The Deep Value Week – 2025/19
New Reports, Outlook, Management Change and Insider Transaction
Companies mentioned:
· Alpha Pro Tech (APT) - Reports Q1 2025 Results: Modest Growth Amid Housing Headwinds and Strategic Positioning
· Asia Pacific Wire & Cable (APWC) - Appoints Ben Lee as Chief Financial Officer
· Avalon Holdings (AWX) - Reports Lower Q1 2025 Sales and Continued Net Loss Amid Operational Pressures
· Chicago Rivet & Machine Co (CVR) - Reports Return to Profitability in Q1 2025 Amid Lower Sales and Liquidity Challenges
· Flexible Solutions International (FSI) - Announces $0.10 special dividend amid strong financial position
· Friedman Industries (FRD) - Extends credit facility maturity to August 2026
· Key Tronic (KTCC) - Reports Q3 FY2025 loss amid tariff disruptions; maintains long-term growth outlook
· Orbit Garant (OGD) - Reports Q3 2025 earnings growth despite margin pressure in Canadian operations
· SigmaTron International (SGMA) - Announces executive resignation with no operational impact
· Strattec (STRT) - Triples earnings in Q3 FY2025, delivers strong cash flow and margin expansion
· Unifi (UFI) - Reports $16.8 million Q1 loss and plans asset sale amid continued restructuring
· Tree Island Steel (TSL) - Reports Q1 2025 Results Impacted by U.S. Tariffs and Lower Residential Demand
· FutureFuel (FF) - Director Richard Rowe acquires 15,000 shares in open market transaction
· Kimball Electronics (KE) - Reports Q3 FY2025 Results; Reiterates FY2025 Guidance, Adds New Medical Facility
· The Manitowoc Company, Inc. (MTW) – Investor Presentation Summary (May 2025) & Q1 2025 Summary
“Graham’s Geiger counter”
Benjamin Graham suggested that one way to measure the valuation of the overall market was to assess the number of net-nets available. When many such opportunities exist, it indicates a cheap market overall, while their absence suggests that the market is expensive. Today’s net-nets, however, are not the same as Graham’s net-nets. Many are un-investable being Chinese RTO’s, loss-making biopharma’s etc. But we do think it is interesting to follow this number over time, and what percentage of total listed stocks qualify as a “naked” net-net without any type of quality adjustments to make them investable. Below is a net-net screen from Stockopedia.
Alpha Pro Tech (APT) - Reports Q1 2025 Results: Modest Growth Amid Housing Headwinds and Strategic Positioning
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Alpha Pro Tech, Ltd. (NYSE American: APT) posted first quarter 2025 revenue of $13.8m, a 2.5% year-on-year increase, driven by gains in both its Building Supply and Disposable Protective Apparel segments. Net income rose 6.4% to $613k ($0.06 per share). Gross margin contracted to 39.0% (from 40.2%) due to prior year freight costs, while operating income improved modestly to $455k. In its Building Supply segment, synthetic roof underlayment sales surged 21.8%, offsetting a 20.9% decline in housewrap sales linked to weather disruptions and reduced private-label orders. The Disposable Protective Apparel segment grew 4.0%, buoyed by garments (+12%) but offset by weaker mask and face shield sales. As of March 31, 2025, Alpha Pro Tech held $13.4m in cash and $47.0m in working capital, with no debt. The company also repurchased 221k shares for $1.2m during the quarter. Management highlighted strong distribution relationships, margin advantages from sourcing outside China, and continued product development in both segments despite macro uncertainty.
Asia Pacific Wire & Cable (APWC) - Appoints Ben Lee as Chief Financial Officer
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Asia Pacific Wire & Cable Corporation Limited (Nasdaq: APWC) announced on May 7, 2025, that Ben Lee will assume the role of Chief Financial Officer effective May 12, 2025. Lee brings extensive global finance experience, having previously served as CFO at O’Neil Global Advisors in Los Angeles and held senior finance positions at Yum! Brands in Shanghai and Canadian Solar in Ontario. His academic background includes a BA in Economics and a Diploma in Accounting from the University of British Columbia, along with CPA and CGMA credentials. CEO Yuan Chun Tang highlighted Lee’s appointment as timely, given current global trade dynamics, and expects his expertise to strengthen APWC’s executive leadership.
Avalon Holdings (AWX) - Reports Lower Q1 2025 Sales and Continued Net Loss Amid Operational Pressures
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Avalon Holdings Corp reported a 15% decline in net sales for Q1 2025 to $16.1 million, down from $18.9 million in the same quarter last year, primarily due to a sharp 22% drop in revenue from its waste management services segment. The company recorded a consolidated net loss of $1.5 million, or $0.38 per share, compared to a net loss of $1.0 million, or $0.25 per share, in Q1 2024. Operating income fell to -$1.2 million from -$0.5 million, reflecting the continued impact of seasonal weaknesses in the golf and resort segment, which contributed a $1.1 million pre-tax loss despite flat sales. Waste management, the company's core segment, remained profitable with $0.9 million in pre-tax income. Operating cash flow turned negative at -$980,000, a reversal from the prior year's positive $409,000, while cash reserves decreased to $1.3 million from $2.8 million in December 2024. Liquidity remains a concern with recurring net losses, declining unrestricted cash, and increased working capital needs, although the company maintains access to a $3.2 million line of credit.
Chicago Rivet & Machine Co (CVR) - Reports Return to Profitability in Q1 2025 Amid Lower Sales and Liquidity Challenges
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Chicago Rivet & Machine Co reported net sales of $7.2 million for the first quarter ended March 31, 2025, down 7.7% from $7.9 million in Q1 2024, mainly due to a 17.9% decline in automotive-related revenue. Despite the drop in sales, gross profit more than doubled to $1.66 million (up from $0.74 million) as a result of improved pricing, cost control, and benefits from consolidating operations. The company turned to a net profit of $401,000 or $0.42 per share, reversing a net loss of $698,000 or $0.72 per share in the prior-year period. Operating income came in at $70,000 compared to a loss of $903,000 a year earlier. However, cash flow from operations was negative $2.0 million, and cash on hand declined to $0.77 million, prompting management to utilize a new credit facility after quarter-end. Working capital improved to $10.7 million, and the company is exploring additional financing options, including potential sale-leaseback transactions. Management acknowledged substantial doubt regarding the company’s ability to continue as a going concern due to recurring losses, declining revenues, and constrained liquidity. Initiatives to stabilize operations include facility divestments, a new sales strategy led by recently hired leadership, and measures to address material weaknesses in internal inventory controls.
Flexible Solutions International (FSI) - Announces $0.10 special dividend amid strong financial position
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Flexible Solutions International Inc., a Canadian-based specialty chemicals company, announced on May 7, 2025, the issuance of a one-time special cash dividend of $0.10 per share, payable on May 28 to shareholders of record as of May 19. The company, which develops biodegradable polymers and water conservation technologies, cited its solid financial condition and ongoing profitability as the basis for the dividend. Management emphasized that this is a special, non-recurring dividend and that future capital allocation decisions will be based on retained earnings and strategic growth needs. The announcement was made through a Form 8-K filing with the U.S. SEC.
Friedman Industries (FRD) - Extends credit facility maturity to August 2026
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On May 6, 2025, Friedman Industries, Inc., a Texas-based steel products manufacturer, entered into a Fourth Amendment to its Amended and Restated Credit Agreement originally dated May 19, 2021. The amendment, agreed upon with JPMorgan Chase Bank as administrative agent and the participating lenders, extends the maturity date of the credit facility to August 19, 2026. The full amendment will be included as an exhibit in the company’s upcoming Form 10-K filing for the fiscal year ended March 31, 2025. The amendment constitutes a direct financial obligation for reporting purposes under SEC regulations.
Key Tronic (KTCC) - Reports Q3 FY2025 loss amid tariff disruptions; maintains long-term growth outlook
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On May 6, 2025, Key Tronic Corporation reported a Q3 FY2025 net loss of $(0.6)m or $(0.06) per share, compared to a loss of $(2.2)m in the same period last year, as revenue fell to $112.0m from $142.4m due to global tariff-related disruptions. Gross margin improved to 7.7% (up from 5.7%), reflecting cost reductions and headcount cuts. For the first nine months of FY2025, revenue declined to $357.4m (from $440.4m) and net loss widened to $(4.4)m. Despite short-term headwinds, the company remains optimistic about long-term profitability, citing new program wins, strategic cost streamlining, and expansion of production capacity in Arkansas and Vietnam. No financial guidance was issued for Q4 due to ongoing uncertainty around tariffs.
Orbit Garant (OGD) - Reports Q3 2025 earnings growth despite margin pressure in Canadian operations
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Orbit Garant Drilling Inc. reported Q3 FY2025 revenue of $50.0 million, up 3.9% from Q3 FY2024, with net earnings rising to $2.7 million (vs. $2.0 million) and adjusted EBITDA improving to $6.2 million (from $3.9 million). The growth was primarily driven by increased drilling activity in South America, offsetting reduced activity and margin compression in Canada. Gross margin declined to 11.9% (from 13.2%), and adjusted gross margin fell to 16.5% (from 17.6%). The company also benefited from a $2.0 million foreign exchange gain. For the nine-month period, net earnings reached $7.4 million (up from a $(0.1) million loss), and adjusted EBITDA more than doubled to $18.3 million. Following the exit from West Africa in 2024, Orbit Garant is focusing on Canada and Chile, supported by ongoing cost discipline, capacity investments, and strong exposure to gold and copper sectors. No going concern risks indicated.
SigmaTron International (SGMA) - Announces executive resignation with no operational impact
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On April 30, 2025, SigmaTron International Inc. (Nasdaq: SGMA), a U.S.-based electronics manufacturing services company, announced the resignation of Rajesh B. Upadhyaya as Executive Vice President, West Coast Operations, effective the same day. The company confirmed that the resignation was not due to any disagreement regarding operations, policies, or practices. The update was disclosed via a Form 8-K filing with the SEC on May 6, 2025.
Strattec (STRT) - Triples earnings in Q3 FY2025, delivers strong cash flow and margin expansion
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On May 8, 2025, STRATTEC Security Corporation reported Q3 FY2025 net income of $5.4m or $1.32 per diluted share, up from $1.5m or $0.37 per share a year earlier. Net sales rose 2.4% YoY to $144.1m, driven by strategic pricing actions, favorable product mix, and new program launches. Gross margin expanded to 16.0% (from 10.4%) aided by FX tailwinds and cost improvements, despite $0.8m in new tariff-related costs. Adjusted EBITDA rose to $12.9m (8.9% margin) from $6.2m (4.4%). The company generated $20.7m in operating cash flow in Q3, raising its cash balance to $62.1m with no debt under its credit facility. Management expects FY2025 restructuring actions in the U.S. and Mexico to yield ~$5m in annual savings. STRATTEC is actively mitigating tariff exposure through sourcing shifts, logistics adjustments, and pricing pass-throughs, while continuing to invest in operational modernization and cost discipline.
Unifi (UFI) - Reports $16.8 million Q1 loss and plans asset sale amid continued restructuring
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For the quarter ended March 30, 2025, Unifi, Inc. reported a net loss of $16.8 million, widening from a $10.3 million loss in the prior year. Revenue declined 1.6% year-over-year to $146.6 million, while gross margin turned negative at $(0.4) million, compared to $4.8 million a year earlier, primarily due to elevated production costs. SG&A expenses rose 8%, and the company incurred $1.3 million in restructuring charges related to the closure of its Madison, NC facility. Operating cash flow was negative at $20 million, driven by operating losses and increased tax payments. Net debt rose to $124 million from $104 million last quarter. Unifi plans to sell the Madison property for $53.2 million, aiming to use part of the proceeds to repay debt.
Tree Island Steel (TSL) - Reports Q1 2025 Results Impacted by U.S. Tariffs and Lower Residential Demand
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Tree Island Steel Ltd. reported Q1 2025 revenue of $50.2 million, a decline of 11.2% year-on-year, driven primarily by lower sales volumes to U.S. residential construction customers and a strategic exit from unprofitable product lines. The impact was further exacerbated by the imposition of new U.S. tariffs on Canadian steel wire products in March, which limited demand and affected shipments not qualifying under CUSMA rules. Gross profit decreased to $3.95 million (from $4.83 million in Q1 2024), while adjusted EBITDA dropped to $2.05 million (from $3.13 million). The company reported net income of $0.002 million, down from $0.625 million in the prior year. A 9% workforce reduction was implemented to control costs. In parallel, Tree Island repurchased 7,806 shares and is reassessing its raw material sourcing to mitigate tariff exposure, including expanding use of U.S.-origin steel. Management continues to monitor evolving trade policies and has expressed support for Canadian anti-dumping investigations on foreign wire imports.
FutureFuel (FF) - Director Richard Rowe acquires 15,000 shares in open market transaction
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On April 3, 2025, Richard P. Rowe, a director of FutureFuel Corp., purchased 15,000 shares of common stock at a weighted average price of $3.95 per share in open market transactions. Following the purchase, he beneficially owns 20,000 shares directly. The Form 4/A, filed on May 7, 2025, corrects an earlier clerical error in the original April 4 filing, clarifying that the shares were acquired—not sold as previously stated.
Kimball Electronics (KE) - Reports Q3 FY2025 Results; Reiterates FY2025 Guidance, Adds New Medical Facility
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Kimball Electronics (Nasdaq: KE) reported Q3 FY2025 results with net sales of $374.6m, down 12% year-on-year, driven by declines in automotive (-14%) and industrial (-15%) segments, partly offset by a 2% rise in medical sales. Operating income was $11.7m (3.1% margin), while adjusted operating income reached $15.7m (4.2% margin). Net income was $3.8m ($0.15 per diluted share), and adjusted net income was $6.8m ($0.27 adjusted EPS). The company generated $30.9m in operating cash flow (fifth consecutive quarter of positive cash flow), reduced inventory by $9.6m, and cut borrowings to $178.8m (down 40% YTD). Cash stood at $51.4m with $253.2m in available credit. Management reiterated FY2025 guidance at the high end of prior ranges: net sales of $1.40–1.44bn and adjusted operating income margin of 3.4%–3.6%. Capex is expected at the low end of the $40–50m range. A new medical-focused manufacturing facility in Indianapolis was announced as part of the company’s CMO growth strategy.
The Manitowoc Company, Inc. (MTW) – Investor Presentation Summary (May 2025) & Q1 2025 Summary
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The Manitowoc Company, a global crane manufacturer (NYSE: MTW), released an investor presentation on May 8, 2025. The company emphasized its ongoing transformation efforts, with a 67% growth in non-new machine sales since 2020 and a long-term strategy centered on increasing recurring revenue from aftermarket services such as rentals, remanufacturing, and parts. In 2024, net sales reached $2.2bn, with adjusted EBITDA of $128m and adjusted ROIC at 6.0%. The firm targets $3bn in sales, $1bn from non-new machine segments, 12% EBITDA margin, and 15% ROIC over time. Management highlighted secular growth tailwinds (e.g., infrastructure, energy, housing), aged global crane fleets, and targeted capital investments (e.g., expanding service branches, a ~260-unit rental fleet). The company reiterated a disciplined M&A approach with prior acquisitions like H&E and Aspen, and noted strong liquidity ($321m) with net leverage at 2.7x. Manitowoc’s near- and long-term focus remains on mix improvement, margin expansion, and capital deployment aligned to ROIC.
Manitowoc reported Q1 2025 net sales of $470.9 million, a 5% decrease compared to $495.1 million in Q1 2024, reflecting softer demand across regions. Gross profit declined slightly to $89.8 million from $92.5 million. Operating income dropped sharply to $5.3 million (vs $15.2 million), driven by higher engineering, selling, and administrative expenses. The company recorded a net loss of $6.3 million (or -$0.18/share) versus a net income of $4.5 million ($0.12/share) a year earlier, primarily due to unfavorable other income/expense and higher restructuring costs.
Cash flow from operations turned positive at $12.9 million (vs -$30.6 million in Q1 2024), despite a $66 million inventory build. Total debt rose slightly to $399 million, but liquidity remains strong with $238 million in revolver availability and $41 million in cash. Inventory levels increased significantly to $701.7 million, from $609.4 million at year-end.
Notable business risks include the macroeconomic backdrop (inflation, tariffs, high interest rates), ongoing litigation and environmental settlement costs (a $42.6 million EPA-related penalty), and potential covenant risks tied to debt levels. Backlog and order visibility remain volatile amid global demand uncertainty, though Q1 2025 orders increased 10% y/y.
The writer may own shares of the companies mentioned. This communication is for informational purposes only. AI helped us with this. Check important info.