Omega Flex, Inc. (OFLX)
SIC breadcrumb: Manufacturing > SIC Major Group 34 > SIC 3430 Heating Equip, Except Elec & Warm Air; & Plumbing Fixtures
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1317945. Latest filing source: 0001493152-26-009876.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 98,296,000 | USD | 2025 | 2026-03-12 |
| Net income | 14,827,000 | USD | 2025 | 2026-03-12 |
| Assets | 104,954,000 | 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
| 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 |
Financial Charts
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.
| 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 |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001493152-26-020884.
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
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. -20- 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. -21- 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-