chemicals segment Kronos competes with other major titanium dioxide producers such as Chemours Tronox and Lomon Billions and maintains a competitive position through its integrated production footprint its recent acquisition of full control of Louisiana Pigment Company and its focus on product quality and customer service. The component products segment faces competition from established security hardware firms like ASSA ABLOY and Allegion as well as specialized marine equipment suppliers; CompX differentiates itself by offering a broad product line that spans both security and marine applications and by maintaining a strong presence in government contracts. In the real estate segment BMI and LandWell operate within the Nevada land development market where they compete with regional developers and homebuilders; their advantage lies in the entitlements and infrastructure agreements with the City of Henderson that allow them to earn reimbursements for public works and to control a sizable land bank earmarked for future growth.

The company's customers span several industries. Titanium dioxide pigment is sold to paint manufacturers plastics producers paper mills fiber processors and ceramics makers as well as to firms that produce inks cosmetics and pharmaceuticals. Security products are purchased by postal agencies office furniture manufacturers healthcare providers cabinet makers tool storage companies and various industrial firms. Marine components are sold to boat builders towboat operators government agencies and industrial users of recreational watercraft. Real estate revenue comes from residential builders who purchase lots in the Henderson development and from commercial developers who acquire parcels designated for light industrial or retail use; additionally the City of Henderson provides infrastructure reimbursements.