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

Part I Financial Statements 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 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][20][21] - 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] - 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 $141,000 in equity income in Q1 2025[36][41] Segment Sales (Q1) | Segment | Q1 2025 Sales ($) | 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][56] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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 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][82][84] - 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][89][90] - 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][93] - 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][95][96] - 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] Liquidity and Capital Resources 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] - 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] Quantitative and Qualitative Disclosures about Market Risk 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] Controls and Procedures 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] - 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] Part II Legal Proceedings 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] Risk Factors 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][125] - 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - The company did not sell any unregistered equity securities during the quarter[128] Other Information 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] Exhibits 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]