[Financial Results Overview](index=1&type=section&id=Financial%20Results%20Overview) This section details Alpha Pro Tech's Q2 2025 financial performance, highlighting a net sales increase driven by the Building Supply segment, alongside a decrease in net income and management's strategic commentary [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Alpha Pro Tech, Ltd. announced its Q2 2025 financial results, with net sales increasing 2.4% to $16.7 million, driven by an 11.5% increase in the Building Supply segment, while Disposable Protective Apparel sales decreased by 12.0% Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $16.7 million | $16.3 million | 2.4% | | Building Supply Segment Sales | $11.1 million | $9.9 million | 11.5% | | Disposable Protective Apparel Sales | $5.6 million | $6.3 million | -12.0% | | Net Income | $1.2 million | $1.6 million | -25.0% | | Diluted EPS | $0.12 | $0.15 | -20.0% | - As of June 30, 2025, the company held **$14.5 million in cash** and **$47.5 million in working capital**, with **no debt**[3](index=3&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO Lloyd Hoffman highlighted record sales in core building products despite a weak housing market, expressing optimism for the Building Supply segment's growth in H2 2025, though acknowledging economic uncertainties - Building Supply segment achieved quarterly record sales for core products (housewrap and synthetic roof underlayment), **up 13.2% from Q2 2024**, outperforming a **9.0% decline in single-family housing starts**[4](index=4&type=chunk) - Management expects further growth in the Building Supply segment in the second half of 2025, despite continued uncertainty in housing starts, economic volatility, and a stronger than normal hurricane season in late 2024[5](index=5&type=chunk) - Disposable Protective Apparel sales were **down 11.3%** due to challenging comparisons (Q2 2024 was highest since COVID-19 sales bump), tariffs, and end-customers reducing inventories. Face mask sales continued to fall below expectations, but face shield sales showed a **positive trend**[5](index=5&type=chunk)[6](index=6&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) This section provides a granular analysis of Q2 2025 net sales by segment, gross profit trends, and net income, detailing the factors influencing each financial metric [Net Sales by Segment](index=2&type=section&id=Net%20Sales%20by%20Segment) Consolidated net sales for Q2 2025 increased by 2.4% to $16.7 million, with the Building Supply segment seeing an 11.5% increase to $11.1 million, primarily due to strong sales of synthetic roof underlayment and housewrap Q2 2025 Net Sales by Segment | Segment | Q2 2025 Sales | Q2 2024 Sales | Change ($) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | :--------- | | Consolidated Sales | $16.7 million | $16.3 million | $383,000 | 2.4% | | Building Supply | $11.1 million | $9.9 million | $1.1 million | 11.5% | | Disposable Protective Apparel | $5.6 million | $6.3 million | -$760,000 | -12.0% | - Building Supply segment increase was primarily due to a **10.6% increase in synthetic roof underlayment sales** and a **17.0% increase in housewrap sales**[8](index=8&type=chunk) - Disposable Protective Apparel segment decrease was due to an **11.3% decrease in disposable protective garments** and a **28.3% decrease in face masks**, partially offset by a **4.9% increase in face shields**[9](index=9&type=chunk) [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit decreased by 10.4% to $6.1 million in Q2 2025, with the gross profit margin falling to 36.8% from 42.0% in Q2 2024, primarily attributed to a margin decrease in the Disposable Protective Apparel segment, higher sales rebates, increased ocean freight rates, and US tariffs Q2 2025 Gross Profit | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :----------- | :---------- | :---------- | :--------- | :--------- | | Gross Profit | $6.1 million | $6.8 million | -$710,000 | -10.4% | | Gross Profit Margin | 36.8% | 42.0% | -5.2 pp | -12.4% | - Gross profit margin was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment, higher sales rebates, ocean freight rates, and US tariffs[11](index=11&type=chunk) - Management will be increasing selling prices starting in July 2025 to partially mitigate the impact of new 2025 US tariffs[11](index=11&type=chunk) [Net Income and Earnings Per Share](index=3&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) Net income for Q2 2025 decreased by 24.3% to $1.2 million, down from $1.6 million in Q2 2024, with diluted earnings per common share at $0.12, mainly due to a reduction in income before income taxes, partially offset by lower tax provisions Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | :--------- | | Net Income | $1.2 million | $1.6 million | -$400,000 | -24.3% | | Net Income as % of Net Sales | 7.5% | 10.1% | -2.6 pp | -25.7% | | Basic EPS | $0.12 | $0.15 | -$0.03 | -20.0% | | Diluted EPS | $0.12 | $0.15 | -$0.03 | -20.0% | - The decrease in net income was primarily due to a **$508,000 decrease in income before provision for income taxes**, partially offset by a **$108,000 decrease in provision for income taxes**[12](index=12&type=chunk) [Financial Position and Capital Allocation](index=3&type=section&id=Financial%20Position%20and%20Capital%20Allocation) This section outlines the company's balance sheet position as of June 30, 2025, including cash, working capital, and details its ongoing stock repurchase activities [Balance Sheet Summary](index=3&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2025, the company reported cash and cash equivalents of $14.5 million, a decrease from $18.6 million at December 31, 2024, with working capital at $47.5 million and the current ratio improving to 17:1 Key Balance Sheet Metrics | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :---------------- | | Cash and Cash Equivalents | $14.5 million | $18.6 million | | Working Capital | $47.5 million | N/A | | Current Ratio | 17:1 | 16:1 | [Stock Repurchase Program](index=3&type=section&id=Stock%20Repurchase%20Program) The company repurchased 181,100 shares of common stock for $0.8 million during Q2 2025, with $2.7 million remaining available under the program, cumulatively repurchasing 21.6 million shares totaling approximately $56.8 million Stock Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :---------- | | Shares Repurchased (Q2 2025) | 181,100 | | Cost of Repurchases (Q2 2025) | $0.8 million | | Remaining Authorization | $2.7 million | - As of June 30, 2025, the company has repurchased a total of **21.6 million shares** of common stock at a cost of approximately **$56.8 million** through its repurchase program, retiring all stock upon repurchase[14](index=14&type=chunk) - Future repurchases are expected to be funded from cash on hand and cash flows from operating activities[14](index=14&type=chunk) [Company Profile and Disclosures](index=3&type=section&id=Company%20Profile%20and%20Disclosures) This section introduces Alpha Pro Tech, Ltd.'s business segments and manufacturing operations, followed by a comprehensive disclaimer on forward-looking statements and associated risks [About Alpha Pro Tech, Ltd.](index=3&type=section&id=About%20Alpha%20Pro%20Tech%2C%20Ltd.) Alpha Pro Tech, Ltd. is a manufacturer of protective apparel and building products, with subsidiaries focusing on disposable protective apparel for various markets and construction weatherization products, operating manufacturing facilities in Arizona, Georgia, and a joint venture in India - Alpha Pro Tech, Inc. develops, manufactures, and markets disposable and limited-use protective apparel for industrial, clean room, medical, and dental markets[15](index=15&type=chunk) - Alpha ProTech Engineered Products, Inc. manufactures and markets construction weatherization products, including building wrap and roof underlayment[15](index=15&type=chunk) - The company has manufacturing facilities in Nogales, Arizona, Valdosta, Georgia, and a joint venture in India[15](index=15&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer, cautioning investors that statements regarding future results, performance, or achievements are forward-looking and involve risks and uncertainties, with the company undertaking no obligation to update these statements - Forward-looking statements are estimates based on current information and involve risks and uncertainties that may cause actual results to differ materially[16](index=16&type=chunk) - Key risk factors include exposure to foreign currency exchange risks, potential failure to remediate material weakness in internal controls, loss of major customers, inability of suppliers to meet requirements, international manufacturing challenges, competition, global economic conditions, effects of tariff policies, and uncertainties with AI development[16](index=16&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements to reflect events or developments after the date of the press release[16](index=16&type=chunk) [Unaudited Financial Statements](index=5&type=section&id=Unaudited%20Financial%20Statements) This section presents the unaudited consolidated balance sheets and condensed consolidated statements of comprehensive income for Alpha Pro Tech, Ltd. for specified periods [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%28Unaudited%29) This section presents the unaudited consolidated balance sheets for Alpha Pro Tech, Ltd. as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $14,464,000 | $18,636,000 | | Accounts receivable, net | $8,363,000 | $3,692,000 | | Inventories, net | $22,361,000 | $22,733,000 | | Total current assets | $50,543,000 | $50,639,000 | | Total assets | $73,165,000 | $73,742,000 | | **Liabilities and Shareholders' Equity** | | | | Accounts payable | $1,380,000 | $1,283,000 | | Total current liabilities | $3,015,000 | $3,123,000 | | Total liabilities | $10,917,000 | $11,508,000 | | Total shareholders' equity | $62,248,000 | $62,234,000 | | Total liabilities and shareholders' equity | $73,165,000 | $73,742,000 | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Unaudited%29) This section provides the unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025, and 2024, outlining net sales, cost of goods sold, gross profit, operating expenses, income from operations, other income, net income, and earnings per common share Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $16,672,000 | $16,289,000 | $30,494,000 | $29,772,000 | | Cost of goods sold | $10,541,000 | $9,448,000 | $18,971,000 | $17,513,000 | | Gross profit | $6,131,000 | $6,841,000 | $11,523,000 | $12,259,000 | | Total operating expenses | $4,796,000 | $5,129,000 | $9,733,000 | $10,221,000 | | Income from operations | $1,335,000 | $1,712,000 | $1,790,000 | $2,038,000 | | Total other income | $276,000 | $407,000 | $593,000 | $803,000 | | Income before provision for income taxes | $1,611,000 | $2,119,000 | $2,383,000 | $2,841,000 | | Provision for income taxes | $367,000 | $475,000 | $526,000 | $621,000 | | Net income | $1,244,000 | $1,644,000 | $1,857,000 | $2,220,000 | | Basic earnings per common share | $0.12 | $0.15 | $0.18 | $0.20 | | Diluted earnings per common share | $0.12 | $0.15 | $0.18 | $0.20 |

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This section identifies the document as Alpha Pro Tech, Ltd.'s Quarterly Report on Form 10-Q for Q2 2025, classifying the company as a non-accelerated and smaller reporting company - **Alpha Pro Tech, Ltd.'s Quarterly Report on Form 10-Q** for the period ended June 30, 2025[2](index=2&type=chunk) - Classified as a **non-accelerated filer** and a **smaller reporting company**[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, shareholders' equity, and cash flows, along with their accompanying notes, providing a detailed view of the company's financial performance and position for the interim periods [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $14,464,000 | $18,636,000 | | Total current assets | $50,543,000 | $50,639,000 | | Total assets | $73,165,000 | $73,742,000 | | Total current liabilities | $3,015,000 | $3,123,000 | | Total liabilities | $10,917,000 | $11,508,000 | | Total shareholders' equity | $62,248,000 | $62,234,000 | [Condensed Consolidated Statements of Income (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Unaudited)) The income statements detail the company's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Income Statement Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | Net sales | $16,672,000 | $16,289,000 | +2.4% | | Gross profit | $6,131,000 | $6,841,000 | -10.4% | | Income from operations | $1,335,000 | $1,712,000 | -22.0% | | Net income | $1,244,000 | $1,644,000 | -24.3% | | Basic earnings per common share | $0.12 | $0.15 | -20.0% | Income Statement Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | Net sales | $30,494,000 | $29,772,000 | +2.4% | | Gross profit | $11,523,000 | $12,259,000 | -6.0% | | Income from operations | $1,790,000 | $2,038,000 | -12.2% | | Net income | $1,857,000 | $2,220,000 | -16.4% | | Basic earnings per common share | $0.18 | $0.20 | -10.0% | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) This section presents the company's comprehensive income, including net income and other comprehensive income components, for the interim periods Comprehensive Income (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Net income | $1,244,000 | $1,644,000 | | Other comprehensive income - foreign currency translation loss | ($22,000) | ($58,000) | | Comprehensive income | $1,222,000 | $1,586,000 | Comprehensive Income (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Net income | $1,857,000 | $2,220,000 | | Other comprehensive income - foreign currency translation loss | ($87,000) | ($52,000) | | Comprehensive income | $1,770,000 | $2,168,000 | [Condensed Consolidated Statements of Shareholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity%20(Unaudited)) This statement outlines changes in shareholders' equity, including net income, share repurchases, and stock-based compensation, for the six months ended June 30, 2025 and 2024 Shareholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Impact on Total Equity | | :-------------------------- | :--------------------- | | Balance as of Dec 31, 2024 | $62,234,000 | | Net income | $1,857,000 | | Common stock repurchased and retired | ($2,008,000) | | Treasury stock excise tax | ($20,000) | | Stock-based compensation expense | $272,000 | | Other comprehensive loss | ($87,000) | | Balance as of June 30, 2025 | $62,248,000 | Shareholders' Equity Changes (Six Months Ended June 30, 2024) | Item | Impact on Total Equity | | :-------------------------- | :--------------------- | | Balance as of Dec 31, 2023 | $61,568,000 | | Net income | $2,220,000 | | Common stock repurchased and retired | ($2,701,000) | | Treasury stock excise tax | ($27,000) | | Stock-based compensation expense | $218,000 | | Options exercised | $815,000 | | Other comprehensive income (loss) | ($52,000) | | Balance as of June 30, 2024 | $62,041,000 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) The cash flow statements summarize cash generated and used in operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Net cash used in operating activities | ($1,871,000) | ($2,042,000) | | Net cash used in investing activities | ($273,000) | ($216,000) | | Net cash used in financing activities | ($2,028,000) | ($1,913,000) | | Decrease in cash and cash equivalents | ($4,172,000) | ($4,171,000) | | Cash and cash equivalents, end of period | $14,464,000 | $16,207,000 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide additional detail and context for the condensed consolidated financial statements, explaining accounting policies and significant transactions [Note 1. The Company](index=9&type=section&id=Note%201.%20The%20Company) Alpha Pro Tech, Ltd. operates in two main segments: Building Supply (construction weatherization products) and Disposable Protective Apparel (protective garments, face masks, face shields). Its products are sold under the 'Alpha Pro Tech' brand and private label, primarily in the U.S - The Building Supply segment includes **housewrap, synthetic roof underlayment, and other woven materials**[18](index=18&type=chunk) - The Disposable Protective Apparel segment offers **shoecovers, bouffant caps, coveralls, gowns, frocks, lab coats, face masks, and face shields** for various markets[19](index=19&type=chunk) - Products are sold predominantly in the United States under the **'Alpha Pro Tech' brand name and private label**[20](index=20&type=chunk) [Note 2. Basis of Presentation and Revenue Recognition Policy](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Revenue%20Recognition%20Policy) The interim financial statements are unaudited and prepared in accordance with SEC rules, omitting certain U.S. GAAP disclosures. Revenue is recognized when control of products transfers to customers, typically upon delivery to a third-party carrier or the customer - Interim financial information is **unaudited** and prepared in accordance with SEC rules, omitting certain U.S. GAAP disclosures[21](index=21&type=chunk) - Revenue is recognized when **control of promised products is transferred to the customer**, generally upon delivery to a third-party carrier (FOB shipping point) or to the customer (FOB destination)[22](index=22&type=chunk) - Shipping and handling charges billed to customers are included in revenue, while associated costs are recorded in cost of goods sold[22](index=22&type=chunk) [Note 3. Shareholder's Equity](index=11&type=section&id=Note%203.%20Shareholder%27s%20Equity) The company continued its share repurchase program, buying back 402,513 shares for $2,008,000 during the six months ended June 30, 2025. Stock-based compensation expense for RSUs was $243,000 for the same period, with $453,000 of unrecognized RSU compensation cost remaining - During the three months ended June 30, 2025, the Company repurchased and retired **181,100 shares of common stock for $830,000**[24](index=24&type=chunk) - During the six months ended June 30, 2025, the Company repurchased and retired **402,513 shares of common stock for $2,008,000**[24](index=24&type=chunk) - As of June 30, 2025, **$2,735,000 was available to repurchase common shares** under the repurchase program[24](index=24&type=chunk) Stock-based Compensation Expense (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Stock-based compensation expense (RSUs) | $243,000 | $189,000 | - As of June 30, 2025, **$453,000 of total unrecognized compensation cost** related to RSU grants was expected to be recognized over a weighted average remainder period of **1.13 years**[29](index=29&type=chunk) [Note 4. Recent Accounting Pronouncements](index=12&type=section&id=Note%204.%20Recent%20Accounting%20Pronouncements) The company is evaluating the impact of new accounting standards, specifically ASU 2023-09 (Income Taxes) effective after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective after December 15, 2026 - **ASU 2023-09, Income Taxes (Topic 740)**, effective for fiscal years beginning after December 15, 2024, improves income tax disclosures[32](index=32&type=chunk) - **ASU 2024-03, Expense Disaggregation Disclosures**, effective for annual periods beginning after December 15, 2026, requires disclosure about types of costs and expenses[33](index=33&type=chunk) - The Company is currently evaluating the impact of ASU 2024-03 on its related disclosures[33](index=33&type=chunk) [Note 5. Inventories](index=13&type=section&id=Note%205.%20Inventories) Inventories, net of reserves, decreased slightly to $22,361,000 as of June 30, 2025, from $22,733,000 as of December 31, 2024, with a decrease in raw materials and finished goods, partially offset by an increase in work in process Inventories, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $10,339,000 | $10,948,000 | | Work in process | $3,466,000 | $2,934,000 | | Finished goods | $8,556,000 | $8,851,000 | | **Total Inventories** | **$22,361,000** | **$22,733,000** | [Note 6. Equity Investment in Unconsolidated Affiliate](index=13&type=section&id=Note%206.%20Equity%20Investment%20in%20Unconsolidated%20Affiliate) The company holds a 41.7% equity investment in Harmony Plastics Private Limited, an unconsolidated affiliate in India, which manufactures products for both of Alpha Pro Tech's segments. The investment was $6,005,000 as of June 30, 2025, impacted by cumulative equity in income and foreign currency translation losses - Alpha ProTech Engineered Products, Inc. holds a **41.7% ownership interest in Harmony Plastics Private Limited**, an unconsolidated affiliate in India[36](index=36&type=chunk) - Harmony supplies products for both the Company's **Building Supply and Disposable Protective Apparel segments**[37](index=37&type=chunk) Related Party Transactions with Harmony (Six Months Ended June 30) | Transaction | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Inventories purchased from Harmony | $9,914,000 | $11,179,000 | | Inventories sold to Harmony | $415,000 | $240,000 | | Equity in income of unconsolidated affiliate | $278,000 | $338,000 | - As of June 30, 2025, the Company's investment in Harmony was **$6,005,000**, which includes cumulative equity in income and is adjusted for accumulated other comprehensive loss on foreign currency translations[42](index=42&type=chunk) [Note 7. Accrued Liabilities](index=14&type=section&id=Note%207.%20Accrued%20Liabilities) Total accrued liabilities decreased to $694,000 as of June 30, 2025, from $947,000 as of December 31, 2024, primarily due to a reduction in commissions and bonuses payable and general accrued liabilities Accrued Liabilities (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Payroll expenses and taxes payable | $196,000 | $221,000 | | Commissions and bonuses payable and general accrued liabilities | $498,000 | $726,000 | | **Total accrued liabilities** | **$694,000** | **$947,000** | [Note 8. Basic and Diluted Earnings Per Common Share](index=14&type=section&id=Note%208.%20Basic%20and%20Diluted%20Earnings%20Per%20Common%20Share) Basic and diluted earnings per common share decreased for both the three and six months ended June 30, 2025, compared to the prior year, reflecting the overall decline in net income Basic and Diluted EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Basic EPS | $0.12 | $0.15 | | Diluted EPS | $0.12 | $0.15 | Basic and Diluted EPS (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Basic EPS | $0.18 | $0.20 | | Diluted EPS | $0.18 | $0.20 | [Note 9. Accumulated Other Comprehensive Loss](index=14&type=section&id=Note%209.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated Other Comprehensive Loss (AOCL) increased to $1,586,000 as of June 30, 2025, primarily due to foreign currency translation adjustments related to the unconsolidated affiliate, Harmony - AOCL consists of **foreign currency translation adjustments** related to the unconsolidated affiliate, Harmony, whose functional currency is not the U.S. dollar[45](index=45&type=chunk) - AOCL was **$1,586,000 as of June 30, 2025**, compared to $1,499,000 as of December 31, 2024[45](index=45&type=chunk) [Note 10. Segments Reporting](index=15&type=section&id=Note%2010.%20Segments%20Reporting) The company operates in two segments: Building Supply and Disposable Protective Apparel. Building Supply sales increased, while Disposable Protective Apparel sales decreased for both the three and six months ended June 30, 2025. Segment net income also saw varied performance, with Building Supply increasing and Disposable Protective Apparel decreasing Segment Net Sales (Three Months Ended June 30) | Segment | 2025 | 2024 | Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | | Building Supply | $11,084,000 | $9,941,000 | +11.5% | | Disposable Protective Apparel | $5,588,000 | $6,348,000 | -12.0% | | **Consolidated Net Sales** | **$16,672,000** | **$16,289,000** | **+2.4%** | Segment Net Sales (Six Months Ended June 30) | Segment | 2025 | 2024 | Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | | Building Supply | $19,456,000 | $18,181,000 | +7.0% | | Disposable Protective Apparel | $11,038,000 | $11,591,000 | -4.8% | | **Consolidated Net Sales** | **$30,494,000** | **$29,772,000** | **+2.4%** | Segment Net Income (Six Months Ended June 30) | Segment | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | Building Supply | $3,160,000 | $2,792,000 | | Disposable Protective Apparel | $1,836,000 | $2,872,000 | Total Segment Assets (June 30, 2025 vs. December 31, 2024) | Segment | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Building Supply | $5,883,000 | $6,069,000 | | Disposable Protective Apparel | $1,369,000 | $1,424,000 | | **Total Segment Assets** | **$7,252,000** | **$7,493,000** | [Note 11. Financial Information about Geographic Areas](index=18&type=section&id=Note%2011.%20Financial%20Information%20about%20Geographic%20Areas) The majority of the company's net sales and long-lived assets are concentrated in the United States, with international sales and assets representing a small portion Net Sales by Geographic Region (Six Months Ended June 30) | Region | 2025 | 2024 | | :------------- | :----------- | :----------- | | United States | $30,116,000 | $29,427,000 | | International | $378,000 | $345,000 | | **Consolidated Net Sales** | **$30,494,000** | **$29,772,000** | Long-lived Assets by Geographic Region (June 30, 2025 vs. December 31, 2024) | Region | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | United States | $7,125,000 | $7,325,000 | | International | $1,185,000 | $1,195,000 | | **Consolidated Total Long-lived Assets** | **$8,310,000** | **$8,520,000** | [Note 12. Related Party Transactions](index=19&type=section&id=Note%2012.%20Related%20Party%20Transactions) The company had no related party transactions other than those with its unconsolidated affiliate, Harmony, as detailed in Note 6 - The Company had no related party transactions other than with its unconsolidated affiliate, Harmony[55](index=55&type=chunk) [Note 13. Leases](index=19&type=section&id=Note%2013.%20Leases) The company's operating lease right-of-use assets were $8,252,000 and lease liabilities were $8,340,000 as of June 30, 2025. Operating lease expense for the six months ended June 30, 2025, was approximately $760,000, with a weighted average remaining lease term of 9.72 years - As of June 30, 2025, **operating lease right-of-use assets were $8,252,000** and **operating lease liabilities were $8,340,000**[57](index=57&type=chunk) - Operating lease expense was approximately **$760,000** during the six months ended June 30, 2025[57](index=57&type=chunk) - The weighted average remaining lease term of the Company's operating leases was **9.72 years**, with a weighted average discount rate of **7.0%**[58](index=58&type=chunk) [Note 14. Income taxes](index=20&type=section&id=Note%2014.%20Income%20taxes) The company accounts for income taxes using the asset and liability method and does not record a tax provision on equity in income of unconsolidated affiliates, which reduces its effective tax rate - The Company accounts for income taxes using the **asset and liability method**[60](index=60&type=chunk) - The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate[119](index=119&type=chunk) [Note 15. Contingencies](index=20&type=section&id=Note%2015.%20Contingencies) The company is subject to various pending and threatened litigation actions in the ordinary course of business, but management does not anticipate a material effect on its financial condition or results of operations - The Company is subject to various pending and threatened litigation actions in the ordinary course of business[63](index=63&type=chunk) - Management does not anticipate that the ultimate liability from such litigation will have a material effect on the Company's financial condition and results of operations[63](index=63&type=chunk) [Note 16. Subsequent Events](index=20&type=section&id=Note%2016.%20Subsequent%20Events) The company has reviewed and evaluated subsequent events through the filing date of the Quarterly Report on Form 10-Q and concluded that no events require recognition or disclosure - No subsequent events requiring recognition or disclosure were identified from June 30, 2025, through the filing date of this Quarterly Report on Form 10-Q[64](index=64&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to 2024. It covers sales performance by segment, gross profit, operating expenses, and liquidity, highlighting the impact of tariffs and market volatility [Special Note Regarding Forward-Looking Statements](index=21&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions readers about forward-looking statements in the report, outlining various risks that could cause actual results to differ materially from expectations, including foreign currency risks, supply chain issues, competition, and global economic conditions - The report contains **forward-looking statements**, which are subject to various risks and uncertainties[66](index=66&type=chunk) - Key risks include foreign currency exchange risks, joint venture risks, loss of large customers, reliance on suppliers, international manufacturing risks, intellectual property protection, tariff policies, competitive industry, environmental regulations, new product acceptance, global economic conditions, climate change, AI uncertainties, security breaches, and legal proceedings[67](index=67&type=chunk) [Special Note Regarding Smaller Reporting Company Status](index=22&type=section&id=Special%20Note%20Regarding%20Smaller%20Reporting%20Company%20Status) As a smaller reporting company, Alpha Pro Tech has elected to omit certain information from this Management's Discussion and Analysis of Financial Condition and Results of Operations - The Company is a **'smaller reporting company'** and has elected to omit certain information from this Management's Discussion and Analysis[69](index=69&type=chunk) [Critical Accounting Policies and Estimates](index=22&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company refers to its 2024 Form 10-K for a full description of its critical accounting policies and estimates, noting that there have been no material changes since December 31, 2024 - There have been **no material changes** to the Company's critical accounting policies and estimates since December 31, 2024[71](index=71&type=chunk) [OVERVIEW](index=22&type=section&id=OVERVIEW) Alpha Pro Tech manufactures and markets building supply and disposable protective apparel products. The company faces challenges from U.S. trade policy, tariffs, and demand volatility, particularly in disposable protective garments, and is implementing strategies to mitigate these impacts - Alpha Pro Tech operates in two business segments: **Building Supply** (construction weatherization products) and **Disposable Protective Apparel** (protective garments, face masks, face shields)[73](index=73&type=chunk) - The company's target markets include **construction, building supply, roofing distributors, pharmaceutical, medical device, and healthcare facilities**[74](index=74&type=chunk)[75](index=75&type=chunk) - Recent U.S. trade policy, including additional tariffs on imports from various countries, has **increased costs and introduced demand volatility**, especially for disposable protective garments[76](index=76&type=chunk) - The company is taking actions to mitigate impacts, including **commercial pricing adjustments, holding extra inventories, resourcing to alternate suppliers, and insourcing**[76](index=76&type=chunk) [RESULTS OF OPERATIONS](index=23&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated net sales increased slightly, but gross profit and net income decreased for both the three and six months ended June 30, 2025, compared to 2024. This was driven by lower margins in Disposable Protective Apparel, higher rebates, freight costs, and tariffs, despite growth in the Building Supply segment [Sales](index=23&type=section&id=Sales) Consolidated sales increased by 2.4% for both the three and six months ended June 30, 2025. Building Supply segment sales saw strong growth, particularly in core products, while Disposable Protective Apparel sales declined due to decreases in garments and face masks Consolidated Net Sales (YoY Change) | Period | 2025 Sales | 2024 Sales | Change | % Change | | :----------------------- | :----------- | :----------- | :------- | :------- | | Three Months Ended Jun 30 | $16,672,000 | $16,289,000 | $383,000 | +2.4% | | Six Months Ended Jun 30 | $30,494,000 | $29,772,000 | $722,000 | +2.4% | - Building Supply segment sales increased by **11.5% to $11,084,000** for the three months ended June 30, 2025, a record quarter for core building products (housewrap and synthetic roof underlayment)[80](index=80&type=chunk) - Disposable Protective Apparel segment sales decreased by **12.0% to $5,588,000** for the three months ended June 30, 2025, driven by an **11.3% decrease in disposable protective garments** and a **28.3% decrease in face masks**[85](index=85&type=chunk) - For the six months ended June 30, 2025, Building Supply segment sales increased by **7.0% to $19,456,000**, marking the second highest mid-year sales on record for the segment[91](index=91&type=chunk) - Disposable Protective Apparel segment sales for the six months ended June 30, 2025, decreased by **4.8% to $11,038,000**, primarily due to a **40.9% decrease in face mask sales**[97](index=97&type=chunk) [Gross Profit](index=25&type=section&id=Gross%20Profit) Gross profit and gross profit margin decreased for both the three and six months ended June 30, 2025. This decline was primarily attributed to lower margins in the Disposable Protective Apparel segment, higher sales rebates, increased ocean freight rates, and U.S. tariffs Gross Profit and Margin (YoY Change) | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Gross profit | $6,131,000 (-10.4%) | $6,841,000 | $11,523,000 (-6.0%) | $12,259,000 | | Gross profit margin | 36.8% | 42.0% | 37.8% | 41.2% | - The gross profit margin was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment, higher sales rebates, ocean freight rates, and US tariffs[101](index=101&type=chunk) - Management plans to increase selling prices starting in July 2025 to partially mitigate the impact of new 2025 US tariffs[101](index=101&type=chunk) [Selling, General and Administrative Expenses](index=26&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, general and administrative (SG&A) expenses decreased for both the three and six months ended June 30, 2025, primarily due to reduced corporate unallocated expenses and, to a lesser extent, Building Supply segment expenses. This was partially offset by slight increases in Disposable Protective Apparel expenses SG&A Expenses (YoY Change) | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | SG&A expenses | $4,556,000 (-6.7%) | $4,884,000 | $9,250,000 (-5.0%) | $9,732,000 | | SG&A as % of net sales | 27.3% | 30.0% | 30.3% | 32.7% | - The decrease in SG&A expenses was primarily due to decreased professional fees, insurance expenses, general office expenses, and reorganization costs (related to moving face mask manufacturing) in corporate unallocated expenses[104](index=104&type=chunk)[107](index=107&type=chunk) CEO Bonus Accrued | Period | 2025 | 2024 | | :----------------------- | :--------- | :--------- | | Three Months Ended Jun 30 | $84,000 | $111,000 | | Six Months Ended Jun 30 | $125,000 | $149,000 | [Depreciation and Amortization](index=26&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expense saw a minor decrease for both the three and six months ended June 30, 2025, compared to the prior year Depreciation and Amortization Expense (YoY Change) | Period | 2025 | 2024 | Change | % Change | | :----------------------- | :--------- | :--------- | :------- | :------- | | Three Months Ended Jun 30 | $240,000 | $245,000 | -$5,000 | -2.0% | | Six Months Ended Jun 30 | $483,000 | $489,000 | -$6,000 | -1.2% | [Income from Operations](index=26&type=section&id=Income%20from%20Operations) Income from operations decreased by 22.0% for the three months and 12.2% for the six months ended June 30, 2025, primarily due to a decrease in gross profit, partially offset by reduced selling, general and administrative expenses Income from Operations (YoY Change) | Period | 2025 | 2024 | Change | % Change | | :----------------------- | :----------- | :----------- | :------- | :------- | | Three Months Ended Jun 30 | $1,335,000 | $1,712,000 | -$377,000 | -22.0% | | Six Months Ended Jun 30 | $1,790,000 | $2,038,000 | -$248,000 | -12.2% | - Income from operations as a percentage of net sales was **8.0%** for the three months and **5.9%** for the six months ended June 30, 2025, down from 10.5% and 6.8% respectively in 2024[110](index=110&type=chunk)[111](index=111&type=chunk) [Other Income](index=27&type=section&id=Other%20Income) Other income decreased for both the three and six months ended June 30, 2025, primarily due to lower interest income and a decrease in equity in income from the unconsolidated affiliate Other Income (YoY Change) | Period | 2025 | 2024 | Change | | :----------------------- | :--------- | :--------- | :------- | | Three Months Ended Jun 30 | $276,000 | $407,000 | -$131,000 | | Six Months Ended Jun 30 | $593,000 | $803,000 | -$210,000 | - The decrease was primarily due to **lower interest income** and **reduced equity in income of the unconsolidated affiliate**[112](index=112&type=chunk)[113](index=113&type=chunk) [Income before Provision for Income Taxes](index=27&type=section&id=Income%20before%20Provision%20for%20Income%20Taxes) Income before provision for income taxes decreased by 24.0% for the three months and 16.1% for the six months ended June 30, 2025, reflecting the combined impact of lower income from operations and other income Income before Provision for Income Taxes (YoY Change) | Period | 2025 | 2024 | Change | % Change | | :----------------------- | :----------- | :----------- | :------- | :------- | | Three Months Ended Jun 30 | $1,611,000 | $2,119,000 | -$508,000 | -24.0% | | Six Months Ended Jun 30 | $2,383,000 | $2,841,000 | -$458,000 | -16.1% | [Provision for Income Taxes](index=27&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes decreased for both periods, with the estimated effective tax rate remaining relatively stable. The company is evaluating the potential impacts of the recently enacted One Big Beautiful Bill Act (OBBBA) Provision for Income Taxes and Effective Tax Rate (YoY Change) | Period | Provision 2025 | Provision 2024 | Effective Rate 2025 | Effective Rate 2024 | | :----------------------- | :--------------- | :--------------- | :------------------ | :------------------ | | Three Months Ended Jun 30 | $367,000 | $475,000 | 22.8% | 22.4% | | Six Months Ended Jun 30 | $526,000 | $621,000 | 22.1% | 21.9% | - The Company is evaluating the potential impacts of the **One Big Beautiful Bill Act (OBBBA)** but does not anticipate a material impact on its financial statements[118](index=118&type=chunk) [Net Income](index=27&type=section&id=Net%20Income) Net income decreased by 24.3% for the three months and 16.4% for the six months ended June 30, 2025, primarily due to the decline in income before taxes, partially offset by a lower tax provision. Basic and diluted EPS also decreased accordingly Net Income and EPS (YoY Change) | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income | $1,244,000 (-24.3%) | $1,644,000 | $1,857,000 (-16.4%) | $2,220,000 | | Net income as % of net sales | 7.5% | 10.1% | 6.1% | 7.5% | | Basic and diluted EPS | $0.12 | $0.15 | $0.18 | $0.20 | [LIQUIDITY AND CAPITAL RESOURCES](index=28&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's cash and cash equivalents decreased by 22.4% to $14,464,000 as of June 30, 2025, primarily due to cash used in operating and financing activities, including significant common stock repurchases. Accounts receivable increased, while inventory decreased - Cash and cash equivalents decreased by **22.4%, or $4,172,000, to $14,464,000** as of June 30, 2025, compared to December 31, 2024[122](index=122&type=chunk) - Working capital was **$47,528,000** and the current ratio was **17:1** as of June 30, 2025[122](index=122&type=chunk) Cash Flow Activities (Six Months Ended June 30, 2025) | Activity | Amount | | :----------------------------------- | :----------- | | Net cash used in operating activities | ($1,871,000) | | Net cash used in investing activities | ($273,000) | | Net cash used in financing activities | ($2,028,000) | - Accounts receivable increased by **99.8% to $9,780,000** as of June 30, 2025, primarily due to increased sales in the latter part of Q2 2025 and a higher percentage of receivables with extended terms[124](index=124&type=chunk) - Inventory decreased by **1.6% to $22,361,000** as of June 30, 2025[125](index=125&type=chunk) - During the six months ended June 30, 2025, the company repurchased **402,513 shares of common stock at a cost of $2,008,000**, with **$2,735,000 remaining available** under the repurchase program[130](index=130&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) This section reiterates the discussion from Note 4 regarding ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), with the company evaluating the impact of the latter - **ASU 2023-09 (Income Taxes)** is effective for fiscal years beginning after December 15, 2024[132](index=132&type=chunk) - **ASU 2024-03 (Expense Disaggregation Disclosures)** is effective for annual periods beginning after December 15, 2026, and the Company is evaluating its impact[133](index=133&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Alpha Pro Tech is not required to provide the quantitative and qualitative disclosures about market risk typically required by this Item - As a **smaller reporting company**, Alpha Pro Tech, Ltd. is not required to provide the information otherwise required by this Item[135](index=135&type=chunk) [ITEM 4. Controls and Procedures](index=29&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025. No material changes in internal control over financial reporting occurred during the quarter - The effectiveness of the design and operation of **disclosure controls and procedures was evaluated and concluded to be effective** as of March 31, 2025[136](index=136&type=chunk)[138](index=138&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[139](index=139&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity security sales, other disclosures, and a list of exhibits for the reporting period [ITEM 1. Legal Proceedings](index=30&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various pending and threatened litigation actions in the ordinary course of business, but management does not anticipate that the ultimate liability will have a material effect on its financial condition or results of operations - The Company is subject to various pending and threatened litigation actions in the ordinary course of business[140](index=140&type=chunk) - Management does not anticipate that the ultimate liability from such litigation will have a material effect on the Company's financial condition and results of operations[140](index=140&type=chunk) [ITEM 1A. Risk Factors](index=30&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the 2024 Form 10-K for a comprehensive list of risk factors, with a specific update on the increased risks related to new tariff policies and potential countermeasures, which could raise costs and disrupt the global supply chain - No material changes to risk factors from the 2024 Form 10-K, except for an update on tariff policies[141](index=141&type=chunk) - New tariff policies and potential countermeasures, including those announced by President Trump in February and April 2025, could **increase costs and disrupt the global supply chain**[142](index=142&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) - Country-specific tariffs on imports from Vietnam, India, and Mexico could increase product costs for the U.S. market and impact international manufacturing facilities[144](index=144&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 181,100 shares of common stock for $830,000 during the three months ended June 30, 2025, under its existing share repurchase program. No unregistered equity securities were sold during the period Issuer Purchases of Equity Securities (April 1 - June 30, 2025) | Period | Total Number of Shares Purchased | Average Price per Share | | :----------------- | :----------------------------- | :---------------------- | | April 1 - 30, 2025 | 75,600 | $4.46 | | May 1 - 31, 2025 | 24,800 | $4.48 | | June 1 - 30, 2025 | 80,700 | $4.63 | | **Total** | **181,100** | **$4.54** | - As of June 30, 2025, **$2,735,000 was available for repurchase** under the Company's existing share repurchase program[147](index=147&type=chunk) - The Company did not sell any unregistered equity securities during the periods covered by this Quarterly Report on Form 10-Q[148](index=148&type=chunk) [ITEM 5. Other Information](index=31&type=section&id=ITEM%205.%20Other%20Information) This section states that there is no other information to report, specifically confirming that no directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or executive officers adopted or terminated a **Rule 10b5-1 trading arrangement** or a **non-Rule 10b5-1 trading arrangement** during the period covered by this report[150](index=150&type=chunk) [ITEM 6. Exhibits](index=32&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, certifications from the CEO and CFO, and interactive data files in Inline XBRL format - Exhibits include the **Certificate of Incorporation, Amended and Restated Bylaws, Certifications of the President and CEO and Chief Financial Officer, and Interactive Data Files (Inline XBRL)**[154](index=154&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) This section formally concludes the report, indicating the signing date and the names of the principal executive and financial officers - The report was signed on **August 7, 2025**, by **Lloyd Hoffman, President and Chief Executive Officer**, and **Colleen McDonald, Chief Financial Officer**[158](index=158&type=chunk)

Core Viewpoint - Alpha Pro Tech, Ltd. reported a 2.4% increase in net sales for the second quarter of 2025, reaching $16.7 million compared to $16.3 million in the same period of 2024, despite challenges in the housing market and a decline in disposable protective apparel sales [1][5][7]. Financial Performance - Consolidated sales for the second quarter of 2025 were $16.7 million, an increase of $383,000 or 2.4% from $16.3 million in the second quarter of 2024 [5][7]. - Net income for the second quarter of 2025 was $1.2 million, or $0.12 per diluted share, down from $1.6 million, or $0.15 per diluted share in the same quarter of 2024, representing a decrease of 24.3% [11][19]. - Gross profit decreased by $710,000, or 10.4%, to $6.1 million for the second quarter of 2025, with a gross profit margin of 36.8%, down from 42.0% in the same period of 2024 [9][10]. Segment Performance - Building Supply segment sales increased by $1.1 million, or 11.5%, to $11.1 million in the second quarter of 2025, driven by a 10.6% increase in synthetic roof underlayment sales and a 17.0% increase in housewrap sales compared to the same period in 2024 [6][7]. - Disposable Protective Apparel segment sales decreased by $760,000, or 12.0%, to $5.6 million, primarily due to an 11.3% decrease in disposable protective garments and a 28.3% decrease in face mask sales [7][8]. Market Conditions - The housing market showed continued weakness, with single-family housing starts down 9.0% compared to the same quarter in 2024, yet the company outperformed the market in its Building Supply segment [2][3]. - Management expressed optimism for further growth in the Building Supply segment in the second half of 2025, despite ongoing uncertainties in housing starts and economic volatility [3]. Cash and Balance Sheet - As of June 30, 2025, the company had cash and cash equivalents of $14.5 million and working capital of $47.5 million, with no debt [12][13]. - The current ratio improved to 17:1 as of June 30, 2025, compared to 16:1 at the end of 2024 [12].

Part I [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) Alpha Pro Tech reported Q1 2025 net sales of **$13.8 million**, up 2.5% YoY, and net income of **$613,000**, up 6.4%, maintaining a solid financial position with **$47.0 million** working capital Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 13,352,000 | 18,636,000 | | Total current assets | 49,340,000 | 50,639,000 | | Total assets | 72,182,000 | 73,742,000 | | **Liabilities & Equity** | | | | Total current liabilities | 2,306,000 | 3,123,000 | | Total liabilities | 10,454,000 | 11,508,000 | | Total shareholders' equity | 61,728,000 | 62,234,000 | Condensed Consolidated Statements of Income (Q1) | Metric | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net sales | 13,822,000 | 13,482,000 | | Gross profit | 5,392,000 | 5,417,000 | | Income from operations | 455,000 | 326,000 | | Net income | 613,000 | 576,000 | | Diluted EPS | 0.06 | 0.05 | Condensed Consolidated Statements of Cash Flows (Q1) | Metric | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (3,959,000) | (1,169,000) | | Net cash used in investing activities | (135,000) | (83,000) | | Net cash used in financing activities | (1,190,000) | (616,000) | | **Decrease in cash and cash equivalents** | **(5,284,000)** | **(1,868,000)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's two segments, a **41.7%** equity investment in Harmony Plastics, **$1.2 million** stock repurchases, and predominant U.S. sales and assets - The company operates in two segments: Building Supply (construction weatherization products) and Disposable Protective Apparel (garments, masks, shields), with products sold under the "Alpha Pro Tech" brand and private labels, predominantly in the U.S[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - During Q1 2025, the company repurchased and retired **221,413** shares of common stock for **$1,178,000**, with **$1,564,000** remaining available under the repurchase program as of March 31, 2025[25](index=25&type=chunk) - The company holds a **41.7%** ownership in Harmony Plastics Private Limited, a joint venture in India, from which Alpha Pro Tech purchased **$4.76 million** of inventory and recorded **$141,000** in equity income in Q1 2025[36](index=36&type=chunk)[41](index=41&type=chunk) Segment Sales (Q1) | Segment | Q1 2025 Sales ($) | Q1 2024 Sales ($) | | :--- | :--- | :--- | | Building Supply | 8,372,000 | 8,240,000 | | Disposable Protective Apparel | 5,450,000 | 5,242,000 | | **Consolidated Net Sales** | **13,822,000** | **13,482,000** | - For Q1 2025, **98.7%** of net sales (**$13.65 million**) were generated in the United States, and **86.0%** of long-lived assets (**$7.24 million**) are located in the U.S[55](index=55&type=chunk)[56](index=56&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated sales increased **2.5%** in Q1 2025, with gross margin slightly down due to freight costs, but lower SG&A boosted operating income by **39.6%**, while cash decreased due to operations and repurchases [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2025 consolidated sales rose **2.5%** to **$13.8 million**, driven by Building Supply and Disposable Protective Apparel growth, despite a gross margin contraction to **39.0%** and a **50.5%** drop in face mask sales - Building Supply sales increased **1.6%** to **$8.4 million**, with a **21.8%** rise in synthetic roof underlayment sales offsetting a **20.9%** drop in housewrap sales, attributed to lower housing starts and reduced sales to private-label distributors[80](index=80&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - Disposable Protective Apparel sales grew **4.0%** to **$5.45 million**, driven by a **12.0%** increase in disposable protective garments due to new and expanded distribution agreements, partially offset by a **50.5%** decrease in face mask sales due to high channel partner inventory levels[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Gross profit margin decreased from **40.2%** to **39.0%** year-over-year, negatively affected by higher ocean freight rates on inventory received in 2024, though the company is now experiencing an easing of these rates[92](index=92&type=chunk)[93](index=93&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **3.2%** to **$4.7 million**, primarily due to lower employee compensation in the Building Supply segment and reduced corporate overhead expenses[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Net income increased **6.4%** to **$613,000**, or **$0.06** per diluted share, compared to **$576,000**, or **$0.05** per diluted share, in Q1 2024[103](index=103&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased by **$5.3 million** to **$13.4 million** in Q1 2025, primarily due to operating activities and stock repurchases, yet the company maintains strong liquidity with **$47.0 million** working capital Key Liquidity Metrics | Metric | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | 13,352,000 | 18,636,000 | | Working capital | 47,035,000 | 47,516,000 | | Current ratio | 21:1 | N/A | - Cash decreased by **$5.3 million** in Q1 2025 due to **$4.0 million** used in operations, **$0.1 million** in investing activities, and **$1.2 million** in financing activities[104](index=104&type=chunk) - During Q1 2025, the company repurchased **221,413** shares of common stock for **$1,178,000**, with **$1,564,000** remaining available for repurchases under the program as of March 31, 2025[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Alpha Pro Tech is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Alpha Pro Tech, Ltd. is not required to provide quantitative and qualitative disclosures about market risk[117](index=117&type=chunk) [Controls and Procedures](index=26&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 - Based on an evaluation as of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[120](index=120&type=chunk) - There were no changes in internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[121](index=121&type=chunk) Part II [Legal Proceedings](index=27&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation, but does not anticipate a material financial impact from these proceedings - The company is involved in ordinary course litigation but does not expect it to have a material financial impact[122](index=122&type=chunk) [Risk Factors](index=27&type=section&id=ITEM%201A.%20Risk%20Factors) A new risk factor highlights potential cost increases and supply chain disruptions from recently announced and future tariff policies, including a **10%** baseline tariff - A new risk factor has been added regarding tariff policies, with President Trump announcing additional tariffs, including a **10%** 'baseline' reciprocal tariff on most U.S. trading partners, which could increase costs for products manufactured in countries like Vietnam, India, and Mexico[124](index=124&type=chunk)[125](index=125&type=chunk) - The company warns that these tariffs and potential countermeasures could increase the cost of raw materials and finished goods, disrupt the global supply chain, and adversely affect financial condition and results of operations[126](index=126&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **221,413** shares for approximately **$1.17 million** under its publicly announced program, with **$1.56 million** remaining available Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | January 2025 | 47,700 | 5.39 | | February 2025 | 77,100 | 5.36 | | March 2025 | 96,613 | 5.16 | | **Total** | **221,413** | **5.28** | - As of March 31, 2025, **$1,564,000** was available for repurchase under the company's stock repurchase plan, which expires on December 15, 2026[127](index=127&type=chunk) - The company did not sell any unregistered equity securities during the quarter[128](index=128&type=chunk) [Other Information](index=28&type=section&id=ITEM%205.%20Other%20Information) No material information was reported under this item, and no directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements - During the reporting period, none of the Company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[130](index=130&type=chunk) [Exhibits](index=29&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Interactive Data Files in Inline XBRL - The exhibits include CEO and CFO certifications (**31.1**, **31.2**, **32.1**, **32.2**) and the Interactive Data Files in Inline XBRL format (**101**, **104**)[133](index=133&type=chunk)

[First Quarter 2025 Financial Results Announcement](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results%20Announcement) Alpha Pro Tech, Ltd. reported a 2.5% net sales increase to $13.8 million in Q1 2025, with net income rising 6.4% to $613,000 and diluted EPS at $0.06, maintaining a strong debt-free financial position [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Alpha Pro Tech, Ltd. reported a 2.5% net sales increase to $13.8 million in Q1 2025, with net income rising 6.4% to $613,000 and diluted EPS at $0.06, maintaining a strong debt-free financial position Key Financial Highlights (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | :--------- | | Net Sales | $13.8M | $13.5M | $0.3M | 2.5% | | Building Supply Segment Sales | $8.4M | $8.2M | $0.132M | 1.6% | | Disposable Protective Apparel Sales | $5.5M | $5.2M | $0.208M | 4.0% | | Net Income | $613,000 | $576,000 | $37,000 | 6.4% | | Diluted EPS | $0.06 | $0.05 | $0.01 | 20.0% | | Cash (as of March 31, 2025) | $13.4M | N/A | N/A | N/A | | Working Capital (as of March 31, 2025) | $47.0M | N/A | N/A | N/A | [Management Commentary](index=2&type=section&id=Management%20Commentary) Management provides insights into Q1 2025 performance, highlighting market conditions, segment-specific drivers, and strategic financial decisions [President and CEO Remarks](index=2&type=section&id=Lloyd%20Hoffman%2C%20President%20and%20Chief%20Executive%20Officer%20of%20Alpha%20Pro%20Tech%2C%20commented) CEO Lloyd Hoffman discussed Q1 2025 housing market weakness, strong synthetic roof underlayment sales, challenges in housewrap and face mask sales, and tariff impacts - The housing market continued to show weakness in the first quarter of 2025, with single-family housing starts down **4.7%** compared to the same quarter in 2024[3](index=3&type=chunk) - Sales of synthetic roof underlayment were up **21.8%** in Q1 2025 due to national programs and category expansion, including self-adhered products[4](index=4&type=chunk) - Face mask sales were negatively affected by excessive purchases by a channel partner in late 2024, leading to higher-than-historical inventory levels in Q1 2025. Demand is anticipated to improve once inventory normalizes[5](index=5&type=chunk) - Management believes the Company is well positioned due to significantly higher tariff rates on disposable protective garments sourced from China, which gives them a favorable cost position compared to competitors. However, new tariffs on India could negatively affect margins[6](index=6&type=chunk) [Chief Financial Officer Remarks](index=3&type=section&id=Colleen%20McDonald%2C%20Chief%20Financial%20Officer%2C%20commented) CFO Colleen McDonald reported $1.6 million available for stock repurchases, with 221,413 shares bought for $1.2 million in Q1 2025, funded by cash and operating cash flows - As of March 31, 2025, **$1.6 million** was available for additional stock repurchases under the existing program[14](index=14&type=chunk) Stock Repurchase Activity | Metric | Q1 2025 | Program Total (as of March 31, 2025) | | :-------------------------------- | :---------- | :----------------------------------- | | Shares Repurchased | 221,413 | 21.5 million | | Cost of Repurchases | $1.2 million | ~$56.0 million | [Detailed Financial Performance](index=2&type=section&id=2025%20First%20Quarter%20Financial%20Results) This section provides a detailed breakdown of the company's Q1 2025 consolidated sales, segment performance, gross profit, and net income [Consolidated Sales](index=2&type=section&id=Consolidated%20sales%20for%20the%20three%20months%20ended%20March%2031%2C%202025) Consolidated sales for Q1 2025 increased by $340,000, or 2.5%, reaching $13,822,000 compared to $13,482,000 in Q1 2024 Consolidated Net Sales | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :---------- | :---------- | :---------- | :--------- | :--------- | | Net Sales | $13,822,000 | $13,482,000 | $340,000 | 2.5% | [Segment Performance](index=2&type=section&id=Segment%20Performance) Both Building Supply and Disposable Protective Apparel segments showed sales growth in Q1 2025, driven by specific product categories [Building Supply Segment](index=2&type=section&id=Building%20Supply%20segment%20sales%20for%20the%20three%20months%20ended%20March%2031%2C%202025) Building Supply segment sales increased by 1.6% to $8,372,000 in Q1 2025, driven by synthetic roof underlayment and other woven materials Building Supply Segment Sales Change (Q1 2025) | Product Category | Q1 2025 Sales Change (%) | | :----------------------------- | :----------------------- | | Synthetic Roof Underlayment | +21.8% | | Other Woven Material | +89.3% | | Housewrap | -20.9% | [Disposable Protective Apparel Segment](index=3&type=section&id=Disposable%20Protective%20Apparel%20segment%20sales%20for%20the%20three%20months%20ended%20March%2031%2C%202025) Disposable Protective Apparel segment sales rose by 4.0% to $5,450,000 in Q1 2025, driven by garments despite declines in face shields and masks Disposable Protective Apparel Segment Sales Change (Q1 2025) | Product Category | Q1 2025 Sales Change (%) | | :----------------------------- | :----------------------- | | Disposable Protective Garments | +12.0% | | Face Shields | -6.7% | | Face Masks | -50.5% | [Gross Profit Analysis](index=3&type=section&id=Gross%20Profit) Gross profit decreased by 0.5% to $5,392,000 in Q1 2025, with the margin declining to 39.0% due to higher prior-year ocean freight rates Gross Profit Performance | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :---------- | :---------- | :---------- | :--------- | :--------- | | Gross Profit | $5,392,000 | $5,417,000 | -$25,000 | -0.5% | | Gross Profit Margin | 39.0% | 40.2% | -1.2 pp | N/A | - Gross profit margin was negatively affected primarily by inventory received last year which incurred higher ocean freight rates, though freight rates began easing in Q1 2025[11](index=11&type=chunk) [Net Income and Earnings Per Share](index=3&type=section&id=Net%20Income) Net income for Q1 2025 increased by 6.4% to $613,000, resulting in diluted earnings per common share of $0.06 Net Income and EPS Performance | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | :--------- | | Net Income | $613,000 | $576,000 | $37,000 | 6.4% | | Income before provision for income taxes | $772,000 | $722,000 | $50,000 | 6.9% | | Provision for income taxes | $159,000 | $146,000 | $13,000 | 8.9% | | Net Income as % of Net Sales | 4.4% | 4.3% | +0.1 pp | N/A | | Basic EPS | $0.06 | $0.05 | $0.01 | 20.0% | | Diluted EPS | $0.06 | $0.05 | $0.01 | 20.0% | [Financial Position and Capital Allocation](index=3&type=section&id=Financial%20Position%20and%20Capital%20Allocation) This section details the company's balance sheet highlights, including cash, working capital, and the ongoing stock repurchase program [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) As of March 31, 2025, the company reported $13.4 million in cash, $47.0 million in working capital, and a strong current ratio of 21:1 with no debt Balance Sheet Summary | Metric | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :--------------- | :---------------- | :--------- | :--------- | | Cash and Cash Equivalents | $13.4 million | $18.6 million | -$5.2 million | -27.9% | | Working Capital | $47.0 million | N/A | N/A | N/A | | Current Ratio | 21:1 | 16:1 | +5:1 | N/A | | Debt | None | None | N/A | N/A | [Stock Repurchase Program](index=3&type=section&id=Stock%20Repurchase%20Program) The company repurchased 221,413 shares for $1.2 million in Q1 2025, with $1.6 million remaining available under the program Stock Repurchase Program Summary | Metric | Q1 2025 Activity | Program Total (as of March 31, 2025) | | :-------------------------------- | :--------------- | :----------------------------------- | | Shares Repurchased | 221,413 | 21.5 million | | Cost of Repurchases | $1.2 million | ~$56.0 million | | Available for Repurchase | N/A | $1.6 million | [Company Information](index=4&type=section&id=About%20Alpha%20Pro%20Tech%2C%20Ltd.) This section provides an overview of Alpha Pro Tech, Ltd.'s business, products, manufacturing locations, and forward-looking statement disclaimers [About Alpha Pro Tech, Ltd.](index=4&type=section&id=About%20Alpha%20Pro%20Tech%2C%20Ltd.) Alpha Pro Tech, Ltd. manufactures protective apparel and building products, operating facilities in Arizona, Georgia, and a joint venture in India - Alpha Pro Tech, Ltd. develops, manufactures, and markets innovative disposable and limited-use protective apparel products for industrial, clean room, medical, and dental markets[15](index=15&type=chunk) - Alpha ProTech Engineered Products, Inc. manufactures and markets construction weatherization products, including building wrap and roof underlayment[15](index=15&type=chunk) - The Company has manufacturing facilities in Nogales, Arizona, Valdosta, Georgia, and a joint venture in India[15](index=15&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Certain%20statements%20made%20in%20this%20press%20release%20constitute%20%22forward-looking%20statements%22) This disclaimer highlights that forward-looking statements involve risks and uncertainties, and actual results may differ materially due to various factors - Forward-looking statements are estimates based on current information and involve risks and uncertainties that may cause actual results to differ materially[16](index=16&type=chunk) - Key risk factors include foreign currency exchange risks, potential failure to remediate material weakness in internal controls, loss of major customers, supplier inability to meet requirements, international manufacturing challenges, inability to protect intellectual property, competition, changes in global economic conditions, security breaches, effects of tariff policies, and volatility in common stock price[16](index=16&type=chunk) [Financial Statements](index=5&type=section&id=Tables%20follow) This section presents the unaudited consolidated balance sheets and statements of comprehensive income for the specified periods [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%28Unaudited%29) The unaudited balance sheets show the company's financial position as of March 31, 2025, with changes in cash, receivables, inventories, and liabilities Consolidated Balance Sheets (Unaudited) | Asset/Liability Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :--------------- | :---------------- | | Cash and cash equivalents | $13,352,000 | $18,636,000 | | Accounts receivable, net | $6,671,000 | $3,692,000 | | Inventories, net | $23,565,000 | $22,733,000 | | Total current assets | $49,340,000 | $50,639,000 | | Total assets | $72,182,000 | $73,742,000 | | Total current liabilities | $2,306,000 | $3,123,000 | | Total liabilities | $10,454,000 | $11,508,000 | | Total shareholders' equity | $61,728,000 | $62,234,000 | [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Unaudited%29) The unaudited income statements detail Q1 2025 performance, showing increased net sales, slightly decreased gross profit, and improved net income and diluted EPS Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Income Statement Item | Q1 2025 | Q1 2024 | | :-------------------------------- | :---------- | :---------- | | Net sales | $13,822,000 | $13,482,000 | | Cost of goods sold | $8,430,000 | $8,065,000 | | Gross profit | $5,392,000 | $5,417,000 | | Selling, general and administrative | $4,694,000 | $4,847,000 | | Income from operations | $455,000 | $326,000 | | Equity in income of unconsolidated affiliate | $141,000 | $138,000 | | Interest income, net | $176,000 | $258,000 | | Income before provision for income taxes | $772,000 | $722,000 | | Provision for income taxes | $159,000 | $146,000 | | Net income | $613,000 | $576,000 | | Diluted earnings per common share | $0.06 | $0.05 |

Core Viewpoint - Alpha Pro Tech, Ltd. reported a modest increase in sales for the first quarter of 2025 despite ongoing challenges in the housing market and economic uncertainty, with a focus on growth in the Building Supply segment and a strong performance in synthetic roof underlayment sales [2][6][7]. Financial Performance - Consolidated sales for Q1 2025 were $13.8 million, up 2.5% from $13.5 million in Q1 2024 [6][7]. - Net income for Q1 2025 was $613,000, representing a 6.4% increase from $576,000 in Q1 2024, with earnings per diluted share rising to $0.06 from $0.05 [12][22]. - Gross profit decreased slightly by $25,000 to $5.4 million, with a gross profit margin of 39.0%, down from 40.2% in the previous year [10][11]. Segment Performance - The Building Supply segment saw sales increase by $132,000, or 1.6%, to $8.4 million, driven by a 21.8% increase in synthetic roof underlayment sales and an 89.3% increase in other woven materials, although housewrap sales fell by 20.9% [7][8]. - The Disposable Protective Apparel segment's sales rose by $208,000, or 4.0%, to $5.5 million, attributed to a 12.0% increase in disposable protective garments, despite a significant decline in face mask sales [9]. Market Conditions - The housing market showed continued weakness, with single-family housing starts down 4.7% compared to Q1 2024, impacting housewrap sales [2]. - Economic uncertainty and inventory levels from previous excessive purchases affected face mask sales, with expectations for demand to improve as inventory normalizes [4]. Strategic Outlook - Management remains optimistic about growth in the Building Supply segment, citing a strong pipeline of business opportunities, while acknowledging ongoing uncertainties in housing starts and the broader economy [4]. - The company is well-positioned competitively due to sourcing products from India, which currently faces lower tariff rates compared to competitors sourcing from China [5].

Financial Performance - Net sales for 2024 decreased to $57.84 million, down 7.2% from $61.23 million in 2023[198]. - Consolidated net income for the year ended December 31, 2024, was $3,929,000, down from $4,189,000 in 2023, a decrease of about 6.2%[273]. - The company reported an income tax expense of $1,091,000 for the year ended December 31, 2024[192]. - The provision for income taxes for 2024 was $1,091,000, a decrease from $1,236,000 in 2023, reflecting an 11.8% reduction[261]. - Total comprehensive income for 2024 was $3.87 million, down from $4.24 million in 2023, impacted by foreign currency translation losses[199]. Assets and Liabilities - Total assets increased to $73,742,000 as of December 31, 2024, compared to $68,763,000 in 2023, reflecting a growth of approximately 4.3%[196]. - Total liabilities rose to $11,508,000 in 2024, compared to $7,195,000 in 2023, marking an increase of approximately 60%[196]. - Cash and cash equivalents decreased to $18,636,000 in 2024 from $20,378,000 in 2023, a decline of about 8.5%[196]. - Accounts receivable, net, fell to $3,692,000 in 2024, down from $5,503,000 in 2023, representing a decrease of approximately 33%[196]. - Deferred income tax liabilities increased to $503,000 in 2024 from $442,000 in 2023, a rise of about 13.8%[196]. - Property and equipment net value rose to $8,520,000 in 2024 from $5,587,000 in 2023, with machinery and equipment increasing to $16,732,000[240]. - Long-lived assets, net of accumulated depreciation and amortization, increased to $8,520,000 as of December 31, 2024, from $5,587,000 in 2023, representing an increase of approximately 52.1%[274]. Inventory and Receivables - Inventories increased to $22,733,000 in 2024, up from $20,131,000 in 2023, indicating a rise of about 13%[196]. - Total inventory increased to $22,733,000 in 2024 from $20,131,000 in 2023, with raw materials at $10,948,000 and finished goods at $8,851,000[239]. - Accounts receivable decreased to $4.89 million in 2024 from $6.55 million in 2023, reflecting improved collection efforts[214]. - The Company’s accounts receivable from Customer A accounted for 36% of total accounts receivable as of December 31, 2024, up from 34% in 2023[280]. Operating Expenses - Operating expenses increased to $19.48 million in 2024, compared to $18.70 million in 2023, primarily due to higher selling, general, and administrative expenses[198]. - Stock-based compensation expense for 2024 was $59,000, up from $25,000 in 2023, with 29,675 restricted stock equity awards granted in 2024[225]. - Operating lease expenses increased from approximately $1,285,000 in 2023 to $1,650,000 in 2024, marking a 28.5% increase[263]. Segment Performance - The Building Supply segment generated net sales of $35,965,000 in 2024, down from $40,396,000 in 2023, reflecting a decrease of about 10.7%[273]. - The Disposable Protective Apparel segment reported net sales of $57,840,000 in 2024, compared to $61,232,000 in 2023, indicating a decline of approximately 5.5%[273]. - The Company’s total segment income for the Building Supply segment was $5,746,000 in 2024, slightly up from $5,703,000 in 2023, an increase of about 0.8%[273]. - The Company’s total segment income for the Disposable Protective Apparel segment was $4,481,000 in 2024, compared to $4,385,000 in 2023, an increase of approximately 2.2%[273]. Shareholder Actions - The Company repurchased and retired 831,000 shares of common stock for $4,452,000 in 2024, compared to 951,010 shares for $4,002,000 in 2023, indicating a 12% increase in repurchase value[251]. - The Company accrued a cash bonus of $264,000 for the year ended December 31, 2024, compared to $286,000 for 2023, reflecting a decrease of approximately 7.7%[269]. Other Financial Information - The company holds a noncontrolling equity investment in a foreign entity valued at $5,814,000 as of December 31, 2024, up from $5,247,000 in 2023[196]. - The foreign currency translation losses reduced the balance of equity in unconsolidated affiliates by $1,499,000 and $1,437,000 as of December 31, 2024, and 2023, respectively[231]. - The accumulated other comprehensive loss on equity in unconsolidated affiliate was $1,499,000 as of December 31, 2024, compared to $1,437,000 in 2023, indicating a 4.3% increase[260]. - The Company has written off a $490,000 deposit related to a lawsuit for equipment that was never delivered, pending any recovery[266]. - The company plans to continue focusing on its building supply and disposable protective apparel segments to drive future growth[203].

Financial Performance - Net sales for the year ended December 31, 2024, were $57.8 million, down 5.5% compared to $61.2 million for the year ended December 31, 2023[4] - Net income for the year ended December 31, 2024, was $3.9 million, a decrease of 6.2% from $4.2 million in 2023, with earnings per share remaining at $0.35[20] - Gross profit for the year ended December 31, 2024, increased by 0.5% to $22.9 million, with a gross profit margin of 39.6% compared to 37.3% in 2023[17] - Net sales for the year ended December 31, 2024, were $57,840,000, a decrease of 5.8% compared to $61,232,000 in 2023[27] - Gross profit for the year ended December 31, 2024, was $22,933,000, slightly up from $22,829,000 in 2023, indicating a stable gross margin[27] - Net income for the year ended December 31, 2024, was $3,929,000, down from $4,189,000 in 2023, reflecting a decline of approximately 6.2%[27] - Basic earnings per share remained stable at $0.35 for both 2024 and 2023, despite fluctuations in net income[27] Cash and Assets - Cash as of December 31, 2024, was $18.6 million, with working capital of $47.5 million and no debt[4] - Cash and cash equivalents decreased to $18,636,000 in 2024 from $20,378,000 in 2023, a decline of approximately 8.5%[26] - Total assets increased to $73,742,000 in 2024 from $68,763,000 in 2023, representing a growth of approximately 2.8%[26] - Property and equipment, net, increased significantly to $8,520,000 in 2024 from $5,587,000 in 2023, reflecting a growth of approximately 52.1%[26] - Total shareholders' equity rose to $62,234,000 in 2024 from $61,568,000 in 2023, an increase of about 1.1%[26] Sales Performance - Sales of disposable protective garments increased by approximately 19% compared to pre-pandemic levels, with a projected continued growth in 2025[9] - Sales of synthetic roof underlayment saw a surge in the fourth quarter of 2024, attributed to rebuilding efforts after hurricanes, with expectations for growth in 2025[6] - Building Supply segment sales for the year ended December 31, 2024, decreased by 11.0% to $36.0 million, primarily due to declines in housewrap and other woven material sales[14] - Sales of other woven material decreased by $1.3 million, or 28.2%, primarily due to a customer acquisition, prompting the company to pursue new opportunities[8] Shareholder Actions - The company repurchased 831,000 shares of common stock at a cost of $4.5 million during the year, with a total of 21.2 million shares repurchased at approximately $54.8 million[22] Future Outlook - Management expects growth in the Building Supply segment in 2025, contingent on housing starts and economic conditions[9]

Core Viewpoint - Alpha Pro Tech, Ltd. reported a decline in net sales and net income for the year ended December 31, 2024, primarily due to challenges in the housing market and competition, but remains optimistic about future growth in specific product segments [2][9][20]. Financial Performance - Net sales for the year ended December 31, 2024, were $57.8 million, down 5.5% from $61.2 million in 2023 [9][13]. - Net income for the year was $3.9 million, a decrease of 6.2% from $4.2 million in 2023, with earnings per diluted share remaining at $0.35 for both years [20]. - For the three months ended December 31, 2024, consolidated sales decreased to $13.8 million, down 9.5% from $15.3 million in the same period of 2023 [10][29]. Segment Performance - Building Supply segment sales for the year decreased by 11.0% to $36.0 million, primarily due to declines in housewrap and synthetic roof underlayment sales [14]. - Disposable Protective Apparel segment sales increased by 5.0% to $21.9 million, driven by growth in face shield sales [15]. Market Conditions - The housing market showed weakness, with housing starts down 4.4% in 2024 compared to 2023, impacting sales of core building products [2]. - Multi-family housing starts were down 11.3% in 2024, marking the lowest level in ten years [3]. Product Insights - Sales of synthetic roof underlayment saw a surge in the fourth quarter of 2024 due to rebuilding efforts after hurricanes, although overall sales were affected by economic uncertainty and competition [4]. - Housewrap sales declined by 2.6% in 2024, which was less than the decline in housing starts, indicating some market resilience [3]. Balance Sheet Highlights - As of December 31, 2024, the company had cash of $18.6 million and working capital of $47.5 million, with no debt [9][22]. - The current ratio was 16:1, down from 21:1 in 2023, reflecting a decrease in liquidity [22]. Strategic Initiatives - The company is focusing on strengthening relationships with builders and contractors and has added new Territory Managers to drive sales [5]. - New distribution agreements with regional and national partners are expected to enhance growth opportunities in the disposable protective garments segment [7].

Sales Performance - Consolidated sales for the three months ended September 30, 2024, decreased to $14,251,000, down from $16,053,000 for the same period in 2023, representing a decrease of $1,802,000, or 11.2%[78] - Building Supply segment sales for the three months ended September 30, 2024, decreased by $2,651,000, or 23.2%, to $8,798,000 compared to $11,449,000 for the same period in 2023[79] - Disposable Protective Apparel segment sales for the three months ended September 30, 2024, increased by $849,000, or 18.4%, to $5,453,000 compared to $4,604,000 for the same period in 2023[85] - Consolidated sales for the nine months ended September 30, 2024, decreased to $44,023,000 from $45,967,000 for the same period in 2023, representing a decrease of $1,944,000, or 4.2%[88] - Building Supply segment sales for the nine months ended September 30, 2024, decreased by $3,637,000, or 11.9%, to $26,979,000 compared to $30,616,000 for the same period in 2023[89] - Sales of disposable protective garments in the third quarter of 2024 were up by 6.9%, primarily due to increased sales to regional and national distributors[87] - Disposable Protective Apparel segment sales increased by $1,693,000, or 11.0%, to $17,044,000 for the nine months ended September 30, 2024, compared to $15,351,000 for the same period in 2023[94] Profitability and Expenses - Gross profit for the nine months ended September 30, 2024, increased by $620,000, or 3.6%, to $17,743,000, with a gross profit margin of 40.3%, compared to 37.3% for the same period in 2023[98] - Selling, general and administrative expenses increased by $959,000, or 7.2%, to $14,234,000 for the nine months ended September 30, 2024, representing 32.3% of net sales, up from 28.9% in 2023[102] - Income from operations decreased by $386,000, or 12.2%, to $2,775,000 for the nine months ended September 30, 2024, with an operating margin of 6.3%, down from 6.9% in 2023[109] - Net income for the nine months ended September 30, 2024, was $3,082,000, a decrease of $46,000, or 1.5%, with a net income margin of 7.0%, compared to 6.8% in 2023[118] Cash Flow and Liquidity - Cash and cash equivalents decreased by 9.7%, or $1,984,000, to $18,394,000 as of September 30, 2024, compared to $20,378,000 as of December 31, 2023[119] - Inventory increased by $946,000, or 4.7%, to $21,077,000 as of September 30, 2024, driven by a 33.6% increase in the Building Supply segment inventory[122] - The current ratio as of September 30, 2024, was 19:1, down from 21:1 as of December 31, 2023[119] - Other income for the nine months ended September 30, 2024, increased by $224,000 to $1,165,000, primarily due to increased interest income[111] - Net cash used in investing activities for the nine months ended September 30, 2024, was $2,333,000, compared to $487,000 for the same period in 2023, primarily for the purchase of property and equipment[126] - Net cash used in financing activities for the nine months ended September 30, 2024, was $2,936,000, compared to $2,569,000 for the same period in 2023, with $3,731,000 spent on common stock repurchase[128] - As of September 30, 2024, the company had $1,463,000 available for stock purchases under its stock repurchase program, having repurchased 695,000 shares at a cost of $3,731,000 during the nine months[129] - The company believes its current cash balance and expected cash flow from operations will be sufficient to meet projected working capital and planned capital expenditures for the foreseeable future[130] Management Outlook - Management expects growth in the Building Supply segment as uncertainty in the housing market abates, with a surge in synthetic roof underlayment orders following hurricanes Helene and Milton[83] - Management expects growth in the Building Supply segment in the coming year, contingent on housing starts[93] Accounting Standards and Compliance - The FASB issued ASU 2023-09 in December 2023, which will enhance income tax disclosures, effective for fiscal years beginning after December 15, 2024, and the company is evaluating its impact[131] - ASU 2023-07 was issued in November 2023 to improve reportable segment disclosures, effective for fiscal years beginning after December 31, 2023, and the company is currently assessing its implications[132] - Management has not identified any new accounting standards that merit further discussion at this time[133] - As a smaller reporting company, the company is not required to provide additional market risk disclosures[134] Market Conditions - The synthetic roof underlayment market has been affected by uncertain economic conditions and increased offshore competition, but new self-adhered roofing products launched in late 2023 are expected to drive revenue growth[91] - Other woven material sales decreased by 27.2% in the third quarter of 2024 compared to the same period in 2023, primarily due to decreased sales to a customer that was acquired by another company[82]