Omega Flex, Inc.

Previous wording

The Company’s cash and cash equivalents balance of $47,905,000 on June 30, 2026 decreased $5,321,000 (10.0%) from a $53,226,000 balance at December 31, 2025. Consistent with prior years, the Company paid a significant amount of cash during the first quarter for obligations that were accrued as of the end of the preceding year such as incentive related compensation. The Company also paid dividends during 2026 totaling $6,864,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, and capital expenditures of $885,000 partially offset by cash provided by operating activities of $2,377,000. See the Company’s Condensed Consolidated Statements of Cash Flow for further details regarding the change in cash.

Current wording

The Company’s cash and cash equivalents balance of $42,823,000 on September 30, 2026 decreased $10,403,000 (19.5%) from a $53,226,000 balance at December 31, 2025. Consistent with prior years, the Company paid a significant amount of cash during the first quarter for obligations that were accrued as of the end of the preceding year such as incentive related compensation. The Company also paid dividends during 2026 totaling $10,295,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, and capital expenditures of $1,190,000 partially offset by cash provided by operating activities of $972,000. See the Company’s Condensed Consolidated Statements of Cash Flow for further details regarding the change in cash.

Previous wording

Retained earnings were $71,867,000 and $73,979,000 as of June 30, 2026 and December 31, 2025, respectively, decreasing $2,112,000 or 2.9%. The decrease was primarily due to dividends declared during 2026, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, partially offset by net income during the year, as provided on the Company’s Condensed Consolidated Statements of Income.

Current wording

Retained earnings were $70,794,000 and $73,979,000 as of September 30, 2026 and December 31, 2025, respectively, decreasing $3,185,000 or 4.3%. The decrease was primarily due to dividends declared during 2026, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, partially offset by net income during the year, as provided on the Company’s Condensed Consolidated Statements of Income.

Previous wording

Net Sales. The Company’s 2026 second quarter sales of $24,057,000 decreased $1,468,000 or 5.8% compared to the second quarter of 2025, which generated sales of $25,525,000.

Current wording

Net Sales. The Company’s 2026 third quarter sales of $25,697,000 increased $1,463,000 or 6.0% compared to the third quarter of 2025, which generated sales of $24,234,000.

Previous wording

Gross Profit. The Company’s gross profit margins were 55.0% and 60.4% for the quarters ended June 30, 2026 and 2025, respectively. The decrease in gross profit is mostly attributable to an increase in raw material costs, including inbound transportation costs and tariffs.

Current wording

Gross Profit. The Company’s gross profit margins were 51.6% and 60.2% for the quarters ended September 30, 2026 and 2025, respectively. The decrease in gross profit is mostly attributable to an increase in raw material costs, including inbound transportation costs and tariffs, for the new re-engineered flexible gas piping fitting introduced on July 1, 2026.

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 $5,411,000 and $5,217,000 for the quarters ended June 30, 2026 and 2025, respectively, representing an increase of $194,000 or 3.7%. The increase is mostly related to higher trade shows and advertising expenses. Selling expenses increased as a percentage of net sales compared to last year, being 22.5% for the quarter ended June 30, 2026, and 20.4% for the quarter ended June 30, 2025.

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 $5,633,000 and $4,993,000 for the quarters ended September 30, 2026 and 2025, respectively, representing an increase of $640,000 or 12.8%. The increase is mostly related to higher trade shows and advertising expenses, outbound freight, and travel. Selling expenses increased as a percentage of net sales compared to last year, being 21.9% for the quarter ended September 30, 2026, and 20.6% for the quarter ended September 30, 2025.

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 $7,232,000 and $8,024,000 for the six months ended June 30, 2026 and 2025, respectively, decreasing by $792,000 or 9.9%. The decrease is mostly due to lower product liability reserves and expenses of $940,000 as well as incentive compensation expenses, which are aligned with profitability, partly offset by higher 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. Product liability reserves and expenses are lower due to lower lawsuit, investigation, and claims (collectively, the “Claims”) related expenses, including lower insurance premiums as the Company decided to self-insure most product liability Claims made for its yellow-jacketed TracPipe® CSST on or after September 1, 2025. As a percentage of sales, general and administrative expenses decreased to 15.3% for the six months ended June 30, 2026 from 16.4% for the six months ended June 30, 2025.

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 $3,781,000 and $4,082,000 for the quarters ended September 30, 2026 and 2025, respectively, decreasing by $301,000 or 7.4%. The decrease is mostly due to lower stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans, product liability reserves and expenses, and incentive compensation expenses, which are aligned with profitability. As a percentage of sales, general and administrative expenses decreased to 14.7% for the quarter ended September 30, 2026 from 16.8% for the quarter ended September 30, 2025.

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 $1,293,000 and $1,350,000 for the quarters ended June 30, 2026 and 2025, respectively, decreasing by $57,000 or 4.2%. The decrease is mostly due to lower product development and certification related expenses. Engineering expenses increased as a percentage of sales, being 5.4% for the quarter ended June 30, 2026, and 5.3% for the same quarter in 2025.

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 $1,269,000 and $1,321,000 for the quarters ended September 30, 2026 and 2025, respectively, decreasing by $52,000 or 3.9%. The decrease is mostly due to lower product development and certification related expenses. Engineering expenses decreased as a percentage of sales, being 4.9% for the quarter ended September 30, 2026, and 5.5% for the same quarter in 2025.

Previous wording

Operating Profits. Reflecting all of the factors mentioned above, operating profits were $3,053,000 and $4,722,000 for the quarters ended June 30, 2026 and 2025, respectively, decreasing by $1,669,000 or 35.3%.

Current wording

Operating Profits. Reflecting all of the factors mentioned above, operating profits were $2,579,000 and $4,185,000 for the quarters ended September 30, 2026 and 2025, respectively, decreasing by $1,606,000 or 38.4%.

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 $428,000 of interest income for the second quarter of 2026 and $493,000 for the second quarter of 2025, decreasing by $65,000 or 13.2%. The decrease is mainly due to lower interest rates.

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 $405,000 of interest income for the third quarter of 2026 and $509,000 for the third quarter of 2025, decreasing by $104,000 or 20.4%. The decrease is due to lower interest rates and cash balances.

Previous wording

Other (Expense) Income. Other (expense) income 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 $7,000 during the second quarter of 2026 compared to a gain of $229,000 during the second quarter of 2025 mainly due to the weakening of the U.S dollar in each of the quarterly periods.

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, and gains and losses on the sale or disposal of property and equipment. There was a gain on the sale of property and equipment of $95,000 offset by a loss on foreign exchange of $29,000 during the third quarter of 2026 compared to a loss on foreign exchange of $1,000 during the third quarter of 2025. There were no gains or losses on the sale or disposal of property and equipment during the third quarter of 2025.

Previous wording

Income Tax Expense. Income tax expense was $876,000 for the second quarter of 2026, compared to $1,341,000 for the second quarter in 2025, decreasing $465,000 or 34.7%, mostly the result of lower income before income taxes. The effective tax rates were 25.1% and 24.6% for the quarters ending June 30, 2026 and June 30, 2025 respectively.

Current wording

Income Tax Expense. Income tax expense was $756,000 for the third quarter of 2026, compared to $1,062,000 for the third quarter in 2025, decreasing $306,000 or 28.8%, mostly the result of lower income before income taxes. The effective tax rates were 24.8% and 22.6% for the quarters ending September 30, 2026 and September 30, 2025 respectively.

Previous wording

The Company reported comparative results from operations for the six month periods ended June 30, 2026 and 2025 as follows:

Current wording

The Company reported comparative results from operations for the nine month periods ended September 30, 2026 and 2025 as follows:

Previous wording

Net Sales. The Company’s sales for the first six months of 2026 of $47,150,000 decreased $1,705,000 or 3.5% compared to the first six months of 2025, which generated sales of $48,855,000.

Current wording

Net Sales. The Company’s sales for the first nine months of 2026 of $72,847,000 decreased $242,000 or 0.3% compared to the first nine months of 2025, which generated sales of $73,089,000.

Previous wording

Gross Profit. The Company’s gross profit margins were 55.8% and 60.4% for the six months ended June 30, 2026 and 2025, respectively. The decrease in gross profit is mostly attributable to an increase in raw material costs, including inbound transportation costs and tariffs.

Current wording

Gross Profit. The Company’s gross profit margins were 54.3% and 60.3% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in gross profit is mostly attributable to an increase in raw material costs, including inbound transportation costs and tariffs.

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 $10,905,000 and $10,218,000 for the six months ended June 30, 2026 and 2025, respectively, representing an increase of $687,000 or 6.7%. Significant, notable items include increases in trade shows and advertising, staffing related costs, annual sales meeting expenses, and outbound freight partly offset by a decrease in commissions. Selling expenses increased as a percentage of net sales compared to last year, being 23.1% for the six months ended June 30, 2026, and 20.9% for the six months ended June 30, 2025.

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 $16,538,000 and $15,211,000 for the nine months ended September 30, 2026 and 2025, respectively, representing an increase of $1,327,000 or 8.7%. Significant, notable items include increases in trade shows and advertising, outbound freight, staffing related costs, and annual sales meeting expenses. Selling expenses increased as a percentage of net sales compared to last year, being 22.7% for the nine months ended September 30, 2026, and 20.8% for the nine months ended September 30, 2025.

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 $3,464,000 and $4,133,000 for the quarters ended June 30, 2026 and 2025, respectively, decreasing by $669,000 or 16.2%. The decrease is mostly due to lower product liability reserves and expenses of $641,000 and incentive compensation expenses, which are aligned with profitability. Product liability reserves and expenses are lower due to lower lawsuit, investigation, and claims (collectively, the “Claims”) related expenses, including lower insurance premiums as the Company decided to self-insure most product liability Claims made for its yellow-jacketed TracPipe® CSST on or after September 1, 2025. As a percentage of sales, general and administrative expenses decreased to 14.4% for the quarter ended June 30, 2026 from 16.2% for the quarter ended June 30, 2025.

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 $11,013,000 and $12,106,000 for the nine months ended September 30, 2026 and 2025, respectively, decreasing by $1,093,000 or 9.0%. The decrease is mostly due to lower product liability reserves and expenses and incentive compensation expenses, which are aligned with profitability, partly offset by higher staffing related costs. As a percentage of sales, general and administrative expenses decreased to 15.1% for the nine months ended September 30, 2026 from 16.6% for the nine months ended September 30, 2025.

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 $2,805,000 and $2,480,000 for the six months ended June 30, 2026 and 2025, respectively, increasing by $325,000 or 13.1%. The increase is mostly due to higher product development and certification related expenses. Engineering expenses increased as a percentage of sales, being 5.9% for the six months ended June 30, 2026, and 5.1% for the six months ended June 30, 2025.

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 $4,074,000 and $3,801,000 for the nine months ended September 30, 2026 and 2025, respectively, increasing by $273,000 or 7.2%. The increase is mostly due to higher staffing related and product development and certification related expenses. Engineering expenses increased as a percentage of sales, being 5.6% for the nine months ended September 30, 2026, and 5.2% for the nine months ended September 30, 2025.

Previous wording

Operating Profits. Reflecting all of the factors mentioned above, operating profits were $5,364,000 and $8,772,000 for the six months ended June 30, 2026 and 2025, respectively, decreasing by $3,408,000 or 38.9%.

Current wording

Operating Profits. Reflecting all of the factors mentioned above, operating profits were $7,943,000 and $12,957,000 for the nine months ended September 30, 2026 and 2025, respectively, decreasing by $5,014,000 or 38.7%.

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 $884,000 and $1,004,000 of interest income during the first six months of 2026 and 2025, respectively, decreasing by $120,000 or 12.0%. The decrease is mainly due to lower interest rates.

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 $1,289,000 and $1,513,000 of interest income during the first nine months of 2026 and 2025, respectively, decreasing by $224,000 or 14.8%. The decrease is due to lower interest rates and cash balances.

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 $86,000 during the first six months of 2026 compared to a gain of $312,000 during the first six months of 2025 mainly due to the strengthening of the U.S. dollar during the first six months of 2026 compared to the British Pound and Euro and, conversely, the weakening of the U.S. dollar during the first six months of 2025.

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, and gains and losses on the sale or disposal of property and equipment. There was a loss on foreign exchange of $115,000 offset by a gain on the sale of property and equipment of $95,000 during the nine months ended September 30, 2026 compared to a gain on foreign exchange of $311,000 during the nine months ended September 30, 2025. There were no gains or losses on the sale or disposal of property and equipment during the nine months ended September 30, 2025.

Previous wording

Income Tax Expense. Income tax expense was $1,546,000 for the first six months of 2026, compared to $2,465,000 for the first six months in 2025, decreasing $919,000 or 37.3%, mostly the result of lower income before income taxes. The effective tax rates were 25.1% and 24.4% for the six months ending June 30, 2026 and June 30, 2025 respectively.

Current wording

Income Tax Expense. Income tax expense was $2,302,000 for the first nine months of 2026, compared to $3,527,000 for the first nine months in 2025, decreasing $1,225,000 or 34.7%, mostly the result of lower income before income taxes. The effective tax rates were 25.0% and 23.9% for the nine months ending September 30, 2026 and September 30, 2025 respectively.

Previous wording

As of June 30, 2026, the Company had a cash balance of $47,905,000. 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, 2026. As of December 31, 2025, the Company had a cash balance of $53,226,000, also with no borrowings against the line of credit.

Current wording

As of September 30, 2026, the Company had a cash balance of $42,823,000. 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, 2026. As of December 31, 2025, the Company had a cash balance of $53,226,000, also with no borrowings against the line of credit.

Previous wording

For the six months ended June 30, 2026, the Company’s operating activities provided cash of $2,377,000, compared to the six months ended June 30, 2025 which provided cash of $7,013,000, a decrease of $4,636,000. 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, 2026, the Company’s operating activities provided cash of $972,000, compared to the nine months ended September 30, 2025 which provided cash of $9,668,000, a decrease of $8,696,000. 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, 2026 and 2025 was $885,000 and $996,000, respectively, mainly as a result of payments for manufacturing equipment capital expenditures and leasehold improvements.

Current wording

Cash used in investing activities during the nine months ended September 30, 2026 and 2025 was $1,140,000 and $1,613,000, respectively, mainly as a result of payments for manufacturing equipment capital expenditures and leasehold improvements.

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 2026 and 2025 amounted to $6,864,000 for each period.

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 2026 and 2025 amounted to $10,295,000 and $10,296,000, respectively.