Alpha Pro Tech Q3 2026 net income rises 97.2%
APT's current ratio was 9:1 as of September 30, 2026, compared with 13:1 as of December 31, 2025.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Alpha Pro Tech, Ltd. (APT) reported third-quarter 2026 net sales of $16.604 million, up 12.3% from a year earlier, and net income of $1.925 million, versus $976,000. Nine-month sales were $49.863 million, up 10.1%, and net income was $4.453 million, up 57.2%. Disposable Protective Apparel sales rose 30.2% to $7.173 million in the quarter; Building Supply sales increased 1.7% to $9.431 million.
Quarterly gross margin was 41.8%, compared with 39.7%; nine-month gross margin was 39.0%, compared with 38.4%. The company received approximately $3.5 million in refunds of previously paid IEEPA tariffs during the nine months. It recorded the majority of refunds in accrued liabilities pending evaluation of customer and vendor arrangements and related obligations; remaining amounts reduced cost of goods sold and inventory.
Operating cash flow was $9.337 million for the nine months, and cash and cash equivalents were $25.546 million as of September 30, 2026. The company also reported a new 10% tariff under Section 122 and said higher ocean freight rates are expected to put additional pressure on future gross margins.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQuarterly sales rose 12.3% to $16.604 million.
- Moderate pointQuarterly net income rose 97.2% to $1.925 million.
- Moderate pointNine-month operating cash flow rose to $9.337 million from $2.052 million.
Negative
- None.
Filing Explained
For the nine months ended
Key Figures
Key Terms
IEEPA tariff refund regulatory
unconsolidated affiliate financial
non-GAAP financial measures financial
imputed interest financial
right-of-use assets financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue and net income did APT report for the third quarter of 2026?
How much did APT repurchase under its stock repurchase program?
How were APT's IEEPA tariff refunds recorded?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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For the quarterly period ended
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For the transition period from to
Commission File No.
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Common Stock, $0.01 par value |
Alpha Pro Tech, Ltd.
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PART I. |
FINANCIAL INFORMATION |
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ITEM 1. |
Financial Statements |
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Condensed Consolidated Balance Sheets (Unaudited) |
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Condensed Consolidated Statements of Income (Unaudited) |
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) |
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Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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ITEM 4. |
Controls and Procedures |
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PART II. |
OTHER INFORMATION |
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ITEM I. |
Legal Proceedings |
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ITEM IA. |
Risk Factors |
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ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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ITEM 5. |
Other Information |
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ITEM 6. |
Exhibits |
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SIGNATURES |
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EXHIBITS |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets (Unaudited)
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The condensed consolidated balance sheet as of December 31, 2025, has been prepared using information from the audited consolidated balance sheet as of that date.
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Income (Unaudited)
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Condensed Consolidated Statements of Comprehensive Income (Unaudited)
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
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Stock-based compensation expense |
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Other comprehensive loss |
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Balance as of March 31, 2025 |
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Net income |
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Cash Flows (Unaudited)
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For the Nine Months Ended September 30, |
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Cash Flows From Operating Activities: |
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Net income |
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Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities: |
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Cash Flows From Financing Activities: |
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Supplemental disclosure of non-cash transactions: |
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1. |
The Company |
Alpha Pro Tech, Ltd. (“Alpha Pro Tech,” the “Company,” “we”, “us” or “our”) is in the business of protecting people, products and environments. The Company accomplishes this by developing, manufacturing and marketing a line of building supply products for the new home and re-roofing markets and a line of disposable protective apparel for the cleanroom, industrial, pharmaceutical, medical and dental markets.
The Building Supply segment consists of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials.
The Disposable Protective Apparel segment consists of a complete line of disposable protective garments (shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields. All of our disposable protective apparel products, including face masks and face shields, are sold through similar distribution channels, are single-use and disposable, have the purpose of protecting people, products and environments, and have to be produced in Food and Drug Administration approved facilities, regardless of the market served.
The Company’s products are sold under the “Alpha Pro Tech” brand name as well as under private label and are predominantly sold in the United States of America (“U.S.”).
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2. |
Basis of Presentation and Revenue Recognition Policy |
The interim financial information included in this report is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods reflected herein. These interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, therefore, omit certain information and note disclosures that would be necessary to present the statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The interim condensed consolidated financial statements should be read in conjunction with the Company’s current year SEC filings, as well as the Company’s consolidated financial statements for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), filed with the SEC on March 11, 2026. The results of operations for the three and nine months ended September 30, 2026, in this Quarterly Report on Form 10-Q are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of December 31, 2025 was prepared using information from the audited consolidated balance sheet contained in the 2025 Form 10-K; however, it does not include all disclosures required by U.S. GAAP for annual consolidated financial statements.
Net sales include revenue from products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Our customer contracts have a single performance obligation which is delivery of products purchased by customers and is satisfied upon transfer control of products to customers. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring control of products. All revenue is recognized when we satisfy our performance obligations under the applicable contract. We recognize revenue in connection with transferring control of the promised products to the customer, with revenue being recognized at the point in time when the customer obtains control of the products, which is generally when title passes to the customer upon delivery to a third-party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements, at which time a receivable is created for the invoice sent to the customer. Shipping and handling activities are performed prior to the customer obtaining control of the goods and are accounted for as fulfillment activities and are not a promised good or service. Shipping and handling charges billed to customers are included in revenue. Shipping and handling costs, associated with the distribution of the Company’s product to the customers, are recorded in cost of goods sold and are recognized when control of the product is transferred to the customer, which is generally when title passes to the customer upon delivery to a third-party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements. We estimate product returns based on historical return rates and estimate rebates based on contractual agreements. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. Sales taxes and value added taxes in foreign and domestic jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales. The Company manufactures certain private label goods for customers and has determined that control does not pass to the customer at the time of manufacture, based upon the nature of the private labeling. The Company has determined as of September 30, 2026, that it had no material contract assets, and concluded that its contract liabilities (primarily rebates) had the right of offset against customer receivables. See Note 10 and Note 11 of these Notes to Condensed Consolidated Financial Statements (Unaudited) for information on revenue disaggregated by type and by geographic region.
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3. |
Shareholders’ Equity |
Repurchase Program
During the three months ended September 30, 2026, the Company repurchased and retired
Equity Awards
At the Company’s 2020 Annual Meeting of Shareholders held on June 9, 2020, the Company’s shareholders approved the Alpha Pro Tech, Ltd. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”). The 2020 Incentive Plan provides for the grant of incentive and nonqualified stock options, stock appreciation rights, awards of restricted stock and restricted stock units (“RSU”), performance share awards, cash awards and other equity-based awards to employees (including officers), consultants and non-employee directors of the Company and its affiliates. A total of
The following table summarizes restricted stock unit (“RSU”) awards activity for the nine months ended September 30, 2026:
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Grant Date Price |
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RSU Awards |
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Outstanding, September 30, 2026 |
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During the nine months ended September 30, 2026 and 2025,
The Company uses the Black-Scholes option-pricing model to value the stock options. The Company uses historical data to estimate the expected life of the options. The risk-free interest rate for periods within the contractual life of an award is based on the US Treasury yield curve in effect at the time of grant. The estimated volatility is based on historical volatility. The Company uses an estimated dividend payout of zero, as the Company has not paid dividends in the past and, at this time, does not expect to do so in the future. The Company accounts for option forfeitures as they occur.
The following table summarizes stock option activity for the nine months ended September 30, 2026:
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Per Option |
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Options outstanding, December 31, 2025 |
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Exercised |
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Options outstanding, September 30, 2026 |
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Options exercisable, September 30, 2026 |
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The Company recognized $
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4. |
Recent Accounting Pronouncements |
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments are expected to impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, derivatives, and transfers of financial assets. The amendments will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASU Topic 606 (Revenue from Contracts with Customers). This pronouncement is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, and should be applied on a prospective basis. The Company adopted this pronouncement effective January 1, 2026. The adoption of this pronouncement did not have a significant impact on the Company's consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements,” which provides additional guidance on what disclosures should be provided in interim reporting periods including disclosure of events since the end of the last annual reporting period that have a material impact on the entity. These amendments will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. These amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this pronouncement and determining the transition method and the timing of adoption.
Management periodically reviews new accounting standards that are issued. Management has not identified any other new standards that it believes merit further discussion at this time.
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5. |
Inventories |
As of September 30, 2026 and December 31, 2025, inventories net of reserves consisted of the following:
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6. |
Equity Investment in Unconsolidated Affiliate |
In 2005, Alpha ProTech Engineered Products, Inc. (a subsidiary of Alpha Pro Tech, Ltd.) entered into a joint venture with a manufacturer in India, Maple Industries and associates, for the production of building products. Under the terms of the joint venture agreement, a private company, Harmony Plastics Private Limited (“Harmony”), was created with ownership interests of
This joint venture positions Alpha ProTech Engineered Products, Inc. to respond to current and expected increased product demand for housewrap and synthetic roof underlayment and provides future capacity for sales of specialty roofing component products and custom products for industrial applications requiring high quality extrusion coated fabrics. In addition, the joint venture now supplies products for the Company’s Disposable Protective Apparel segment.
Harmony currently has four facilities in India (three owned and one rented), consisting of: (1) a
In accordance with ASC 810, Consolidation, the Company assesses whether or not related entities are variable interest entities (“VIEs”). For those related entities that qualify as VIEs, ASC 810 requires the Company to determine whether the Company is the primary beneficiary of the VIE, and, if so, to consolidate the VIE. The Company has determined that Harmony is not a VIE and is, therefore, considered to be an unconsolidated affiliate.
The Company records its investment in Harmony as “equity investment in unconsolidated affiliate” in the accompanying consolidated balance sheets. The Company records its equity interest in Harmony’s results of operations as “equity in income of unconsolidated affiliate” in the accompanying condensed consolidated statements of income. The Company periodically reviews its investment in Harmony for impairment. Management has determined that no impairment was required as of September 30, 2026, or December 31, 2025. Under the equity method, since the Company’s reporting currency is different from Harmony’s functional currency, the Company is required to translate our proportionate share of equity for the effects of translations in foreign currency and adjust the investment accordingly and accrue the adjustment as a component of accumulated other comprehensive loss (“AOCL”).
For the three months ended September 30, 2026 and 2025, the Company purchased $
As of September 30, 2026, the Company’s investment in Harmony was $
|
7. |
Accrued Liabilities |
As of September 30, 2026 and December 31, 2025, accrued liabilities consisted of the following:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Payroll expenses and taxes payable |
$ | $ | ||||||
|
Commissions and bonuses payable and general accrued liabilities |
||||||||
|
Total accrued liabilities |
$ | $ | ||||||
|
8. |
Basic and Diluted Earnings Per Common Share |
The following table provides a reconciliation of both net income and the number of shares used in the computation of “basic” earnings per common share (“EPS”), which utilizes the weighted average number of common shares outstanding without regard to dilutive shares, and “diluted” EPS, which includes all such dilutive shares, for the three and nine months ended September 30, 2026 and 2025:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net income (numerator) |
$ | $ | $ | $ | ||||||||||||
|
Shares (denominator): |
||||||||||||||||
|
Basic weighted average common shares outstanding |
||||||||||||||||
|
Add: dilutive effect of common stock options |
||||||||||||||||
|
Diluted weighted average common shares outstanding |
||||||||||||||||
|
Earnings per common share: |
||||||||||||||||
|
Basic |
$ | $ | $ | $ | ||||||||||||
|
Diluted |
$ | $ | $ | $ | ||||||||||||
|
9. |
Accumulated Other Comprehensive Loss |
AOCL, a component of shareholders' equity, consists of foreign currency translation adjustments related to foreign currency gains or losses on our unconsolidated affiliate as its functional currency is other than the U.S. dollar. The resulting foreign currency translation gains or losses are deferred as AOCL and reclassified to earnings only upon sale or liquidation of that business. The AOCL on equity in unconsolidated affiliate was $
|
10. |
Segments Reporting |
The Company has determined that it has two reporting segments, which are also operating segments:
(1) Building Supply: consisting of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials. The majority of the Company’s equity in income of unconsolidated affiliate (Harmony) is included in the total segment income for the Building Supply segment.
(2) Disposable Protective Apparel: consisting of a complete line of disposable protective garments, including shoecovers (including the Aqua Trak® and spunbond shoecovers), bouffant caps, coveralls, frocks, lab coats, gowns and hoods, as well as face masks and face shields for the pharmaceutical, cleanroom, industrial, medical and dental markets. A portion of the Company’s equity in income of unconsolidated affiliate (Harmony) is included in the total segment income for the Disposable Protective Apparel segment.
The chief operating decision maker (“CODM”) of the Company is the Company’s chief executive officer. The CODM assesses performance and decides how to allocate resources, including employees and financial and capital resources, based on segment net sales.
Segment data excludes charges allocated to the principal executive office and other unallocated corporate overhead expenses and income tax. The Company evaluates the performance of its segments and allocates resources to them based primarily on net sales.
The following provides segment information as described below:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
|
September 30, 2026 |
September 30, 2026 |
|||||||||||||||
|
Building Supply |
Disposable Protective Apparel |
Building Supply |
Disposable Protective Apparel |
|||||||||||||
|
Segment sales |
$ | $ | $ | $ | ||||||||||||
|
Less: |
||||||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Selling, general and administrative |
||||||||||||||||
|
Depreciation and amortization |
||||||||||||||||
|
Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Segment net income |
$ | $ | $ | $ | ||||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
|
September 30, 2025 |
September 30, 2025 |
|||||||||||||||
|
Building Supply |
Disposable Protective Apparel |
Building Supply |
Disposable Protective Apparel |
|||||||||||||
|
Segment sales |
$ | $ | $ | $ | ||||||||||||
|
Less: |
||||||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Selling, general and administrative |
||||||||||||||||
|
Depreciation and amortization |
||||||||||||||||
|
Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Segment net income |
$ | $ | $ | $ | ||||||||||||
The following table presents net sales for each segment for the three and nine months ended September 30, 2026 and 2025:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Building Supply |
$ | $ | $ | $ | ||||||||||||
|
Disposable Protective Apparel |
||||||||||||||||
|
Consolidated net sales |
$ | $ | $ | $ | ||||||||||||
The following table presents the reconciliation of total segment income to consolidated net income for the three and nine months ended September 30, 2026 and 2025:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Building Supply |
$ | $ | $ | $ | ||||||||||||
|
Disposable Protective Apparel |
||||||||||||||||
|
Total segment income |
||||||||||||||||
|
Unallocated corporate overhead expenses |
||||||||||||||||
|
Provision for income taxes |
||||||||||||||||
|
Consolidated net income |
$ | $ | $ | $ | ||||||||||||
The following table presents the net property and equipment, goodwill and definite-lived intangible assets (“total assets”) by segment as of September 30, 2026 and December 31, 2025:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Building Supply |
$ | $ | ||||||
|
Disposable Protective Apparel |
||||||||
|
Total segment assets |
||||||||
|
Unallocated corporate assets |
||||||||
|
Total consolidated assets |
$ | $ | ||||||
|
11. |
Financial Information about Geographic Areas |
The following table summarizes the Company’s net sales by geographic region for the three and nine months ended September 30, 2026 and 2025:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net sales by geographic region |
||||||||||||||||
|
United States |
$ | $ | $ | $ | ||||||||||||
|
International |
||||||||||||||||
|
Consolidated net sales |
$ | $ | $ | $ | ||||||||||||
Net sales by geographic region are based on the countries in which our customers are located. For the three and nine months ended September 30, 2026 and 2025, the Company did not generate sales from any single country, other than the United States, that were significant to the Company’s consolidated net sales.
The following table summarizes the locations of the Company’s long-lived assets by geographic region as of September 30, 2026 and December 31, 2025:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Long-lived assets by geographic region |
||||||||
|
United States |
$ | $ | ||||||
|
International |
||||||||
|
Consolidated total long-lived assets |
$ | $ | ||||||
|
12. |
Related Party Transactions |
As of September 30, 2026, the Company had no related party transactions, other than the Company’s transactions with its unconsolidated affiliate, Harmony. See Note 6 of these Notes to Condensed Consolidated Financial Statements (Unaudited).
|
13. |
Leases |
The Company has operating leases for the Company’s corporate office and manufacturing facilities, which expire at various dates through 2034. The Company’s primary operating lease commitments as of September 30, 2026, related to the Company’s manufacturing facilities in Valdosta, Georgia and Nogales, Arizona, as well as the Company’s corporate headquarters in Aurora, Ontario, Canada.
As of September 30, 2026, the Company had operating lease right-of-use assets of $
The aggregate future minimum lease payments and reconciliation to total lease liabilities as of September 30, 2026 were as follows:
|
September 30, |
||||
|
2026 |
||||
|
Remaining three months of 2026 |
$ | |||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
|
2030 |
||||
|
Thereafter |
||||
|
Total future minimum lease payments |
||||
|
Less imputed interest |
( |
) | ||
|
Total lease liabilities |
$ | |||
As of September 30, 2026, the weighted average remaining lease term of the Company’s operating leases was
|
14. |
Income taxes |
The Company accounts for income taxes using the asset and liability method. A valuation allowance is recorded to reduce the carrying amounts of deferred income tax assets unless it is more likely than not that such assets will be realized. The Company’s policy is to record any interest and penalties assessed by the Internal Revenue Service as a component of the provision for income taxes. The Company provides allowances for uncertain income tax positions when it is more likely than not that the position will not be sustained upon examination by the tax authority.
Alpha Pro Tech, Ltd. and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of domestic research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. The Company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.
An employer generally does not claim a corporate income tax deduction (which would be in an amount equal to the amount of income recognized by the employee) upon the exercise of its employee's incentive stock options (“ISOs”) unless the employee does not meet the holding period requirements and sells early, making a disqualifying disposition, or if the options otherwise do not qualify as ISOs under applicable tax laws. With non-qualified stock options (“NQSOs”), on the other hand, the employer is typically eligible to claim a deduction upon its employee's exercise of the NQSOs.
The Company is subject to income tax examinations in various jurisdictions with respect to fiscal years after 2022. The timing and potential resolution of income tax examinations is highly uncertain and when, and if, the Company is subject to a tax examination it is reasonably possible that a taxing authority may interpret certain tax laws differently resulting in additional taxes due from the Company.
|
15. |
Contingencies |
The Company is subject to various litigation actions in the ordinary course of business. Although it is not possible to determine with certainty at this point in time what liability, if any, the Company will have as a result of such litigation, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on the Company’s financial condition and results of operations.
Tariff Matter
In February 2026, the U.S. Supreme Court issued a ruling that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the United States were unauthorized. Following that ruling, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs, although the CIT immediately suspended the order while CBP develops and implements the refund process. The IEEPA tariffs and related refund framework remain subject to ongoing litigation, including potential appeals, as well as regulatory and administrative developments.
As previously disclosed, tariffs imposed under the IEEPA on goods imported into the United States remain subject to ongoing litigation, including appeals of applicable court rulings, as well as related regulatory and administrative actions.
During the nine months ended September 30, 2026, the Company received refunds representing the majority of the IEEPA tariffs previously paid. The Company continues to pursue recovery of any remaining eligible amounts. Although the majority of the refunds have been received, uncertainty remains regarding the ultimate financial impact of the recoveries, including the potential impact of customer and vendor refunds, rebates or other obligations, as well as the final resolution of pending litigation and related administrative proceedings.
As of September 30, 2026, the Company had received the majority of the refunds expected to be recovered. Pending further evaluation of the appropriate accounting treatment of the refunds, including the potential impact of customer and vendor arrangements and related obligations, the Company has recorded the majority of the tariffs’ refunds in accrued liabilities on its condensed consolidated balance sheet with the remaining amounts deducted from the cost of goods sold and inventory.
Management continues to evaluate the appropriate presentation and recognition of the tariff recoveries in accordance with U.S. generally accepted accounting principles. The ultimate financial impact of the refunds may be affected by the resolution of outstanding claims, customer and vendor arrangements, and ongoing litigation and appeals. The Company will continue to assess these matters as additional information becomes available.
|
16. |
Subsequent Events |
The Company has reviewed and evaluated whether subsequent events have occurred from the condensed consolidated balance sheet date of September 30, 2026 through the filing date of this Quarterly Report on Form 10-Q that would require recognition or disclosure and has concluded that there are no such subsequent events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and the notes to our unaudited condensed consolidated financial statements, which appear elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 11, 2026 (the “2025 Form 10-K”).
Special Note Regarding Forward-Looking Statements
Certain information set forth in this Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions, including, without limitation, our expected orders, production levels and sales in 2026 and 2027, and other information that is not historical information. When used in this report, the words “estimates,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. We may make additional forward-looking statements from time to time. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. All forward-looking statements, whether written or oral and whether made by us or on our behalf, are expressly qualified by this special note.
The following are some of the risks that could affect our financial performance or that could cause actual results to differ materially from those expressed or implied in our forward-looking statements:
|
● |
We are exposed to foreign currency exchange risks related to our unconsolidated affiliate operations in India. |
|
● |
We are subject to risks associated with our joint venture. |
|
● |
The loss of any large customer or a reduction in orders from any large customer could reduce our net sales and harm our operating results. |
|
● |
We rely on suppliers and contractors, and our business could be seriously harmed if these suppliers and contractors are not able to meet our requirements. |
|
● |
Risks associated with international manufacturing could have a significant effect on our business. |
|
● |
Our success depends in part on protection of our intellectual property, and our failure to protect our intellectual property could adversely affect our competitive advantage, our brand recognition and our business. |
|
● |
Tariff policies, ongoing trade disputes and related litigation, including related to tariff refunds could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations and cash flows. |
|
● |
Our industry is highly competitive, which may negatively affect our ability to grow our customer base and generate sales. |
|
● |
The Company’s results are affected by competitive conditions and customer preferences. |
|
● |
Environmental laws and regulations may subject us to significant liabilities. |
|
● |
The Company’s growth objectives are largely dependent on the timing and market acceptance of our new product offerings, including our ability to continually renew our pipeline of new products and to bring those products to market. |
|
● |
Global economic conditions could adversely affect the Company’s business and financial results. |
|
● |
We are subject to risks related to climate change and natural disasters or other events beyond our control. |
|
● |
Uncertainties with respect to the development, deployment, and use of artificial intelligence. |
|
● |
Security breaches and other disruptions to the Company’s information technology infrastructure could interfere with the Company’s operations, compromise information belonging to the Company and our customers and suppliers and expose the Company to liability, which could adversely impact the Company’s business and reputation. |
|
● |
The Company’s future results may be affected by various legal and regulatory proceedings and legal compliance risks. |
|
● |
Our common stock price is volatile, which could result in substantial losses for individual shareholders. |
The foregoing list of risks is not exhaustive. For a more detailed discussion of the risk factors associated with our business, see the risks described in Part I, Item IA, “Risk Factors,” in the 2025 Form 10-K. These and many other factors could affect the Company’s future operating results and financial condition and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company or on its behalf.
Special Note Regarding Smaller Reporting Company Status
We are filing this report as a “smaller reporting company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of being a smaller reporting company, we are allowed and have elected to omit certain information from this Management’s Discussion and Analysis of Financial Condition and Results of Operations; however, we have provided all information for the periods presented that we believe to be appropriate.
Where to find more information about us. We make available, free of charge, on our website (http://www.alphaprotech.com) our most recent Annual Report on Form 10-K, any Current Reports on Form 8-K furnished or filed since our most recent Annual Report on Form 10-K, and any amendments to such reports, as soon as reasonably practicable following the electronic filing of such reports with the SEC. In addition, in accordance with SEC rules, we provide paper copies of our filings free of charge upon request.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the periods reported. We base estimates on past experience and on various other assumptions that are believed to be reasonable under the circumstances. The application of these accounting policies on a consistent basis enables us to provide timely and reliable financial information. Our significant accounting policies and estimates are more fully described in Note 2 – “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8 of the 2025 Form 10-K. Since December 31, 2025, there have been no material changes to our critical accounting policies and estimates as described in the 2025 Form 10-K.
OVERVIEW
Alpha Pro Tech is in the business of protecting people, products and environments. We accomplish this by developing, manufacturing and marketing a line of high-value, disposable protective apparel products for the cleanroom, industrial, pharmaceutical, medical and dental markets. We also manufacture a line of building supply construction weatherization products. Our products are sold under the “Alpha Pro Tech” brand name, as well as under private label.
Our products are grouped into two business segments: (i) the Building Supply segment, consisting of construction weatherization products, such as housewrap, housewrap accessories, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven material; and (ii) the Disposable Protective Apparel segment, consisting of disposable protective garments (including shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields.
Our target markets include construction companies and building supply and roofing distributors; companies in pharmaceutical manufacturing, bio-pharmaceutical manufacturing, medical device manufacturing, lab animal research, and high technology electronics manufacturing (which includes the semi-conductor market); and medical and dental distributors.
Our products are used primarily in cleanrooms, industrial safety manufacturing environments, health care facilities, such as hospitals, laboratories and dental offices, and building and re-roofing sites. Our products are distributed principally in the United States through a network consisting of purchasing groups, national distributors, local distributors, independent sales representatives and our own sales and marketing force.
Recent developments in U.S. trade policy continue to introduce uncertainty regarding the future of global trade relations. Following the inauguration of the second Trump administration, there have been numerous announcements and actions related to tariff increases and other trade restrictions on imports into the United States. Changes in tariffs, quotas, embargoes, or other trade barriers affecting countries from which the Company sources products, or affecting its global network of third-party suppliers, could impact the Company's supply chain and cost structure. In addition, retaliatory measures by affected countries could further disrupt our operations or reduce our competitiveness in international markets. The Company continues to monitor evolving trade policies and tariff developments. Future changes in tariffs or other trade restrictions could require the Company to adjust pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect revenue, gross margins, and results of operations.
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the President lacked authority under the International Emergency Economic Powers Act ("IEEPA") to impose certain tariffs. During the nine months ended September 30, 2026, the Company received a recovery of approximately $3,500,000 of previously paid IEEPA tariffs. The related refunds, including applicable statutory interest, were received from U.S. Customs and Border Protection (the “CBP”). The U.S. government has appealed the court's decision, and the litigation remains ongoing. The Company will continue to monitor developments related to the litigation and U.S. trade policy.
Management reviews and analyzes several key performance measures which are non-GAAP financial measures when shown excluding the impact of the IEEPA tariff refund, including gross profit; selling, general and administrative expense; income from operations; income before provision for taxes; provision for taxes; net income; basic earnings per share; and diluted earnings per share. These measures are reviewed and analyzed in order to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions, including those discussed below. See “Results of Operations” below for further discussion on these key performance measures, which are indicated by an asterisk (*).
The non-GAAP financial measures should be considered along with the most directly comparable U.S. GAAP financial measures. Definitions of these non-GAAP financial measures, a discussion of why we believe they are useful to management and investors as well as certain of their limitations, and reconciliations to their most directly comparable U.S. GAAP financial measures are provided below under “Non-GAAP Financial Measures.”
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 September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net sales |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
|
Gross profit |
41.8 | % | 39.7 | % | 39.0 | % | 38.4 | % | ||||||||
|
Selling, general and administrative expenses |
28.6 | % | 30.9 | % | 28.3 | % | 30.5 | % | ||||||||
|
Income from operations |
11.9 | % | 7.4 | % | 9.1 | % | 6.4 | % | ||||||||
|
Income before provision for income taxes |
15.2 | % | 8.7 | % | 11.6 | % | 8.1 | % | ||||||||
|
Net income |
11.6 | % | 6.6 | % | 8.9 | % | 6.3 | % | ||||||||
For the Three and Nine months ended September 30, 2026 compared to the Three and Nine months ended September 30, 2025
Sales. Consolidated sales for the three months ended September 30, 2026, increased to $16,604,000, from $14,785,000 for the three months ended September 30, 2025, representing an increase of $1,819,000, or 12.3%. This increase consisted of increased sales in the Building Supply segment of $157,000 and increased sales in the Disposable Protective Apparel segment of $1,662,000.
Building Supply segment sales for the three months ended September 30, 2026, increased by $157,000, or 1.7%, to $9,431,000, compared to $9,274,000 for the three months ended September 30, 2025.
The Building Supply segment sales increase during the three months ended September 30, 2026, was primarily due to a 13.1% increase in sales of housewrap, partially offset by a 6.3% decrease in sales of synthetic roof underlayment, and a 22.0% decrease in sales of other woven material as compared to the same period of 2025.
The sales mix of the Building Supply segment for the three months ended September 30, 2026, was approximately 35% for synthetic roof underlayment, 50% for housewrap and 15% for other woven material, which was the same for the three months ended September 30, 2025. 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. Our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.
The housing market continued to show weakness in the third quarter of 2026, as single-family housing starts declined by 1.6% compared to the corresponding period of 2025. However, this market decline in the third quarter of 2026 represents an improvement from the decline in the prior quarter. Single-family housing starts in the U.S. remained constrained by mortgage rates, increased land, labor and construction costs, affordability pressures, macroeconomic uncertainty, and geopolitical volatility, which has led builders to moderate new construction activity.
During the third quarter of 2026, we again outperformed the market, as sales of our core building products (housewrap and synthetic roof underlayment) increased by 5.2% compared to the same period of 2025, driven primarily by a 13.1% increase in housewrap sales. In the third quarter of 2026, our synthetic roof underlayment sales decreased by 6.3% compared to the third quarter of 2025, outperforming the overall market, as the Asphalt Roofing Manufacturers Association (“ARMA”) reported a steeper 13.0% decline in industry shipments.
Sales of other woven material were down 22.0% in the third quarter of 2026 compared to the same period of 2025, primarily due to timing of orders but year to date sales for the product line are basically flat compared to the prior year period.
The building industry outlook for the remainder of 2026 reflects a soft but generally stable market, rather than a meaningful rebound. A modest increase in single-family housing starts is expected in 2027, assuming economic and financing conditions improve. The Company plans on expanding our housewrap and synthetic roof underlayment market product offerings in 2027 to enhance our competitive position and support long-term growth. Management remains focused on growth in the Building Supply segment and has recently expanded its sales team; however, uncertainty related to the factors described above could adversely impact results.
Disposable Protective Apparel segment sales for the three months ended September 30, 2026, were $7,173,000, compared to $5,511,000 for the same period of 2025, reflecting an increase of $1,662,000, or 30.2%. The segment experienced strong underlying sales growth during the quarter.
The sales mix of the Disposable Protective Apparel segment for the three months ended September 30, 2026, 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 September 30, 2025.
Sales of disposable protective garments, which comprised 90% of the segment sales, increased by $1,521,000 or 30.6% in the third quarter of 2026, compared to the same period of 2025. The sales increase was primarily due to improved sales across our distribution network comprised of our large international channel partner and national and regional distributors. In addition, a considerable portion of the increase was attributable to higher selling prices compared to the third quarter of 2025. The disposable protective garments product line continues to demonstrate positive momentum, with most major categories performing well ahead of the third quarter of 2025. Sales of shoe covers, lab coats and frocks, gowns, and bouffant caps are all contributing to this improved performance. The breadth of growth across these product categories is encouraging and provides an opportunity to further expand customer relationships and capture incremental business. As we enter the final quarter of 2026, our focus is on building upon this broader-based improvement, deepening customer relationships, and identifying additional opportunities to expand sales across the portfolio in 2027.
Sales of our face mask and face shield products in the third quarter of 2026, which comprise the remaining 10% of the segment sales, were up by $141,000 or 25.9% compared to the same period in 2025. The face mask and face shield product lines are showing encouraging improvement, with both face mask and face shields posting solid gains over the prior year period. Management hopes to continue to build on this progress through focused customer engagement, targeted promotional programs, and the pursuit of new business opportunities to sustain growth and strengthen our position in these markets.
Consolidated sales for the nine months ended September 30, 2026 were $49,863,000, compared with $45,279,000 for the nine months ended September 30, 2025, an increase of $4,584,000, or 10.1%. The increase was attributable to higher sales in both operating segments, consisting of a $253,000 increase in the Building Supply segment and a $4,331,000 increase in the Disposable Protective Apparel segment.
Building Supply segment sales for the nine months ended September 30, 2026 increased by $253,000, or 0.9%, to $28,982,000, compared to $28,729,000 for the nine months ended September 30, 2025.
The Building Supply segment sales increase during the nine months ended September 30, 2026, was primarily due to a 8.3% increase in sales of housewrap, partially offset by a 9.9% decrease in sales of synthetic roof underlayment and a 0.8% decrease in sales of other woven material compared to the same period of 2025.
The sales mix of the Building Supply segment for the nine months ended September 30, 2026 was 53% for housewrap, 36% for synthetic roof underlayment and 11% for other woven material. This compared to 49% for housewrap, 40% for synthetic roof underlayment and 11% for other woven material for the nine months ended September 30, 2025.
As per the US Census Bureau, single-family housing starts declined by 4.0% year to date compared to the same period of 2025. Accordingly, management is encouraged by the year-to-date increase in sales of housewrap of 8.3%.
Management expects growth in the Building Supply segment, however continued uncertainty in housing starts and the economy in general could negatively affect this segment.
Disposable Protective Apparel segment sales for the nine months ended September 30, 2026 increased by $4,331,000, or 26.2%, to $20,881,000, compared to $16,550,000 for the nine months ended September 30, 2025.
The increase in segment sales was primarily driven by strong demand across the Company's disposable protective product lines. Compared with the first nine months of 2025, sales of disposable protective garments increased by 27.8%, sales of face masks increased by 10.3%, and sales of face shields increased by 12.4%. These increases contributed to the segment's strong underlying year-over-year growth.
The sales mix of the Disposable Protective Apparel segment for the nine months ended September 30, 2026, was 92% for disposable protective garments, 5% for face masks and 3% for face shields. This sales mix is compared to 90% for disposable protective garments, 6% for face masks and 4% for face shields for the nine months ended September 30, 2025.
Gross Profit. Gross profit increased by $1,069,000, or 18.2%, to $6,937,000 for the three months ended September 30, 2026, from $5,868,000 for the three months ended September 30, 2025. The gross profit margin was 41.8% for the three months ended September 30, 2026, compared to 39.7% for the three months ended September 30, 2025.
Gross profit margin for the third quarter of 2026 improved compared to the prior year period, primarily reflecting the rescission in late February 2026 of the 50% IEEPA tariffs on goods from India, following a U.S. Supreme Court decision invalidating the use of IEEPA to authorize such tariffs. However, the U.S. Government subsequently announced a new 10% tariff under Section 122 of the Trade Act of 1974. Accordingly, the Company continues to incur tariff costs, although at a lower rate.
Beginning in the second quarter of 2026, the Company also experienced increased costs associated with global geopolitical instability, including the ongoing U.S.-Iran conflict. These conditions have contributed to higher energy, transportation and supply chain costs, as well as volatility in raw material prices, particularly petroleum-based inputs. Many of the Company's products are manufactured using petroleum-based resin, which has experienced significant price increases since the conflict began. In response to these higher costs, the Company implemented a price increase in the third quarter of 2026. The combination of lower tariff rates and the Company's pricing actions contributed to the improvement in gross profit margin during the third quarter.
The Company will continue to monitor developments in U.S. trade policy and global geopolitical conditions. Ocean freight rates have also increased substantially over the past several months, partly as a result of the U.S.-Iran conflict and are expected to put additional pressure on gross profit margin in future periods. Changes in tariffs, energy markets, freight rates and international conflicts may continue to affect the Company's supply chain, cost structure and profitability.
The net change in gross profit for the three months September 30, 2026 due to the IEEPA tariff refund was $70,000, which was due to lower cost of goods sold. Excluding the IEEPA tariff refund, gross profit increased by $999,000, or 17.0%, to $6,867,000* for the three months ended September 30, 2026, from $5,868,000 for the three months ended September 30, 2025. Excluding the tariff refund, gross profit margin was 41.4%* for the three months ended September 30, 2026, compared to 39.7% for the three months ended September 30, 2025.
Gross profit increased by $2,040,000, or 11.7%, to $19,431,000 for the nine months ended September 30, 2026, from $17,391,000 for the nine months ended September 30, 2025. The gross profit margin was 39.0% for the nine months ended September 30, 2026, compared to 38.4% for the nine months ended September 30, 2025.
The net change in gross profit for the nine months September 30, 2026 due to the IEEPA tariff refund was $364,000, which was due to lower cost of goods sold. Excluding the IEEPA tariff refund, gross profit increased by $1,676,000, or 9.6%, to $19,067,000* for the nine months ended September 30, 2026, from $17,391,000 for the nine months ended September 30, 2025. Excluding the tariff refund, gross profit margin was 38.2%* for the nine months ended September 30, 2026, compared to 38.4% for the nine months ended September 30, 2025.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $173,000, or 3.8%, to $4,741,000 for the three months ended September 30, 2026, from $4,568,000 for the three months ended September 30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 28.6% for the three months ended September 30, 2026, from 30.9% for the same period of 2025. The change in expenses by segment for the three months ended September 30, 2026, was as follows: Building Supply expenses were down by $25,000, or 1.4%; Disposable Protective Apparel expenses were down by $47,000, or 3.4%; and corporate unallocated expenses were up by $245,000, or 17.4%. The IEEPA refund effect did not have a material effect on selling, general and administrative expenses.
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation, marketing expenses and commission expenses, partially offset by increased sales-related travel expenses, insurance expenses and general office expenses. The decrease in the Disposable Protective Apparel segment expenses was primarily related to decreased general office expenses, partially offset by increased employee compensation, commission expenses, insurance expenses and rent and utilities expenses. The increase in corporate unallocated expenses was primarily due to increased employee bonuses and professional fees, partially offset by decreased general office expenses.
Selling, general and administrative expenses increased by $307,000, or 2.2%, to $14,125,000 for the nine months ended September 30, 2026, from $13,818,000 for the nine months ended September 30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 28.3% for the nine months ended September 30, 2026, from 30.5% for the same period of 2025. Excluding the IEEPA tariff refund, selling, general and administrative expenses would have been $15,000 lower for the nine months ended September 30, 2026.
The change in expenses by segment for the nine months ended September 30, 2026, was as follows: Building Supply expenses were down by $204,000, or 3.8%; Disposable Protective Apparel expenses were up by $15,000, or 0.4%; and corporate unallocated expenses were up by $496,000, or 11.6%. The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation, trade show expenses and commission expenses, partially offset by increased sales-related travel expenses, insurance expenses and general office expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, commission expenses and insurance expenses, partially offset by decreased sales-related travel expenses and general office and factory expenses. The increase in corporate unallocated expenses was primarily due to increased employee bonuses, professional fees, public company expenses and general office expenses in the nine months ended September 30, 2026 compared to the same period of 2025.
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 $133,000 was accrued for the three months ended September 30, 2026, compared to $69,000 for the three months ended September 30, 2025. A bonus amount of $305,000 was accrued for the nine months ended September 30, 2026, compared to $194,000 for the same period of 2025.
Depreciation and Amortization. Depreciation and amortization expense increased by $23,000, or 11.3%, to $226,000 for the three months ended September 30, 2026, from $203,000 for the three months ended September 30, 2025. Depreciation and amortization expense increased by $58,000, or 8.5%, to $744,000 for the nine months ended September 30, 2026, from $686,000 for the nine months ended September 30, 2025. The increase was primarily due to an increase in depreciation in the Disposable Protective Apparel segment.
Income from Operations. Income from operations increased by $873,000, or 79.6%, to $1,970,000 for the three months ended September 30, 2026, compared to $1,097,000 for the three months ended September 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $1,069,000, partially offset by an increase in selling, general and administrative expenses of $173,000 and an increase in depreciation and amortization expenses of $23,000. Income from operations as a percentage of net sales for the three months ended September 30, 2026, was 11.9%, compared to 7.4% for the three months ended September 30, 2025.
The net change in income from operations for the third quarter of 2026 due to the IEEPA tariff refund was $70,000. Excluding the impact of the IEEPA tariff refund, income from operations increased by $803,000, or 73.2%, to $1,900,000* for the three months ended September 30, 2026, compared to $1,097,000 for the three months ended September 30, 2025.The increased income from operations was primarily due to an increase in gross profit of $999,000, partially offset by an increase in selling, general and administrative expenses of $173,000 and an increase in depreciation and amortization expenses of $23,000. Income from operations as a percentage of net sales for the third quarter of 2026, was 11.4%, compared to 7.4% for the three months ended September 30, 2025.
Income from operations increased by $1,675,000, or 58.0%, to $4,562,000 for the nine months ended September 30, 2026, compared to $2,887,000 for the nine months ended September 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $2,040,000 partially offset by an increase in selling, general and administrative expenses of $307,000 and an increase in depreciation and amortization expenses of $58,000. Income from operations as a percentage of net sales for the nine months ended September 30, 2026, was 9.1%, compared to 6.4% for the nine months ended September 30, 2025.
The net change in income from operations for the nine months September 30, 2026 due to the IEEPA tariff refund was $349,000. Excluding the impact of the IEEPA tariff refund, income from operations increased by $1,326,000, or 45.9%, to $4,213,000* for the nine months ended September 30, 2026, compared to $2,887,000 for the nine months ended September 30, 2025.The increased income from operations was primarily due to an increase in gross profit of $1,676,000, partially offset by an increase in selling, general and administrative expenses of $292,000 and an increase in depreciation and amortization expenses of $58,000. Income from operations as a percentage of net sales for the nine months ended September 30, 2026, was 8.4%, compared to 6.4% for the nine months ended September 30, 2025.
Other Income. Other income increased by $364,000 to income of $560,000 for the three months ended September 30, 2026, compared to $196,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $227,000 and an increase in interest income of $137,000. The increase in interest income was primarily due to interest paid by the federal government on our IEEPA tariff refund of $97,000 and to interest earned in investments.
Other income increased by $448,000 to income of $1,237,000 for the nine months ended September 30, 2026, compared to $789,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliates of $313,000 and an increase in interest income of $135,000, of which $112,000 was interest paid by the federal government on our IEEPA tariff refund.
Income before Provision for Income Taxes. Income before provision for income taxes for the three months ended September 30, 2026, was $2,530,000, compared to $1,293,000 for the same period of 2025, representing an increase of $1,237,000, or 95.7%. This increase in income before provision for income taxes was due to an increase in income from operations of $873,000 and an increase in other income of $364,000.
The net change in income before provision for income taxes for the third quarter of 2026 due to the IEEPA tariff refund was $167,000. Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the three months ended September 30, 2026, was $2,363,000*, compared to $1,293,000 for the same period of 2025, representing an increase of $1,070,000, or 82.8%.
Income before provision for income taxes for the nine months ended September 30, 2026, was $5,799,000, compared to $3,676,000 for the same period of 2025, representing an increase of $2,123,000, or 57.8%. This increase in income before provision for income taxes was due to an increase in income from operations of $1,675,000 and an increase in other income of $448,000.
The net change in income before provision for income taxes for the nine months ended September 30, 2026 due to the IEEPA tariff refund was $461,000. Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the nine months ended September 30, 2026, was $5,338,000*, compared to $3,676,000 for the same period of 2025, representing an increase of $1,662,000, or 45.2%.
Provision for Income Taxes.The provision for income taxes for the three months ended September 30, 2026, was $605,000, compared to $317,000 for the same period of 2025. The estimated effective tax rate was 23.9% for the three months ended September 30, 2026, compared to 24.5% for the three months ended September 30, 2025.
The net change in provision for income taxes for the third quarter of 2026 due to the IEEPA tariff refund was $43,000. Excluding the impact of the IEEPA tariff refund, the provision for income taxes for the three months ended September 30, 2026, was $562,000*, compared to $317,000 for the same period of 2025. The estimated effective tax rate was 23.8% for the three months ended September 30, 2026, compared to 24.5% for the three months ended September 30, 2025.
The provision for income taxes for the nine months ended September 30, 2026, was $1,346,000, compared to $843,000 for the same period of 2025. The estimated effective tax rate was 23.2% for the nine months ended September 30, 2026, compared to 22.9% for the nine months ended September 30, 2025.
The net change in provision for income taxes for the nine months ended September 30, 2026 due to the IEEPA tariff refund was $118,000. Excluding the impact of the IEEPA tariff refund, the provision for income taxes for the nine months ended September 30, 2026, was $1,228,000*, compared to $843,000 for the same period of 2025. The estimated effective tax rate was 23.0% for the nine months ended September 30, 2026, compared to 22.9% for the nine months ended September 30, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which included permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes. The Company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.
The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate.
Net Income. Net income for the three months ended September 30, 2026, was $1,925,000, compared to net income of $976,000 for the same period of 2025, representing an increase of $949,000, or 97.2%. The net income increase between the three months ended September 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $1,237,000, partially offset by an increase in provision for income taxes of $288,000. Net income as a percentage of net sales was 11.6% for the three months ended September 30, 2026, compared to 6.6% for the same period of 2025. Basic and diluted earnings per common share for the three months ended September 30, 2026 and 2025, were $0.19 and $0.09, respectively.
The net change in net income for the third quarter of 2026 due to the IEEPA tariff refund was $124,000. Excluding the impact of the IEEPA tariff refund, net income for the three months ended September 30, 2026, was $1,801,000*, compared to net income of $976,000 for the same period of 2025, representing an increase of $825,000, or 84.5%. Excluding the impact of the IEEPA refund, the net income increase between the three months ended September 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $1,070,000, partially offset by an increase in provision for income taxes of $245,000. Net income as a percentage of net sales was 10.8% for the three months ended September 30, 2026, compared to 6.6% for the same period of 2025. Basic and diluted earnings per common share for the three months ended September 30, 2026 and 2025, were $0.18* and $0.09, respectively. This comparison reflects the Company’s underlying operating performance before the effect of the IEEPA tariff refund.
Net income for the nine months ended September 30, 2026, was $4,453,000 compared to net income of $2,833,000 for the same period of 2025, representing an increase of $1,620,000, or 57.2%. The net income increase between the nine months ended September 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $2,123,000, partially offset by an increase in provision for income taxes of $503,000. Net income as a percentage of net sales was 8.9% for the nine months ended September 30, 2026, compared to 6.3% for the same period of 2025. Basic earnings per common share for the nine months ended September 30, 2026 and 2025, were $0.44 and $0.27, respectively. Diluted earnings per common share for the nine months ended September 30, 2026 and 2025, were $0.43 and $0.27, respectively
The net change in net income for the nine months ended September 30, 2026 due to the IEEPA tariff refund was $343,000. Excluding the impact of the IEEPA tariff refund, net income for the nine months ended September 30, 2026, was $4,110,000*, compared to net income of $2,833,000 for the same period of 2025, representing an increase of $1,277,000, or 45.1%. Excluding the impact of the IEEPA refund, the net income increase between the nine months ended September 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $1,662,000, partially offset by an increase in provision for income taxes of $385,000. Net income as a percentage of net sales was 8.2% for the nine months ended September 30, 2026, compared to 6.3% for the same period of 2025. Basic earnings per common share for the nine months ended September 30, 2026 and 2025, were $0.41* and $0.27, respectively. Diluted earnings per common share for the nine months ended September 30, 2026 and 2025, were $0.40* and $0.27, respectively. This comparison reflects the Company’s underlying operating performance before the effect of the IEEPA tariff refund.
NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures presented in this Quarterly Report on Form 10-Q are supplemental measures of our performance that we believe will help investors understand our operating results and assess our future prospects. When read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as one basis for making financial, operational, and planning decisions. For each financial measure we have excluded the impact of the tariff refunds due to their unusual nature which is not reflective of our ongoing operating results.
Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes. In order to compensate for the discussed limitations, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP.
The detailed reconciliations of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure are provided below, and no single financial measure should be relied on to evaluate our business.
|
For the Three Months |
For the Nine Months |
|||||||
|
Ended September 30, |
Ended September 30, |
|||||||
|
2026 |
2026 |
|||||||
|
Gross profit |
$ | 6,937,000 | 19,431,000 | |||||
|
Less impact of tariff refund |
(70,000 | ) | (364,000 | ) | ||||
|
Gross profit excluding tariff refund |
6,867,000 | 19,067,000 | ||||||
|
Income from operations |
1,970,000 | 4,562,000 | ||||||
|
Less impact of tariff refund |
(70,000 | ) | (349,000 | ) | ||||
|
Income from operations excluding tariff refund |
1,900,000 | 4,213,000 | ||||||
|
Income before provision for income taxes |
2,530,000 | 5,799,000 | ||||||
|
Less impact of tariff refund |
(167,000 | ) | (461,000 | ) | ||||
|
Income before provision for income taxes excluding tariff refund |
2,363,000 | 5,338,000 | ||||||
|
Provision for income taxes |
605,000 | 1,346,000 | ||||||
|
Less impact of tariff refund |
(43,000 | ) | (118,000 | ) | ||||
|
Provision for income taxes excluding tariff refund |
562,000 | 1,228,000 | ||||||
|
Net income |
1,925,000 | 4,453,000 | ||||||
|
Less impact of tariff refund |
(124,000 | ) | (343,000 | ) | ||||
|
Net income excluding tariff refund |
1,801,000 | 4,110,000 | ||||||
|
Basic earnings per share |
$ | 0.19 | $ | 0.44 | ||||
|
Less impact of tariff refund |
$ | (0.01 | ) | $ | (0.03 | ) | ||
|
Basic earns per share excluding tariff refund |
$ | 0.18 | $ | 0.41 | ||||
|
Diluted earnings per share |
$ | 0.19 | $ | 0.43 | ||||
|
Less impact of tariff refund |
$ | (0.01 | ) | $ | (0.03 | ) | ||
|
Diluted earnings per share excluding tariff refund |
$ | 0.18 | $ | 0.40 | ||||
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2026, the Company had cash and cash equivalents (“cash”) of $25,546,000 and working capital of $52,066,000. As of September 30, 2026, the Company’s current ratio (current assets/current liabilities) was 9:1, compared to a current ratio of 13:1 as of December 31, 2025. Cash increased by 50.4%, or $8,558,000, to $25,546,000 as of September 30, 2026, compared to $16,988,000 as of December 31, 2025, and working capital increased by $3,604,000, to $52,066,000 from $48,462,000 as of December 31, 2025. The increase in cash from December 31, 2025, was due to cash provided by operating activities of $9,337,000 partially offset by cash used in investing activities of $342,000 and cash used in financing activities of $437,000.
Net cash provided by operating activities of $9,337,000 for the nine months ended September 30, 2026 was due to net income of $4,453,000, as adjusted primarily by the following: stock-based compensation expense of $385,000, depreciation and amortization expense of $744,000, equity in income of unconsolidated affiliate of $618,000, operating lease asset amortization of $768,000, an increase in accounts receivable of $1,303,000, an increase in prepaid expenses of $2,179,000, a decrease in inventory of $5,744,000, an increase in accounts payable and accrued liabilities of $2,092,000 and a decrease in lease liabilities of $749,000, all compared to December 31, 2025.
Accounts receivable increased by $1,303,000, or 16.0%, to $9,441,000 as of September 30, 2026, from $8,138,000 as of December 31, 2025. The increase in accounts receivable was primarily related to increased sales in the third quarter of 2026 compared to the fourth quarter of 2025. The number of days that sales remained outstanding as of September 30, 2026, calculated by using an average of accounts receivable outstanding and annual revenue, was 64 days, compared to 40 days as of December 31, 2025. The increase in days outstanding was primarily due to increased sales.
Inventory decreased by $5,744,000, or 24.3%, to $17,854,000 as of September 30, 2026, from $23,598,000 as of December 31, 2025. The decrease was due to a decrease in inventory for the Building Supply segment of $4,263,000, or 33.2%, to $8,566,000 and a decrease in inventory for the Disposable Protective Apparel segment of $1,481,000, or 13.8%, to $9,288,000. We purchased less inventory due to the high tariff rate.
Prepaid expenses increased by $2,179,000, or 57.4%, to $5,975,000 as of September 30, 2026, from $3,796,000 as of December 31, 2025. The increase was primarily due to increased prepayments for inventory.
Right-of-use assets as of September 30, 2026, decreased by $545,000 to $7,230,000 from $7,775,000 as of December 31, 2025, as a result of amortization of the right-of-use assets partially offset by renewed corporate office lease in Canada.
Lease liabilities as of September 30, 2026, decreased by $526,000 to $7,356,000 from $7,882,000 as of December 31, 2025. The decrease in the lease liabilities was the result of lease payments made during the period partially offset by the effect of the renewed lease for our corporate office being extended for three years.
Accounts payable and accrued liabilities as of September 30, 2026 increased by $2,603,000, or 84.2%, to $5,696,000, from $3,093,000 as of December 31, 2025. Excluding the accrued withholding taxes, which represent a non-cash financing activity, accounts payable and accrued liabilities increased by $2,092,000, as reflected in the condensed consolidated statement of cash flows. The increase was primarily due to advanced deposits of IEEPA tariffs.
Net cash used in investing activities was $342,000 for the nine months ended September 30, 2026, compared to net cash used in investing activities of $372,000 for the nine months ended September 30, 2025. Investing activities for the nine months ended September 30, 2026 and 2025 consisted of the purchase of property and equipment.
Net cash used in financing activities was $437,000 for the nine months ended September 30, 2026, compared to net cash used in financing activities of $2,658,000 for the same period of 2025. Net cash used in financing activities for the nine months ended September 30, 2026, resulted from the payment of $483,000 for the repurchase of common stock, partially offset by $46,000 from proceeds from stock options exercised. 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.
As of September 30, 2026, we had $914,000 available for stock purchases under our stock repurchase program. During the nine months ended September 30, 2026, we repurchased 97,982 shares of common stock at a cost of $483,000. As of September 30, 2026, we had repurchased a total of 22,025,922 shares of common stock at a cost of approximately $58,606,000 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.
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.
Recent Accounting Pronouncements
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments are expected to impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, derivatives, and transfers of financial assets. The amendments will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of these amendments on the consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this pronouncement on its related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606 (Revenue from Contracts with Customers). The amendment is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The amendment in this update should be applied on a prospective basis. The Company adopted this ASU effective January 1, 2026. The adoption of this pronouncement did not have a significant impact on the Company's consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements,” which provides additional guidance on what disclosures should be provided in interim reporting periods including disclosure of events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption.
Management periodically reviews new accounting standards that are issued. Management has not identified any other new standards that it believes merit further discussion at this time.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information otherwise required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 2026, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Exchange Act. Disclosure controls and procedures are the controls and other procedures that we have designed to ensure that we record, process, summarize and report in a timely manner the information that we must disclose in reports that we file with or submit to the SEC under the Exchange Act, and such controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and that we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
During the quarter to which this report relates, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various litigation actions in the ordinary course of business. Although it is not possible to determine with certainty at this point in time what liability, if any, the Company will have as a result of such litigation, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on the Company’s financial condition and results of operations. The information presented under the caption "Tariff Matter" in Note 15 of the Notes to Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this report is incorporated herein by reference.
ITEM 1A. RISK FACTORS
A list of factors that could materially affect our business, financial condition or operating results is described in Part I, Item 1A, “Risk Factors” in the 2025 Form 10-K. Other than the risk factor set forth below, there have been no material changes to our risk factors from those disclosed in Part I, Item 1A, “Risk Factors” in the 2025 Form 10-K.
Tariff policies, ongoing trade disputes, and related litigation, including related to tariff refunds, could increase our costs, disrupt our global supply chain, and adversely affect our business, financial condition, results of operations, and cash flows
Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which have increased our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers, may disrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, certain markets. The United States has imposed increased tariffs on imported products, and certain trading partners have responded with retaliatory tariffs, which could adversely affect our business. In addition, changes in government policies and the uncertainty surrounding such changes could increase market volatility and foreign currency exchange rate fluctuations.
During the nine months ended September 30, 2026, the Company recognized a refund of certain tariffs previously paid under the IEEPA, including applicable statutory interest, that were received from U.S. Customs and Border Protection. However, the underlying litigation challenging the IEEPA tariffs remains ongoing, and the U.S. government has appealed the applicable court decisions. As a result, there can be no assurance regarding the ultimate outcome of the litigation or whether future judicial, legislative, or administrative actions could adversely affect the Company or require additional actions with respect to the refunded amounts.
Due to the uncertainty described above. There can be no assurance regarding the ultimate recognition of those refunds. Because of these dynamics, we cannot predict the impact of future changes to U.S. or foreign trade policies, tariffs, or other trade regulations, or the outcome of ongoing litigation relating to such measures. Any such developments could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
The following table sets forth purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act:
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Issuer Purchases of Equity Securities |
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Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program (1) |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) |
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July 1 - 31, 2026 |
19,500 | $ | 4.92 | 19,500 | $ | 1,201,000 | ||||||||||
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August 1 - 31, 2026 |
- | 0.00 | 0 | 1,201,000 | ||||||||||||
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September 1 - 30, 2026 |
56,682 | 5.04 | 56,682 | 914,000 | ||||||||||||
| 76,182 | 5.01 | 76,182 | ||||||||||||||
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(1) |
All of the shares included in this table were purchased pursuant to the Company’s existing share repurchase program. Since the inception of the program in 1999, the Company has authorized the repurchase of $59,402,000 of common stock. As of September 30, 2026, we had repurchased a total of 22,025,922 shares of common stock at a cost of approximately $58,606,000. As of September 30, 2026, $914,000 was available for repurchase under the program. The stock repurchase plan expires on December 15, 2026. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did not sell any unregistered equity securities during the periods covered by this Quarterly Report on Form 10-Q.
ITEM 5. OTHER INFORMATION
(a)
(b) None.
(c) During the period covered by this report, none of the Company’s directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).
ITEM 6. EXHIBITS
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3.1.1(P) |
Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(f) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
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3.1.2(P) |
Certificate of Amendment of Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(j) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
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3.1.3(P) |
Certificate of Ownership and Merger (BFD Industries, Inc. into Alpha Pro Tech, Ltd.), incorporated by reference to Exhibit 3(l) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
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3.2 |
Amended and Restated Bylaws of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3.1 to Form 8-K, filed on December 19, 2022 (File No. 001-15725). |
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16.1 |
Letter from Tanner LLP to the Securities and Exchange Commission dated September 16, 2026, incorporated by reference to Exhibit 16.1 to Form 8-K, filed on September 16, 2026 (File No. 001-15725). |
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31.1 |
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
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31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
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32.1 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – President and Chief Executive Officer. |
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32.2 |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Financial Officer. |
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101 |
Interactive Data Files for Alpha Pro Tech, Ltd’s Form 10-Q for the period ended September 30, 2026, formatted in Inline XBRL. |
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104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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| (P) Indicates a paper filing with the SEC. |
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.
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ALPHA PRO TECH, LTD. |
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DATE: |
November 10, 2026 |
BY: /s/Lloyd Hoffman |
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Lloyd Hoffman | |||
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President and Chief Executive Officer | |||
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DATE: |
November 10, 2026 |
BY: /s/Colleen McDonald |
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Colleen McDonald | |||
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Chief Financial Officer | |||