ALPHA PRO TECH LTD (APT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was modestly positive: revenue grew 2.5% to $13.8M, diluted EPS rose to $0.06 (vs. $0.05 LY), while gross margin compressed 120 bps to 39.0% on carryover 2024 freight costs that began easing in Q1 .
• Building Supply rose 1.6% as 21.8% growth in synthetic roof underlayment offset a 20.9% decline in housewrap (impacted by two private‑label distributors, weather, and softer single‑family starts); Disposable Protective Apparel grew 4.0% on stronger garments, offset by a 50.5% drop in masks due to channel overstock .
• Balance sheet remains strong: $13.4M cash, $47.0M working capital, no debt; buybacks of 221,413 shares for $1.2M in the quarter (remaining authorization $1.6M) .
• No formal guidance; management sees Building Supply growth potential and underlayment momentum, but flags housing starts uncertainty, mask demand normalization timing, ocean freight volatility easing from Q1, and tariff risk on India sourcing (currently a cost advantage vs. China) .
• Street estimates were not available via S&P Global for Q1, so beat/miss vs. consensus cannot be determined (S&P Global consensus unavailable as of our check)*.

What Went Well and What Went Wrong

What Went Well

• Synthetic roof underlayment up 21.8% YoY on national builder/contractor programs and category expansion (including self‑adhered), helping offset housewrap pressure .
  “Sales of synthetic roof underlayment…have been robust due to national programs…as well as category expansion, which includes self‑adhered products.”
• Disposable Protective Apparel segment +4.0% YoY; garments +12.0% YoY; management expects organic growth in 2025 with strong channel partnerships .
• Ocean freight rate headwinds from 2024 began easing in Q1 2025, positioning gross margin for improvement as older, high‑freight inventory sells through .

What Went Wrong

• Housewrap sales fell 20.9% YoY, pressured by lower single‑family starts, weather, economic uncertainty, and declines at two private‑label distributors .
• Face masks down 50.5% YoY due to a channel partner’s late‑2024 over‑purchasing for the 2025 flu/COVID season; normalization expected as inventories right‑size .
• Gross margin fell 120 bps YoY to 39.0% on 2024 high ocean freight costs embedded in inventory, despite early easing in Q1 .

Financial Results

Consolidated P&L (oldest → newest)

Segment Sales ($USD)

Selected sub-trends Q1 2025: Underlayment +21.8% YoY; other woven +89.3% YoY; housewrap -20.9% YoY; garments +12.0% YoY; face shields -6.7% YoY; face masks -50.5% YoY .

Key Balance Sheet and Cash Flow KPIs (point-in-time)

Actual vs. S&P Global Consensus (Q1 2025)

S&P Global consensus for Q1 2025 revenue and EPS was unavailable as of our check; therefore, a beat/miss determination vs. Street cannot be made at this time. Values retrieved from S&P Global.*

Guidance Changes

Management commentary indicates expected Building Supply growth with pipeline visibility, offset by uncertainty in housing starts/economy; underlayment momentum; expectations for mask demand to recover as channel inventories normalize; ongoing freight volatility but easing in Q1; tariff exposure dynamic (advantage vs. China, risk if India tariffs rise) .

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was available in company documents; themes reflect management commentary across recent press releases.

Management Commentary

• “Sales of synthetic roof underlayment…have been robust due to national programs with builders and contractors as well as category expansion, which includes self‑adhered products.”
• “Housewrap sales…have been challenging due to lower single‑family housing starts, a significant decline in sales to two private‑label distributors…economic uncertainty, and…colder temperatures and increased snowfall.”
• “Sales of face masks…were negatively affected by excessive purchases primarily by one of our channel partners in the later part of 2024…We anticipate demand to improve once inventory levels return to more normal levels.”
• “Management believes…we are well positioned as a significant portion of our competition purchase disposable protective garments from China which currently have significantly higher tariff rates than the products that we source from India…However, new tariffs on India may negatively affect our margins.”
• “Gross profit margin…was negatively affected primarily by the inventory received last year which incurred higher ocean freight rates…in the first quarter of 2025 we began experiencing an easing of those freight rates.”

Q&A Highlights

• Not applicable. No Q1 2025 earnings call transcript was available in company documents; management commentary is sourced from the earnings press release .

Estimates Context

• S&P Global consensus for Q1 2025 revenue and EPS was unavailable as of our check; therefore, no beat/miss vs. Street can be determined.*
• Given segment strength in underlayment and a path to margin relief as freight costs normalize, estimates may need to reflect improving Building Supply mix and a potential sequential margin tailwind as older, high‑freight inventory is consumed, offset by near‑term mask destocking .

Key Takeaways for Investors

• Underlayment momentum is a bright spot (+21.8% YoY) driven by national programs and category expansion; this can support Building Supply growth despite housewrap pressure .
• Gross margin headwinds from 2024 freight costs persisted in Q1 but began easing; as high‑freight inventory sells through, margin trajectory should improve, all else equal .
• Mask weakness (-50.5% YoY) is largely a channel inventory issue from late‑2024 over‑buying; management expects normalization over time, reducing segment drag .
• Tariff structure currently favors APT’s India‑sourced garments vs. China‑sourced competitors, but policy risk (new India tariffs) is a watch item for margins .
• Balance sheet provides ample flexibility (cash $13.4M, working capital $47.0M, no debt) to continue buybacks ($1.6M remaining authorization) and invest in growth .
• Near‑term narrative hinges on: pace of mask destocking, sustainability of underlayment growth, and freight normalization; medium‑term focus on expanding downstream relationships and product breadth (incl. self‑adhered underlayment and woven materials) .
• No formal guidance; management tone is cautiously constructive on Building Supply growth with pipeline visibility but acknowledges macro uncertainty and tariff/freight volatility .

Footnote: *S&P Global consensus values checked via GetEstimates and were unavailable for Q1 2025 as of this analysis; therefore, no beat/miss vs. consensus is shown. Values retrieved from S&P Global.