Omega Flex(OFLX) - 2025 Q4 - Annual Report

Financial Performance - The Company reported net sales of $98,296,000 for the year ended December 31, 2025, a decrease of $3,385,000 or 3.3% compared to $101,681,000 in 2024[97] - Gross profit margins were 60.0% for 2025, down from 61.2% in 2024[98] - Operating profit decreased by $4,640,000 or 21.5%, resulting in an operating profit of $16,931,000 in 2025 compared to $21,571,000 in 2024[102] - Cash provided from operating activities was $17,173,000 in 2025, a decrease of $3,684,000 from $20,857,000 in 2024[111] Expenses - Engineering expenses increased by $973,000 or 23.9%, totaling $5,041,000 in 2025, primarily due to product development and certification costs[101] - Selling expenses were $20,730,000 in 2025, an increase of $191,000 or 0.9% compared to $20,539,000 in 2024[99] Assets and Liabilities - The Company's cash and cash equivalents balance increased to $53,226,000 as of December 31, 2025, up $1,527,000 or 3.0% from $51,699,000 in 2024[94] - Retained earnings rose to $73,979,000 as of December 31, 2025, an increase of $1,099,000 or 1.5% from $72,880,000 in 2024[95] - The Company has a $15,000,000 line of credit available with no borrowings outstanding as of December 31, 2025[109] - The Company has product liability reserves for existing claims, with deductible or self-insured retention limits ranging from $250,000 to $3,000,000 per claim[123] - As of December 31, 2025, there are no open Self-Insured Claims[123] Compensation and Incentives - The Phantom Stock Plan allows for the grant of phantom stock units, which vest over three years and are recorded as liabilities[125] - The Equity Incentive Plan allows for the issuance of up to 818,458 shares of common stock, representing 7.5% of fully-diluted shares[128] - On January 2, 2025, 420,000 shares of restricted stock were granted, representing 4% of the shares of common stock[129] - The Company recognizes compensation expense for the Equity Incentive Plan over the vesting period[130] Taxation - The effective tax rate for both 2025 and 2024 was 24.2% of income before taxes[106] - The Company accounts for tax liabilities under FASB ASC Topic 740, recognizing deferred tax assets and liabilities based on enacted tax rates[132] - The Company evaluates its deferred tax assets to determine if a valuation allowance is required[133] Regulatory Changes - In November 2023, the FASB issued ASU No. 2023-07, which expands segment disclosures effective for fiscal years beginning after December 15, 2023[134] - The Company adopted ASU No. 2023-09 in 2025, improving tax disclosures effective for annual periods beginning after December 15, 2024[135]