Omega Flex(OFLX) - 2025 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2025, net sales increased to $25,525,000, a 3.7% increase from $24,620,000 in the same period of 2024[15] - Gross profit for the three months ended June 30, 2025, was $15,422,000, slightly up from $15,222,000 in 2024, resulting in a gross margin of 60.5%[15] - Operating profit decreased to $4,722,000 for the three months ended June 30, 2025, compared to $5,283,000 in 2024, reflecting a decline of 10.6%[15] - Net income attributable to Omega Flex, Inc. for the three months ended June 30, 2025, was $4,156,000, down from $4,496,000 in 2024, representing a decrease of 7.6%[15] - Net income for the six months ended June 30, 2025, was $7,623,000, compared to $8,674,000 for the same period in 2024, representing a decrease of approximately 12.1%[30] - The Company reported net sales of $48,855,000 for the first six months of 2025, a decrease of $981,000 or 2.0% compared to $49,836,000 in the same period of 2024[144] - Gross profit margins were 60.4% for the first six months of 2025, down from 60.8% in 2024[145] - Operating profit decreased by $1,569,000 or 15.2%, totaling $8,772,000 for the first six months of 2025 compared to $10,341,000 in 2024[150] Assets and Liabilities - Total assets as of June 30, 2025, were $102,783,000, a decrease from $105,891,000 as of December 31, 2024[13] - Total liabilities decreased to $18,819,000 as of June 30, 2025, from $22,710,000 at the end of 2024, indicating a reduction of 17.1%[13] - Cash and cash equivalents as of June 30, 2025, were $50,734,000, slightly down from $51,699,000 at the end of 2024[13] - The reserve for credit losses was $810,000 as of June 30, 2025, down from $866,000 as of December 31, 2024, indicating a decrease of approximately 6.5%[50] - The net present value of retirement payments associated with salary continuation agreements is $282,000 as of June 30, 2025, with $240,000 classified as Other Long Term Liabilities[85] Earnings and Dividends - Cash dividends declared per common share remained stable at $0.34 for both the three months ended June 30, 2025, and 2024[15] - Declared dividends for the six months ended June 30, 2025, were $6,864,000, compared to $6,763,000 in 2024, marking an increase of about 1.5%[30] - Basic and diluted earnings per common share for the three months ended June 30, 2025, were $0.41, down from $0.45 in 2024, a decrease of 8.9%[15] Operating Activities - Cash provided by operating activities for the six months ended June 30, 2025, was $7,013,000, slightly down from $7,107,000 in 2024, indicating a decrease of about 1.3%[30] - Cash provided by operating activities was $7,013,000 for the first six months of 2025, a decrease of $94,000 compared to $7,107,000 in 2024[162] Expenses - Engineering expenses increased by $366,000 or 37.2% to $1,350,000 in Q2 2025, primarily due to product development and certification costs[137] - General and administrative expenses rose by $185,000 or 2.4%, totaling $8,024,000 for the first six months of 2025, with an increase in staffing-related costs[147] - Selling expenses rose to $5,217,000 in Q2 2025, an increase of $343,000 or 7.0% compared to $4,874,000 in Q2 2024[135] - Selling expenses were $10,218,000 for the first six months of 2025, a slight decrease of $8,000 or 0.1% compared to $10,226,000 in 2024[146] Stock and Equity - The Equity Incentive Plan allows for the issuance of up to 818,458 shares, representing 7.5% of fully-diluted shares of common stock[56] - In January 2025, 420,000 shares of restricted stock were granted, representing 4% of the shares of common stock, with an eight-year cliff vesting schedule[57] - The Company granted 12,829 phantom stock units with a fair value of $32.35 per unit in February 2025, increasing total nonvested and unmatured units to 23,397 as of June 30, 2025[97] - Total unrecognized compensation costs related to the Phantom Stock Plan as of June 30, 2025, were $470,000, expected to be recognized through February 2028[105] Lease and Tax - The Company applies the requirements of FASB ASC Topic 842 for lease accounting, classifying all leases as operating leases as of June 30, 2025[61] - The Company recorded right-of-use assets of $4,813,000 and lease liabilities of $5,142,000 as of June 30, 2025[115] - Future minimum lease payments under non-cancelable leases total $5,710,000 as of June 30, 2025[117] - Income tax expense decreased by $297,000 or 10.8%, totaling $2,465,000 for the first six months of 2025 compared to $2,762,000 in 2024[153] Customer and Market - The company operates as a single segment focused on the manufacture and sale of flexible metal hose, with most sales concentrated in North America[33][46] - The Company has one significant customer that represented more than 10% of Accounts Receivable and total Net Sales as of June 30, 2025[74]