NATIONAL PRESTO INDUSTRIES INC

Previous wording

On a consolidated basis, net sales increased by $6,114,000 (8%), gross profit increased by $1,319,000 (10%), selling and general expenses increased by $280,000 (4%), and amortization decreased by $72,000 (16%). Other income decreased by $389,000 (21%), earnings before provision for income taxes increased by $722,000 (10%), and net earnings increased by $574,000 (10%). Details concerning these changes can be found in the comments by segment below.

Current wording

On a consolidated basis, net sales increased by $8,682,000 (10%), gross profit increased by $1,824,000 (12%), selling and general expenses decreased by $283,000 (4%), and amortization decreased by $48,000 (11%). Other income decreased by $625,000 (35%), earnings before provision for income taxes increased by $1,530,000 (17%), and net earnings increased by $1,064,000 (15%). Details concerning these changes can be found in the comments by segment below.

Previous wording

Housewares/Small Appliance net sales were relatively flat, decreasing by $269,000 from $18,936,000 to $18,667,000, or 1%.** **Defense net sales increased by $6,421,000 from $59,705,000 to $66,126,000 or 11%, primarily reflecting an increase in shipments from the segment's backlog.

Current wording

Housewares/Small Appliance net sales increased by $3,271,000 from $21,545,000 to $24,816,000, or 15%, which was primarily attributable to an increase in units shipped. Defense net sales increased by $5,483,000 from $61,311,000 to $66,794,000 or 9%, primarily reflecting an increase in shipments from the segment's backlog.

Previous wording

Housewares/Small Appliance gross profit decreased $727,000 from $4,188,000 to $3,461,000, primarily reflecting increases in the cost of ocean shipping, as well as higher repair costs at its main facility. Defense gross profit increased $2,586,000 from $10,193,000 to $12,779,000, primarily reflecting the increase in sales mentioned above, changes to the product mix, and improved efficiencies. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.

Current wording

Housewares/Small Appliance gross profit increased $1,077,000 from $3,920,000 to $4,997,000, primarily reflecting the increase in sales mentioned above, partially offset by increases in the cost of ocean shipping, as well as higher repair costs at its main facility. Defense gross profit increased $707,000 from $12,740,000 to $13,447,000, primarily reflecting the increase in sales mentioned above, impacted by changes to the product mix, and improved efficiencies. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.

Previous wording

Selling and general expenses for the Housewares/Small Appliance were relatively flat. Selling and general expenses for the Defense segment increased $664,000, primarily reflecting increased personnel and recruiting costs of $281,000 and the absence of a prior year adjustment of $313,000 related to the purchase of Woodlawn manufacturing, LTD., which was acquired on October 26, 2022.** **Selling and general expenses for the Safety segment decreased $351,000, primarily reflecting the decreased personnel costs of $173,000 and decreased legal and professional costs of $132,000.

Current wording

Selling and general expenses for the Housewares/Small Appliance and the Defense segment were relatively flat. Selling and general expenses for the Safety segment decreased $339,000, primarily reflecting the decreased personnel costs of $260,000 and decreased legal and professional costs of $69,000.

Previous wording

The $389,000 decrease in other income was primarily attributable to a decrease in interest income on marketable securities largely stemming from higher yields on a lower average daily investment.

Current wording

The $625,000 decrease in other income was primarily attributable to a decrease in interest income on marketable securities largely stemming from a lower average daily investment.

Previous wording

Earnings before provision for income taxes increased $722,000 from $7,124,000 to $7,846,000. The provision for income taxes increased from $1,621,000 to $1,769,000. The effective income tax rate was 23% for the quarters ended June 30, 2024 and July 2, 2023, respectively. Net earnings increased $574,000 from $5,503,000 to $6,077,000, or 10%.

Current wording

Earnings before provision for income taxes increased $1,530,000 from $8,843,000 to $10,373,000. The provision for income taxes increased from $1,824,000 to $2,290,000. The effective income tax rate was 22% and 21% for the quarters ended September 29, 2024 and October 1, 2023, respectively. Net earnings increased $1,064,000 from $7,019,000 to $8,083,000, or 15%.

Previous wording

Comparison of First Six Months 2024 and 2023

Current wording

Comparison of First Nine Months 2024 and 2023

Previous wording

Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the first six months ended June 30, 2024 and July 2, 2023.

Current wording

Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the first nine months ended September 29, 2024 and October 1, 2023.

Previous wording

On a consolidated basis, net sales increased by $2,358,000 (2%), gross profit decreased by $2,848,000 (9%), selling and general expenses decreased by $744,000 (5%), and amortization decreased by $72,000 (9%).** **Other income decreased by $167,000 (5%), earnings before provision for income taxes decreased by $2,199,000 (12%), and net earnings decreased by $1,736,000 (12%). Details concerning these changes can be found in the comments by segment below.

Current wording

On a consolidated basis, net sales increased by $11,040,000 (5%), gross profit decreased by $1,024,000 (2%), selling and general expenses decreased by $1,027,000 (4%), and amortization decreased by $120,000 (10%).** **Other income decreased by $792,000 (14%), earnings before provision for income taxes decreased by $669,000 (3%), and net earnings decreased by $672,000 (3%). Details concerning these changes can be found in the comments by segment below.

Previous wording

Housewares/Small Appliance net sales were relatively flat, decreasing by $54,000 from $39,988,000 to $39,934,000.** Increases in volume of $1,177,000 were essentially offset by decreases in product pricing. **Defense net sales increased by $2,603,000 from $118,563,000 to $121,166,000 or 2%, primarily reflecting an increase in shipments from the segment's backlog.

Current wording

Housewares/Small Appliance net sales increased by $3,217,000 from $61,533,000 to $64,750,000, or 5%, primarily attributable to the increase in units shipped, approximately one-fourth of which was offset by decreases in pricing.** **Defense net sales increased by $8,086,000 from $179,874,000 to $187,960,000 or 5%, primarily reflecting an increase in shipments from the segment's backlog.

Previous wording

Housewares/Small Appliance gross profit decreased $2,325,000 from $8,894,000 to $6,569,000, primarily reflecting increases in the cost of ocean shipping, higher repair costs at its main facility, and changes in various accruals. Defense gross profit increased $451,000 from $24,252,000 to $24,703,000, primarily reflecting the increase in sales mentioned above, changes to the product mix, and improved efficiencies. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.

Current wording

Housewares/Small Appliance gross profit decreased $1,248,000 from $12,814,000 to $11,566,000, primarily reflecting the sales increase mentioned above, offset by increases in the cost of ocean shipping, higher repair costs at its main facility, and changes in various accruals. Defense gross profit increased $1,158,000 from $36,992,000 to $38,150,000, primarily reflecting the increase in sales mentioned above, impacted by changes to the product mix, and improved efficiencies. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.

Previous wording

Selling and general expenses for the Housewares/Small Appliance decreased $734,000, primarily reflecting decreased accruals relating to legal and professional costs of $264,000, self-insurance of $130,000, and bad debts of $285,000.** Selling and general expenses for the Defense segment increased $664,000, primarily reflecting increased personnel and recruiting costs of $458,000, and the absence of a prior year adjustment of $313,000 related to the purchase of Woodlawn manufacturing, LTD., which was acquired on October 26, 2022. **Selling and general expenses for the Safety segment decreased $671,000, primarily reflecting the decreased personnel costs of $379,000 and decreased legal and professional costs of $242,000.

Current wording

Selling and general expenses for the Housewares/Small Appliance decreased $657,000, primarily reflecting decreased accruals relating to legal and professional costs of $518,000 and bad debts of $285,000, offset by an increase in software expense of $88,000. Selling and general expenses for the Defense segment increased $638,000, primarily reflecting increased personnel and recruiting costs of $613,000, and the absence of a prior year adjustment of $313,000 related to the purchase of Woodlawn Manufacturing LTD., which was acquired on October 26, 2022. These were partially offset by the absences of prior year legal settlement costs of $288,000, and one-time insurance related costs of $250,000. Selling and general expenses for the Safety segment decreased $1,008,000, primarily reflecting the decreased personnel costs of $655,000 and decreased legal and professional costs of $312,000.

Previous wording

The $167,000 decrease in other income was primarily attributable to a decrease in interest income on marketable securities largely stemming from higher yields on a lower average daily investment.

Current wording

The $792,000 decrease in other income was primarily attributable to a decrease in interest income on marketable securities largely stemming from a lower average daily investment, partially offset by higher yields.

Previous wording

Earnings before provision for income taxes decreased $2,199,000 from $18,397,000 to $16,198,000. The provision for income taxes decreased from $4,016,000 to $3,553,000. The effective income tax rate was 22% for the first six months ended June 30, 2024 and July 2, 2023. Net earnings decreased $1,736,000 from $14,381,000 to $12,645,000, or 12%.

Current wording

Earnings before provision for income taxes decreased $669,000 from $27,240,000 to $26,571,000. The provision for income taxes increased slightly from $5,840,000 to $5,843,000. The effective income tax rate was 22% and 21% for the first nine months ended September 29, 2024 and October 1, 2023, respectively. Net earnings decreased $672,000 from $21,400,000 to $20,728,000, or 3%.

Previous wording

Net cash used in operating activities was $28,328,000 during the first six months of 2024 compared to $33,001,000 provided by operating activities during the first six months of 2023. The principal factors contributing to the change can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the first six months of 2024 were net earnings of $12,645,000, which included non-cash depreciation and amortization expenses of $2,684,000. Contributing to the cash used were increases in accounts receivable and inventory levels, as well as a decrease in federal and state taxes due. Of particular note during the first six months of 2023 were net earnings of $14,381,000, which included non-cash depreciation and amortization expenses of $2,951,000. Contributing to the cash provided were a decrease in accounts receivable levels stemming from cash collections on customer sales and increases in payable and accrual levels, partially offset by increases in inventory levels.

Current wording

Net cash used in operating activities was $45,793,000 during the first nine months of 2024 compared to $28,790,000 provided by operating activities during the first nine months of 2023. The principal factors contributing to the change can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the first nine months of 2024 were net earnings of $20,728,000, which included non-cash depreciation and amortization expenses of $3,877,000. Contributing to the cash used were increases in inventory levels, as well as a decrease in payable and accrual levels. These were partially offset by decreases in accounts receivable levels stemming from cash collections on customer sales and deposits made to vendors included in other current assets. Of particular note during the first nine months of 2023 were net earnings of $21,400,000, which included non-cash depreciation and amortization expenses of $4,144,000. Contributing to the cash provided were decreases in accounts receivable levels stemming from cash collections on customer sales and deposits made to vendors included in other assets and current assets, and increases in payable and accrual levels, partially offset by increases in inventory levels.

Previous wording

Net cash provided by investing activities was $4,758,000 for the first six months of 2024, and net cash used in investing activities was $2,394,000 for the first six months of 2023. Significant factors contributing to the change were net maturities and sales of marketable securities of $5,576,000 in 2024, in contrast with net marketable securities purchased of $1,472,000 in 2023.

Current wording

Net cash provided by investing activities was $5,981,000 for the first nine months of 2024, and net cash used in investing activities was $1,134,000 for the first nine months of 2023. Significant factors contributing to the change were net maturities and sales of marketable securities of $9,624,000 in 2024, in contrast with net marketable securities purchased of $68,000 in 2023; and purchases of property, plant and equipment of $3,873,000 in 2024, as opposed to $1,693,000 in 2023.

Previous wording

Net cash used in financing activities was $31,516,000 and $27,956,000, for the first six months of 2024 and 2023, respectively, and primarily relates to the annual dividend payments. The extra dividend increased from $3.00 per share in 2023 to $3.50 per share in 2024. Cash flows for both six month periods also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan.

Current wording

Net cash used in financing activities was $31,516,000 and $27,956,000, for the first nine months of 2024 and 2023, respectively, and primarily relates to the annual dividend payments. The extra dividend increased from $3.00 per share in 2023 to $3.50 per share in 2024. Cash flows for both nine month periods also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan. In addition, the Company drew on and repaid its line of credit during 2024, incurring interest expense of $2,000.

Previous wording

Working capital decreased by $16,524,000 during the first six months of 2024 to $271,567,000 at June 30, 2024 for the reasons stated above. The Company's current ratio was 5.0 to 1.0 at both June 30, 2024 and December 31, 2023.

Current wording

Working capital decreased by $9,608,000 during the first nine months of 2024 to $278,483,000 at September 29, 2024 for the reasons stated above. The Company's current ratio was 5.0 to 1.0 at both September 29, 2024 and December 31, 2023.

Previous wording

New Housewares/Small Appliance and safety product introductions are an important part of the Company’s sales. In the case of the Housewares/Small Appliance segment, the introductions are important to offset the morbidity rate of other products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail unusual risks and have occasionally, in the past, resulted in losses related to obsolete or excess inventory as a result of low or diminishing demand for a product. The Housewares/Small Appliance segment recorded impairments related to such losses of $1,216,000 during the year ended 2023. There were no other obsolescence issues that had a material effect during the six months ended June 30, 2024. In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory. Inventory risk for the Company’s Defense segment is not deemed to be significant, as products are largely built pursuant to customers’ specific orders.

Current wording

New Housewares/Small Appliance and Safety product introductions are an important part of the Company’s sales. In the case of the Housewares/Small Appliance segment, the introductions are important to offset the morbidity rate of other products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail unusual risks and have occasionally, in the past, resulted in losses related to obsolete or excess inventory as a result of low or diminishing demand for a product. The Housewares/Small Appliance segment recorded impairments related to such losses of $1,216,000 during the year ended 2023. There were no other obsolescence issues that had a material effect during the nine months ended September 29, 2024. In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory. Inventory risk for the Company’s Defense segment is not deemed to be significant, as products are largely built pursuant to customers’ specific orders.