Omega Flex Inc
For the period ended Sep 30, 2024. Filed Nov 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 1, 2024
OFLX$23.91-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001493152-24-030000
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0001493152-24-043338
Item 2. – 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 52 previous paragraphs and 51 current paragraphs.
25 unchanged; 25 reworded; 1 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 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 (1)
Current report
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Removed paragraphs (2)
Previous report
Accrued Compensation was $1,006,000 on June 30, 2024, compared to $3,198,000 on December 31, 2023, decreasing $2,192,000 or 68.5%. A significant portion of the liability that existed at the previous year end related to incentive compensation earned in 2023. As is customary, the liability was then paid during the first quarter of the following year, or 2024, thus diminishing the balance. The liability now represents amounts mainly earned during the current year.
Previous report
Six months ended June 30, 2024 compared to six months ended June 30, 2023
Reworded paragraphs (25)
Previous wording
The Company’s cash balance of $45,705,000 on June 30, 2024 decreased $651,000 (1.4%) from a $46,356,000 balance at December 31, 2023 mainly due to dividend payments of $6,663,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, and capital expenditures of $1,099,000 mostly offset by cash provided by operating activities of $7,107,000. See the Company’s Condensed Consolidated Cash Flow Statements for further details regarding the change in cash.
Current wording
The Company’s cash balance of $45,873,000 on September 30, 2024 decreased $483,000 (1.0%) from a $46,356,000 balance at December 31, 2023 mainly due to dividend payments of $10,095,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, and capital expenditures of $1,443,000 mostly offset by cash provided by operating activities of $11,097,000. See the Company’s Condensed Consolidated Cash Flow Statements for further details regarding the change in cash.
Previous wording
Retained earnings were $70,445,000 and $68,493,000 as of June 30, 2024 and December 31, 2023, respectively, increasing $1,952,000 or 2.8%. The increase was primarily due to net income during the year, as provided on the Company’s Condensed Consolidated Statements of Income, partially offset by dividends declared during 2024, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report.
Current wording
Retained earnings were $71,630,000 and $68,493,000 as of September 30, 2024 and December 31, 2023, respectively, increasing $3,137,000 or 4.6%. The increase was primarily due to net income during the year, as provided on the Company’s Condensed Consolidated Statements of Income, partially offset by dividends declared during 2024, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report.
Previous wording
Net Sales. The Company’s 2024 second quarter sales of $24,620,000 decreased $1,215,000 or 4.7% compared to the second quarter of 2023, which generated sales of $25,835,000. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed because of, among other factors, a decline in housing starts.
Current wording
Net Sales. The Company’s 2024 third quarter sales of $24,880,000 decreased $2,616,000 or 9.5% compared to the third quarter of 2023, which generated sales of $27,496,000. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed because of, among other factors, a decline in housing starts.
Previous wording
Gross Profit. The Company’s gross profit margins were 61.8% and 61.2% for the quarters ended June 30, 2024 and 2023, respectively. Gross profit for the second quarter of 2024 improved mainly due to lower raw material costs and a decrease in the provision for excess inventories for MediTrac® CMT products.
Current wording
Gross Profit. The Company’s gross profit margins were 61.7% and 61.6% for the quarters ended September 30, 2024 and 2023, respectively.
Previous wording
Selling Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $4,874,000 and $4,999,000 for the quarters ended June 30, 2024 and 2023, respectively, representing a decrease of $125,000 or 2.5%. The decrease is mostly related to commissions due to the lower sales. Selling expenses increased as a percent of net sales compared to last year, being 19.8% for the quarter ended June 30, 2024, and 19.3% for the quarter ended June 30, 2023.
Current wording
Selling Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $4,976,000 and $5,059,000 for the quarters ended September 30, 2024 and 2023, respectively, representing a decrease of $83,000 or 1.6%. The decrease is mostly related to commissions due to the lower sales. Selling expenses increased as a percent of net sales compared to last year, being 20.0% for the quarter ended September 30, 2024, and 18.4% for the quarter ended September 30, 2023.
Previous wording
General and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative, executive and finance personnel, legal and accounting, and corporate general and administrative services. General and administrative expenses were $4,081,000 and $4,373,000 for the quarters ended June 30, 2024 and 2023, respectively, decreasing by $292,000 or 6.7%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year. Product liability reserves and expenses were also lower. These were partly offset by increases in staffing related costs and director fees. As a percentage of sales, general and administrative expenses decreased to 16.6% for the quarter ended June 30, 2024 from 16.9% for the quarter ended June 30, 2023.
Current wording
General and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative, executive and finance personnel, legal and accounting, and corporate general and administrative services. General and administrative expenses were $3,848,000 and $4,037,000 for the quarters ended September 30, 2024 and 2023, respectively, decreasing by $189,000 or 4.7%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year. Product liability reserves and expenses were also lower. These were partly offset by increases in stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans, and staffing related costs. As a percentage of sales, general and administrative expenses increased to 15.5% for the quarter ended September 30, 2024 from 14.7% for the quarter ended September 30, 2023.
Previous wording
Engineering Expense. Engineering expenses consist of development expenses associated with the development of new products and enhancements to existing products, and manufacturing engineering costs. Engineering expenses were $984,000 and $907,000 for the quarters ended June 30, 2024 and 2023, respectively, increasing by $77,000 or 8.5%. Engineering expenses increased as a percentage of sales, being 4.0% for the quarter ended June 30, 2024, and 3.5% for the same quarter in 2023.
Current wording
Engineering Expense. Engineering expenses consist of development expenses associated with the development of new products and enhancements to existing products, and manufacturing engineering costs. Engineering expenses were $1,058,000 and $992,000 for the quarters ended September 30, 2024 and 2023, respectively, increasing by $66,000 or 6.7%. Engineering expenses increased as a percentage of sales, being 4.3% for the quarter ended September 30, 2024, and 3.6% for the same quarter in 2023.
Previous wording
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $5,283,000 and $5,521,000 for the quarters ended June 30, 2024 and 2023, respectively, decreasing by $238,000 or 4.3%.
Current wording
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $5,468,000 and $6,859,000 for the quarters ended September 30, 2024 and 2023, respectively, decreasing by $1,391,000 or 20.3%.
Previous wording
Interest Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts outstanding on its line of credit. The Company recorded $609,000 of interest income for the second quarter of 2024 and $396,000 for the second quarter of 2023. Higher interest rates are mainly responsible for the higher interest income.
Current wording
Interest Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts outstanding on its line of credit. The Company recorded $586,000 of interest income for the third quarter of 2024 and $502,000 for the third quarter of 2023. Higher invested cash balances are mainly responsible for the higher interest income.
Previous wording
Other Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries. There was a loss of $31,000 during the second quarter of 2024 compared to a gain of $24,000 during the second quarter of 2023.
Current wording
Other Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries. There was a gain of $21,000 during the third quarter of 2024 compared to a loss of $41,000 during the third quarter of 2023.
Previous wording
Income Tax Expense. Income tax expense was $1,387,000 for the second quarter of 2024, compared to $1,391,000 for the second quarter in 2023, decreasing $4,000 or 0.3%, mostly the result of lower income before income taxes.
Current wording
Income Tax Expense. Income tax expense was $1,479,000 for the third quarter of 2024, compared to $1,746,000 for the third quarter in 2023, decreasing $267,000 or 15.3%, mostly the result of lower income before income taxes.
Previous wording
The Company reported comparative results from operations for the six month periods ended June 30, 2024 and 2023 as follows:
Current wording
The Company reported comparative results from operations for the nine month periods ended September 30, 2024 and 2023 as follows:
Previous wording
Net Sales. The Company’s sales for the first six months of 2024 of $49,836,000 decreased $5,986,000 or 10.7% compared to the first six months of 2023, which generated sales of $55,822,000. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed because of, among other factors, a decline in housing starts.
Current wording
Net Sales. The Company’s sales for the first nine months of 2024 of $74,716,000 decreased $8,602,000 or 10.3% compared to the first nine months of 2023, which generated sales of $83,318,000. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed because of, among other factors, a decline in housing starts.
Previous wording
Gross Profit. The Company’s gross profit margins were 60.8% and 61.7% for the six months ended June 30, 2024 and 2023, respectively. The decline in gross profit margin is mainly due to lower production, which caused lower absorption of factory labor and overhead costs. This is partly offset by lower raw material costs and a decrease in the provision for excess inventories for MediTrac® CMT products.
Current wording
Gross Profit. The Company’s gross profit margins were 61.1% and 61.7% for the nine months ended September 30, 2024 and 2023, respectively. The decline in gross profit margin is mainly due to lower production, which caused lower absorption of factory labor and overhead costs, and higher overhead expenses mainly due to newly leased facilities. This is partly offset by lower raw material costs and a decrease in the provision for excess inventories for MediTrac® CMT products.
Previous wording
Selling Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $10,226,000 and $10,572,000 for the six months ended June 30, 2024 and 2023, respectively, representing a decrease of $346,000 or 3.3%. The decrease is mostly related to commissions and freight due to lower sales. These decreases were partially offset by higher staffing related costs. Selling expenses increased as a percent of net sales compared to last year, being 20.5% for the six months ended June 30, 2024, and 18.9% for the six months ended June 30, 2023.
Current wording
Selling Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $15,202,000 and $15,631,000 for the nine months ended September 30, 2024 and 2023, respectively, representing a decrease of $429,000 or 2.7%. The decrease is mostly related to commissions and freight due to lower sales. These decreases were partially offset by higher travel and recruiting expenses. Selling expenses increased as a percent of net sales compared to last year, being 20.3% for the nine months ended September 30, 2024, and 18.8% for the nine months ended September 30, 2023.
Previous wording
General and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative, executive and finance personnel, legal and accounting, and corporate general and administrative services. General and administrative expenses were $7,839,000 and $9,167,000 for the six months ended June 30, 2024 and 2023, respectively, decreasing by $1,328,000 or 14.5%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year and lower profits. Product liability reserves and expenses were also lower along with stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans. These were partly offset by increases in staffing related costs and director fees. As a percentage of sales, general and administrative expenses decreased to 15.7% for the six months ended June 30, 2024 from 16.4% for the six months ended June 30, 2023.
Current wording
General and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative, executive and finance personnel, legal and accounting, and corporate general and administrative services. General and administrative expenses were $11,687,000 and $13,204,000 for the nine months ended September 30, 2024 and 2023, respectively, decreasing by $1,517,000 or 11.5%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year and lower profits. Product liability reserves and expenses were also lower along with stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans. These were partly offset by increases in staffing and computer related expenses. As a percentage of sales, general and administrative expenses decreased to 15.6% for the nine months ended September 30, 2024 from 15.8% for the nine months ended September 30, 2023.
Previous wording
Engineering Expense. Engineering expenses consist of development expenses associated with the development of new products and enhancements to existing products, and manufacturing engineering costs. Engineering expenses were $1,915,000 and $1,862,000 for the six months ended June 30, 2024 and 2023, respectively, increasing by $53,000 or 2.8%. Engineering expenses increased as a percentage of sales, being 3.8% for the six months ended June 30, 2024, and 3.3% for the six months ended June 30, 2023.
Current wording
Engineering Expense. Engineering expenses consist of development expenses associated with the development of new products and enhancements to existing products, and manufacturing engineering costs. Engineering expenses were $2,973,000 and $2,854,000 for the nine months ended September 30, 2024 and 2023, respectively, increasing by $119,000 or 4.2% mainly due to higher consulting expenses. Engineering expenses increased as a percentage of sales, being 4.0% for the nine months ended September 30, 2024, and 3.4% for the nine months ended September 30, 2023.
Previous wording
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $10,341,000 and $12,827,000 for the six months ended June 30, 2024 and 2023, respectively, decreasing by $2,486,000 or 19.4%.
Current wording
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $15,809,000 and $19,686,000 for the nine months ended September 30, 2024 and 2023, respectively, decreasing by $3,877,000 or 19.7%.
Previous wording
Interest Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts outstanding on its line of credit. The Company recorded $1,155,000 and $677,000 of interest income during the first six months of 2024 and 2023, respectively. Higher interest rates are mainly responsible for the higher interest income.
Current wording
Interest Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts outstanding on its line of credit. The Company recorded $1,741,000 and $1,179,000 of interest income during the first nine months of 2024 and 2023, respectively. Higher invested cash balances and interest rates are mainly responsible for the higher interest income.
Previous wording
Other Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries. There was a loss of $60,000 during the first six months of 2024 compared to a gain of $55,000 during the first six months of 2023.
Current wording
Other Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries. There was a loss of $39,000 during the first nine months of 2024 compared to a gain of $14,000 during the first nine months of 2023.
Previous wording
Income Tax Expense. Income tax expense was $2,762,000 for the first six months of 2024, compared to $3,268,000 for the same period in 2023, decreasing $506,000 or 15.5%, mostly the result of lower income before income taxes.
Current wording
Income Tax Expense. Income tax expense was $4,241,000 for the first nine months of 2024, compared to $5,014,000 for the same period in 2023, decreasing $773,000 or 15.4%, mostly the result of lower income before income taxes.
Previous wording
As of June 30, 2024, the Company had a cash balance of $45,705,000. Additionally, the Company has a $15,000,000 line of credit available, as discussed in detail in Note 5, which had no borrowings outstanding upon it as of June 30, 2024. As of December 31, 2023, the Company had a cash balance of $46,356,000, with no borrowings against the line of credit.
Current wording
As of September 30, 2024, the Company had a cash balance of $45,873,000. Additionally, the Company has a $15,000,000 line of credit available, as discussed in detail in Note 5, which had no borrowings outstanding upon it as of September 30, 2024. As of December 31, 2023, the Company had a cash balance of $46,356,000, with no borrowings against the line of credit.
Previous wording
For the six months ended June 30, 2024, the Company’s operating activities provided cash of $7,107,000, compared to the six months ended June 30, 2023 which provided cash of $9,457,000, a decrease of $2,350,000. For details of the operating cash flows refer to the Condensed Consolidated Statements of Cash Flows in Part I – Financial Information on page nine.
Current wording
For the nine months ended September 30, 2024, the Company’s operating activities provided cash of $11,097,000, compared to the nine months ended September 30, 2023 which provided cash of $11,496,000, a decrease of $399,000. For details of the operating cash flows refer to the Condensed Consolidated Statements of Cash Flows in Part I – Financial Information on page nine.
Previous wording
Cash used in investing activities during the six months ended June 30, 2024 and 2023 was $1,099,000 and $817,000, respectively, as a result of payments for mainly leasehold improvements and manufacturing equipment capital expenditures.
Current wording
Cash used in investing activities during the nine months ended September 30, 2024 and 2023 was $1,443,000 and $1,455,000, respectively, as a result of payments for mainly leasehold improvements and manufacturing equipment capital expenditures.
Previous wording
All financing activities relate to dividend payments, which are detailed in Note 9, Shareholders’ Equity. Dividend payments through the first six months of 2024 and 2023 amounted to $6,663,000 and $6,461,000, respectively.
Current wording
All financing activities relate to dividend payments, which are detailed in Note 9, Shareholders’ Equity. Dividend payments through the first nine months of 2024 and 2023 amounted to $10,095,000 and $9,793,000, respectively.