Alpha Pro Tech(APT) - 2025 Q2 - Quarterly Results

Financial Results Overview This section details Alpha Pro Tech's Q2 2025 financial performance, highlighting a net sales increase driven by the Building Supply segment, alongside a decrease in net income and management's strategic commentary Second Quarter 2025 Highlights Alpha Pro Tech, Ltd. announced its Q2 2025 financial results, with net sales increasing 2.4% to $16.7 million, driven by an 11.5% increase in the Building Supply segment, while Disposable Protective Apparel sales decreased by 12.0% Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $16.7 million | $16.3 million | 2.4% | | Building Supply Segment Sales | $11.1 million | $9.9 million | 11.5% | | Disposable Protective Apparel Sales | $5.6 million | $6.3 million | -12.0% | | Net Income | $1.2 million | $1.6 million | -25.0% | | Diluted EPS | $0.12 | $0.15 | -20.0% | - As of June 30, 2025, the company held $14.5 million in cash and $47.5 million in working capital, with no debt[3] Management Commentary CEO Lloyd Hoffman highlighted record sales in core building products despite a weak housing market, expressing optimism for the Building Supply segment's growth in H2 2025, though acknowledging economic uncertainties - Building Supply segment achieved quarterly record sales for core products (housewrap and synthetic roof underlayment), up 13.2% from Q2 2024, outperforming a 9.0% decline in single-family housing starts[4] - Management expects further growth in the Building Supply segment in the second half of 2025, despite continued uncertainty in housing starts, economic volatility, and a stronger than normal hurricane season in late 2024[5] - Disposable Protective Apparel sales were down 11.3% due to challenging comparisons (Q2 2024 was highest since COVID-19 sales bump), tariffs, and end-customers reducing inventories. Face mask sales continued to fall below expectations, but face shield sales showed a positive trend[5][6] Detailed Financial Performance This section provides a granular analysis of Q2 2025 net sales by segment, gross profit trends, and net income, detailing the factors influencing each financial metric Net Sales by Segment Consolidated net sales for Q2 2025 increased by 2.4% to $16.7 million, with the Building Supply segment seeing an 11.5% increase to $11.1 million, primarily due to strong sales of synthetic roof underlayment and housewrap Q2 2025 Net Sales by Segment | Segment | Q2 2025 Sales | Q2 2024 Sales | Change ($) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | :--------- | | Consolidated Sales | $16.7 million | $16.3 million | $383,000 | 2.4% | | Building Supply | $11.1 million | $9.9 million | $1.1 million | 11.5% | | Disposable Protective Apparel | $5.6 million | $6.3 million | -$760,000 | -12.0% | - Building Supply segment increase was primarily due to a 10.6% increase in synthetic roof underlayment sales and a 17.0% increase in housewrap sales[8] - Disposable Protective Apparel segment decrease was due to an 11.3% decrease in disposable protective garments and a 28.3% decrease in face masks, partially offset by a 4.9% increase in face shields[9] Gross Profit Gross profit decreased by 10.4% to $6.1 million in Q2 2025, with the gross profit margin falling to 36.8% from 42.0% in Q2 2024, primarily attributed to a margin decrease in the Disposable Protective Apparel segment, higher sales rebates, increased ocean freight rates, and US tariffs Q2 2025 Gross Profit | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :----------- | :---------- | :---------- | :--------- | :--------- | | Gross Profit | $6.1 million | $6.8 million | -$710,000 | -10.4% | | Gross Profit Margin | 36.8% | 42.0% | -5.2 pp | -12.4% | - Gross profit margin was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment, higher sales rebates, ocean freight rates, and US tariffs[11] - Management will be increasing selling prices starting in July 2025 to partially mitigate the impact of new 2025 US tariffs[11] Net Income and Earnings Per Share Net income for Q2 2025 decreased by 24.3% to $1.2 million, down from $1.6 million in Q2 2024, with diluted earnings per common share at $0.12, mainly due to a reduction in income before income taxes, partially offset by lower tax provisions Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | :--------- | | Net Income | $1.2 million | $1.6 million | -$400,000 | -24.3% | | Net Income as % of Net Sales | 7.5% | 10.1% | -2.6 pp | -25.7% | | Basic EPS | $0.12 | $0.15 | -$0.03 | -20.0% | | Diluted EPS | $0.12 | $0.15 | -$0.03 | -20.0% | - The decrease in net income was primarily due to a $508,000 decrease in income before provision for income taxes, partially offset by a $108,000 decrease in provision for income taxes[12] Financial Position and Capital Allocation This section outlines the company's balance sheet position as of June 30, 2025, including cash, working capital, and details its ongoing stock repurchase activities Balance Sheet Summary As of June 30, 2025, the company reported cash and cash equivalents of $14.5 million, a decrease from $18.6 million at December 31, 2024, with working capital at $47.5 million and the current ratio improving to 17:1 Key Balance Sheet Metrics | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :---------------- | | Cash and Cash Equivalents | $14.5 million | $18.6 million | | Working Capital | $47.5 million | N/A | | Current Ratio | 17:1 | 16:1 | Stock Repurchase Program The company repurchased 181,100 shares of common stock for $0.8 million during Q2 2025, with $2.7 million remaining available under the program, cumulatively repurchasing 21.6 million shares totaling approximately $56.8 million Stock Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :---------- | | Shares Repurchased (Q2 2025) | 181,100 | | Cost of Repurchases (Q2 2025) | $0.8 million | | Remaining Authorization | $2.7 million | - As of June 30, 2025, the company has repurchased a total of 21.6 million shares of common stock at a cost of approximately $56.8 million through its repurchase program, retiring all stock upon repurchase[14] - Future repurchases are expected to be funded from cash on hand and cash flows from operating activities[14] Company Profile and Disclosures This section introduces Alpha Pro Tech, Ltd.'s business segments and manufacturing operations, followed by a comprehensive disclaimer on forward-looking statements and associated risks About Alpha Pro Tech, Ltd. Alpha Pro Tech, Ltd. is a manufacturer of protective apparel and building products, with subsidiaries focusing on disposable protective apparel for various markets and construction weatherization products, operating manufacturing facilities in Arizona, Georgia, and a joint venture in India - Alpha Pro Tech, Inc. develops, manufactures, and markets disposable and limited-use protective apparel 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 section serves as a disclaimer, cautioning investors that statements regarding future results, performance, or achievements are forward-looking and involve risks and uncertainties, with the company undertaking no obligation to update these statements - 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 exposure to foreign currency exchange risks, potential failure to remediate material weakness in internal controls, loss of major customers, inability of suppliers to meet requirements, international manufacturing challenges, competition, global economic conditions, effects of tariff policies, and uncertainties with AI development[16] - The company undertakes no obligation to update or revise any forward-looking statements to reflect events or developments after the date of the press release[16] Unaudited Financial Statements This section presents the unaudited consolidated balance sheets and condensed consolidated statements of comprehensive income for Alpha Pro Tech, Ltd. for specified periods Consolidated Balance Sheets (Unaudited) This section presents the unaudited consolidated balance sheets for Alpha Pro Tech, Ltd. as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Assets | | | | Cash and cash equivalents | $14,464,000 | $18,636,000 | | Accounts receivable, net | $8,363,000 | $3,692,000 | | Inventories, net | $22,361,000 | $22,733,000 | | Total current assets | $50,543,000 | $50,639,000 | | Total assets | $73,165,000 | $73,742,000 | | Liabilities and Shareholders' Equity | | | | Accounts payable | $1,380,000 | $1,283,000 | | Total current liabilities | $3,015,000 | $3,123,000 | | Total liabilities | $10,917,000 | $11,508,000 | | Total shareholders' equity | $62,248,000 | $62,234,000 | | Total liabilities and shareholders' equity | $73,165,000 | $73,742,000 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) This section provides the unaudited condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025, and 2024, outlining net sales, cost of goods sold, gross profit, operating expenses, income from operations, other income, net income, and earnings per common share Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $16,672,000 | $16,289,000 | $30,494,000 | $29,772,000 | | Cost of goods sold | $10,541,000 | $9,448,000 | $18,971,000 | $17,513,000 | | Gross profit | $6,131,000 | $6,841,000 | $11,523,000 | $12,259,000 | | Total operating expenses | $4,796,000 | $5,129,000 | $9,733,000 | $10,221,000 | | Income from operations | $1,335,000 | $1,712,000 | $1,790,000 | $2,038,000 | | Total other income | $276,000 | $407,000 | $593,000 | $803,000 | | Income before provision for income taxes | $1,611,000 | $2,119,000 | $2,383,000 | $2,841,000 | | Provision for income taxes | $367,000 | $475,000 | $526,000 | $621,000 | | Net income | $1,244,000 | $1,644,000 | $1,857,000 | $2,220,000 | | Basic earnings per common share | $0.12 | $0.15 | $0.18 | $0.20 | | Diluted earnings per common share | $0.12 | $0.15 | $0.18 | $0.20 |