UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from Not Applicable to Not Applicable
Commission file number:
CRAWFORD UNITED CORPORATION
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number (
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 29, 2024,
PART I
ITEM 1. FINANCIAL STATEMENTS
CRAWFORD UNITED CORPORATION
CONSOLIDATED BALANCE SHEET
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable less allowance for doubtful accounts | ||||||||
| Contract assets | ||||||||
| Inventories less allowance for obsolete inventory | ||||||||
| Investments | ||||||||
| Refundable tax asset | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right of use asset, net | ||||||||
| OTHER ASSETS: | ||||||||
| Goodwill | ||||||||
| Intangibles, net of accumulated amortization | ||||||||
| Other non-current assets | ||||||||
| Total Non-Current Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Notes payable – current | $ | $ | ||||||
| Bank debt – current | ||||||||
| Operating lease liabilities – current | ||||||||
| Accounts payable | ||||||||
| Unearned revenue | ||||||||
| Accrued income taxes | ||||||||
| Accrued expenses | ||||||||
| Total Current Liabilities | ||||||||
| LONG-TERM LIABILITIES: | ||||||||
| Notes payable | ||||||||
| Bank debt | ||||||||
| Operating lease liabilities – noncurrent | ||||||||
| Deferred income taxes | ||||||||
| Total Long-Term Liabilities | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Class A common shares - shares authorized, issued at June 30, 2024 and issued at December 31, 2023 | ||||||||
| Class B common shares - shares authorized, shares issued at June 30, 2024 and December 31, 2023 | ||||||||
| Contributed capital | ||||||||
| Treasury shares | ( | ) | ( | ) | ||||
| Class A common shares – treasury shares held at June 30, 2024 and shares held at December 31, 2023 | ||||||||
| Class B common shares – treasury shares held at June 30, 2024 and December 31, 2023 | ||||||||
| Retained earnings | ||||||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Total Sales |
$ | $ | $ | $ | ||||||||||||
| Cost of Sales |
||||||||||||||||
| Gross Profit |
||||||||||||||||
| Operating Expenses: |
||||||||||||||||
| Selling, general and administrative expenses |
||||||||||||||||
| Operating Income |
||||||||||||||||
| Other (Income) and Expenses: |
||||||||||||||||
| Interest charges |
||||||||||||||||
| Loss (gain) on investments |
( |
) | ( |
) | ||||||||||||
| Other (income) expense, net |
( |
) | ( |
) | ( |
) | ||||||||||
| Total Other Expenses and (Income) |
( |
) | ||||||||||||||
| Income before Provision for Income Taxes |
||||||||||||||||
| Income tax expense |
||||||||||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| Net Income Per Common Share - Basic |
$ | $ | $ | $ | ||||||||||||
| Net Income Per Common Share - Diluted |
$ | $ | $ | $ | ||||||||||||
| Weighted Average Shares of Common Stock Outstanding |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
||||||||||||||||
See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Three Months Ended June 30, 2024 and 2023
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at March 31, 2024 |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Balance at June 30, 2024 |
||||||||||||||||||||||||
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at March 31, 2023 |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Stock forfeit |
( |
) | ( |
) | ||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at June 30, 2023 |
||||||||||||||||||||||||
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Six Months Ended June 30, 2024 and 2023
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at December 31, 2023 |
||||||||||||||||||||||||
| Stock awards issued to directors and officers |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at June 30, 2024 |
||||||||||||||||||||||||
| COMMON SHARES - |
||||||||||||||||||||||||
| NO PAR VALUE |
||||||||||||||||||||||||
| CONTRIBUTED |
TREASURY |
RETAINED |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CAPITAL |
SHARES |
EARNINGS |
TOTAL |
|||||||||||||||||||
| Balance at December 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| Share-based compensation expense |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Share repurchase |
( |
) | ( |
) | ||||||||||||||||||||
| Net Income |
||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||
| COMMON SHARES |
COMMON SHARES |
|||||||||||||||||||||||
| ISSUED |
TREASURY SHARES |
OUTSTANDING |
||||||||||||||||||||||
| CLASS A |
CLASS B |
CLASS A |
CLASS B |
CLASS A |
CLASS B |
|||||||||||||||||||
| Balance at December 31, 2022 |
||||||||||||||||||||||||
| Stock awards issued to directors and officers |
||||||||||||||||||||||||
| Stock issuance (see note 6) |
||||||||||||||||||||||||
| Stock forfeit |
( |
) | ( |
) | ||||||||||||||||||||
| Share repurchase |
( |
) | ||||||||||||||||||||||
| Balance at June 30, 2023 |
||||||||||||||||||||||||
CRAWFORD UNITED CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
| Six Months Ended June 30, |
||||||||
| 2024 |
2023 |
|||||||
| Cash Flows from Operating Activities |
||||||||
| Net Income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Loss (Gain) on investments in equity securities |
( |
) | ||||||
| Amortization of right of use assets |
||||||||
| Loss on disposal of assets |
||||||||
| Share-based compensation expense |
||||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Contract assets |
( |
) | ||||||
| Prepaid expenses & other assets |
( |
) | ||||||
| Right of use assets |
( |
) | ||||||
| Other noncurrent assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Lease liabilities |
( |
) | ( |
) | ||||
| Accrued Income Taxes |
( |
) | ( |
) | ||||
| Other current liabilities |
||||||||
| Unearned revenue |
( |
) | ||||||
| Total adjustments |
( |
) | ||||||
| Net Cash Provided by Operating Activities |
||||||||
| Cash Flows from Investing Activities |
||||||||
| Cash paid for business acquisitions, net |
( |
) | ||||||
| Proceeds from sale of property, plant and equipment |
||||||||
| Sale of investments |
||||||||
| Capital expenditures |
( |
) | ( |
) | ||||
| Net Cash (Used in) Investing Activities |
( |
) | ( |
) | ||||
| Cash Flows from Financing Activities |
||||||||
| Payments on notes |
( |
) | ( |
) | ||||
| Payments on bank debt |
( |
) | ( |
) | ||||
| Borrowings on bank debt |
||||||||
| Payments for debt issue costs |
( |
) | ||||||
| Share repurchase |
( |
) | ( |
) | ||||
| Net Cash Provided by (Used in) Financing Activities |
( |
) | ||||||
| Net Increase in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information |
||||||||
| Interest Paid |
$ | $ | ||||||
| Supplemental disclosures of noncash financing and investing activity |
||||||||
| Additions to ROU assets obtained from new operating lease liabilities |
$ | $ | ||||||
| Purchase accounting adjustment to Goodwill for a change in inventory |
$ | $ | ||||||
| Purchase accounting adjustment to Goodwill for a change in fixed assets |
$ | $ | ||||||
| Assumption of debt for purchase of real-estate |
$ | $ | ||||||
| Issuance of Class A common shares for capital expenditures |
$ | $ | ||||||
See accompanying notes to consolidated financial statements
CRAWFORD UNITED CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2024
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Crawford United Corporation and its wholly-owned subsidiaries (the “Company”). Significant intercompany transactions and balances have been eliminated in the financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Certain prior period financial information has been reclassified to conform to the current presentation. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ended December 31, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
During the six-month period ended June 30, 2024 there have been no changes to the Company's significant accounting policies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s Summary of Significant Accounting Policies is provided with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss. In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item. The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others. Lastly, all previously required annual segment reporting disclosures under Topic 280 will also be required for interim periods. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this ASU.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold. Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions. This ASU is effective for fiscal years and interim periods beginning after December 15, 2024. The Company is evaluating the impact of adopting this ASU.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts of certain assets and liabilities and disclosure of contingencies at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Accounting for "Financial Instruments" requires the Company to disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable, and notes payable. The carrying amounts reported in the consolidated balance sheet for assets and liabilities qualifying as financial instruments is a reasonable estimate of fair value.
Fair Value Measurements
As defined in FASB ASC 820, "Fair Value Measurements", fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
* Level 1: Quoted market prices in active markets for identical assets or liabilities.
* Level 2: Inputs to the valuation methodology include:
* Quoted prices for similar assets or liabilities in active markets;
* Quoted prices for identical assets or similar assets or liabilities in inactive markets;
* Inputs other than quoted prices that are observable for the asset or liability;
* Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
* Level 3: Unobservable inputs that are not corroborated by market data.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following is a description of the valuation methodologies used for the Company's instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
* Stock: The stock market value is based on valuation of market quotes from independent active market sources and is considered a level 1 investment.
3. ACCOUNTS RECEIVABLE
The balance of accounts receivable, net was $
The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The reserve for doubtful accounts was $
4. INVENTORY
Inventory is valued at the lower of cost (first-in, first-out) or net realizable value and consists of:
| June 30, |
December 31, |
|||||||
| 2024 |
2023 |
|||||||
| Raw materials and component parts |
$ | $ | ||||||
| Work-in-process |
||||||||
| Finished products |
||||||||
| Total inventory |
$ | $ | ||||||
| Less: inventory reserves |
||||||||
| Net inventory |
$ | $ | ||||||
5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill represents the excess of cost over the fair value of identifiable assets acquired. U.S. GAAP requires that both indefinite-lived intangible assets and Goodwill are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not (i.e., a likelihood greater than 50%) that the intangible asset or the reporting unit is impaired. During interim periods, ASC 350 requires companies to focus on those events and circumstances that affect the significant inputs used to determine the fair value of the asset group or reporting unit to determine whether an interim quantitative impairment test is required. The Company performed its annual impairment test for Goodwill and intangible assets as of the last day of the fourth quarter. The Company first assessed certain qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible assets is less than its carrying amount, and whether it is therefore necessary to perform the quantitative impairment test. In 2023, for all reporting units other than CAD Enterprises the qualitative analysis indicated that a quantitative analysis was not necessary. For the identified reporting unit, impairment testing was performed as of December 31, 2023 using an income approach based on management’s determination of the prospective financial information, and no indefinite-lived intangible assets or goodwill was determined to be impaired.
There were
Goodwill increased by $
Goodwill by reportable segment is as follows:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Commercial Air Handling Equipment Segment: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
| Industrial and Transportation Products Segment: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
| Total Company: | ||||||||
| Beginning Balance | $ | $ | ||||||
| Acquisitions | ||||||||
| Adjustments | ||||||||
| Ending Balance | $ | $ | ||||||
The Company's intangible assets have primarily been generated via acquisitions. Intangibles are being amortized on a straight-line basis over periods ranging from to
Intangible assets consist of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Customer list intangibles | $ | $ | ||||||
| Non-compete agreements | ||||||||
| Trademarks | ||||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ||||||||
| Intangible assets, net | $ | $ | ||||||
Amortization of intangible assets was $
Intangible amortization for the remainder of 2024 and the next four years is expected to be as follows:
| Amortization in future periods | ||
| Remainder of 2024 | $ | |
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 | ||
6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are recorded at cost and depreciated over their useful lives. Maintenance and repair costs are expensed as incurred. Property, plant and equipment are as follows:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Land | $ | $ | ||||||
| Buildings and improvements | ||||||||
| Machinery & equipment | ||||||||
| Total property, plant & equipment | ||||||||
| Less: accumulated depreciation | ||||||||
| Property plant & equipment, net | $ | $ | ||||||
During the second quarter of 2024, the Company issued
During the first quarter of 2024, the Company acquired Heany Industries, which included property, plant and equipment valued at million. During the second quarter of 2024, the Company exercised a purchase option for the building and land that CAD Enterprises operates out of for $
Depreciation expense was $
7. INVESTMENTS IN EQUITY SECURITIES
Investments in equity securities are valued based on quoted stock prices in active markets, thus Level 1 in the fair value hierarchy.
As of June 30, 2024, the Company held common stock of a single company, publicly traded on the New York Stock Exchange, with a fair value of $
As of June 30, 2023, the fair value was $
8. BANK DEBT
The Company is party to a Credit Agreement with JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”).
The Company entered into a sixth amendment to the Credit Agreement on June 12, 2023. The most significant change in the amended Credit Agreement was the discontinued use of LIBOR as a reference rate, with the adoption of the Federal Reserve Bank of New York's Secured Overnight Financing Rate (SOFR) as the primary reference rate. This change was anticipated and aligns with the US Dollar LIBOR panel ceasing on June 30, 2023.
The Company entered into a seventh amendment to the Credit Agreement on November 27, 2023. The Seventh Amendment to the Credit Agreement, among other things, (a) extends the maturity date of the underlying credit facility from June 1, 2024 to June 1, 2027, (b) increases the maximum annual amount that the Company and its subsidiaries may pay in dividends or other restricted payments to $
The revolving facility under the Credit Agreement includes a $
The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants. The financial covenants under the Credit Agreement include a minimum fixed charge coverage ratio, a maximum senior funded debt to EBITDA ratio and a maximum total funded debt to EBITDA ratio.
On May 16, 2024, North 52nd Properties LLC (the “Purchaser”), a subsidiary of Crawford United Corporation (the “Company”), purchased certain real property located in Phoenix, Arizona (the “Real Property”) for $
Bank debt balances consist of the following:
| June 30, |
December 31, |
|||||||
| 2024 |
2023 |
|||||||
| Term debt |
$ | $ | ||||||
| Revolving debt |
||||||||
| Total Bank debt |
||||||||
| Less: current portion |
||||||||
| Non-current bank debt |
||||||||
| Less: unamortized debt costs |
||||||||
| Net non-current bank debt |
$ | $ | ||||||
The Company had $
9. NOTES PAYABLE
Notes Payable – Related Party
In connection with the Komtek Forge acquisition, on January 15, 2021, the Company refinanced its previously outstanding First Francis promissory notes in the aggregate amount of $
Notes payable consists of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| In connection with the Komtek Forge acquisition, the Company refinanced the outstanding First Francis promissory notes, accrued interest payable through the refinance date and the assumed First Francis promissory note into one note on January 15, 2021 for a $ loan due to First Francis Company, payable in quarterly installments beginning April 15, 2021 and maturing on October 15, 2025 | $ | $ | ||||||
| Total notes payable | ||||||||
| Less current portion | ||||||||
| Notes payable – non-current portion | $ | $ | ||||||
10. LEASES
The Company has operating leases for facilities, vehicles and equipment. These leases have remaining terms of under year to
Supplemental balance sheet information related to leases:
| June 30, |
December 31, |
|||||||
| 2024 |
2023 |
|||||||
| Operating leases: |
||||||||
| Operating lease right-of-use assets, net |
$ | $ | ||||||
| Operating lease liabilities – current |
||||||||
| Operating lease liabilities – noncurrent |
||||||||
| Total operating lease liabilities |
$ | $ | ||||||
| Weighted Average Remaining Lease Term |
||||||||
| Operating Leases (in years) |
||||||||
| Weighted Average Discount Rate |
||||||||
| Operating Leases |
% | % | ||||||
11. EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic and diluted earnings per share.
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Earnings Per Share - Basic |
||||||||||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| Weighted average shares of common stock outstanding - Basic |
||||||||||||||||
| Earnings Per Share - Basic |
$ | $ | $ | $ | ||||||||||||
| Earnings Per Share - Diluted |
||||||||||||||||
| Weighted average shares of common stock outstanding - Basic |
||||||||||||||||
| Unvested Restricted Stock Awards |
||||||||||||||||
| Weighted average shares of common stock - Diluted |
||||||||||||||||
| Earnings Per Share - Diluted |
$ | $ | $ | $ | ||||||||||||
Heany Industries, LLC
Effective January 2, 2024, Heany Industries, LLC ("Heany"), a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the operating assets of Heany Industries, Inc, a New York corporation and specialist in materials engineering solutions for a variety of aerospace, industrial and bio-medical applications pursuant to an Asset Purchase Agreement. The acquired business is strategically important to the Company’s growing aerospace presence and has expanded its offerings and diversified its customer base. The purchase price, subject to customary post-closing adjustments was $
| Total Consideration |
$ | |||
| Cash |
$ | |||
| Accounts Receivable |
||||
| Inventory |
||||
| Fixed Assets |
||||
| Prepaid and Other Assets |
||||
| Intangible Assets: Customer List & Trademarks |
||||
| Goodwill |
||||
| Total Assets Acquired |
$ | |||
| Accounts Payable |
$ | |||
| Deferred Revenue |
||||
| Total Liabilities Assumed |
||||
| Total Fair Value |
$ | |||
| Acquisition transaction costs incurred were: |
$ |
Goodwill has an assigned value of $
Sales and Net Income for the Acquired Companies
Sales and net income information for Heany since the respective acquisition date for the six months ended June 30, 2024 and 2023 are provided below.
| Six Months ended |
Six Months ended |
|||||||||||||||
| June 30, 2024 |
June 30, 2023 |
|||||||||||||||
| Sales |
Net Income |
Sales |
Net Income |
|||||||||||||
| Acquired Companies: |
||||||||||||||||
| Heany Industries (acquired January 2, 2024) |
$ | $ | $ | $ | ||||||||||||
| Subtotal Acquired Companies |
$ | $ | $ | $ | ||||||||||||
| All Other Companies |
||||||||||||||||
| Total |
$ | $ | $ | $ | ||||||||||||
13. SEGMENT AND RELATED INFORMATION
The Company reports operations for business segments: (1) Commercial Air Handling Equipment and (2) Industrial and Transportation Products. The identification of our operating segments is based on guidance in ASC 280-10-50-1. The Company's management evaluates segment performance based primarily on segment operating profit. Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses. The Company does not allocate corporate costs to the respective segments.
Both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment engage in business activities from which they recognize revenues and incur expenses, including revenue and expenses relating to transactions with other components of the Company, which are eliminated in consolidation. The operating results for both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment are reviewed regularly by our chief operating decision maker, the chief executive officer, and is considered in making decisions about resources to be allocated to the segment in assessing its performance. Financial information for both segments is available in internal financial statements that are prepared on a monthly basis.
Commercial Air Handling Equipment:
The Commercial Air Handling Equipment segment was added June 1, 2017, when the Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC in Akron, Ohio. The acquired business, which operates under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. Its customers are typically in the health care, education and pharmaceutical markets in the United States. This segment also sells to select international markets. The custom air handling units are constructed of non-corrosive aluminum, resulting in sustainable, long-lasting, and energy efficient solutions with life expectancies of 50 years or more. These products are distributed through a network of sales representatives, based on relationships with health care networks, building contractors and engineering firms. The custom air handling equipment is designed, manufactured and installed under the brand names FactoryBilt® and SiteBilt®. FactoryBilt® air handling solutions are designed, fabricated and assembled in a vertically integrated process entirely within the Akron, Ohio facility. SiteBilt® air handling solutions are designed and fabricated in Akron, but are then crated and shipped to the field and assembled on-site.
Industrial and Transportation Products:
The Industrial and Transportation Products segment was added July 1, 2016, when the Company purchased the assets of Federal Hose Manufacturing, LLC of Painesville, Ohio. This business segment includes the manufacture of flexible interlocking metal hoses and the distribution of silicone and hydraulic hoses. Metal hoses are sold primarily to major heavy-duty truck manufacturers and major aftermarket suppliers in North America. Metal hoses are also sold into the agricultural, industrial and petrochemical markets. Silicone hoses are distributed to a number of industries in North America, including agriculture and general industrial markets. The Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc.(“CAD”) in Phoenix, Arizona on July 1, 2018. CAD provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions. Utilizing state-of-the-art machining and welding technologies, this segment is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels. CAD’s quality certifications include ISO 9001:2015/AS9100D, as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, and TIG/E-Beam welding. The Company added the distribution of marine hose to this segment through the acquisition of the assets of MPI Products, Inc. (“MPI”) on January 2, 2020. MPI specializes in rubber and plastic marine hose for the recreational boating industry. MPI offers certified products that meet marine industry standards and regulations. Effective April 19, 2019, the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”). DG is in the business of developing and commercializing marketing and data analytic technology applications. The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC), in Worcester, Massachusetts on January 15, 2021. Komtek Forge LLC is a supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics, alternative energy, petrochemical and defense industries. The Company purchased all of the membership interests of Global-Tek-Manufacturing LLC (“Global-Tek”), in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology LLC (name later changed to Global-Tek Colorado LLC or “Global-Tek Colorado”) in Longmont, Colorado on March 2, 2021. Global-Tek and Global-Tek Colorado specialize in providing customers with highly engineered manufacturing solutions, including CNC machining, anodizing, electro polishing and laser marking for customers in the defense, aerospace and medical device markets. The Company purchased substantially all of the assets of Emergency Hydraulics LLC (“Emergency Hydraulics”), in Ocala, Florida on July 1, 2021. Emergency Hydraulics provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles. The company purchased substantially all of the assets of Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), in Davie, Florida on January 10, 2022. Reverso Pumps develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems.
The company purchased substantially all of the assets of Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), in Davie, Florida on January 10, 2022. Separ America develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems. The company purchased substantially all of the assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”), in Cleveland, Ohio and Greenville, Ohio on May 1, 2022. Knitting Machinery specializes in manufacturing hose reinforcement machinery for the plastic, rubber and silicone industries. The company purchased substantially all of the assets of Heany Industries, Inc. in Scottsville, New York on January 2, 2024. Heany is a specialist in materials engineering solutions for a variety of aerospace, industrial and bio-medical applications.
The factors used to determine the Company’s reportable segments follow the guidance of ASC 280-10-50-21 and 50-10-22 and include consideration of the type of products or services delivered, the customers and end markets served, the appliable revenue recognition methodology and the length of time it takes to deliver products or services to customers. The Commercial Air Handling Equipment segment was identified as a reportable segment consisting of Air Enterprises, because Air Enterprises is strategically and operationally different from our other companies in several ways. First, Air Enterprises sells equipment to end customers and our other businesses that fall into the Industrial and Transportation Products segment sell products and components to end customers, not equipment. Second, the Commercial Air Handling Equipment segment delivers custom air handling solutions to customers which is different than the Industrial and Transportation Products segment which delivers manufactured metal, silicone, hydraulic and marine hoses, complex engineered components, highly engineered forgings, highly engineered and machined parts and data analytic technology applications. Third, the Commercial Air Handling Equipment segment serves customers primarily in the health care and education end markets while the Industrial and Transportation Products segment delivers products to customers in the heavy-duty truck manufacturing, agricultural, industrial, petrochemical, aerospace, defense, industrial gas turbine, medical prosthetics, alternative energy and emergency vehicle end markets. Fourth, the Commercial Air Handling Equipment segment recognizes revenue primarily over time while the Industrial and Transportation Products segment recognizes revenue primarily at a point in time. Fifth, the Commercial Air Handling Equipment segment manufactures custom air handling solutions for customers over a period of three to twenty-four months from the time the order is received to the time the air handling solution is delivered to the end customer as compared to the Industrial and Transportation Products segment which sells and delivers products to customers much more quickly, often within 30 days or less. For the reasons previously mentioned, Air Enterprises is strategically and operationally different than the other businesses owned by the Company and management finds it useful to include this business in the Commercial Air Handling Segment which is separate and distinct from all of our other businesses that reside in the Industrial and Transportation Products segment.
Corporate costs not allocated to the segments:
Corporate costs not directly attributable to a segment are aggregated here.
Information by industry segment is set forth below:
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Sales summary by segment |
||||||||||||||||
| Commercial Air Handling |
$ | $ | $ | $ | ||||||||||||
| Industrial and Transportation Products |
||||||||||||||||
| Total Sales |
||||||||||||||||
| Gross profit summary by segment |
||||||||||||||||
| Commercial Air Handling |
||||||||||||||||
| Industrial and Transportation Products |
||||||||||||||||
| Total Gross Profit |
||||||||||||||||
| Segment operating profit |
||||||||||||||||
| Commercial Air Handling |
||||||||||||||||
| Industrial and Transportation Products |
||||||||||||||||
| Total Segment Operating Profit |
||||||||||||||||
| Corporate charges not allocated to segments |
||||||||||||||||
| Operating Income |
||||||||||||||||
| Interest charges |
||||||||||||||||
| Loss (gain) on investments |
( |
) | ( |
) | ||||||||||||
| Other (income) expense, net |
( |
) | ( |
) | ( |
) | ||||||||||
| Income before Provision for Income Taxes |
$ | $ | $ | $ | ||||||||||||
14. SUBSEQUENT EVENTS
None.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion is intended to assist in the understanding of the Company's financial position at June 30, 2024 and December 31, 2023, results of operations for the three and six month periods ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023, and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and within the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Items Affecting the Comparability of our Financial Results
The Company purchased substantially all of the operating assets of Heany Industries, Inc ("Heany") located in Scottsville, New York on January 2, 2024.
Accordingly, in light of the timing of this transaction, the Company’s results for the three and six month periods ended June 30, 2024 include the results of Heany in the Industrial and Transportation Products segment. Conversely, our results for the three and six month periods ended June 30, 2023 do not include Heany.
Results of Operations – Three Months Ended June 30, 2024 and 2023
Sales for the quarter ended June 30, 2024 (“current quarter”) increased to $37.6 million, a modest increase of $0.7 million or 1.9% from sales of $36.9 million during the same quarter of the prior year. The increase in sales for the quarter ended June 30, 2024 was primarily driven by an increase in volume in the Company's Commercial Air Handling Segment offset by a decrease in volume in the Company's Industrial and Transportation Product Segment. The overall increase in volume can be attributed to the increased demand for air handling units, being offset by the macroeconomic trend of decreased demand within the boating market. Further insights into the performance of each segment are provided in the detailed discussions that follow.
Cost of sales for the current quarter were $27.2 million compared to $26.5 million for the same quarter of the prior year, a slight increase of $0.8 or 2.9%, which is attributable to the increase in sales. Gross margin of 27.7% in the current quarter remained materially consistent with 28.4% in the same quarter of the prior year. However, the slight decrease can mainly be attributed to inflationary labor cost as well as a decrease in sales in our Industrial and Transportation Products Segment leading to the less efficient absorption of fixed cost.
Selling, general and administrative expenses (SG&A) in the current quarter were $5.3 million, compared to $5.3 million, in the same quarter of last year. Selling, general and administrative expenses were decreased as a percentage of sales, while costs remained flat, due primarily to expense management efforts and the increased sales amount for the current quarter compared to the same quarter of last year.
Interest charges in the current quarter were $0.3 million compared to $0.4 million in the same quarter of the prior year. Average total debt outstanding has decreased leading to a decrease in interest expense. Average total debt (including notes) and average interest rates for the current quarter were $15.8 million and 7.1%, respectively, compared to $20.4 million and 6.8%, respectively, in the same period of last year.
The loss on investment in the current quarter of $0.3 million and the gain on investment in the prior year quarter of $0.2 million is attributed to market price change impacting the Company's investment in another public company.
The Company recognized an immaterial amount of other expense in the current quarter compared to other income of $0.3 million in the prior year current quarter, resulting from incentives that Global-Tek received from the government of Puerto Rico in the second quarter of 2023 that did not occur in the second quarter of 2024.
Income tax expense in the current quarter was $1.3 million compared to $1.5 million in the same quarter of the prior year. Tax expense is lower compared to the same quarter of the prior year primarily because of lower pre-tax income.
Net income in the current quarter was $3.3 million, or $0.92 per diluted share, as compared to net income of $3.9 million, or $1.09 per diluted share, for the same quarter of the prior year because of the factors noted above.
Commercial Air Handling Segment
Sales in the Commercial Air Handling Equipment segment for the quarter ended June 30, 2024 increased to $16.4 million, an increase of approximately $1.6 million, or 10.6%, from sales of $14.9 million during the same period of the prior year. The consistent growth in reported sales in this segment highlights our sustained momentum in meeting the rising demand for clean air solutions.
Segment operating profit in the Commercial Air Handling Equipment segment for the current quarter was $4.7 million, or 28.4%, compared to $4.0 million, or 26.8% in the same quarter of the prior year, an increase of $0.7 million or 160 basis points. This enhancement in segment operating profit and margin can be attributed to the expanded revenue base, which facilitates more efficient absorption of fixed costs. Another supporting factor of the improved margins has been the continued implementation of various efficiency and continuous improvement initiatives within our manufacturing processes. These strategic measures have effectively optimized operations and bolstered profitability. The segment's Selling, General, and Administrative (SG&A) costs have remained consistent compared to the prior year.
Industrial and Transportation Products Segment
Sales in the Industrial and Transportation Products segment for the quarter ended June 30, 2024 decreased to $21.2 million, a decrease of approximately $0.9 million, or 3.9%, from sales of $22.1 million during the same period of the prior year. The decrease in the current period was primarily the result of decreased demand in the marine products and industrial hose businesses of approximately $2.3 million, being partially offset by sales from our acquisition of Heany Industries of approximately $1.4 million. By design, this segment is diversified and operates across several industries. The decrease in marine sales volume can be attributed to the cyclical nature of recreational boating demand whereby there was a pandemic-driven surge in demand lasting through the second quarter of 2023.
Segment operating profit in the Industrial and Transportation Products segment for the current quarter was $1.6 million, or 7.5%, compared to $2.6 million, or 11.8%, in the same quarter of the prior year, a decrease of $1.0 million or 430 basis points. As sales have decreased and many of the underlying expenses are fixed in the short-term, our ability to absorb fixed cost has been negatively impacted. In response, we have implemented several strategic initiatives aimed at mitigating the effects on our gross margin. These include optimizing our production processes to enhance efficiency and reduce costs, renegotiating supplier contracts to secure more favorable terms, and intensifying our focus on inventory management to minimize excess inventory. The segment's Selling, General, and Administrative (SG&A) costs have risen compared to the prior year quarter as we have strategically increased our investment in talent to support growth.
Results of Operations – Six Months Ended June 30, 2024 and 2023
Sales for the six months ended June 30, 2024 (“current year-to-date period”) decreased to $76.1 million, a modest decrease of $0.3 million or 0.4% from sales of $76.4 million during the same year-to-date period of the prior year. The decrease in sales for the six months ended June 30, 2024 was primarily driven by a decrease in volume in the Company's Industrial and Transportation Product Segment partially offset by an increase in volume in the Company's Commercial Air Handling Segment. The overall decrease in volume can be attributed to the macroeconomic trend of decreased demand within the boating market being partially offset by an increased demand for air handling units. Further insights into the performance of each segment are provided in the detailed discussions that follow.
Cost of sales for the six months ended June 30, 2024 remained flat at $55.4 million compared to $55.4 million for the same year-to-date period of the prior year. Gross margin of 27.2% in the current year-to-date period remained materially consistent with 27.5% in the same year-to-date period of the prior year. However, the slight decrease can predominantly be attributed to inflationary labor cost as well as a decrease in sales in our Industrial and Transportation Products Segment leading to the less efficient absorption of fixed cost.
Selling, general and administrative expenses (SG&A) in the current year-to-date period were $11.0 million, compared to $10.7 million, in the same year-to-date period of last year. Selling, General, and Administrative (SG&A) costs have risen compared to the prior year period as we have strategically increased our investment in talent to support growth.
Interest charges in the current year-to-date period were $0.5 million compared to $0.7 million in the same year-to-date period of the prior year. Average total debt outstanding has decreased leading to a decrease in interest expense. Average total debt (including notes) and average interest rates for the current year-to-date period were $14.1 million and 7.1%, respectively, compared to $21.4 million and 6.6%, respectively, in the same period of last year.
The loss on investment in the current year-to-date period of $0.4 million and the gain on investment in the prior year-to-date period of $0.1 million is attributed to market price change impacting the Company's investment in another public company.
The Company recognized other (income) expense, net of $0.1 million in the current year-to-date period, resulting from fees related to the purchase of Heany Industries, Inc. The Company had $0.3 million of other income (expense), net for the same year-to-date period of the prior year, resulting from incentives that Global-Tek received from the government of Puerto Rico that did not occur in the current year-to-date period.
Income tax expense in the current year-to-date period was $2.4 million compared to $2.8 million in the same year-to-date period of the prior year. Tax expense is lower compared to the same year-to-date period of the prior year primarily because of lower pre-tax income.
Net income in the current year-to-date period was $6.3 million, or $1.77 per diluted share, as compared to net income of $7.2 million, or $2.07 per diluted share, for the same year-to-date period of the prior year because of the factors noted above.
Commercial Air Handling Segment
Sales in the Commercial Air Handling Equipment segment for the six months ended June 30, 2024 increased to $33.4 million, an increase of approximately $2.5 million, or 8.1%, from sales of $30.9 million during the same period of the prior year. The consistent growth in reported sales in this segment highlights our sustained momentum in meeting the rising demand for clean air solutions.
Segment operating profit in the Commercial Air Handling Equipment segment for the current year-to-date period was $9.2 million, or 27.6% compared to $7.4 million, or 23.9% in the same year-to-date period of the prior year, an increase of $1.8 million or 370 basis points. This enhancement in segment operating profit and margin can be attributed to the expanded revenue base, which facilitates more efficient absorption of fixed costs. Another supporting factor of the improved margins has been the continued implementation of various efficiency and continuous improvement initiatives within our manufacturing processes. These strategic measures have effectively optimized operations and bolstered profitability. The segment's Selling, General, and Administrative (SG&A) costs have remained consistent compared to the prior year.
Industrial and Transportation Products Segment
Sales in the Industrial and Transportation Products segment for the six months ended June 30, 2024 decreased to $42.7 million, a decrease of approximately $2.8 million, or 6.2%, from sales of $45.5 million during the same period of the prior year. The decrease in the current period was primarily the result of decreased demand in the marine products and industrial hose businesses of approximately $5.7 million, being partially offset by sales from our acquisition of Heany Industries of approximately $2.9 million. By design, this segment is diversified and operates across several industries. The decrease in marine sales volume can be attributed to the cyclical nature of recreational boating demand whereby there was a pandemic-driven surge in demand lasting through the second quarter of 2023.
Segment operating profit in the Industrial and Transportation Products segment for the current year-to-date period was $3.2 million, or 7.4%, compared to $5.8 million, or 12.7%, in the same period of the prior year, a decrease of $2.6 million or 530 basis points. As sales have decreased and many of the underlying expenses are fixed in the short-term, our ability to absorb fixed cost has been negatively impacted. In response, we have implemented several strategic initiatives aimed at mitigating the effects on our gross margin. These include optimizing our production processes to enhance efficiency and reduce costs and renegotiating supplier contracts to secure more favorable terms. The segment's Selling, General, and Administrative (SG&A) costs have risen compared to the prior year period as we have strategically increased our investment in talent to support growth.
Liquidity and Capital Resources
The Company’s credit agreement, by and between the Company and JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”), provides for a revolving credit facility of up to $30.0 million. At June 30, 2024, there was approximately $20.1 million of borrowing availability, which has decreased in the year-to-date period as the Company used borrowed cash to fund the acquisition of Heany Industries, Inc.
Operating Activities. The dynamics of cash flows from operating activities are subject to variability, influenced by the oscillating demands of working capital and the scheduling of payment cycles. Net cash provided by operating activities was $4.0 million for the six months ended June 30, 2024, compared to $8.2 million net cash provided by operating activities for the prior year period. The decrease in cash flow from operations can be attributed to several factors. Firstly, the reduction in net income of $1.0 million for the six months ended June 30, 2024, compared to the same period of the prior year. Secondly, the increase in accounts receivable and decrease in contract assets of $6.8 and $1.9 million, respectively, which is directly attributable to the timing of billings and collections on large projects in the commercial air handling segment during the six months ended June 30, 2024, compared to a decrease of $0.7 million and an increase of $0.1 million on accounts receivable and contract assets, respectively in the prior year period. Thirdly, offsetting the increase in accounts receivable was an increase of $0.7 million in accounts payable during the six months ended June 30, 2024 compared to a decrease of $1.3 million in the prior year period which is a result of strict oversight of disbursement timing to align with collections. Finally, also a function of cyclicality during the year, the Company experienced an inventory increase in the current period of $0.9 million compared to an increase of $1.0 million in the prior year period.
Investing Activities. Cash used in investing activities for the six months ended June 30, 2024 was $8.0 million, compared to cash used in investing activities of $0.9 million in the prior year period. Cash used in investing activities for the period ended June 30, 2024 was primarily for the acquisition of Heany Industries, Inc, the purchase of the property in Phoenix in which CAD operates, and routine capital expenditures. Cash used in investing activities for the period ended June 30, 2023 was for capital expenditures in the normal course of business.
Financing Activities. Cash provided by financing activities was approximately $4.0 million for the six months ended June 30, 2024, compared to cash used in financing activities of $5.3 million in the same period last year. During the current period the Company borrowed on its revolving credit facility to fund the acquisition