# Omega Flex, Inc. (OFLX)

Informational only - not investment advice.

CIK: 0001317945
SIC: 3430 Heating Equip, Except Elec & Warm Air; & Plumbing Fixtures
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 34](/major-group/34/) > [SIC 3430 Heating Equip, Except Elec & Warm Air; & Plumbing Fixtures](/industry/3430/)
Latest 10-K filed: 2026-03-12
SEC page: https://www.sec.gov/edgar/browse/?CIK=1317945
Filing source: https://www.sec.gov/Archives/edgar/data/1317945/000149315226009876/form10-k.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 98296000 | USD | 2025 | 2026-03-12 |
| Net income | 14827000 | USD | 2025 | 2026-03-12 |
| Assets | 104954000 | USD | 2025 | 2026-03-12 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001317945.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2010 | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  |  | 101,799,000 | 108,313,000 | 111,360,000 | 105,796,000 | 130,011,000 | 125,487,000 | 111,465,000 | 101,681,000 | 98,296,000 |
| Net income |  |  |  | 14,377,000 | 15,662,000 | 20,139,000 | 17,286,000 | 19,910,000 | 26,195,000 | 23,622,000 | 20,763,000 | 18,014,000 | 14,827,000 |
| Operating income |  |  |  | 21,897,000 | 24,217,000 | 26,366,000 | 21,922,000 | 26,653,000 | 35,062,000 | 31,016,000 | 25,799,000 | 21,571,000 | 16,931,000 |
| Gross profit |  |  |  | 57,884,000 | 61,766,000 | 66,096,000 | 70,487,000 | 66,550,000 | 81,531,000 | 78,305,000 | 68,365,000 | 62,263,000 | 59,002,000 |
| Diluted EPS | 0.45 | 0.46 | 0.68 |  |  |  |  |  | 2.60 | 2.34 | 2.06 | 1.78 | 1.47 |
| Operating cash flow |  |  |  | 14,758,000 | 18,048,000 | 21,058,000 | 16,041,000 | 19,310,000 | 25,149,000 | 15,246,000 | 23,422,000 | 20,857,000 | 17,173,000 |
| Capital expenditures |  |  |  | 233,000 | 3,093,000 | 1,924,000 | 1,225,000 | 564,000 | 971,000 | 942,000 | 1,642,000 | 2,006,000 | 1,822,000 |
| Dividends paid |  |  |  | 8,578,000 | 13,018,000 | 9,775,000 | 46,028,000 | 11,306,000 | 14,867,000 | 9,489,000 | 13,124,000 | 13,527,000 | 13,729,000 |
| Assets |  |  |  | 70,562,000 | 77,091,000 | 86,836,000 | 60,984,000 | 71,571,000 | 88,915,000 | 97,684,000 | 100,234,000 | 105,891,000 | 104,954,000 |
| Liabilities |  |  |  | 24,501,000 | 21,022,000 | 20,515,000 | 23,408,000 | 25,194,000 | 28,374,000 | 26,511,000 | 21,382,000 | 22,710,000 | 20,946,000 |
| Stockholders' equity |  |  |  | 45,679,000 | 55,458,000 | 66,069,000 | 37,382,000 | 46,117,000 | 60,352,000 | 70,977,000 | 78,689,000 | 83,114,000 | 84,186,000 |
| Cash and cash equivalents |  |  |  | 35,318,000 | 37,938,000 | 32,392,000 | 16,098,000 | 23,633,000 | 32,913,000 | 37,703,000 | 46,356,000 | 51,699,000 | 53,226,000 |
| Free cash flow |  |  |  | 14,525,000 | 14,955,000 | 19,134,000 | 14,816,000 | 18,746,000 | 24,178,000 | 14,304,000 | 21,780,000 | 18,851,000 | 15,351,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2010 | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  |  | 15.39% | 18.59% | 15.52% | 18.82% | 20.15% | 18.82% | 18.63% | 17.72% | 15.08% |
| Operating margin |  |  |  |  | 23.79% | 24.34% | 19.69% | 25.19% | 26.97% | 24.72% | 23.15% | 21.21% | 17.22% |
| Return on equity |  |  |  | 31.47% | 28.24% | 30.48% | 46.24% | 43.17% | 43.40% | 33.28% | 26.39% | 21.67% | 17.61% |
| Return on assets |  |  |  | 20.37% | 20.32% | 23.19% | 28.35% | 27.82% | 29.46% | 24.18% | 20.71% | 17.01% | 14.13% |
| Liabilities / equity |  |  |  | 0.54 | 0.38 | 0.31 | 0.63 | 0.55 | 0.47 | 0.37 | 0.27 | 0.27 | 0.25 |
| Current ratio |  |  |  | 2.62 | 3.51 | 4.00 | 2.26 | 2.62 | 3.15 | 3.38 | 4.43 | 4.80 | 5.20 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001317945.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2012-Q1 | 2012-03-31 |  |  | 0.39 | reported discrete quarter |
| 2012-Q2 | 2012-06-30 |  |  | 0.05 | reported discrete quarter |
| 2012-Q3 | 2012-09-30 |  |  | 0.17 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 25,835,000 | 4,556,000 | 0.45 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 27,496,000 | 5,576,000 | 0.55 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 28,147,000 | 4,889,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 25,216,000 | 4,219,000 | 0.42 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 24,620,000 | 4,496,000 | 0.45 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 24,880,000 | 4,617,000 | 0.46 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 26,965,000 | 4,682,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 23,330,000 | 3,568,000 | 0.35 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 25,525,000 | 4,156,000 | 0.41 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 24,234,000 | 3,688,000 | 0.37 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 25,207,000 | 3,415,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 23,093,000 | 2,077,000 | 0.21 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1317945/000149315226020884/form10-q.htm

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization.
Confidence: high
Filing date: 2026-05-01
Report date: 2026-03-31

Item
2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

You
should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated
financial statements and related notes thereto included in Part I, Item 1 of this Form 10-Q. This discussion contains forward-looking
statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. Risk
Factors, and other parts of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. See “Cautionary
Note Regarding Forward-Looking Statements” in this Form 10-Q.

OVERVIEW

The
Company is a leading manufacturer of flexible metal hose and is currently engaged in a number of different markets, including construction,
manufacturing, transportation, petrochemical, pharmaceutical and other industries.

The
Company’s business is managed as a single operating segment that consists of the manufacture and sale of flexible metal hose, fittings,
and accessories. The Company’s products are concentrated in residential and commercial construction within buildings, and general
industrial markets, with a comprehensive portfolio of intellectual property and patents issued in various countries around the world.
The residential and commercial construction market also utilizes corrugated stainless steel tubing (“CSST”) primarily for
flexible gas piping. Through its flexibility and ease of use, the Company’s TracPipe® CSST and TracPipe®
CounterStrike® CSST, along with its fittings distributed under the trademark AutoFlare®, allows users
to substantially cut the time required to install gas piping, as compared to traditional methods. The Company’s newest product
line MediTrac® corrugated medical tubing (“CMT”) is used for piping medical gases (oxygen, nitrogen, nitrous
oxide, carbon dioxide, and medical vacuum) in health care facilities. Building on the recognized strengths and strategies employed in
the flexible gas piping market, MediTrac® CMT can be used in place of rigid copper pipe, and due to its long continuous
lengths and flexibility, it can be installed approximately five times faster than rigid copper pipe, saving on installation labor and
construction schedules. The Company’s products are manufactured at its Exton, Pennsylvania and Houston, Texas facilities in the
U.S., and in Banbury, Oxfordshire in the U.K. A majority of the Company’s sales across all industries are generated through independent
outside sales organizations such as sales representatives, wholesalers and distributors, or a combination of both. The Company has a
broad distribution network in North America and to a lesser extent in other global markets.

-27-

CHANGES
IN FINANCIAL CONDITION

For
the period ended March 31, 2026 vs. December 31, 2025

The
Company’s cash and cash equivalents balance of $49,757,000 on March 31, 2026 decreased $3,469,000 (6.5%) from a $53,226,000 balance
at December 31, 2025. Consistent with prior years, the Company paid a significant amount of cash during the first quarter for obligations
that were accrued as of the end of the preceding year such as incentive related compensation. The Company also paid a dividend during
2026 totaling $3,431,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included
in this report, and capital expenditures of $709,000 partially offset by cash provided by operating activities of $608,000. See the Company’s
Condensed Consolidated Statements of Cash Flow for further details regarding the change in cash.

Retained
earnings were $72,623,000 and $73,979,000 as of March 31, 2026 and December 31, 2025, respectively, decreasing $1,356,000 or 1.8%. The
decrease was primarily due to a dividend declared during 2026, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed
Consolidated Financial Statements included in this report, partially offset by net income during the year, as provided on the Company’s
Condensed Consolidated Statements of Income.

RESULTS
OF OPERATIONS

Three
months ended March 31, 2026 compared to three months ended March 31, 2025

The
Company reported comparative results from operations for the three month periods ended March 31, 2026 and 2025 as follows:

Three months ended March 31,

(in thousands)

2026

2026

2025

2025

($000)

%

($000)

%

Net Sales

$

23,093

100.0

%

$

23,330

100.0

%

Gross Profit

$

13,085

56.7

%

$

14,072

60.3

%

Operating Profit

$

2,311

10.0

%

$

4,050

17.4

%

Net
Sales. The Company’s 2026 first quarter sales of $23,093,000 decreased $237,000 or 1.0% compared to the first quarter of 2025,
which generated sales of $23,330,000.

Gross
Profit. The Company’s gross profit margins were 56.7% and 60.3% for the quarters ended March 31, 2026 and 2025, respectively.
The decrease in gross profit is mostly attributable to an increase in raw material costs, which includes tariffs.

Selling
Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing
programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $5,494,000 and $5,001,000
for the quarters ended March 31, 2026 and 2025, respectively, representing an increase of $493,000 or 9.9%. The increase is mostly related
to higher trade show and advertising, salary related, annual sales meeting, and outbound freight related expenses, partly offset by lower
travel and commissions. Selling expenses increased as a percentage of net sales compared to last year, being 23.8% for the quarter ended
March 31, 2026, and 21.4% for the quarter ended March 31, 2025.

-28-

General
and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative,
executive and finance personnel, legal and accounting, and corporate general and administrative services. General and administrative
expenses were $3,768,000 and $3,891,000 for the quarters ended March 31, 2026 and 2025, respectively, decreasing by $123,000 or 3.2%.
The decrease is due to lower legal and product liability and incentive compensation expenses, which are aligned with profitability, partly
offset by higher stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based
Compensation Plans. As a percentage of sales, general and administrative expenses decreased to 16.3% for the quarter ended March 31,
2026 from 16.7% for the quarter ended March 31, 2025.

Engineering
Expense. Engineering expenses consist of development expenses associated with the development of new products and enhancements to
existing products, and manufacturing engineering costs. Engineering expenses were $1,512,000 and $1,130,000 for the quarters ended March
31, 2026 and 2025, respectively, increasing by $382,000 or 33.8%. The increase is mostly due to product development and certification
related expenses. Engineering expenses increased as a percentage of sales, being 6.5% for the quarter ended March 31, 2026, and 4.8%
for the same quarter in 2025.

Operating
Profits. Reflecting all of the factors mentioned above, operating profits were $2,311,000 and $4,050,000 for the quarters ended March
31, 2026 and 2025, respectively, decreasing by $1,739,000 or 42.9%.

Interest
Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts
outstanding on its line of credit. The Company recorded $456,000 of interest income for the first quarter of 2026 and $511,000 for the
first quarter of 2025. The decrease is mainly due to lower interest rates.

Other
(Expense) Income. Other (expense) income primarily consists of foreign currency exchange gains (losses) on transactions settled in
currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries.
There was a loss of $93,000 during the first quarter of 2026 compared to a gain of $83,000 during the first quarter of 2025 mainly due
to the strengthening of the U.S. dollar in the current quarter compared to the British Pound and Euro and, conversely, the weakening
of the U.S dollar in the same quarter of 2025.

Income
Tax Expense. Income tax expense was $670,000 for the first quarter of 2026, compared to $1,124,000 for the first quarter in 2025,
decreasing $454,000 or 40.4%, mostly the result of lower income before income taxes. The effective tax rates were 25.1% and 24.2% for
the quarters ending March 31, 2026 and March 31, 2025 respectively.

LIQUIDITY
AND CAPITAL RESOURCES

Historically,
the Company’s primary cash needs have been related to working capital items, which the Company has largely funded through cash
generated from operations.

-29-

As
of March 31, 2026, the Company had a cash balance of $49,757,000. Additionally, the Company has a $15,000,000 line of credit available,
as discussed in detail in Note 5, which had no borrowings outstanding upon it as of March 31, 2026. As of December 31, 2025, the Company
had a cash balance of $53,226,000, also with no borrowings against the line of credit.

We
believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs
for at least the next twelve months. Our future capital requirements will depend upon many factors including our rate of revenue growth,
the timing and extent of any expansion efforts, and the potential for investments in, or the acquisition of any complementary products,
businesses, or supplementary facilities for additional capacity.

See
Notes 6 and 8 to the Company’s Condensed Consolidated Financial Statements included in this Form 10-Q for a description of the
Company’s commitments and contingencies.

CASH
FLOWS

Operating
Activities

Cash
provided or used by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities,
such as those included in working capital.

For
the three months ended March 31, 2026, the Company’s operating activities provided cash of $608,000, compared to the three months
ended March 31, 2025 which provided cash of $1,555,000, a decrease of $947,000. For details of the operating cash flows refer to the
Condensed Consolidated Statements of Cash Flows in Part I – Financial Information on page eight.

As
a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically
made for incentive compensation and accrued promotional incentives. Cash has then historically shown a tendency to be restored and accumulated
during the latter portion of the year.

Investing
Activities

Cash
used in investing activities during the three months ended March 31, 2026 and 2025 was $709,000 and $552,000, respectively, mainly as
a result of payments for manufacturing equipment capital expenditures and leasehold improvements.

Financing
Activities

All
financing activities relate to dividend payments, which are detailed in Note 9, Shareholders’ Equity. Dividend payments through
the first three months of 2026 and 2025 amounted to $3,431,000 and $3,432,000, respectively.

-30-

CRITICAL
ACCOUNTING POLICIES AND ESTIMATES

See
our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of our critical accounting policies and estimates.
There have been no material changes to our critical accounting policies and estimates discussed in such report.

RECENT
ACCOUNTING PRONOUNCEMENTS

In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU expands
public entities tax disclosures inclu

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Item
7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You
should read the following discussion and analysis of our financial condition and results of operations together with our consolidated
financial statements and related notes included in this annual report. This discussion contains forward-looking statements based upon
current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under the section titled “Risk Factors” or in other
parts of this annual report. See “Cautionary Note Regarding Forward-Looking Statements” in this annual report. Our historical
results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

The
Company is a leading manufacturer of flexible metal hose and is currently engaged in a number of different markets, including construction,
manufacturing, transportation, petrochemical, pharmaceutical and other industries.

The
Company’s business is managed as a single operating segment that consists of the manufacture and sale of flexible metal hose, fittings,
and accessories. The Company’s products are concentrated in residential and commercial construction within buildings, and general
industrial markets, with a comprehensive portfolio of intellectual property and patents issued in various countries around the world.
The residential and commercial construction market also utilizes corrugated stainless steel tubing (“CSST”) primarily for
flexible gas piping. Through its flexibility and ease of use, the Company’s TracPipe® CSST and TracPipe®
CounterStrike® CSST, along with its fittings distributed under the trademark AutoFlare®, allows users
to substantially cut the time required to install gas piping, as compared to traditional methods. The Company’s newest product
line MediTrac® corrugated medical tubing (“CMT”) is used for piping medical gases (oxygen, nitrogen, nitrous
oxide, carbon dioxide, and medical vacuum) in health care facilities. Building on the recognized strengths and strategies employed in
the flexible gas piping market, MediTrac® CMT can be used in place of rigid copper pipe, and due to its long continuous
lengths and flexibility, it can be installed approximately five times faster than rigid copper pipe, saving on installation labor and
construction schedules. The Company’s products are manufactured at its Exton, Pennsylvania and Houston, Texas facilities in the
U.S., and in Banbury, Oxfordshire in the U.K. A majority of the Company’s sales across all industries are generated through independent
outside sales organizations such as sales representatives, wholesalers and distributors, or a combination of both. The Company has a
broad distribution network in North America and to a lesser extent in other global markets.

Changes
in Financial Condition

The
Company’s cash and cash equivalents balance of $53,226,000 as of December 31, 2025 increased $1,527,000 or 3.0% from a $51,699,000
balance at December 31, 2024. The primary reason for the increase is due to income generated from operations during 2025. This was partially
offset by dividend payments during 2025 totaling $13,729,000, as detailed in Note 12, Shareholders’ Equity, to the Consolidated
Financial Statements included in this report. See the Company’s Consolidated Statements of Cash Flows for further details regarding
the change in cash and cash equivalents.

Retained
earnings were $73,979,000 and $72,880,000 as of December 31, 2025 and December 31, 2024, respectively, increasing $1,099,000 or 1.5%.
The increase was primarily due to an increase from net income during the year, as provided on the Company’s Consolidated Statements
of Income, partially offset by dividends declared during 2025, as discussed in detail in Note 12, Shareholders’ Equity, to the
Consolidated Financial Statements included in this report.

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Results
of Operations

Twelve
months ended December 31, 2025 vs. twelve months ended December 31, 2024

The
Company reported comparative results from operations for the twelve month periods ended December 31, 2025 and 2024 as follows:

Twelve-months ended December 31,

(dollars in thousands)

2025

%

2024

%

Net Sales

$

98,296

100.0

%

$

101,681

100.0

%

Gross Profit

$

59,002

60.0

%

$

62,263

61.2

%

Operating Profit

$

16,931

17.2

%

$

21,571

21.2

%

Net
Sales. The Company’s sales for the year were $98,296,000, reflecting a decrease of $3,385,000, or 3.3%, compared to $101,681,000
in the previous year. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed
because of, among other factors, a decline in housing starts.

Gross
Profit. The Company’s gross profit margins were 60.0% and 61.2% for the years ended December 31, 2025, and 2024, respectively.

Selling
Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing
programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $20,730,000 and $20,539,000
for 2025 and 2024, respectively, representing an increase of $191,000, or 0.9%. The increase is mostly related to higher sales incentive
compensation. As a percentage of net sales, selling expenses were 21.1% and 20.2% for the twelve months ended December 31, 2025 and 2024,
respectively.

General
and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative,
executive and finance personnel, legal and accounting, insurance, and corporate general and administrative services. General and administrative
expenses were $16,300,000 and $16,085,000 for the years ended December 31, 2025 and 2024, respectively, increasing $215,000, or 1.3%
between periods. The increase is due to higher staffing related costs, mainly employee benefits, celebration activities associated with
the Company’s fifty-year anniversary, and stock based compensation, which moves in relation to the Company’s stock price,
as detailed in Note 8, Stock Based Compensation Plans. These were partly offset by lower product liability reserves and expenses and
the incentive compensation component, which is aligned with profitability, due to lower operating profits. As a percentage of net sales,
general and administrative expenses were 16.6% and 15.8% for the twelve months ended December 31, 2025 and 2024, respectively.

Engineering
Expenses. Engineering expenses consist of development expenses associated with the development of new products, and costs related
to enhancements of existing products and manufacturing processes. Engineering expenses increased $973,000 or 23.9% between periods, being
$5,041,000 and $4,068,000 for the years ended December 31, 2025 and 2024, respectively, mainly associated with increases in product development
and certification related expenses, staffing related costs, and consulting. As a percentage of net sales for the year, engineering expenses
were 5.1% in 2025 and 4.0% in 2024.

Operating
Profit. Reflecting all the factors mentioned above, operating profits decreased $4,640,000, or 21.5%, between periods, reflecting
a profit of $16,931,000 in 2025, as compared to $21,571,000 in 2024.

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Interest
Income. Interest income is recorded on investments in cash equivalents, and interest expense is recorded at times when the Company
has debt amounts outstanding on its line of credit. The Company recorded interest income of $1,989,000 for 2025, compared to $2,278,000
for 2024. The decrease in interest income was mainly due to lower interest rates. There were no borrowings on its line of credit during
2025 or 2024.

Other
Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in
currencies other than the Company’s local currency, typically related to the Company’s foreign U.K. and France subsidiaries
and Canada. The Company recognized other income of $331,000 during 2025 and other expense of $227,000 during 2024.

Income
Tax Expense. Income tax expense was $4,667,000 for 2025, compared to $5,707,000 for 2024. The $1,040,000 or 18.2% decrease in tax
expense was largely the result of the decrease in income before taxes. The effective tax rate for 2025 and 2024 was 24.2% of income before
taxes respectively.

Commitments
and Contingencies

See
Note 7 to the Consolidated Financial Statements included in this report for a detailed description of commitments and contingencies.

Liquidity
and Capital Resources

Historically,
the Company’s primary cash needs have been related to working capital items, which the Company has largely funded through cash
generated from operations.

As
of December 31, 2025, the Company had a cash and cash equivalents balance of $53,226,000. Additionally, the Company has a $15,000,000
line of credit available, as discussed in detail in Note 6, Line of Credit and Other Borrowings, which had no borrowings outstanding
against it as of December 31, 2025. As of December 31, 2024, the Company had a cash and cash equivalents balance of $51,699,000, with
no borrowings against the line of credit.

Operating
Activities

Cash
provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such
as those included in working capital.

For
2025, the Company’s cash provided from operating activities was $17,173,000, compared to $20,857,000 of cash provided during 2024.
This illustrates a decrease of $3,684,000 during 2025. For details of the operating cash flows refer to the Consolidated Statements of
Cash Flows in the Company’s Consolidated Financial Statements.

As
a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically
made for accrued promotional incentives, incentive compensation, and taxes. Cash has then historically shown a tendency to be restored
and accumulated during the latter portion of the year.

Investing
Activities

Cash
used in investing activities during 2025 and 2024 was $1,822,000 and $2,006,000, respectively, all related to various capital expenditure
projects.

Financing
Activities

All
financing activities relate to dividend payments, which are detailed in Note 12, Shareholders’ Equity, in the Consolidated Financial
Statements included in this report. Dividend payments for 2025 and 2024 amounted to $13,729,000 and $13,527,000, respectively. The Company
had no borrowings or payments on its line of credit during 2025 or 2024 as described in Note 6, Line of Credit and Other Borrowings.

-22-

Liquidity

We
believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs
for at least the next twelve months. Our future capital requirements will depend upon many factors including our rate of revenue growth,
the timing and extent of any expansion efforts, the potential for investments in, or the acquisition of any complementary products, businesses,
or supplementary facilities for additional capacity.

Future
Impact of Known Trends or Uncertainties

The
Company’s operations are sensitive to a number of market and extrinsic factors, any one of which could materially adversely affect
the Company’s business, competitive position, results of operations or financial condition in any given year. See Item 1A, Risk
Factors, for a detailed description.

Critical
Accounting Policies and Estimates

Note
2, Significant Accounting Policies, to the Consolidated Financial Statements included in this report, includes a summary of the significant
accounting policies and methods used in the preparation of our Consolidated Financial Statements.

Our
discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which
have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, revenue
recognition and related sales incentives, provisions for credit losses, inventory reserves, valuation of goodwill, product liability
reserves, valuation of phantom stock, and accounting for income taxes. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe our judgments related
to these accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions or conditions.

Revenue
Recognition

The
Company applies the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 606, Revenue from Contracts with Customers (“Topic 606”). The standard requires revenue to be recognized in
a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received
in exchange for those goods or services. The principle of Topic 606 is achieved through applying a five-step approach, which is discussed
further in the Notes to the Consolidated Financial Statements. The Company sells goods on typical, unmodified free on board (FOB) shipping
point terms. As the seller, it can be determined that the shipped goods meet the agreed-upon specifications in the contract or customer
purchase order (e.g., items, quantities, and prices) with the buyer, so customer acceptance would be deemed a formality, as noted in
ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the goods. Based upon the above, the Company
has concluded that transfer of control substantively transfers to the customer upon shipment. Other than standard product warranty provisions,
the sales arrangements provide for no other post-shipment obligations. The Company offers rebates and other sales incentives, promotional
allowances, or discounts to certain customers, typically related to purchase volume, and are classified as a reduction of revenue and
recorded at the time of sale. The Company periodically evaluates whether an allowance for sales returns is necessary. Historically, the
Company has experienced minimal sales returns. If it is believed there are to be material potential sales returns, the Company will provide
the necessary provision against sales.

-23-

Provision
for Credit Losses

The
Company maintains allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of
its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result
of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in
estimating credit losses in its receivable portfolio. For accounts receivable, the Company uses historical loss experience rates and
applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the
proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could
materially affect the provision for credit losses and, as a result, net earnings. The allowances consider numerous quantitative and qualitative
factors that include receivable type, historical loss experience, delinquency trends, collection experience, current economic conditions,
estimates for supportable forecasts, when appropriate, and credit risk characteristics. Changes in allowances may occur in the future
as the above referenced quantitative and qualitative factors change.

Inventories

Inventories
are valued at the lower of cost or net realizable value. The cost of inventories is determined by the first-in, first-out (FIFO) method.
The Company generally considers inventory quantities beyond two years of usage, measured on a historical usage basis, to be excess inventory
and reduces the carrying value of inventory accordingly. These reductions to the inventory carrying values are estimates, which could
vary significantly, either favorably or unfavorably, from actual amounts if future economic conditions, sales levels, or competitive
conditions change.

Goodwill

In
accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other (ASU 2017-04), using the simplified method as adopted,
the Company performed an annual impairment test as of December 31, 2025. This test did not indicate any impairment of goodwill as the
Company’s estimated fair value of the reporting unit exceeded carrying value. The test may be performed more frequently if we believe
indicators of impairment might exist. These indicators may include changes in macroeconomic and industry conditions, overall financial
performance, and other relevant entity-specific events.

Product
Liability Reserves

Except
for most product liability claims made for its yellow-jacketed TracPipe® CSST on or after September 1, 2025, for which
the Company decided to self-insure (the “Self-Insured Claims”), product liability reserves represent the estimated unpaid
amounts under the Company’s insurance policies with respect to existing claims. The Company uses the most current available data
to estimate claims. As explained more fully under Note 7, Commitments and Contingencies, to the Consolidated Financial Statements included
in this report for various product liability claims covered under the Company’s general liability insurance policies, the Company
must pay certain defense and settlement costs within its deductible or self-insured retention limits, ranging primarily from $250,000
to $3,000,000 per claim, depending on the terms of the policy and the applicable policy year, up to an aggregate amount. The Company
is vigorously defending against all known claims. It is possible that the Company may incur increased litigation costs in the future
due to a variety of factors, including a higher number of claims, higher financial magnitude of claims, higher legal costs, and higher
insurance deductibles or retentions. Litigation is subject to many uncertainties and management is unable to predict the outcome of the
pending suits and claims. From time to time, depending upon the nature of a particular case, the Company may decide to spend more than
a deductible or retention to enable more discretion regarding the defense, although this is not common. It is possible that the results
of operations or liquidity of the Company, as well as the Company’s ability to procure reasonably priced insurance, could be adversely
affected by the pending litigation, potentially materially. The Company is currently unable to estimate the ultimate liability, if any,
that may result from the pending litigation, or potential litigation from future claims or claims that have not yet come to our attention,
and accordingly, the liability in the Consolidated Financial Statements primarily represents an accrual for legal costs for services
previously rendered, settlements for Claims not yet paid, and anticipated settlements for claims within the Company’s remaining
retention under its insurance policies. There are no open Self-Insured Claims as of December 31, 2025.

-24-

Stock
Based Compensation Plans

Phantom
Stock Plan

In
2006, the Company adopted a Phantom Stock Plan (the “Phantom Plan”), which allows the Company to grant phantom stock units
(“Units”) to certain key employees, officers, or directors. The Units each represent a contractual right to payment of compensation
in the future based upon the market value of the Company’s common stock and are accordingly recorded as liabilities. The Units
follow a vesting schedule over three years from the grant date and are then paid upon maturity. In accordance with FASB ASC Topic 718,
Compensation - Stock Compensation (“Topic 718”), the Company uses the Black-Scholes option pricing model as its method
for determining the fair value of the Units. The liabilities for the Units are adjusted to market value over time from the grant dates
to the related maturity dates. The Company recognizes the reversal of any previously recognized compensation expense on forfeited nonvested
Units in the period the Units are forfeited.

The
Phantom Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year cliff
vesting following the grant date, with full value paid upon maturity. Additionally, for grants made starting January 1, 2023, upon retirement
at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate on
a pro-rata basis, 1/3 per year from the grant date. The amended and restated plan did not have a material impact upon compensation expense.

Further
details of the Phantom Plan are provided in Note 8, Stock Based Compensation Plans, to the Consolidated Financial Statements included
in this report. Any significant changes in the Company’s stock price may have a material impact upon the valuation of the Units.

Equity
Incentive Plan

In
2024, the Flex-Trac, Inc. 2025 Equity Incentive Plan (the “Equity Incentive Plan”) was adopted to provide directors, officers,
employees, contractors and consultants of Flex-Trac, Inc. or its affiliates an equity-based incentive to maintain and enhance the performance
and profitability of Flex-Trac, Inc. Subject to adjustment as provided in the Equity Incentive Plan, up to 818,458 shares of the common
stock, par value $0.01 per share, of Flex-Trac, Inc. (“FTI Common Stock”), or 7.5% of the fully-diluted shares of FTI Common
Stock, may be issued pursuant to the Equity Incentive Plan with respect to awards.

On
January 2, 2025, 420,000 shares of restricted stock in the aggregate, or 4% of the shares of FTI Common Stock, were granted and issued
to certain eligible participants under the Equity Incentive Plan (the “Awards”). The Awards cliff vest after eight years
of continuous service or earlier upon the grantee’s death, disability or retirement, or a change of control, as defined and further
described in the Equity Incentive Plan.

In
accordance with FASB ASC Topic 718, Compensation - Stock Compensation, the Company values the Awards at fair value at grant date
and recognizes compensation expense over the vesting period. The Company recognizes the reversal of any previously recognized compensation
expense on forfeited nonvested Awards in the period the Awards are forfeited.

Further
details of the Equity Incentive Plan are provided in Note 8, Stock Based Compensation Plans, to the Consolidated Financial Statements
included in this report. Any significant changes in the performance and profitability of Flex-Trac, Inc. may have a material impact upon
the valuation of the Awards.

Income
Taxes

The
Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company recorded
tax expense and related deferred taxes and tax benefits.

-25-

Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes
the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either
expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company’s accounting for
deferred tax consequences represents the best estimate of those future events. The Company recognizes interest and penalties related
to any uncertain tax positions in income tax expense. Changes in estimates, due to unanticipated events or otherwise, could have a material
effect on the financial condition and results of operations of the Company. The Company continually evaluates its deferred tax assets
to determine if a valuation allowance is required.

Recent
Accounting Pronouncements

In
November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly
provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description
of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The purpose
of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows.
The amendment is effective for fiscal years beginning after December 15, 2023 and interim periods in fiscal years beginning after December
15, 2024. The impact of the adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU expands
public entities tax disclosures including improving disclosures surrounding the company’s rate reconciliation, cash taxes paid,
and disaggregation of income tax expense (or benefit) from continuing operations. The amendment is effective for annual periods beginning
after December 15, 2024. In 2025, the Company adopted ASU No. 2023-09 retrospectively and reflected these improvements in Note 9. Income
Taxes of the Consolidated Financial Statements.

In
November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires new tabular disclosures disaggregating prescribed
expense categories within relevant income statement captions. The amendment is effective for annual periods beginning after December
15, 2026 and interim periods in fiscal years beginning after December 15, 2027. The Company is in the process of evaluating the impact
of ASU No. 2024-03 on its Consolidated Financial Statements.

-26-