NPK 10-K & 10-Q changes, risk factors and insider trading
National Presto Industries Inc. · NYSE · Ordnance & Accessories, (No Vehicles/guided Missiles) · CIK 80172 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“On March 1, 2025, the Company experienced a system outage caused by a cybersecurity incident. Upon discovery, the Company activated its incident response team, comprised of internal personnel and external cybersecurity experts retained to assist in addressing the incident. While the full scope of the impact is not yet known, the incident could have the potential to have a material impact on the Company’s financial condition and results of operations. The Company is continuing its forensic investigation and analysis to assess the potential impact.”see in full comparison
“On March 1, 2025, the Company experienced a system outage caused by a cybersecurity incident, which is described in Item 1C CYBERSECURITY.”see in full comparison
Full comparison: every changed paragraph (2)
On March 1, 2025, the Company experienced a system outage caused by a cybersecurity incident, which is described in Item 1C CYBERSECURITY.
On March 1, 2025, the Company experienced a system outage caused by a cybersecurity incident. Upon discovery, the Company activated its incident response team, comprised of internal personnel and external cybersecurity experts retained to assist in addressing the incident. While the full scope of the impact is not yet known, the incident could have the potential to have a material impact on the Company’s financial condition and results of operations. The Company is continuing its forensic investigation and analysis to assess the potential impact.
Management's Discussion & Analysis (MD&A)
New heading “2025 COMPARED TO 2024”
New heading “2025 COMPARED TO 2024”
Removed heading “2023 COMPARED TO 2022”
Removed heading “2023 COMPARED TO 2022”
Largest changes
“During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit is deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.”see in full comparison
“Cash provided by operating activities was $45,389,000 during 2023 as compared to $8,768,000 during 2022. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during 2023 were net earnings of $34,559,000, which included total non-cash depreciation and amortization of $6,007,000, decreases in accounts receivable levels and deposits made to vendors (included in other assets and current assets), and a net increase in payable and accrual levels. …”see in full comparison
“On a consolidated basis, sales increased by $19,289,000 (6%), gross profit increased by $12,327,000 (22%), selling and general expense increased by $3,663,000 (14%), intangibles amortization increased by $1,053,000 (181%) and Impairments - goodwill and intangible assets decreased $5,295,000. Other income increased by $3,581,000 (94%), earnings before provision for income taxes increased by $16,487,000 (64%), and net earnings increased by $13,860,000 (67%). Details concerning these changes can be found, by segment, in the comments below.”see in full comparison
“Impairment - goodwill and intangible assets decreased as a result of the absence of the prior year's impairment of goodwill and technology intangibles in the Safety segment. See Note A(10) and Note A(11) to the Consolidated Financial Statements.”see in full comparison
“Gross profit of the Housewares/Small Appliance segment increased $2,445,000 from $17,422,000 (15% of sales) in 2022 to $19,867,000 (20% of sales) in 2023, primarily reflecting the absence of the levels of inventory adjustments made in the prior year. Those adjustments related to obsolete or excess inventory adjustments of $3,613,000, and decrease in standard unit costs of $3,108,000 that were not offset by decreases in the segment's LIFO inventory reserve. Decreased ocean cargo and inland freight costs and a more favorable U.S. Dollar-RMB exchange rate affected margins to a lesser degree. …”see in full comparison
“Cash used in operating activities was $9,137,000 during 2025 as compared to $53,426,000 during 2024. The principal factors behind the decrease in cash used can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during 2025 was net earnings of $33,084,000, which included the non-cash impairment of a vendor deposit of $2,701,000, depreciation and amortization expenses of $5,136,000, deferred income tax of $7,741,000 and retirement plan expense of $1,008,000. …”see in full comparison
Full comparison: every changed paragraph (39)
2025 COMPARED TO 2024
Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2025 and 2024.
On a consolidated basis, sales increased by $115,296,000 (30%), gross profit increased by $1,759,000 (2%), selling and general expense increased by $4,030,000 (13%), impairment of vendor deposit increased $2,701,000, and amortization was consistent. Other income decreased by $3,579,000 (66%), earnings before provision for income taxes decreased by $8,551,000 (17%), and net earnings decreased by $8,376,000 (20%). Details concerning these changes can be found, by segment, in the comments below.
Net sales of the Housewares/Small Appliance segment decreased by $7,195,000 (7%), from $102,799,000 to $95,604,000, primarily attributable to a decrease in units shipped, approximately 47% was offset by an increase in pricing. Net sales of the Defense segment increased by $121,912,000 (43%), from $284,025,000 to $405,937,000, reflecting an increase in shipments from the segment's backlog. Safety segment sales increased $579,000 to $1,983,000, reflecting an increase in shipments.
Gross profit of the Housewares/Small Appliance segment decreased $17,889,000 from $25,478,000 (25% of sales) in 2024 to $7,589,000 (8% of sales) in 2025, primarily reflecting the decrease in sales mentioned above and the Trump administration's tariffs that went into effect on goods deemed to have been shipped from the Orient after January 31, 2025. Those tariffs are generally treated as period costs and expensed as they are incurred, reflecting the segment’s LIFO inventory cost valuation method. The relocation costs of the segment’s distribution center from Canton to Nettleton, Mississippi also served to reduce gross profit by approximately $1,261,000. Defense gross profit increased $19,471,000 from $58,173,000 (21% of sales) in 2024 to $77,644,000 (19% of sales) in 2025, primarily reflecting the increase in sales mentioned above, as well as differences in mix efficiencies, and material costs. Due to the startup nature of the businesses in the Safety segment and resulting limited revenues, gross margins were negative in both years.
Selling and general expenses for the Housewares/Small Appliance segment increased $1,304,000, primarily reflecting increased personnel costs of $768,000, computers and technology costs of $266,000, and the favorable adjustment to the reserve for bad debts of $285,000 that occurred in the prior year. Defense segment selling and general expenses increased $3,941,000, primarily due to increased personnel costs of $3,012,000, legal and professional expenses of $347,000, repairs and maintenance costs of $334,000, and computers and software expenses of $256,000. Safety segment selling and general expenses decreased $1,215,000, primarily reflecting the sale of OneEvent's refrigeration monitoring business that occurred on July 31, 2025.
During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit is deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.
The $3,579,000 decrease in other income was attributable to a decrease of $3,009,000 in interest income on marketable securities and an increase in interest expense of $830,000 related to the outstanding balance of the Company's revolving line of credit during 2025. Both stem from the increased investments in inventory required to support augmented Defense segment awards.
Earnings before provision for income taxes decreased $8,551,000 from $50,670,000 to $42,119,000. The provision for income taxes decreased $175,000 from $9,210,000 to $9,035,000, which resulted in an effective income tax rate of 22% and 18% for the years ended December 31, 2025 and 2024, respectively. The increase in the effective income tax rate was primarily attributable to the absence of favorable adjustments recognized in 2024 related to prior year estimates. Net earnings decreased $8,376,000 from $41,460,000 to $33,084,000.
Intangibles amortization decreased as a result of the absence of the prior year's amortization of intellectual property intangibles from the acquisition of Knox Safety, Inc. See Note P to the Company's Consolidated Financial Statements.
2023 COMPARED TO 2022
Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2023 and 2022.
On a consolidated basis, sales increased by $19,289,000 (6%), gross profit increased by $12,327,000 (22%), selling and general expense increased by $3,663,000 (14%), intangibles amortization increased by $1,053,000 (181%) and Impairments - goodwill and intangible assets decreased $5,295,000. Other income increased by $3,581,000 (94%), earnings before provision for income taxes increased by $16,487,000 (64%), and net earnings increased by $13,860,000 (67%). Details concerning these changes can be found, by segment, in the comments below.
Net sales of the Housewares/Small Appliance segment decreased by $20,729,000, from $118,347,000 to $97,619,000, or 18%. Approximately 30% of which was attributable to a decrease pricing with the balance due to changes in units shipped and mix. Net sales of the Defense segment increased by $39,220,000, from $202,483,000 to $241,703,000, or 19%, reflecting an increase in units shipped. In addition, as Woodlawn Manufacturing, Ltd. was acquired during the fourth quarter of 2022 (see Note P to the Company's Consolidated Financial Statements), 2023 was the first full year that its operations were reflected in the segment's sales.
Gross profit of the Housewares/Small Appliance segment increased $2,445,000 from $17,422,000 (15% of sales) in 2022 to $19,867,000 (20% of sales) in 2023, primarily reflecting the absence of the levels of inventory adjustments made in the prior year. Those adjustments related to obsolete or excess inventory adjustments of $3,613,000, and decrease in standard unit costs of $3,108,000 that were not offset by decreases in the segment's LIFO inventory reserve. Decreased ocean cargo and inland freight costs and a more favorable U.S. Dollar-RMB exchange rate affected margins to a lesser degree. These elements were partially offset by the changes in pricing and unit shipments mentioned above. Defense gross profit increased $9,365,000 from $42,638,000 (21% of sales) in 2022 to $52,003,000 (22% of sales) in 2023, primarily reflecting the increase in sales mentioned above, and comparatively more efficient operations. Due to the startup nature of the businesses in the Safety segment, gross margins were negative in both years. Fiscal year 2023 included a full year of operations of Rely Innovations, Inc., which was acquired in July of 2022. See Note P. This increase in operating losses was offset by the absence of the prior year's write-downs of inventory and materials to reflect realizable values of $1,822,000, leading to the comparative increase in gross margin of $517,000.
Selling and general expenses for the Housewares/Small Appliance segment increased $355,000, primarily reflecting increased compensation/payroll costs of $503,000, and changes to accrual levels, which included increased bad debt reserves of $285,000 and decreased legal and professional fees of $534,000. Defense segment selling and general expenses increased $1,606,000, primarily due to increased compensation/payroll costs of $724,000, insurance settlement/deductible costs of $538,000 and a full year of selling and general expenses of Woodlawn Manufacturing, Ltd., which was acquired, during the fourth quarter of 2022. The increase in Woodlawn's selling and general expenses was $405,000. Safety segment selling and general expenses increased $1,702,000, primarily reflecting increased compensation/payroll costs of $1,420,000 and the absence of the prior year bargain purchase gain of $492,000 recognized upon the acquisition of Knox Safety, Inc., partially offset by the gain on the sale of Rusoh, Inc. of $351,000. See Notes L and P to the Company's Consolidated Financial Statements.
Intangibles amortization increased as a result of the acquisition of contracts/customer relationship and intellectual property intangibles in the acquisitions of Knox Safety, Inc. and Woodlawn Manufacturing, Ltd. See Note P to the Company's Consolidated Financial Statements.
Impairment - goodwill and intangible assets decreased as a result of the absence of the prior year's impairment of goodwill and technology intangibles in the Safety segment. See Note A(10) and Note A(11) to the Consolidated Financial Statements.
Other income increased $3,581,000, which was primarily attributable to higher interest earned with higher yields, partially offset by a reduced portfolio of marketable securities.
Earnings before provision for income taxes increased $16,487,000 from $25,944,000 to $42,431,000. The provision for income taxes increased from $5,245,000 to $7,872,000, which resulted in an effective income tax rate of 19% and 20% for the years ended December 31, 2023 and 2022, respectively. Net earnings increased $13,860,000 from $20,699,000 to $34,559,000.
2025 COMPARED TO 2024
Cash used in operating activities was $9,137,000 during 2025 as compared to $53,426,000 during 2024. The principal factors behind the decrease in cash used can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during 2025 was net earnings of $33,084,000, which included the non-cash impairment of a vendor deposit of $2,701,000, depreciation and amortization expenses of $5,136,000, deferred income tax of $7,741,000 and retirement plan expense of $1,008,000. The combination of these factors was more than offset by increases in inventory and accounts receivable levels and a net decrease in payables and accrual levels. Of particular note during 2024 was net earnings of $41,460,000, which included total non-cash depreciation and amortization of $5,046,000 and deferred income tax benefit of $4,528,000. This was augmented by decreases in deposits made to vendors (included in other assets and current assets) and a net increase in payable and accrual levels. The combination of these factors was more than offset by increases in inventory and accounts receivable levels.
Net cash used in investing activities was $21,876,000 during 2025 as compared to $14,965,000 provided by investing activities during 2024. The change primarily related to net sales and maturities of marketable securities of $4,477,000 in 2025, as opposed to $21,459,000 in 2024, and purchases of property, plant and equipment of $27,034,000 in 2025, as opposed to $7,531,000 in 2024.
Net cash provided by financing activities was $16,602,000 during 2025 as compared to $31,533,000 of net cash used in financing activities during 2024. The change primarily relates to net proceeds from the Company's line of credit in 2025 of $23,624,000, as well as the annual dividend payments. During both years, the regular dividend was $1.00 per share. In 2024, the extra dividend was $3.50 per share. However, there was no extra dividend payment during 2025. Cash flows for both years also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan. During 2025and 2024, the Company incurred interest expense of $832,000 and $2,000 related to its line of credit, respectively.
As a result of the foregoing factors, cash and cash equivalents decreased in 2025 by $14,411,000 to $3,252,000.
Working capital increased by $15,887,000 to $308,112,000 at December 31, 2025 for the reasons stated above. The Company’s current ratio was 4.2 to 1.0 at December 31, 2025 and 4.9 to 1.0 at December 31, 2024.
The Company has sufficient liquidity in the form of cash and cash equivalents and marketable securities and credit facilities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means.
The Company's principal commitments consist of purchase and lease obligations. Purchase obligations include outstanding purchase orders issued to material suppliers and contractors in the Company's Defense segment and those issued to manufacturers located primarily in the Orient for the Housewares/Small Appliance segment and in Mexico for the Safety segment. As of December 31, 2025, the purchase orders amounted to approximately $602,558,000. The Company can cancel or change many of these purchase orders, but may incur costs if its supplier cannot use the material to manufacture the Company's or other customers' products in other applications or return the material to their supplier. As a result, the actual amount the Company is obligated to pay cannot be reasonably estimated. Lease obligations are described in Note M - Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Based on the accounting profession’s 2005 interpretation of cash equivalents under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 230, the Company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), has resulted in a presentation of the Company’s Consolidated Balance Sheets that the Company believes understates the true liquidity of the Company’s income portfolio. As of December 31, 2024,2024 there were no variable rate demand notes classified as marketable securities. As of December 31,and 2023, $5,123,000$0 and $5,123,000, respectively, of variable rate demand notes arewere classified as marketable securities. These notes havehad structural features that allowallowed the Company to tender them at par plus interest within any 7-day period for cash to the notes’ trustees or remarketers and thus provideprovided the liquidity of cash equivalents.
The Company has sufficient liquidity in the form of cash and cash equivalents and marketable securities and credit facilities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means. The bulk of its marketable securities have been invested in the variable rate demand notes described above, in municipal bonds that are pre-refunded with escrowed U.S. Treasuries, and certificates of deposit. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings.
The Company's principal commitments consist of purchase and lease obligations. Purchase obligations include outstanding purchase orders issued to the Company's Housewares and Safety segments' manufacturers in the Orient and to material suppliers and contractors in the Defense segment, and as of December 31, 2024 amounted to approximately $346,143,000. The Company can cancel or change many of these purchase orders, but may incur costs if its supplier cannot use the material to manufacture the Company's or other customers' products in other applications or return the material to their supplier. As a result, the actual amount the Company is obligated to pay cannot be reasonably estimated. Lease obligations are described in Note M - Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
2023 COMPARED TO 2022
Cash provided by operating activities was $45,389,000 during 2023 as compared to $8,768,000 during 2022. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during 2023 were net earnings of $34,559,000, which included total non-cash depreciation and amortization of $6,007,000, decreases in accounts receivable levels and deposits made to vendors (included in other assets and current assets), and a net increase in payable and accrual levels. These were partially offset by non-cash deferred income tax benefit of $1,190,000 and an increase in inventory levels. Of particular note during 2022 were net earnings of $20,699,000, which included a non-cash loss on impairment of goodwill and intangible assets of $5,295,000 and total non-cash depreciation and amortization expenses of $3,347,000. These were partially offset by a non-cash deferred income tax benefit of $2,311,000 and increases in accounts receivable and inventory levels.
Net cash used in investing activities was $447,000 during 2023 as compared to $16,436,000 during 2022. Of note during 2023 were proceeds from sale of subsidiary of $2,000,000, net purchases of marketable securities of $1,466,000 and purchases of plant and equipment of $1,840,000. During 2022 the Company acquired two businesses for $24,683,000 net of cash acquired and purchased plant and equipment for $1,030,000. These were partially offset by net sales and maturities of marketable securities of $9,171,000.
Based on the accounting profession’s 2005 interpretation of cash equivalents under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 230, the Company’s variable rate demand notes have been classified as marketable securities. This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), has resulted in a presentation of the Company’s Consolidated Balance Sheets that the Company believes understates the true liquidity of the Company’s income portfolio. As of December 31, 2023 and 2022, $5,123,000 and $3,638,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7-day period for cash to the notes’ trustees or remarketers and thus provide the liquidity of cash equivalents.
Cash flows from financing activities for 2023 and 2022 primarily differed as a result of the $0.50 per share decrease in the extra dividend paid during these years. Cash flows for both years also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan.
As a result of the foregoing factors, cash and cash equivalents increased in 2023 by $16,946,000 to $87,657,000.
Working capital increased by $15,100,000 to $288,091,000 at December 31, 2023 for the reasons stated above. The Company’s current ratio was 5.0 to 1.0 at December 31, 2023 and 6.1 to 1.0 at December 31, 2022.
The Company recognizes the excess cost of acquired entities over the net amount assigned to the fair value of assets acquired and liabilities assumed as goodwill. GoodwillGoodwill, at the reporting unit level, is tested for impairment on an annual basis at the start of the fourth quarter and between annual tests whenever an impairment is indicated. The impairment test for goodwill requires the determination of fair value of the reporting unit.units. The Company uses multiples of earnings before interest, taxes, depreciation, and amortization ("EBITDA"), sales, and discounted cash flow models, which are described above, to determine the reporting unit's fair value, as appropriate. The Company uses internal discounted cash flows estimates, quoted market prices when available and independent appraisals, as appropriate, to determine fair value. A number of assumptions and estimates are involved in the application of the discounted cash flow model including revenue projections, projected operating cash flow margins, and discount rates. The Company derives the required cash flow estimates from its historical experience and its internal business plans. The Company also utilizes qualitative analyses to assess goodwill impairment.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of First Six Months 2026 and 2025”
Largest changes
“During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit was deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.”see in full comparison
“During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit was deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.”see in full comparison
Net cash provided by operating activities wassee in full comparison$31,347,000$44,144,000 during the firstthreesix months of 2026 as compared to$12,460,000$1,542,000 during the firstthreesix months of 2025. The principal factors contributing to the change can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the firstthreesix months of 2026 were net earnings of$6,626,000,$22,488,000, which included the non-cash depreciation and amortization expenses of$1,294,000$2,980,000 and book gain on the sale of property plant and equipment of $1,707,000. Contributing to the cash providedwaswere a decrease in accounts receivable stemming from cash collections on customersales,salespartiallyandoffsetanby a decreaseincrease in payable and accruallevels and increases in inventories and deposits made to vendors included in other current assets. Of particular note during the first three months of 2025 were net earnings of $7,610,000, which included non-cash depreciation and amortization expenses of $1,220,000. Contributing to the cash provided were a decrease in accounts receivable levels stemming from cash collections on customer sales and increases in payable and accrual levels. These werelevels, partially offset by increases in inventory levels and deposits made to vendors included in other current assets. Of particular note during the first six months of 2025 were net earnings of $12,762,000, which included the non-cash impairment of a vendor deposit of $2,701,000 and depreciation and amortization expenses of $2,460,000. Contributing to the cash provided was a decrease in accounts receivable levels stemming from cash collections on customer sales. These were partially offset by a decrease in payable and accrual levels and increases in inventory levels and deposits made to vendors included in other current assets.
“Notwithstanding the decrease in sales mentioned above, Housewares/Small Appliance gross profit increased $405,000 from $1,940,000 to $2,345,000, primarily reflecting a refund of a portion of the tariffs the segment had paid that the Supreme Court declared unauthorized in its February 2026 decision. By contrast, a portion of the declared unauthorized tariffs were paid during the first six months of 2025. Tariffs are generally recognized as they are refunded or incurred, reflecting the segment’s LIFO inventory cost valuation method. …”see in full comparison
see in full comparisonHousewares/SmallNotwithstandingAppliance gross profit decreased $3,823,000 from $1,460,000 to a loss of $2,363,000, primarily reflectingthe decrease in sales mentioned above,augmentedHousewares/SmallbyAppliance gross profit increased $4,228,000 from $480,000 to $4,708,000, primarily reflecting alessrefundfavorableofproductamix,portion of the tariffs the segment had paid that the Supreme Court declared unauthorized in its February 2026 decision. By contrast, a portion of the declared unauthorized tariffs were paid during the second quarter of 2025. Tariffs are generally recognized aswelltheyasare refunded or incurred, reflecting the segment’s LIFO inventory cost valuation method. The balance of the change in gross profit was attributable to an increase in costs incident to the startup of the segment’s new warehousing facility of approximately$1,909,000.$450,000. Defense gross profit increased$3,160,000$5,741,000 from$17,630,000$19,200,000 to$20,790,000,$24,941,000, primarily reflecting the increase in sales mentionedabove, partially offset by a less favorable mix of products.above. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.
Full comparison: every changed paragraph (30)
Forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-Q, in the Company’s 2025 Annual Report to Stockholders, in the Proxy Statement for the annual meeting to be held on May 19, 2026, and in the Company’s press releases and oral statements made with the approval of an authorized executive officer are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed herein and in the Notes to Consolidated Financial Statements, among the other factors that could cause actual results to differ materially are the following: consumer spending and debt levels; interest rates; continuity of relationships with and purchases by major customers; product mix; the benefit and risk of business acquisitions; competitive pressure on sales and pricing; development and market acceptance of new products; increases in material, freight/shipping, tariffs, or production cost which cannot be recouped in product pricing; delays or interruptions in shipping or production; shipment of defective product which could result in product liability claims or recalls; work or labor disruptions stemming from a unionized work force; changes in government requirements, military spending, and funding of government contracts, which could result in, among other things, the modification or termination of existing contracts; dependence on subcontractors or vendors to perform as required by contract; the ability of startup businesses to ultimately have the potential to be successful; the efficient start-up and utilization of capital equipment investments; political actions of federal and state governments which could have an impact on everything from the value of the U.S dollar vis-à-vis other currencies to the availability of affordable labor and energy; and security breaches and disruptions to the Company’s information technology systems. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings.
Comparison of FirstSecond Quarter 2026 and 2025
Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the quarters ended AprilJuly 5, 2026 and MarchJune 30,29, 2025.
The Company reports its operations on a fiscal quarter basis in which each quarter contains approximately thirteen weeks and ends on a Sunday, with the exception of the fourth quarter, which ends on December 31. Occasionally, the end dates of the fiscal quarters are adjusted to account for differences that accumulate between the end of the fiscal year and the end of the subsequent first quarter. One such adjustment occurred during the quarter ended April 5, 2026. As compared to the prior year's first quarter, the current quarter includes six additional days.
On a consolidated basis, net sales increased by $15,010,000$26,147,000 (15%22%), gross profit decreasedincreased by $633,000$10,001,000 (4%54%), selling and general expenses increaseddecreased by $2,078,000$698,000 (24%7%), gain on saleimpairment of property,vendor plantdeposit anddecreased equipment increased $1,707,000,$2,701,000, and amortization increased by $34,000.$82,000 (22%). Other income decreasedincreased by $157,000$284,000 (21%55%), earnings before provision for income taxes decreasedincreased by $1,195,000$13,602,000 (12%206%), and net earnings decreasedincreased by $984,000$10,710,000 (13%208%). Details concerning these changes can be found in the comments by segment below.
Housewares/Small Appliance net sales decreased by $3,428,000$1,263,000 from $21,926,000$20,346,000 to $18,498,000,$19,083,000, or 16%,6%, which was attributable to a decrease in units shipped, approximately 40% of which58% was offset in part by increases in pricing. The decrease in units shipped was due in large part to startup issues at the segment’s new warehousing facility and a resulting inability to ship during a portion of the quarter. Defense net sales increased by $18,634,000$27,144,000 from $80,938,000$99,813,000 to $99,572,000$126,957,000 or 23%,27%, primarily reflecting an increase in shipments from the segment's backlog.
Housewares/SmallNotwithstanding Appliance gross profit decreased $3,823,000 from $1,460,000 to a loss of $2,363,000, primarily reflectingthe decrease in sales mentioned above, augmentedHousewares/Small byAppliance gross profit increased $4,228,000 from $480,000 to $4,708,000, primarily reflecting a lessrefund favorableof producta mix,portion of the tariffs the segment had paid that the Supreme Court declared unauthorized in its February 2026 decision. By contrast, a portion of the declared unauthorized tariffs were paid during the second quarter of 2025. Tariffs are generally recognized as wellthey asare refunded or incurred, reflecting the segment’s LIFO inventory cost valuation method. The balance of the change in gross profit was attributable to an increase in costs incident to the startup of the segment’s new warehousing facility of approximately $1,909,000.$450,000. Defense gross profit increased $3,160,000$5,741,000 from $17,630,000$19,200,000 to $20,790,000,$24,941,000, primarily reflecting the increase in sales mentioned above, partially offset by a less favorable mix of products.above. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.
Selling and general expenses for the Housewares/Small Appliance segment increaseddecreased $185,000,$1,384,000, primarily reflecting increased cost accruals for health care of $656,000 and legal and professional of $286,000, and increased compensation costs of $191,000. These were offset by an increased allocation of corporate overhead to the Defense segment of $928,000.$642,000 and decreased cost accruals for self insurance of $770,000. Selling and general expenses for the Defense segment increased $2,037,000,$788,000, primarily attributable to increasesthe increase in the allocation of corporate overhead of $928,000 and personnel costs of $618,000, and a write off of a note receivable of $208,000.overhead. Selling and general expenses for the Safety segment decreased $145,000,$102,000, primarily reflecting reduced personnel costs of $87,000, and legal and professional costs of $78,000.costs.
During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit was deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.
Intangibles amortization increased $82,000, reflecting amortization of a trade secret intangible asset used in in the fulfillment of certain contracts in the Defense segment.
The gain on sale of property, plant and equipment stemmed from the February 10, 2026 sale of the Company’s warehousing facility in Canton, Mississippi that mainly served the Housewares/Small Appliance segment. Subsequent to the sale, the Company entered into a short-term lease agreement with the buyer, as it completes warehousing operations transfer to the new warehousing facility in Nettleton, Mississippi.
The $157,000$284,000 decreaseincrease in other income was primarily attributable to aan decreaseincrease in interest income on marketable securities of $85,000and$125,000 anand increasea decrease in interest expense related to the Company's revolving line of credit of $40,000. Both stem from the increased investments in inventory required to support augmented Defense segment awards.$71,000.
Earnings before provision for income taxes decreasedincreased $1,195,000$13,602,000 from $9,808,000$6,613,000 to $8,613,000.$20,215,000. The provision for income taxes decreasedincreased from $2,198,000$1,461,000 to $1,987,000,$4,353,000, which resulted in an effective income tax rate of 23% and 22% for theboth quarters ended AprilJuly 5, 2026 and MarchJune 30,29, 2025, respectively.2025. Net earnings decreasedincreased $984,000$10,710,000 from $7,610,000$5,152000 to $6,626,000,$15,862,000, or 13%.208%.
Comparison of First Six Months 2026 and 2025
Readers are directed to Note D to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the first six months ended July 5, 2026 and June 29, 2025.
The Company reports its operations on a fiscal quarter basis in which each quarter contains approximately thirteen weeks and ends on a Sunday, with the exception of the fourth quarter, which ends on December 31. Occasionally, the end dates of the fiscal quarters are adjusted to account for differences that accumulate between the end of the fiscal year and the end of the subsequent first quarter. One such adjustment occurred during the quarter ended April 5, 2026.
On a consolidated basis, net sales increased by $41,157,000 (18%), gross profit increased by $9,368,000 (26%), selling and general expenses increased by $1,380,000 (8%), gain on sale of property, plant and equipment increased $1,707,000, impairment of vendor deposit decreased $2,701,000, and amortization increased by $116,000 (15%). Other income increased by $127,000 (10%), earnings before provision for income taxes increased by $12,407,000 (76%), and net earnings increased by $9,726,000 (76%). Details concerning these changes can be found in the comments by segment below.
Housewares/Small Appliance net sales decreased by $4,691,000 from $42,272,000 to $37,581,000, or 11%, which was attributable to a decrease in units shipped, approximately 45% of which was offset by increases in pricing. The decrease in units shipped was due in large part to startup issues at the segment’s new warehousing facility and a resulting inability to ship during a portion of the first quarter. Defense net sales increased by $45,778,000 from $180,751,000 to $226,529,000 or 25%, primarily reflecting an increase in shipments from the segment's backlog.
Notwithstanding the decrease in sales mentioned above, Housewares/Small Appliance gross profit increased $405,000 from $1,940,000 to $2,345,000, primarily reflecting a refund of a portion of the tariffs the segment had paid that the Supreme Court declared unauthorized in its February 2026 decision. By contrast, a portion of the declared unauthorized tariffs were paid during the first six months of 2025. Tariffs are generally recognized as they are refunded or incurred, reflecting the segment’s LIFO inventory cost valuation method. The balance of the change in gross profit was attributable to an increase in costs incident to the startup of the segment’s new warehousing facility of approximately $2,359,000. Defense gross profit increased $8,901,000 from $36,830,000 to $45,731,000, primarily reflecting the increase in sales mentioned above. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years.
Selling and general expenses for the Housewares/Small Appliance segment decreased $1,199,000, primarily reflecting the increased allocation of corporate overhead to the Defense segment of $1,569,000 and decreased accruals for self-insurance of $114,000, partially offset by increased compensation of $327,000 and legal and professional costs of $159,000. Selling and general expenses for the Defense segment increased $2,825,000, primarily attributable to increases in the allocation of corporate overhead of $1,569,000, personnel costs of $704,000, repairs and maintenance costs of $137,000, and a write off of a note receivable of $208,000. Selling and general expenses for the Safety segment decreased $246,000, primarily reflecting reduced personnel costs of $192,000 and legal and professional costs of $74,000.
The gain on sale of property, plant and equipment stemmed from the February 10, 2026 sale of the Company’s warehousing facility in Canton, Mississippi that mainly served the Housewares/Small Appliance segment. Subsequent to the sale, the Company entered into a short-term lease agreement with the buyer, as it completes its warehousing operations transfer to the new warehousing facility in Nettleton, Mississippi.
During the first quarter of 2025, the Company made deposits totaling $2,701,000 with a vendor in its Housewares/Small Appliances segment. On May 29, 2025, the vendor filed for protection in the U.S. Bankruptcy Court in the Northern District of Texas. As recovery of the deposit was deemed unlikely, the Company recorded an impairment of the full deposit during the second quarter of 2025.
Intangibles amortization increased $116,000, reflecting amortization of a trade secret intangible asset used in the fulfillment of certain contracts in the Defense segment.
The above items were responsible for the change in operating profit.
The $127,000 increase in other income was primarily attributable to an increase in interest income on marketable securities of $40,000, an increase in rental income of $52,000, and a decrease in interest expense related to the Company's revolving line of credit of $31,000.
Earnings before provision for income taxes increased $12,407,000 from $16,421,000 to $28,828,000. The provision for income taxes increased from $3,659,000 to $6,340,000, which resulted in an effective income tax rate of 22% for both six month periods ended July 5, 2026 and June 29, 2025. Net earnings increased $9,726,000 from $12,762,000 to $22,488,000, or 76%.
Net cash provided by operating activities was $31,347,000$44,144,000 during the first threesix months of 2026 as compared to $12,460,000$1,542,000 during the first threesix months of 2025. The principal factors contributing to the change can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the first threesix months of 2026 were net earnings of $6,626,000,$22,488,000, which included the non-cash depreciation and amortization expenses of $1,294,000$2,980,000 and book gain on the sale of property plant and equipment of $1,707,000. Contributing to the cash provided waswere a decrease in accounts receivable stemming from cash collections on customer sales,sales partiallyand offsetan by a decreaseincrease in payable and accrual levels and increases in inventories and deposits made to vendors included in other current assets. Of particular note during the first three months of 2025 were net earnings of $7,610,000, which included non-cash depreciation and amortization expenses of $1,220,000. Contributing to the cash provided were a decrease in accounts receivable levels stemming from cash collections on customer sales and increases in payable and accrual levels. These werelevels, partially offset by increases in inventory levels and deposits made to vendors included in other current assets. Of particular note during the first six months of 2025 were net earnings of $12,762,000, which included the non-cash impairment of a vendor deposit of $2,701,000 and depreciation and amortization expenses of $2,460,000. Contributing to the cash provided was a decrease in accounts receivable levels stemming from cash collections on customer sales. These were partially offset by a decrease in payable and accrual levels and increases in inventory levels and deposits made to vendors included in other current assets.
Net cash provided by investing activities was $2,560,000 for the first three months of 2026, while net cash used in investing activities was $22,083,000$933,000 for the first threesix months of 2026, and $23,062,000 for the first six months of 2025. Significant factors contributing to the change were purchases of property, plant and equipment of $1,950,000$5,449,000 in 2026, as opposed to $22,983,000$25,449,000 in 2025, and proceeds from the sale of property.property, plant and equipment of $4,510,000 in 2026. Also contributing to the change were net maturities and sales of marketable securities of $6,000 in 2026, in contrast to $1,983,000 in 2025.
Net cash used in financing activities was $30,671,000 for the first threesix months of 2026, as compared to $7,022,000$5,614,000 cash usedprovided inby financing activities for the first threesix months of 2025. The change primarily relates to net payments on the Company's line of credit in 2026 of $23,624,000, as opposed to $0net proceeds from the line of credit of $12,636,000 in 2025. Cash flows for both threesix month periods also reflected the payment of the $1.00 per share regular dividend and the proceeds from the sale of treasury stock to a Company sponsored retirement plan. During 2026 and 2025, the Company incurred interest expense of $44,000 and $4,000$75,000 related to its line of credit, respectively.
Working capital decreasedincreased by $2,179,000$16,500,000 during the first threesix months of 2026 to $310,257,000$324,611,000 at AprilJuly 5, 2026 for the reasons stated above. The Company's current ratio was 5.95.2 to 1.0 and 4.2 to 1.0 at AprilJuly 5, 2026 and December 31, 2025, respectively.
NPK 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 0 filings. 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 |
|---|---|---|---|---|---|
| 2026-04-30 | Morgan Jeffery Alan |
Shares withheld for tax | 349 | $139.84 | $48.8K |
Well-known investors holding NPK (13F)
None of the 59 investors we track reported a position in their latest 13F.