Company: APT
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001437749-25-015457
Chunk: 32

Company: ALPHA PRO TECH LTD
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 2
Chunk 32
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2% for the three months ended March 31, 2024.

The gross profit margin in the three months ended March 31, 2025 was negatively affected by a margin decrease in both the Disposable Protective Apparel and Building Supply segments. Gross profit margin was negatively affected primarily by the inventory received last year which incurred higher ocean freight rates. There was significant volatility in ocean freight rates in 2024, due to factors such as geopolitical tensions, labor disputes and market dynamics but we are now experiencing an easing of those freight rates.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $153,000, or 3.2%, to $4,694,000 for the three months ended March 31, 2025, from $4,847,000 for the three months ended March 31, 2024. As a percentage of net sales, selling, general and administrative expenses decreased to 34.0% for the three months ended March 31, 2025, from 36.0% for the same period of 2024.

The change in expenses by segment for the three months ended March 31, 2025, was as follows: Building Supply expenses were down by $107,000, or 5.4%; Disposable Protective Apparel expenses were up by $87,000, or 6.4%; and corporate unallocated expenses were down by $133,000, or 8.9%.

The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation, marketing and sales travel expenses. The decrease in corporate unallocated expenses was primarily due to decreased, professional fees, insurance expenses, general office expenses, and reorganization costs in 2024. The reorganization costs in 2024 were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona.

In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million. A bonus amount of $41,000 was accrued for the three months ended March 31, 2025, compared to $38,000 for the three months ended March 31, 2024.

Depreciation and Amortization. Depreciation and amortization expense decreased by $1,000,