Alpha Pro Tech(APT) - 2024 Q2 - Quarterly Report

Sales Performance - Consolidated sales for Q2 2024 increased to $16,289,000, a rise of 1.1$16,115,000 in Q2 2023, driven by a $770,000 increase in the Disposable Protective Apparel segment [89]. - Disposable Protective Apparel segment sales rose by$770,000, or 13.8%, to $6,348,000 in Q2 2024, marking the highest quarter in two years [95]. - For the six months ended June 30, 2024, consolidated sales decreased to$29,772,000 from $29,914,000, a decline of 0.5$986,000, or 5.1%, to $18,181,000 compared to$19,167,000 in the same period of 2023 [97]. - Sales of other woven materials increased by 12.3% in Q2 2024, attributed to higher sales to a major customer [94]. Profitability - Gross profit margin improved to 42.0% in Q2 2024, up from 37.9% in Q2 2023, while net income margin increased to 10.1% from 7.1% [88]. - Gross profit for the three months ended June 30, 2024, increased by $735,000, or 12.0$6,841,000, with a gross profit margin of 42.0% compared to 37.9% for the same period in 2023 [101]. - Income from operations increased by $400,000, or 30.5$1,712,000 for the three months ended June 30, 2024, with an operating margin of 10.5% compared to 8.1% in 2023 [108]. - Net income for the three months ended June 30, 2024, was $1,644,000, an increase of$498,000, or 43.5%, with net income as a percentage of net sales at 10.1% [112]. Expenses and Cash Flow - Selling, general and administrative expenses increased by $309,000, or 6.8$4,884,000 for the three months ended June 30, 2024, representing 30.0% of net sales, up from 28.4% in 2023 [102]. - Net cash used in operating activities was $2,042,000 for the six months ended June 30, 2024, primarily due to an increase in accounts receivable [115]. - Net cash used in financing activities for the six months ended June 30, 2024, was$1,913,000, an increase from $1,538,000 for the same period in 2023 [119]. Balance Sheet Items - As of June 30, 2024, the company had cash and cash equivalents of$16,207,000, a decrease of 20.5% from $20,378,000 as of December 31, 2023 [114]. - Accounts receivable increased by$2,302,000, or 35.2%, to $8,847,000 as of June 30, 2024, reflecting higher sales in the second quarter [116]. - Inventory increased by$654,000, or 3.2%, to $20,785,000 as of June 30, 2024, driven by a 26.9$2,701,000 during the six months ended June 30, 2024 [121]. - As of June 30, 2024, the company had repurchased a total of 20,926,627 shares at a cost of approximately $53,027,000 since the repurchase program began in 1999 [121]. - The company has$1,493,000 available for stock purchases under its stock repurchase program as of June 30, 2024 [121]. - Future stock repurchases are expected to be funded from cash on hand and cash flows from operating activities [121]. - The company believes its current cash balance and expected cash flow from operations will be sufficient for projected working capital and planned capital expenditures [121]. Market Conditions and Management Outlook - The housing market remains weak, with housing starts down 7.4% in Q2 2024 compared to the prior year, impacting sales of core building products [91]. - Management expects continued growth in disposable protective garments for the remainder of 2024, despite challenges in face mask and face shield sales due to excess inventories [96]. - Management is exploring new product offerings, including roof deck flashing, to enhance revenue growth in the Building Supply segment [92]. Regulatory Updates - The FASB issued ASU 2023-09 in December 2023, which will enhance income tax disclosures effective for fiscal years beginning after December 15, 2024 [122]. - The FASB also issued ASU 2023-07 in November 2023, improving reportable segment disclosure requirements, effective for fiscal years beginning after December 31, 2023 [123].