ALPHA PRO TECH LTD
For the period ended Dec 31, 2024. Filed Mar 12, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 12, 2025
APT$5.42-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-13.
0001437749-24-007539
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-12.
0001437749-25-007218
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 66 previous paragraphs and 69 current paragraphs.
25 unchanged; 34 reworded; 9 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Recent developments in U.S. trade policy have introduced uncertainty regarding the future of global trade relations. Following the inauguration of the second Trump administration, there have been numerous announcements made and actions taken related to tariff increases and other trade restrictions regarding imports into the U.S. President Trump has indicated that his administration is likely to impose significant tariffs on imported goods, including a 60% tariff on Chinese imports, a 25% tariff on goods from Canada and Mexico and up to 10% or 20% on all other U.S. imports. Given that we currently source very little from China, this may be a benefit in regards to our competition that does import from China, but any new or increased tariffs, quotas, embargoes, or other trade barriers affecting other countries from which we do source supplies or our global network of third-party suppliers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries could further disrupt our operations or reduce our competitiveness in international markets. We continue to monitor these changing tariffs and trade restrictions. If new tariffs or trade restrictions are imposed, we may need to adjust our pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect our revenue, gross margins, and overall financial performance
Current report
The housing market continues to be weak, with housing starts down 4.4% in 2024 compared to 2023. Although sales of the core building products (housewrap and synthetic roof underlayment) were down 7.9% in 2024, which exceeds the decline in housing starts, a closer look reveals the issues we faced. Excluding the decline of sales to two private label distributors, which were beyond our control, the 2024 sales performance of our core building products would have resulted in a lower percentage decline than the reduction in housing starts, indicating that we otherwise outperformed the market. In addition, the percentage change in sales for all of 2024 improved slightly over the first nine months of 2024. Synthetic roof underlayment sales in the fourth quarter of 2024 exceeded sales in the same quarter of 2023.
Current report
Housewrap sales were encouraging through the first nine months of 2024 especially since the percentage decline of housing starts was higher than the percentage decline of housewrap sales. Lower housewrap sales in the final quarter of 2024 were primarily due to one of our larger distributors losing some end user’s business but we have not lost share with this distributor. Presenting an additional challenge in 2024, multi-family housing starts in 2024 were down 11.3% compared to 2023 with 2024 being the lowest in ten years. Management expects growth with this distributor and in the housewrap category in the coming year, when uncertainty in the housing market is expected to abate.
Current report
Despite the challenges faced in 2024, our efforts are now focused on builders and contractors and we are educating the industry on our extensive manufacturing capabilities which are expected to contribute to future growth. Our top fifteen accounts have increased compared to 2023, excluding one of our top accounts mentioned above. This is a testament to the hard work and commitment of our sales team. Late in the year, we added two Territory Mangers who will assist in strengthening relationships with our customers and driving new business. We also created the position of Director of Product and Business Development. This role will be instrumental in helping APT expand its product offerings and explore new opportunities and industries where we currently do not have a presence.
Current report
Sales of other woven material sales decreased by $1,326,000, or 28.2% in 2024 compared to 2023, primarily due to one of our customers being acquired by another company. The Company is pursuing new opportunities for other woven material that could improve sales, and as mentioned above, we have hired a Director of Product and Business Development.
Current report
Sales of disposable protective garments in 2024 were up approximately 19% as compared to pre-pandemic levels, increasing due to further integration and growth among some of our largest regional channel partners. We have signed new distribution agreements with regional and national channel partners, which should provide for an enhanced level of engagement and mutual growth incentives. In addition, we signed a new agreement with our largest international channel partners and achieved elevated status and were named as a preferred supplier going forward. We believe this achievement will provide some growth opportunities, and management expects continued growth for disposable protective garments in 2025.
Current report
The significant growth in face masks and shields was a direct result of a return to a pre-pandemic business model. Together, with both our dental and medical channel partners, we have overcome the negative impact of excess inventories. Our partnerships in this segment remain strong and, through further integration and buy-side incentives, we anticipate a steady growth trajectory going forward.
Current report
The gross profit margin in 2024 was positively affected by a margin increase in both the Disposable Protective Apparel and Building Supply segments. However, management expects that the gross profit margin could be negatively affected next year by ocean freight rates that experienced significant volatility in 2024, due to factors such as geopolitical tensions, labor disputes and market dynamics. As we progress into next year, the outlook suggests both challenges and potential easing of freight rates.
Current report
Prepaid expenses decreased by $1,634,000, or 27.2%, to $4,376,000 as of December 31, 2024, from $6,010,000 as of December 31, 2023. The decrease was primarily due to decreased prepaid equipment and prepayments for insurance, partially offset by increased prepaid tax payments.
Removed paragraphs (7)
Previous report
The housewrap market continues to be soft, as housing starts in 2023 in the United States decreased by 8.8% compared to the same period a year ago. We experienced a 22.2% increase in housewrap and accessories sales, as we continue to significantly outperform the market through market diversification and product development. Sales of our REX Wrap® and REX Wrap Plus®, our entry-level housewrap products, were up by 15.1% over the prior year, despite the decrease in housing starts, as we continue to form relationships with new dealers. Management also expects to see growth opportunities with REX™ Wrap Fortis, our premium housewrap line, as we continue to make inroads into the multi-family and commercial construction sector, evidenced by a 33.9% increase in sales for this product in 2023. We also experienced a 180.5% increase in sales of housewrap accessories in 2023. Management expects that we will continue to see positive trends relative to the industry for both our entry level and premium housewrap and housewrap accessories product lines.
Previous report
Sales of disposable protective garments in 2023 were up by 4.0% as our channel partners and our end customers are continuing to work through their excess inventory, which had accumulated as a result of the pandemic. Our sales have been positively affected as we can now meet face-to-face with our distribution partners and end customers, something we have not been able to do since 2020. Disposable protective garment sales in 2023 were up by approximately 19% as compared to pre-pandemic levels. We expect continued growth for disposable protective garments in 2024.
Previous report
Face mask and face shield sales are still suffering from the post COVID-19 residual excess inventories at the distributor level, but sales in the fourth quarter of 2023 showed improvement and approximately doubled as compared to the prior quarter. The market continues to be saturated with products but we’re cautiously optimistic that face mask and face shield sales will show growth in the coming year.
Previous report
The gross profit margin in 2023 was positively affected by ocean freight rates that have come down since the latter part of 2022. Management expects the gross profit margin to be in a similar range in 2024, although gross margin could be negatively affected by the ongoing wars in Ukraine and the middle east, which have resulted in increased freight rates.
Previous report
Prepaid expenses increased by $1,108,000, or 22.6%, to $6,010,000 as of December 31, 2023, from $4,902,000 as of December 31, 2022. The increase was primarily due to increased prepaid inventory and equipment and increased prepayments for insurance.
Previous report
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses, and is effective for fiscal years beginning after December 15, 2023, on a retrospective basis. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
Previous report
In June 2016, the FASB issued ASU 2016-13, Financial Instruments –Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. Public business entities classified as smaller reporting companies are required to apply the provision of ASU 2016-13 with annual reporting periods after December 15, 2022. The Company adopted Topic 326 effective January 1, 2023, which did not have a material impact on the Company’s consolidated financial statements.
Reworded paragraphs (34)
Previous wording
Accounts Receivable: Accounts receivable are recorded at the invoice amount and do not bear interest. The allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. The Company pools accounts receivable based on risk characteristics, which include type of customer and age of open receivable balance. The allowance for credit losses pool is estimated based on historical write-off experience and known conditions, adjusted for management’s reasonable and supportable expectations of future conditions. Account balances are charged against the allowance when management determines that the probability for collection of an account balance is remote. As of December 31, 2023, the Company had recorded an allowance for credit losses on accounts receivable of $35,000. As of December 31, 2022, the Company had recorded an allowance for doubtful accounts on accounts receivable of $45,000.
Current wording
**Accounts Receivable:**Accounts receivable are recorded at the invoice amount and do not bear interest. The allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. The Company pools accounts receivable based on risk characteristics, which include type of customer and age of open receivable balance. The allowance for credit losses pool is estimated based on historical write-off experience and known conditions, adjusted for management’s reasonable and supportable expectations of future conditions. Account balances are charged against the allowance when management determines that the probability for collection of an account balance is remote. As of December 31, 2024, 2023, and 2022, the Company had accounts receivable totaling $4,894,000, $6,545,000 and $6,973,000, respectively. As of December 31, 2024, and 2023, the Company had recorded an allowance for credit losses on accounts receivable of $35,000 for both periods respectively.
Previous wording
Inventories: Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost or net realizable value. Allowances are recorded for slow-moving, obsolete or unusable inventory. We assess our inventory for estimated obsolescence or unmarketable inventory and write-down the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future sales and supply on-hand, if necessary. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. In 2023 and 2022, we recorded approximately $292,000 and $152,000, respectively, in write-downs of inventory.
Current wording
Inventories: Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost or net realizable value. Allowances are recorded for slow-moving, obsolete or unusable inventory. We assess our inventory for estimated obsolescence or unmarketable inventory and write-down the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future sales and supply on-hand, if necessary. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. In 2024 and 2023, we recorded approximately $416,000 and $292,000, respectively, in write-downs of inventory.
Previous wording
**Leases:**We determine if an arrangement is a lease at its inception. Operating leases are included as right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our leases do not provide an implicit interest rate, and, therefore, we estimate our collateralized borrowing rate under similar terms based on the information available at the commencement date in determining the present value of future minimum lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. We do not record leases on our consolidated balance sheet with a term of one year or less. We elected a package of transition practical expedients permitted under the standards of the Financial Accounting Standards Board (“FASB”), which included not reassessing whether any expired or existing contracts are or contain leases, not reassessing the lease classification of expired or existing leases, and not reassessing initial direct costs for existing leases. We also elected a practical expedient to not separate lease and non-lease components. We did not elect the practical expedient to use hindsight in determining our lease terms or assessing impairment of our ROU assets. As of December 31, 2023, we had $4.8 million in ROU assets and $4.8 million in lease liabilities.
Current wording
**Leases:**We determine if an arrangement is a lease at its inception. Operating leases are included as right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our leases do not provide an implicit interest rate, and, therefore, we estimate our collateralized borrowing rate under similar terms based on the information available at the commencement date in determining the present value of future minimum lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. We do not record leases on our consolidated balance sheet with a term of one year or less. We elected a package of transition practical expedients permitted under the standards of the Financial Accounting Standards Board (“FASB”), which included not reassessing whether any expired or existing contracts are or contain leases, not reassessing the lease classification of expired or existing leases, and not reassessing initial direct costs for existing leases. We also elected a practical expedient to not separate lease and non-lease components. We did not elect the practical expedient to use hindsight in determining our lease terms or assessing impairment of our ROU assets. As of December 31, 2024, we had $8.7 million in ROU assets and $8.8 million in lease liabilities.
Previous wording
The fair values of stock option grants are determined using the Black-Scholes option-pricing model and are based on the following assumptions: expected stock price volatility based on historical data and management’s expectations of future volatility, risk-free interest rates from published sources, expected term based on historical data, and no dividend yield, as the Board of Directors currently has no plans to pay dividends in the foreseeable future. The Company accounts for option forfeitures as they occur. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and that are fully transferable. In addition, the option-pricing model requires the input of highly subjective assumptions, including expected stock price volatility. Our stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value of such options. In 2023 and 2022, we recorded $170,000 and $147,000, respectively, in compensation expense for share-based awards.
Current wording
The fair values of stock option grants are determined using the Black-Scholes option-pricing model and are based on the following assumptions: expected stock price volatility based on historical data and management’s expectations of future volatility, risk-free interest rates from published sources, expected term based on historical data, and no dividend yield, as the Board of Directors currently has no plans to pay dividends in the foreseeable future. The Company accounts for option forfeitures as they occur. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and that are fully transferable. In addition, the option-pricing model requires the input of highly subjective assumptions, including expected stock price volatility. Our stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value of such options. In 2024 and 2023, we recorded $463,000 and $170,000, respectively, in compensation expense for share-based awards.
Previous wording
Our target markets include pharmaceutical manufacturing, bio-pharmaceutical manufacturing and medical device manufacturing, lab animal research, high technology electronics manufacturing (which includes the semi-conductor market), medical and dental distributors, and construction, building supply and roofing distributors.
Current wording
Our target markets include construction, building supply and roofing distributors; companies in pharmaceutical manufacturing, bio-pharmaceutical manufacturing, medical device manufacturing, lab animal research, and high technology electronics manufacturing (which includes the semi-conductor market); and medical and dental distributors.
Previous wording
Sales. Consolidated sales for the year ended December 31, 2023, decreased to $61,232,000, from $61,981,000 for the year ended December 31, 2022, representing a decrease of $749,000, or 1.2%. This decrease consisted of decreased sales in the Disposable Protective Apparel segment of $4,208,000, partially offset by increased sales in the Building Supply segment of $3,459,000.
Current wording
Sales. Consolidated sales for the year ended December 31, 2024, decreased to $57,840,000, from $61,232,000 for the year ended December 31, 2023, representing a decrease of $3,392,000, or 5.5%. This decrease consisted of decreased sales in the Building Supply segment of $4,431,000, partially offset by increased sales in the Disposable Protective Apparel segment of $1,039,000.
Previous wording
Building Supply segment sales for the year ended December 31, 2023, increased by $3,459,000, or 9.4%, to a record sales year of $40,396,000 compared to $36,937,000 for the year ended December 31, 2022. The Building Supply segment increase during the year ended December 31, 2023, was primarily due to a 22.2% increase in sales of housewrap and a 18.0% increase in sales of other woven material, partially offset by a decrease in sales of synthetic roof underlayment of 3.0% and an increase in rebates compared to the same period of 2022. We have experienced the six highest quarters on record for the Building Supply segment over the past eight quarters: the second, third, and fourth quarters of 2023 and the first, second and third quarters of 2022.
Current wording
Building Supply segment sales for the year ended December 31, 2024, decreased by $4,431,000, or 11.0%, to $35,965,000 compared to $40,396,000 for the year ended December 31, 2023. The Building Supply segment decrease during the year ended December 31, 2024, was primarily due to a 6.4% decrease in sales of housewrap, an 8.8% decrease in sales of synthetic roof underlayment and a 28.2% decrease in sales of other woven material compared to the same period of 2023.
Previous wording
The sales mix of the Building Supply segment for the year ended December 31, 2023, was approximately 42% for synthetic roof underlayment, 47% for housewrap and 11% for other woven material. This compared to approximately 47% for synthetic roof underlayment, 43% for housewrap and 10% for other woven material for the year ended December 31, 2022. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® TECHNO SB and our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape and our synthetic roof underlayment accessories consist of our new self- adhered TECHNOplus and REX Ultra HT.
Current wording
The sales mix of the Building Supply segment for the year ended December 31, 2024, was approximately 42% for synthetic roof underlayment, 49% for housewrap and 9% for other woven material. This compared to approximately 42% for synthetic roof underlayment, 47% for housewrap and 11% for other woven material for the year ended December 31, 2023. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® and TECHNO SB and our synthetic roof underlayment accessories consist of our new self-adhered TECHNOplus and REX Ultra HT. Our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.
Previous wording
The synthetic roof underlayment market has also been affected by the continued decrease in new home starts, economic uncertainty, more offshore competition and a push in the market to reduce product selling prices. Despite these pressures, our synthetic roof underlayment sales also outperformed the market despite being down 3.0% in 2023 compared to 2022. We launched our new line of self-adhered roofing products in late 2023, which we expect to result in revenue growth within our current customer base and allow for expansion into new markets and business segments. We continue to work closely with our customers to develop and expand our product lines. Other woven material sales increased by 18.0% in 2023 compared to the same period of 2022, due to increased sales to our major customer, but management does not expect this to be a growth driver in the coming year.
Current wording
Sales of synthetic roof underlayment which were down double digits through the first nine months of 2024, ended the year down single digits. After hurricanes Helene and Milton, we saw a surge in synthetic roof underlayment orders in the fourth quarter of 2024 to assist in the southeast rebuild. Sales of this product line continue to be affected by the uncertain economic conditions, more offshore competition and a push in the market to reduce product selling prices. We launched our new line of self-adhered roofing products in late 2023 and have achieved revenue in 2024, and we expect continued growth within our current customer base and into new markets. We are exploring additional products in the roofing market and expect growth in 2025 in the synthetic roof underlayment category.
Previous wording
Management expects growth in the building supply segment in the coming year, especially in housewrap sales. While housing starts have trended down nationally, we have continued to grow market share. We also hope to build on our success within the multi-family and commercial segment and the single-family segment. However, there continues to be uncertainty in housing starts and the economy in general that could affect this segment.
Current wording
Management expects growth in the Building Supply segment in the coming year, as the projected number of housing starts in 2025 is expected to increase. However, there continues to be uncertainty in housing starts and the economy in general that could affect this segment.
Previous wording
Sales for the Disposable Protective Apparel segment for the year ended December 31, 2023, decreased by $4,208,000, or 16.8%, to $20,836,000, compared to $25,044,000 for 2022. This segment decrease was due to a 4.0% increase in sales of disposable protective garments that was more than offset by a 62.3% decrease in sales of face masks and a 75.5% decrease in sales of face shields.
Current wording
Sales for the Disposable Protective Apparel segment for the year ended December 31, 2024, increased by $1,039,000, or 5.0%, to $21,875,000, compared to $20,836,000 for 2023. This segment increase was due to a 0.8% increase in sales of disposable protective garments and a 43.5% increase in sales of face shields, partially offset by a 34.6% decrease in sales of face masks.
Previous wording
The sales mix of the Disposable Protective Apparel segment for the year ended December 31, 2023, was approximately 88% for disposable protective garments, 9% for face masks and 3% for face shields. This sales mix is compared to approximately 71% for disposable protective garments, 19% for face masks and 10% for face shields for the year ended December 31, 2022.
Current wording
The sales mix of the Disposable Protective Apparel segment for the year ended December 31, 2024, was approximately 85% for disposable protective garments, 11% for face masks and 4% for face shields. This sales mix is compared to approximately 88% for disposable protective garments, 9% for face masks and 3% for face shields for the year ended December 31, 2023.
Previous wording
**Gross Profit.**Gross profit increased by $1,146,000, or 5.3%, to $22,829,000 for the year ended December 31, 2023, from $21,683,000 for the year ended December 31, 2022. The gross profit margin was 37.3% for the year ended December 31, 2023, compared to 35.0% for the year ended December 31, 2022.
Current wording
**Gross Profit.**Gross profit increased by $104,000, or 0.5%, to $22,933,000 for the year ended December 31, 2024, from $22,829,000 for the year ended December 31, 2023. The gross profit margin was 39.6% for the year ended December 31, 2024, compared to 37.3% for the year ended December 31, 2023.
Previous wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1,553,000, or 9.6%, to $17,772,000 for the year ended December 31, 2023, from $16,219,000 for the year ended December 31, 2022. As a percentage of net sales, selling, general and administrative expenses increased to 29.0% for the year ended December 31, 2023, from 26.2% for 2022.
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $839,000, or 4.7%, to $18,611,000 for the year ended December 31, 2024, from $17,772,000 for the year ended December 31, 2023. As a percentage of net sales, selling, general and administrative expenses increased to 32.2% for the year ended December 31, 2024, from 29.0% for 2023.
Previous wording
The change in expenses by segment for the year ended December 31, 2023, was as follows: Disposable Protective Apparel was down by $55,000, or 1.1%; Building Supply was up by $1,244,000, or 19.3%; and corporate unallocated expenses were up by $364,000, or 7.3%. The decrease in the Disposable Protective Apparel segment expenses was primarily related to decreased employee compensation, partially offset by increased marketing expenses, travel expenses and sales commission. The increase in the Building Supply segment expenses was related to increased employee compensation, sales commission, travel, insurance, and general factory expenses. The increase in corporate unallocated expenses was primarily due to increased employee compensation, accrued bonuses, stock option and restricted stock expenses, professional fees, and general office expenses, partially offset by decreased insurance expenses.
Current wording
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation, travel and insurance expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing and rent expenses. The increase in corporate unallocated expenses was primarily due to increased employee compensation, stock option and restricted stock expenses, reorganization costs, professional fees, insurance expenses and general office expenses. The reorganization costs were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona during 2024. This relocation of our face mask manufacturing facility is expected to result in lower expenses for this product line.
Previous wording
In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million. A bonus amount of $286,000 was accrued for the year ended December 31, 2023, compared to $231,000 for the year ended December 31, 2022.
Current wording
In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million. A bonus amount of $264,000 was accrued for the year ended December 31, 2024, compared to $286,000 for the year ended December 31, 2023.
Previous wording
Depreciation and Amortization. Depreciation and amortization expense increased by $111,000, or 13.6%, to $925,000 for the year ended December 31, 2023, from $814,000 for the year ended December 31, 2022. The increase was primarily attributable to increased depreciation for machinery and equipment in the Building Supply segment.
Current wording
Depreciation and Amortization. Depreciation and amortization expense decreased by $52,000, or 5.6%, to $873,000 for the year ended December 31, 2024, from $925,000 for the year ended December 31, 2023. The decrease was primarily due to a decrease in depreciation in the Building Supply segment.
Previous wording
Income from Operations. Income from operations decreased by $518,000, or 11.1%, to $4,132,000 for the year ended December 31, 2023, compared to $4,650,000 for the year ended December 31, 2022. The decreased income from operations was primarily due to an increase in gross profit of $1,146,000, offset by an increase in selling, general and administrative expenses of $1,553,000 and an increase in depreciation and amortization expense of $111,000. Income from operations as a percentage of net sales for the year ended December 31, 2023, was 6.7%, compared to 7.5% for 2022.
Current wording
Income from Operations. Income from operations decreased by $683,000, or 16.5%, to $3,449,000 for the year ended December 31, 2024, compared to $4,132,000 for the year ended December 31, 2023. The decreased income from operations was primarily due to an increase in selling, general and administrative expenses of $839,000, partially offset by an increase in gross profit of $104,000 and a decrease in depreciation and amortization expenses of $52,000. Income from operations as a percentage of net sales for the year ended December 31, 2024, was 6.0%, compared to 6.8% for 2023.
Previous wording
Other Income. Other income increased by $1,548,000 to income of $1,293,000 for the year ended December 31, 2023, from a loss of $255,000 for 2022. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $390,000 and an increase in interest income of $668,000. In addition, there was a loss on fixed assets of $490,000 in 2022 due to equipment for the Disposable Protective Apparel segment that was not delivered. The Company has filed a lawsuit in this matter. See Part I, Item 3, “Legal Proceedings,” for more information on the Lawsuit.
Current wording
Other Income. Other income increased by $278,000 to income of $1,571,000 for the year ended December 31, 2024, compared to $1,293,000 for 2023. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $152,000, an increase in interest income of $96,000 and a gain on sale of assets of $30,000.
Previous wording
Income before Provision for Income Taxes. Income before provision for income taxes for the year ended December 31, 2023, was $5,425,000, compared to income before provision for income taxes of $4,395,000 for 2022, representing an increase of $1,030,000, or 23.4%. This increase in income before provision for income taxes was due to an increase in other income of $1,548,000, partially offset by a decrease in income from operations of $518,000.
Current wording
Income before Provision for Income Taxes. Income before provision for income taxes for the year ended December 31, 2024, was $5,020,000, compared to income before provision for income taxes of $5,425,000 for 2023, representing a decrease of $405,000, or 7.5%. This decrease in income before provision for income taxes was due to a decrease in income from operations of $683,000, partially offset by an increase in other income of $278,000.
Previous wording
Provision for Income Taxes. The provision for income taxes for the year ended December 31, 2023, was $1,236,000, compared to $1,113,000 for 2022. The estimated effective tax rate was 22.8% for the year ended December 31, 2023, compared to 25.3% for the year ended December 31, 2022. The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate.
Current wording
Provision for Income Taxes. The provision for income taxes for the year ended December 31, 2024, was $1,091,000, compared to $1,236,000 for 2023. The estimated effective tax rate was 21.8% for the year ended December 31, 2024, compared to 22.8% for the year ended December 31, 2023. The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate.
Previous wording
**Net Income.**Net income for the year ended December 31, 2023, was $4,189,000 compared to net income of $3,282,000 for 2022, representing an increase of $907,000, or 27.6%. The net income increase between 2023 and 2022, was due to an increase in income before provision for income taxes of $1,030,000, partially offset by an increase in provision for income taxes of $123,000. Net income as a percentage of net sales for the year ended December 31, 2023, was 6.8%, and net income as a percentage of net sales for 2022 was 5.3%. Basic and diluted earnings per common share for the years ended December 31, 2023 and 2022, were $0.35 and $0.26, respectively.
Current wording
**Net Income.**Net income for the year ended December 31, 2024, was $3,929,000 compared to net income of $4,189,000 for 2023, representing a decrease of $261,000, or 6.2%. The net income decrease between 2024 and 2023 was due to a decrease in income before provision for income taxes of $405,000, partially offset by a decrease in provision for income taxes of $145,000. Net income as a percentage of net sales was 6.8% for both years ended December 31, 2024 and 2023. Basic and diluted earnings per common share for the years ended December 31, 2024 and 2023, were $0.35.
Previous wording
As of December 31, 2023, the Company had cash and cash equivalents (“cash”) of $20,378,000 and working capital of $50,498,000. As of December 31, 2023, the Company’s current ratio (current assets/current liabilities) was 21:1, compared to a current ratio of 22:1 as of December 31, 2022. Cash increased by 25.1%, or $4,088,000, to $20,378,000 as of December 31, 2023, compared to $16,290,000 as of December 31, 2022, and working capital increased by $342,000 from $50,156,000 as of December 31, 2022. The increase in cash from December 31, 2022, was due to cash provided by operating activities of $8,458,000, partially offset by cash used in investing activities of $792,000 and cash used in financing activities of $3,578,000.
Current wording
As of December 31, 2024, the Company had cash and cash equivalents (“cash”) of $18,636,000 and working capital of $47,516,000. As of December 31, 2024, the Company’s current ratio (current assets/current liabilities) was 16:1, compared to a current ratio of 21:1 as of December 31, 2023. Cash decreased by 8.5%, or $1,742,000, to $18,636,000 as of December 31, 2024, compared to $20,378,000 as of December 31, 2023, and working capital decreased by $2,982,000, to $47,516,000 from $50,498,000 as of December 31, 2023. The decrease in cash from December 31, 2023, was due to cash used in investing activities of $3,776,000 and cash used in financing activities of $3,664,000, partially offset by cash provided by operating activities of $5,698,000.
Previous wording
Net cash provided by operating activities of $8,458,000 for the year ended December 31, 2023 was due to net income of $4,189,000, as adjusted primarily by the following: stock-based compensation expense of $170,000, depreciation and amortization expense of $925,000, equity in income of unconsolidated affiliate of $477,000, operating lease asset amortization of $774,000, a decrease in accounts receivable of $428,000, an increase in prepaid expenses of $1,108,000, a decrease in inventory of $4,266,000, an increase in accounts payable and accrued liabilities of $398,000, and an decrease in lease liabilities of $785,000, all compared to December 31, 2022.
Current wording
Net cash provided by operating activities of $5,698,000 for the year ended December 31, 2024 was due to net income of $3,922,000, as adjusted primarily by the following: stock-based compensation expense of $463,000, depreciation and amortization expense of $873,000, equity in income of unconsolidated affiliate of $629,000, gain on sale of assets of $30,000, operating lease asset amortization of $899,000, and increase in deferred income taxes of $61,000, a decrease in accounts receivable of $1,651,000, a decrease in prepaid expenses of $1,635,000, an increase in inventory of $2,602,000, an increase in accounts payable and accrued liabilities of $325,000, and a decrease in lease liabilities of $876,000, all compared to December 31, 2023.
Previous wording
Accounts receivable decreased by $428,000, or 6.1%, to $6,545,000 as of December 31, 2023, from $6,973,000 as of December 31, 2022. The decrease in accounts receivable was primarily related to decreased receivables from our related party. The number of days that sales remained outstanding as of December 31, 2023, calculated by using an average of accounts receivable outstanding and annual revenue, was 40 days, compared to 35 days as of December 31, 2022. The increase in days was due to higher sales in the last months of 2023 compared to the same period of 2022.
Current wording
Accounts receivable decreased by $1,651,000, or 25.2%, to $4,894,000 as of December 31, 2024, from $6,545,000 as of December 31, 2023. The decrease in accounts receivable was primarily related to decreased sales in the latter part of 2024 compared to the same period of 2023. The number of days that sales remained outstanding as of December 31, 2024, calculated by using an average of accounts receivable outstanding and annual revenue, was 36 days, compared to 40 days as of December 31, 2023.
Previous wording
Inventory decreased by $4,266,000, or 17.5%, to $20,131,000 as of December 31, 2023, from $24,397,000 as of December 31, 2022. The decrease was due to a decrease in inventory for the Disposable Protective Apparel segment of $1,224,000, or 8.5%, to $13,161,000, and a decrease in inventory for the Building Supply segment of $3,042,000, or 30.4%, to $6,970,000.
Current wording
Inventory increased by $2,602,000, or 12.9%, to $22,733,000 as of December 31, 2024, from $20,131,000 as of December 31, 2023. The increase was due to an increase in inventory for the Building Supply segment of $3,961,000, or 56.8%, to $10,931,000, partially offset by a decrease in inventory for the Disposable Protective Apparel segment of $1,359,000, or 10.3%, to $11,802,000.
Previous wording
Right-of-use assets as of December 31, 2023 increased by $3,085,000 to $4,810,000 from $1,725,000 as of December 31, 2022, primarily as a result of renewing our Valdosta Georgia lease offset by amortization of the balance sheet.
Current wording
Right-of-use assets as of December 31, 2024, increased by $3,904,000 to $8,714,000 from $4,801,000 as of December 31, 2023, primarily as a result of our new Nogales, Arizona lease, partially offset by amortization of the right of use asset.
Previous wording
Lease liabilities as of December 31, 2023 increased by $3,074,000 to $4,848,000 from $1,774,000 as of December 31, 2022. The increase in the lease liabilities was primarily the result of renewing our Valdosta, Georgia lease in December 2023 and the assumption we will continue to lease that facility for at least 16 years, partially offset by lease payments made during the year.
Current wording
Lease liabilities as of December 31, 2024, increased by $3,927,000 to $8,775,000 from $4,848,000 as of December 31, 2023. The increase in the lease liabilities was primarily the result of our new lease in Nogales, Arizona starting March 1, 2024, partially offset by lease payments made during the period.
Previous wording
Accounts payable and accrued liabilities as of December 31, 2023 increased by $398,000, or 26.4%, to $1,905,000, from $1,507,000 as of December 31, 2022. The increase was primarily due to an increase in accrued bonuses and payroll.
Current wording
Accounts payable and accrued liabilities as of December 31, 2024 increased by $325,000, or 17.1%, to $2,230,000, from $1,905,000 as of December 31, 2023. The increase was primarily due to an increase in trade payables and accrued payroll, partially offset by a decrease in accrued bonuses.
Previous wording
Net cash used in investing activities was $792,000 for the year ended December 31, 2023, compared to net cash used in investing activities of $492,000 for 2022. Investing activities for the year ended December 31, 2023 and 2022, consisted of the purchase of property and equipment.
Current wording
Net cash used in investing activities was $3,776,000 for the year ended December 31, 2024, compared to net cash used in investing activities of $792,000 for 2023. Investing activities for the year ended December 31, 2024 and 2023 consisted primarily of the purchase of property and equipment.
Previous wording
Net cash used in financing activities was $3,578,000 for the year ended December 31, 2023, compared to net cash used in financing activities of $3,802,000 for 2022. Net cash used in financing activities for the year ended December 31, 2023 resulted from the payment of $4,002,000 for the repurchase of common stock and $40,000 for treasury stock excise tax, partially offset by $464,000 in proceeds from the exercise of stock options. Net cash used in financing activities for the year ended December 31, 2022 resulted from the payment of $3,882,000 for the repurchase of common stock, partially offset by $80,000 in proceeds from the exercise of stock options.
Current wording
Net cash used in financing activities was $3,664,000 for the year ended December 31, 2024, compared to net cash used in financing activities of $3,578,000 for 2023. Net cash used in financing activities for the year ended December 31, 2024 resulted from the payment of $4,452,000 for the repurchase of common stock and $44,000 for treasury stock excise tax, partially offset by $832,000 in proceeds from the exercise of stock options. Net cash used in financing activities for the year ended December 31, 2023 resulted from the payment of $4,002,000 for the repurchase of common stock and $40,000 for treasury stock excise tax, partially offset by $464,000 in proceeds from the exercise of stock options.
Previous wording
As of December 31, 2023, we had $2,194,000 available for stock purchases under our stock repurchase program. During the year ended December 31, 2023, we repurchased 951,010 shares of common stock at a cost of $4,002,000. As of December 31, 2023, we had repurchased a total of 20,411,627 shares of common stock at a cost of approximately $50,326,000 through our repurchase program which commenced in 1999. We retire all stock upon repurchase. Future repurchases are expected to be funded from cash on hand and cash flows from operating activities.
Current wording
As of December 31, 2024, we had $2,742,000 available for stock purchases under our stock repurchase program. During the year ended December 31, 2024, we repurchased 831,000 shares of common stock at a cost of $4,452,000. As of December 31, 2024, we had repurchased a total of 21,242,627 shares of common stock at a cost of approximately $54,778,000 through our repurchase program which commenced in 1999. We retire all stock upon repurchase. Future repurchases are expected to be funded from cash on hand and cash flows from operating activities.
Previous wording
During 2023 and 2022, the Company had no related party transactions, other than the Company’s transactions with its non-consolidated affiliate, Harmony. See Note 7 – “Equity Investments in Unconsolidated Affiliate” in the notes to our consolidated financial statements in Item 8 for more information on our relationship with our non-consolidated affiliate Harmony Plastics Private Limited.
Current wording
During 2024 and 2023, the Company had no related party transactions, other than the Company’s transactions with its non-consolidated affiliate, Harmony. See Note 6 to our consolidated financial statements for more information on our relationship with our non-consolidated affiliate Harmony Plastics Private Limited.
Previous wording
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. These amendments address investor requests for enhanced transparency regarding income tax information. Specifically, they improve income tax disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 becomes effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements.
Current wording
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. These amendments address investor requests for enhanced transparency regarding income tax information. Specifically, they improve income tax disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 becomes effective for fiscal years beginning after December 15, 2024, with early adoption permitted.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The change in expenses by segment for the year ended December 31, 2024, was as follows: Disposable Protective Apparel expenses were up by $672,000, or 14.3%; Building Supply expenses were down by $505,000, or 6.6%; and corporate unallocated expenses were up by $672,000, or 12.5%.