Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-51372 | |
Entity Registrant Name | Omega Flex, Inc. | |
Entity Central Index Key | 0001317945 | |
Entity Tax Identification Number | 23-1948942 | |
Entity Incorporation, State or Country Code | PA | |
Entity Address, Address Line One | 451 Creamery Way | |
Entity Address, City or Town | Exton | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19341 | |
City Area Code | (610) | |
Local Phone Number | 524-7272 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | OFLX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,094,322 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current Assets: | ||
Cash and Cash Equivalents | $ 45,268 | $ 46,356 |
Accounts Receivable - less allowances of $833 and $1,126, respectively | 14,271 | 15,361 |
Inventories - Net | 15,582 | 15,597 |
Other Current Assets | 2,398 | 2,874 |
Total Current Assets | 77,519 | 80,188 |
Right-Of-Use Assets - Operating | 4,622 | 2,940 |
Property and Equipment - Net | 9,125 | 8,951 |
Goodwill - Net | 3,526 | 3,526 |
Deferred Taxes | 189 | |
Other Long Term Assets | 4,418 | 4,440 |
Total Assets | 99,210 | 100,234 |
Current Liabilities: | ||
Accounts Payable | 2,857 | 2,090 |
Accrued Compensation | 600 | 3,198 |
Accrued Commissions and Sales Incentives | 2,930 | 4,428 |
Dividends Payable | 3,331 | 3,332 |
Taxes Payable | 1,299 | 190 |
Lease Liability - Operating | 387 | 454 |
Other Liabilities | 3,036 | 4,390 |
Total Current Liabilities | 14,440 | 18,082 |
Lease Liability - Operating, net of current portion | 4,297 | 2,492 |
Deferred Taxes | 21 | |
Taxes Payable Long Term | 205 | 205 |
Other Long Term Liabilities | 542 | 603 |
Total Liabilities | 19,505 | 21,382 |
Commitments and Contingencies (Note 6) | ||
Omega Flex, Inc. Shareholders’ Equity: | ||
Common Stock – par value $0.01 share: authorized 20,000,000 shares: 10,153,633 shares issued and 10,094,322 shares outstanding as of March 31, 2024 and December 31, 2023, respectively | 102 | 102 |
Treasury Stock | (1) | (1) |
Paid-in Capital | 11,025 | 11,025 |
Retained Earnings | 69,381 | 68,493 |
Accumulated Other Comprehensive Loss | (945) | (930) |
Total Omega Flex, Inc. Shareholders’ Equity | 79,562 | 78,689 |
Noncontrolling Interest | 143 | 163 |
Total Shareholders’ Equity | 79,705 | 78,852 |
Total Liabilities and Shareholders’ Equity | $ 99,210 | $ 100,234 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 833 | $ 1,126 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 10,153,633 | 10,153,633 |
Common stock, shares outstanding | 10,094,322 | 10,094,322 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net Sales | $ 25,216 | $ 29,987 |
Cost of Goods Sold | 10,117 | 11,359 |
Gross Profit | 15,099 | 18,628 |
Selling Expense | 5,352 | 5,573 |
General and Administrative Expense | 3,758 | 4,794 |
Engineering Expense | 931 | 955 |
Operating Profit | 5,058 | 7,306 |
Interest Income | 546 | 281 |
Other (Expense) Income | (29) | 31 |
Income Before Income Taxes | 5,575 | 7,618 |
Income Tax Expense | 1,375 | 1,877 |
Net Income | 4,200 | 5,741 |
Net Loss - Noncontrolling Interest | 19 | 1 |
Net Income attributable to Omega Flex, Inc. | $ 4,219 | $ 5,742 |
Earnings per common share - Basic | $ 0.42 | $ 0.57 |
Earnings per common share - Diluted | 0.42 | 0.57 |
Cash Dividends Declared per Common Share | $ 0.33 | $ 0.32 |
Weighted average shares outstanding - Basic | 10,094 | 10,094 |
Weighted average shares 0utstanding - Diluted | 10,094 | 10,094 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net Income | $ 4,200 | $ 5,741 |
Other Comprehensive (Loss) Income: | ||
Foreign Currency Translation Adjustment | (16) | 81 |
Other Comprehensive (Loss) Income | (16) | 81 |
Comprehensive Income | 4,184 | 5,822 |
Comprehensive Loss (Income) - Noncontrolling Interest | 20 | (3) |
Total Comprehensive Income | $ 4,204 | $ 5,819 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock, Common [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2022 | $ 102 | $ (1) | $ 11,025 | $ 60,954 | $ (1,103) | $ 196 | $ 71,173 |
Balance, shares at Dec. 31, 2022 | 10,094,322 | ||||||
Net Income | 5,742 | (1) | 5,741 | ||||
Cumulative Translation Adjustment | 77 | 4 | 81 | ||||
Dividends Declared | (3,229) | (3,229) | |||||
Balance at Mar. 31, 2023 | $ 102 | (1) | 11,025 | 63,467 | (1,026) | 199 | 73,766 |
Balance, shares at Mar. 31, 2023 | 10,094,322 | ||||||
Balance at Dec. 31, 2023 | $ 102 | (1) | 11,025 | 68,493 | (930) | 163 | 78,852 |
Balance, shares at Dec. 31, 2023 | 10,094,322 | ||||||
Net Income | 4,219 | (19) | 4,200 | ||||
Cumulative Translation Adjustment | (15) | (1) | (16) | ||||
Dividends Declared | (3,331) | (3,331) | |||||
Balance at Mar. 31, 2024 | $ 102 | $ (1) | $ 11,025 | $ 69,381 | $ (945) | $ 143 | $ 79,705 |
Balance, shares at Mar. 31, 2024 | 10,094,322 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 4,200 | $ 5,741 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
Non-Cash Compensation | 61 | 409 |
Non-Cash Lease Expense | 170 | 120 |
Depreciation and Amortization | 287 | 264 |
Provision for Losses on Accounts Receivable, net of write-offs and recoveries | (292) | (4) |
Deferred Taxes | 210 | 435 |
Provision for Inventory Reserves | (142) | 443 |
Changes in Assets and Liabilities: | ||
Accounts Receivable | 1,376 | 102 |
Inventories | 134 | (393) |
Other Assets | 500 | 820 |
Accounts Payable | 767 | (244) |
Accrued Compensation | (2,598) | (2,647) |
Accrued Commissions and Sales Incentives | (1,498) | (1,729) |
Lease Liability - Operating | (115) | (118) |
Other Liabilities | (356) | (1,729) |
Net Cash Provided by Operating Activities | 2,704 | 1,470 |
Cash Flows from Investing Activities: | ||
Capital Expenditures | (461) | (453) |
Net Cash Used in Investing Activities | (461) | (453) |
Cash Flows from Financing Activities: | ||
Dividends Paid | (3,332) | (3,232) |
Net Cash Used in Financing Activities | (3,332) | (3,232) |
Net Decrease in Cash and Cash Equivalents | (1,089) | (2,215) |
Translation effect on cash | 1 | (8) |
Cash and Cash Equivalents – Beginning of Period | 46,356 | 37,703 |
Cash and Cash Equivalents – End of Period | 45,268 | 35,480 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for Income Taxes | 90 | 102 |
Declared Dividends | 3,331 | 3,229 |
Additions to Right-Of-Use Assets obtained from new operating Lease Liabilities | $ 1,874 | $ 6 |
BASIS OF PRESENTATION AND DESCR
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS | 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Omega Flex, Inc., and its subsidiaries (collectively the “Company”). The Company’s Condensed Consolidated Financial Statements for the quarter ended March 31, 2024 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions of Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“Form 10-K”). All material intercompany accounts and transactions have been eliminated in consolidation. It is management’s opinion that all adjustments necessary for a fair statement of the results for the interim periods have been made, and that all adjustments are of a normal recurring nature, or a description is provided for any adjustments that are not of a normal recurring nature. Description of Business The Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within their particular applications. The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose and accessories. These applications include carrying fuel gases within residential and commercial buildings; gasoline and diesel gasoline products (both above and below the ground) in a double containment piping to contain any possible leaks, which is used in automotive and marina refueling, and fueling for back-up generation; and medical gases in health care facilities. The Company’s flexible metal piping is also used to carry other types of gases and fluids in a number of industrial applications where the customer requires the piping to have both a degree of flexibility and/or an ability to carry corrosive compounds or mixtures, or to carry at both very high and very low (cryogenic) temperatures. The Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania and Houston, Texas, in the United States (U.S.), and in Banbury, Oxfordshire in the United Kingdom (U.K.), and sells its products through distributors, wholesalers and to original equipment manufacturers (OEMs) throughout North America, and in certain European markets. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. Revenue Recognition The Company applies the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The principle of Topic 606 was achieved through applying the following five-step approach: ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ■ The Company has a present right to payment ■ The customer has legal title to the goods ■ The Company has transferred physical possession of the goods ■ The customer has the significant risks and rewards of ownership of the goods ■ The customer has accepted the goods It is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control of the goods has transferred to the customer. The indicators are a list of factors that are often present if a customer has control of the goods. The Company has typical, unmodified FOB shipping point terms. As the seller, the Company can determine that the shipped goods meet the agreed-upon specifications in the contract or customer purchase order (e.g., items, quantities, and prices) with the buyer, so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the goods. Based upon the above, the Company has concluded that control substantively transfers to the customer upon shipment. Other considerations of Topic 606 include the following: ● Contract Costs - ● Warranties ● Returned Goods ● Volume Rebates (Promotional Incentives) ■ The amount of consideration is highly susceptible to factors outside the Company’s influence. ■ The uncertainty about the amount of consideration is not expected to be resolved for a long period of time. ■ The Company’s experience with similar types of contracts is limited. ■ The contract has a large number and broad range of possible consideration amounts. If it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal of revenue. However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue based upon estimates of the eligible products expected to be sold. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. As indicated in this Note 2, Significant Accounting Policies, under the caption “Significant Concentrations”, the majority of the Company’s sales were geographically contained within North America, with the remainder scattered internationally. All performance assessments and resource allocations are generally based upon the review of the results of the Company as a whole. Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes, and bonds, and/or repurchase agreements, backed by such obligations, and in U.S. Treasury bills and certificates of deposit. Carrying value approximates fair value except for U.S. Treasury bills and certificates of deposit where amortized cost approximates fair value. Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits. The Company monitors the viability of the banking institutions carrying their assets on a regular basis and has the ability to transfer cash to various institutions during times of risk. The Company has not experienced any losses related to these cash balances and believes its credit risk to be minimal. Accounts Receivable and Provision for Credit Losses All accounts receivable is stated at amortized cost, net of allowances for credit losses, and adjusted for any write-offs. The Company maintains allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in its receivable portfolio. For accounts receivable, the Company uses historical loss experience rates and applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, operating profit. The allowances consider numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends, collection experience, current economic conditions, estimates for supportable forecasts, when appropriate, and credit risk characteristics. The reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 833,000 1,126,000 Inventories Inventories are valued at the lower of cost or net realizable value. The cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two years of usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly. Property and Equipment Property and equipment are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized. Goodwill In accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other Stock Based Compensation Plans In 2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units (“Units”) to certain key employees, officers, or directors. The Units each represent a contractual right to payment of compensation in the future based upon the market value of the Company’s common stock and are accordingly recorded as liabilities. The Units follow a vesting schedule over three years from the grant date and are then paid upon maturity. In accordance with FASB ASC Topic 718, Compensation - Stock Compensation The Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year cliff vesting following the grant date, with payment upon maturity. Additionally, for grants made starting January 1, 2023, upon retirement at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate on a pro-rata basis, 1/3 per year from the grant date. Further details of the Plan are provided in Note 7, Stock Based Compensation Plans, to the Condensed Consolidated Financial Statements included in this report. Product Liability Reserves Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policy deductibles or self-insured retention limits, with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 6, Commitments and Contingencies, to the Condensed Consolidated Financial Statements included in this report, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense and settlement costs within its deductible or self-insured retention limits, ranging primarily from $ 250,000 3,000,000 Leases The Company applies the requirements of FASB ASC Topic 842, Leases 1. The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. 2. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. 3. The lease term is for the major part of the remaining economic life of the underlying asset. 4. The present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset. 5. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. For any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases. As of March 31, 2024 and December 31, 2023, each of the Company’s leases is classified as an operating lease. Both finance and operating leases are reflected on the balance sheet as lease or “right-of-use” assets and lease liabilities. There are some exceptions which the Company has elected in its accounting policies. For leases with terms of twelve months or less, or below the Company’s general capitalization policy threshold, the Company has elected an accounting policy to not recognize lease assets and lease liabilities for all asset classes. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain to be exercised. Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for separately. In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining if the component should be included in the lease liability. For purposes of calculating the present value of the lease obligations, the Company utilizes the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes its incremental borrowing rate at the time of the lease agreement. Fair Value of Financial and Nonfinancial Instruments The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures Intangibles - Goodwill and Other Earnings per Common Share Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. Currency Translation Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The assets and liabilities denominated in foreign currencies relate to the Company’s U.K. subsidiary whose functional currency is the British Pound and the U.K. subsidiary’s France subsidiary whose functional currency is the Euro. The Condensed Consolidated Statements of Income are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in the Condensed Consolidated Statements of Income in the period in which they occur. Income Taxes The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The FASB ASC Topic 740, Income Taxes The Company follows the provisions of FASB ASC Subtopic 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. Other Comprehensive Income For the three months ended March 31, 2024 and 2023, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. Significant Concentrations The Company has one significant customer which represented more than 10% of the Company’s Accounts Receivable as of March 31, 2024 and as of December 31, 2023. That same customer represented more than 10% of the Company’s total Net Sales for the three months ended March 31, 2024 and 2023. Geographically, the Company has a significant amount of sales in the United States versus internationally. Subsequent Events The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its Condensed Consolidated Financial Statements. Refer to Note 11 of the Condensed Consolidated Financial Statements. Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, Deferral of Sunset Date of Topic 848 In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES Inventories, net of reserves of $ 547,000 and $ 692,000 as of March 31, 2024 and December 31, 2023, respectively, consisted of the following: SCHEDULE OF INVENTORIES, NET OF RESERVES March 31, December 31, 2024 2023 (in thousands) Finished Goods $ 6,410 $ 6,161 Raw Materials 9,172 9,436 Inventories - Net $ 15,582 $ 15,597 |
OTHER LONG TERM ASSETS
OTHER LONG TERM ASSETS | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER LONG TERM ASSETS | 4. OTHER LONG TERM ASSETS Other long term assets were as follows: SCHEDULE OF OTHER LONG TERM ASSETS March 31, December 31, 2024 2023 (in thousands) Inventories, net $ 2,563 $ 2,620 Cash surrender value of life insurance policies 1,733 1,681 Other 122 139 Other Long Term Assets $ 4,418 $ 4,440 The Company maintains inventories, net of reserves of $ 1,000,000 The Company has obtained and is the beneficiary of life insurance policies with respect to past employees. |
LINE OF CREDIT AND OTHER BORROW
LINE OF CREDIT AND OTHER BORROWINGS | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT AND OTHER BORROWINGS | 5. LINE OF CREDIT AND OTHER BORROWINGS On July 3, 2023, the Company agreed to an Amended and Restated Loan Agreement with Santander Bank, N.A. (the “Bank”), and a Second Amended and Restated Committed Revolving Line of Credit Note to the Bank (both documents together, the “Facility”). The Facility is an unsecured revolving credit facility in the maximum amount of $ 15,000,000 1,000,000 June 1, 2028 The Applicable Margin for the Term SOFR Reference Rate is plus 0.75% to plus 1.75%, and for Prime Rate, up to plus 0.50%, depending upon the Company’s then existing specified financial ratios. As of March 31, 2024, the Company’s ratio would allow for the most favorable rate under the Facility’s ranges or 6.07%. The Company is also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note and an annual commitment fee of $ 5,000 On December 1, 2017, the Company agreed to an Amended and Restated Revolving Line of Credit Note (the “Line”) and Third Amendment to the Loan Agreement with the Bank. The Company established a line of credit facility in the maximum amount of $ 15,000,000 December 1, 2022 The loan agreement provided for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than to the effective date of the Facility of July 3, 2023), depending upon the Company’s then existing financial ratios. The Company was also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note. As of March 31, 2024 and December 31, 2023, the Company had no outstanding borrowings on the Facility or the Line, as applicable, and was in compliance with all debt covenants. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES Commitments Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain obligations under the indemnity agreements. The Company has salary continuation agreements with past employees. These agreements provide for monthly payments to each of the past employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $ 1,000 3,000 326,000 278,000 48,000 In addition to the above, the Company has other contractual employment and or change of control agreements in place with key employees, as previously disclosed and noted in the Exhibit Index to the Company’s Form 10-K. Obligations related to these arrangements are currently indeterminable due to the variable nature and timing of possible events required to incur such obligations. As disclosed in detail in Note 8, Leases, to the Condensed Consolidated Financial Statements included in this report, the Company has several lease obligations in place that will be paid over time. Most notably, the Company leases a facility in Banbury, England that serves the manufacturing, warehousing, and distribution functions and a facility in West Chester, Pennsylvania that provides warehousing, quality control, distribution, and corporate office space. Lastly, as provided in Item 7 under “Liquidity and Capital Resources”, of the Company’s Form 10-K, the Company has numerous contractual obligations in place for the current year, mainly related to purchase obligations for the Company’s raw material inventories. Contingencies In the ordinary and normal conduct of the Company’s business, it is subject to lawsuits, investigations, and claims (collectively, the “Claims”). The Claims generally relate to potential lightning or other electrical damage to our flexible gas piping products and may result in legal and product liability related expenses. The Company does not believe the Claims have legal merit and vigorously defends them. It is possible that the Company may incur increased litigation costs in the future due to a variety of factors, including a higher number of Claims, higher legal and expert costs, and higher insurance deductibles or self-insured retention limits (or “retentions”). The Company has in place commercial general liability insurance policies that cover most Claims, which are subject to deductibles or retentions, ranging primarily from $ 250,000 3,000,000 3,000,000 3,046,000 365,000 947,000 |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK BASED COMPENSATION PLANS | 7. STOCK BASED COMPENSATION PLANS Phantom Stock Plan Plan Description. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers, or directors of the Company. The phantom stock units (“Units”) each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. ■ ownership interest in the Company; ■ shareholder voting rights; and ■ other incidents of ownership to the Company’s common stock The Units are granted to participants upon the recommendation of the Company’s President, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee at an amount equal to the closing price of the Company’s common stock on the grant date but are recorded at fair value using the Black-Sholes method as described below. The Units follow a vesting schedule, with a maximum vesting of three years after the grant date. Grants made on or after January 1, 2023, will fully vest three-years from the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit and therefore are stated as liabilities in accordance with FASB ASC Topic 718, Compensation - Stock Compensation In 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared by the Company on its common stock to be accrued to the Units outstanding as of the record date of the common stock dividend. The dividend equivalent will be paid at the same time the underlying Units are paid to the participant. In addition, the Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year cliff vesting following the grant date, with payment upon maturity. Additionally, for grants made starting January 1, 2023, upon retirement at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate on a pro-rata basis, 1/3 per year from the grant date. In certain circumstances, the Units may be immediately vested upon the participant’s death or disability. All Units granted to a participant are forfeited if the participant is terminated from their relationship with the Company or its subsidiary for “cause,” which is defined under the Plan. If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination. However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination. Grants of Units. 6,440 141,000 1,875 6,459 68.05 244 10,983 The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting and maturity periods of each grant. The FASB ASC Topic 718, Compensation - Stock Compensation The Company recognizes the reversal of any previously recognized compensation expense on forfeited awards in the period that the award is forfeited. During the three months ended March 31, 2024, a reversal of $ 6,000 244 22,000 597 The total liability related to the Units as of March 31, 2024 was $ 449,000 186,000 263,000 530,000 206,000 324,000 Related to the Plan, in accordance with FASB ASC Topic 718, Compensation - Stock Compensation 61,000 409,000 The following table summarizes information about the Company’s nonvested and unmatured Units as of and for the three months ended March 31, 2024: SUMMARY OF NONVESTED PHANTOM STOCK UNITS Units Weighted Average Grant Date Fair Value Number of Units: Nonvested and Unmatured as of December 31, 2023 6,440 $ 111.85 Granted 6,459 $ 68.05 Vested (1,672 ) $ 127.80 Forfeited (244 ) $ 119.17 Canceled — — Nonvested and Unmatured as of March 31, 2024 10,983 $ 83.50 Units Expected to Vest and Mature 10,983 $ 83.50 The total unrecognized compensation costs calculated as of March 31, 2024 were $ 683,000 2.2 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
LEASES | 8. LEASES In the U.S., the Company owns its two main operating facilities located in Exton, Pennsylvania. In addition to the owned facilities, the Company also has operations in other locations that are leased, as well as other leased assets. In conjunction with the guidance for leases, as defined by FASB ASC Topic 842, Leases In the U.S., the Company leases a facility in Houston, Texas, which currently provides manufacturing, stocking, and sales operations, with the lease term running through October 2024, a facility in Malvern, Pennsylvania, with a term ending in December 2024, that provides warehousing, and a facility in West Chester, Pennsylvania which was consummated effective January 2024, with a term ending February 2030, that provides warehousing and storage, quality control, distribution, and corporate office space. Additionally, the Company has an operating lease agreement for its corporate office space in Middletown, Connecticut, with the lease term ending in June 2027. In the U.K., the Company leases a facility in Banbury, England, which serves manufacturing, warehousing, and other operational functions. The lease in Banbury has a 15-year term ending in March 2036 In addition to property rentals, the Company also has lease agreements in place for various fleet vehicles and equipment with various lease terms. As of March 31, 2024, the Company recorded right-of-use assets of $ 4,622,000 4,684,000 387,000 2,940,000 2,946,000 454,000 9.06 3.04 Rent expense for operating leases was $ 194,000 122,000 Future minimum lease payments, under non-cancelable leases as of March 31, 2024, are as follows: SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES Twelve Months Ending March 31, Operating Leases (in thousands) 2025 $ 534 2026 673 2027 662 2028 604 2029 597 Thereafter 2,261 Total Future Minimum Lease Payments 5,331 Less: Interest 647 Lease Liability 4,684 Less: Current Portion of Lease Liability 387 Lease Liability – Net of Current Portion $ 4,297 |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | 9. SHAREHOLDERS’ EQUITY As of March 31, 2024 and December 31, 2023, the Company had 20,000,000 0.01 10,094,322 59,311 10,153,633 During 2024 and 2023, upon approval of the Board of Directors (the “Board”) the Company has declared and paid regular quarterly dividends, as set forth in the following table: SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS Dividend Declared Dividend Paid Date Price Per Share Date Amount March 28, 2024 $ 0.33 April 24, 2024 $ 3,331,000 December 6, 2023 $ 0.33 January 4, 2024 $ 3,332,000 September 11, 2023 $ 0.33 October 6, 2023 $ 3,331,000 June 13, 2023 $ 0.33 July 7, 2023 $ 3,332,000 March 28, 2023 $ 0.32 April 24, 2023 $ 3,229,000 It should be noted that from time to time, the Board may elect to pay special dividends, in addition to or in lieu of the regular quarterly dividends, depending upon the financial condition of the Company. The most recent special dividend was declared and paid in December 2019. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS From time to time the Company may have related party transactions (“RPTs”). RPTs represent any transaction between the Company and any Company employee, director or officer, or any related entity, or relative, etc. The Company performs a review of transactions each year to determine if any RPTs exist, and if so, determines if the related parties act independently of each other in a fair transaction. Through this investigation the Company noted a limited number of RPTs. In all cases, these RPTs have been determined to be arms length transactions with no indication that they are influenced by the related relationships. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred through the date of this filing. During this period, no events came to the Company’s attention that would impact the Condensed Consolidated Financial Statements for the period ended March 31, 2024. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. |
Revenue Recognition | Revenue Recognition The Company applies the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The principle of Topic 606 was achieved through applying the following five-step approach: ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ■ The Company has a present right to payment ■ The customer has legal title to the goods ■ The Company has transferred physical possession of the goods ■ The customer has the significant risks and rewards of ownership of the goods ■ The customer has accepted the goods It is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control of the goods has transferred to the customer. The indicators are a list of factors that are often present if a customer has control of the goods. The Company has typical, unmodified FOB shipping point terms. As the seller, the Company can determine that the shipped goods meet the agreed-upon specifications in the contract or customer purchase order (e.g., items, quantities, and prices) with the buyer, so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the goods. Based upon the above, the Company has concluded that control substantively transfers to the customer upon shipment. Other considerations of Topic 606 include the following: ● Contract Costs - ● Warranties ● Returned Goods ● Volume Rebates (Promotional Incentives) ■ The amount of consideration is highly susceptible to factors outside the Company’s influence. ■ The uncertainty about the amount of consideration is not expected to be resolved for a long period of time. ■ The Company’s experience with similar types of contracts is limited. ■ The contract has a large number and broad range of possible consideration amounts. If it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal of revenue. However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue based upon estimates of the eligible products expected to be sold. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. As indicated in this Note 2, Significant Accounting Policies, under the caption “Significant Concentrations”, the majority of the Company’s sales were geographically contained within North America, with the remainder scattered internationally. All performance assessments and resource allocations are generally based upon the review of the results of the Company as a whole. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes, and bonds, and/or repurchase agreements, backed by such obligations, and in U.S. Treasury bills and certificates of deposit. Carrying value approximates fair value except for U.S. Treasury bills and certificates of deposit where amortized cost approximates fair value. Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits. The Company monitors the viability of the banking institutions carrying their assets on a regular basis and has the ability to transfer cash to various institutions during times of risk. The Company has not experienced any losses related to these cash balances and believes its credit risk to be minimal. |
Accounts Receivable and Provision for Credit Losses | Accounts Receivable and Provision for Credit Losses All accounts receivable is stated at amortized cost, net of allowances for credit losses, and adjusted for any write-offs. The Company maintains allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in its receivable portfolio. For accounts receivable, the Company uses historical loss experience rates and applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, operating profit. The allowances consider numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends, collection experience, current economic conditions, estimates for supportable forecasts, when appropriate, and credit risk characteristics. The reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 833,000 1,126,000 |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value. The cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two years of usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly. |
Property and Equipment | Property and Equipment Property and equipment are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized. |
Goodwill | Goodwill In accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other |
Stock Based Compensation Plans | Stock Based Compensation Plans In 2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units (“Units”) to certain key employees, officers, or directors. The Units each represent a contractual right to payment of compensation in the future based upon the market value of the Company’s common stock and are accordingly recorded as liabilities. The Units follow a vesting schedule over three years from the grant date and are then paid upon maturity. In accordance with FASB ASC Topic 718, Compensation - Stock Compensation The Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year cliff vesting following the grant date, with payment upon maturity. Additionally, for grants made starting January 1, 2023, upon retirement at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate on a pro-rata basis, 1/3 per year from the grant date. Further details of the Plan are provided in Note 7, Stock Based Compensation Plans, to the Condensed Consolidated Financial Statements included in this report. |
Product Liability Reserves | Product Liability Reserves Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policy deductibles or self-insured retention limits, with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 6, Commitments and Contingencies, to the Condensed Consolidated Financial Statements included in this report, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense and settlement costs within its deductible or self-insured retention limits, ranging primarily from $ 250,000 3,000,000 |
Leases | Leases The Company applies the requirements of FASB ASC Topic 842, Leases 1. The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. 2. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. 3. The lease term is for the major part of the remaining economic life of the underlying asset. 4. The present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset. 5. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. For any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases. As of March 31, 2024 and December 31, 2023, each of the Company’s leases is classified as an operating lease. Both finance and operating leases are reflected on the balance sheet as lease or “right-of-use” assets and lease liabilities. There are some exceptions which the Company has elected in its accounting policies. For leases with terms of twelve months or less, or below the Company’s general capitalization policy threshold, the Company has elected an accounting policy to not recognize lease assets and lease liabilities for all asset classes. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain to be exercised. Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for separately. In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining if the component should be included in the lease liability. For purposes of calculating the present value of the lease obligations, the Company utilizes the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes its incremental borrowing rate at the time of the lease agreement. |
Fair Value of Financial and Nonfinancial Instruments | Fair Value of Financial and Nonfinancial Instruments The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures Intangibles - Goodwill and Other |
Earnings per Common Share | Earnings per Common Share Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. |
Currency Translation | Currency Translation Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The assets and liabilities denominated in foreign currencies relate to the Company’s U.K. subsidiary whose functional currency is the British Pound and the U.K. subsidiary’s France subsidiary whose functional currency is the Euro. The Condensed Consolidated Statements of Income are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in the Condensed Consolidated Statements of Income in the period in which they occur. |
Income Taxes | Income Taxes The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The FASB ASC Topic 740, Income Taxes The Company follows the provisions of FASB ASC Subtopic 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. |
Other Comprehensive Income | Other Comprehensive Income For the three months ended March 31, 2024 and 2023, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments. |
Significant Concentrations | Significant Concentrations The Company has one significant customer which represented more than 10% of the Company’s Accounts Receivable as of March 31, 2024 and as of December 31, 2023. That same customer represented more than 10% of the Company’s total Net Sales for the three months ended March 31, 2024 and 2023. Geographically, the Company has a significant amount of sales in the United States versus internationally. |
Subsequent Events | Subsequent Events The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its Condensed Consolidated Financial Statements. Refer to Note 11 of the Condensed Consolidated Financial Statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, Deferral of Sunset Date of Topic 848 In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORIES, NET OF RESERVES | SCHEDULE OF INVENTORIES, NET OF RESERVES March 31, December 31, 2024 2023 (in thousands) Finished Goods $ 6,410 $ 6,161 Raw Materials 9,172 9,436 Inventories - Net $ 15,582 $ 15,597 |
OTHER LONG TERM ASSETS (Tables)
OTHER LONG TERM ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SCHEDULE OF OTHER LONG TERM ASSETS | Other long term assets were as follows: SCHEDULE OF OTHER LONG TERM ASSETS March 31, December 31, 2024 2023 (in thousands) Inventories, net $ 2,563 $ 2,620 Cash surrender value of life insurance policies 1,733 1,681 Other 122 139 Other Long Term Assets $ 4,418 $ 4,440 |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Phantom Share Units (PSUs) [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
SUMMARY OF NONVESTED PHANTOM STOCK UNITS | SUMMARY OF NONVESTED PHANTOM STOCK UNITS Units Weighted Average Grant Date Fair Value Number of Units: Nonvested and Unmatured as of December 31, 2023 6,440 $ 111.85 Granted 6,459 $ 68.05 Vested (1,672 ) $ 127.80 Forfeited (244 ) $ 119.17 Canceled — — Nonvested and Unmatured as of March 31, 2024 10,983 $ 83.50 Units Expected to Vest and Mature 10,983 $ 83.50 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES | SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES Twelve Months Ending March 31, Operating Leases (in thousands) 2025 $ 534 2026 673 2027 662 2028 604 2029 597 Thereafter 2,261 Total Future Minimum Lease Payments 5,331 Less: Interest 647 Lease Liability 4,684 Less: Current Portion of Lease Liability 387 Lease Liability – Net of Current Portion $ 4,297 |
SHAREHOLDERS_ EQUITY (Tables)
SHAREHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS | SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS Dividend Declared Dividend Paid Date Price Per Share Date Amount March 28, 2024 $ 0.33 April 24, 2024 $ 3,331,000 December 6, 2023 $ 0.33 January 4, 2024 $ 3,332,000 September 11, 2023 $ 0.33 October 6, 2023 $ 3,331,000 June 13, 2023 $ 0.33 July 7, 2023 $ 3,332,000 March 28, 2023 $ 0.32 April 24, 2023 $ 3,229,000 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Allowance for doubtful accounts receivable | $ 833,000 | $ 1,126,000 |
Concentration risk percentage description | The Company has one significant customer which represented more than 10% of the Company’s Accounts Receivable as of March 31, 2024 and as of December 31, 2023. That same customer represented more than 10% of the Company’s total Net Sales for the three months ended March 31, 2024 and 2023. Geographically, the Company has a significant amount of sales in the United States versus internationally. | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Defense and settlement costs per claim | $ 250,000 | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Defense and settlement costs per claim | $ 3,000,000 |
SCHEDULE OF INVENTORIES, NET OF
SCHEDULE OF INVENTORIES, NET OF RESERVES (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 6,410 | $ 6,161 |
Raw Materials | 9,172 | 9,436 |
Inventories - Net | $ 15,582 | $ 15,597 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Inventory Valuation Reserves | $ 547 | $ 692 |
SCHEDULE OF OTHER LONG TERM ASS
SCHEDULE OF OTHER LONG TERM ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Inventories, net | $ 2,563 | $ 2,620 |
Cash surrender value of life insurance policies | 1,733 | 1,681 |
Other | 122 | 139 |
Other Long Term Assets | $ 4,418 | $ 4,440 |
OTHER LONG TERM ASSETS (Details
OTHER LONG TERM ASSETS (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Inventories, net of reserves | $ 1,000 | $ 1,000 |
LINE OF CREDIT AND OTHER BORR_2
LINE OF CREDIT AND OTHER BORROWINGS (Details Narrative) - Loan Agreement [Member] - USD ($) $ in Thousands | Jul. 03, 2023 | Dec. 01, 2017 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 15,000 | $ 15,000 |
Line of credit facility, additional borrowing capacity | $ 1,000 | |
Line of credit facility, expiration date | Jun. 01, 2028 | Dec. 01, 2022 |
Line of credit facility, interest rate description | The Applicable Margin for the Term SOFR Reference Rate is plus 0.75% to plus 1.75%, and for Prime Rate, up to plus 0.50%, depending upon the Company’s then existing specified financial ratios. As of March 31, 2024, the Company’s ratio would allow for the most favorable rate under the Facility’s ranges or 6.07%. | The loan agreement provided for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than to the effective date of the Facility of July 3, 2023), depending upon the Company’s then existing financial ratios. |
Line of credit facility, commitment fee description | The Company is also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note and an annual commitment fee of $5,000 due and payable on each anniversary date of the Facility. | The Company was also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance of the note. |
Commitment fee | $ 5 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Loss Contingencies [Line Items] | ||
Employee benefit payment term description | The payment benefits range from $1,000 to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement. | |
Other compensation liabilities | $ 326 | |
Other compensation liabilities, noncurrent | $ 278 | |
Other compensation liabilities, current | 48 | |
Maximum aggregate claim amount | 3,046 | |
Liabilities recorded | 365 | $ 947 |
Minimum [Member] | ||
Loss Contingencies [Line Items] | ||
Payment benefit to employee's | 1 | |
Deductibles per claim | 250 | |
Maximum [Member] | ||
Loss Contingencies [Line Items] | ||
Payment benefit to employee's | 3 | |
Deductibles per claim | 3,000 | |
Maximum [Member] | Insurance Claims [Member] | ||
Loss Contingencies [Line Items] | ||
Potential liability per claim maximum range, value | $ 3,000 |
SUMMARY OF NONVESTED PHANTOM ST
SUMMARY OF NONVESTED PHANTOM STOCK UNITS (Details) - Phantom Share Units (PSUs) [Member] | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Nonvested units, beginning balance | shares | 6,440 |
Nonvested weighted average grant date fair value, beginning balance | $ / shares | $ 111.85 |
Nonvested units, granted | shares | 6,459 |
Nonvested weighted average grant date fair value, granted | $ / shares | $ 68.05 |
Nonvested units, vested | shares | (1,672) |
Nonvested weighted average grant date fair value, vested | $ / shares | $ 127.80 |
Nonvested units, forfeited | shares | (244) |
Nonvested weighted average grant date fair value, forfeited | $ / shares | $ 119.17 |
Nonvested units, canceled | shares | |
Nonvested weighted average grant date fair value, canceled | $ / shares | |
Nonvested units, ending balance | shares | 10,983 |
Nonvested weighted average grant date fair value, ending balance | $ / shares | $ 83.50 |
Phantom stock unit awards expected to vest, units | shares | 10,983 |
Phantom stock unit awards expected to vest, weighted average grant date fair value | $ / shares | $ 83.50 |
STOCK BASED COMPENSATION PLAN_2
STOCK BASED COMPENSATION PLANS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Mar. 20, 2024 | Mar. 31, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Unvested units outstanding | 10,983 | 10,983 | 6,440 | ||
Share based compensation paid in period | $ 141,000 | ||||
Share based compensation vested shares | 1,875 | ||||
Nonvested forfeited units | 244 | 244 | 597 | ||
Compensation expense | $ 6,000 | $ 22,000 | |||
Share based compensation liability | $ 449,000 | 449,000 | $ 530,000 | ||
Share based compensation liability, current | 186,000 | 186,000 | 206,000 | ||
Share based compensation liability, non-current | 263,000 | 263,000 | $ 324,000 | ||
Unrecognized compensation costs | $ 683,000 | $ 683,000 | |||
Compensation expense, weighted average recognize period | 2 years 2 months 12 days | ||||
Phantom Stock Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share based compensation, description | On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers, or directors of the Company. The phantom stock units (“Units”) each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. | ||||
Share based compensation vesting rights | The Units are granted to participants upon the recommendation of the Company’s President, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee at an amount equal to the closing price of the Company’s common stock on the grant date but are recorded at fair value using the Black-Sholes method as described below. The Units follow a vesting schedule, with a maximum vesting of three years after the grant date. Grants made on or after January 1, 2023, will fully vest three-years from the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit and therefore are stated as liabilities in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. | ||||
Compensation expense | $ 61,000 | $ 409,000 | |||
Full Value Units [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share based compensation grants in period | 6,459 | ||||
Share based compensation weighted average grant date fair value | $ 68.05 |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Leases | ||
2025 | $ 534 | |
2026 | 673 | |
2027 | 662 | |
2028 | 604 | |
2029 | 597 | |
Thereafter | 2,261 | |
Total Future Minimum Lease Payments | 5,331 | |
Less: Interest | 647 | |
Lease Liability | 4,684 | $ 2,946 |
Less: Current Portion of Lease Liability | 387 | 454 |
Lease Liability – Net of Current Portion | $ 4,297 | $ 2,492 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Right of use assets - operating | $ 4,622 | $ 2,940 | |
Lease liability | 4,684 | 2,946 | |
Lease liability, current | $ 387 | $ 454 | |
Weighted average remaining lease term | 9 years 21 days | ||
Operating lease, weighted average discount rate, percent | 3.04% | ||
Operating lease expense | $ 194 | $ 122 | |
Banbury [Member] | |||
Operating leases term, description | The lease in Banbury has a 15-year term ending in March 2036 |
SCHEDULE OF REGULAR QUARTER DIV
SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 28, 2024 | Dec. 06, 2023 | Sep. 11, 2023 | Jun. 13, 2023 | Mar. 28, 2023 |
Equity [Abstract] | |||||
Dividends payable, date declared | Mar. 28, 2024 | Dec. 06, 2023 | Sep. 11, 2023 | Jun. 13, 2023 | Mar. 28, 2023 |
Dividends payable, amount per share | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.32 |
Dividends payable, date to be paid | Apr. 24, 2024 | Jan. 04, 2024 | Oct. 06, 2023 | Jul. 07, 2023 | Apr. 24, 2023 |
Dividend paid on or before date, amount | $ 3,331 | $ 3,332 | $ 3,331 | $ 3,332 | $ 3,229 |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Equity [Abstract] | ||
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares outstanding | 10,094,322 | 10,094,322 |
Treasury stock, common, shares | 59,311 | 59,311 |
Common stock, shares issued | 10,153,633 | 10,153,633 |