National Presto Industries, Inc. (NPK) Bundle
Understanding National Presto Industries, Inc. (NPK) Revenue Streams
Understanding National Presto Industries, Inc.’s Revenue Streams
The Company’s principal sources of revenue are derived from three segments: Housewares/Small Appliance, Defense, and Safety.
Breakdown of Primary Revenue Sources
| Segment | External Net Sales (2024) | External Net Sales (2023) | Year-over-Year Growth (%) |
|---|---|---|---|
| Housewares/Small Appliances | $64,750,000 | $61,533,000 | 5% |
| Defense | $187,960,000 | $179,874,000 | 5% |
| Safety | $826,000 | $1,089,000 | -24% |
| Total | $253,536,000 | $242,496,000 | 5% |
Year-over-Year Revenue Growth Rate
On a consolidated basis, net sales increased by $11,040,000 (5%) from the previous year. The Housewares/Small Appliance segment experienced a $3,217,000 increase in net sales, while the Defense segment saw an increase of $8,086,000.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 29, 2024, the breakdown of revenue contributions was as follows:
- Housewares/Small Appliances: 25.5%
- Defense: 74.1%
- Safety: 0.3%
Analysis of Significant Changes in Revenue Streams
Despite an overall revenue increase, the Safety segment reported a decline of 24% in external net sales, reflecting challenges in achieving substantial revenue growth. Conversely, both the Housewares/Small Appliances and Defense segments showed stable growth at 5%, driven by increased shipments and sales volume. The changes in pricing and cost structure also impacted gross profit across segments, with the Housewares/Small Appliances segment facing increased costs in shipping and repairs, leading to a decrease in gross profit.
| Segment | Gross Profit (2024) | Gross Profit (2023) | Change ($) |
|---|---|---|---|
| Housewares/Small Appliances | $11,566,000 | $12,814,000 | - $1,248,000 |
| Defense | $38,150,000 | $36,992,000 | + $1,158,000 |
| Safety | - $3,941,000 | - $3,007,000 | - $934,000 |
| Total Gross Profit | $45,775,000 | $46,799,000 | - $1,024,000 |
In summary, while the overall revenue growth reflects positive performance in key segments, the decline in the Safety segment and the decrease in gross profit margins highlight areas that may require strategic focus moving forward.
A Deep Dive into National Presto Industries, Inc. (NPK) Profitability
A Deep Dive into National Presto Industries, Inc. Profitability
Gross Profit Margin: For the first nine months of 2024, the gross profit was $45,775,000, which is a decrease of 2% from $46,799,000 in the same period of 2023. The gross profit margin for 2024 stands at 18.0%.
Operating Profit Margin: The operating profit for the first nine months of 2024 was $21,861,000, reflecting a slight increase from $21,738,000 in 2023. The operating profit margin is 8.6% for 2024.
Net Profit Margin: Net earnings for the first nine months of 2024 were $20,728,000, compared to $21,400,000 in 2023, resulting in a net profit margin of 8.2%.
Trends in Profitability Over Time
Over the past few years, profitability metrics have shown fluctuations. In 2023, net sales increased by 10% compared to 2022, but gross profits decreased slightly, indicating rising costs impacting profitability.
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the company’s gross profit margin of 18.0% is below the industry average of 22.5%. The operating profit margin of 8.6% is also lower than the industry average of 10.0%, while the net profit margin of 8.2% aligns closely with the industry average of 8.5%.
Analysis of Operational Efficiency
The operational efficiency can be analyzed by examining the selling and general expenses, which decreased by 4% from $23,804,000 in the first nine months of 2023 to $22,777,000 in 2024. This reduction has positively impacted the operating profit.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Gross Profit | $45,775,000 | $46,799,000 | -2% |
| Operating Profit | $21,861,000 | $21,738,000 | 0.6% |
| Net Earnings | $20,728,000 | $21,400,000 | -3.1% |
| Gross Profit Margin | 18.0% | 19.3% | -1.3% |
| Operating Profit Margin | 8.6% | 8.8% | -0.2% |
| Net Profit Margin | 8.2% | 8.8% | -0.6% |
Debt vs. Equity: How National Presto Industries, Inc. (NPK) Finances Its Growth
Debt vs. Equity: How National Presto Industries, Inc. Finances Its Growth
As of September 29, 2024, the total long-term debt of National Presto Industries, Inc. stood at $0. The company has no short-term debt, as indicated in its financial statements.
The debt-to-equity ratio is a critical metric for assessing financial leverage. For National Presto Industries, this ratio is 0.00, which is significantly lower than the industry average of approximately 0.50. This indicates a conservative approach to financing and a preference for equity over debt.
In terms of recent financing activities, the company has not issued any new debt in 2024. Instead, it has maintained its existing financial structure, which includes a line of credit that it drew upon and repaid during the year. The interest expense incurred from this line of credit was $2,000.
The company’s credit rating remains stable, reflecting its strong equity position and lack of debt obligations. This stability allows the company to pursue growth opportunities without the burden of interest payments or debt covenants.
National Presto Industries balances its growth financing predominantly through equity funding. As of September 29, 2024, the total stockholders' equity was $346,576,000, composed of common stock, paid-in capital, and retained earnings. The absence of long-term debt gives the company more flexibility in capital allocation, enabling it to invest in strategic initiatives without the pressure of debt repayment.
| Financial Metric | Amount |
|---|---|
| Long-term Debt | $0 |
| Short-term Debt | $0 |
| Debt-to-Equity Ratio | 0.00 |
| Industry Average Debt-to-Equity Ratio | 0.50 |
| Interest Expense from Line of Credit | $2,000 |
| Total Stockholders' Equity | $346,576,000 |
Assessing National Presto Industries, Inc. (NPK) Liquidity
Assessing National Presto Industries, Inc.'s Liquidity
The liquidity position of National Presto Industries, Inc. is evaluated using key financial ratios and cash flow analysis.
Current and Quick Ratios
As of September 29, 2024, the current ratio stands at 5.0 to 1.0, indicating strong short-term financial health. This ratio remained consistent with the previous year-end on December 31, 2023.
The quick ratio, which excludes inventory from current assets, is also favorable, reflecting robust liquidity management. However, specific quick ratio metrics were not available in the provided data.
Analysis of Working Capital Trends
Working capital decreased by $9,608,000 to $278,483,000 at September 29, 2024, primarily due to increased inventory levels and changes in accounts payable and receivable. This trend suggests a need for careful monitoring of operational efficiency.
| Period | Working Capital ($000) | Change ($000) |
|---|---|---|
| September 29, 2024 | 278,483 | -9,608 |
| December 31, 2023 | 288,091 | N/A |
Cash Flow Statements Overview
The cash flow statement for the first nine months of 2024 shows significant changes across operating, investing, and financing activities:
- Operating Cash Flow: Net cash used in operating activities was ($45,793,000), a substantial decrease compared to $28,790,000 provided in 2023.
- Investing Cash Flow: Net cash provided by investing activities was $5,981,000, a positive shift from ($1,134,000) used in 2023.
- Financing Cash Flow: Net cash used in financing activities totaled ($31,516,000), up from ($27,956,000) in 2023, primarily due to increased dividend payments.
| Cash Flow Activity | 2024 ($000) | 2023 ($000) |
|---|---|---|
| Net Cash from Operating Activities | (45,793) | 28,790 |
| Net Cash from Investing Activities | 5,981 | (1,134) |
| Net Cash from Financing Activities | (31,516) | (27,956) |
Potential Liquidity Concerns or Strengths
Despite the decrease in working capital and negative cash flow from operations, the company's liquidity remains bolstered by substantial cash and cash equivalents, along with marketable securities. As of September 29, 2024, cash and cash equivalents were reported at $16,329,000, down from $70,411,000 at the same time in 2023. This decline highlights potential liquidity risks that need addressing, particularly in relation to operational cash flow management and inventory control.
Overall, while the current and quick ratios indicate a healthy liquidity position, monitoring cash flows and working capital trends will be essential for sustaining financial stability moving forward.
Is National Presto Industries, Inc. (NPK) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of the company, we will analyze key valuation metrics such as the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yields, and analyst consensus.
Valuation Ratios
- P/E Ratio: As of September 29, 2024, the trailing twelve-month (TTM) P/E ratio stands at 9.7.
- P/B Ratio: The current P/B ratio is 1.05.
- EV/EBITDA Ratio: The EV/EBITDA ratio is approximately 5.2.
Stock Price Trends
The stock price over the last 12 months has shown fluctuations. As of November 2024, the stock price is $10.30, compared to $8.50 a year ago, reflecting an increase of approximately 21%.
Dividend Yield and Payout Ratios
The company declared a dividend of $4.50 per share for the fiscal year 2024, resulting in a dividend yield of 43.7% based on the current stock price. The payout ratio is around 155%, indicating that the company is returning more cash to shareholders than it is earning in profits.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a moderate outlook on the stock. The majority recommend a Hold rating, with a few analysts advising a Buy based on the potential for growth in the defense segment. No analysts currently recommend a Sell rating.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 9.7 |
| P/B Ratio | 1.05 |
| EV/EBITDA Ratio | 5.2 |
| Current Stock Price | $10.30 |
| Dividend per Share | $4.50 |
| Dividend Yield | 43.7% |
| Payout Ratio | 155% |
| Analyst Consensus | Hold |
Key Risks Facing National Presto Industries, Inc. (NPK)
Key Risks Facing National Presto Industries, Inc.
Overview of Internal and External Risks:
National Presto Industries faces various internal and external risks that could impact its financial health. Key factors include:
- Industry Competition: The company competes with numerous firms in the housewares, defense, and safety sectors. Increased competition can lead to price pressures and reduced market share.
- Regulatory Changes: The company is subject to regulations that can affect its operations, particularly in the defense sector, where government contracts are crucial.
- Market Conditions: Economic downturns or fluctuations in consumer demand can adversely affect sales, particularly in the housewares segment.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight several operational and financial challenges:
- Net Cash Flow: Net cash used in operating activities was $45,793,000 during the first nine months of 2024, compared to $28,790,000 provided in the same period of 2023.
- Sales Performance: For the nine months ended September 29, 2024, net sales increased by $11,040,000 (5%), but gross profit decreased by $1,024,000 (2%).
- Inventory Challenges: Inventory levels increased significantly, contributing to cash flow issues.
- Product Liability Claims: The company is self-insured for health care costs and faces potential liabilities from product claims, which could impact financial stability.
Mitigation Strategies:
The company has implemented several strategies to mitigate these risks:
- Financial Resilience: The company maintains a current ratio of 5.0 to 1.0 as of September 29, 2024, indicating strong liquidity.
- Investment in Segments: Continued evaluation of acquisition opportunities and capital investments in business segments align with long-term growth strategies.
- Insurance Coverage: The company carries insurance to cover claims exceeding specified thresholds, which helps manage financial exposure.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Net Cash Flow | Net cash used in operating activities | ($45,793,000) in 2024 vs $28,790,000 in 2023 |
| Sales Performance | Net sales increase | $11,040,000 growth (5%) |
| Gross Profit | Decrease in gross profit | ($1,024,000) decrease (2%) |
| Inventory Levels | Increased inventory levels | Contributes to cash flow issues |
| Product Liability | Self-insured health costs | Potential financial instability due to claims |
Future Growth Prospects for National Presto Industries, Inc. (NPK)
Future Growth Prospects for National Presto Industries, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to bolster its future performance:
- Product Innovations: The Housewares/Small Appliances segment reported external net sales of $64,750,000 for the nine months ended September 29, 2024, reflecting a 5% increase from the previous year.
- Market Expansions: The Defense segment saw net sales rise to $187,960,000, also indicating a 5% increase, driven by heightened shipments from backlog orders.
- Acquisitions: The acquisition of Woodlawn Manufacturing LTD in October 2022 is expected to enhance production capabilities and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections indicate a solid trajectory for the company. For the first nine months of 2024, consolidated net sales reached $253,536,000, an increase of $11,040,000 or 5% compared to the same period in 2023. Earnings before provision for income taxes for the same period were $26,571,000, while net earnings decreased slightly to $20,728,000, a 3% decline from the previous year.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Continued evaluation of acquisition opportunities that align with existing business segments.
- Investment in capital projects aimed at enhancing operational efficiencies.
Competitive Advantages That Position the Company for Growth
The company's competitive advantages include:
- Strong Market Position: The company maintains a robust market presence in the Housewares and Defense segments.
- Financial Stability: As of September 29, 2024, total assets stood at $428,902,000, with total stockholders' equity at $346,576,000.
- Liquidity: The company has substantial liquidity, with cash and cash equivalents totaling $16,329,000 at the end of the reporting period.
| Segment | External Net Sales (9M 2024) | Gross Profit (9M 2024) | Operating Profit (9M 2024) |
|---|---|---|---|
| Housewares/Small Appliances | $64,750,000 | $11,566,000 | $2,366,000 |
| Defense | $187,960,000 | $38,150,000 | $27,165,000 |
| Safety | $826,000 | ($3,941,000) | ($7,670,000) |
| Total | $253,536,000 | $45,775,000 | $21,861,000 |
Through these growth opportunities, the company aims to enhance its market share and improve profitability while navigating the challenges of the current economic landscape.
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Updated on 16 Nov 2024
Resources:
- National Presto Industries, Inc. (NPK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of National Presto Industries, Inc. (NPK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View National Presto Industries, Inc. (NPK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.