美國
證券交易委員會
華盛頓，特區。20549
表格
(馬克 一)
截至季度結束
從________________________到______________________的過渡期
委員會檔案編號
（公司章程中指定的準確公司名稱）
（國家或其他管轄區的 公司成立或組織） |
（IRS僱主 唯一識別號碼） | |
| (主要 執行人員之地址) | (郵政 編 碼) |
註冊人的電話號碼，包括區號
不適用
（如自上次報告以來更改，前名稱，前地址和前財政年度）
根據法案第12(b)節註冊的證券:
| 每一類別的名稱 | 交易符號 | 在每個交易所註冊的名稱 | ||
請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及 （2）是否已被提交要求過去90天的提交要求所制約。
通過勾選圓圈表明註冊者是否在過去12個月內(或註冊者需要提交這些文件的較短期限內)已經遞交規章S-T(本章第232.405條)規定的每個交互式數據文件。
在勾選標記處表示註冊人是大型加速提交人、加速提交人、非加速提交人、小型報告公司還是新興增長公司。請參閱證券交易法120億條規則中「大型加速提交人」、「加速提交人」、「小型報告公司」和「新興增長公司」的定義。
| 大 加速歸檔者 ☐ | ||
| 非加速文件 | 較小的
報告公司 | |
| 新興成長企業 |
如果是新興成長企業，請勾選表示該登記註冊者已選擇不使用Exchange Act第13(a)條規定的任何新的或修訂的財務會計準則的延長過渡期進行遵守。☐
請勾選是否登記的公司是空殼公司（根據《交易所法》第120億.2條的定義）。 是 ☐ 否
截至2024年11月1日，註冊人普通股的流通股份數量爲 .
OMEGA FLEX，INC。
第10-Q表格的季度報告
截至2024年9月30日的九個月
指數
| -2- |
關於前瞻性聲明的警示說明
在歐美佳福萊克斯公司本季度報告（「表格10-Q」）中，某些聲明並非歷史事實——而是反映我們對未來結果和事件的當前期望——構成根據1995年《私人證券訴訟改革法》意義上的前瞻性聲明。諸如「相信」、「期望」、「打算」、「計劃」、「預測」、「意圖」、「估計」、「潛在」、「持續」、「希望」、「可能」、「將」和類似表達，或這些詞的否定形式，標識了這樣的前瞻性聲明。這些前瞻性聲明並不能保證未來的表現，且受到風險和不確定性的影響。可能導致歐美佳福萊克斯公司或行業結果的實際結果、表現或成就與這些前瞻性聲明中表達或暗示的未來結果、表現或成就發生重大差異的重要因素已在公司的年度報告第 I 部分，第 1A 項風險因素以及截至2023年12月31日的其他部分中列出。
讀者 被提醒不要過度依賴這些前瞻性聲明，這些聲明僅反映管理層在本10-Q表格日期的觀點。 我們沒有義務更新或修訂任何前瞻性聲明，無論是反映本文件日期之後的事件或情況，還是反映不可預見的事件、條件或情況的發生，除非法律要求。 此外，本10-Q表格的某些部分包含來自獨立行業板塊來源和其他來源的信息，我們並未獨立驗證這些信息。
除非另有說明或上下文另有要求，本表格10-Q中提到的「歐美佳福萊克斯」、「公司」、「我們」、「我們」和「我們的」均指歐美佳福萊克斯公司及其子公司。
| -3- |
第一部分 - 財務信息
項目 1 - 基本報表
歐美佳福萊克斯，INC.
簡化 合併資產負債表
(金額
以千爲單位，除普通股數據外)
九月 30, 2024 | 十二月 31, 2023 | |||||||
| (未經審計) | ||||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 應收賬款 - 減去$的備用金 | ||||||||
| 存貨 - 淨值 | ||||||||
| 其他流動資產 | ||||||||
| 流動資產合計 | ||||||||
| 使用權資產 - 運營 | ||||||||
| 物業和設備 - 淨值 | ||||||||
| 商譽 - 淨值 | ||||||||
| 遞延稅款 | ||||||||
| 其他長期資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債和股東權益 | ||||||||
| 流動負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計薪酬 | ||||||||
| 應計佣金和銷售激勵 | ||||||||
| 未付股息 | ||||||||
| 應付稅款 | ||||||||
| 租賃負債 - 營運 | ||||||||
| 其他負債 | ||||||||
| 總流動負債 | ||||||||
| 租賃負債 - 營運，扣除當前部分 | ||||||||
| 遞延稅款 | ||||||||
| 長期應付稅款 | ||||||||
| 其他長期負債 | ||||||||
| 總負債 | ||||||||
| 承諾和或有事項（注6） | ||||||||
| 股東權益： | ||||||||
| 歐美佳福萊克斯公司股東權益： | ||||||||
| 普通股 – 面值$ 每股：授權了 股： 已發行股； 截至2024年9月30日和2023年12月31日的流通股數，分別是 | ||||||||
| 庫存股 | ( | ) | ( | ) | ||||
| 實收資本 | ||||||||
| 留存收益 | ||||||||
| 累計其他全面收益虧損 | ( | ) | ( | ) | ||||
| 總歐美佳福萊克斯有限公司股東權益 | ||||||||
| 非控制性權益 | ||||||||
| 股東權益總額 | ||||||||
| 總負債和股東權益 | $ | $ | ||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -4- |
歐美佳福萊克斯，有限公司
簡化版 合併損益表
(金額 以千爲單位，除了每普通股數據)
| 截至三個月 | 截至九個月 | |||||||||||||||
| 九月三十日 | 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (未經審計) | ||||||||||||||||
| 淨銷售額 | $ | $ | $ | $ | ||||||||||||
| 營業成本 | ||||||||||||||||
| 毛利潤 | ||||||||||||||||
| 銷售費用 | ||||||||||||||||
| 一般和行政費用 | ||||||||||||||||
| 工程費用 | ||||||||||||||||
| 營業利潤 | ||||||||||||||||
| 利息收入 | ||||||||||||||||
| 其他收益（費用） | ( | ) | ( | ) | ||||||||||||
| 稅前收入 | ||||||||||||||||
| 所得稅費用 | ||||||||||||||||
| 淨利潤 | ||||||||||||||||
| 淨虧損 - 非控股權益 | ||||||||||||||||
| 歸屬於歐美佳福萊克斯公司的淨利潤 | $ | $ | $ | $ | ||||||||||||
| 每股普通股的基本和稀釋每股收益 | $ | $ | $ | $ | ||||||||||||
| 每股普通股宣佈的現金分紅 | $ | $ | $ | $ | ||||||||||||
| 基本和稀釋加權平均股數 | ||||||||||||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -5- |
歐美佳福萊克斯，有限公司
精簡 綜合收入報表
(金額 以千爲單位)
| 截至三個月 | 截至九個月 | |||||||||||||||
| 九月三十日 | 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (未經審計) | ||||||||||||||||
| 淨利潤 | $ | $ | $ | $ | ||||||||||||
| 其他全面收益（虧損）： | ||||||||||||||||
| 外匯翻譯調整 | ( | ) | ||||||||||||||
| 其他綜合收益（損失） | ( | ) | ||||||||||||||
| 綜合收入 | ||||||||||||||||
| 綜合虧損 - 非控股權益 | ||||||||||||||||
| 全面收益總額 | $ | $ | $ | $ | ||||||||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -6- |
歐美佳福萊克斯，INC.
濃縮 合併股東權益變動表
(金額 以千爲單位，除分享金額外)
(未經審計)
截至2024年9月30日的三個月期間
| 普通股發行在外 | 普通股 股票 | 財政部 股票 | 實收資本 | 留存收益 | 累計 其他 綜合的 收入（損失） | 非控股 利息 | 股東的 股權 | |||||||||||||||||||||||||
| 2024年7月1日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| 凈利潤 | - | ( | ) | |||||||||||||||||||||||||||||
| 累積翻譯調整 | - | |||||||||||||||||||||||||||||||
| 分紅派息已宣佈 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| 2024年9月30日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
截至2023年9月30日的三個月
| 流通在外的普通股 | 普通股 股票 | 財政部 股票 | 實繳資本 | 留存收益 | 累計 其他 綜合的 (虧損) | 非控股 利息 | 股東的 股權 | |||||||||||||||||||||||||
| 2023年7月1日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| 淨利潤 | ( | ) | ||||||||||||||||||||||||||||||
| 累積翻譯調整 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| 分紅派息已宣佈 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| 2023年9月30日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -7- |
歐美佳福萊克斯，INC.
濃縮 合併股東權益變動表
（金額 以千計，股份金額除外）
(未經審計)
截至2024年9月30日的九個月
| 流通普通股 | 普通股 股票 | 財政部 股票 | 實收資本 | 留存收益 | 累計 其他 綜合的 收入（損失） | 非控股 利息 | 股東的 股權 | |||||||||||||||||||||||||
| January 1, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| 淨利潤 | ( | ) | ||||||||||||||||||||||||||||||
| 累計翻譯調整 | ||||||||||||||||||||||||||||||||
| 分紅派息已宣佈 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| 2024年9月30日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
For the nine months ended September 30, 2023
| 流通在外的普通股 | 普通股 股票 | 財政部 股票 | 實繳資本 | 留存收益 | 累計 其他 綜合的 收入（損失） | 非控股 利息 | 股東的 股權 | |||||||||||||||||||||||||
| 2023年1月1日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| 凈利潤 | ( | ) | ||||||||||||||||||||||||||||||
| 累計翻譯調整 | ||||||||||||||||||||||||||||||||
| 分紅派息已宣佈 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| 2023年9月30日 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -8- |
歐美佳福萊克斯，有限公司
簡明合併現金流量表
(金額 以千爲單位)
| 截至九個月 | ||||||||
| 九月三十日 | ||||||||
| 2024 | 2023 | |||||||
| (未經審計) | ||||||||
| 經營活動產生的現金流量： | ||||||||
| 凈利潤 | $ | $ | ||||||
| 調整凈利潤與 | ||||||||
| 經營活動提供的淨現金： | ||||||||
| 非現金補償 | ||||||||
| 非現金租賃費用 | ||||||||
| 折舊和攤銷 | ||||||||
| 應收賬款損失準備，扣除沖銷 | ( | ) | ( | ) | ||||
| 遞延稅 | ||||||||
| 庫存準備金準備 | ||||||||
| 資產和負債的變動： | ||||||||
| 應收賬款 | ||||||||
| 存貨 | ( | ) | ||||||
| 其他資產 | ( | ) | ( | ) | ||||
| 應付賬款 | ( | ) | ||||||
| 應計薪酬 | ( | ) | ( | ) | ||||
| 應計佣金和銷售激勵 | ( | ) | ( | ) | ||||
| 租賃負債 - 經營 | ( | ) | ( | ) | ||||
| 其他負債 | ( | ) | ( | ) | ||||
| 經營活動產生的現金流量淨額 | ||||||||
| 投資活動產生的現金流： | ||||||||
| 資本支出 | ( | ) | ( | ) | ||||
| 投資活動所使用的淨現金 | ( | ) | ( | ) | ||||
| 融資活動產生的現金流： | ||||||||
| 分紅派息 | ( | ) | ( | ) | ||||
| 融資活動中使用的淨現金 | ( | ) | ( | ) | ||||
| 現金及現金等價物的淨（減少）增加 | ( | ) | ||||||
| 現金的翻譯效果 | ( | ) | ||||||
| 現金及現金等價物 – 期初 | ||||||||
| 現金及現金等價物 – 期末 | $ | $ | ||||||
| 現金流信息補充披露： | ||||||||
| 支付的所得稅 | $ | $ | ||||||
| 已宣告的分紅派息 | $ | $ | ||||||
| 新經營租賃所獲得的使用權資產的增加 負債 | $ | $ | ||||||
請參見 附帶的未經審計的簡明合併基本報表說明。
| -9- |
歐美佳福萊克斯，有限公司
備註 關於簡明合併基本報表
(未經審計)
1. 財務報表的基礎和業務描述
呈現基礎
隨附的未經審計的合併基本報表包括歐美佳福萊克斯公司及其子公司的賬目（統稱爲「公司」）。公司截至2024年9月30日的合併基本報表是按照美國普遍接受的會計原則（GAAP）以及10-Q表格季度報告的指示和S-X條例第10條編制的。根據這些規則和規定，通常包括在按照GAAP編制的年度基本報表中的某些信息和備註披露被簡化或省略，儘管公司認爲所披露的信息足以使信息不具誤導性。建議與公司截至2023年12月31日的年度報告（「10-K表格」）中包含的財務報表及其附註一併閱讀這些合併基本報表。所有重大關聯帳戶和交易均已在合併中消除。管理層認爲，已做出所有必要的調整，以公平地陳述中期結果，且所有調整均爲正常經常性性質，或者對任何非正常經常性性質的調整提供了描述。
業務描述
該公司是靈活金屬軟管的領先製造商，廣泛應用於各種場合以輸送氣體和液體。該公司的業務被視爲一個單一的運營部門，包括靈活金屬軟管及其配件的製造和銷售。這些應用包括在住宅和商業建築內輸送燃料氣體；在雙重保護管道中輸送汽油和柴油（地下和地上），以防止任何可能的泄漏，適用於汽車和碼頭加油，以及備用發電的燃料；以及在醫療保健設施中輸送醫療氣體。該公司的靈活金屬管道也用於在多種工業應用中輸送其他類型的氣體和液體，這些情況下客戶需要管道具有一定的靈活性和/或能夠輸送腐蝕性化合物或混合物，或者在非常高或非常低（低溫）溫度下輸送。
公司在美國賓夕法尼亞州的埃克斯頓和德克薩斯州的休斯敦，以及在英國牛津郡的班伯裏製造柔性金屬軟管，並通過分銷商、批發商以及原始設備製造商（OEM）在北美及某些歐洲市場銷售其產品。
| -10- |
2. 重要會計政策
估算的使用
根據公認會計原則（GAAP）編制基本報表需要管理層做出影響報告中資產和負債的金額以及在基本報表日期時披露或有資產和負債的估計和假設，並影響報告期間的收入和費用的金額。管理層根據歷史經驗和在特定情況下被認爲合理的各種其他因素制定並定期更改這些估計和假設。實際金額可能與這些估計存在顯著差異。
營業收入 確認
公司遵循財務會計準則委員會（「FASB」）會計標準分類（「ASC」）第606主題的要求， 來自客戶合同的營業收入 （「主題606」）。該標準要求在識別收入時，確保反映向客戶轉移貨物或服務的過程，並且反映預期收到的對價金額，以換取這些貨物或服務。
通過應用以下五步方法實現了主題606的原則：
| ● | 識別 與客戶的合同，或多個合同，—— 當公司與客戶簽訂可執行合同時，即存在與客戶的合同，通常由客戶發起的訂單，定義了每方關於將要轉讓的貨物的權利，並確定與這些貨物相關的付款條款。 |
| ● | 識別 合同中的履約義務 — 合同中承諾的履約義務 是根據將轉讓給客戶的商品進行識別的，這些商品是獨特的，客戶可以單獨使用這些商品或與從第三方或我們這裏容易獲得的其他資源一起使用。必須存在產品銷售安排的有力證據。公司按照採購訂單和公司確認訂單及銷售發票中反映的標準條款發貨。 |
| ● | Determination of the transaction price —the transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods to the customer. This would be the agreed upon quantity and price per product type in accordance with the customer purchase order, which is aligned with the Company’s internally approved pricing guidelines. |
| ● | 合同中交易價格分配 給履約義務 — 如果合同包含單一履約義務，則整個交易價格分配 給該單一履約義務。這適用於公司，因爲只有一個履約義務來 船舶貨物。 |
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| ● | 識別出現時，公司履行履約義務時達到營業收入。 — 公司 在客戶控制商品轉移時於某一時刻履行績效義務。確定控制轉移的時刻需要判斷。 在判斷客戶是否獲得商品的控制權時考慮的因數包括： |
| ■ | 公司目前有權獲得支付 |
| ■ | 客戶對貨物擁有合法所有權 |
| ■ | 公司已經轉移了貨物的實際佔有權 |
| ■ | 客戶對貨物享有重大風險和收益的所有權 |
| ■ | 客戶已接受貨物 |
重要的是要注意，因子並不是公司在確定貨物已經轉移給客戶之前必須滿足的一系列條件。因子是一系列通常存在於客戶擁有貨物控制權時的因素。
公司採用典型的未修改的FOB發貨地點條款。作爲賣方，公司可以判斷所發貨物符合與買方約定的合同或客戶訂單中的規格（例如，項目、數量和價格），因此客戶的接受將被視爲一種形式，如ASC 606-10-55-86中所述。因此，公司在發貨時擁有合法的付款權利。
根據上述情況，公司已得出結論，控制實質上在發貨時轉移給客戶。
其他 關於主題606的考慮包括以下幾點：
| ● | 合同 成本 - 獲取合同的成本（例如客戶採購訂單）包括銷售佣金。 根據第606條，針對週期爲一年或更短的合同，這些成本可以在發生時計入費用。公司的大多數客戶採購訂單在收貨後兩天內得到履行（例如，貨物已發貨）。 |
| ● | 保修 - 公司不提供單獨出售的保修服務。 保修通常隨每次購買而附帶，提供商品符合約定規範的保證， 因此成本相應累積，但合同中不包括任何額外獨立服務的要求。 因此，沒有單獨的履行義務，且根據主題606，保修將不會對公司的財務報告產生影響。 |
| ● | 已退貨 商品 - 公司不時會授權客戶退貨。 如果被認爲是重大的，公司會記錄一個「退貨權」 資產，以便抵消退回商品的成本，從而減少銷售成本。 |
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| ● | 成交量 返還（促銷激勵） - 成交量返還是變量（取決於我們符合條件的客戶購買的商品成交量），並且根據主題606，必須估計並 在履行義務滿足時作爲營業收入的減少進行確認（例如在商品發貨時）。根據主題606，爲了確保確認的相關營業收入不會有重大倒退的可能性，考慮了以下四個因素： |
| ■ | 該 關注的金額在很大程度上受到公司無法影響的因素的影響。 |
| ■ | 關於對價金額的不確定性預計不會在短時間內得到解決。 |
| ■ | 公司在類似類型合同上的經驗有限。 |
| ■ | 該 合同有大量且廣泛的可能對價金額。 |
如果 得出結論認爲公司具備上述因素，那麼這將支持營業收入顯著反轉的可能性。然而，由於四個因素都不適用於公司，因此促銷激勵被記錄爲營業收入的減少，基於預計將售出的符合條件的產品的估算。
關於分項營業收入披露，如前所述，公司業務作爲一個單一的運營板塊進行控制，主要包括柔性金屬軟管的製造和銷售。公司的大多數交易在性質、合同、條款、時間和貨物控制轉移方面都非常相似。如本附註2重要會計政策中所示，在「重大集中」標題下，公司的大部分銷售集中在北美，剩餘部分分佈在國際市場。所有業績評估和資源分配通常是基於對公司整體結果的審核。
現金 等價物
公司將所有購買時原始到期日爲90天或更短的高流動性投資視爲現金等價物。 現金等價物包括投資於貨幣型基金，該基金投資於美國國債、票據和債券，以及/或 由此類證券作爲擔保的回購協議，以及美國國債和存款憑證。賬面價值大致等於 公允價值，除了美國國債和存款憑證，其攤餘成本大致等於公允價值。現金及現金等價物 存放在各個地區銀行，偶爾可能超過聯邦保險限額。公司定期監測承載其資產的銀行 機構的可行性，並在風險時期具備將現金轉移到各個機構的能力。 公司沒有經歷與這些現金餘額相關的任何損失，並認爲其信用風險很小。
應收賬款 壞賬準備
所有應收賬款均以攤餘成本列示，扣除信用損失準備金，並根據任何沖銷進行調整。公司保持信用損失準備金，該準備金代表對其應收賬款剩餘合同期限內預計損失的估計，考慮到當前市場條件和適當時的可支持預測的估計。該估計是公司對可收回性進行持續評估和評估的結果，歷史損失經驗和未來預期，用於估計其應收賬款組合中的信用損失。對於應收賬款，公司使用歷史損失經驗率，並將其應用於相關的賬齡分析，同時在適當時考慮客戶和/或經濟風險。確定適當的準備金金額需要管理層對可能對信用損失準備金產生重大影響的信用損失發生的時間、頻率和嚴重程度進行判斷，因此影響營業利潤。準備金考慮了許多定量和定性因素，包括應收賬款類型、歷史損失經驗、拖欠趨勢、收款經驗、當前經濟狀況、適當時的可支持預測的估計，以及信用風險特徵。
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The
reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $
存貨
庫存 按照成本或可變現淨值中的較低者進行評估。庫存成本由先進先出（FIFO）法確定。 公司通常將歷史使用基礎上超過兩年使用的庫存數量視爲過剩庫存 並相應減少庫存的賬面價值。
資產 和設備
物業和設備 最初按成本記錄。折舊和攤銷採用直線法計算，依據資產的預計使用壽命 或對於租賃改善，按照租約的年限（如果較短）。當資產退休或以其他方式處置時， 成本和相關的累計折舊將從賬目中刪除，所產生的任何收益或損失將在其他收入或 費用中反映。維護和修理的成本在發生時計入費用；重大改善則資本化。
商譽
根據FASB ASC第350主題， ——其他資產和商譽使用採用的簡化方法，公司在2023年12月31日進行了年度減值測試。此分析未顯示商譽的減值。
在 2006年，公司採用了虛擬股票計劃（「計劃」），該計劃允許公司向某些關鍵員工、官員或董事授予虛擬股票單位（「單位」）。每個單位代表未來根據公司普通股的市場價值支付補償的合同權利，因此被記錄爲負債。這些單位遵循從授予日期起的三年歸屬時間表，在到期時支付。根據FASB ASC第718主題， 補償 - 股票補償公司採用布萊克-肖爾斯期權定價模型作爲確定單位公允價值的方法。單位的負債會從授予日期到相關到期日期隨着時間推移而調整爲市場價值。公司在單位被沒收的期間確認任何之前已確認的補償費用的反轉。
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該 計劃已於2023年1月1日起進行了修訂和重述，設定了歸屬方式爲從授予日期起爲期三年的懸崖式歸屬， 並在到期時付款。此外，針對自2023年1月1日起授予的股票，若在67歲或以上退休，並且在退休前有一年連續服務，所授予的股票歸屬將會按比例加速， 從授予日期起每年1/3。
有關該計劃的詳細信息，已在本報告中包含的《簡明合併基本報表》第7條，股票基礎補償計劃中提供。
產品 責任儲備
產品
責任準備金代表公司保險政策的免賠額或自保保留限額下，針對現有索賠的預計未支付金額。公司使用最新可用數據來估算索賠。如第6號註釋中更詳細說明的那樣，關於本報告中包含的財務報表的承諾和或有事項，對於公司一般責任保險政策下的各種產品責任索賠，公司必須在其免賠額或自保保留限額內支付某些辯護和和解費用，範圍主要從$
租賃
本 公司遵循FASB ASC第842主題的要求， 租賃 合同在支付對價的情況下，賦予某人使用特定資產的權利，定義爲租賃。 如果滿足以下任一標準，則租賃被分類爲融資租賃，以前稱爲資本租賃：
| 1. | 租賃在租賃期結束時將基礎資產的所有權轉移給承租人。 |
| 2. | 租賃授予承租人一個購買基礎資產的選擇權，承租人有合理的確定性將會行使該權利。 |
| 3. | 租賃期限是基礎資產剩餘經濟壽命的主要部分。 |
| 4. | 租賃支付的現值和承租人擔保的任何殘值之和大於或等於基礎資產公允價值的絕大部分。 |
| 5. | 該 基礎資產具有如此專業化的性質，預計在租賃期結束時出租人將沒有其他用途。 |
對於 任何不滿足上述融資租賃標準的租賃，公司將這些租賃視爲經營租賃。截止到2024年9月30日和2023年12月31日，公司所有的租賃均被分類爲經營租賃。
融資租賃和經營租賃均在資產負債表上以租賃或「使用權」資產和租賃負債的形式反映。
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有一些例外情況， 公司在其會計政策中選擇了這些情況。對於租賃期限在十二個月或更短，或低於公司的一般資本化政策閾值的租賃，公司選擇了一種會計政策，不對所有資產類別確認租賃資產和租賃負債。公司通常在租賃期限內根據直線法確認此類租賃的租賃費用。
公司在安排開始時確定合同是否爲租賃。公司審查在租賃開始時所有延長、終止或購買其使用權資產的選項，並在這些選項在合理確定的情況下會被行使時予以反映。某些租賃包含非租賃元件，例如公共區域維護，通常會單獨進行會計處理。通常，公司在確定元件是否應包括在租賃負債中時，將評估非租賃元件是固定和可確定的，還是變量。爲了計算租賃義務的現值，公司在已知和/或可確定的情況下使用租賃協議中的隱含利率，否則在租賃協議時使用其增量借款利率。
公平 金融和非金融工具的價值
本 公司根據FASB ASC第820主題對金融工具進行計量， 公允價值計量與披露該會計 標準定義了公允價值，建立了在GAAP下計量公允價值的框架，並增強了關於公允價值計量的披露。 公允價值被定義爲在計量日期的主要或最有利市場中，市場參與者之間有序交易時，資產的交換價格或爲轉移負債支付的價格（退出價格）。用於計量公允價值的估值技術必須最大限度地利用可觀察輸入，並最小化不可觀察輸入的使用。該標準創建了一個公允價值層次結構，優先考慮用於計量公允價值的估值技術的輸入分爲以下三大類：第一層輸入是活躍市場中相同資產或負債的報價（未經調整）；第二層輸入是其他可觀察到的資產或負債輸入，不包括在第一層內，無論是直接還是間接；第三層輸入是不可觀察輸入，反映公司關於市場參與者在爲資產或負債定價時可能使用的假設。公司在其年期減值測試中依賴於第一層輸入來確定公司報告單位的公允價值，如FASB ASC第350主題中所述， 無形資產-商譽和其他.
基本每股收益是通過加權平均流通普通股數量計算得出的。在所呈現的期間內，沒有可稀釋的證券。因此，基本每股收益和稀釋每股收益是相同的。
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貨幣 翻譯
資產 以外幣計價的資產和負債按資產負債表日的匯率換算爲美元。以外幣計價的資產和負債與公司的英國子公司有關，該子公司的功能貨幣爲英鎊，以及該英國子公司的法國子公司，其功能貨幣爲歐元。在財務期間內，簡明合併收益表按平均匯率換算爲美元。由於財務報表翻譯所產生的調整不包括在收益的確定中，而是累積在股東權益的一個獨立組成部分中。外幣交易產生的匯兌損益在發生的期間內計入簡明合併收益表。
所得稅
公司根據FASB ASC主題740確認稅務負債， 所得稅根據此方法，公司記錄稅費、相關的遞延稅項和稅收利益，以及稅務立場中的不確定性。
遞延 稅收資產和負債是針對財務報表上現有資產和負債的賬面價值與其各自稅基之間差異所產生的未來稅務後果進行確認的。 遞延稅收資產和負債的計量是使用預計在這些暫時性差異預期被回收或結算的年份適用的生效稅率。 稅率變化對遞延稅收資產和負債的影響在包含生效日期的期間內確認在收入中。 如果更可能代過公司無法實現利益，或未來的可抵扣性不確定，則爲遞延稅收資產提供估值備抵。
該 FASB ASC主題740， 所得稅明確了一個個別稅務事項必須滿足的標準，以便在公司的基本報表中認定該事項的某些或全部利益。該指導規定了一個更可能的確認標準，併爲所有已採取或預計將在稅務申報中採取的稅務事項設定了一個測量屬性，以便這些稅務事項能夠在基本報表中被確認。
The Company follows the provisions of FASB ASC Subtopic 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions.
Other Comprehensive Income
For the three and nine months ended September 30, 2024 and 2023, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments.
Significant Concentrations
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後續 事件
公司在相關文件提交日期之前評估所有事件或交易，這些事件或交易可能對其基本報表產生重要影響。請參閱基本報表的第11條註釋。
最近的 會計公告
在 2020年3月，FASB發佈了會計準則更新（「ASU」）第2020-04號， 參考利率改革（主題848）：促進 參考利率改革對基本報表的影響， 於2022年12月由ASU第2022-06號更新， 推遲主題848的 結束日期這些ASU適用於所有有合同、對沖關係以及其他與參考利率改革相關的交易的實體，這些交易引用LIBOR或其他預計將因參考利率改革而被停止的參考利率。 這些ASU提供了適用於GAAP的可選應急措施和例外情況，以適用於受到參考利率改革影響的合同、對沖關係和其他交易，前提是滿足某些標準。 ASU提供的應急措施和例外情況不適用於在2024年12月31日之後進行的合同修改和對沖關係的進入或評估，除非是截至2024年12月31日存在的對沖關係，實體選擇了某些可選應急措施並在對沖關係結束時保留。 ASU 2020-04，經過ASU 2022-06的更新，自2020年3月12日起生效，至2024年12月31日。該採納的影響對公司的基本報表沒有重大影響。
在 2023年12月，FASB發佈了ASU第2023-09號， 所得稅（主題740）：所得稅披露的改進該ASU擴展了公共實體的稅務披露，包括改善圍繞公司的稅率調節、實際支付的現金稅和從持續經營中分解的所得稅費用（或收益）的披露。該修正案適用於2024年12月15日後開始的年度期間。公司正在評估ASU第2023-09號對其簡明合併基本報表的影響。
3. 存貨
存貨，
扣除儲備後的淨額爲$
| 九月三十日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| (以千爲單位) | ||||||||
| 成品 | $ | $ | ||||||
| 原材料 | ||||||||
| 存貨 - 淨值 | $ | $ | ||||||
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4. 其他開多期資產
其他 開多期資產如下：
| 九月三十日 | 12月31日 | |||||||
| 2024 | 2023 | |||||||
| (以千爲單位) | ||||||||
| 存貨，淨額 | $ | $ | ||||||
| 人壽保險的現金 surrender 價值 | ||||||||
| 其他 | ||||||||
| 其他長期資產 | $ | $ | ||||||
公司保持庫存，扣除$的準備金
公司已獲得併成爲過去員工人壽保險政策的受益人。
5. 信用額度和其他借款
在2023年7月3日，公司與桑坦德銀行（N.A.）（「銀行」）達成了一份修訂和重述的貸款協議，並與銀行簽訂了一份第二份修訂和重述的承諾循環信用額度票據（兩份文件合稱爲「貸款協議」）。
該貸款協議爲一項無擔保的循環信用額度，最高金額爲$
在2017年12月1日，公司同意了一份修訂和重述的循環信用額度票據（「信用額度」）和與銀行的第三次修訂貸款協議。公司設立了一個最高金額爲$的信用額度設施，
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截至2024年9月30日和2023年12月31日，公司有
6. 承諾和或有事項
承諾
根據公司與其每位高級職員和董事之間的一些賠償協議，公司已同意對每位高級職員和董事在其作爲高級職員或董事，或兩者的身份下提出的任何責任進行賠償。公司在賠償協議項下的賠償義務受每份協議中規定的某些條件和限制的約束。 根據協議的條款，公司對由於這些個人作爲高級職員和董事而產生的索賠可能產生的費用負有或有條件的責任。公司已爲董事和高級職員購買了保險政策，以資助根據賠償協議下的某些義務。
公司與過去的員工簽訂了薪資續付協議。這些協議在員工的養老或身故時，爲每位過去的員工或其指定受益人提供每月支付。 與這些協議相關的養老支付的淨現值爲$
除了上述內容，公司與關鍵員工之間還有其他合同僱傭或控制變更協議， 如之前披露並在公司Form 10-k的附錄指數中註明的。與這些安排相關的義務 由於所需事件的變量性質和時間尚不可確定。
如本報告中包含的《簡明合併基本報表》第8條租賃中詳細披露的，公司有幾個租賃義務，這些租賃將分期支付。特別是，公司在英國牛津郡班布里租賃設施，提供製造、倉儲和配送；在賓夕法尼亞州西切斯特提供倉儲、質量控制、配送和公司辦公室；在德克薩斯州休斯頓提供製造、庫存和銷售運營。
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最後， 根據公司10-k表格第7項「流動性和資本資源」中的規定，公司在當前年份有多項 合同義務，主要與公司原材料庫存的購買義務相關。
意外事件
在公司的日常正常業務中，可能會面臨訴訟、調查和索賠（統稱爲「索賠」）。這些索賠通常與我們柔性燃料管道產品的潛在雷電或其他電氣損壞有關，並可能導致法律和產品責任相關的費用。公司不認爲這些索賠具有法律依據，並對其進行強有力的辯護。由於多種因素，公司未來可能會面臨增加的訴訟成本，包括索賠數量的增加、法律和專家費用的增加以及更高的保險免賠額或自保保留限額（或稱爲「保留」）。
這個
公司已經制定了商業一般責任保險單，涵蓋了大多數索賠，這些索賠需要扣除額或保留金，
主要從 $ 不等
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虛擬 股票計劃
計劃 描述。 這些單位不是公司的普通股，單位接收者不獲得以下任何權利：
| ■ | ownership interest in the Company; |
| ■ | shareholder voting rights; and |
| ■ | other incidents of ownership to the Company’s common stock |
這些單位將按其付款 到期日，在特定獎勵中授予的所有單位全部歸屬一年後，除非根據該獎勵發生特定事件 計劃的條款，這將允許提前付款。授予的到期日價值等於收盤價的單位 截至到期日，公司的普通股被定義爲全值單位。除非另有說明，否則描述的所有單位 以下是全值單位。
在 2009年，董事會批准對計劃進行修訂，支付等於公司在其普通股上宣告的任何現金或股票紅利的價值的金額，該金額將按普通股紅利的記錄日期計算到已發行單位中。紅利等額款項將在基礎單位支付給參與者的同時支付。
In addition, the 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 payment 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.
In certain circumstances, the Units may be immediately vested upon the participant’s death or disability. All Units granted to a participant are forfeited if the participant is terminated from their relationship with the Company or its subsidiary for “cause,” which is defined under the Plan. If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination. However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination.
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單位的贈款。 截至2023年12月31日，公司擁有
The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting and maturity periods of each grant.
FASb ASC主題718， 補償 - 股票補償要求在授予時估計註銷，如果實際註銷與這些估計不同，則在隨後的期間進行調整，以得出最終歸屬的獎勵估計， 或在獎勵被註銷的期間內，確認未完成歸屬所需期間的任何註銷獎勵的影響。
公司在獎項被沒收的期間確認對任何以前確認的賠償費用的逆轉。截止到2024年和2023年9月30日的三個月內， 獎項被沒收。在2024年9月30日截止的九個月內，確認了$ 以前確認的賠償費用的逆轉 非完全歸屬的沒收單位。在截止到2023年9月30日的九個月內，確認了$ 以前確認的賠償費用的逆轉 非完全歸屬的沒收單位。
截至2024年9月30日，與該單位相關的總負債爲$ 其中$已包含在其他負債中，因爲預計將在未來十二個月內支付，餘額爲$ 已包含在其他長期負債中。截至2023年12月31日，與該單位相關的總負債爲$ 其中$ 已包含在其他負債中，餘額爲$ 已包含在其他長期負債中。
與計劃相關，依據FASB ASC主題718， 補償 - 股票補償公司在截至2024年9月30日和2023年9月30日的九個月內記錄了補償費用 爲$ 和 $ 公司在截至2024年9月30日和2023年9月30日的三個月內記錄了補償費用 爲$ 以及補償收入爲$ 在給定期間的補償費用或收入在很大程度上取決於公司股票價格的波動。
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| 單位 | 加權平均授予日期公允價值 | |||||||
| 單位數量： | ||||||||
| 截至2023年12月31日，未歸屬和未成熟 | $ | |||||||
| 授予 | $ | |||||||
| Vested | ( | ) | $ | |||||
| 被註銷 | ( | ) | $ | |||||
| 已取消 | ||||||||
| 截至2024年9月30日，尚未歸屬和未成熟 | $ | |||||||
| 預計將歸屬和成熟的單位 | $ | |||||||
The total unrecognized compensation costs calculated as of September 30, 2024 were $ which will be recognized through March of 2027. The Company will recognize the related expense over the weighted average period of years.
8. LEASES
In the U.S., the Company owns its two main operating facilities located in Exton, Pennsylvania. In addition to the owned facilities, the Company also has operations in other locations that are leased, as well as other leased assets. In conjunction with the guidance for leases, as defined by FASB ASC Topic 842, Leases, the Company has described the existing leases, which are all classified as operating leases, pursuant to the below.
In the U.S., the Company leases a facility in West Chester, Pennsylvania, which was consummated effective January 2024, with its lease terminating in February 2030, which provides warehousing and storage, quality control, distribution, and corporate offices. The Company also leases two facilities in Houston, Texas. Each provides manufacturing, stocking, and sales operations. One facility is newly leased, which was consummated effective June 2024, with its lease terminating in July 2029. The other Houston facility’s lease terminates in October 2024. Other facility leases include a facility in Malvern, Pennsylvania, with a lease term ending in December 2024, which provides warehousing, and a corporate office facility in Middletown, Connecticut, with its lease terminating in June 2027.
In
the U.K., the Company leases a facility in Banbury, Oxfordshire, which provides manufacturing, warehousing, and other operational functions.
In addition to facility leases, the Company also has lease agreements in place for various fleet vehicles and equipment with various lease terms.
As
of September 30, 2024, the Company recorded right-of-use assets of $
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Rent
expense for operating leases was $
Future minimum lease payments, under non-cancelable leases as of September 30, 2024, are as follows:
| Twelve Months Ending September 30, | Operating Leases | |||
| (in thousands) | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total Future Minimum Lease Payments | ||||
| Less: Interest | ||||
| Lease Liability | ||||
| Less: Current Portion of Lease Liability | ||||
| Lease Liability – Net of Current Portion | $ | |||
9. SHAREHOLDERS’ EQUITY
As of September 30, 2024 and December 31, 2023, the Company had shares of common stock, with par value of $ per share, authorized. For both periods, the total number of outstanding shares was , shares held in Treasury was , and total shares issued was .
During 2024 and 2023, upon approval of the Board of Directors (the “Board”) the Company has declared and paid regular quarterly dividends, as set forth in the following table:
| Dividend Declared | Dividend Paid | |||||||||
| Date | Price Per Share | Date | Amount | |||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
| $ | $ | |||||||||
It should be noted that from time to time, the Board may elect to pay special dividends, in addition to or in lieu of the regular quarterly dividends, depending upon the financial condition of the Company. The most recent special dividend was declared and paid in December 2019.
10. RELATED PARTY TRANSACTIONS
From time to time the Company may have related party transactions (“RPTs”). RPTs represent any transaction between the Company and any Company employee, director or officer, or any related entity, or relative, etc. The Company performs a review of transactions each year to determine if any RPTs exist, and if so, determines if the related parties act independently of each other in a fair transaction. Through this investigation the Company noted a limited number of RPTs. In all cases, these RPTs have been determined to be arms length transactions with no indication that they are influenced by the related relationships.
11. SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred through the date of this filing. During this period, no events came to the Company’s attention that would impact the Condensed Consolidated Financial Statements for the period ended September 30, 2024.
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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 and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. 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, and general industrial markets, with a comprehensive portfolio of intellectual property and patents issued in various countries around the world. The Company’s primary product, flexible gas piping, is used for gas piping within residential and commercial buildings. Through its flexibility and ease of use, the Company’s TracPipe® and TracPipe® CounterStrike® flexible gas piping, along with its fittings distributed under the trademarks 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.
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CHANGES IN FINANCIAL CONDITION
For the period ended September 30, 2024 vs. December 31, 2023
The Company’s cash balance of $45,873,000 on September 30, 2024 decreased $483,000 (1.0%) from a $46,356,000 balance at December 31, 2023 mainly due to dividend payments of $10,095,000, as detailed in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report, and capital expenditures of $1,443,000 mostly offset by cash provided by operating activities of $11,097,000. See the Company’s Condensed Consolidated Cash Flow Statements for further details regarding the change in cash.
Retained earnings were $71,630,000 and $68,493,000 as of September 30, 2024 and December 31, 2023, respectively, increasing $3,137,000 or 4.6%. The increase was primarily due to net income during the year, as provided on the Company’s Condensed Consolidated Statements of Income, partially offset by dividends declared during 2024, as discussed in detail in Note 9, Shareholders’ Equity, to the Condensed Consolidated Financial Statements included in this report.
RESULTS OF OPERATIONS
Three months ended September 30, 2024 compared to three months ended September 30, 2023
The Company reported comparative results from operations for the three month periods ended September 30, 2024 and 2023 as follows:
Three months ended September 30,
(in thousands) | ||||||||||||||||
| 2024 | 2024 | 2023 | 2023 | |||||||||||||
| ($000) | % | ($000) | % | |||||||||||||
| Net Sales | $ | 24,880 | 100.0 | % | $ | 27,496 | 100.0 | % | ||||||||
| Gross Profit | $ | 15,350 | 61.7 | % | $ | 16,947 | 61.6 | % | ||||||||
| Operating Profit | $ | 5,468 | 22.0 | % | $ | 6,859 | 24.9 | % | ||||||||
Net Sales. The Company’s 2024 third quarter sales of $24,880,000 decreased $2,616,000 or 9.5% compared to the third quarter of 2023, which generated sales of $27,496,000. 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 61.7% and 61.6% for the quarters ended September 30, 2024 and 2023, 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 $4,976,000 and $5,059,000 for the quarters ended September 30, 2024 and 2023, respectively, representing a decrease of $83,000 or 1.6%. The decrease is mostly related to commissions due to the lower sales. Selling expenses increased as a percent of net sales compared to last year, being 20.0% for the quarter ended September 30, 2024, and 18.4% for the quarter ended September 30, 2023.
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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 $3,848,000 and $4,037,000 for the quarters ended September 30, 2024 and 2023, respectively, decreasing by $189,000 or 4.7%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year. Product liability reserves and expenses were also lower. These were partly offset by increases in stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans, and staffing related costs. As a percentage of sales, general and administrative expenses increased to 15.5% for the quarter ended September 30, 2024 from 14.7% for the quarter ended September 30, 2023.
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 $1,058,000 and $992,000 for the quarters ended September 30, 2024 and 2023, respectively, increasing by $66,000 or 6.7%. Engineering expenses increased as a percentage of sales, being 4.3% for the quarter ended September 30, 2024, and 3.6% for the same quarter in 2023.
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $5,468,000 and $6,859,000 for the quarters ended September 30, 2024 and 2023, respectively, decreasing by $1,391,000 or 20.3%.
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 $586,000 of interest income for the third quarter of 2024 and $502,000 for the third quarter of 2023. Higher invested cash balances are mainly responsible for the higher interest income.
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. There was a gain of $21,000 during the third quarter of 2024 compared to a loss of $41,000 during the third quarter of 2023.
Income Tax Expense. Income tax expense was $1,479,000 for the third quarter of 2024, compared to $1,746,000 for the third quarter in 2023, decreasing $267,000 or 15.3%, mostly the result of lower income before income taxes.
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Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
The Company reported comparative results from operations for the nine month periods ended September 30, 2024 and 2023 as follows:
Nine months ended September 30, (in thousands) | ||||||||||||||||
| 2024 | 2024 | 2023 | 2023 | |||||||||||||
| ($000) | % | ($000) | % | |||||||||||||
| Net Sales | $ | 74,716 | 100.0 | % | $ | 83,318 | 100.0 | % | ||||||||
| Gross Profit | $ | 45,671 | 61.1 | % | $ | 51,375 | 61.7 | % | ||||||||
| Operating Profit | $ | 15,809 | 21.2 | % | $ | 19,686 | 23.6 | % | ||||||||
Net Sales. The Company’s sales for the first nine months of 2024 of $74,716,000 decreased $8,602,000 or 10.3% compared to the first nine months of 2023, which generated sales of $83,318,000. 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 61.1% and 61.7% for the nine months ended September 30, 2024 and 2023, respectively. The decline in gross profit margin is mainly due to lower production, which caused lower absorption of factory labor and overhead costs, and higher overhead expenses mainly due to newly leased facilities. This is partly offset by lower raw material costs and a decrease in the provision for excess inventories for MediTrac® CMT products.
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 $15,202,000 and $15,631,000 for the nine months ended September 30, 2024 and 2023, respectively, representing a decrease of $429,000 or 2.7%. The decrease is mostly related to commissions and freight due to lower sales. These decreases were partially offset by higher travel and recruiting expenses. Selling expenses increased as a percent of net sales compared to last year, being 20.3% for the nine months ended September 30, 2024, and 18.8% for the nine months ended September 30, 2023.
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 $11,687,000 and $13,204,000 for the nine months ended September 30, 2024 and 2023, respectively, decreasing by $1,517,000 or 11.5%. The incentive compensation component, which is aligned with profitability, decreased mainly due to the changes in the executive management team at the beginning of the year and lower profits. Product liability reserves and expenses were also lower along with stock based compensation, which moves in relation to the Company’s stock price, as detailed in Note 7, Stock Based Compensation Plans. These were partly offset by increases in staffing and computer related expenses. As a percentage of sales, general and administrative expenses decreased to 15.6% for the nine months ended September 30, 2024 from 15.8% for the nine months ended September 30, 2023.
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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 $2,973,000 and $2,854,000 for the nine months ended September 30, 2024 and 2023, respectively, increasing by $119,000 or 4.2% mainly due to higher consulting expenses. Engineering expenses increased as a percentage of sales, being 4.0% for the nine months ended September 30, 2024, and 3.4% for the nine months ended September 30, 2023.
Operating Profits. Reflecting all of the factors mentioned above, operating profits were $15,809,000 and $19,686,000 for the nine months ended September 30, 2024 and 2023, respectively, decreasing by $3,877,000 or 19.7%.
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 $1,741,000 and $1,179,000 of interest income during the first nine months of 2024 and 2023, respectively. Higher invested cash balances and interest rates are mainly responsible for the higher interest income.
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. There was a loss of $39,000 during the first nine months of 2024 compared to a gain of $14,000 during the first nine months of 2023.
Income Tax Expense. Income tax expense was $4,241,000 for the first nine months of 2024, compared to $5,014,000 for the same period in 2023, decreasing $773,000 or 15.4%, mostly the result of lower income before income taxes.
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 September 30, 2024, the Company had a cash balance of $45,873,000. 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 September 30, 2024. As of December 31, 2023, the Company had a cash balance of $46,356,000, 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.
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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 nine months ended September 30, 2024, the Company’s operating activities provided cash of $11,097,000, compared to the nine months ended September 30, 2023 which provided cash of $11,496,000, a decrease of $399,000. For details of the operating cash flows refer to the Condensed Consolidated Statements of Cash Flows in Part I – Financial Information on page nine.
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 nine months ended September 30, 2024 and 2023 was $1,443,000 and $1,455,000, respectively, as a result of payments for mainly leasehold improvements and manufacturing equipment capital expenditures.
Financing Activities
All financing activities relate to dividend payments, which are detailed in Note 9, Shareholders’ Equity. Dividend payments through the first nine months of 2024 and 2023 amounted to $10,095,000 and $9,793,000, respectively.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
See our Annual Report on Form 10-K for the year ended December 31, 2023 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.
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RECENT ACCOUNTING PRONOUNCEMENTS
In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, updated in December 2022 by ASU No. 2022-06, Deferral of Sunset Date of Topic 848. The ASUs apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the ASUs do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. ASU 2020-04, as updated by ASU 2022-06, is effective for all entities as of March 12, 2020, through December 31, 2024. The impact of the adoption did not have a material impact on the Company’s Condensed 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. The Company is in the process of evaluating the impact of ASU No. 2023-09 on its Condensed Consolidated Financial Statements.
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
The Company does not engage in the purchase or trading of market risk sensitive instruments. The Company does not presently have any positions with respect to hedge transactions such as forward contracts relating to currency fluctuations. No market risk sensitive instruments are held for speculative or trading purposes.
Item 4 – Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
(b) Changes in Internal Controls.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1 – Legal Proceedings
See legal proceedings disclosure in Note 6, Commitments and Contingencies, to the Condensed Consolidated Financial Statements included in this Form 10-Q.
Item 1A – Risk Factors
Risk factors are discussed in detail in the Company’s December 31, 2023 Form 10-K. There are no additional risks attributable to the quarter.
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 – Defaults Upon Senior Securities
None.
Item 4 – Mine Safety Disclosures
Not Applicable.
Item 5 – Other Information
None.
Item 6 - Exhibits
| Exhibit No. | Description | |
| 31.1 | Certification of Chief Executive Officer of Omega Flex, Inc. pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. | |
| 31.2 | Certification of Chief Financial Officer of Omega Flex, Inc. pursuant to 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer of Omega Flex, Inc., pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| OMEGA FLEX, INC. | ||
| (Registrant) | ||
| Date: November 1, 2024 | By: | /s/ Matthew F. Unger |
| Matthew F. Unger | ||
| Vice President – Finance, | ||
| Chief Financial Officer, and Assistant Secretary | ||
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