Omega Flex(OFLX) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2024, were $24,880,000, a decrease of 9.3% compared to $27,496,000 for the same period in 2023[11] - Gross profit for the three months ended September 30, 2024, was $15,350,000, down from $16,947,000 in 2023, reflecting a gross margin of 61.6%[11] - Operating profit for the three months ended September 30, 2024, was $5,468,000, a decline of 20.3% from $6,859,000 in the prior year[11] - Net income attributable to Omega Flex, Inc. for the three months ended September 30, 2024, was $4,617,000, compared to $5,576,000 in 2023, representing a decrease of 17.3%[11] - Basic and diluted earnings per common share for the three months ended September 30, 2024, were $0.46, down from $0.55 in the same period last year[11] - Comprehensive income for the three months ended September 30, 2024, was $4,767,000, compared to $5,422,000 in 2023[12] - For the nine months ended September 30, 2024, the net cash provided by operating activities was $11,097,000, slightly lower than $11,496,000 for the same period in 2023, representing a decrease of approximately 3.5%[18] - Net sales for the first nine months of 2024 were $74,716,000, a decrease of $8,602,000 or 10.3% from $83,318,000 in the same period of 2023[125] - Operating profits for the first nine months of 2024 were $15,809,000, a decrease of $3,877,000 or 19.7% from $19,686,000 in 2023[131] Assets and Liabilities - Total current assets increased to $80,913,000 as of September 30, 2024, from $80,188,000 at December 31, 2023[9] - Total liabilities decreased to $20,785,000 as of September 30, 2024, compared to $21,382,000 at December 31, 2023[9] - The reserve for credit losses was $796,000 as of September 30, 2024, down from $1,126,000 as of December 31, 2023, indicating a decrease in expected credit losses[42] - The Company had no outstanding borrowings on the credit facility and was in compliance with all debt covenants as of September 30, 2024[77] - Cash balance as of September 30, 2024, was $45,873,000, with no borrowings against the $15,000,000 line of credit[136] Shareholder Equity and Dividends - Retained earnings increased to $71,630,000 as of September 30, 2024, from $68,493,000 at December 31, 2023[9] - Cash dividends declared per common share for the three months ended September 30, 2024, were $0.34, compared to $0.33 in the same period of 2023[11] - The company declared dividends of $10,195,000 in September 2024, compared to $9,892,000 in September 2023, marking an increase of about 3.1%[18] - Retained earnings increased by $3,137,000 or 4.6%, reaching $71,630,000 as of September 30, 2024, compared to $68,493,000 at December 31, 2023, mainly due to net income[115] Expenses - Selling expenses decreased by $83,000 or 1.6% to $4,976,000 for the quarter ended September 30, 2024, compared to $5,059,000 in 2023, but increased as a percentage of net sales to 20.0% from 18.4%[118] - General and administrative expenses decreased by $189,000 or 4.7% to $3,848,000 for the quarter ended September 30, 2024, while the percentage of sales increased to 15.5% from 14.7%[120] - Selling expenses for the first nine months of 2024 were $15,202,000, a decrease of $429,000 or 2.7% compared to $15,631,000 in 2023[127] - General and administrative expenses decreased to $11,687,000 for the first nine months of 2024, down $1,517,000 or 11.5% from $13,204,000 in 2023[128] Inventory and Capital Expenditures - As of September 30, 2024, net inventories amounted to $16,053,000, an increase of 2.9% from $15,597,000 as of December 31, 2023[70] - The Company maintains inventories estimated to be used beyond the next twelve months, primarily for corrugated medical tubing products, with reserves of $1,000,000 as of September 30, 2024[72] - The company’s capital expenditures for the nine months ended September 30, 2024, were $1,443,000, slightly lower than $1,455,000 for the same period in 2023[18] Revenue Recognition and Operations - The Company recognizes revenue upon shipment of goods, concluding that control transfers to the customer at that point[30] - The Company operates in a single segment focused on the manufacture and sale of flexible metal hose and accessories, serving various industries including healthcare and automotive[21] - The majority of the Company's sales are geographically concentrated in North America, with limited international sales[38] Other Financial Information - Interest income for Q3 2024 was $586,000, an increase of $84,000 or 16.7% compared to $502,000 in Q3 2023[123] - Interest income for the first nine months of 2024 was $1,741,000, an increase of $562,000 or 47.7% compared to $1,179,000 in 2023[132] - The Company recorded compensation expense of $60,000 for the nine months ended September 30, 2024, compared to $285,000 for the same period in 2023[97] - The total unrecognized compensation costs as of September 30, 2024, were $368,000, expected to be recognized through March 2027[99] Compliance and Risk Management - The Company has not experienced any losses related to cash balances and believes its credit risk to be minimal[39] - The Company has a broad distribution network in North America and other global markets, focusing on flexible metal hose and fittings for various industries[112] - No additional risks attributable to the quarter were reported[154] - There were no unregistered sales of equity securities during the quarter[154] - The company has not experienced any defaults upon senior securities[154] - There are no mine safety disclosures applicable to the company[154] - The report includes certifications from the Chief Executive Officer and Chief Financial Officer[156]