Second Quarter Net Sales of $12.1 Million
New Distributor Programs Expected to Drive
Increased Sales in Building Supply Segment in Second Half of
2015
Alpha Pro Tech, Ltd. (NYSE MKT:APT), a leading
manufacturer of products designed to protect people, products and
environments, including disposable protective apparel and building
products, today announced financial results for the three and six
months ended June 30, 2015.
Consolidated sales for the second quarter decreased 1.3% to
$12.1 million, from $12.3 million for the comparable quarter of
2014. Building Supply segment sales for the three months ended June
30, 2015 decreased by 4.6% to $7.1 million, compared to $7.4
million for the same period of 2014. The sales mix of the Building
Supply segment for the three months ended June 30, 2015 was 63% for
synthetic roof underlayment, 33% for housewrap and 4% for other
woven material. This compared to 63% for synthetic roof
underlayment, 32% for housewrap and 5% for other woven material for
the second quarter of 2014. Sales for the Disposable Protective
Apparel segment for the three months ended June 30, 2015 increased
1.2% to $3.84 million, compared to $3.79 million for the same
period of 2014. Infection Control segment sales for the three
months ended June 30, 2015 increased by $139,000, or 13.3%, to $1.2
million, compared to $1.0 million for the same period of 2014.
Al Millar, President of Alpha Pro Tech, commented, “Our
Infection Control segment again reported solid double-digit sales
growth in the second quarter of 2015. Our Disposable Protective
Apparel segment also reported top-line growth as we increased sales
to our major international supply chain partner. The Building
Supply segment was impacted by severe weather that continued to
affect the construction industry in the second quarter.”
“We continue to focus on broadening our market share in the
Building Supply segment through the introduction of innovative new
products,” continued Millar. “This quarter, we introduced TECHNO
SB, our third synthetic roof underlayment, which is positioned
between REX™
and TECHNOply™. Second quarter sales of our TECHNO family of
products, which includes TECHNOply™ and our new TECHNO SB, have
continued to show strong growth, almost doubling from the same
period of last year. In addition to new innovative products, we are
also excited about two new distributor programs in the roofing
market, which we expect will increase sales in the latter half of
2015,” continued Millar.
Consolidated sales for the six months ended June 30, 2015
increased 2.4% to $22.7 million from $22.2 million for the
comparable period of 2014. This increase consisted of increased
sales in the Disposable Protective Apparel segment of $329,000 and
increased sales in the Infection Control segment of $263,000,
partially offset by slightly decreased sales in the Building Supply
segment of $51,000.
Building Supply segment sales for the six months ended June 30,
2015 decreased by $51,000, or 0.4%, to $12.88 million, compared to
$12.94 million for the same period of 2014. The decrease was
primarily due to severe weather in the first quarter that also
extended into the second quarter of 2015. Housewrap and synthetic
roof underlayment sales were basically flat year to date as
compared to the same period last year.
Gross profit for the three months ended June 30, 2015 decreased
by 13.1% to $3.9 million, or 32.4% gross profit margin, compared to
$4.5 million, or 36.8% gross profit margin, for the same period of
2014. Gross profit for the six months ended June 30, 2015 decreased
4.6% to $7.7 million, or 34.0% gross profit margin, from $8.1
million, or 36.6% gross profit margin, for the same period of 2014.
Gross margin was down primarily due to competitive pricing
pressures, including increased rebate, as well as increased
manufacturing costs. Management is working on cost reductions in
order to improve gross margin.
Selling, general and administrative expenses increased by 6.7%
to $3.5 million for the second quarter of 2015, from $3.3 million
for the same quarter of 2014. As a percentage of net sales,
selling, general and administrative expenses increased to 29.1% for
the three months ended June 30, 2015, from 26.9% for the same
period of 2014. The increase in selling, general and administrative
expenses was primarily due to an increase in legal costs and an
increase in sales and marketing salaries. For the six months ended
June 30, 2015, selling, general and administrative expenses as a
percentage of net sales increased to 31.2% from 30.0%, driven
primarily by an increase in legal expenses, an increase in sales
and marketing salaries and an increase in foreign exchange losses
due to a weaker Canadian dollar.
Net income decreased for the three months ended June 30, 2015 to
$288,000, compared to $895,000 for the same period of 2014, a
decrease of 67.8%. The decrease was primarily due to a decrease in
income before provision of income taxes of $965,000, partially
offset by a decrease in income taxes of $358,000. The decrease in
income before provision for income taxes was partially due to the
$218,000 of pre-tax gains on investments in the second quarter of
2014, which were not repeated in the second quarter of 2015. Net
income as a percentage of net sales for the three months ended June
30, 2015 and 2014 was 2.4% and 7.3%, respectively. Basic and
diluted earnings per common share for the three months ended June
30, 2015 and 2014 were $0.02 and $0.05, respectively.
Net income for the six months ended June 30, 2015 was $436,000,
compared to $1.2 million for the same period of 2014, a decrease of
62.5%. The decrease was primarily due to a decrease in income
before provision for incomes taxes of $1,144,000, partially offset
by a decrease in income taxes of $416,000. The decrease in income
before provision for income taxes was partially due to the $409,000
gains on investments in the first six months of 2014, which were
not repeated in the same period of 2015. Net income as a percentage
of net sales for the six months ended June 30, 2015 was 1.9%, and
net income as a percentage of net sales for the same period of 2014
was 5.2%. Basic and diluted earnings per common share for the six
months ended June 30, 2015 and 2014 were $0.02 and $0.06,
respectively.
The consolidated balance sheet remained strong with a current
ratio of 20:1 as of June 30, 2015, compared to 15:1 as of December
31, 2014. The Company ended the second quarter of 2015 with working
capital of $32.0 million. Cash at the end of the second quarter of
2015 totaled $3.9 million, up from $1.1 million as of March 31,
2015.
Inventory increased by $2.7 million, or 16.2%, to $19.2 million
as of June 30, 2015, from $16.5 million as of December 31, 2014.
The increase was primarily due to an increase in inventory for the
Disposable Protective Apparel segment of $1.6 million, or 34.3%, to
$6.1 million and an increase in inventory for the Building Supply
segment of $1.2 million, or 14.0%, to $9.9 million, partially
offset by a decrease in inventory for the Infection Control segment
of $105,000, or 3.2%, to $3.2 million. Inventory as of the end of
the second quarter of 2015 was basically flat compared to the end
of the first quarter of 2015, with Building Supply and Infection
Control segment inventory down as compared to the first
quarter.
Lloyd Hoffman, Chief Financial Officer, commented, “At the end
of the second quarter of 2015, we had $2.4 million available for
additional stock purchases under our stock repurchase program. For
the six months ended June 30, 2015, we have repurchased 409,100
shares of common stock at a cost of $968,000, bringing the program
total to 11,953,631 shares of common stock at a cost of $17.1
million since the program’s inception. Future repurchases are
expected to be funded from cash on hand and cash flows from
operating activities.”
The Company currently has no outstanding debt and maintains an
unused $3.5 million credit facility. The Company believes that
current cash balances and the borrowings available under its credit
facility will be sufficient to satisfy projected working capital
needs and planned capital expenditures for the foreseeable
future.
About Alpha Pro Tech, Ltd.
Alpha Pro Tech, Ltd. is the parent company of Alpha Pro Tech,
Inc. and Alpha ProTech Engineered Products, Inc. Alpha Pro Tech,
Inc. develops, manufactures and markets innovative disposable and
limited-use protective apparel products for the industrial, clean
room, medical and dental markets. Alpha ProTech Engineered
Products, Inc. manufactures and markets a line of construction
weatherization products, including building wrap and roof
underlayment. The Company has manufacturing facilities in Salt Lake
City, Utah; Nogales, Arizona; Valdosta, Georgia; and a joint
venture in India. For more information and copies of all news
releases and financials, visit Alpha Pro Tech's website at
http://www.alphaprotech.com.
Certain statements made in this press release constitute
“forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include any statement that may predict,
forecast, indicate or imply future results, performance or
achievements instead of historical facts and may be identified
generally by the use of forward-looking terminology and words such
as “expects,” “anticipates,” “estimates,” “believes,” “predicts,”
“intends,” “plans,” “potentially,” “may,” “continue,” “should,”
“will” and words of similar meaning. Without limiting the
generality of the preceding statement, all statements in this press
release relating to estimated and projected earnings, margins,
costs, expenditures, cash flows, sources of capital, growth rates,
product offerings and future financial and operating results are
forward-looking statements. We caution investors that any such
forward-looking statements are only estimates based on current
information and involve risks and uncertainties that may cause
actual results to differ materially from the results contained in
the forward-looking statements. We cannot give assurances that any
such statements will prove to be correct. Factors that could cause
actual results to differ materially from those estimated by us
include the risks, uncertainties and assumptions described from
time to time in our public releases and reports filed with the
Securities and Exchange Commission, including, but not limited to,
our most recent Annual Report on Form 10-K. We also caution
investors that the forward-looking information described herein
represents our outlook only as of this date, and we undertake no
obligation to update or revise any forward-looking statements to
reflect events or developments after the date of this press
release. Given these uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2015 2014 (1) Assets Current assets: Cash $
3,914,000
$ 5,495,000 Investments 1,495,000 2,840,000
Accounts receivable, net of allowance for
doubtful accounts of $59,000 and $60,000 as of June 30, 2015 and
December 31, 2014, respectively
5,771,000 5,333,000 Accounts receivable, related party 84,000
333,000 Inventories 19,218,000 16,544,000 Prepaid expenses
2,805,000 4,472,000 Deferred income tax assets 486,000
486,000 Total current assets 33,773,000
35,503,000 Property and equipment, net 3,111,000 3,315,000
Goodwill 55,000 55,000 Definite-lived intangible assets, net 60,000
71,000 Equity investments in unconsolidated affiliate
3,223,000 3,008,000 Total assets $ 40,222,000
$ 41,952,000
Liabilities and Shareholders'
Equity Current liabilities: Accounts payable $ 1,198,000 $
1,099,000 Accrued liabilities 529,000
1,195,000 Total current liabilities 1,727,000 2,294,000
Deferred income tax liabilities 1,261,000
1,752,000 Total liabilities 2,988,000
4,046,000 Commitments Shareholders' equity:
Common stock, $.01 par value: 50,000,000
shares authorized; 18,384,456 and 18,348,556 shares outstanding as
of June 30, 2015 and December 31, 2014, respectively
184,000 183,000 Additional paid-in capital 17,593,000 17,833,000
Accumulated other comprehensive income 506,000 1,375,000 Retained
earnings 18,951,000 18,515,000 Total
shareholders' equity 37,234,000 37,906,000
Total liabilities and shareholders' equity $ 40,222,000
$ 41,952,000 (1) The condensed consolidated
balance sheet as of December 31, 2014 has been prepared using
information from the audited consolidated balance sheet as of that
date.
Condensed Consolidated Income
Statements (Unaudited)
For the Three Months Ended For the
Six Months Ended June 30, June 30, 2015
2014 2015 2014 Net sales
$
12,095,000
$
12,252,000
$
22,749,000
$
22,208,000
Cost of goods sold, excluding depreciation
and amortization
8,179,000 7,744,000 15,008,000
14,090,000 Gross profit 3,916,000
4,508,000 7,741,000
8,118,000 Operating expenses: Selling, general and
administrative 3,520,000 3,298,000 7,097,000 6,670,000 Depreciation
and amortization 150,000 176,000
321,000 364,000 Total operating
expenses 3,670,000 3,474,000
7,418,000 7,034,000 Income from
operations 246,000 1,034,000
323,000 1,084,000 Other income: Equity
in income of unconsolidated affiliate 117,000 84,000 215,000
195,000
Gain on sale of marketable securities and
investment in common stock warrants
- 218,000 - 409,000 Interest income, net 14,000
6,000 15,000 9,000 Total
other income 131,000 308,000
230,000 613,000
Income before provision for income
taxes
377,000 1,342,000 553,000 1,697,000 Provision for income
taxes 89,000 447,000 117,000
533,000 Net income $ 288,000 $
895,000 $ 436,000 $ 1,164,000
Basic earnings per common share $ 0.02 $ 0.05 $ 0.02
$ 0.06 Diluted earnings per common share $
0.02 $ 0.05 $ 0.02 $ 0.06 Basic
weighted average common shares outstanding 18,208,947
18,321,432 18,254,188 18,594,118
Diluted weighted average common shares outstanding
18,308,806 18,597,466 18,388,228
18,842,018
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version on businesswire.com: http://www.businesswire.com/news/home/20150804005132/en/
Company:Alpha Pro Tech, Ltd.Al
Millar/Donna Millar, 905-479-0654ir@alphaprotech.comorInvestor Relations:Hayden IRCameron Donahue,
651-653-1854cameron@haydenir.com
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