Omega Flex manufactures and sells flexible metal hoses in the U.S. and around the world. Its flexible gas piping is used in both residential and commercial buildings, including in highly specialized situations such as medical and dental facilities. Its products are sold through independent sales representatives to building owners and operators, construction companies, and original equipment manufacturers among others. Omega Flex commands a minority share of the flexible pipe market, distinguishing its brand from its numerous competitors with specialized product features and quality service.
Oppressed housing starts in the U.S. and Europe has been a threat to Omega Flex sales activity. Management commented on weak demand conditions in late July 2024, when the Company reported a year-over-year decline in sales in the six months ending June 2024. Management has matched lower sales with reduced spending on operating elements as well as astute management of raw materials costs. The effort has helped support profit margins even as fixed cost absorption has been pressured.
The Company reported $105.5 million in total sales in the twelve months ending June 2024, providing $23.3 million in operating income. In our view, it is notable that during the same period operating cash flow generated was $21.1 million. This represents a sales-to-cash conversion rate of 20.0%. The ability to continue generating operating cash flow to support capital and growth investment is an important element in the Company’s capacity to weather the current period of economic adversity.
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