What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 144 added, 130 removed, 121 unchanged (69% of the section changed)

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This significant level of volatility in demand levels, input and transportation costs, and material and labor availability, have pressured our ability to operate efficiently in recent periods.

We will continue to take actions to mitigate such impacts, including implementing commercial pricing adjustments, holding extra inventories, resourcing to alternate suppliers and insourcing of previously sourced products.

We will continue to take actions to mitigate such impacts, including implementing commercial pricing adjustments, holding extra inventory, resourcing to alternate suppliers and insourcing of previously sourced products.

Although we believe we generally may be able to mitigate the impact of higher commodity costs over time, we may experience additional material costs and disruptions in supply in the future and may not be able to pass along higher costs to our customers in the form of price increases or otherwise mitigate the impacts to our operating results.

In August 2025, the U.S.

government imposed a 25% tariff on India in response to its continued importation of Russian oil, which is in addition to the pre-existing 25% individualized reciprocal tariff on India.

Increased tariffs by the United States have led, and may continue to lead, to the imposition of retaliatory tariffs or other measures taken by foreign jurisdictions, which may in turn lead to additional tariffs imposed or measures taken by the United States.

In August 2025, however, the U.S.

Court of Appeals for the Federal Circuit ruled that many of the tariffs imposed under the Trump Administration exceed presidential authority and therefore are invalid, though the decision has been stayed pending U.S.

Supreme Court review.

This ruling introduces additional uncertainty as to the scope and durability of existing and future tariff measures.

While the U.S.

government has announced various trade deals, many such agreements are preliminary and may be subject to change.

Any new or increased tariffs, quotas, embargoes, or other trade barriers affecting other countries from which we do source supplies or our global network of third-party suppliers could impact our supply chain and cost structure.

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If new tariffs or trade restrictions are imposed, we may need to adjust our pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect our revenue, gross margins, and overall financial performance.

Alpha Pro Tech, Ltd.

RESULTS OF OPERATIONS

The following table sets forth certain operational data as a percentage of net sales for the periods indicated:

For the Three Months Ended

For the Six Months

Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Selling, general and administrative expenses

1 unchanged sentence

Income before provision for income taxes

Three and Six months ended June 30, 2025 compared to Three and Six months ended June 30, 2024

Consolidated sales for the three months ended June 30, 2025 , increased to $16,672,000, from $16,289,000 for the three months ended June 30, 2024, representing an increase of $383,000, or 2.4%.

This increase consisted of increased sales in the Building Supply segment of $1,143,000, partially offset by decreased sales in the Disposable Protective Apparel segment of $760,000.

Alpha Pro Tech, Ltd.

Building Supply segment sales for the three months ended June 30, 2025 , increased by $1,143,000, or 11.5%, to $11,084,000 compared to $9,941,000 for the three months ended June 30, 2024.

It was a record quarter for sales of the core building products, which include housewrap and synthetic roof underlayment and comprise approximately 90% of the total Building Supply segment sales.

Including sales of other woven material, which make up the additional approximately 10% of sales, the second quarter of 2025 was the second highest quarter on record for Building Supply segment sales.

The Building Supply segment increase during the three months ended June 30, 2025, was primarily due to a 10.6% increase in sales of synthetic roof underlayment, a 17.0% increase in sales of housewrap and a 0.1% increase in sales of other woven material compared to the same period of 2024

The sales mix of the Building Supply segment for the three months ended June 30, 2025, was approximately 40% for synthetic roof underlayment, 50% for housewrap and 10% for other woven material.

This compared to approximately 40% for synthetic roof underlayment, 48% for housewrap and 12% for other woven material for the three months ended June 30, 2024.

Three and Nine months ended September 30, 2025, compared to Three and Nine months ended September 30, 2024

Consolidated sales for the three months ended September 30, 2025 , increased to $14,785,000, from $14,251,000 for the three months ended September 30, 2024, representing an increase of $534,000, or 3.7%.

This increase consisted of increased sales in the Building Supply segment of $476,000 and increased sales in the Disposable Protective Apparel segment of $58,000.

Building Supply segment sales for the three months ended September 30, 2025 , increased by $476,000, or 5.4%, to $9,274,000 compared to $8,798,000 for the three months ended September 30, 2024.

The Building Supply segment increase during the three months ended September 30, 2025, was primarily due to a 12.7% increase in sales of housewrap, a 17.4% increase in sales of other woven material, partially offset by a 11.0% decrease in sales of synthetic roof underlayment as compared to the same period of 2024.

Sales of other woven material increased by $214,000, or 17.4%, to $1,446,000 compared to $1,232,000 for the three months ended September 30, 2025 compared to the same period of 2024.

The Company is continuing pursuing new opportunities for other woven material that could improve sales.

The sales mix of the Building Supply segment for the three months ended September 30, 2025, was approximately 35% for synthetic roof underlayment, 51% for housewrap and 14% for other woven material.

This compared to approximately 41% for synthetic roof underlayment, 46% for housewrap and 13% for other woven material for the three months ended September 30, 2024.

Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® and TECHNO SB and our synthetic roof underlayment accessories consist of our new self-adhered TECHNOplus Ice & Water and REX Hi Temp.

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Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.

The housing market continued to show weakness in the second quarter of 2025, continuing the weak trend of 2024, with single-family housing starts down 9.0% compared to the same quarter in 2024.

During the second quarter of 2025, we significantly outperformed the market as sales of the core building products (housewrap and synthetic roof underlayment) were up 13.2% as compared to the same period of 2024.

Our core REX branded products and core private label product sales were both strong in the second quarter of 2025.

Sales of other woven material increased by $1,000, or 0.1%, to $1,246,000 compared to $1,245,000 for the three months ended June 30, 2025 compared to the same period of 2024.

The Company is pursuing new opportunities for other woven material that could improve sales, and we hired a Director of Product and Business Development during the first quarter of 2025.

Management expects growth in the Building Supply segment in 2025 and is encouraged by the strength in the second quarter of 2025.

However, there continues to be uncertainty in housing starts and volatility and uncertainty in the economy as well as a stronger than normal hurricane season in the latter part of 2024 which could affect this segment.

Disposable Protective Apparel segment sales for the three months ended June 30, 2025 , decreased by $760,000, or 12.0%, to $5,588,000, compared to $6,348,000 for the three months ended June 30, 2024.

This segment decrease was due to an 11.3% decrease in sales of disposable protective garments and a 28.3% decrease in sales of face masks, partially offset by a 4.8% increase in sales of face shields.

The sales mix of the Disposable Protective Apparel segment for the three months ended June 30, 2025, was approximately 90% for disposable protective garments, 6% for face masks and 4% for face shields.

This sales mix is compared to approximately 90% for disposable protective garments, 7% for face masks and 3% for face shields for the three months ended June 30, 2024.

Sales of disposable protective garments in the three months ended June 30, 2025 were down 11.3%, however, this is a challenging comparison as sales during the three months ended June 30, 2024 were the highest since the COVID-19 sales bump.

The second quarter of 2025 started strong but experienced a decline part way through the quarter, resulting in lower-than-expected performance in the second quarter of 2025.

Tariffs have added uncertainty and volatility to the marketplace, as we are seeing end-customers reducing and conserving their inventories in an effort to reduce overall spend.

Sales of face masks in the second quarter of 2025 continued to fall below management’s expectations, while we have seen a positive trend with sales of face shields.

Face mask sales continue to be negatively affected by excessive purchases by one of our channel partners in the latter part of 2024.

Demand from this channel partner started to improve at the end of the second quarter, which will potentially continue through the rest of 2025.

Our distribution partnerships across multiple distribution channels are strong, with mutual desire to achieve organic growth in 2025 while navigating increased costs due to tariffs.

Our efforts to discover and partner with new channels in this segment have been productive, and we are pleased to bring on a few select, strategic regional players this past quarter.

The housing market continued to show weakness in the third quarter of 2025 with single-family housing starts down 2.6% compared to the same quarter in 2024.

These figures only include July and August, as the census bureau did not publish a report for September 2025 due to the US government shutdown.

During the third quarter of 2025, we again outperformed the market, as our core building products (housewrap and synthetic roof underlayment) were up 3.5%, driven primarily by housewrap sales, compared to the same period of 2024.

Although synthetic roof underlayment sales were down in the third quarter of 2025, our decrease in the shipments was lower than the Asphalt Roofing Manufacturers Association (“ARMA”) decline in shipments for the third quarter 2025, compared to the same period of 2024.

There continues to be uncertainty in housing starts, volatility and uncertainty in the economy as well as a stronger than normal hurricane season in the latter part of 2024 which could affect this segment in the coming quarter.

The increase in tariffs have created notable pricing and supply volatility within the market.

In addition, declining builder confidence and ongoing price volatility have resulted in reduced inventory positions among our primary customers.

Management attributes its success in a down market to our national builder partnerships.

While the building sector is currently experiencing a significant downturn, we recognize that substantial opportunities for continued expansion still exist.

Looking ahead to 2026, we anticipate new product introductions as we continue to expand our self-adhered roofing and flashing categories.

Alpha Pro Tech, Ltd.

Consolidated sales for the six months ended June 30, 2025 increased to $30,494,000 from $29,772,000 for the six months ended June 30, 2024, representing an increase of $722,000, or 2.4%.

Disposable Protective Apparel segment sales for the three months ended September 30, 2025 , increased by $58,000, or 1.1%, to $5,511,000, compared to $5,453,000 for the three months ended September 30, 2024.

This increase was due to a 10.4% increase in sales of disposable protective garments, partially offset by a 46.5% decrease in sales of face masks and a 33.6% decrease in sales of face shields.

The sales mix of the Disposable Protective Apparel segment for the three months ended September 30, 2025, was approximately 90% for disposable protective garments, 7% for face masks and 3% for face shields.

This sales mix is compared to approximately 82% for disposable protective garments, 13% for face masks and 5% for face shields for the three months ended September 30, 2024.

Sales of disposable protective garments in the three months ended September 30, 2025, were up 10.4%, rebounding nicely across all product categories.

Sales of shoe covers, coveralls, lab coats, caps and gowns all grew in the third quarter of 2025 compared to the same quarter of 2024.

Moreover, our third quarter results pushed our year-to-date performance into positive territory.

Management anticipates and is working to uncover new growth opportunities with our customers and to continue this current trend into the fourth quarter.

Tariffs have added uncertainty and volatility to the marketplace, but we remain hopeful that tariffs will be significantly reduced soon.

We currently are not making any changes to form, fit, function, or material basis weight of our products in an effort to mitigate these tariff challenges.

We plan to continue to deliver our high-quality products and remain agile in our pricing strategies to maintain our leadership position and to differentiate Alpha Pro Tech in the disposable protective garments marketplace.

Sales of our face mask and face shield products in the third quarter of 2025 continue to lag behind prior year.

We have promotions and pricing incentives for our customers to attempt to turn the tide and will continue to seek out and close new sales opportunities.

Our inventory position is strong and much of this segment is not burdened by tariffs.

We will continue our efforts to move the trend lines in a positive direction for both face masks and face shields.

Consolidated sales for the nine months ended September 30, 2025 increased to $45,279,000 from $44,023,000 for the nine months ended September 30, 2024, representing an increase of $1,256,000, or 2.9%.

This increase consisted of increased sales in the Building Supply segment of $1,750,000, partially offset by decreased sales in the Disposable Protective Apparel segment of $494,000.

Building Supply segment sales for the six months ended June 30, 2025 increased by $1,275,000, or 7.0%, to $19,456,000, compared to $18,181,000 for the same period of 2024.

This is the second highest mid-year Building Supply segment sales on record.

The Building Supply segment sales increase during the six months ended June 30, 2025, was primarily due to a 15.7% increase in sales of synthetic roof underlayment and a 19.9% increase in sales of other woven material, partially offset by a 1.8% decrease in sales of housewrap compared to the same period of 2024.

The sales mix of the Building Supply segment for the six months ended June 30, 2025 was 48% for housewrap, 43% for synthetic roof underlayment and 9% for other woven material.

This compared to 52% for housewrap, 40% for synthetic roof underlayment and 8% for other woven material for the six months ended June 30, 2024.

We are encouraged by our year-to-date increase in core building product sales of 5.2%, especially since single-family housing starts were down 6.8% during the same period.

Excluding the decline in housewrap sales to two private-label distributors, which were beyond our control, the year-to-date sales performance of our core building products would have improved upon an already mid-year sales record for Building Supply segment sales.

Building Supply segment sales for the nine months ended September 30, 2025 increased by $1,750,000, or 6.5%, to $28,729,000, compared to $26,979,000 for the same period of 2024.

The Building Supply segment sales increase during the nine months ended September 30, 2025, was primarily due to a 6.7% increase in sales of synthetic roof underlayment, a 2.6% increase in sales of housewrap and a 18.8% increase in sales of other woven material compared to the same period of 2024.

The sales mix of the Building Supply segment for the nine months ended September 30, 2025 was 49% for housewrap, 40% for synthetic roof underlayment and 11% for other woven material.

This compared to 50% for housewrap, 40% for synthetic roof underlayment and 10% for other woven material for the nine months ended September 30, 2024.

We continue to be encouraged by our year-to-date increase in core building product sales of 3.5%, especially since single-family housing starts were down 4.9% during year-to-date through August 2025.

As stated above, the census bureau did not publish a report for September 2025 due to the US government shutdown.

Additionally, we have achieved the highest year-to-date sales on seam tape, flashing and lumber wrap.

Sales of other woven material were up 18.8% year-to-date, primarily due to increased sales to our largest customer for this product line.

As previously stated, we have hired a Director of Product and Business Development, with the intent of significantly increasing sales of other woven material.

Management expects continued growth in the Building Supply segment for the remainder of 2025 and is encouraged by the strength in the second quarter of 2025.

However, there continues to be uncertainty in housing starts, volatility and uncertainty in the economy as well as a stronger than normal hurricane season in the latter part of 2024 which could affect this segment.

Disposable Protective Apparel segment sales for the six months ended June 30, 2025 decreased by $553,000, or 4.8%, to $11,038,000, compared to $11,591,000 for the same period of 2024.

This segment decrease was due to a 1.1% decrease in sales of disposable protective garments, a 40.9% decrease in sales of face masks, and a 1.3% decrease in sales of face shields.

The sales mix of the Disposable Protective Apparel segment for the six months ended June 30, 2025 was 90% for disposable protective garments, 6% for face masks and 4% for face shields.

This sales mix is compared to 87% for disposable protective garments, 9% for face masks and 4% for face shields for the six months ended June 30, 2024.

Gross Profit .

Gross profit decreased by $710,000, or 10.4%, to $6,131,000 for the three months ended June 30, 2025, from $6,841,000 for the three months ended June 30, 2024.

The gross profit margin was 36.8% for the three months ended June 30, 2025, compared to 42.0% for the three months ended June 30, 2024.

Gross profit decreased by $736,000, or 6.0%, to $11,523,000 for the six months ended June 30, 2025, from $12,259,000 for the six months ended June 30, 2024.

The gross profit margin was 37.8% for the six months ended June 30, 2025, compared to 41.2% for the six months ended June 30, 2024.

The gross profit margin in the three months and six months ended June 30, 2025 was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment.

Gross profit margin in the Disposable Protective Apparel segment in 2025 was lower compared to the 2024 margin, which was higher than historical margins.

In addition, gross profit margin has been negatively affected in 2025, primarily by higher sales rebates, ocean freight rates and to a lesser degree US tariffs.

Management will be increasing selling prices starting in July 2025 to partially mitigate the impact of the new 2025 US tariffs, but it is expected that tariffs will have a negative effect on gross profit.

Management expects growth in the Building Supply segment, however continued uncertainty in housing starts, tariffs and the economy in general could negatively affect this segment.

Disposable Protective Apparel segment sales for the nine months ended September 30, 2025 decreased by $494,000, or 2.9%, to $16,550,000, compared to $17,044,000 for the same period of 2024.

This segment decrease was due to a 2.5% increase in sales of disposable protective garments, offset by a 43.1% decrease in sales of face masks, and a 13.2% decrease in sales of face shields.

Alpha Pro Tech, Ltd.

The sales mix of the Disposable Protective Apparel segment for the nine months ended September 30, 2025 was 90% for disposable protective garments, 6% for face masks and 4% for face shields.

This sales mix is compared to 86% for disposable protective garments, 10% for face masks and 4% for face shields for the nine months ended September 30, 2024.

Gross Profit .

Gross profit increased by $384,000, or 7.0%, to $5,868,000 for the three months ended September 30, 2025, from $5,484,000 for the three months ended September 30, 2024.

The gross profit margin was 39.7% for the three months ended September 30, 2025, compared to 38.5% for the three months ended September 30, 2024.

Gross profit decreased by $352,000, or 2.0%, to $17,391,000 for the nine months ended September 30, 2025, from $17,743,000 for the nine months ended September 30, 2024.

The gross profit margin was 38.4% for the nine months ended September 30, 2025, compared to 40.3% for the nine months ended September 30, 2024.

The gross profit margin in the nine months ended September 30, 2025 was negatively affected by a margin decrease primarily in the Disposable Protective Apparel segment and lesser degree in the Building Supply segment.

Gross profit margin has been negatively affected in 2025, primarily by increased US tariffs, higher sales rebates and ocean freight rates.

Management expects that tariffs will have a negative effect on gross profit in the fourth quarter of 2025, as we have experienced three tariff increases on many of our products.

There was a 10% baseline tariff on goods shipped from our joint venture partner after April 5th, a reciprocal tariff of an additional 15% on goods shipped after August 1st and an additional 25% on goods shipped after August 27.

Management has increased selling prices in July 2025 and is expected to do so again in November, to partially mitigate the impact of the first two tariffs increases.

There have been some positive developments of late regarding tariffs and management is hopeful that some of the tariff increases may be rolled back.

Selling, General and Administrative Expenses .

Selling, general and administrative expenses decreased by $328,000, or 6.7%, to $4,556,000 for the three months ended June 30, 2025, from $4,884,000 for the three months ended June 30, 2024.

As a percentage of net sales, selling, general and administrative expenses decreased to 27.3% for the three months ended June 30, 2025, from 30.0% for the same period of 2024.

The change in expenses by segment for the three months ended June 30, 2025, was as follows:

Building Supply expenses were down by $21,000, or 1.2%;

Disposable Protective Apparel expenses were down by $85,000, or 6.1%;

Selling, general and administrative expenses increased by $66,000, or 1.5%, to $4,568,000 for the three months ended September 30, 2025, from $4,502,000 for the three months ended September 30, 2024.

As a percentage of net sales, selling, general and administrative expenses decreased to 30.9% for the three months ended September 30, 2025, from 31.6% for the same period of 2024.

The change in expenses by segment for the three months ended September 30, 2025, was as follows:

Building Supply expenses were up by $59,000, or 3.4%;

Disposable Protective Apparel expenses were up by $45,000, or 3.4%;

and corporate unallocated expenses were down by $38,000, or 2.6%.

The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and marketing expenses, partially offset by increased sales travel expenses.

The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing and sales travel expenses.

The decrease in corporate unallocated expenses was primarily due to decreased professional fees, insurance expenses, general office expenses, and reorganization costs in the three months ended June 30, 2025 compared to the same period of 2024.

The reorganization costs in 2024 were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona.

Selling, general and administrative expenses decreased by $482,000, or 5.0%, to $9,250,000 for the six months ended June 30, 2025, from $9,732,000 for the six months ended June 30, 2024.

As a percentage of net sales, selling, general and administrative expenses decreased to 30.3% for the six months ended June 30, 2025, from 32.7% for the same period of 2024.

The change in expenses by segment for the six months ended June 30, 2025, was as follows:

The increase in the Building Supply segment expenses was primarily related to increased employee compensation, marketing, insurance and sales travel expenses, partially offset by decreased general factory expenses.

The increase in the Disposable Protective Apparel segment expenses was primarily related to increased general office expenses, partially offset by decreased rent and marketing.

The decrease in corporate unallocated expenses was primarily due to decreased professional fees, partially offset by increased employee compensation and general office expenses in the three months ended September 30, 2025 compared to the same period of 2024.

Selling, general and administrative expenses decreased by $416,000, or 2.9%, to $13,818,000 for the nine months ended September 30, 2025, from $14,234,000 for the nine months ended September 30, 2024.

As a percentage of net sales, selling, general and administrative expenses decreased to 30.5% for the nine months ended September 30, 2025, from 32.3% for the same period of 2024.

The change in expenses by segment for the nine months ended September 30, 2025, was as follows:

Building Supply expenses were down by $69,000, or 1.3%;

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and corporate unallocated expenses were down by $394,000, or 8.4%.

The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation.

The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing and sales travel expenses, partially offset by lower rent and utilities, general office and factory expenses and commission.

The decrease in corporate unallocated expenses was primarily due to decreased professional fees, insurance expenses, general office expenses, and reorganization costs in the six months ended June 30, 2025 compared to the same period of 2024.

Alpha Pro Tech, Ltd.

The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and general factory expenses, partially offset by increased insurance expenses.

The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing, sales travel expenses, partially offset by lower rent and utilities, general office and factory expenses.

The decrease in corporate unallocated expenses was primarily due to decreased professional fees, insurance expenses, and reorganization costs in the nine months ended September 30, 2025 compared to the same period of 2024.

The reorganization costs in 2024 were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona.

In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million.

A bonus amount of $84,000 was accrued for the three months ended June 30, 2025, compared to $111,000 for the three months ended June 30, 2024.

A bonus amount of $125,000 was accrued for the six months ended June 30, 2025, compared to $149,000 for the six months ended June 30, 2024.

A bonus amount of $69,000 was accrued for the three months ended September 30, 2025, compared to $58,000 for the three months ended September 30, 2024.

A bonus amount of $194,000 was accrued for the nine months ended September 30, 2025, compared to $207,000 for the nine months ended September 30, 2024.

Depreciation and Amortization .

Depreciation and amortization expense decreased by $5,000, or 2.0%, to $240,000 for the three months ended June 30, 2025, from $245,000 for the three months ended June 30, 2024.

Depreciation and amortization expense decreased by $6,000, or 1.2%, to $483,000 for the six months ended June 30, 2025, from $489,000 for the six months ended June 30, 2024.

Depreciation and amortization expense decreased by $42,000, or 17.1%, to $203,000 for the three months ended September 30, 2025, from $245,000 for the three months ended September 30, 2024.

Depreciation and amortization expense decreased by $48,000, or 6.5%, to $686,000 for the nine months ended September 30, 2025, from $734,000 for the nine months ended September 30, 2024.

Income from Operations.

Income from operations decreased by $377,000, or 22.0%, to $1,335,000 for the three months ended June 30, 2025, compared to $1,712,000 for the three months ended June 30, 2024.

The decreased income from operations was primarily due to a decrease in gross profit of $710,000, partially offset by a decrease in selling, general and administrative expenses of $328,000 and a decrease in depreciation and amortization expenses of $5,000.

Income from operations as a percentage of net sales for the three months ended June 30, 2025, was 8.0%, compared to 10.5% for the three months ended June 30, 2024.

Income from operations decreased by $248,000, or 12.2%, to $1,790,000 for the six months ended June 30, 2025, compared to $2,038,000 for the six months ended June 30, 2024.

The decreased income from operations was primarily due to a decrease in gross profit of $736,000, partially offset by a decrease in selling, general and administrative expenses of $482,000 and a decrease in depreciation and amortization expenses of $6,000.

Income from operations as a percentage of net sales for the six months ended June 30, 2025, was 5.9%, compared to 6.8% for the six months ended June 30, 2024.

Alpha Pro Tech, Ltd.

Income from operations increased by $360,000, or 48.8%, to $1,097,000 for the three months ended September 30, 2025, compared to $737,000 for the three months ended September 30, 2024.

The increased income from operations was primarily due to an increase in gross profit of $384,000 and a decrease in depreciation and amortization expenses of $42,000, partially offset by an increase in selling, general and administrative expenses of $66,000.

Income from operations as a percentage of net sales for the three months ended September 30, 2025, was 7.4%, compared to 5.2% for the three months ended September 30, 2024.

Income from operations increased by $112,000, or 4.0%, to $2,887,000 for the nine months ended September 30, 2025, compared to $2,775,000 for the nine months ended September 30, 2024.

The increased income from operations was primarily due to a decrease in selling, general and administrative expenses of $416,000 and a decrease in depreciation and amortization expenses of $48,000, partially offset by a decrease in gross profit of $352,000.

Income from operations as a percentage of net sales for the nine months ended September 30, 2025, was 6.4%, compared to 6.3% for the nine months ended September 30, 2024.

Other Income .

Other income decreased by $131,000 to income of $276,000 for the three months ended June 30, 2025, compared to $407,000 for the same period of 2024.

The decrease was primarily due to a decrease in interest income of $68,000 and a decrease in equity in income of unconsolidated affiliate of $63,000.

Other income decreased by $210,000 to income of $593,000 for the six months ended June 30, 2025, compared to $803,000 for the same period of 2024.

The decrease was primarily due to a decrease in interest income of $150,000 and a decrease in equity in income of unconsolidated affiliate of $60,000.

Other income decreased by $166,000 to income of $196,000 for the three months ended September 30, 2025, compared to $362,000 for the same period of 2024.

The decrease was primarily due to a decrease in interest income of $66,000, a decrease in equity in income of unconsolidated affiliate of $70,000 and a decrease in gain on sale of assets of $30,000.

Other income decreased by $376,000 to income of $789,000 for the nine months ended September 30, 2025, compared to $1,165,000 for the same period of 2024.

The decrease was primarily due to a decrease in interest income of $216,000, a decrease in equity in income of unconsolidated affiliate of $130,000 and a decrease in gain on sale of assets of $30,000.

Income before Provision for Income Taxes .

Income before provision for income taxes for the three months ended June 30, 2025, was $1,611,000, compared to income before provision for income taxes of $2,119,000 for the same period of 2024, representing a decrease of $508,000, or 24.0%.

This decrease in income before provision for income taxes was due to a decrease in income from operations of $377,000 and a decrease in other income of $131,000.

Income before provision for income taxes for the six months ended June 30, 2025, was $2,383,000, compared to income before provision for income taxes of $2,841,000 for the same period of 2024, representing a decrease of $458,000, or 16.1%.

This decrease in income before provision for income taxes was due to a decrease in income from operations of $248,000 and a decrease in other income of $210,000.

Income before provision for income taxes for the three months ended September 30, 2025, was $1,293,000, compared to income before provision for income taxes of $1,099,000 for the same period of 2024, representing an increase of $194,000, or 17.7%.

This increase in income before provision for income taxes was due to an increase in income from operations of $360,000, partially offset by a decrease in other income of $166,000.

Income before provision for income taxes for the nine months ended September 30, 2025, was $3,676,000, compared to income before provision for income taxes of $3,940,000 for the same period of 2024, representing a decrease of $264,000, or 6.7%.

This decrease in income before provision for income taxes was due to a decrease in other income of $376,000, partially offset by an increase in income from operations of $112,000.

Provision for Income Taxes .

The provision for income taxes for the three months ended June 30, 2025, was $367,000, compared to $475,000 for the same period of 2024.

The estimated effective tax rate was 22.8% for the three months ended June 30, 2025, compared to 22.4% for the three months ended June 30, 2024.

The provision for income taxes for the six months ended June 30, 2025, was $526,000, compared to $621,000 for the same period of 2024.

The estimated effective tax rate was 22.1% for the six months ended June 30, 2025, compared to 21.9% for the six months ended June 30, 2024.

The provision for income taxes for the three months ended September 30, 2025, was $317,000, compared to $237,000 for the same period of 2024.

The estimated effective tax rate was 24.5% for the three months ended September 30, 2025, compared to 21.6% for the three months ended September 30, 2024.

The provision for income taxes for the nine months ended September 30, 2025, was $843,000, compared to $858,000 for the same period of 2024.

The estimated effective tax rate was 22.9% for the nine months ended September 30, 2025, compared to 21.8% for the nine months ended September 30, 2024.

Alpha Pro Tech, Ltd.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes.

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The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate.

Net income for the three months ended June 30, 2025, was $1,244,000 compared to net income of $1,644,000 for the same period of 2024, representing a decrease of $400,000, or 24.3%.

The net income decrease between the three months ended June 30, 2025 and the same period of 2024 was due to a decrease in income before provision for income taxes of $508,000, partially offset by a decrease in provision for income taxes of $108,000.

Net income as a percentage of net sales was 7.5% for the three months ended June 30, 2025, compared to 10.1% for the same period of 2024.

Basic and diluted earnings per common share for each of the three months ended June 30, 2025 and 2024, was $0.12 and $0.15, respectively.

Net income for the six months ended June 30, 2025, was $1,857,000 compared to net income of $2,220,000 for the same period of 2024, representing a decrease of $363,000, or 16.4%.

The net income decrease between the six months ended June 30, 2025 and the same period of 2024 was due to a decrease in income before provision for income taxes of $458,000, partially offset by a decrease in provision for income taxes of $95,000.

Net income as a percentage of net sales was 6.1% for the six months ended June 30, 2025, compared to 7.5% for the same period of 2024.

Basic and diluted earnings per common share for each of the six months ended June 30, 2025 and 2024, was $0.18 and $0.20, respectively.

Alpha Pro Tech, Ltd.

Net income for the three months ended September 30, 2025, was $976,000 compared to net income of $862,000 for the same period of 2024, representing an increase of $114,000, or 13.2%.

The net income increase between the three months ended September 30, 2025 and the same period of 2024 was due to an increase in income before provision for income taxes of $194,000, partially offset by an increase in provision for income taxes of $80,000.

Net income as a percentage of net sales was 6.6% for the three months ended September 30, 2025, compared to 6.0% for the same period of 2024.

Basic and diluted earnings per common share for each of the three months ended September 30, 2025 and 2024, was $0.09 and $0.08, respectively.

Net income for the nine months ended September 30, 2025, was $2,833,000 compared to net income of $3,082,000 for the same period of 2024, representing a decrease of $249,000, or 8.1%.

The net income decrease between the nine months ended September 30, 2025 and the same period of 2024 was due to a decrease in income before provision for income taxes of $264,000, partially offset by a decrease in provision for income taxes of $15,000.

Net income as a percentage of net sales was 6.3% for the nine months ended September 30, 2025, compared to 7.0% for the same period of 2024.

Basic and diluted earnings per common share for each of the nine months ended September 30, 2025 and 2024, was $0.27 and $0.28, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2025, the Company had cash and cash equivalents (“cash”) of $14,464,000 and working capital of $47,528,000.

As of June 30, 2025, the Company’s current ratio (current assets/current liabilities) was 17:1.

Cash decreased by 22.4%, or $4,172,000, to $14,464,000 as of June 30, 2025, compared to $18,636,000 as of December 31, 2024, and working capital increased by $12,000, to $47,528,000 from $47,516,000 as of December 31, 2024.

The decrease in cash from December 31, 2024, was due to cash used in operating activities of $1,871,000, cash used in investing activities of $273,000, and cash used in financing activities of $2,028,000.

Net cash used in operating activities of $1,871,000 for the six months ended June 30, 2025 was due to net income of $1,857,000, as adjusted primarily by the following:

stock-based compensation expense of $272,000, depreciation and amortization expense of $483,000, equity in income of unconsolidated affiliate of $278,000, operating lease asset amortization of $462,000, an increase in accounts receivable of $4,886,000, a decrease in prepaid expenses of $438,000, a decrease in inventory of $372,000, a decrease in accounts payable and accrued liabilities of $156,000, and a decrease in lease liabilities of $435,000, all compared to December 31, 2024.

Accounts receivable increased by $4,886,000, or 99.8%, to $9,780,000 as of June 30, 2025, from $4,894,000 as of December 31, 2024.

The increase in accounts receivable was primarily related to increased sales in the latter part of the second quarter of 2025 compared to the latter part of 2024 and due to a higher percentage than normal of receivables with extended terms.

The number of days that sales remained outstanding as of June 30, 2025, calculated by using an average of accounts receivable outstanding and annual revenue, was 40 days, compared to 36 days as of December 31, 2024.

Inventory decreased by $372,000, or 1.6%, to $22,361,000 as of June 30, 2025, from $22,733,000 as of December 31, 2024.

The decrease was due to a decrease in inventory for the Disposable Protective Apparel segment of $519,000, or 4.4%, to $11,283,000, partially offset by an increase in inventory for the Building Supply segment of $147,000, or 1.3%, to $11,078,000.

Prepaid expenses decreased by $438,000, or 10.0%, to $3,938,000 as of June 30, 2025, from $4,376,000 as of December 31, 2024.

The decrease was primarily due to a decrease in prepaid insurance.

Right-of-use-assets as of June 30, 2025, decreased by $462,000 to $8,252,000 from $8,714,000 as of December 31, 2024, as a result of amortization of the right-of- use-assets.

Lease liabilities as of June 30, 2025, decreased by $435,000 to $8,340,000 from $8,775,000 as of December 31, 2024.

As of September 30, 2025, the Company had cash and cash equivalents (“cash”) of $17,658,000 and working capital of $48,078,000.

As of September 30, 2025, the Company’s current ratio (current assets/current liabilities) was 14:1.

Cash decreased by 5.2%, or $978,000, to $17,658,000 as of September 30, 2025, compared to $18,636,000 as of December 31, 2024, and working capital increased by $562,000, to $48,078,000 from $47,516,000 as of December 31, 2024.

The decrease in cash from December 31, 2024, was due to cash used in investing activities of $372,000 and cash used in financing activities of $2,658,000 offset by cash provided by operating activities of $2,052,000.

Net cash provided by operating activities of $2,052,000 for the nine months ended September 30, 2025 was due to net income of $2,833,000, as adjusted primarily by the following:

stock-based compensation expense of $408,000, depreciation and amortization expense of $686,000, equity in income of unconsolidated affiliate of $305,000, operating lease asset amortization of $698,000, an increase in accounts receivable of $2,235,000, a decrease in prepaid expenses of $894,000, an increase in inventory of $746,000, an increase in accounts payable and accrued liabilities of $489,000, and a decrease in lease liabilities of $670,000, all compared to December 31, 2024.

Accounts receivable increased by $2,235,000, or 45.7%, to $7,129,000 as of September 30, 2025, from $4,894,000 as of December 31, 2024.

The increase in accounts receivable was primarily related to increased sales in the third quarter of 2025 compared to the latter part of 2024 and due to a higher percentage of receivables with extended terms.

The number of days that sales remained outstanding as of September 30, 2025, calculated by using an average of accounts receivable outstanding and annual revenue, was 37 days, compared to 36 days as of December 31, 2024.

Inventory increased by $746,000, or 3.3%, to $23,479,000 as of September 30, 2025, from $22,733,000 as of December 31, 2024.

The increase was due to an increase in inventory for the Building Supply segment of $969,000, or 8.9%, to $11,900,000, partially offset by a decrease in inventory for the Disposable Protective Apparel Building Supply segment of $223,000, or 1.9%, to $11,579,000.

Prepaid expenses decreased by $894,000, or 20.4%, to $3,482,000 as of September 30, 2025, from $4,376,000 as of December 31, 2024.

The decrease was primarily due to a decrease in prepaid insurance and prepaid taxes partially offset by increase in prepaid inventory for Building Supply segment.

Alpha Pro Tech, Ltd.

Right-of-use-assets as of September 30, 2025, decreased by $698,000 to $8,016,000 from $8,714,000 as of December 31, 2024, as a result of amortization of the right-of- use-assets.

Lease liabilities as of September 30, 2025, decreased by $670,000 to $8,105,000 from $8,775,000 as of December 31, 2024.

The decrease in lease liabilities was the result of lease payments made during the period.

Accounts payable and accrued liabilities as of June 30, 2025, decreased by $156,000, or 7.0%, to $2,074,000, from $2,230,000 as of December 31, 2024.

The decrease was primarily due to decreases in accrued bonuses, partially offset by increased trade payables.

Net cash used in investing activities was $273,000 for the six months ended June 30, 2025, compared to net cash used in investing activities of $216,000 for the same period of 2024.

Investing activities for the six months ended June 30, 2025 and 2024 consisted primarily of the purchase of property and equipment.

Net cash used in financing activities was $2,028,000 for the six months ended June 30, 2025, compared to net cash used in financing activities of $1,913,000 for the same period of 2024.

Net cash used in financing activities for the six months ended June 30, 2025 resulted from the payment of $2,008,000 for the repurchase of common stock and $20,000 for treasury stock excise tax.

Net cash used in financing activities for the six months ended June 30, 2024 resulted from the payment of $2,701,000 for the repurchase of common stock and $27,000 for treasury stock excise tax, partially offset by $815,000 in proceeds from the exercise of stock options.

As of June 30, 2025, we had $2,735,000 available for stock purchases under our stock repurchase program.

During the six months ended June 30, 2025, we repurchased 402,513 shares of common stock at a cost of $2,008,000.

As of June 30, 2025, we had repurchased a total of 21,645,140 shares of common stock at a cost of approximately $56,786,000 through our repurchase program which commenced in 1999.

Accounts payable and accrued liabilities as of September 30, 2025, increased by $489,000, or 21.9%, to $2,719,000, from $2,230,000 as of December 31, 2024.

The increase was primarily due to increases in trade payables, partially offset by decreases in accrued bonuses.

Net cash used in investing activities was $372,000 for the nine months ended September 30, 2025, compared to net cash used in investing activities of $2,333,000 for the same period of 2024.

Investing activities for the nine months ended September 30, 2025 and 2024 consisted primarily of the purchase of equipment.

Net cash used in financing activities was $2,658,000 for the nine months ended September 30, 2025, compared to net cash used in financing activities of $2,936,000 for the same period of 2024.

Net cash used in financing activities for the nine months ended September 30, 2025 resulted from the payment of $2,632,000 for the repurchase of common stock and $26,000 for treasury stock excise tax.

Net cash used in financing activities for the nine months ended September 30, 2024 resulted from the payment of $3,731,000 for the repurchase of common stock and $37,000 for treasury stock excise tax, partially offset by $832,000 in proceeds from the exercise of stock options.

As of September 30, 2025, we had $2,111,000 available for stock purchases under our stock repurchase program.

During the nine months ended September 30, 2025, we repurchased 532,313 shares of common stock at a cost of $2,632,000.

As of September 30, 2025, we had repurchased a total of 21,774,940 shares of common stock at a cost of approximately $57,410,000 through our repurchase program which commenced in 1999.

We retire all stock upon repurchase.

Future repurchases are expected to be funded from cash on hand and cash flows from operating activities.

Alpha Pro Tech, Ltd.

We believe that our current cash balance and expected cash flow from operations will be sufficient to satisfy our projected working capital and planned capital expenditures for the foreseeable future.

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As a smaller reporting company, we are not required to provide the information otherwise required by this Item.

Alpha Pro Tech, Ltd.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis