APT 10-K & 10-Q changes, risk factors and insider trading
Alpha Pro Tech Ltd. · NYSE · Orthopedic, Prosthetic & Surgical Appliances & Supplies · CIK 884269 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“On February 1, 2025, President Trump announced the imposition of additional substantial tariffs on imports from various countries, including China, Canada and Mexico, and the subject countries indicated their intention to impose counter measures. Under the announced measures, a 25% tariff will be applied to certain products from Canada and Mexico, while a 10% tariff will be imposed on certain imports from China. …”see in full comparison
We are in the initial stages of incorporating artificial intelligence (“AI”) into our business activities and our product and service offerings. As with many innovations, AI presents risks and challenges that could adversely impact our business. The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices could result in unintended consequences. For example, AI algorithms may be flawed or may be based on datasets that are biased or insufficient. In addition, any disruption or failure in the AI functionality we have incorporated or may in the future incorporate into our business activities, products or services could adversely impact our business or result in delays or errors in our offerings. The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity and privacy and data protection. At the federal level, in January 2025, the Trump administration rescinded an executive order relating to the safe and secure development of AI technologies that was previously implemented by the Biden administration. The Trump administration then issued a new executive order that, among other things, requires certain agencies to develop and submit to the president action plans to “sustain and enhance America’s global AI dominance,” and to specifically review and, if possible, rescind rulemaking taken pursuant to the rescinded Biden executive order. Additionally, in December 2025, the Trump administration’s “Ensuring a National Policy Framework for Artificial Intelligence” Executive Order was signed. This order calls for federal standards and legislation that would preempt conflicting state AI regulations and create a federal litigation task force focused on challenging state AI laws in court. The Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI technologies or may implement new executive orders and/or other rule making relating to AI technologies in the future. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant costs and may limit our ability to develop, deploy or use AI technologies. We also work with vendors that incorporate artificial intelligence tools into their offerings and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.see in full comparison
“Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which have caused and will continue to cause increases in our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers, have disrupted and may continue to disrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. …”see in full comparison
“By way of example, but not limitation, governmental authorities in the U.S. and in other jurisdictions are increasingly focused on potential contamination resulting from the use of so-called “forever chemicals,” most notable at present are per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, and consumer applications over many decades, including in some of our engineered materials and components, and are virtually ubiquitous in parts of the environment. Until recently, these substances were largely unregulated. …”see in full comparison
Unfavorable economic conditions, including the impact of recessions and general economic downturns in the United States and throughout the world, may negatively affect the Company’s business and financial results. These economic conditions could negatively impact (i) demand for our products, (ii) the number and types of products sold, (iii) our ability to collect accounts receivable on a timely basis from certain customers, and (iv) the ability of certain suppliers to fill our orders for raw materials or other goods and services. A prolonged recession could result in decreased revenue, margins and earnings. Additionally, the war between Russia and Ukraine has led to economic sanctions imposed against Russia by the U.S. and certain European nations. Such sanctions may impact companies in many sectors and could lead to volatility of prices in the global energy industry. The extent and strength of the sanctions are still developing, and the corresponding effect on the Company remains uncertain. In addition, the war insee in full comparisonUkraineUkraine,hasand the recent attacks on Iran and escalating conflicts in the Middle East, have further increased existing global supply chain, logistics, and inflationary challenges.
“Large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue. For example, sales to one customer represented 24%, and 20% of our total revenue, and sales to another customer represented 15% and 15% of our total revenue for the years ended December 31, 2025 and 2024, respectively. We have experienced unpredictability in the timing of orders from our large customers primarily due to the overall complexity of these large orders and changes in demand specific to these customers. …”see in full comparison
Full comparison: every changed paragraph (9)
Large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue. For example, sales to one customer represented 24%, and 20% of our total revenue, and sales to another customer represented 15% and 15% of our total revenue for the years ended December 31, 2025 and 2024, respectively. We have experienced unpredictability in the timing of orders from our large customers primarily due to the overall complexity of these large orders and changes in demand specific to these customers. We sometimes provide more favorable terms and conditions to large customers than we typically do to other customers, which may reduce gross margins for the period in which such sales occur. In addition, our largest customer accounted for 53% and 36% of our accounts receivable as of December 31, 2025 and 2024, respectively. Our customers are not contractually obligated to purchase any fixed quantities of products, and they may stop placing orders with us at any time. We are subject to the risk of losing large customers or incurring significant reductions in sales to these customers.
Our operating results could be negatively affected by the loss of revenue from one or more large customers. Our customers are not contractually obligated to purchase any fixed quantities of products, and they may stop placing orders with us at any time. We are subject to the risk of losing large customers or incurring significant reductions in sales to these customers.
We rely on a limited number of suppliers and contractors for the manufacture of our products. If we lose the services of these key suppliers and contractors, or if they are not willing or able to satisfy our requirements, finding substitute suppliers or contractors may be time-consuming and would affect our results of operations in the near term. Changes in business conditions, pandemics, wars, including the recent attacks on Iran and escalating conflicts in the Middle East, Russian invasion of Ukraine and world sanctions on Russia, Belarus, and related parties, governmental changes, and other factors beyond our control or which we do not presently anticipate could negatively affect our suppliers and contractors, as well as our ability to receive components.
Tariff policies and potential countermeasures could continue to increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations.
Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which have caused and will continue to cause increases in our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers, have disrupted and may continue to disrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, certain markets. The U.S. has significantly increased tariffs on products imported from China into the U.S. and implemented new tariffs on imports into the U.S. from other countries, particularly from India, Canada, Mexico, and Vietnam. In response to these tariffs, some foreign countries, including China, have instituted retaliatory tariffs, which could impact our products, while other countries have threatened retaliatory tariffs on certain U.S. products. Further, it is possible that government policy changes and related uncertainty about policy changes could increase market volatility and currency exchange rate fluctuations. Because of these dynamics, we cannot predict the impact of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries on our business. Such changes in tariffs and trade regulations could have a material adverse effect on our financial condition, results of operations and cash flows.
On February 1, 2025, President Trump announced the imposition of additional substantial tariffs on imports from various countries, including China, Canada and Mexico, and the subject countries indicated their intention to impose counter measures. Under the announced measures, a 25% tariff will be applied to certain products from Canada and Mexico, while a 10% tariff will be imposed on certain imports from China. If implemented, these tariffs and countermeasures could increase the cost of raw materials and components necessary for our operations, disrupt our global supply chain and create additional operational challenges. Tariffs may increase our manufacturing costs and make our products less competitive than those of our competitors whose inputs are not subject to these tariffs. Further, it is possible that government policy changes and related uncertainty about policy changes could increase market volatility and currency exchange rate fluctuations. Because of these dynamics, we cannot predict the impact of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries on our business. Such changes in tariffs and trade regulations could have a material adverse effect on our financial condition, results of operations and cash flows.
By way of example, but not limitation, governmental authorities in the U.S. and in other jurisdictions are increasingly focused on potential contamination resulting from the use of so-called “forever chemicals,” most notable at present are per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, and consumer applications over many decades, including in some of our engineered materials and components, and are virtually ubiquitous in parts of the environment. Until recently, these substances were largely unregulated. Nevertheless, over the last few years, PFAS regulation has been evolving rapidly. In 2023, the U.S. EPA issued a new rule under the Toxic Substances Control Act, requiring manufacturers and importers of PFAS to submit additional reporting information about production volumes, industrial uses, byproducts, worker exposure, and disposal. In 2023, certain EU member states submitted a proposal to the European Chemicals Agency calling for the phase out of the manufacture, import, sale, and use of PFAS substances beginning in late 2025. In 2024, among other things, U.S. EPA issued new regulations regarding PFAS in drinking water, PFAS reporting obligations under Toxic Substances Control Act, and designated two PFAS chemicals (Perfluorooctanoic acid and Perfluorooctane sulfonic acid) as hazardous substances under Comprehensive Environmental Response, Compensation, and Liability Act. While PFAS regulation continues to advance at the federal level and in many states, the full scope of such regulation is still being developed. In some cases, PFAS compounds are regulated at, or even below, the ability of current technology to detect their presence, making remediation difficult and complex. We may therefore incur costs in connection with any obligations to transition away from the usage of PFAS-containing products, to dispose of PFAS-containing waste or to remediate any PFAS contamination, which could have a negative effect on our financial position, results of operations and cash flows. We may incur costs in connection with any obligations to transition away from the usage of PFAS-containing products, to dispose of PFAS-containing waste or to remediate any PFAS contamination, which could have a negative effect on our financial position, results of operations and cash flows.
Unfavorable economic conditions, including the impact of recessions and general economic downturns in the United States and throughout the world, may negatively affect the Company’s business and financial results. These economic conditions could negatively impact (i) demand for our products, (ii) the number and types of products sold, (iii) our ability to collect accounts receivable on a timely basis from certain customers, and (iv) the ability of certain suppliers to fill our orders for raw materials or other goods and services. A prolonged recession could result in decreased revenue, margins and earnings. Additionally, the war between Russia and Ukraine has led to economic sanctions imposed against Russia by the U.S. and certain European nations. Such sanctions may impact companies in many sectors and could lead to volatility of prices in the global energy industry. The extent and strength of the sanctions are still developing, and the corresponding effect on the Company remains uncertain. In addition, the war in UkraineUkraine, hasand the recent attacks on Iran and escalating conflicts in the Middle East, have further increased existing global supply chain, logistics, and inflationary challenges.
We are in the initial stages of incorporating artificial intelligence (“AI”) into our business activities and our product and service offerings. As with many innovations, AI presents risks and challenges that could adversely impact our business. The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices could result in unintended consequences. For example, AI algorithms may be flawed or may be based on datasets that are biased or insufficient. In addition, any disruption or failure in the AI functionality we have incorporated or may in the future incorporate into our business activities, products or services could adversely impact our business or result in delays or errors in our offerings. The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity and privacy and data protection. At the federal level, in January 2025, the Trump administration rescinded an executive order relating to the safe and secure development of AI technologies that was previously implemented by the Biden administration. The Trump administration then issued a new executive order that, among other things, requires certain agencies to develop and submit to the president action plans to “sustain and enhance America’s global AI dominance,” and to specifically review and, if possible, rescind rulemaking taken pursuant to the rescinded Biden executive order. Additionally, in December 2025, the Trump administration’s “Ensuring a National Policy Framework for Artificial Intelligence” Executive Order was signed. This order calls for federal standards and legislation that would preempt conflicting state AI regulations and create a federal litigation task force focused on challenging state AI laws in court. The Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI technologies or may implement new executive orders and/or other rule making relating to AI technologies in the future. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant costs and may limit our ability to develop, deploy or use AI technologies. We also work with vendors that incorporate artificial intelligence tools into their offerings and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.
Management's Discussion & Analysis (MD&A)
Largest changes
“Gross Profit. Gross profit decreased by $396,000, or 1.7%, to $22,537,000 for the year ended December 31, 2025, from $22,933,000 for the year ended December 31, 2024. The gross profit margin was 38.1% for the year ended December 31, 2025, compared to 39.6% for the year ended December 31, 2024. The gross profit margin in 2025 was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment and to a lesser degree in the Building Supply segment due to increased U.S. tariffs and higher sales rebates. …”see in full comparison
“The housing market in 2025 proved to be a year of sustained challenges for single-family housing starts, which were down by 7.0% through October 2025 (the latest data available). Demand for new homes has dropped due to economic volatility, high interest rates, and uncertainty surrounding housing starts. Increased tariffs have created notable pricing and supply volatility within the market. In addition, declining builder confidence and ongoing price volatility have resulted in reduced inventory positions among our primary customers. …”see in full comparison
“The building industry forecasts for 2026 remain somewhat conflicted with many being cautiously optimistic. This optimism is fueled by hopes of further interest rate reductions coupled with builder incentives such as price concessions or mortgage rate buydown assistance that would result in improved home affordability. …”see in full comparison
Other Income. Other incomesee in full comparisonincreaseddecreased by$278,000$741,000 to income of$1,571,000$830,000 for the year ended December 31,2024,2025, compared to$1,293,000$1,571,000 for2023.2024. Theincreasedecrease was primarily due toanaincreasedecrease in equity in income of unconsolidated affiliate of$152,000,$447,000,anaincreasedecrease in interest income of$96,000$264,000 and a decrease in gain on sale of assets of $30,000. Equity in income of unconsolidated affiliate was down primarily due to lower sales as a result of the impact of U.S. tariffs. We expect this to improve going forward, as U.S. tariffs on goods from India are expected to decrease to 15% from 50%. The decrease in interest income was primarily due to lower interest rates.
Net Income. Net income for the year ended December 31,see in full comparison2024,2025, was$3,929,000$3,531,000 compared to net income of$4,189,000$3,929,000 for2023,2024, representing a decrease of$261,000,$398,000, or6.2%.10.1%. The net income decrease between20242025 and20232024 was primarily due to a decrease inincome before provision forother incometaxesof$405,000,$741,000partiallyandoffsetanby a decreaseincrease in provision for income taxes of$145,000.$47,000, partially offset by an increase in income from operations of $390,000. The other income decrease of $741,000, the majority of which is not taxable, negatively impacted our net income in 2025. In addition, gross profit was adversely affected in 2025 as a result of U.S. tariffs. Net income as a percentage of net sales was6.8%6.0% forboththeyearsyear ended December 31,20242025,andcompared2023.to 6.8% for 2024. Basicand dilutedearnings per common share for the years ended December 31,20242025 and2023,2024, were$0.35.$0.34 and $0.35, respectively. Diluted earnings per common share for the years ended December 31, 2025 and 2024, were $0.33 and $0.35, respectively.
“Sales of disposable protective garments, which comprise approximately 90% of the segment, were up 12.2% in 2025. Sales started gaining significant momentum in the third quarter and continued very strong in the fourth quarter of 2025. Sales of shoe covers, lab coats, frocks, gowns and caps all grew in 2025 compared to 2024. Tariffs in 2025 created uncertainty and volatility in the marketplace, but we remained resilient and steadfast and exceeded our forecast. …”see in full comparison
Full comparison: every changed paragraph (46)
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the periods reported. We base estimates on past experience and on various other assumptions that are believed to be reasonable under the circumstances. The application of these accounting policies on a consistent basis enables us to provide timely and reliable financial information. Our significant accounting policies and estimates are more fully described in Note 2 – “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8.statements. Our critical accounting policies and estimates include the following:
Accounts Receivable: Accounts receivable are recorded at the invoice amount and do not bear interest. The allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. The Company pools accounts receivable based on risk characteristics, which include type of customer and age of open receivable balance. The allowance for credit losses pool is estimated based on historical write-off experience and known conditions, adjusted for management’s reasonable and supportable expectations of future conditions. Account balances are charged against the allowance when management determines that the probability for collection of an account balance is remote. As of December 31, 2024, 2023,2025 and 2022,2024, the Company had accounts receivable totaling $4,894,000, $6,545,000$8,138,000 and $6,973,000,$4,894,000, respectively. As of December 31, 2024,2025 and 2023,2024, the Company had recorded an allowance for credit losses on accounts receivable of $46,000 and $35,000 for both periods respectively.
Our target markets include construction,construction building supply and roofing distributors; companies in pharmaceutical manufacturing, bio-pharmaceutical manufacturing, medical device manufacturing, lab animal research, and high technology electronics manufacturing (which includes the semi-conductor market); and medical and dental distributors.
Recent developments in U.S. trade policy have introduced uncertainty regarding the future of global trade relations. Following the inauguration of the second Trump administration, there have been numerous announcements made and actions taken related to tariff increases and other trade restrictions regarding imports into the U.S. President Trump has indicated that his administration is likely to impose significant tariffs on imported goods, including a 60% tariff on Chinese imports, a 25% tariff on goods from Canada and Mexico and up to 10% or 20% on all other U.S. imports. Given that we currently source very little from China, this may be a benefit in regards to our competition that does import from China, but any new or increased tariffs, quotas, embargoes, or other trade barriers affecting other countries from which we do source supplies or our global network of third-party suppliers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries could further disrupt our operations or reduce our competitiveness in international markets. We continue to monitor these changing tariffs and trade restrictions. If new tariffs or trade restrictions are imposed, we may need to adjust our pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect our revenue, gross margins, and overall financial performanceperformance.
Sales. Consolidated sales for the year ended December 31, 2024,2025, decreasedincreased to $57,840,000,$59,142,000, from $61,232,000$57,840,000 for the year ended December 31, 2023,2024, representing aan decreaseincrease of $3,392,000,$1,302,000, or 5.5%.2.3%. This decreaseincrease consisted of decreasedincreased sales in the Building Supply segment of $4,431,000,$66,000 partially offset byand increased sales in the Disposable Protective Apparel segment of $1,039,000.$1,236,000.
Building Supply segment sales for the year ended December 31, 2024,2025, decreasedincreased by $4,431,000,$66,000, or 11.0%,0.2%, to $35,965,000$36,031,000 compared to $40,396,000$35,965,000 for the year ended December 31, 2023. The Building Supply segment decrease during the year ended December 31, 2024, was primarily due to a 6.4% decrease in sales of housewrap, an 8.8% decrease in sales of synthetic roof underlayment and a 28.2% decrease in sales of other woven material compared to the same period of 2023.2024.
The Building Supply segment increase during the year ended December 31, 2025, was primarily due to a 2.3% increase in sales of housewrap and a 28.9% increase in sales of other woven material, partially offset by a 10.6% decrease in sales of synthetic roof underlayment as compared to the same period of 2024.
The sales mix of the Building Supply segment for the year ended December 31, 2024,2025, was approximately 38% for synthetic roof underlayment, 51% for housewrap and 11% for other woven material. This compared to approximately 42% for synthetic roof underlayment, 49% for housewrap and 9% for other woven material. This compared to approximately 42% for synthetic roof underlayment, 47% for housewrap and 11% for other woven material for the year ended December 31, 2023.2024. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® and TECHNO SB and our synthetic roof underlayment accessories consist of our new self-adhered TECHNOplus Ice & Water and REX UltraHi HT.Temp. Our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.
The housing market in 2025 proved to be a year of sustained challenges for single-family housing starts, which were down by 7.0% through October 2025 (the latest data available). Demand for new homes has dropped due to economic volatility, high interest rates, and uncertainty surrounding housing starts. Increased tariffs have created notable pricing and supply volatility within the market. In addition, declining builder confidence and ongoing price volatility have resulted in reduced inventory positions among our primary customers. With that said, in 2025 we outperformed the market as our core building products (housewrap and synthetic roof underlayment) were down 3.7%, as compared to the 7.0% decrease in single-family housing starts.
Housewrap sales in 2025 outperformed the broader market by nearly 10%, with an increase of 2.3% despite a 7.0% decline in single-family housing starts. In 2025, due to the economic climate in the building industry, there was pricing pressure on this product line, which affected overall sales. This performance was driven by our reputation for product quality, breadth of offerings, and system warranty programs, which delivered market share improvement among existing customers and facilitated expansion into developing geographic regions and end-market applications. Management expects continued growth in the housewrap category in the coming year, especially if uncertainty in the economy and housing market abates.
The housing market continues to be weak, with housing starts down 4.4% in 2024 compared to 2023. Although sales of the core building products (housewrap and synthetic roof underlayment) were down 7.9% in 2024, which exceeds the decline in housing starts, a closer look reveals the issues we faced. Excluding the decline of sales to two private label distributors, which were beyond our control, the 2024 sales performance of our core building products would have resulted in a lower percentage decline than the reduction in housing starts, indicating that we otherwise outperformed the market. In addition, the percentage change in sales for all of 2024 improved slightly over the first nine months of 2024. Synthetic roof underlayment sales in the fourth quarter of 2024 exceeded sales in the same quarter of 2023.
Housewrap sales were encouraging through the first nine months of 2024 especially since the percentage decline of housing starts was higher than the percentage decline of housewrap sales. Lower housewrap sales in the final quarter of 2024 were primarily due to one of our larger distributors losing some end user’s business but we have not lost share with this distributor. Presenting an additional challenge in 2024, multi-family housing starts in 2024 were down 11.3% compared to 2023 with 2024 being the lowest in ten years. Management expects growth with this distributor and in the housewrap category in the coming year, when uncertainty in the housing market is expected to abate.
Sales of synthetic roof underlayment which were downup double digits6.7% through the first nine months of 2024,2025 but ended the year down single10.6%. digits.This can be attributable primarily to two issues. First, the Asphalt Roofing Manufacturers Association reported a steep decline in shipments of 27.9% in the fourth quarter of 2025 compared to the same period of 2024. In addition, the association reported a 10.3% decline during 2025 compared to the prior year. Secondly, a stronger than normal hurricane season in the fourth quarter of 2024 caused the results to be lower for this segment in the fourth quarter of 2025 and for the year. After hurricanes Helene and Milton,Milton in late 2024, we sawexperienced a surge in synthetic roof underlayment orders in the fourth quarter of 20242024. toIn assistaddition, in the southeast rebuild. Salessales of thisour productroof underlayment line continue to be affected by the uncertain economic conditions, more offshore competition and a push in the market to reduce product selling prices.prices Weand launchedmore ouroffshore newcompetition. Despite all these factors, we maintained market share within the roofing product line ofin self-adhered2025. roofingOur productsdomestic inventory position, customer expansion efforts, and continued investment in late 2023builder and havecontractor achievedrelationships revenuemitigated inthe 2024,impact andof wemarket expectcontraction, continuedallowing growthus withinto our currentmeet customer basedemand andwhile intomaintaining newcompetitive markets.positioning. We are exploring additional products in the roofing market and expect growth in 20252026 in the synthetic roof underlayment category.
Despite the challenges faced in 2024, our efforts are now focused on builders and contractors and we are educating the industry on our extensive manufacturing capabilities which are expected to contribute to future growth. Our top fifteen accounts have increased compared to 2023, excluding one of our top accounts mentioned above. This is a testament to the hard work and commitment of our sales team. Late in the year, we added two Territory Mangers who will assist in strengthening relationships with our customers and driving new business. We also created the position of Director of Product and Business Development. This role will be instrumental in helping APT expand its product offerings and explore new opportunities and industries where we currently do not have a presence.
Sales of other woven material sales decreasedincreased by $1,326,000,$976,000, or 28.2%28.9% in 20242025 compared to 2023,2024, primarily due to oneincreased ofsales to our customerslargest beingcustomer acquiredfor bythis anotherproduct company.line. The Company is pursuing new opportunities for other woven material in 2026 that could improve sales, and as mentioned above, we have hired a Director of Product and Business Development.sales.
The building industry forecasts for 2026 remain somewhat conflicted with many being cautiously optimistic. This optimism is fueled by hopes of further interest rate reductions coupled with builder incentives such as price concessions or mortgage rate buydown assistance that would result in improved home affordability. Management remains committed to production and development of industry leading products and expects growth in the Building Supply segment in the coming year, however uncertainty in housing starts, tariffs, interest rates and the economy in general could negatively affect this segment.
Management expects growth in the Building Supply segment in the coming year, as the projected number of housing starts in 2025 is expected to increase. However, there continues to be uncertainty in housing starts and the economy in general that could affect this segment.
Sales for the Disposable Protective Apparel segment for the year ended December 31, 2024,2025, increased by $1,039,000,$1,236,000, or 5.0%,5.7%, to $21,875,000,$23,111,000, compared to $20,836,000$21,875,000 for 2023.2024. This segment increase was due to a 0.8%12.2% increase in sales of disposable protective garmentsgarments, andpartially offset by a 43.5%13.8% increasedecrease in sales of face shields,shields partially offset byand a 34.6%38.3% decrease in sales of face masks.
Sales of disposable protective garments, which comprise approximately 90% of the segment, were up 12.2% in 2025. Sales started gaining significant momentum in the third quarter and continued very strong in the fourth quarter of 2025. Sales of shoe covers, lab coats, frocks, gowns and caps all grew in 2025 compared to 2024. Tariffs in 2025 created uncertainty and volatility in the marketplace, but we remained resilient and steadfast and exceeded our forecast. We plan to continue to deliver our high-quality products and remain agile to maintain our leadership position and to differentiate Alpha Pro Tech in the disposable protective garments marketplace. Management anticipates the growth trend will continue and we will work to uncover new growth opportunities in 2026.
Sales of our face mask and face shield products in 2025 were below management’s expectations. Our inventory position and manufacturing capacity is on solid ground and a sizable percentage of our products in this category are not burdened by tariffs. We will continue our efforts to improve sales of our face mask and face shields products, including by use of promotions and pricing incentives.
Gross Profit. Gross profit decreased by $396,000, or 1.7%, to $22,537,000 for the year ended December 31, 2025, from $22,933,000 for the year ended December 31, 2024. The gross profit margin was 38.1% for the year ended December 31, 2025, compared to 39.6% for the year ended December 31, 2024. The gross profit margin in 2025 was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment and to a lesser degree in the Building Supply segment due to increased U.S. tariffs and higher sales rebates. In 2025, we experienced three tariff increases on most of our products due to the implementation of the Trump administration’s tariff policies and reciprocal tariffs. Management increased selling prices in July and November 2025 in order to partially mitigate the impact of the first two tariffs increases, but many of the higher tariffed products remain in inventory, which we expect will have a negative effect on gross margin in the first half of 2026. Effective February 7, 2026, the Trump administration announced that tariffs on goods from India would be reduced to 18% down from 50%. These U.S. tariffs were implemented under the International Emergency Economic Powers Act (“IEEPA”) and were rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize these tariffs, but the U.S. government subsequently announced plans to implement a new “temporary import surcharge” of 15% on many of the same imports beginning February 24, 2026, under authorities provided for in Section 122 of the Trade Act of 1974. These or other tariffs, actual or proposed legislation, or similar laws and regulations in the future, including changes to implemented bilateral trade deals between the U.S. and India, could adversely impact our current or future third-party arrangements with certain companies, including those in India, which could impact our products and supply chain. As we progress into next year, gross margin should improve as we deplete our higher tariffed inventory.
Sales of disposable protective garments in 2024 were up approximately 19% as compared to pre-pandemic levels, increasing due to further integration and growth among some of our largest regional channel partners. We have signed new distribution agreements with regional and national channel partners, which should provide for an enhanced level of engagement and mutual growth incentives. In addition, we signed a new agreement with our largest international channel partners and achieved elevated status and were named as a preferred supplier going forward. We believe this achievement will provide some growth opportunities, and management expects continued growth for disposable protective garments in 2025.
The significant growth in face masks and shields was a direct result of a return to a pre-pandemic business model. Together, with both our dental and medical channel partners, we have overcome the negative impact of excess inventories. Our partnerships in this segment remain strong and, through further integration and buy-side incentives, we anticipate a steady growth trajectory going forward.
Gross Profit. Gross profit increased by $104,000, or 0.5%, to $22,933,000 for the year ended December 31, 2024, from $22,829,000 for the year ended December 31, 2023. The gross profit margin was 39.6% for the year ended December 31, 2024, compared to 37.3% for the year ended December 31, 2023.
The gross profit margin in 2024 was positively affected by a margin increase in both the Disposable Protective Apparel and Building Supply segments. However, management expects that the gross profit margin could be negatively affected next year by ocean freight rates that experienced significant volatility in 2024, due to factors such as geopolitical tensions, labor disputes and market dynamics. As we progress into next year, the outlook suggests both challenges and potential easing of freight rates.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increaseddecreased by $839,000,$838,000, or 4.7%,4.5%, to $17,773,000 for the year ended December 31, 2025, from $18,611,000 for the year ended December 31, 2024, from $17,772,000 for the year ended December 31, 2023.2024. As a percentage of net sales, selling, general and administrative expenses increaseddecreased to 32.2%30.1% for the year ended December 31, 2024,2025, from 29.0%32.2% for 2023.2024.
The change in expenses by segment for the year ended December 31, 2024,2025, was as follows: Building Supply expenses were down by $361,000, or 5.0%; Disposable Protective Apparel expenses were up by $672,000,$47,000, or 14.3%; Building Supply expenses were down by $505,000, or 6.6%0.9%; and corporate unallocated expenses were updown by $672,000,$524,000, or 12.5%.8.6%.
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation, travelcommission, general factory and office expenses, and insurance expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketingmarketing, and sales travel expenses, partially offset by lower rent and utilities and general office and factory expenses. The increasedecrease in corporate unallocated expenses was primarily due to increaseddecreased professional fees, public company expenses, insurance expenses, employee compensation, stockgeneral option and restricted stock expenses, reorganization costs, professional fees, insuranceoffice expenses and general office expenses.reorganization. The reorganization costs in 2024 were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona during 2024. This relocation of our face mask manufacturing facility is expected to result in lower expenses for this product line.Arizona.
Depreciation and Amortization. Depreciation and amortization expense decreasedincreased by $52,000, or 5.6%,6.0%, to $925,000 for the year ended December 31, 2025, from $873,000 for the year ended December 31, 2024, from $925,000 for the year ended December 31, 2023.2024. The decreaseincrease was primarily due to aan decreaseincrease in depreciation in the Building Supply segment.
Income from Operations. Income from operations decreasedincreased by $683,000,$390,000, or 16.5%,11.3%, to $3,839,000 for the year ended December 31, 2025, compared to $3,449,000 for the year ended December 31, 2024, compared to $4,132,000 for the year ended December 31, 2023.2024. The decreasedincreased income from operations was primarily due to ana increasedecrease in selling, general and administrative expenses of $839,000,$838,000, partially offset by ana increasedecrease in gross profit of $104,000$396,000 and aan decreaseincrease in depreciation and amortization expenses of $52,000. Gross profit margin was adversely affected in 2025 because of U.S. tariffs on products primarily from our joint venture partner in India. Income from operations as a percentage of net sales for the year ended December 31, 2024,2025, was 6.0%,6.5%, compared to 6.8%6.0% for 2023.2024.
Other Income. Other income increaseddecreased by $278,000$741,000 to income of $1,571,000$830,000 for the year ended December 31, 2024,2025, compared to $1,293,000$1,571,000 for 2023.2024. The increasedecrease was primarily due to ana increasedecrease in equity in income of unconsolidated affiliate of $152,000,$447,000, ana increasedecrease in interest income of $96,000$264,000 and a decrease in gain on sale of assets of $30,000. Equity in income of unconsolidated affiliate was down primarily due to lower sales as a result of the impact of U.S. tariffs. We expect this to improve going forward, as U.S. tariffs on goods from India are expected to decrease to 15% from 50%. The decrease in interest income was primarily due to lower interest rates.
Income before Provision for Income Taxes. Income before provision for income taxes for the year ended December 31, 2024,2025, was $5,020,000,$4,669,000, compared to income before provision for income taxes of $5,425,000$5,020,000 for 2023,2024, representing a decrease of $405,000,$351,000, or 7.5%.7.0%. This decrease in income before provision for income taxes was due to a decrease in other income from operations of $683,000,$741,000, partially offset by an increase in otherincome incomefrom operations of $278,000.$390,000.
Provision for Income Taxes. The provision for income taxes for the year ended December 31, 2024,2025, was $1,091,000,$1,138,000, compared to $1,236,000$1,091,000 for 2023.2024. The estimated effective tax rate was 24.4% for the year ended December 31, 2025, compared to 21.8% for the year ended December 31, 2024. The effective tax rate increase between 2025 and 2024, comparedof 2.6 percentage points, was primarily due to 22.8%lower forequity thein yearincome endedof Decemberunconsolidated 31,affiliate 2023.in 2025. The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes. The Company is still evaluating the potential impacts of the OBBBA; however, the Company does not anticipate it will have a material impact on the Company’s financial statements.
Net Income. Net income for the year ended December 31, 2024,2025, was $3,929,000$3,531,000 compared to net income of $4,189,000$3,929,000 for 2023,2024, representing a decrease of $261,000,$398,000, or 6.2%.10.1%. The net income decrease between 20242025 and 20232024 was primarily due to a decrease in income before provision forother income taxes of $405,000,$741,000 partiallyand offsetan by a decreaseincrease in provision for income taxes of $145,000.$47,000, partially offset by an increase in income from operations of $390,000. The other income decrease of $741,000, the majority of which is not taxable, negatively impacted our net income in 2025. In addition, gross profit was adversely affected in 2025 as a result of U.S. tariffs. Net income as a percentage of net sales was 6.8%6.0% for boththe yearsyear ended December 31, 20242025, andcompared 2023.to 6.8% for 2024. Basic and diluted earnings per common share for the years ended December 31, 20242025 and 2023,2024, were $0.35.$0.34 and $0.35, respectively. Diluted earnings per common share for the years ended December 31, 2025 and 2024, were $0.33 and $0.35, respectively.
As of December 31, 2024,2025, the Company had cash and cash equivalents (“cash”) of $18,636,000$16,988,000 and working capital of $47,516,000.$48,462,000. As of December 31, 2024,2025, the Company’s current ratio (current assets/current liabilities) was 1613:1, compared to a current ratio of 2116:1 as of December 31, 2023.2024. Cash decreased by 8.5%,8.8%, or $1,742,000,$1,648,000, to $16,988,000 as of December 31, 2025, compared to $18,636,000 as of December 31, 2024, comparedand working capital increased by $946,000, to $20,378,000$48,462,000 from $47,516,000 as of December 31, 2023, and working capital decreased by $2,982,000, to $47,516,000 from $50,498,000 as of December 31, 2023.2024. The decrease in cash from December 31, 2023,2024, was due to cash used in investing activities of $3,776,000$639,000 and cash used in financing activities of $3,664,000,$3,379,000, partially offset by cash provided by operating activities of $5,698,000.$2,370,000.
Net cash provided by operating activities of $5,698,000$2,370,000 for the year ended December 31, 20242025 was due to net income of $3,922,000,$3,531,000, as adjusted primarily by the following: stock-based compensation expense of $463,000,$540,000, depreciation and amortization expense of $873,000,$925,000, equity in income of unconsolidated affiliate of $629,000, gain on sale of assets of $30,000,$182,000, operating lease asset amortization of $899,000,$939,000, andan increase in deferred income taxes of $61,000,$176,000, aan decreaseincrease in accounts receivable of $1,651,000,$3,244,000, a decrease in prepaid expenses of $1,635,000,$580,000, an increase in inventory of $2,602,000,$865,000, an increase in accounts payable and accrued liabilities of $325,000,$863,000, and a decrease in lease liabilities of $876,000,$893,000, all compared to December 31, 2023.2024.
Accounts receivable decreasedincreased by $1,651,000,$3,244,000, or 25.2%,66.3%, to $8,138,000 as of December 31, 2025, from $4,894,000 as of December 31, 2024, from $6,545,000 as of December 31, 2023.2024. The decreaseincrease in accounts receivable was primarily related to decreasedincreased disposable garment and other woven material sales in the latterfourth partquarter of 20242025 compared to the same period of 2023.2024. The number of days that sales remained outstanding as of December 31, 2024,2025, calculated by using an average of accounts receivable outstanding and annual revenue, was 3640 days, compared to 4036 days as of December 31, 2023.2024.
Prepaid expenses decreased by $1,634,000,$580,000, or 27.2%,13.3%, to $3,796,000 as of December 31, 2025, from $4,376,000 as of December 31, 2024, from $6,010,000 as of December 31, 2023.2024. The decrease was primarily due to decreased prepaid equipment and prepayments for insurance,inventory and prepaid tax payments partially offset by increased prepaid taxinsurance payments.
Right-of-use assets as of December 31, 2024,2025, increaseddecreased by $3,904,000$939,000 to $8,714,000$7,775,000 from $4,801,000$8,714,000 as of December 31, 2023, primarily2024, as a result of our new Nogales, Arizona lease, partially offset by amortization of the right of use asset.
Lease liabilities as of December 31, 2024,2025, increaseddecreased by $3,927,000$893,000 to $8,775,000$7,882,000 from $4,848,000$8,775,000 as of December 31, 2023.2024. The increasedecrease in the lease liabilities was primarily the result of our new lease in Nogales, Arizona starting March 1, 2024, partially offset by lease payments made during the period.
Accounts payable and accrued liabilities as of December 31, 20242025 increased by $325,000,$863,000, or 17.1%,38.7%, to $2,230,000,$3,093,000, from $1,905,000$2,230,000 as of December 31, 2023.2024. The increase was primarily due to an increase in trade payables andof accrued payroll, partially offset by a decrease in accrued bonuses.$722,000.
Net cash used in investing activities was $3,776,000$639,000 for the year ended December 31, 2024,2025, compared to net cash used in investing activities of $792,000$3,776,000 for 2023.2024. Investing activities for the yearyears ended December 31, 20242025 and 20232024 consisted primarily of the purchase of property and equipment.
Net cash used in financing activities was $3,664,000$3,379,000 for the year ended December 31, 2024,2025, compared to net cash used in financing activities of $3,578,000$3,664,000 for 2023.2024. Net cash used in financing activities for the year ended December 31, 20242025, resulted from the payment of $3,345,000 for the repurchase of common stock and $34,000 for treasury stock excise tax. Net cash used in financing activities for the year ended December 31, 2024, resulted from the payment of $4,452,000 for the repurchase of common stock and $44,000 for treasury stock excise tax, partially offset by $832,000 in proceeds from the exercise of stock options. Net cash used in financing activities for the year ended December 31, 2023 resulted from the payment of $4,002,000 for the repurchase of common stock and $40,000 for treasury stock excise tax, partially offset by $464,000 in proceeds from the exercise of stock options.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures.Disclosures Theseto amendmentsexpand addressthe investordisclosure requestsrequirements for enhanced transparency regarding income taxtaxes, information. Specifically, they improve income tax disclosuresspecifically related to the rate reconciliation and income taxes paid. ASU 2023-09 becomeswas effective for fiscalannual yearsperiods beginning after December 15, 2024,2024. withThe earlyCompany adoptionadopted permitted.this pronouncement and the related disclosure for the year ended December 31, 2025, and revised its income tax disclosures in Note 14 – “Income Taxes” on a retrospective basis.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company evaluating the impact of this pronouncement on its related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendment is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. The amendments in this update should be applied on a prospective basis. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements and related disclosures.
What changed in the latest 10-Q
Risk Factors
Largest changes
Tariffsee in full comparisonpoliciespolicies, ongoing trade disputes, andpotentialrelatedcountermeasureslitigation, including related to tariff refunds, could increase ourcosts andcosts, disrupt our global supply chain,whichandcouldadverselynegativelyaffectimpactourthebusiness, financial condition, results ofouroperations,operations.and cash flows
“Because of these dynamics, we cannot predict the impact of future changes to U.S. or foreign trade policies, tariffs, or other trade regulations, or the outcome of ongoing litigation relating to such measures. Any such developments could have a material adverse effect on our business, financial condition, results of operations, and cash flows.”see in full comparison
“During the three months ended June 30, 2026, the Company recognized a refund of certain tariffs previously paid under the IEEPA, including applicable statutory interest, that were received from U.S. Customs and Border Protection during June 2026. However, the underlying litigation challenging the IEEPA tariffs remains ongoing, and the U.S. government has appealed the applicable court decisions. …”see in full comparison
Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which havesee in full comparisoncaused and will continue to cause increases inincreased our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers,have disrupted andmaycontinue todisrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, certain markets. TheU.S.United States has imposed increased tariffs on importedproductsproducts, andin response to these tariffs, somecertain trading partners haveinstitutedresponded with retaliatory tariffs, which couldimpactadversely affect ourproducts.business.Further,Initaddition,ischangespossible thatin governmentpolicy changespolicies andrelatedthe uncertaintyaboutsurroundingpolicysuch changes could increase market volatility and foreign currency exchange rate fluctuations.Because of these dynamics, we cannot predict the impact of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries on our business. Such changes in tariffs and trade regulations could have a material adverse effect on our financial condition, results of operations and cash flows.
“The Company received an additional $3.2 million in refunds in July 2026 which were not recognized in the condensed consolidated financial statements as of June 30, 2026 due to the uncertainty described above. There can be no assurance regarding the ultimate recognition of those refunds.”see in full comparison
Full comparison: every changed paragraph (5)
Tariff policiespolicies, ongoing trade disputes, and potentialrelated countermeasureslitigation, including related to tariff refunds, could increase our costs andcosts, disrupt our global supply chain, whichand couldadversely negativelyaffect impactour thebusiness, financial condition, results of ouroperations, operations.and cash flows
Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which have caused and will continue to cause increases inincreased our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers, have disrupted and may continue to disrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, certain markets. The U.S.United States has imposed increased tariffs on imported productsproducts, and in response to these tariffs, somecertain trading partners have institutedresponded with retaliatory tariffs, which could impactadversely affect our products.business. Further,In itaddition, ischanges possible thatin government policy changespolicies and relatedthe uncertainty aboutsurrounding policysuch changes could increase market volatility and foreign currency exchange rate fluctuations. Because of these dynamics, we cannot predict the impact of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries on our business. Such changes in tariffs and trade regulations could have a material adverse effect on our financial condition, results of operations and cash flows.
During the three months ended June 30, 2026, the Company recognized a refund of certain tariffs previously paid under the IEEPA, including applicable statutory interest, that were received from U.S. Customs and Border Protection during June 2026. However, the underlying litigation challenging the IEEPA tariffs remains ongoing, and the U.S. government has appealed the applicable court decisions. As a result, there can be no assurance regarding the ultimate outcome of the litigation or whether future judicial, legislative, or administrative actions could adversely affect the Company or require additional actions with respect to the refunded amounts.
The Company received an additional $3.2 million in refunds in July 2026 which were not recognized in the condensed consolidated financial statements as of June 30, 2026 due to the uncertainty described above. There can be no assurance regarding the ultimate recognition of those refunds.
Because of these dynamics, we cannot predict the impact of future changes to U.S. or foreign trade policies, tariffs, or other trade regulations, or the outcome of ongoing litigation relating to such measures. Any such developments could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Management's Discussion & Analysis (MD&A)
New heading “NON-GAAP FINANCIAL MEASURES”
Removed heading “BUILDING SUPPLY SEGMENT”
Removed heading “DISPOSABLE PROTECTIVE APPAREL SEGMENT”
Largest changes
“Subsequent to June 30, 2026, the Company received approximately $3.2 million in refunds from the CBP related to previously paid IEEPA tariffs. This is in addition to the approximately $300,000 in refunds received (and recorded) during the second quarter of 2026. Although approximately $3.2 million of refunds were received after quarter-end and prior to the filing of this Form 10-Q, the IEEPA tariff matters related to the $3.2 million remain subject to ongoing litigation, including pending appeals, and the ultimate resolution of these matters has not been finalized. …”see in full comparison
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the Presidentsee in full comparisonlackslacked authority under the International Emergency Economic Powers Act ("IEEPA") to impose certain tariffs. During the three months ended June 30, 2026, the Company recognized a recovery of approximately $300,000 of previously paid IEEPA tariffs under the gain contingency model. TheCompanyrelatedpaidrefunds,tariffsincludinginapplicable2025statutoryunderinterest,IEEPAwereandreceivedhas filed for refunds of these tariffs, but the ultimate receipt and timing of such refunds remain subject to review byfrom U.S. Customs and Border Protection (the “CBP”).ThereduringisJuneno2026.guaranteeThe U.S. government has appealed the court's decision, and the litigation remains ongoing. The Company willreceivecontinueatorefund.monitor developments related to the litigation and U.S. trade policy.
“Single-family housing starts in the U.S. have remained constrained by affordability pressures, macroeconomic uncertainty, and more recently by geopolitical volatility. Elevated mortgage rates and persistently high home prices relative to income have reduced affordability and softened demand, while tighter lending standards have further limited activity. Geopolitical tensions have also contributed to input cost volatility and ongoing supply chain disruptions, increasing construction cost pressures. …”see in full comparison
“Excluding the impact of the IEEPA tariff refund, net income for the six months ended June 30, 2026, was $2,309,000*, compared to net income of $1,857,000 for the same period of 2025, representing an increase of $452,000, or 24.3%. Excluding the impact of the IEEPA refund, the net income increase between the six months ended June 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $592,000, partially offset by an increase in provision for income taxes of $140,000. …”see in full comparison
“The decrease in gross profit margin was primarily driven by U.S. tariffs, implemented under the International Emergency Economic Powers Act (“IEEPA”), in early 2025. During 2025, the Company experienced three tariff increases on most products as a result of U.S. trade policy actions and reciprocal tariffs. We implemented price increases in mid-2025 as well as later in the year to partially offset the impact of these tariff increases; however higher tariffed inventory on hand continued to negatively impact gross margin in the first quarter of 2026. …”see in full comparison
“Excluding the impact of the IEEPA tariff refund, net income for the three months ended June 30, 2026, was $1,607,000*, compared to net income of $1,244,000 for the same period of 2025, representing an increase of $363,000, or 29.2%. The net income increase between the three months ended June 30, 2026, and the same period of 2025 was due to an increase in income before provision for income taxes of $479,000, partially offset by a decrease in provision for income taxes of $116,000. …”see in full comparison
Full comparison: every changed paragraph (90)
Recent developments in U.S. trade policy havecontinue introducedto introduce uncertainty regarding the future of global trade relations. Following the inauguration of the second Trump administration, there have been numerous announcements and actions related to tariff increases and other trade restrictions on imports into the U.S.United States. Changes in tariffs, quotas, embargoes, or other trade barriers affecting countries from which wethe sourceCompany supplies,sources products, or ouraffecting its global network of third-party suppliers, could impact ourthe Company's supply chain and cost structure. Additionally,In addition, retaliatory measures by affected countries could further disrupt our operations or reduce our competitiveness in international markets. WeThe continueCompany continues to monitor these evolving tariffstrade policies and tradetariff restrictions.developments. IfFuture newchanges in tariffs or other trade restrictions arecould imposed,require wethe may needCompany to adjust pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect our revenue, gross margins, and overallresults financialof performance.operations.
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the President lackslacked authority under the International Emergency Economic Powers Act ("IEEPA") to impose certain tariffs. During the three months ended June 30, 2026, the Company recognized a recovery of approximately $300,000 of previously paid IEEPA tariffs under the gain contingency model. The Companyrelated paidrefunds, tariffsincluding inapplicable 2025statutory underinterest, IEEPAwere andreceived has filed for refunds of these tariffs, but the ultimate receipt and timing of such refunds remain subject to review byfrom U.S. Customs and Border Protection (the “CBP”). Thereduring isJune no2026. guaranteeThe U.S. government has appealed the court's decision, and the litigation remains ongoing. The Company will receivecontinue ato refund.monitor developments related to the litigation and U.S. trade policy.
Subsequent to June 30, 2026, the Company received approximately $3.2 million in refunds from the CBP related to previously paid IEEPA tariffs. This is in addition to the approximately $300,000 in refunds received (and recorded) during the second quarter of 2026. Although approximately $3.2 million of refunds were received after quarter-end and prior to the filing of this Form 10-Q, the IEEPA tariff matters related to the $3.2 million remain subject to ongoing litigation, including pending appeals, and the ultimate resolution of these matters has not been finalized. Given the uncertainty related to the litigation, management concluded that the ultimate collectability of the $3.2 million could not be deemed to be probable as of June 30, 2026. Accordingly, no additional amounts related to the $3.2 million have been recognized in the accompanying condensed consolidated financial statements as of June 30, 2026.
Management reviews and analyzes several key performance measures which are non-GAAP financial measures when shown excluding the impact of the IEEPA tariff refund, including gross profit; selling, general and administrative expense; income from operations; income before provision for taxes; provision for taxes; net income; basic earnings per share; and diluted earnings per share. These measures are reviewed and analyzed in order to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions, including those discussed below. See “Results of Operations” below for further discussion on these key performance measures, which are indicated by an asterisk (*).
The non-GAAP financial measures should be considered along with the most directly comparable U.S. GAAP financial measures. Definitions of these non-GAAP financial measures, a discussion of why we believe they are useful to management and investors as well as certain of their limitations, and reconciliations to their most directly comparable U.S. GAAP financial measures are provided below under “Non-GAAP Financial Measures.”
For the threeThree and Six months ended MarchJune 31,30, 2026 compared to the threeThree and Six months ended MarchJune 31,30, 2025
Sales. Consolidated sales for the three months ended MarchJune 31,30, 2026, increased to $14,585,000,$18,674,000, from $13,822,000$16,672,000 for the three months ended MarchJune 31,30, 2025, representing an increase of $763,000,$2,002,000, or 5.5%.12.0%. This increase consisted of increased sales in the Building Supply segment of $608,000 and increased sales in the Disposable Protective Apparel segment of $1,276,000, partially offset by decreased sales in the Building Supply segment of $513,000.$1,394,000.
BUILDING SUPPLY SEGMENT
Building Supply segment sales for the three months ended MarchJune 31,30, 2026, decreasedincreased by $513,000,$608,000, or 6.1%,5.5%, to $7,859,000$11,692,000, compared to $8,372,000$11,084,000 for the three months ended MarchJune 31,30, 2025.
The Building Supply segment sales decreaseincrease during the three months ended MarchJune 31,30, 2026, was primarily due to a 27.4%1.2% decreaseincrease in sales of housewrap, a 3.4% increase in sales of synthetic roof underlayment, partially offset by a 13.1% increase in sales of housewrap and a 32.0%6.0% increase in sales of other woven material and a 25.0% decrease in rebates as compared to the same period of 2025.
The sales mix of the Building Supply segment for the three months ended MarchJune 31,30, 2026, was approximately 37%40% for synthetic roof underlayment, 53%50% for housewrap and 10% for other woven material.material, Thiswhich comparedwas tothe approximately 48% for synthetic roof underlayment, 45% for housewrap and 7% for other woven materialsame for the three months ended MarchJune 31,30, 2025. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® and TECHNO SB and our synthetic roof underlayment accessories consist of our new self-adhered TECHNOplus Ice & Water and REX Hi Temp. Our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.
The housing market continued to show weakness in the second quarter of 2026, as single-family housing starts declined by 4.2% compared to the corresponding period in 2025. This decline in the second quarter of 2026 represents an improvement from the decline of 6.5% in the first quarter of 2026. Single-family housing starts in the U.S. remained constrained by mortgage rates, increased land, labor and construction costs, affordability pressures, macroeconomic uncertainty, and geopolitical volatility, which has led builders to moderate new construction activity.
During the second quarter of 2026, we again outperformed the market, as our core building products (housewrap and synthetic roof underlayment) were up by 2.2% compared to the same period of 2025, driven by an increase in both housewrap and synthetic roof underlayment sales. Our synthetic roof underlayment sales increased by 3.4% in the second quarter of 2026 compared to the second quarter of 2025, even though the Asphalt Roofing Manufacturers Association (“ARMA”) reported a 10.0% decline in industry shipments. The Company plans to expand our roofing market product offerings in order to enhance our competitive position and support long-term growth.
Challenges in the housing market continued during the first quarter of 2026, as single-family housing starts declined compared to the corresponding period in 2025. According to the U.S. Census Bureau, single-family housing starts decreased by 5.5% for the quarter. Housing starts for January and February 2026 declined by 14.0% compared to the same period in 2025; however, housing activity increased in March 2026, partially mitigating the overall quarterly decline.
In the first quarter of 2026, our housewrap sales increased by 13.1%, significantly outperforming the broader market and reflecting market share gains. Management expects continued growth in the housewrap category over the coming year, particularly if broader economic and housing market uncertainty eases. Our synthetic roof underlayment sales declined in the first quarter of 2026, and the Asphalt Roofing Manufacturers Association (“ARMA”) reported a 9.9% decline in industry shipments compared to the first quarter of 2025 as well. We are pursuing opportunities to expand our product portfolio within the roofing market by identifying and developing additional complementary product offerings that align with customer needs, enhance our competitive position, and support long-term growth.
Sales of other woven material sales increased by $215,000, or 32.0%, for the three months ended March 31, 2026 compared to the same period of 2025, primarily due to increased sales to our largest customer for this product line. The Company continues to pursue new opportunities for other woven material.
Single-family housing starts in the U.S. have remained constrained by affordability pressures, macroeconomic uncertainty, and more recently by geopolitical volatility. Elevated mortgage rates and persistently high home prices relative to income have reduced affordability and softened demand, while tighter lending standards have further limited activity. Geopolitical tensions have also contributed to input cost volatility and ongoing supply chain disruptions, increasing construction cost pressures. In combination with elevated land, labor, and material costs, these factors have led builders to moderate new construction activity, resulting in continued softness in single-family housing starts.
The building industry outlook for the remainder of 2026 remainsreflects mixed,a withsoft expectationsbut forgenerally gradualstable improvementmarket, rather than a meaningful rebound. A modest increase in thesingle-family latterhousing partstarts ofis theexpected year.in 2027, assuming economic and financing conditions improve. Management remains focused on developing and producing industry-leading products and anticipates growth in the Building Supply segment; however, uncertainty related to the factors described above could adversely impact results.
DISPOSABLE PROTECTIVE APPAREL SEGMENT
Sales for the Disposable Protective Apparel segment sales for the three months ended MarchJune 31,30, 2026, increasedwere by $1,276,000, or 23.4%, to $6,726,000,$6,982,000, compared to $5,450,000$5,588,000 for the same period in 2025, reflecting an increase of 2025.$1,394,000, Thisor 24.9%. The segment salesexperienced increasestrong was due to a 23.8% increase inunderlying sales ofgrowth disposableduring protectivethe garments, a 28.8% increase in sales of face masks and an 8.0% increase in sales of face shields.quarter.
The sales mix of the Disposable Protective Apparel segment for the three months ended MarchJune 31,30, 20262026, was approximately 91%93% for disposable protective garments, 6%4% for face masks and 3% for face shields. This sales mix is compared to approximately 90% for disposable protective garments, 6% for face masks and 4% for face shields for the three months ended MarchJune 31,30, 2025.
Sales of disposable protective garments, which comprised 91%93% of the segment sales, were upincreased by $1,172,000$1,458,000 or 23.8%29.0% in the firstsecond quarter of 2026.2026, compared to the same period in 2025. The sales increase was primarily due to improved sales to our largest international channel partner.partner, as well as national and regional distributors. A considerable portion of the increase was attributable to higher selling prices, primarily driven by the impact of U.S. tariffs. Sales of shoeour covers,face coveralls, lab coats, frocks, gownsmask and capsface allshield grewproducts in the firstsecond quarter of 20262026, which comprise the remaining 7% of the segment sales, were down by $64,000 compared to the same period ofin 2025.
Consolidated sales for the six months ended June 30, 2026 were $33,259,000, compared with $30,494,000 for the six months ended June 30, 2025, an increase of $2,765,000, or 9.1%. The increase was attributable to higher sales in both operating segments, consisting of a $95,000 increase in the Building Supply segment and a $2,670,000 increase in the Disposable Protective Apparel segment.
Building Supply segment sales for the six months ended June 30, 2026 increased by $95,000, or 0.5%, to $19,551,000, compared to $19,456,000 for the six months ended June 30, 2025.
The Building Supply segment sales increase during the six months ended June 30, 2026, was primarily due to a 5.9% increase in sales of housewrap and a 15.1% increase in sales of other woven material and a 13.6% decrease in rebates, partially offset by an 11.3% decrease in sales of synthetic roof underlayment, compared to the same period of 2025.
The sales mix of the Building Supply segment for the six months ended June 30, 2026 was 51% for housewrap, 39% for synthetic roof underlayment and 10% for other woven material. This compared to 48% for housewrap, 43% for synthetic roof underlayment and 9% for other woven material for the six months ended June 30, 2025.
As per the US Census Bureau, single-family housing starts declined by 5.3% year to date compared to the same period in 2025. The Asphalt Roofing Manufacturers Association (“ARMA”) reported a 10.0% decline in industry shipments compared to the year to date in 2025. Management is encouraged by a 5.9% increase in sales of housewrap and sales of synthetic roof underlayment as compared to the decline in the ARMA figures.
Sales of other woven material were up 15.1% year to date in 2026 compared to the same period in 2025, primarily due to increased sales to our largest customer for this product line.
Management expects growth in the Building Supply segment, however continued uncertainty in housing starts and the economy in general could negatively affect this segment.
Disposable Protective Apparel segment sales for the six months ended June 30, 2026 increased by $2,670,000, or 24.2%, to $13,708,000, compared to $11,038,000 for the six months ended June 30, 2025.
The increase in segment sales was primarily driven by strong demand across the Company's disposable protective product lines. Compared with the first six months of 2025, sales of disposable protective garments increased by 26.4%, sales of face masks increased by 5.7%, and sales of face shields increased by 0.9%. These increases contributed to the segment's strong underlying year-over-year growth.
The sales mix of the Disposable Protective Apparel segment for the six months ended June 30, 2026, was 92% for disposable protective garments, 5% for face masks and 3% for face shields. This sales mix is compared to 90% for disposable protective garments, 6% for face masks and 4% for face shields for the six months ended June 30, 2025.
Sales of our face mask and face shield products in the first quarter of 2026, which comprise the remaining 9% of the segment sales, were up 28.8% and 8.0%, respectively and for the most part did not benefit from tariff related price increases. We will continue to pursue initiatives aimed at increasing sales of our face mask and face shield products, including the implementation of targeted promotions and strategic pricing incentives.
Gross Profit. GrossIncluding the impact of the IEEPA tariff refund, gross profit increased by $124,000,$847,000, or 2.3%,13.8%, to $5,516,000$6,978,000 for the three months ended MarchJune 31,30, 2026, from $5,392,000$6,131,000 for the three months ended MarchJune 31,30, 2025. The gross profit margin was 37.8%37.4% for the three months ended MarchJune 31,30, 2026, compared to 39.0%36.8% for the three months ended MarchJune 31,30, 2025.
The net change in gross profit for the second quarter of 2026 due to the IEEPA tariff refund was $294,000, which comprised of lower cost of goods sold.
Excluding the IEEPA tariff refund, gross profit increased by $553,000, or 9.0%, to $6,684,000 for the three months ended June 30, 2026, from $6,131,000 for the three months ended June 30, 2025. The gross profit margin was 35.8% for the three months ended June 30, 2026, compared to 36.8% for the three months ended June 30, 2025.
Including the impact of the IEEPA tariff refund, gross profit increased by $971,000, or 8.4%, to $12,494,000 for the six months ended June 30, 2026, from $11,523,000 for the six months ended June 30, 2025. The gross profit margin was 37.6% for the six months ended June 30, 2026, compared to 37.8% for the six months ended June 30, 2025.
Excluding the IEEPA tariff refund, gross profit increased by $677,000, or 5.9%, to $12,200,000 for the six months ended June 30, 2026, from $11,523,000 for the six months ended June 30, 2025. The gross profit margin was 36.7% for the six months ended June 30, 2026, compared to 37.8% for the six months ended June 30, 2025.
The decrease in gross profit margin was primarily driven by U.S. tariffs, implemented under the International Emergency Economic Powers Act (“IEEPA”), in early 2025. During 2025, the Company experienced three tariff increases on most products as a result of U.S. trade policy actions and reciprocal tariffs. We implemented price increases in mid-2025 as well as later in the year to partially offset the impact of these tariff increases; however higher tariffed inventory on hand continued to negatively impact gross margin in the first quarter of 2026. We expect gross margin improvement after higher-cost tariffed inventory flows through the system.These IEEPA tariffs were subsequently rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize such tariffs. On the same date, the U.S. government announced plans to implement a new 15% tariff under Section 122 of the Trade Act of 1974. Although announced at 15%, the tariff is currently at 10%.
We have filed claims with U.S. Customs and Border Protection (CBP) seeking refunds of all the IEEPA tariffs. CBP officially launched the refund system on April 20, 2026. The ultimate receipt and timing of such refunds remain subject to review by CBP and other administrative processes. Any approved refunds are expected to be received in cash and would favorably impact the statement of income.
The decrease in gross profit margin for the three and six months ended June 30, 2026 compared to the same period of 2025 was driven by IEEPA tariffs ranging from 10% to 50%. IEEPA tariffs were subsequently rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize such tariffs. On the same date, the U.S. Government announced plans to implement a new 15% tariff under Section 122 of the Trade Act of 1974. Although announced at 15%, the tariff as of June 30, 2026 was at 10%. In addition, beginning in the latter part of the first quarter of 2026, the Company has experienced increased costs associated with global geopolitical instability, including related to the ongoing U.S.-Iran conflict. These conditions have contributed to higher energy, transportation and supply chain costs, as well as volatility in raw material costs, particularly petroleum-based inputs. Many of our products are made from a petroleum-based resin, which has seen significant price increases since the start of the conflict. In response to these increased costs, we are implementing a price increase in the third quarter of 2026. Management expects gross profit margin to be positively affected in the coming quarters.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreasedincreased by $8,000,$142,000, or 0.2%,3.1%, to $4,686,000$4,698,000 for the three months ended MarchJune 31,30, 2026, from $4,694,000$4,556,000 for the three months ended MarchJune 31,30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 32.1%25.2% for the three months ended MarchJune 31,30, 2026, from 34.0%27.3% for the same period of 2025. Excluding the IEEPA tariff refund, selling, general and administrative expenses would have been $15,000 lower. The change in expenses by segment for the three months ended June 30, 2026, was as follows: Building Supply expenses were down by $10,000, or 0.6%; Disposable Protective Apparel expenses were up by $50,000, or 3.8%; and corporate unallocated expenses were up by $103,000, or 9.4%.
The change in expenses by segment for the three months ended March 31, 2026, was as follows: Building Supply expenses were down by $169,000, or 9.0%; Disposable Protective Apparel expenses were up by $14,000, or 1.0%; and corporate unallocated expenses were up by $147,000, or 10.8%.
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and trademarketing showexpenses, partially offset by increased sales-related travel expenses and general office expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased commission and professional fees, partially offset by lower travel and factoryinsurance expenses. The increase in corporate unallocated expenses was primarily due to increased employee compensation and general office expenses.expenses, partially offset by decreased legal fees.
Selling, general and administrative expenses increased by $134,000, or 1.4%, to $9,384,000 for the six months ended June 30, 2026, from $9,250,000 for the six months ended June 30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 28.2% for the six months ended June 30, 2026, from 30.3% for the same period of 2025.
The change in expenses by segment for the six months ended June 30, 2025, was as follows: Building Supply expenses were down by $178,000, or 4.9%; Disposable Protective Apparel expenses were up by $63,000, or 2.3%; and corporate unallocated expenses were up by $250,000, or 8.7%. The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and trade show expenses, partially offset by increased sales-related travel expenses and general office expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased insurance expenses. The increase in corporate unallocated expenses was primarily due to increased employee bonuses, general office expenses partially offset by lower legal fees in the six months ended June 30, 2026 compared to the same period of 2025.
In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million. A bonus amount of $47,000$125,000 was accrued for the three months ended MarchJune 31,30, 2026, compared to $41,000$84,000 for the three months ended MarchJune 31,30, 2025. A bonus amount of $172,000 was accrued for the six months ended June 30, 2026, compared to $125,000 for the same period of 2025.
Depreciation and Amortization. Depreciation and amortization expense increased by $7,000,$28,000, or 2.9%,11.7%, to $250,000$268,000 for the three months ended MarchJune 31,30, 2026, from $243,000$240,000 for the three months ended MarchJune 31,30, 2025. Depreciation and amortization expense increased by $35,000, or 7.2%, to $518,000 for the six months ended June 30, 2026, from $483,000 for the six months ended June 30, 2025. The increase was primarily due to an increase in depreciation in the Disposable Protective Apparel segment.
Income from Operations. IncomeIncluding the impact of the IEEPA tariff refund, income from operations increased by $125,000,$677,000, or 27.5%,50.7%, to $580,000$2,012,000 for the three months ended MarchJune 31,30, 2026, compared to $455,000$1,335,000 for the three months ended MarchJune 31,30, 2025. The increased income from operations was primarily due to an increase in gross profit of $124,000$847,000, andpartially aoffset decreaseby an increase in selling, general and administrative expenses of $8,000,$142,000 partially offset byand an increase in depreciation and amortization expenses of $7,000.$28,000. Income from operations as a percentage of net sales for the three months ended MarchJune 31,30, 2026, was 4.0%,10.8%, compared to 3.3%8.0% for the samethree periodmonths ofended June 30, 2025.
The net change in income from operations for the second quarter of 2026 due to the IEEPA tariff refund was $279,000.
Excluding the impact of the IEEPA tariff refund, income from operations increased by $398,000, or 29.8%, to $1,733,000* for the three months ended June 30, 2026, compared to $1,335,000 for the three months ended June 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $553,000, partially offset by an increase in selling, general and administrative expenses of $127,000 and an increase in depreciation and amortization expenses of $28,000. Income from operations as a percentage of net sales for the three months ended June 30, 2026, was 9.3%, compared to 8.0% for the three months ended June 30, 2025.
OtherIncluding Income.the Otherimpact of the IEEPA tariff refund, income decreasedfrom operations increased by $12,000$802,000, or 44.8%, to income of $305,000$2,592,000 for the threesix months ended MarchJune 31,30, 2026, compared to $317,000$1,790,000 for the samesix periodmonths ofended June 30, 2025. The decreaseincreased income from operations was primarily due to aan decreaseincrease in interestgross incomeprofit of $26,000,$971,000 partially offset by an increase in equityselling, general and administrative expenses of $134,000 and an increase in incomedepreciation and amortization expenses of unconsolidated$35,000. affiliateIncome from operations as a percentage of $14,000.net sales for the six months ended June 30, 2025, was 7.8%, compared to 5.9% for the six months ended June 30, 2025.
Excluding the impact of the IEEPA tariff refund, income from operations increased by $523,000, or 29.2%, to $2,313,000* for the six months ended June 30, 2026, compared to $1,790,000 for the six months ended June 30, 2025.The increased income from operations was primarily due to an increase in gross profit of $677,000, partially offset by an increase in selling, general and administrative expenses of $119,000 and an increase in depreciation and amortization expenses of $35,000. Income from operations as a percentage of net sales for the six months ended June 30, 2026, was 7.0%, compared to 5.9% for the six months ended June 30, 2025.
Other Income. Other income increased by $96,000 to income of $372,000 for the three months ended June 30, 2026, compared to $276,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $72,000 and an increase in interest income of $24,000. The increase in interest income was primarily due to interest earned in investments and interest paid by the federal government on our IEEPA tariff refund.
Other income increased by $84,000 to income of $677,000 for the six months ended June 30, 2026, compared to $593,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $86,000 and interest paid by the federal government on our IEEPA tariff refund partially offset by a decrease in interest earned on investments.
Income before Provision for Income Taxes. IncomeIncluding the impact of the IEEPA tariff refund, income before provision for income taxes for the three months ended MarchJune 31,30, 2026, was $885,000,$2,384,000, compared to income before provision for income taxes of $772,000$1,611,000 for the same period of 2025, representing an increase of $113,000,$773,000, or 14.6%.48.0%. This increase in income before provision for income taxes was due to an increase in income from operations of $125,000,$677,000 partiallyand offsetan by a decreaseincrease in other income of $12,000.$96,000.
The net change in income before provision for income taxes for the second quarter of 2026 due to the IEEPA tariff refund was $294,000.
Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the three months ended June 30, 2026, was $2,090,000*, compared to income before provision for income taxes of $1,611,000 for the same period of 2025, representing an increase of $479,000, or 29.7%. This increase in income before provision for income taxes would have been due to an increase in income from operations of $398,000 and an increase in other income of $81,000.
Including the impact of the IEEPA tariff refund, income before provision for income taxes for the six months ended June 30, 2026, was $3,269,000, compared to income before provision for income taxes of $2,383,000 for the same period of 2025, representing an increase of $886,000, or 37.2%. This increase in income before provision for income taxes was due to an increase in income from operations of $802,000 and an increase in other income of $84,000.
Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the six months ended June 30, 2026, was $2,975,000*, compared to income before provision for income taxes of $2,383,000 for the same period of 2025, representing an increase of $592,000, or 24.8%. This increase in income before provision for income taxes was due to an increase in income from operations of $523,000 and an increase in other income of $69,000.
APT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 6 filings (3 insiders, 5 trade dates, 87,772 shares, about $513.6K). Net open-market shares: -87,772 (purchases minus sales); net value about -$513.6K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-30 | Ritota John |
Grant/award | 5,860 | — | — |
| 2026-09-30 | Shaw Benjamin A |
Grant/award | 5,860 | — | — |
| 2026-09-30 | Buchan James |
Grant/award | 5,860 | — | — |
| 2026-09-30 | Garcia David R |
Grant/award | 5,860 | — | — |
| 2026-09-28 | Montgomery Charles D |
Shares withheld for tax | 13,057 | $5.04 | $65.8K |
| 2026-09-28 | Montgomery Charles D |
Grant/award | 33,000 | $5.04 | $166.3K |
| 2026-09-28 | Montgomery Charles D |
Open-market sale | 21,943 | $5.04 | $110.6K |
| 2026-09-28 | Hoffman Lloyd |
Grant/award | 45,000 | $5.04 | $226.8K |
| 2026-09-28 | Hoffman Lloyd |
Shares withheld for tax | 26,765 | $5.04 | $134.9K |
| 2026-09-28 | Millar Donna |
Shares withheld for tax | 8,029 | $5.04 | $40.5K |
| 2026-09-28 | Millar Donna |
Grant/award | 15,000 | $5.04 | $75.6K |
| 2026-09-28 | Millar Donna |
Open-market sale | 6,971 | $5.04 | $35.1K |
| 2026-09-28 | Mcdonald Colleen J |
Shares withheld for tax | 16,059 | $5.04 | $80.9K |
| 2026-09-28 | Mcdonald Colleen J |
Grant/award | 27,000 | $5.04 | $136.1K |
| 2026-05-15 | Garcia David R |
Open-market sale | 6,186 | $5.56 | $34.4K |
| 2026-05-15 | Garcia David R |
Option exercise | 4,900 | $4.23 | $20.7K |
| 2026-05-15 | Garcia David R |
Option exercise | 4,900 | $3.99 | $19.6K |
| 2026-05-14 | Garcia David R |
Open-market sale | 4,900 | $5.88 | $28.8K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.04 | $30.2K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.35 | $31.8K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.33 | $31.6K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.28 | $31.4K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.04 | $30.2K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.33 | $31.6K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.35 | $31.8K |
| 2026-05-12 | Montgomery Charles D |
Open-market sale | 5,000 | $6.28 | $31.4K |
| 2026-05-11 | Montgomery Charles D |
Open-market sale | 3,886 | $7.03 | $27.3K |
| 2026-05-11 | Montgomery Charles D |
Open-market sale | 3,886 | $7.03 | $27.3K |
| 2023-09-28 | Hoffman Lloyd |
Grant/award | 50,000 | — | — |
| 2023-09-28 | Montgomery Charles D |
Grant/award | 35,000 | — | — |
| 2023-09-28 | Millar Donna |
Grant/award | 15,000 | — | — |
| 2023-09-28 | Mcdonald Colleen J |
Grant/award | 30,000 | — | — |
| 2023-09-28 | Mcdonald Colleen J |
Grant/award | 30,000 | — | — |
Well-known investors holding APT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 561,572 | $3.2M | 0.0% | Added 3% |