What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-06 · 85 added, 97 removed, 131 unchanged (58% of the section changed)

44 unchanged sentences

IN FINANCIAL CONDITION

the period ended June 30, 2021 vs.

the period ended September 30, 2021 vs.

December 31, 2020

Compensation was $3,609,000 at June 30, 2021, compared to $5,429,000 at December 31, 2020, decreasing $1,820,000 (33.5%).

A significant

portion of the liability that existed at the previous year end related to incentive compensation earned in 2020.

As is customary, the

liability was then paid during the first quarter of the following year, or 2021, thus diminishing the balance.

The liability primarily

represents amounts earned during the current year.

Company’s cash balance of $27,245,000 at September 30, 2021, increased $3,612,000 (15.3%) from the $23,633,000 balance at December

31, 2020 mainly the result of income generated from operations during 2021, less dividends of $8,809,000 paid during the first nine months

The condensed consolidated statement of cash flows is provided on page 8 which provides further details regarding changes in

Receivable was $22,115,000 and $20,077,000 as of September 30, 2021, and December 31, 2020, respectively, increasing $2,038,000 or 10.2%.

This is mostly timing related, associated with higher sales during the current quarter compared to the fourth quarter of last year.

OF OPERATIONS

months ended June 30, 2021 vs.

June 30, 2020

Company reported comparative results from continuing operations for the three months ended June 30, 2021 and 2020 as follows:

Three months ended June 30,

months ended September 30, 2021 vs.

September 30, 2020

Company reported comparative results from continuing operations for the three months ended September 30, 2021 and 2020 as follows:

months ended September 30,

(in thousands)

Operating Profit

The Company’s 2021 second quarter sales of $31,966,000 increased $10,148,000 or 46.5% compared to the second quarter

of 2020, which generated sales of $21,818,000.

The increase in sales was two-fold, resulting primarily from an increase in unit volume,

and partially due to pricing actions which the Company took to offset material cost pressure and to protect margins.

The previous year

was also significantly lower compared to prior quarters due to the impact of the COVID-19 pandemic.

The Company’s gross profit margins were 61.6% and 60.8% for the three months ended June 30, 2021 and 2020, respectively.

The Company experienced a decrease in production during the first six months of 2020 mainly the result of the COVID-19 pandemic, which

diminished labor and overhead absorption, and resulted in lower gross profit.

The Company’s 2021 third quarter sales of $31,725,000 increased $4,638,000 or 17.1% compared to the third quarter of

2020, which generated sales of $27,087,000.

The increase in sales resulted primarily from an increase in pricing actions which the Company

took to offset material cost pressure and to protect margins.

The Company’s gross profit margins were 63.2% and 63.7% for the three months ended September 30, 2021 and 2020, respectively.

The Company experienced higher material prices which largely have been offset by the pricing actions noted above.

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing

1 unchanged sentence

Selling expense was $4,876,000 and $3,991,000

for the three months ended June 30, 2021 and 2020, respectively, representing an increase of $1,425,000 or 40.7%.

The increase was primarily

related to higher commissions and freight expenses, which move in relation to sales.

Other less significant increases were noted in staffing,

as resources were added, and also advertising.

Selling expenses as a percent of net sales were 15.4% and 16.0% for the three months ended

June 30, 2021 and 2020, respectively.

for the three months ended September 30, 2021 and 2020, respectively, representing an increase of $885,000 or 22.2%.

The increase was

primarily related to higher staffing costs, as resources were added, and freight expenses, which move in relation to sales.

Selling expenses

as a percent of net sales were 15.4% and 14.7% for the three months ended September 30, 2021 and 2020, respectively.

and Administrative Expenses .

2 unchanged sentences

General and administrative

expenses were $5,139,000 and $3,852,000 for the three months ended June 30, 2021 and 2020, respectively, thus increasing by $1,287,000

The most notable increase related to legal and product liability related defense costs, which were $689,000 above last year.

To a lesser extent, staffing expenses increased mostly due to an increase in incentive compensation associated with higher profitability,

partially offset by a decrease in the phantom stock component, driven by the change in the Company’s stock price between periods,

as discussed in detail in Note 6, Stock Based Plans, to the condensed consolidated financial statements included in this report.

fees also increased.

As a percentage of sales, general and administrative expenses decreased to 16.1% for the three months ended June

30, 2021 from 17.7% for the three months ended June 30, 2020.

expenses were $5,724,000 and $5,951,000 for the three months ended September 30, 2021 and 2020, respectively, thus decreasing by $227,000

The most notable decrease related to a decrease in phantom stock expense of $1,162,000, driven by the change in the Company’s

stock price between periods, as discussed in detail in Note 6, Stock Based Plans, to the condensed consolidated financial statements

included in this report, partially offset by an increase in incentive compensation associated with higher profitability and by higher

legal and product liability related defense costs.

As a percentage of sales, general and administrative expenses decreased to 18.0% for

the three months ended September 30, 2021 from 22.0% for the three months ended September 30, 2020.

Engineering expenses consist of development expenses associated with the development of new products and enhancements to

1 unchanged sentence

Engineering expenses were $1,113,000 and $945,000 for the three months ended

June 30, 2021 and 2020, respectively, increasing by $191,000 or 18.7%, partially associated with an increase in development and certification

related costs required for the progression of various promising applications.

Engineering expenses decreased as a percentage of sales,

being 3.8% for the three months ended June 30, 2021, and 4.7% for the same period in 2020.

Reflecting all of the factors mentioned above, operating profits were $8,419,000 and $4,886,000 for the quarters ended June

September 30, 2021 and 2020, respectively, increasing by $168,000 or 17.8%, partially associated with an increase in staffing and development

and certification related costs required for the progression of various promising applications.

Engineering expenses as a percentage

of sales, were essentially the same at 3.5% for the three months ended September 30, 2021, and 2020.

Reflecting all of the factors mentioned above, operating profits were $8,326,000 and $6,379,000 for the quarters ended September

30, 2021 and 2020, respectively, increasing by $1,947,000 or 30.5%.

As a percentage of sales, operating profits increased, being 26.2%

and 22.4% for the three months ended June 30, 2021 and 2020, respectively.

and 23.6% for the three months ended September 30, 2021 and 2020, respectively.

Income (Expense).

1 unchanged sentence

debt amounts outstanding on its line of credit.

The Company recorded $8,000 of interest income and $97,000 of interest expense for the

quarters ended June 30, 2021 and 2020, respectively.

The Company had borrowed $15,000,000 on its line of credit for a portion of the

second quarter of 2020 to ensure liquidity during the COVID-19 crisis, which created the interest expense during that period.

The Company recorded $10,000 and $6,000 of interest income for the quarters ended September

30, 2021 and 2020, respectively.

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.

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.

subsidiaries.

was income of $7,000 and expense of $23,000 recorded for the quarters ended June 30, 2021 and 2020, respectively.

expense of $19,000 and income of $19,000 recorded for the quarters ended September 30, 2021 and 2020, respectively.

Tax Expense .

Income Tax Expense was $2,232,000 for the second quarter of 2021, compared to $1,196,000 for the same period in 2020,

Income Tax Expense was $2,160,000 for the third quarter of 2021, compared to $1,576,000 for the same period in 2020,

increasing $584,000 or 37.1%, mostly the result of the increase in income before taxes.

months ended June 30, 2021 vs.

June 30, 2020

Company reported comparative results from operations for the six month periods ended June 30, 2021 and 2020 as follows:

Six months ended June 30,

months ended September 30, 2021 vs.

September 30, 2020

Company reported comparative results from operations for the nine month periods ended September 30, 2021 and 2020 as follows:

Nine months ended September 30,

(in thousands)

Operating Profit

The Company’s 2021 sales for the first six months of 2021 of $62,829,000 increased $15,745,000 or 33.4% compared to

the first six months of 2020, which generated sales of $47,084,000.

The increase in sales was two-fold, resulting primarily from an increase

in unit volume, and to a lesser extent by pricing actions which the Company took to offset material cost pressure and to protect margins.

Sales during the first six months of 2020 were partially impeded by the COVID-19 pandemic.

The Company’s gross profit margins were 62.5% and 61.7% for the six-months ended June 30, 2021 and 2020, respectively.

The Company’s 2021 sales for the first nine months of 2021 of $94,554,000 increased $20,383,000 or 27.5% compared to

the first nine months of 2020, which generated sales of $74,171,000.

The increase in sales was two-fold, resulting primarily from an

increase in unit volume, and to a lesser extent by pricing actions which the Company took to offset material cost pressure and to protect

Sales during the first nine months of 2020 were partially impeded by the COVID-19 pandemic.

The Company’s gross profit margins were 62.7% and 62.4% for the nine months ended September 30, 2021 and 2020, respectively.

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing

1 unchanged sentence

Selling expense was $14,625,000 and $12,045,000

for the six months ended June 30, 2021 and 2020, respectively, representing an increase of $1,695,000 or 21.1%.

for the nine months ended September 30, 2021 and 2020, respectively, representing an increase of $2,580,000 or 21.4%.

The increases primarily

1 unchanged sentence

Other less significant increases

were noted in staffing, as resources were added, and also advertising.

Inversely, travel, tradeshow and sales meeting expenses all decreased

primarily due to restrictions imposed by the COVID-19 pandemic.

Selling expenses decreased as a percent of net sales compared to last

year, being 15.5% for the six months ended June 30, 2021, and 17.1% for the six months ended June 30, 2020.

were noted in staffing, as resources were added.

Selling expenses decreased as a percent of net sales compared to last year, being 15.5%

for the nine months ended September 30, 2021, and 16.2% for the nine months ended September 30, 2020.

and Administrative Expenses .

2 unchanged sentences

General and administrative

expenses were $10,557,000 and $8,105,000 for the six months ended June 30, 2021 and 2020, respectively, thus increasing by $2,452,000

Incentive compensation increased $1,494,000 over last year.

This was primarily due to higher net profits as well as an increase

of $335,000 in the phantom stock portion of incentive compensation expense between years, driven by the change in the Company’s

stock price between periods, as discussed in detail in Note 6, Stock Based Plans, to the condensed consolidated financial statements

included in this report.

Additional higher items include legal and product liability related defense costs and also director fees due

to a revised arrangement resulting from an independent study performed to align board compensation with comparable peers.

As a percentage

of sales, general and administrative expenses decreased to 16.8% for the six months ended June 30, 2021 from 17.2% for the six months

ended June 30, 2020.

expenses were $16,281,000 and $14,056,000 for the nine months ended September 30, 2021 and 2020, respectively, thus increasing by $2,225,000

Incentive compensation increased $1,561,000 over last year due to higher operating profits.

Additional higher items include

legal and product liability related defense costs and director fees due to a revised arrangement resulting from an independent study

performed to align board compensation with comparable peers.

These higher items were partially offset by a decrease in phantom stock

expense between years, driven by the change in the Company’s stock price between periods, as discussed in detail in Note 6, Stock

Based Plans, to the condensed consolidated financial statements included in this report.

As a percentage of sales, general and administrative

expenses decreased to 17.2% for the nine months ended September 30, 2021 from 19.0% for the nine months ended September 30, 2020.

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 $2,213,000 and $2,141,000 for the six months ended

June 30, 2021 and 2020, respectively, increasing by $72,000 or 3.4%.

Engineering expenses were $3,326,000 and $3,086,000 for the nine months ended

September 30, 2021 and 2020, respectively, increasing by $240,000 or 7.8%.

Engineering expenses decreased as a percentage of sales, being

for the six months ended June 30, 2021, and 4.6% for the same period in 2020.

Reflecting all of the factors mentioned above, operating profits were $16,738,000 and $10,731,000 for the six months ended

June 30, 2021 and 2020, respectively, increasing by $6,007,000 or 56.0%.

3.5% for the nine months ended September 30, 2021, and 4.2% for the same period in 2020.

Reflecting all of the factors mentioned above, operating profits were $25,064,000 and $17,110,000 for the nine months ended

September 30, 2021 and 2020, respectively, increasing by $7,954,000 or 46.5%.

Income (Expense).

2 unchanged sentences

The Company recorded $27,000 of interest income and $46,000 of interest expense during

the first six months of 2021 and 2020, respectively.

the first nine months of 2021 and 2020, respectively.

The Company had borrowed $15,000,000 on its line of credit for a portion of the

4 unchanged sentences

subsidiaries.

income of $25,000 recorded during the first six months of 2021, but expense of $131,000 during the first six months of 2020.

income of $6,000 recorded during the first nine months of 2021, but expense of $112,000 during the first nine months of 2020.

Pound had weakened in 2020 as a result of the pandemic impacting the economy.

Tax Expense .

Income Tax Expense was $4,281,000 for the first six months of 2021, compared to $2,612,000 for the same period in 2020,

Income Tax Expense was $6,441,000 for the first nine months of 2021, compared to $4,188,000 for the same period in 2020,

increasing $2,253,000 or 53.8%, mostly the result of the increase in income before taxes.

17 unchanged sentences

generated from operations.

of June 30, 2021, the Company had a cash balance of $28,463,000.

of September 30, 2021, the Company had a cash balance of $27,245,000.

Additionally, the Company has a $15,000,000 line of credit available,

as discussed in detail in Note 4, which had no borrowings outstanding upon it at June 30, 2021.

At December 31, 2020, the Company had

a cash balance of $23,633,000, with no borrowings against the line of credit.

as discussed in detail in Note 4, which had no borrowings outstanding upon it as of September 30, 2021.

At December 31, 2020, the Company

had a cash balance of $23,633,000, with no borrowings against the line of credit.

provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such

as those included in working capital.

the six months ended June 30, 2021, the Company’s operating activities provided cash of $10,980,000, compared to the six months

ended June 30, 2020 which provided cash of $9,303,000, a difference of $1,677,000.

For details of the operating cash flows refer to the

unaudited condensed consolidated statements of cash flows in Part I – Financial Information on page eight.

the nine months ended September 30, 2021, the Company’s operating activities provided cash of $13,164,000, compared to the nine

months ended September 30, 2020 which provided cash of $11,341,000, a difference of $1,823,000.

For details of the operating cash flows

refer to the unaudited condensed consolidated statements of cash flows in Part I – Financial Information on page eight.

a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically

2 unchanged sentences

and accumulated during the latter portion of the year.

used in investing activities during the six months ended June 30, 2021 and 2020 was $517,000 and $187,000, respectively for capital expenditures.

used in investing activities during the nine months ended September 30, 2021 and 2020 was $720,000 and $381,000, respectively for capital

expenditures.

financing activities relate to dividend payments, which are detailed in Note 8, Shareholders’ Equity.

Dividend payments through

the first six months of 2021 and 2020, amounted to $5,653,000 for both periods.

See Note 4, Line of Credit and Other Borrowings, for

a description of borrowings and repayments during the second quarter of 2020.

the first nine months of 2021 and 2020, amounted to $8,809,000 and $8,479,000, respectively.

See Note 4, Line of Credit and Other Borrowings,

for a description of borrowings and repayments during the second quarter of 2020.

believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs

7 unchanged sentences

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