Alpha Pro Tech, Ltd. Announces Financial Results for the Third
Quarter
NOGALES, AZ-(Marketwired - Nov 2, 2016) - Alpha Pro Tech, Ltd.
(NYSE MKT: APT)
- Net income for the third quarter of 2016 increased 233% to $1.0
million, compared to $306,000 for the same period of 2015.
- Diluted earnings per common share for the quarter ended
September 30, 2016 were $0.06, compared to $0.02 for the quarter
ended September 30, 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 nine month
periods ended September 30, 2016.
Consolidated sales for the third quarter of 2016 were $11.8
million, compared to $12.2 million in the third quarter of 2015.
Building Supply segment sales for the three months ended September
30, 2016 decreased by 5.6% to $7.0 million, compared to $7.4
million for the same period of 2015. The sales mix of the Building
Supply segment for the three months ended September 30, 2016 was
57% for synthetic roof underlayment, 35% for housewrap and 8% for
other woven material. This compared to 63% for synthetic roof
underlayment, 32% for housewrap and 5% for other woven material for
the third quarter of 2015. Sales for the Disposable Protective
Apparel segment for the three months ended September 30, 2016
increased 0.2% to $3.698 million, compared to $3.689 million for
the same period of 2015. Infection Control segment sales for the
three months ended September 30, 2016 increased by $8,000, or 0.8%,
to $1.06 million, compared to $1.05 million for the same period of
2015.
Lloyd Hoffman, Chief Executive Officer of Alpha Pro Tech,
commented, "Macro demand in the roofing market slowed during the
third quarter, driving lower than anticipated sales of our
synthetic roof underlayment. We are encouraged by sales of our
housewrap products, as we maintain healthy sales increases over
last year. We expect sales growth in our Building Supply segment to
be similar to the current year to date figure for the remainder of
2016."
"We further demonstrated our commitment to maintaining a solid
balance sheet and increasing shareholder value with the reduction
of inventories across all segments of our business and the
expansion of our existing share repurchase program," said Hoffman.
"The board authorized an additional $3.0 million for share
repurchases during the quarter. In addition we systematically
reduced inventory by $4.5 million compared to the end of last year.
Managing inventory levels in concert with demand projections and
returning a portion of available capital to our shareholders are
both integral to our disciplined capital allocation and balance
sheet management."
Consolidated sales for the nine months ended September 30, 2016
increased by 4.0% to $36.3 million, up from $34.9 million for the
comparable period of 2015. This increase was due to increased sales
in the Building Supply segment of 6.8% and in the Infection Control
segment of 1.6%, partially offset by decreased sales in the
Disposable Protective Apparel segment of 0.2%.
Building Supply segment sales for the nine months ended
September 30, 2016 increased by $1.4 million, or 6.8%, to a first
nine months of the year record of $21.7 million, compared to $20.3
million for the same period of 2015. This increase was primarily
due to a 9.0% increase in sales of housewrap, a 2.6% increase in
sales of synthetic roof underlayment and a 24.5% increase in sales
of other woven material.
Gross profit for the three months ended September 30, 2016
decreased by 6.0% to $4.5 million, compared to $4.8 million for the
same period of 2015. The gross profit margin was 38.3% for the
three months ended September 30, 2016, compared to 39.5% for the
same period of 2015. In the third quarter of last year, gross
profit margin was positively affected by the U.S. Customs and
Border Protection issuing a retroactive refund for duty paid on
eligible products, which applied to certain of our Building Supply
and Disposable Apparel segments products. Gross profit for the nine
months ended September 30, 2016 increased by 6.0% to $13.3 million,
or 36.6% gross profit margin, from $12.5 million, or 35.9% gross
profit margin, for the same period of 2015. Management expects
gross profit margin to be in a similar range for the balance of
2016 and is continuing to work on reducing product costs.
Selling, general and administrative expenses decreased by 18.7%
to $3.2 million for the third quarter of 2016 from $3.9 million for
the same quarter of 2015. As a percentage of net sales, selling,
general and administrative expenses decreased to 26.8% for the
three months ended September 30, 2016 from 31.9% for the same
period of 2015. The decrease in expenses was primarily due to an
accrual for the retirement of our former CEO in the third quarter
of last year which was not repeated in 2016. Selling, general and
administrative expenses decreased by $1.0 million, or 9.4%, to
$10.0 million for the nine months ended September 30, 2016 from
$11.0 million for the nine months ended September 30, 2015. As a
percentage of net sales, selling, general and administrative
expenses decreased to 27.4% for the nine months ended September 30,
2016 from 31.4% for the same period of 2015. The decrease in year
to date expenses was primarily due to the accrual mentioned above
and decreased sales and marketing expenses.
Net income increased for the three months ended September 30,
2016 to $1.0 million, compared to $306,000 for the same period of
2015, an increase of 233.0%. The increase was due to an increase in
income before provision for income taxes of $895,000, partially
offset by an increase in provision for income taxes of $182,000.
Net income as a percentage of net sales for the three months ended
September 30, 2016 and 2015 was 8.7% and 2.5%, respectively. Basic
and diluted earnings per common share for the three months ended
September 30, 2016 and 2015 were $0.06 and $0.02, respectively.
Net income for the nine months ended September 30, 2016 was $2.3
million, compared to $741,000 for the same period of 2015, an
increase of 213.5%. Net income as a percentage of net sales for the
nine months ended September 30, 2016 was 6.4%, and net income as a
percentage of net sales for the same period of 2015 was 2.1%. Basic
and diluted earnings per common share for the nine months ended
September 30, 2016 and 2015 were $0.14 and $0.04, respectively.
The consolidated balance sheet remained strong with a current
ratio of 11:1 as of September 30, 2016, compared to a 15:1 current
ratio as of December 31, 2015. The Company ended the third quarter
of 2016 with working capital of $29.4 million.
Inventory decreased by $4.5 million, or 27.7%, to $11.9 million
as of September 30, 2016 from $16.4 million as of December 31,
2015. The decrease was primarily due to a decrease in inventory for
the Disposable Protective Apparel segment of $1.6 million, or
26.9%, to $4.2 million, a decrease in inventory for the Building
Supply segment of $2.7 million, or 34.5%, to $5.1 million and a
decrease in inventory for the Infection Control segment of
$287,000, or 10.3%, to $2.5 million.
Colleen McDonald, Chief Financial Officer, commented, "At the
end of the third quarter of 2016, we had $2.6 million available for
additional stock purchases under our stock repurchase program.
Year-to-date, we have repurchased 1,564,400 shares of common stock
at a cost of $3.7 million, bringing the program total to 14,082,031
shares of common stock at a cost of $21,931,000 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 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
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.
- Tables follow -
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Condensed Consolidated Balance Sheets (Unaudited)
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September 30,
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December 31,
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2016
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2015 (1)
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Assets
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Current assets:
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Cash
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$
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11,772,000
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$
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9,681,000
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Investments
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617,000
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656,000
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Accounts receivable, net of allowance for doubtful accounts of
$59,000 and $46,000 as of September 30, 2016 and December 31, 2015,
respectively
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4,715,000
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2,762,000
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Accounts receivable, unconsolidated affiliate
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19,000
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8,000
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Inventories
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11,854,000
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16,398,000
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Prepaid expenses and other current assets
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2,901,000
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3,092,000
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Deferred income tax assets
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484,000
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484,000
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Total current assets
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32,362,000
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33,081,000
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Property and equipment, net
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2,704,000
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2,907,000
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Goodwill
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55,000
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55,000
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Definite-lived intangible assets, net
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39,000
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51,000
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Equity investment in unconsolidated affiliate
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3,473,000
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3,040,000
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Total assets
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$
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38,633,000
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$
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39,134,000
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Liabilities and Shareholders' Equity
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Current liabilities:
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Accounts payable
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$
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1,257,000
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$
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1,027,000
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Accrued liabilities
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1,713,000
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1,128,000
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Total current liabilities
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2,970,000
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2,155,000
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Deferred income tax liabilities
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835,000
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867,000
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Total liabilities
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3,805,000
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3,022,000
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Commitments
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Shareholders' equity:
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Common stock, $.01 par value: 50,000,000 shares authorized;
16,301,056 and 17,850,456 shares outstanding as of September 30,
2016 and December 31, 2015, respectively
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163,000
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178,000
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Additional paid-in capital
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12,984,000
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16,526,000
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Accumulated other comprehensive loss
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(198,000
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)
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(148,000
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)
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Retained earnings
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21,879,000
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19,556,000
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Total shareholders' equity
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34,828,000
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36,112,000
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Total liabilities and shareholders' equity
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$
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38,633,000
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$
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39,134,000
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(1)
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The condensed consolidated balance sheet as of December 31, 2015
has been prepared using information from the audited consolidated
balance sheet as of that date.
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Condensed Consolidated Income Statements (Unaudited)
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For the Three Months Ended
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For the Nine Months Ended
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September 30,
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September 30,
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2016
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2015
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2016
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2015
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Net sales
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$
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11,779,000
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$
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12,176,000
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$
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36,334,000
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$
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34,925,000
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Cost of goods sold, excluding depreciation and amortization
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7,263,000
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7,370,000
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23,032,000
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22,379,000
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Gross profit
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4,516,000
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4,806,000
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13,302,000
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12,546,000
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Operating expenses:
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Selling, general and administrative
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3,158,000
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3,882,000
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9,950,000
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10,979,000
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Depreciation and amortization
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153,000
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206,000
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425,000
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527,000
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Total operating expenses
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3,311,000
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4,088,000
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10,375,000
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11,506,000
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Income from operations
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1,205,000
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718,000
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2,927,000
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1,040,000
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Other income (loss):
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Equity in income (loss) of unconsolidated affiliate
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242,000
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(165,000
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)
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433,000
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50,000
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Interest income, net
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1,000
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-
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3,000
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15,000
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Total other income (loss)
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243,000
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(165,000
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)
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436,000
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65,000
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Income before provision for income taxes
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1,448,000
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553,000
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3,363,000
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1,105,000
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Provision for income taxes
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429,000
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247,000
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1,040,000
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364,000
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Net income
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$
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1,019,000
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$
|
306,000
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$
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2,323,000
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$
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741,000
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Basic earnings per common share
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$
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0.06
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$
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0.02
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$
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0.14
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$
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0.04
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Diluted earnings per common share
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$
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0.06
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$
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0.02
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$
|
0.14
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$
|
0.04
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|
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Basic weighted average common shares outstanding
|
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16,695,059
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18,276,616
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|
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17,190,073
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18,261,747
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Diluted weighted average common shares outstanding
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16,706,532
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18,299,279
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17,190,073
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18,359,725
|
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Company Contact: Alpha Pro Tech, Ltd. Al Millar/Donna Millar
905-479-0654 e-mail: ir@alphaprotech.com Investor Relations
Contact: Hayden IR Cameron Donahue 651-653-1854 e-mail:
cameron@haydenir.com
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