Shares of National Presto Industries, Inc. (NPK Quick QuoteNPK - Free Report) have declined 8.2% since the company reported its earnings for the quarter ended March 30, 2025. This compares to the S&P 500 index’s 0.3% decline over the same time frame. Over the past month, the stock has decreased 4.8% against the S&P 500’s 2.8% growth, suggesting a notable underperformance relative to the broader market.

National Presto reported first-quarter 2025 earnings per share of $1.07 compared to 92 cents a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Net sales reached $103.6 million, marking a 35.2% increase from $76.7 million in the prior-year period. Net earnings rose to $7.6 million, up 15.9% from $6.6 million in the first quarter of 2024.

Segment Performance Highlights

All three of the company’s segments experienced higher sales during the quarter, but the Defense segment was the standout performer. Defense sales surged $25.9 million, or 47.1%, primarily driven by increased backlog shipments. Operating earnings in the Defense segment also climbed significantly — by $4.9 million or 58.6% — reflecting the sales boost.

Meanwhile, sales in the Housewares/Small Appliance and Safety segments showed only nominal gains. However, the Small Appliance business posted an operating loss, attributed to a less favorable product mix and elevated material costs. The Safety segment also recorded a loss, which management had previously anticipated.

Management Commentary

President Maryjo Cohen emphasized that the growth in Defense was the central driver of overall company performance, citing “increased shipments from its backlog” as the primary catalyst. However, she acknowledged challenges in the consumer-facing segments, particularly in the Housewares business. A key headwind was the implementation of “Trump tariffs” on certain imported goods, which became effective for shipments deemed to have originated from the Orient after Jan. 31. These tariffs, now set at 145%, are recorded as period costs and significantly impacted earnings. In response, the company has paused new product announcements and purchasing activity, a notable shift given its historical emphasis on innovation in the Housewares segment.

Factors Affecting Financial Results

The company faced a complex cost environment. Elevated material costs and punitive tariff rates weighed heavily on margins, particularly in the Housewares/Small Appliance segment. The tariff-related expenses were not capitalized but rather expensed immediately, further pressuring the bottom line. Additionally, despite improved sales, the Safety segment continued to be a drag on overall profitability.

A further dampener on earnings was muted portfolio income. According to the release, the company’s portfolio earnings were “nominal” due to the capital allocation needs of the Defense business. Inventory investments were ramped up to support recently expanded Defense contract awards, limiting the availability of funds for interest or dividend-yielding instruments.