Alpha Pro Tech(APT) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results Announcement 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 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 Management provides insights into Q1 2025 performance, highlighting market conditions, segment-specific drivers, and strategic financial decisions President and CEO Remarks 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] - Sales of synthetic roof underlayment were up 21.8% in Q1 2025 due to national programs and category expansion, including self-adhered products[4] - 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] - 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] Chief Financial Officer Remarks 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] 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 This section provides a detailed breakdown of the company's Q1 2025 consolidated sales, segment performance, gross profit, and net income Consolidated Sales 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 Both Building Supply and Disposable Protective Apparel segments showed sales growth in Q1 2025, driven by specific product categories Building Supply Segment 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 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 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] Net Income and Earnings Per Share 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 This section details the company's balance sheet highlights, including cash, working capital, and the ongoing stock repurchase program Balance Sheet Highlights 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 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 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. 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] - Alpha ProTech Engineered Products, Inc. manufactures and markets construction weatherization products, including building wrap and roof underlayment[15] - The Company has manufacturing facilities in Nogales, Arizona, Valdosta, Georgia, and a joint venture in India[15] Forward-Looking Statements 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] - 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] Financial Statements This section presents the unaudited consolidated balance sheets and statements of comprehensive income for the specified periods Consolidated Balance Sheets (Unaudited) 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) 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 |