[10-Q] CRAWFORD UNITED Corp Quarterly Earnings Report
Crawford United Corporation reported strong Q3 results with revenue of $47.2 million, up 28.4% from $36.7 million a year ago. Net income rose to $5.4 million from $3.4 million, and diluted EPS increased to $1.52 from $0.95. Gross margin improved to 30.3% from 29.1% as the mix shifted toward higher-margin Commercial Air Handling. The quarter benefited from the acquisitions of Rahn Industries and Advanced Industrial Coatings, plus organic gains at CAD Enterprises and Reverso Pumps.
Year-to-date, revenue reached $137.3 million versus $112.8 million, with net income of $13.7 million versus $9.6 million and diluted EPS of $3.84 versus $2.72. Cash from operations was $12.9 million for the nine months. The balance sheet showed total assets of $134.9 million, cash of $1.9 million, and debt comprised of a $2.6 million revolving balance and a $5.7 million real property term loan. Borrowing availability under the $30 million revolver was approximately $27.4 million as of September 30, 2025, supporting ongoing operations and integration of recent acquisitions.
- Q3 growth: Revenue rose 28.4% to $47.2M and diluted EPS increased to $1.52, driven by acquisitions and improved margins.
- None.
Insights
Q3 revenue and EPS rose sharply on acquisitions and margin mix.
Crawford United delivered higher sales and profitability in Q3, with revenue at
Operating income improved as SG&A absorbed integration and growth investments, while interest expense eased versus last year. Year-to-date revenue of
Liquidity appears ample with roughly
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from Not Applicable to Not Applicable
Commission file number:
CRAWFORD UNITED CORPORATION
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number (
Securities registered pursuant to Section 12(b) of the Act: None.
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 ☐ |
| | Smaller reporting company |
| 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
As of November 3, 2025,
PART I
ITEM 1. FINANCIAL STATEMENTS
CRAWFORD UNITED CORPORATION
CONSOLIDATED BALANCE SHEET
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable less allowance for credit losses | ||||||||
| Contract assets | ||||||||
| Inventories | ||||||||
| Refundable tax asset | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating right of use asset, net | ||||||||
| OTHER ASSETS: | ||||||||
| Goodwill | ||||||||
| Intangibles, net of accumulated amortization | ||||||||
| Other non-current assets | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Notes payable – current | $ | $ | ||||||
| Real property term loan – current | ||||||||
| Accounts payable | ||||||||
| Unearned revenue | ||||||||
| Accrued expenses | ||||||||
| Operating lease liabilities - current | ||||||||
| Total Current Liabilities | ||||||||
| LONG-TERM LIABILITIES: | ||||||||
| Revolving credit facility | ||||||||
| Real property term loan | ||||||||
| Operating lease liabilities - noncurrent | ||||||||
| Deferred income taxes | ||||||||
| Total Long-Term Liabilities | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Class A common shares - 10,000,000 shares authorized, 2,887,357 issued at September 30, 2025 and 2,870,107 issued at December 31, 2024 | ||||||||
| Class B common shares - 2,500,000 shares authorized, 914,283 shares issued at September 30, 2025 and December 31, 2024 | ||||||||
| Contributed capital | ||||||||
| Treasury shares | ( | ) | ( | ) | ||||
| Class A common shares – 67,273 shares held at September 30, 2025 and 62,559 shares held at December 31, 2024 | ||||||||
| Class B common shares – 182,435 shares held at September 30, 2025 and December 31, 2024 | ||||||||
| Retained earnings | ||||||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
|||||||||||||
| Total Sales |
$ | $ | $ | $ | ||||||||||||
| Cost of Sales |
||||||||||||||||
| Gross Profit |
||||||||||||||||
| Operating Expenses: |
||||||||||||||||
| Selling, general and administrative expenses |
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| Operating Income |
||||||||||||||||
| Other Expense and (Income): |
||||||||||||||||
| Interest charges |
||||||||||||||||
| (Gain) Loss on investments |
( |
) | ||||||||||||||
| Other expense |
||||||||||||||||
| Total Other Expense |
||||||||||||||||
| Income before Provision for Income Taxes |
||||||||||||||||
| Income tax expense |
||||||||||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| Net Income Per Common Share - Basic |
$ | $ | $ | $ | ||||||||||||
| Net Income Per Common Share - Diluted |
$ | $ | $ | $ | ||||||||||||
| Weighted Average Shares of Common Stock Outstanding |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
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See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Three Months Ended September 30, 2025 and 2024
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at June 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at September 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at June 30, 2025 |
||||||||||||||||||||||||
| Balance at September 30, 2025 |
||||||||||||||||||||||||
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at September 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at June 30, 2024 |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at September 30, 2024 |
||||||||||||||||||||||||
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Nine Months Ended September 30, 2025 and 2024
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at September 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at December 31, 2024 |
||||||||||||||||||||||||
| Stock awards issued to directors and officers |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at September 30, 2025 |
||||||||||||||||||||||||
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at September 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at December 31, 2023 |
||||||||||||||||||||||||
| Stock awards issued to directors and officers |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at September 30, 2024 |
||||||||||||||||||||||||
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2025 |
2024 |
|||||||
| Cash Flows from Operating Activities |
||||||||
| Net Income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Loss on investments in equity securities |
||||||||
| Reduction in carrying amount of right of use asset |
||||||||
| Share-based compensation expense |
||||||||
| Deferred income taxes |
||||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ( |
) | ||||
| Inventories |
( |
) | ||||||
| Contract assets |
||||||||
| Prepaid expenses & other current assets |
||||||||
| Operating lease assets and liabilities |
( |
) | ( |
) | ||||
| Other noncurrent assets |
( |
) | ||||||
| Accounts payable |
||||||||
| Accrued income taxes |
( |
) | ||||||
| Other current liabilities |
||||||||
| Unearned revenue |
( |
) | ||||||
| Total adjustments |
( |
) | ||||||
| Net Cash Provided by Operating Activities |
||||||||
| Cash Flows from Investing Activities |
||||||||
| Cash paid for business acquisitions |
( |
) | ( |
) | ||||
| Proceeds from sale of property, plant and equipment |
||||||||
| Sale of investments |
||||||||
| Capital expenditures |
( |
) | ( |
) | ||||
| Net Cash Used in Investing Activities |
( |
) | ( |
) | ||||
| Cash Flows from Financing Activities |
||||||||
| Payments on related party notes |
( |
) | ( |
) | ||||
| Payments on revolving credit facility |
( |
) | ( |
) | ||||
| Borrowings on revolving credit facility |
||||||||
| Payments on real property term loan |
( |
) | ( |
) | ||||
| Payment for debt issue costs |
( |
) | ||||||
| Share repurchase |
( |
) | ( |
) | ||||
| Net Cash Provided by (Used in) Financing Activities |
( |
) | ||||||
| Net increase in cash and cash equivalents |
||||||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information |
||||||||
| Interest paid |
$ | $ | ||||||
| Supplemental disclosures of noncash financing and investing activity |
||||||||
| Additions to ROU assets obtained from new operating lease liabilities |
$ | $ | ||||||
| Purchase accounting adjustment to goodwill for a change in prepaids |
$ | $ | ||||||
| Purchase accounting adjustment to goodwill for a change in inventory |
$ | $ | ||||||
| Purchase accounting adjustment to goodwill for a change in fixed assets |
$ | $ | ||||||
| Assumption of debt for purchase of real-estate |
$ | $ | ||||||
| Issuance of Class A common shares for capital expenditures |
$ | $ | ||||||
See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 30, 2025
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Crawford United Corporation and its wholly-owned subsidiaries (the “Company”). Significant intercompany transactions and balances have been eliminated in the financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Certain prior period financial information has been reclassified to conform to the current presentation. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ended December 31, 2025. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
During the nine-month period ended September 30, 2025 there have been no changes to the Company's significant accounting policies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s Summary of Significant Accounting Policies is provided with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Recent Accounting Pronouncements and Regulatory Updates
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This update requires public entities to disclose significant segment expenses regularly provided to the Chief Operating Decision Maker (CODM) and to provide additional qualitative and quantitative disclosures regarding how segments are managed. The Company adopted ASU 2023-07 as of December 31, 2024, in accordance with the required adoption timeline for public entities. The adoption of this ASU did not materially impact the Company's financial statement disclosures, as the Company’s existing segment reporting practices were already in alignment with the new requirements. Due to the Company's decentralized nature involving many operating companies using independent accounting systems, there are not additional significant expense metrics which are regularly provided to the CODM, nor would the computation thereof be easily computable or practical. The Company will continue to evaluate its segment disclosures in future reporting periods to ensure continued compliance with evolving accounting guidance and disclosure best practices.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold. Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024. The Company will make the requisite updates in the notes to the annual financial statements for the fiscal year ending December 31, 2025.
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". This guidance requires tabular footnote disclosure of certain operating expenses disaggregated into categories, such as employee compensation, depreciation, and intangible asset amortization, included within each interim and annual income statement’s expense caption, as applicable. The effective date of this guidance is for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are in the process of evaluating the impact of adopting this guidance on our consolidated financial statement disclosures.
On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was signed into law and contains a broad range of tax provisions affecting businesses. The Act has several provisions which have, and will continue to, reduce our taxes paid in 2025. We have included the impact of the Act in our consolidated balance sheet at September 30, 2025. We do not expect the legislation to have a material impact on our consolidated statement of operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts of certain assets and liabilities and disclosure of contingencies at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Accounting for "Financial Instruments" requires the Company to disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable, and notes payable. The carrying amounts reported in the consolidated balance sheet for assets and liabilities qualifying as financial instruments is a reasonable estimate of fair value.
3. ACCOUNTS RECEIVABLE
The balance of accounts receivable, net was $
The Company establishes an allowance for credit losses based upon factors surrounding the credit risk of specific customers, historical trends and other information relevant to estimating expected credit losses. The reserve for credit losses was $
4. INVENTORY
Inventory is valued at the lower of cost (first-in, first-out) or net realizable value and consists of:
| September 30, |
December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Raw materials and component parts |
$ | $ | ||||||
| Work-in-process |
||||||||
| Finished products |
||||||||
| Total inventory |
$ | $ | ||||||
| Less: inventory reserves |
||||||||
| Net inventory |
$ | $ | ||||||
5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill represents the excess of cost over the fair value of identifiable assets acquired. U.S. GAAP requires both indefinite-lived intangible assets and goodwill to be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not (i.e., a likelihood greater than 50%) that the intangible asset or the reporting unit is impaired. During interim periods, ASC 350 requires companies to focus on those events and circumstances that affect the significant inputs used to determine the fair value of the asset group or reporting unit to determine whether an interim quantitative impairment test is required. The Company performed its annual impairment test for goodwill and intangible assets as of the last day of the fourth quarter of 2024. The Company first assessed certain qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible assets is less than its carrying amount, and whether it is therefore necessary to perform the quantitative impairment test. In 2024, for all reporting units other than CAD Enterprises, Federal Hose and Marine Products International, the qualitative analysis indicated that a quantitative analysis was not necessary. For the identified reporting units, impairment testing was performed as of December 31, 2024 using an income approach based on management’s determination of the prospective financial information, and no indefinite-lived intangible assets or goodwill was determined to be impaired.
There were
Goodwill increased by $
Goodwill increased by $
Goodwill by reportable segment for the year ended December 31, 2024 and the nine months ended September 30, 2025 is as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Commercial Air Handling Equipment Segment: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
| Industrial and Transportation Products Segment: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
| Total Company: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
The Company's intangible assets have primarily been generated through acquisitions. Intangibles are being amortized on a straight-line basis over periods ranging from one to
Intangible assets consist of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Customer list intangibles | $ | $ | ||||||
| Non-compete agreements | ||||||||
| Trademarks | ||||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ||||||||
| Intangible assets, net | $ | $ | ||||||
Amortization of intangible assets was $
Intangible amortization for the remainder of 2025 and the following four fiscal years is expected to be as follows:
| Amortization in future periods | ||||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are recorded at cost and depreciated over their useful lives. Maintenance and repair costs are expensed as incurred. Property, plant and equipment are as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Land | $ | $ | ||||||
| Buildings and improvements | ||||||||
| Machinery & equipment | ||||||||
| Total property, plant & equipment | ||||||||
| Less: accumulated depreciation | ||||||||
| Property plant & equipment, net | $ | $ | ||||||
During the first quarter of 2025, the Company acquired Rahn, which included property, plant and equipment valued at $
During the first quarter of 2024, the Company acquired Heany, which included property, plant and equipment valued at $2.2 million. During the second quarter of 2024, the Company exercised a purchase option for the building and land from which CAD Enterprises, Inc. ("CAD") operates for $
During the second quarter of 2024, the Company issued
Depreciation expense was $
7. BANK DEBT
Debt balances consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Real property term loan | $ | $ | ||||||
| Revolving credit facility | ||||||||
| Total debt | ||||||||
| Less: current portion | ||||||||
| Non-current debt | ||||||||
| Less: unamortized debt costs | ||||||||
| Net non-current debt | $ | $ | ||||||
Revolving Credit Facility
The Company and certain of its subsidiaries are parties to a Credit Agreement with JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”), which provides for a $30 million revolving credit facility that matures on June 1, 2027.
The revolving facility under the Credit Agreement includes a $
The Company had $
Real Property Term Loan
On May 16, 2024, North 52nd Properties LLC (“North 52nd”), a subsidiary of the Company, purchased certain real property located in Phoenix, Arizona (the “Phoenix Property”) for a purchase price of $
The Company was in compliance with all covenants under the Credit Agreement and Loan Agreement at September 30, 2025.
8. NOTES PAYABLE
Notes Payable – Related Party
In connection with the Company's Komtek Forge acquisition, on January 15, 2021, the Company refinanced its previously outstanding First Francis promissory notes in the aggregate amount of $
Notes payable consists of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| First Francis note payable | $ | $ | ||||||
| Total notes payable | ||||||||
| Less current portion | ||||||||
| Notes payable – non-current portion | $ | $ | ||||||
9. LEASES
The Company has operating leases for facilities, vehicles and equipment. These leases have remaining terms ranging from under one year to
Cash spent on leases was $
Supplemental balance sheet information related to leases:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Operating lease liabilities – current | ||||||||
| Operating lease liabilities – noncurrent | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted Average Remaining Lease Term | ||||||||
| Operating Leases (in years) | ||||||||
| Weighted Average Discount Rate | ||||||||
| Operating Leases | % | % | ||||||
10. EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic and diluted earnings per share.
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
|||||||||||||
| Earnings Per Share - Basic |
||||||||||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| Weighted average shares of common stock outstanding - Basic |
||||||||||||||||
| Earnings Per Share - Basic |
$ | $ | $ | $ | ||||||||||||
| Earnings Per Share - Diluted |
||||||||||||||||
| Weighted average shares of common stock outstanding - Basic |
||||||||||||||||
| Unvested Restricted Stock Awards |
||||||||||||||||
| Weighted average shares of common stock - Diluted |
||||||||||||||||
| Earnings Per Share - Diluted |
$ | $ | $ | $ | ||||||||||||
11. ACQUISITIONS
Heany Industries, LLC
Effective January 2, 2024, Heany Industries, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the operating assets of Heany Industries, Inc, a New York corporation and specialist in materials engineering solutions for a variety of aerospace, industrial and bio-medical applications pursuant to an Asset Purchase Agreement. The acquired business is strategically important to the Company’s growing aerospace presence and has expanded the Company's offerings and diversified its customer base. The purchase price after working capital adjustment was $
| Total Consideration | $ | |||
| Cash | $ | |||
| Accounts Receivable | ||||
| Inventory | ||||
| Fixed Assets | ||||
| Prepaid and Other Assets | ||||
| Intangible Assets: Customer List & Trademarks | ||||
| Goodwill | ||||
| Total Assets Acquired | $ | |||
| Accounts Payable | $ | |||
| Accrued Expense | ||||
| Total Liabilities Assumed | ||||
| Total Fair Value | $ | |||
| Acquisition transaction costs incurred were: | $ |
Goodwill has an assigned value of $
Advanced Industrial Coatings, LLC
Effective August 30, 2024, Advanced Industrial Coatings LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of substantially all the assets of Advanced Industrial Coatings, Inc., a California corporation and specialist in fluoropolymers and other high-performance coatings solutions for the aerospace, semiconductor, medical, energy and other industrial sectors, pursuant to an Asset Purchase Agreement. The acquired business is strategically important to the Company’s growing aerospace presence and has expanded the Company's offerings and diversified its customer base. The purchase price allocation is complete. During the third quarter of 2025, the final fair market value reduction to inventory totaling $
| Total Consideration | $ | |||
| Accounts Receivable | $ | |||
| Inventory | ||||
| Fixed Assets | ||||
| Prepaid and Other Assets | ||||
| Intangible Assets: Customer List | ||||
| Goodwill | ||||
| Total Assets Acquired | $ | |||
| Accounts Payable | $ | |||
| Accrued Expense | ||||
| Total Liabilities Assumed | ||||
| Total Fair Value | $ | |||
| Acquisition transaction costs incurred were: | $ |
Goodwill has an assigned value of $
Rahn Industries Incorporated
Effective January 2, 2025, Crawford AE LLC, an Ohio limited liability company (“Air Enterprises”) and wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the issued and outstanding shares of capital stock of Rahn Industries, Incorporated, a California corporation. Rahn is a leading manufacturer of HVAC coils and related coatings, serving both OEM and aftermarket customers in the healthcare, industrial, energy, and defense industries. The purchase price after working capital adjustment was $
The Company has made substantial progress with the purchase price allocation, reflecting estimates of the fair values of assets acquired and liabilities assumed as of the acquisition date. We may record fair value adjustments, particularly to inventory, fixed assets or deferred taxes, as additional information becomes available within the measurement period regarding circumstances existing at the acquisition date.
| Total Consideration | $ | |||
| Cash | $ | |||
| Accounts Receivable | ||||
| Inventory | ||||
| Fixed Assets | ||||
| Operating Right of Use Asset | ||||
| Prepaid and Other Assets | ||||
| Intangible Assets: Customer List | ||||
| Goodwill | ||||
| Total Assets Acquired | $ | |||
| Accounts Payable | $ | |||
| Accrued Expense | ||||
| Operating Lease Liabilities | ||||
| Deferred Tax | ||||
| Total Liabilities Assumed | ||||
| Total Fair Value | $ | |||
| Acquisition transaction costs incurred were: | $ |
Goodwill has an assigned value of $
Sales and Net Income (Loss) for the Acquired Companies
Sales and net income (loss) information for Heany, AIC and Rahn since their respective acquisition dates for the three and nine months ended September 30, 2025 and 2024 are provided below.
| Three Months Ended | Three Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | |||||||||||||||
| Sales | Net Income | Sales | Net Income | |||||||||||||
| Acquired Companies: | ||||||||||||||||
| Heany Industries (acquired January 2, 2024) | $ | $ | $ | $ | ||||||||||||
| Advanced Industrial Coatings (acquired August 30, 2024) | 405,182 | 60,253 | ||||||||||||||
| Rahn Industries (acquired January 2, 2025) | - | - | ||||||||||||||
| Subtotal Acquired Companies | $ | $ | $ | $ | ||||||||||||
| All Other Companies | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Nine Months ended | Nine Months ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | |||||||||||||||
| Sales | Net Income | Sales | Net Income | |||||||||||||
| Acquired Companies: | ||||||||||||||||
| Heany Industries (acquired January 2, 2024) | $ | $ | $ | $ | ||||||||||||
| Advanced Industrial Coatings (acquired August 30, 2024) | ||||||||||||||||
| Rahn Industries (acquired January 2, 2025) | ||||||||||||||||
| Subtotal Acquired Companies | $ | $ | $ | $ | ||||||||||||
| All Other Companies | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
12. REVENUE RECOGNITION
Revenue is recognized when the Company's obligations under the contract terms are satisfied and control of the product transfers to the customer, typically upon shipment. Revenue from certain contracts in the Commercial Air Handling Equipment segment is accounted for over time, as control transfers under these arrangements.
Contract assets primarily relate to the Commercial Air Handling segment’s rights to consideration for progress on performance obligations, measured by the proportion of actual costs incurred to the total costs expected to complete the contract, but not contractually billable at the reporting date. The contract assets are reclassified into the receivables balance when the rights to receive payment become unconditional. Substantially all contract assets are expected to be billed and collected within twelve months. The Company has no history of material cancellations or write-offs involving its contract assets.
Unearned revenue represents amounts collected from, or invoiced to, a customer in advance of revenue recognition. The liability for unearned revenue is reversed when the Company satisfies its performance obligations, which are typically satisfied within twelve months, but could span up to twenty-four months. All unearned revenue is recorded as a current liability, as performance periods beyond one year are usually due to unexpected circumstances outside of the Company’s control such as construction delays. At December 31, 2024, the unearned revenue balance was $
13. SEGMENT AND RELATED INFORMATION
The Company reports operations for two business segments: (1) Commercial Air Handling Equipment and (2) Industrial and Transportation Products. The identification of the Company's operating segments is based on guidance in ASC 280-10-50-1. The Company's management evaluates segment performance based primarily on segment operating profit. Intangible assets are allocated to each segment and the related amortization of these assets is recorded in selling, general and administrative expenses. The Company does not allocate corporate costs to the respective segments.
Both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment engage in business activities from which they recognize revenues and incur expenses, including revenue and expenses relating to transactions with other components of their respective segment. The operating results for both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment are reviewed regularly by the Company's chief operating decision maker, who is the Company's chief executive officer, and are considered in making decisions about resources to be allocated to the segment and in assessing its performance. Financial information for both segments is available to the chief operating decision maker in internal financial statements that are prepared on a monthly basis.
The adoption of ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" did not materially impact the Company's segment disclosures. Due to the Company’s decentralized nature, which includes many operating companies using independent accounting systems and ledgers, there are not additional significant expense metrics which are regularly provided to the chief operating decision maker beyond those included below. Additionally, the computation of significant expense categories within the segments would not be easily computable or practical.
Commercial Air Handling Equipment:
The Commercial Air Handling Equipment segment was added June 1, 2017, when the Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC in Akron, Ohio. The acquired business, which operates under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. Its customers are typically in the health care, education and pharmaceutical markets in the United States. The custom air handling units are constructed of non-corrosive aluminum, resulting in sustainable, long-lasting, and energy efficient solutions with life expectancies of 50 years or more. These products are distributed through a network of sales representatives, based on relationships with health care networks, building contractors and engineering firms. The custom air handling equipment is designed, manufactured and installed under the brand names FactoryBilt® and SiteBilt®. FactoryBilt® air handling solutions are designed, fabricated and assembled in a vertically integrated process entirely within the Akron, Ohio facility. SiteBilt® air handling solutions are designed and fabricated in Akron, but are then crated and shipped to the field and assembled on-site. The segment also includes Rahn Industries Incorporated, which was added on January 2, 2025. Rahn is a leading manufacturer and coater of HVAC coils, the single largest expenditure by Air Enterprises. Rahn serves both OEM and aftermarket customers in the healthcare, industrial, energy, and defense industries.
Industrial and Transportation Products:
The Industrial and Transportation Products segment was added July 1, 2016, when the Company purchased the assets of Federal Hose Manufacturing, LLC of Painesville, Ohio. This business includes the manufacture of flexible interlocking metal hoses and the distribution of silicone and hydraulic hoses. Metal hoses are sold primarily to major heavy-duty truck manufacturers and major aftermarket suppliers in North America. Metal hoses are also sold into the agricultural, industrial and petrochemical markets. Silicone hoses are distributed to a number of industries in North America, including agriculture and general industrial markets. The Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc.(“CAD”) in Phoenix, Arizona on July 1, 2018. CAD provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions. Utilizing state-of-the-art machining and welding technologies, CAD holds many niche certifications and is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels particularly for the aerospace market. The Company added the distribution of marine hose to this segment through the acquisition of the assets of MPI Products, Inc. (“MPI”) on January 2, 2020. MPI specializes in rubber and plastic marine hose for the recreational boating industry. MPI offers certified products that meet marine industry standards and regulations. Effective April 19, 2019, the Company completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”). DG is in the business of developing and commercializing marketing and data analytic technology applications. The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC), in Worcester, Massachusetts on January 15, 2021. Komtek Forge LLC is a supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics, alternative energy, petrochemical and defense industries. The Company purchased all of the membership interests of Global-Tek-Manufacturing LLC (“Global-Tek”), in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology LLC (name later changed to Global-Tek Colorado LLC or “Global-Tek Colorado”) in Longmont, Colorado on March 2, 2021. Global-Tek and Global-Tek Colorado specialize in providing customers with highly engineered manufacturing solutions, including CNC machining, anodizing, electro polishing and laser marking for customers in the defense, aerospace and medical device markets. The Company purchased substantially all of the assets of Emergency Hydraulics LLC (“Emergency Hydraulics”), in Ocala, Florida on July 1, 2021. Emergency Hydraulics provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles. The company purchased substantially all of the assets of Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), in Davie, Florida on January 10, 2022. Reverso Pumps develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems. The Company purchased substantially all of the assets of Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), in Davie, Florida on January 10, 2022. Separ America develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems. The company purchased substantially all of the assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”), in Cleveland, Ohio and Greenville, Ohio on May 1, 2022. Knitting Machinery specializes in manufacturing hose reinforcement machinery for the plastic, rubber and silicone industries. The Company purchased substantially all of the assets of Heany Industries, Inc ("Heany") in Scottsville, New York on January 2, 2024. Heany is a specialist in coatings solutions for a variety of aerospace, industrial and bio-medical applications. The Company purchased substantially all of the assets of Advanced Industrial Coatings, Inc ("AIC") in Stockton, California on August 30, 2024. AIC is a specialist in fluoropolymers and other high-performance coatings solutions for the aerospace, semiconductor, medical, energy and other industrial sectors.
The factors used to determine the Company’s reportable segments follow the guidance of ASC 280-10-50-21 and 280-10-50-22 and include consideration of the type of products or services delivered, the customers and end markets served, the appliable revenue recognition methodology and the length of time it takes to deliver products or services to customers. The Commercial Air Handling Equipment segment was identified as a reportable segment consisting of Air Enterprises and Rahn, because these businesses are strategically and operationally different from our other companies in several ways. First, most of this segment's sales are of equipment, while our other businesses that fall into the Industrial and Transportation Products segment sell products, components and coatings to end customers, not equipment. Second, the Commercial Air Handling Equipment segment delivers custom air handling solutions to customers which is different than the Industrial and Transportation Products segment which delivers manufactured metal, silicone, hydraulic and marine hoses, complex engineered components and coatings, highly engineered forgings, highly engineered and machined parts and data analytic technology applications. Third, the Commercial Air Handling Equipment segment serves customers primarily in the health care and education end markets while the Industrial and Transportation Products segment delivers products to customers in the heavy-duty truck manufacturing, agricultural, industrial, petrochemical, aerospace, defense, industrial gas turbine, medical prosthetics, alternative energy and emergency vehicle end markets. Fourth, the Commercial Air Handling Equipment segment recognizes revenue primarily over time while the Industrial and Transportation Products segment recognizes revenue primarily at a point in time. Fifth, the Commercial Air Handling Equipment segment manufactures custom air handling solutions for customers over a period of up to twenty-four months from the time the order is received to the time the air handling solution is delivered to the end customer as compared to the Industrial and Transportation Products segment which sells and delivers products to customers much more quickly, often within 30 days or less. For the reasons previously mentioned, Air Enterprises and Rahn are strategically and operationally different than the other businesses owned by the Company and management finds it useful to include these businesses in the Commercial Air Handling Segment which is separately managed and distinct from all of our other businesses that reside in the Industrial and Transportation Products segment.
Corporate charges not allocated to the segments:
Corporate charges that are not directly attributable to a segment are aggregated in the "Corporate" column below.
Information by industry segment is set forth below:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales summary by segment | ||||||||||||||||
| Commercial Air Handling | $ | $ | $ | $ | ||||||||||||
| Industrial and Transportation Products | ||||||||||||||||
| Total Sales | ||||||||||||||||
| Gross profit summary by segment | ||||||||||||||||
| Commercial Air Handling | ||||||||||||||||
| Industrial and Transportation Products | ||||||||||||||||
| Total Gross Profit | ||||||||||||||||
| Segment operating profit | ||||||||||||||||
| Commercial Air Handling | ||||||||||||||||
| Industrial and Transportation Products | ||||||||||||||||
| Total Segment Operating Profit | ||||||||||||||||
| Corporate charges not allocated to segments | ||||||||||||||||
| Operating Income | ||||||||||||||||
| Interest charges | ||||||||||||||||
| Loss on investments | ( | ) | ||||||||||||||
| Other (income) expense, net | ||||||||||||||||
| Income before Provision for Income Taxes | $ | $ | $ | $ | ||||||||||||
14. SUBSEQUENT EVENTS
None.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion is intended to assist in the understanding of the Company's financial position at September 30, 2025 and December 31, 2024, results of operations for the three and nine month periods ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024, and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and within the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Items Affecting the Comparability of our Financial Results
The Company purchased the capital stock of Rahn Industries Incorporated ("Rahn"), located in Whittier, California and Portland, Tennessee, on January 2, 2025. Accordingly, in light of the timing of this transaction, Rahn is included in the results of the Commercial Air Handling segment for the three and nine month periods ended September 30, 2025 but not the three and nine month periods ended September 30, 2024.
The Company purchased substantially all of the operating assets of Advanced Industrial Coatings, Inc. ("AIC") located in Stockton, California on August 30, 2024. Accordingly, in light of the timing of this transaction, AIC is included in the results of the Industrial and Transportation Products segment for the three and nine month periods ended September 30, 2025 and the three and nine month periods ended September 30, 2024, but reflects only one month of activity for both 2024 periods.
The Company acquired all of the operating assets of Heany Industries, Inc. ("Heany") located in Scottsville, New York on January 2, 2024. As January 1, 2024 was not a business day, the three and nine month periods ended September 30, 2025 and 2024 are both inclusive of a full quarter of Heany's operations, and thus the Heany acquisition does not impact comparability of results.
Results of Operations – Three Months Ended September 30, 2025 and 2024
Sales for the quarter ended September 30, 2025 (“current quarter”) increased to $47.2 million, an increase of $10.4 million or 28.4% from sales of $36.7 million during the same quarter of the prior year. $5.8 million of the increase in sales was driven by the Company's acquisitions of Rahn and AIC. CAD Enterprises, Inc. ("CAD") experienced $2.1 million of growth as a result of increased order volume, supply chain improvements and price increases. Additionally, Reverso Pumps LLC (“Reverso") experienced $1.1 million of growth as a result of increased order volume.
Cost of sales for the current quarter was $32.9 million compared to $26.0 million for the same quarter of the prior year, an increase of $6.8 million, or 26.2%, which is attributable to the increase in sales. Gross margin of 30.3% in the current quarter increased from 29.1% in the same quarter of the prior year. Both segments improved margin percentages, and a greater proportion of sales came from our growing Commercial Air Handling segment which operates at higher margins.
Selling, general and administrative expenses (SG&A) in the current quarter were $7.2 million, compared to $5.4 million, in the same quarter of the prior year. This increase in SG&A expenses is primarily due to the acquisition of Rahn and AIC, as well as other strategic investments in talent aimed at managing and supporting the Company's growth.
Interest charges in the current quarter were $0.2 million compared to $0.3 million in the same quarter of the prior year. Average total debt (including notes) and average interest rates for the current quarter were $12.5 million and 6.6%, respectively, compared to $13.6 million and 7.1%, respectively, in the same quarter of last year.
The Company no longer holds stock investments in other companies, and therefore did not have a gain or loss to report in the quarter ended September 30, 2025. In the third quarter of 2024, the Company reported an immaterial loss, attributed to market price changes of the Company's stock investment.
The Company had other expense of $0.2 million in the current quarter, primarily resulting from fees related to merger and acquisition activities. The Company had $0.3 million of other expense for the same quarter of the prior year also primarily resulting from fees related to merger and acquisition activities.
Income tax expense in the current quarter was $1.2 million compared to $1.3 million in the same quarter of the prior year. The effective tax rate in the current quarter of 18.6% decreased from 28.4% in the same quarter of the prior year, largely as a result of one-time return-to-provision adjustments recognized in connection with the filing of the prior year tax return. The adjustments primarily reflected additional research and development credits and energy-efficient building deductions under Section 179D, which were quantified through recently completed studies performed by third-party consultants.
Net income in the current quarter was $5.4 million, or $1.52 per diluted share, as compared to net income of $3.4 million, or $0.95 per diluted share, for the same quarter of the prior year because of the factors noted above.
Commercial Air Handling Segment
Sales in the Commercial Air Handling Equipment segment for the quarter ended September 30, 2025 increased to $21.8 million, an increase of approximately $5.9 million, or 36.9%, from sales of $15.9 million during the same period of the prior year. The increase was driven by the Company's acquisition of Rahn. Absent the acquisition, sales remained materially consistent.
Segment operating profit in the Commercial Air Handling Equipment segment for the current quarter was $6.1 million, or 27.9%, compared to $4.9 million, or 31.0% in the same quarter of the prior year, an increase of $1.1 million. $1.0 million of the increase was due to the acquisition of Rahn.
Industrial and Transportation Products Segment
Sales in the Industrial and Transportation Products segment for the quarter ended September 30, 2025 were $25.4 million, an increase of approximately $4.6 million, or 21.9%, from sales of $20.8 million during the same period of the prior year. The most significant drivers of growth were CAD, which increased sales by $2.1 million due to a mix of increased order volume, supply chain improvements and price increases; Reverso, which increased sales by $1.1 million, driven primarily by higher sales volume; and $0.7 million of sales from the acquisition of AIC.
Segment operating profit in the Industrial and Transportation Products segment for the current quarter was $2.6 million, or 10.1%, compared to $1.5 million, or 7.2%, in the same quarter of the prior year, an increase of $1.1 million and 290 basis points. The improvement in operating margin took place across the portfolio of operating companies, largely as a result of the higher revenue base allowing for better fixed cost absorption, with no individual company accounting for more than $0.4 million of the improvement.
Results of Operations – Nine Months Ended September 30, 2025 and 2024
Sales for the nine months ended September 30, 2025 (“current year-to-date period”) increased to $137.3 million, an increase of $24.5 million or 21.7% from sales of $112.8 million during the same year-to-date period of the prior year. The increase in sales for the nine months ended September 30, 2025 was largely the result of the Company's acquisitions of Rahn and AIC, which contributed $18.0 million of growth. The remainder of the growth came from improved sales in the operating companies in the Industrial Products and Transportation Segment, all of which experienced year-over-year growth with the exception of Data Genomix.
Cost of sales for the nine months ended September 30, 2025 was $96.5 million compared to $81.5 million for the same year-to-date period of the prior year, an increase of $15.0 million, which is attributable to the increase in sales. Gross margin of 29.8% in the current year-to-date period increased from 27.8% in the same year-to-date period of the prior year. The margin improvement is due to a greater proportion of sales coming from our growing Commercial Air Handling segment which operates at higher margins, combined with operational efficiencies and fixed cost absorption across the segments.
Selling, general and administrative expenses (SG&A) in the current year-to-date period were $21.6 million, compared to $16.4 million, in the same year-to-date period of the prior year. This increase in SG&A expenses is primarily due to the acquisition of Rahn and AIC, as well as other strategic investments in talent aimed at managing and supporting the Company's growth.
Interest charges in the current year-to-date period were $0.9 million compared to $0.8 million in the same year-to-date period of the prior year. Average total debt (including notes) and average interest rates for the current year-to-date period were $16.7 million and 6.5%, respectively, compared to $13.9 million and 7.1%, respectively, in the same period of last year. The increase in debt is a result of the Rahn acquisition in the first quarter of 2025, and the decrease in interest rates is consistent with changes in U.S. treasury yields.
The Company no longer holds stock investments in other companies, and therefore did not have a gain or loss to report in the nine months ended September 30, 2025. In the nine months ended September 30, 2024, the Company reported a loss of $0.4 million, attributable to market price changes of the Company's stock investment.
The Company had other expense of $0.6 million in the current year-to-date period, primarily resulting from fees related to merger and acquisition activities. The Company had $0.4 million of other expense for the same year-to-date period of the prior year also primarily resulting from fees related to merger and acquisition activities.
Income tax expense in the current year-to-date period was $4.1 million compared to $3.8 million in the same year-to-date period of the prior year. The effective tax rate in the current year-to-date period of 23.2% has decreased from 28.0% in the same year-to-date period of the prior year, primarily due to higher levels of activities qualifying for research and development tax credits and the recognition of tax benefits associated with Section 179D energy-efficiency deductions.
Net income in the current year-to-date period was $13.7 million, or $3.84 per diluted share, as compared to net income of $9.6 million, or $2.72 per diluted share, for the same year-to-date period of the prior year because of the factors noted above.
Commercial Air Handling Segment
Sales in the Commercial Air Handling Equipment segment for the nine months ended September 30, 2025 increased to $65.0 million, an increase of approximately $15.7 million, or 31.7%, from sales of $49.3 million during the same period of the prior year. The increase was driven by the Company's acquisition of Rahn. Absent the acquisition, sales remained materially consistent.
Segment operating profit in the Commercial Air Handling Equipment segment for the current year-to-date period was $17.2 million, or 26.7%, compared to $14.0 million, or 28.7%, in the same year-to-date period of the prior year, an increase of $3.1 million, but a decrease of 200 basis points. The increase in operating profit is the result of the sales increase. The decline in operating profit margin is the result of Rahn's first quarter results. Prior to a streamlining of operations in the second quarter of 2025, Rahn's operating margin on coils was not as high as on air handling units.
Industrial and Transportation Products Segment
Sales in the Industrial and Transportation Products segment for the nine months ended September 30, 2025 were $72.3 million, an increase of approximately $8.9 million, or 14.0%, from sales of $63.5 million during the same period of the prior year. $2.8 million of the increase was led by the Company's acquisition of AIC, but all operating companies in the segment improved sales year-over-year with the exception of Data Genomix.
Segment operating profit in the Industrial and Transportation Products segment for the current year-to-date period was $6.5 million, or 8.9%, compared to $4.7 million, or 7.3%, in the same period of the prior year, an increase of $1.8 million and 160 basis points. The majority of the margin improvement was driven by CAD, which became more efficient with a higher volume of orders and benefited from price increases.
Liquidity and Capital Resources
The Company’s credit agreement, by and among the Company, certain of its subsidiaries and JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”), provides for a revolving credit facility of up to $30.0 million maturing on June 1, 2027. At September 30, 2025, there was approximately $27.4 million of borrowing availability under the credit facility, which decreased from $30.0 million of borrowing availability at December 31, 2024, as the Company borrowed cash to fund the acquisition of Rahn. See Note 7 of the consolidated financial statements for further information regarding the Credit Agreement.
Operating Activities. The dynamics of cash flows from operating activities are subject to variability, influenced by the oscillating demands of working capital and the scheduling of payment cycles. Net cash provided by operating activities was $12.9 million for the nine months ended September 30, 2025, compared to $13.3 million for the same period of the prior year, representing a slight decrease. Although profitability improved year over year, the benefit was largely offset by increases in accounts receivable due to the timing of billing milestones at Air Enterprises LLC (“AIR”), higher inventory levels at CAD to support continued growth, and the timing of federal tax payments.
Investing Activities. Cash used in investing activities for the nine months ended September 30, 2025 was $14.5 million, compared to cash used in investing activities of $12.6 million in the same period of the prior year. Cash used in investing activities for the period ended September 30, 2025 was primarily for the acquisition of Rahn and cash used in investing activities for the period ended September 30, 2024 was primarily for the acquisitions of Heany and AIC.
Financing Activities. Cash provided by financing activities was $1.9 million for the nine months ended September 30, 2025, compared to cash used in financing activities of $0.4 million in the same period last year. In each instance, the Company borrowed from the revolving credit facility to finance the acquisitions referenced above, and has used cash generated to pay down the revolving credit facility.
The Company is actively managing its business to optimize cash flow generation. We believe the Company's cash, together with the borrowing availability on our revolving credit facility, is sufficient to fund the Company's working capital needs and service the principal and interest payments due on outstanding debt for at least the next 12 months. Based on a combination of the sustained profitability demonstrated over the past several years and significant available borrowing capacity, the Company believes it is well positioned to support ongoing operations as well as growth initiatives. Notwithstanding the Company's expectations, if the Company's operating results decrease as the result of pressures on the business due to, for example, supply chain interruptions or delays, increases in material, freight or labor costs, inflationary pressures, currency or interest rate fluctuations, lost customers, regulatory issues, the effects of international trade conflicts between the U.S. and its global trade partners, including any related tariffs, a downturn in general economic conditions, or the Company's failure to execute its business plans, the Company may require additional financing, or may be unable to comply with its obligations under the credit facility, and its lenders could demand repayment of any amounts outstanding under the Company’s credit facility. See Note 7 of the consolidated financial statements for further information on the Company's total debt.
Off-Balance Sheet Arrangements
From time to time, the Company enters into performance and payment bonds in the ordinary course of business. These bonds are secured by certain assets of the Company until the Company’s completion of certain contractual requirements. At September 30, 2025, the Company had no secured performance or payment bonds. The Company has no other off-balance sheet arrangements (as defined in Regulation S-K Item 303 paragraph (a)(4)(ii)) that have or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources.)
Critical Accounting Policies
Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions which affect amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate the accounting policies and estimates that are used to prepare financial statements. Management has made their best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe that there is great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed below. On a regular basis, critical accounting policies are reviewed with the Audit Committee of the Board of Directors.
Revenue Recognition: We recognize revenue with respect to customer orders when our obligations under the contract terms are satisfied and control of the product transfers to the customer, typically upon shipment. Revenue from certain contracts in the Commercial Air Handling Equipment segment is accounted for over time, when products are manufactured or services are performed, as control transfers under these arrangements. We follow a cost-based input method, since there is no objective output measure that would fairly depict the transfer of control over the life of the performance obligation. Progress on the performance obligation is measured by the proportion of actual costs incurred to the total costs expected to complete the contract. Costs included in the measure of progress include direct labor and third-party. This cost-based method of revenue recognition requires the Company to make estimates of costs to complete its projects on an ongoing basis. Significant judgment is required to evaluate assumptions related to these estimates. The effect of revisions to estimates related to the transaction price or costs to complete a project are recorded on a cumulative catch-up basis. Certain contracts may be terminated by the customer; however, in the event of termination, most contracts require payment for services rendered through the date of termination.
Allowance for Obsolete and Slow-Moving Inventory: Inventories are stated at the lower of cost or net realizable value; and are reduced by an allowance for obsolete and slow-moving inventories. The allowance is estimated based on management’s review of inventories on hand with minimal sales activity, which is compared to estimated future usage and sales. Inventories identified by management as slow-moving or obsolete are reserved for based on estimated selling prices less disposal costs. Though we consider these allowances adequate and proper, changes in economic conditions in specific markets in which we operate could have a material effect on allowances required.
Business Combinations: Business combinations are accounted for using the purchase method of accounting under ASC 805, “Business Combinations.” This method requires the Company to record assets and liabilities of the businesses acquired at their estimated fair values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Determining the fair value requires management to make estimates and assumptions including discount rates, rates of return on assets, and long-term sales growth rates.
Goodwill and Indefinite Lived Intangible Assets: As referenced by ASC 350 “Intangibles- Goodwill and other” (“ASC 350”), management performs its impairment test for goodwill and intangible assets at least annually or more frequently, if impairment indicators arise at the reporting unit level. Our reporting units have been identified at the individual company component level, with each individual subsidiary operating company constituting its own reporting unit. In 2024, for all reporting units other than CAD, Federal Hose and Marine Products International, management performed a qualitative assessment which indicated there were no indicators of impairment. A quantitative impairment analysis was done for CAD, Federal Hose and Marine Products International, which concluded that goodwill and intangible assets were not impaired at any of the reporting units.
Our quantitative impairment analysis utilizes an income approach to estimate the fair value of the reporting unit. The income approach uses a number of factors, including discount rates, growth rates, cash flow projections and terminal value rates. Discount rates are set by using the Weighted Average Cost of Capital (WACC) methodology. The WACC methodology considers market and industry data as well as Company-specific risk factors for each reporting unit in determining the appropriate discount rates to be used. The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such a business. Operational management, considering industry and Company-specific historical and projected data, develops growth rates, sales projections and cash flow projections for each reporting unit. Terminal value rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and low long-term growth rates.
The CAD Enterprises reporting unit includes goodwill of $7.3 million. The quantitative analyses performed in 2024 indicated that fair value exceeded carrying value by 35%. The discount rate used to estimate fair value was 15.1% in 2024, reflective of the incremental Company-specific risks related to missed profitability projections in 2024. The assumed terminal growth rate for CAD Enterprises was 3%, despite much larger revenue growth in each of the prior two years, which terminal growth rate is based on management’s assessment of the likely minimum long-term growth rate for the aerospace industry. The after-tax income margins used to project future margins for the company were based on the historical margins for CAD Enterprises prior to the COVID-19 pandemic.
The Federal Hose and Marine Products International reporting units include goodwill of $2.2 million and $1.7 million, respectively. The quantitative analysis performed in 2024 indicated that fair value substantially exceeded carrying value and was not particularly sensitive to changes in assumptions.
Our estimates in reaching the conclusion that goodwill is not impaired were based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. Potential events and circumstances including global conflicts, trade wars, materials shortages, inability to increase prices to keep pace with expenses, onset of a global pandemic, departure of key employees and loss of a key customer could negatively affect the key assumptions used for the recent fair value test and are similar to the risk factors noted in Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Income Taxes: In accordance with ASC 740, “Income Taxes” (“ASC 740”), we account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities and are measured using the currently enacted tax rates. Specifically, we measure gross deferred tax assets for deductible temporary differences and carryforwards, such as operating losses and tax credits, using the applicable enacted tax rates and apply the more likely than not measurement criterion. Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual annual effective income tax rates and related income tax liabilities may differ materially from our interim estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known.
Impact of Inflation
Inflationary economic conditions in recent years have increased the Company’s costs of producing its products. U.S. trade policy, including the implementation of tariffs by the U.S. and/or its trade partners, may further contribute to inflation. The Company’s products are manufactured using various metals and other commodity-based materials including steel, aluminum, rubber and silicone. Freight and labor costs also are significant elements of the Company’s production costs. Inflationary economic conditions have elevated, and may further elevate, these various costs. If the Company is unable to continue mitigating cost increases through customer pricing actions, alternative supply arrangements or other cost reduction initiatives, the Company's profitability may be adversely affected.
Forward-Looking Statements
The foregoing discussion includes forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements made regarding the Company’s future results. Generally, these statements can be identified by the use of words such as “guidance,” “outlook,” “believes,” “estimates,” “anticipates,” “expects,” “forecasts,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements, or other statements made by the Company, are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors (including, but not limited to, those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. As a result, actual results of the Company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) shortages in supply or increased costs of necessary products, components or raw materials from the Company’s suppliers; (b) availability shortages or increased costs of freight and labor for the Company and/or its suppliers; (c) actions that governments, businesses and individuals take in response to public health crises, including mandatory business closures and restrictions on onsite commercial interactions; (d) conditions in the global and regional economies and economic activity, including slow economic growth or recession, inflation, currency and credit market volatility, reduced capital expenditures and changes in government trade, fiscal, tax and monetary policies; in particular the impact of any protectionist trade policies and related tariffs; (e) adverse effects from evolving geopolitical conditions, such as the military conflicts in Ukraine and the Middle East; (f) the Company's ability to effectively integrate acquisitions, and manage the larger operations of the combined businesses, (g) the Company's dependence upon a limited number of customers and the aerospace industry, (h) the highly competitive industries in which the Company operates, which includes several competitors with greater financial resources and larger sales organizations, (i) the Company's ability to capitalize on market opportunities in certain sectors, (j) the Company's ability to obtain cost effective financing and (k) the Company's ability to satisfy obligations under its financing arrangements, and the other risks described in “Item 1A. Risk Factors” in our Annual Report Form 10-K and the Company’s subsequent filings with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
This item is not applicable to the Company as a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
Under the supervision of and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
At the time of filing this Quarterly Report on Form 10-Q, there were no material legal proceedings pending or threatened against the Company.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024, except for the following which supplements the Company's previously disclosed risk factors:
U.S. trade policy, including the implementation of tariffs, could adversely affect the Company’s business and financial results.
The U.S. administration has implemented numerous tariffs on imported materials and products and, in response, various countries have imposed new, or increased existing, tariffs on imports. These tariffs, to the extent that they continue to be imposed, and any new or increased tariffs, may increase the cost of materials used by our suppliers and in our products. Tariffs imposed by other countries may apply to our products sold internationally. The ultimate impact of the announced tariffs and any future tariffs will depend on various factors, including the extent to which such tariffs are implemented, the timing of implementation and the amount, scope and nature of such tariffs. If we are unable to mitigate the impact of tariffs, including through product pricing and supply arrangements, our business and financial results could be adversely affected.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Repurchases. The following table discloses shares repurchased by the Company during the quarter ended September 30, 2025. All shares repurchased during the quarter were Class A common shares.
| Period |
Total number of shares purchased |
Average price paid per share |
Total number of shares purchased as part of publicly announced program |
Maximum number of shares that may yet be purchased under the program (1) |
||||||||||||
| July 1 to July 31, 2025 | - | $ | - | - | 298,488 | |||||||||||
| August 1 to August 31, 2025 | - | - | - | 298,488 | ||||||||||||
| September 1 to September 30, 2025 |
- | - | - | 298,488 | ||||||||||||
| Total |
- | $ | - | - | 298,488 | |||||||||||
| (1) | On December 15, 2023, the Company announced a share repurchase program of up to 300,000 of the Company’s Class A and/or Class B common shares. Shares may be repurchased from time to time by the Company through open-market transactions, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of share repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing share prices, and other considerations. The authorization may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of shares. The authorization has no expiration date. |
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended September 30, 2025, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, each as defined in Item 408 of Regulation S-K.
ITEM 6. EXHIBITS
| 31.1 |
Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer. |
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| 31.2 |
Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer. |
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| 32.1 |
Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
| 32.2 |
Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
| 101.INS* |
Inline XBRL Instance |
|
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema |
|
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation |
|
| 101.DEF* |
Inline XBRL Extension Definition |
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| 101.LAB* |
Inline XBRL Taxonomy Extension Labels |
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| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation |
|
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
*XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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 as of November 4, 2025, thereunto duly authorized.
| SIGNATURE: |
TITLE |
| /s/ Brian E. Powers |
President and Chief Executive Officer |
| Brian E. Powers |
(Principal Executive Officer) |
| /s/ Jeffrey J. Salay |
Vice President and Chief Financial Officer |
| Jeffrey J. Salay |
(Principal Accounting and Financial Officer) |
FAQ
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