Valhi Q2 2026 Earnings: Chemicals Drive the Profit Increase

Valhi (NYSE: VHI) reported Q2 2026 net sales of $606.1 million for the quarter ended June 30, up approximately 12% from $540.4 million a year earlier, while basic and diluted EPS increased to $0.78 from $0.03. The profit increase was primarily driven by the Chemicals segment, where higher TiO2 volumes, lower production costs and earlier cost-reduction measures outweighed weaker pricing and adverse currency effects on operating income.

Core earnings data

Chemicals generated $63.7 million of Valhi’s $65.7 million year-over-year sales increase. Reported total operating income rose by $32.2 million, while net income attributable to Valhi stockholders increased by $21.4 million.

Q2 results also included a $5.8 million gain from the sale of an office building. After income taxes and noncontrolling interest, the transaction contributed $3.0 million, or $0.10 per share, to Valhi stockholders.

Business and segment performance

Chemicals remained Valhi’s dominant business, contributing approximately 92% of consolidated quarterly sales. Component Products also improved, while Real Estate Management and Development recorded lower sales as development activity slowed.

Chemicals sales increased 13%, supported by market-share gains and a 16% increase in TiO2 sales volumes. The gains were partly offset by a 3% negative contribution from TiO2 pricing, a 2% negative contribution from product mix and other factors, and weaker pricing and volumes in complementary businesses. Currency movements added 2% to the segment’s sales growth.

Component Products sales rose approximately 8%, reflecting higher security-product sales in healthcare, transportation, tool storage and distributor markets, along with higher marine-component sales to industrial customers. Operating income increased approximately 41% because of higher sales and gross margin, primarily in security products.

Real estate sales declined approximately 23% as the segment approached completion of development work on previously sold residential and planned-community parcels. Its quarterly operating income included the $5.8 million office-building sale gain.

Currency lifted Chemicals sales but reduced its profit

Foreign exchange had opposing effects on the Chemicals segment. Currency movements, primarily involving the euro, increased Q2 sales by approximately $10 million but reduced operating income by approximately $12 million compared with the prior-year quarter.

Despite that profit headwind, Chemicals operating income rose to $40.4 million from $10.3 million. Higher sales volumes, lower raw-material costs—particularly feedstock—lower unabsorbed fixed costs and cost-reduction initiatives implemented in Q4 2025 more than offset lower average TiO2 prices and unfavorable currency effects.

Average TiO2 selling prices increased 4% during the first six months of 2026, but they remained below the comparable prior-year level in the Q2 sales bridge. The segment implemented price increases and surcharges during the quarter in response to higher operating costs.

Profitability and below-the-line items

Corporate expenses declined 2% to $9.0 million, mainly because of lower environmental remediation and related costs. This provided a modest benefit relative to the much larger improvement in segment operating results.

Interest expense increased to $14.7 million from $13.8 million because of higher overall debt levels and higher average interest rates. Interest income and other items increased by $0.3 million to $4.0 million, partly reflecting higher interest income on the real estate segment’s note receivable.

Noncontrolling interests absorbed $13.2 million of consolidated net income, compared with $6.6 million a year earlier. After that allocation, net income attributable to Valhi stockholders was $22.3 million.

Recent insider transactions

The supplied insider data shows six director stock awards on May 21, 2026. A separate six-month transaction summary recorded no insider purchase or sale transactions, so these grants should not be treated as open-market buying.

Risks investors should monitor

• TiO2 pricing: Chemicals volume increased, but lower average TiO2 prices reduced quarterly sales growth. Continued pricing pressure could limit the profit benefit from higher volumes.
• Currency exposure: Foreign exchange added to reported sales but reduced Chemicals operating income, demonstrating that revenue translation and profit effects can move in opposite directions.
• Operating-cost pressure: Chemicals introduced price increases and surcharges in response to higher costs. Raw-material inflation, tariffs or weaker-than-expected cost savings could pressure margins.
• Debt and interest rates: Higher debt levels and average interest rates increased quarterly interest expense, reducing the amount of operating improvement reaching pre-tax income.
• Real estate earnings variability: Development activity is slowing as existing work nears completion, while the Q2 office-building gain was transaction-specific rather than recurring operating revenue.

Summary

Valhi’s Q2 2026 improvement was led by Chemicals, where volume growth and lower production costs outweighed weaker pricing and adverse currency effects on profit. Component Products also contributed higher sales and margins, while real estate sales slowed and included a nonrecurring asset-sale gain. The main follow-up issues are TiO2 pricing, the durability of cost savings, currency exposure and rising interest expense.