Alpha Pro Tech(US:APT)2025-11-06 18:23Sales Performance - Consolidated sales for Q3 2025 increased to $14,785,000, up 3.7% from $14,251,000 in Q3 2024, driven by a $476,000 increase in the Building Supply segment and a $58,000 increase in the Disposable Protective Apparel segment [81]. - Consolidated sales for the nine months ended September 30, 2025, rose to $45,279,000, a 2.9% increase from $44,023,000 in the same period of 2024 [92]. - Building Supply segment sales rose by $476,000, or 5.4%, to $9,274,000 in Q3 2025, with a 12.7% increase in housewrap sales [82]. - Building Supply segment sales increased by $1,750,000, or 6.5%, to $28,729,000 for the nine months ended September 30, 2025, driven by a 6.7% increase in synthetic roof underlayment sales [93]. - Disposable Protective Apparel segment sales increased by $58,000, or 1.1%, to $5,511,000 in Q3 2025, attributed to a 10.4% rise in disposable protective garments [88]. - Disposable Protective Apparel segment sales decreased by $494,000, or 2.9%, to $16,550,000 for the nine months ended September 30, 2025, primarily due to a 43.1% decrease in face mask sales [97]. - Sales of disposable protective garments increased by 10.4% in Q3 2025 compared to Q3 2024, contributing to a positive year-to-date performance [90]. Profitability - Gross profit margin for Q3 2025 was 39.7%, compared to 38.5% in Q3 2024, while net income margin improved to 6.6% from 6.0% year-over-year [80]. - Gross profit for Q3 2025 increased by $384,000, or 7.0%, to $5,868,000, with a gross profit margin of 39.7% compared to 38.5% in Q3 2024 [99]. - Income from operations for Q3 2025 rose by $360,000, or 48.8%, to $1,097,000, with an operating margin of 7.4% [111]. - Net income for Q3 2025 was $976,000, an increase of 13.2% from $862,000 in Q3 2024, with net income as a percentage of net sales at 6.6% [121]. - Management anticipates that tariffs will negatively impact gross profit in Q4 2025, following multiple tariff increases on products [102]. Market Conditions - The housing market showed weakness with single-family housing starts down 2.6% in Q3 2025 compared to the same quarter in 2024, yet the company outperformed the market with a 3.5% increase in core building products [85]. - Increased tariffs have led to pricing and supply volatility, impacting operational efficiency and cost structure [76]. - The Disposable Protective Apparel segment experienced a significant decline in face mask sales, down 46.5%, reflecting changing market dynamics [88]. Strategic Initiatives - Management anticipates new product introductions in 2026 to expand self-adhered roofing and flashing categories, despite current market challenges [87]. - The company is implementing strategies such as commercial pricing adjustments and holding extra inventory to mitigate the impact of higher commodity costs [76]. Financial Position - As of September 30, 2025, the company had cash and cash equivalents of $17,658,000, a decrease of 5.2% from $18,636,000 as of December 31, 2024 [123]. - Working capital increased by $562,000 to $48,078,000 as of September 30, 2025, compared to $47,516,000 as of December 31, 2024 [123]. - Accounts receivable increased by $2,235,000, or 45.7%, to $7,129,000 as of September 30, 2025, from $4,894,000 as of December 31, 2024 [125]. - Inventory increased by $746,000, or 3.3%, to $23,479,000 as of September 30, 2025, from $22,733,000 as of December 31, 2024 [126]. - Net cash provided by operating activities was $2,052,000 for the nine months ended September 30, 2025, due to net income of $2,833,000 [124]. - Net cash used in investing activities was $372,000 for the nine months ended September 30, 2025, compared to $2,333,000 for the same period of 2024 [130]. - Net cash used in financing activities was $2,658,000 for the nine months ended September 30, 2025, compared to $2,936,000 for the same period of 2024 [131]. - As of September 30, 2025, the company had $2,111,000 available for stock purchases under its stock repurchase program [132]. - The company repurchased 532,313 shares of common stock at a cost of $2,632,000 during the nine months ended September 30, 2025 [132]. - The company believes its current cash balance and expected cash flow from operations will be sufficient to satisfy projected working capital and planned capital expenditures for the foreseeable future [133].