Omega Flex(OFLX) - 2024 Q4 - Annual Report

Financial Performance - The Company's net sales for the year were $101,681,000, reflecting a decrease of$ 9,784,000, or 8.8%, compared to $111,465,000 in the previous year[103] - Gross profit margins were 61.2% for 2024, slightly down from 61.3% in 2023[104] - Operating profit decreased by$ 4,228,000, or 16.4%, to $21,571,000 in 2024 from$ 25,799,000 in 2023[108] - Cash provided from operating activities was $20,857,000 in 2024, down from$ 23,422,000 in 2023, illustrating a decrease of $2,565,000[117] - Dividend payments for 2024 amounted to$ 13,527,000, compared to $13,124,000 in 2023[120] Assets and Liabilities - Cash and cash equivalents increased by$ 5,343,000, or 11.5%, to $51,699,000 as of December 31, 2024, from$ 46,356,000 at the end of 2023[100] - Retained earnings increased by $4,387,000, or 6.4%, to$ 72,880,000 as of December 31, 2024, compared to $68,493,000 in 2023[101] - Interest income rose to$ 2,278,000 in 2024 from $1,700,000 in 2023, attributed to higher invested cash equivalent balances[110] - Income tax expense decreased by$ 1,118,000, or 16.4%, to $5,707,000 in 2024, with an effective tax rate of approximately 24%[112] Expenses - Engineering expenses increased by$ 200,000, or 5.2%, to $4,068,000 in 2024, representing 4.0% of net sales[107] Goodwill and Impairment - The Company performed an annual impairment test for goodwill as of December 31, 2024, which indicated no impairment as the estimated fair value exceeded carrying value[128] Legal and Regulatory Matters - Product liability reserves are estimated based on current data, with defense and settlement costs ranging from$ 250,000 to $3,000,000 per claim, potentially impacting future liquidity and operations[129] Employee Compensation - The Phantom Stock Plan allows for the granting of phantom stock units to key employees, with a vesting schedule over three years and adjustments to market value over time[131] - The amended Phantom Stock Plan effective January 1, 2023, introduces three-year cliff vesting and pro-rata acceleration upon retirement at age 67 or greater[132] Accounting and Reporting - The Company accounts for tax liabilities under FASB ASC Topic 740, recognizing deferred tax assets and liabilities based on enacted tax rates expected to apply in future periods[135] - Recent accounting updates, including ASU No. 2023-07 and ASU No. 2023-09, will enhance segment reporting and tax disclosures, effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively[138][139] - The Company is evaluating the impact of ASU No. 2024-03, which requires disaggregation of income statement expenses, effective for annual periods beginning after December 15, 2026[140]