Alpha Pro Tech, Ltd. Announces Financial Results for the Second
Quarter
NOGALES, AZ-(Marketwired - Aug 2, 2017) - Alpha Pro Tech, Ltd.
(NYSE American: APT) (NYSE MKT: APT)
- Gross margin for the second quarter of 2017 increased to 39.8%,
up from 35.7% in the second quarter of 2016.
- Net income for the second quarter of 2017 increased 0.9% to
$804,000, or $0.05 per diluted share, compared to $797,000, or
$0.05 per diluted share, for the same period of 2016.
- The Company's Board of Directors authorized a $2.0 million
expansion of its existing share repurchase program.
Alpha Pro Tech, Ltd. (NYSE American: APT) (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 month periods ended June 30, 2017.
Lloyd Hoffman, CEO of Alpha Pro Tech, commented, "Our gross
margin and net income increased year-over-year as a result of our
continued efforts to optimize our cost structure and synchronize
inventory levels with anticipated demand. The prudent management of
our costs and generation of solid cash from operating activities
together enable us to return value to our shareholders through
share repurchases, while simultaneously introducing a new,
innovative product line to the Company's housewrap family of
products. This new product offering, which we expect to roll out in
the third quarter of this year, will compete in a segment of the
housewrap market that is currently untapped for us, and we expect
that it will provide us with growth opportunities for this
segment."
"As previously announced, our board of directors authorized a
$2.0 million expansion of our existing share repurchase program as
part of our continuing commitment to our shareholders," said
Hoffman. "Our board of directors and management team believe that
the Company's shares are an attractive investment opportunity and
that the repurchase of our common stock is an important part of our
capital allocation strategy."
Net sales
Consolidated sales for the second quarter of 2017 were $11.3
million, compared to $12.7 million for the second quarter of 2016.
This decrease consisted of decreased sales in the Building Supply
segment of $1.6 million, partially offset by increased sales in the
Disposable Protective Apparel segment of $150,000 and increased
sales in the Infection Control segment of $65,000.
Building Supply segment sales for the three months ended June
30, 2017 decreased by 20.7% to $6.3 million, compared to $7.9
million for the same period of 2016. The sales mix of the Building
Supply segment for the three months ended June 30, 2017 was 51% for
synthetic roof underlayment, 40% for housewrap and 9% 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 2016. As previously mentioned, management
expects the Building Supply segment to experience growth in the
latter half of 2017 following the introduction of a new, innovative
and exciting product line to the Company's housewrap family of
products.
Sales for the Disposable Protective Apparel segment for the
three months ended June 30, 2017 increased 4.1% to $3.8 million,
compared to $3.6 million for the same period of 2016.
Infection Control segment sales for the three months ended June
30, 2017 increased by $65,000, or 5.6%, to $1.23 million, compared
to $1.16 million for the same period of 2016.
Consolidated sales for the six months ended June 30, 2017
decreased 10.3% to $22.0 million, down from $24.6 million for the
same period of 2016. This decrease consisted of decreased sales in
the Building Supply segment of $2.5 million and decreased sales in
the Disposable Protective Apparel segment of $380,000, partially
offset by increased sales in the Infection Control segment of
$314,000.
Building Supply segment sales for the first six months of 2017
decreased by $2.5 million, or 16.7%, to $12.2 million, compared to
$14.7 million for the same period of 2016. The decrease was
primarily due to a 29.8% decrease in sales of synthetic roof
underlayment, partially offset by a 4.6% increase in sales of
housewrap and a 24.9% increase in sales of other woven
material.
Sales for the Disposable Protective Apparel segment for the six
months ended June 30, 2017 decreased by $380,000, or 5.1%, to $7.1
million, compared to $7.4 million for the same period of 2016. The
decrease was primarily due to decreased sales to national and
regional distributors and to a lesser extent to the Company's major
international supply chain partner.
Infection Control segment sales for the six months ended June
30, 2017 increased by $314,000, or 12.9%, to $2.7 million, compared
to $2.4 million for the same period of 2016.
Gross profit
Gross profit for the second quarter of 2017 decreased by 1.2% to
$4.49 million, or 39.8% gross profit margin, compared to $4.54
million, or 35.7% gross profit margin, for the same period of
2016.
Gross profit for the six months ended June 30, 2017 was
essentially unchanged at $8.780 million, compared to $8.785 million
for the same period of 2016. The gross profit margin was 39.9% for
the six months ended June 30, 2017, compared to 35.8% for the same
period of 2016. Management expects gross profit margin to be in and
around the 39% range in 2017.
Selling, general and administrative expenses
Selling, general and administrative expenses of $3.35 million
for the second quarter of 2017 were essentially unchanged from
$3.33 million for the same period of 2016. As a percentage of net
sales, selling, general and administrative expenses increased to
29.7% for the second quarter ended June 30, 2017, up from 26.2% for
the same period of 2016.
Selling, general and administrative expenses increased by
$28,000, or 0.4%, to $6.82 million for the six months ended June
30, 2017, up slightly from $6.79 million for the six months ended
June 30, 2016. As a percentage of net sales, selling, general and
administrative expenses increased to 31.0% for the six months ended
June 30, 2017, up from 27.7% for the same period of 2016.
Net income
Net income increased for the second quarter of 2017 to $804,000,
compared to $797,000 for the same period of 2016, an increase of
$7,000, or 0.9%. Net income as a percentage of net sales for the
second quarter of 2017 and 2016 was 7.1% and 6.3%, respectively.
Basic and diluted earnings per common share for the second quarters
of 2017 and 2016 were $0.05 and $0.05, respectively.
Net income for the six months ended June 30, 2017 was $1.4
million, compared to $1.3 million for the same period of 2016, an
increase of 3.8%. The increase in net income was due to an increase
in income before provision for income taxes of $2,000 and a
decrease in provision for income taxes of $48,000. Net income as a
percentage of net sales for the six months ended June 30, 2017 was
6.1%, and net income as a percentage of net sales for the same
period of 2016 was 5.3%. Basic and diluted earnings per common
share for the six months ended June 30, 2017 and 2016 were $0.09
and $0.07, respectively.
Balance Sheet
The consolidated balance sheet remained strong with a cash
balance of $8.8 million as of June 30, 2017, a decrease of $620,000
from $9.5 million as of December 31, 2016. The decrease in cash was
due to cash used in investing activities of $734,000 and cash used
in financing activities of $1.6 million, primarily for the
repurchase of the Company's common stock, offset by cash provided
by operating activities of $1.7 million. The Company ended the
second quarter of 2017 with working capital of $26.0 million and a
current ratio of 15:1.
Inventory decreased by $226,000, or 2.1%, to $10.8 million as of
June 30, 2017, down from $11.0 million as of December 31, 2016. The
decrease was primarily due to a decrease in inventory for the
Disposable Protective Apparel segment of $976,000, or 26.1%, to
$2.8 million, partially offset by an increase in inventory for the
Building Supply segment of $747,000, or 15.2%, to $5.7 million and
an increase in inventory for the Infection Control segment of
$3,000, or 0.1%, to $2.4 million.
Colleen McDonald, Chief Financial Officer, commented, "At the
end of the second quarter of 2017, we had $2.9 million available
for additional stock purchases under our stock repurchase program.
Year-to-date, we have repurchased 525,300 shares of common stock at
a cost of $1.6 million, bringing the program total to 15,496,831
shares of common stock repurchased at a cost of $26.6 million since
the program's inception. All stock is retired upon repurchase, and
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,
the impact of future product lines 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,
|
|
|
|
2017
|
|
|
2016 (1)
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
8,836,000
|
|
|
$
|
9,456,000
|
|
|
Investments
|
|
|
564,000
|
|
|
|
607,000
|
|
|
Accounts receivable, net of allowance for doubtful accounts of
$85,000 and $67,000 as of June 30, 2017 and December 31, 2016,
respectively
|
|
|
4,947,000
|
|
|
|
4,648,000
|
|
|
Accounts receivable, unconsolidated affiliate
|
|
|
278,000
|
|
|
|
174,000
|
|
|
Inventories
|
|
|
10,768,000
|
|
|
|
10,994,000
|
|
|
Prepaid expenses and other current assets
|
|
|
2,505,000
|
|
|
|
3,346,000
|
|
|
Deferred income tax assets
|
|
|
-
|
|
|
|
438,000
|
|
|
|
Total current assets
|
|
|
27,898,000
|
|
|
|
29,663,000
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
3,110,000
|
|
|
|
2,646,000
|
|
Goodwill
|
|
|
55,000
|
|
|
|
55,000
|
|
Definite-lived intangible assets, net
|
|
|
25,000
|
|
|
|
34,000
|
|
Equity investments in unconsolidated affiliate
|
|
|
3,772,000
|
|
|
|
3,538,000
|
|
|
|
Total assets
|
|
$
|
34,860,000
|
|
|
$
|
35,936,000
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,204,000
|
|
|
$
|
1,005,000
|
|
|
Accrued liabilities
|
|
|
712,000
|
|
|
|
1,460,000
|
|
|
|
Total current liabilities
|
|
|
1,916,000
|
|
|
|
2,465,000
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
361,000
|
|
|
|
807,000
|
|
|
|
Total liabilities
|
|
|
2,277,000
|
|
|
|
3,272,000
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value: 50,000,000 shares authorized;
14,926,256 and 15,411,556 shares outstanding as of June 30, 2017
and December 31, 2016, respectively
|
|
|
149,000
|
|
|
|
154,000
|
|
|
Additional paid-in capital
|
|
|
7,729,000
|
|
|
|
9,990,000
|
|
|
Accumulated other comprehensive loss
|
|
|
(239,000
|
)
|
|
|
(204,000
|
)
|
|
Retained earnings
|
|
|
24,944,000
|
|
|
|
22,724,000
|
|
|
|
Total shareholders' equity
|
|
|
32,583,000
|
|
|
|
32,664,000
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
34,860,000
|
|
|
$
|
35,936,000
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The condensed consolidated balance sheet as of December 31, 2016
has been prepared using information from the audited consolidated
balance sheet as of that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Income (Unaudited)
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
11,282,000
|
|
$
|
12,708,000
|
|
$
|
22,032,000
|
|
$
|
24,555,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, excluding depreciation and amortization
|
|
|
6,795,000
|
|
|
8,168,000
|
|
|
13,252,000
|
|
|
15,770,000
|
|
|
Gross profit
|
|
|
4,487,000
|
|
|
4,540,000
|
|
|
8,780,000
|
|
|
8,785,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
3,346,000
|
|
|
3,334,000
|
|
|
6,819,000
|
|
|
6,791,000
|
|
Depreciation and amortization
|
|
|
125,000
|
|
|
117,000
|
|
|
279,000
|
|
|
271,000
|
|
|
Total operating expenses
|
|
|
3,471,000
|
|
|
3,451,000
|
|
|
7,098,000
|
|
|
7,062,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
1,016,000
|
|
|
1,089,000
|
|
|
1,682,000
|
|
|
1,723,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of unconsolidated affiliate
|
|
|
129,000
|
|
|
93,000
|
|
|
234,000
|
|
|
191,000
|
|
Interest income, net
|
|
|
1,000
|
|
|
1,000
|
|
|
2,000
|
|
|
2,000
|
|
|
Total other income
|
|
|
130,000
|
|
|
94,000
|
|
|
236,000
|
|
|
193,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
|
1,146,000
|
|
|
1,183,000
|
|
|
1,918,000
|
|
|
1,916,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
342,000
|
|
|
386,000
|
|
|
564,000
|
|
|
612,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
804,000
|
|
$
|
797,000
|
|
$
|
1,354,000
|
|
$
|
1,304,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
0.05
|
|
$
|
0.05
|
|
$
|
0.09
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
0.05
|
|
$
|
0.05
|
|
$
|
0.09
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
14,953,217
|
|
|
17,211,268
|
|
|
15,079,733
|
|
|
17,440,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
15,006,089
|
|
|
17,211,268
|
|
|
15,151,032
|
|
|
17,440,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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