On November 6, 2024, Alpha Pro Tech Ltd (APT, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, known for its disposable protective apparel and building supply products, reported a decrease in overall sales by 11.2% to $14.3 million compared to $16.1 million in the same quarter of 2023.
Company Overview
Alpha Pro Tech Ltd is engaged in the development, manufacturing, and marketing of disposable protective apparel and building supply products, primarily in the United States. The company operates through two main segments: Building Supply and Disposable Protective Apparel. Its product offerings include construction supply weatherization products like house wrap and synthetic roof underlayment, as well as various disposable protective items such as shoe covers, gowns, and face masks.
Performance and Challenges
The third quarter of 2024 presented significant challenges for Alpha Pro Tech Ltd, particularly in its Building Supply segment, which saw a sales decline of 23.2% to $8.8 million. This drop was attributed to a decrease in housing starts and a reduction in shipments from major customers. In contrast, the Disposable Protective Apparel segment experienced a sales increase of 18.4% to $5.5 million, driven by higher demand for face masks and shields.
Lloyd Hoffman, President and CEO, noted, “The U.S. housing market continues to face challenges, with housing starts down 4.0% in the third quarter of 2024 compared to the prior year period.”
Financial Achievements and Industry Impact
Despite the overall sales decline, Alpha Pro Tech Ltd achieved a gross profit margin of 38.5% for the quarter, up from 37.6% in the previous year. This improvement was due to margin increases in both segments. The company's ability to maintain a strong gross profit margin is crucial in the construction industry, where cost management is vital amidst fluctuating demand.
Income Statement Highlights
For the three months ended September 30, 2024, Alpha Pro Tech Ltd reported a net income of $862,000, down from $1.4 million in the same period of 2023. The decrease in net income was primarily due to lower income from operations and increased selling, general, and administrative expenses.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $14.3 million | $16.1 million |
| Gross Profit | $5.5 million | $6.0 million |
| Net Income | $862,000 | $1.4 million |
Balance Sheet and Cash Flow
As of September 30, 2024, Alpha Pro Tech Ltd reported cash and cash equivalents of $18.4 million, a decrease from $20.4 million at the end of 2023. The company maintained a strong current ratio of 19:1, indicating robust liquidity. Inventory levels increased by 4.7% to $21.1 million, reflecting strategic stockpiling in anticipation of future demand.
Colleen McDonald, CFO, stated, “We repurchased 180,000 shares of common stock at a cost of $1.0 million during the quarter, reflecting our commitment to returning value to shareholders.”
Analysis and Outlook
Alpha Pro Tech Ltd's performance in the third quarter of 2024 highlights the challenges faced by the Building Supply segment due to market conditions. However, the growth in the Disposable Protective Apparel segment provides a positive outlook. The company's strategic focus on inventory management and product diversification positions it well for potential recovery in the housing market and continued demand for protective apparel.
Explore the complete 8-K earnings release (here) from Alpha Pro Tech Ltd for further details.
