ALPHA PRO TECH LTD
For the period ended Dec 31, 2025. Filed Mar 11, 2026.
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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.
FY2025 · Filed Mar 11, 2026
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 2024-12-31; filed 2025-03-12.
0001437749-25-007218
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-11.
0001437749-26-007797
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 69 previous paragraphs and 70 current paragraphs.
26 unchanged; 32 reworded; 12 added; 11 removed; 0 previous and 0 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 (12)
Current report
Building Supply segment sales for the year ended December 31, 2025, increased by $66,000, or 0.2%, to $36,031,000 compared to $35,965,000 for the year ended December 31, 2024.
Current report
The housing market in 2025 proved to be a year of sustained challenges for single-family housing starts, which were down by 7.0% through October 2025 (the latest data available). Demand for new homes has dropped due to economic volatility, high interest rates, and uncertainty surrounding housing starts. Increased tariffs have created notable pricing and supply volatility within the market. In addition, declining builder confidence and ongoing price volatility have resulted in reduced inventory positions among our primary customers. With that said, in 2025 we outperformed the market as our core building products (housewrap and synthetic roof underlayment) were down 3.7%, as compared to the 7.0% decrease in single-family housing starts.
Current report
Housewrap sales in 2025 outperformed the broader market by nearly 10%, with an increase of 2.3% despite a 7.0% decline in single-family housing starts. In 2025, due to the economic climate in the building industry, there was pricing pressure on this product line, which affected overall sales. This performance was driven by our reputation for product quality, breadth of offerings, and system warranty programs, which delivered market share improvement among existing customers and facilitated expansion into developing geographic regions and end-market applications. Management expects continued growth in the housewrap category in the coming year, especially if uncertainty in the economy and housing market abates.
Current report
Sales of synthetic roof underlayment were up 6.7% through the first nine months of 2025 but ended the year down 10.6%. This can be attributable primarily to two issues. First, the Asphalt Roofing Manufacturers Association reported a steep decline in shipments of 27.9% in the fourth quarter of 2025 compared to the same period of 2024. In addition, the association reported a 10.3% decline during 2025 compared to the prior year. Secondly, a stronger than normal hurricane season in the fourth quarter of 2024 caused the results to be lower for this segment in the fourth quarter of 2025 and for the year. After hurricanes Helene and Milton in late 2024, we experienced a surge in synthetic roof underlayment orders in the fourth quarter of 2024. In addition, sales of our roof underlayment line continue to be affected by a push in the market to reduce product selling prices and more offshore competition. Despite all these factors, we maintained market share within the roofing product line in 2025. Our domestic inventory position, customer expansion efforts, and continued investment in builder and contractor relationships mitigated the impact of market contraction, allowing us to meet customer demand while maintaining competitive positioning. We are exploring additional products in the roofing market and expect growth in 2026 in the synthetic roof underlayment category.
Current report
The building industry forecasts for 2026 remain somewhat conflicted with many being cautiously optimistic. This optimism is fueled by hopes of further interest rate reductions coupled with builder incentives such as price concessions or mortgage rate buydown assistance that would result in improved home affordability. Management remains committed to production and development of industry leading products and expects growth in the Building Supply segment in the coming year, however uncertainty in housing starts, tariffs, interest rates and the economy in general could negatively affect this segment.
Current report
Sales of disposable protective garments, which comprise approximately 90% of the segment, were up 12.2% in 2025. Sales started gaining significant momentum in the third quarter and continued very strong in the fourth quarter of 2025. Sales of shoe covers, lab coats, frocks, gowns and caps all grew in 2025 compared to 2024. Tariffs in 2025 created uncertainty and volatility in the marketplace, but we remained resilient and steadfast and exceeded our forecast. We plan to continue to deliver our high-quality products and remain agile to maintain our leadership position and to differentiate Alpha Pro Tech in the disposable protective garments marketplace. Management anticipates the growth trend will continue and we will work to uncover new growth opportunities in 2026.
Current report
Sales of our face mask and face shield products in 2025 were below management’s expectations. Our inventory position and manufacturing capacity is on solid ground and a sizable percentage of our products in this category are not burdened by tariffs. We will continue our efforts to improve sales of our face mask and face shields products, including by use of promotions and pricing incentives.
Current report
**Gross Profit.**Gross profit decreased by $396,000, or 1.7%, to $22,537,000 for the year ended December 31, 2025, from $22,933,000 for the year ended December 31, 2024. The gross profit margin was 38.1% for the year ended December 31, 2025, compared to 39.6% for the year ended December 31, 2024. The gross profit margin in 2025 was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment and to a lesser degree in the Building Supply segment due to increased U.S. tariffs and higher sales rebates. In 2025, we experienced three tariff increases on most of our products due to the implementation of the Trump administration’s tariff policies and reciprocal tariffs. Management increased selling prices in July and November 2025 in order to partially mitigate the impact of the first two tariffs increases, but many of the higher tariffed products remain in inventory, which we expect will have a negative effect on gross margin in the first half of 2026. Effective February 7, 2026, the Trump administration announced that tariffs on goods from India would be reduced to 18% down from 50%. These U.S. tariffs were implemented under the International Emergency Economic Powers Act (“IEEPA”) and were rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize these tariffs, but the U.S. government subsequently announced plans to implement a new “temporary import surcharge” of 15% on many of the same imports beginning February 24, 2026, under authorities provided for in Section 122 of the Trade Act of 1974. These or other tariffs, actual or proposed legislation, or similar laws and regulations in the future, including changes to implemented bilateral trade deals between the U.S. and India, could adversely impact our current or future third-party arrangements with certain companies, including those in India, which could impact our products and supply chain. As we progress into next year, gross margin should improve as we deplete our higher tariffed inventory.
Current report
Other Income. Other income decreased by $741,000 to income of $830,000 for the year ended December 31, 2025, compared to $1,571,000 for 2024. The decrease was primarily due to a decrease in equity in income of unconsolidated affiliate of $447,000, a decrease in interest income of $264,000 and a decrease in gain on sale of assets of $30,000. Equity in income of unconsolidated affiliate was down primarily due to lower sales as a result of the impact of U.S. tariffs. We expect this to improve going forward, as U.S. tariffs on goods from India are expected to decrease to 15% from 50%. The decrease in interest income was primarily due to lower interest rates.
Current report
In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 was effective for annual periods beginning after December 15, 2024. The Company adopted this pronouncement and the related disclosure for the year ended December 31, 2025, and revised its income tax disclosures in Note 14 – “Income Taxes” on a retrospective basis.
Current report
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company evaluating the impact of this pronouncement on its related disclosures.
Current report
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendment is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. The amendments in this update should be applied on a prospective basis. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements and related disclosures.
Removed paragraphs (11)
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
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 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.
Previous 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.
Previous report
**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 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.
Previous report
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 report
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.
Reworded paragraphs (32)
Previous wording
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the periods reported. We base estimates on past experience and on various other assumptions that are believed to be reasonable under the circumstances. The application of these accounting policies on a consistent basis enables us to provide timely and reliable financial information. Our significant accounting policies and estimates are more fully described in Note 2 – “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8. Our critical accounting policies and estimates include the following:
Current wording
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the periods reported. We base estimates on past experience and on various other assumptions that are believed to be reasonable under the circumstances. The application of these accounting policies on a consistent basis enables us to provide timely and reliable financial information. Our significant accounting policies and estimates are more fully described in Note 2 to our consolidated financial statements. Our critical accounting policies and estimates include the following:
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, 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.
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, 2025 and 2024, the Company had accounts receivable totaling $8,138,000 and $4,894,000, respectively. As of December 31, 2025 and 2024, the Company had recorded an allowance for credit losses on accounts receivable of $46,000 and $35,000 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 2024 and 2023, we recorded approximately $416,000 and $292,000, 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 2025 and 2024, we recorded approximately $384,000 and $416,000, 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, 2024, we had $8.7 million in ROU assets and $8.8 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, 2025, we had $7.8 million in ROU assets and $7.9 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 2024 and 2023, we recorded $463,000 and $170,000, 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 2025 and 2024, we recorded $540,000 and $463,000, respectively, in compensation expense for share-based awards.
Previous wording
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 wording
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. 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.
Previous 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.
Current wording
Sales. Consolidated sales for the year ended December 31, 2025, increased to $59,142,000, from $57,840,000 for the year ended December 31, 2024, representing an increase of $1,302,000, or 2.3%. This increase consisted of increased sales in the Building Supply segment of $66,000 and increased sales in the Disposable Protective Apparel segment of $1,236,000.
Previous 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.
Current wording
The Building Supply segment increase during the year ended December 31, 2025, was primarily due to a 2.3% increase in sales of housewrap and a 28.9% increase in sales of other woven material, partially offset by a 10.6% decrease in sales of synthetic roof underlayment as compared to the same period of 2024.
Previous 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.
Current wording
The sales mix of the Building Supply segment for the year ended December 31, 2025, was approximately 38% for synthetic roof underlayment, 51% for housewrap and 11% for other woven material. This compared to approximately 42% for synthetic roof underlayment, 49% for housewrap and 9% for other woven material for the year ended December 31, 2024. 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 Ice & Water and REX Hi Temp. 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
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 wording
Sales of other woven material sales increased by $976,000, or 28.9% in 2025 compared to 2024, primarily due to increased sales to our largest customer for this product line. The Company is pursuing new opportunities for other woven material in 2026 that could improve sales.
Previous 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.
Current wording
Sales for the Disposable Protective Apparel segment for the year ended December 31, 2025, increased by $1,236,000, or 5.7%, to $23,111,000, compared to $21,875,000 for 2024. This segment increase was due to a 12.2% increase in sales of disposable protective garments, partially offset by a 13.8% decrease in sales of face shields and a 38.3% decrease in sales of face masks.
Previous 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.
Current wording
The sales mix of the Disposable Protective Apparel segment for the year ended December 31, 2025, was approximately 90% for disposable protective garments, 6% for face masks and 4% for face shields. This sales mix is compared to approximately 85% for disposable protective garments, 11% for face masks and 4% for face shields for the year ended December 31, 2024.
Previous 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.
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $838,000, or 4.5%, to $17,773,000 for the year ended December 31, 2025, from $18,611,000 for the year ended December 31, 2024. As a percentage of net sales, selling, general and administrative expenses decreased to 30.1% for the year ended December 31, 2025, from 32.2% for 2024.
Previous wording
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%.
Current wording
The change in expenses by segment for the year ended December 31, 2025, was as follows: Building Supply expenses were down by $361,000, or 5.0%; Disposable Protective Apparel expenses were up by $47,000, or 0.9%; and corporate unallocated expenses were down by $524,000, or 8.6%.
Previous 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.
Current wording
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation, commission, general factory and office expenses, and insurance expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing, and sales travel expenses, partially offset by lower rent and utilities and general office and factory expenses. The decrease in corporate unallocated expenses was primarily due to decreased professional fees, public company expenses, insurance expenses, employee compensation, general office expenses and reorganization. The reorganization costs in 2024 were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona.
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 $264,000 was accrued for the year ended December 31, 2024, compared to $286,000 for the year ended December 31, 2023.
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 $246,000 was accrued for the year ended December 31, 2025, compared to $264,000 for the year ended December 31, 2024.
Previous 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.
Current wording
Depreciation and Amortization. Depreciation and amortization expense increased by $52,000, or 6.0%, to $925,000 for the year ended December 31, 2025, from $873,000 for the year ended December 31, 2024. The increase was primarily due to an increase in depreciation in the Building Supply segment.
Previous 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.
Current wording
Income from Operations. Income from operations increased by $390,000, or 11.3%, to $3,839,000 for the year ended December 31, 2025, compared to $3,449,000 for the year ended December 31, 2024. The increased income from operations was primarily due to a decrease in selling, general and administrative expenses of $838,000, partially offset by a decrease in gross profit of $396,000 and an increase in depreciation and amortization expenses of $52,000. Gross profit margin was adversely affected in 2025 because of U.S. tariffs on products primarily from our joint venture partner in India. Income from operations as a percentage of net sales for the year ended December 31, 2025, was 6.5%, compared to 6.0% for 2024.
Previous 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.
Current wording
Income before Provision for Income Taxes. Income before provision for income taxes for the year ended December 31, 2025, was $4,669,000, compared to income before provision for income taxes of $5,020,000 for 2024, representing a decrease of $351,000, or 7.0%. This decrease in income before provision for income taxes was due to a decrease in other income of $741,000, partially offset by an increase in income from operations of $390,000.
Previous 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.
Current wording
Provision for Income Taxes. The provision for income taxes for the year ended December 31, 2025, was $1,138,000, compared to $1,091,000 for 2024. The estimated effective tax rate was 24.4% for the year ended December 31, 2025, compared to 21.8% for the year ended December 31, 2024. The effective tax rate increase between 2025 and 2024, of 2.6 percentage points, was primarily due to lower equity in income of unconsolidated affiliate in 2025. The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes. The Company is still evaluating the potential impacts of the OBBBA; however, the Company does not anticipate it will have a material impact on the Company’s financial statements.
Previous 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.
Current wording
**Net Income.**Net income for the year ended December 31, 2025, was $3,531,000 compared to net income of $3,929,000 for 2024, representing a decrease of $398,000, or 10.1%. The net income decrease between 2025 and 2024 was primarily due to a decrease in other income of $741,000 and an increase in provision for income taxes of $47,000, partially offset by an increase in income from operations of $390,000. The other income decrease of $741,000, the majority of which is not taxable, negatively impacted our net income in 2025. In addition, gross profit was adversely affected in 2025 as a result of U.S. tariffs. Net income as a percentage of net sales was 6.0% for the year ended December 31, 2025, compared to 6.8% for 2024. Basic earnings per common share for the years ended December 31, 2025 and 2024, were $0.34 and $0.35, respectively. Diluted earnings per common share for the years ended December 31, 2025 and 2024, were $0.33 and $0.35, respectively.
Previous 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.
Current wording
As of December 31, 2025, the Company had cash and cash equivalents (“cash”) of $16,988,000 and working capital of $48,462,000. As of December 31, 2025, the Company’s current ratio (current assets/current liabilities) was 13:1, compared to a current ratio of 16:1 as of December 31, 2024. Cash decreased by 8.8%, or $1,648,000, to $16,988,000 as of December 31, 2025, compared to $18,636,000 as of December 31, 2024, and working capital increased by $946,000, to $48,462,000 from $47,516,000 as of December 31, 2024. The decrease in cash from December 31, 2024, was due to cash used in investing activities of $639,000 and cash used in financing activities of $3,379,000, partially offset by cash provided by operating activities of $2,370,000.
Previous 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.
Current wording
Net cash provided by operating activities of $2,370,000 for the year ended December 31, 2025 was due to net income of $3,531,000, as adjusted primarily by the following: stock-based compensation expense of $540,000, depreciation and amortization expense of $925,000, equity in income of unconsolidated affiliate of $182,000, operating lease asset amortization of $939,000, an increase in deferred income taxes of $176,000, an increase in accounts receivable of $3,244,000, a decrease in prepaid expenses of $580,000, an increase in inventory of $865,000, an increase in accounts payable and accrued liabilities of $863,000, and a decrease in lease liabilities of $893,000, all compared to December 31, 2024.
Previous 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.
Current wording
Accounts receivable increased by $3,244,000, or 66.3%, to $8,138,000 as of December 31, 2025, from $4,894,000 as of December 31, 2024. The increase in accounts receivable was primarily related to increased disposable garment and other woven material sales in the fourth quarter of 2025 compared to the same period of 2024. The number of days that sales remained outstanding as of December 31, 2025, calculated by using an average of accounts receivable outstanding and annual revenue, was 40 days, compared to 36 days as of December 31, 2024.
Previous 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.
Current wording
Inventory increased by $865,000, or 3.8%, to $23,598,000 as of December 31, 2025, from $22,733,000 as of December 31, 2024. The increase was due to an increase in inventory for the Building Supply segment of 1,898,000, or 17.4%, to $12,829,000, partially offset by a decrease in inventory for the Disposable Protective Apparel segment of $1,033,000, or 8.8%, to $10,769,000.
Previous wording
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.
Current wording
Prepaid expenses decreased by $580,000, or 13.3%, to $3,796,000 as of December 31, 2025, from $4,376,000 as of December 31, 2024. The decrease was primarily due to decreased prepayments for inventory and prepaid tax payments partially offset by increased prepaid insurance payments.
Previous 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.
Current wording
Right-of-use assets as of December 31, 2025, decreased by $939,000 to $7,775,000 from $8,714,000 as of December 31, 2024, as a result of amortization of the right of use asset.
Previous 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.
Current wording
Lease liabilities as of December 31, 2025, decreased by $893,000 to $7,882,000 from $8,775,000 as of December 31, 2024. The decrease in the lease liabilities was the result of lease payments made during the period.
Previous 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.
Current wording
Accounts payable and accrued liabilities as of December 31, 2025 increased by $863,000, or 38.7%, to $3,093,000, from $2,230,000 as of December 31, 2024. The increase was primarily due to an increase in trade payables of $722,000.
Previous 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.
Current wording
Net cash used in investing activities was $639,000 for the year ended December 31, 2025, compared to net cash used in investing activities of $3,776,000 for 2024. Investing activities for the years ended December 31, 2025 and 2024 consisted primarily of the purchase of property and equipment.
Previous 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.
Current wording
Net cash used in financing activities was $3,379,000 for the year ended December 31, 2025, compared to net cash used in financing activities of $3,664,000 for 2024. Net cash used in financing activities for the year ended December 31, 2025, resulted from the payment of $3,345,000 for the repurchase of common stock and $34,000 for treasury stock excise tax. 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.
Previous 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.
Current wording
As of December 31, 2025, we had $1,397,000 available for stock purchases under our stock repurchase program. During the year ended December 31, 2025, we repurchased 685,313 shares of common stock at a cost of $3,345,000. As of December 31, 2025, we had repurchased a total of 21,927,940 shares of common stock at a cost of approximately $58,123,000 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.