Alpha Pro Tech, Ltd. (NYSE American: 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 fourth quarter and year ended
December 31, 2018.
Lloyd Hoffman, President and Chief Executive
Officer of Alpha Pro Tech, commented, “Increased sales in 2018 were
driven by solid growth in our Building Supply and Disposable
Protective Apparel segments, which grew by 6% and 10%,
respectively. Building Supply sales were positively impacted by
record revenue in both housewrap and other woven material products.
Based on the success of our TECHNO SB® synthetic roof underlayment
product in 2018, we will be expanding this line to include two new
products, an economy and a premium version. These new products
should provide significant growth opportunities commencing in 2019.
Strong Disposable Protective Apparel segment sales in 2018 were
driven by increased sales to our major international supply chain
partner and to our national and regional distributors. We are
optimistic about continued overall company revenue growth for
2019.”
Hoffman continued, “Demand for our products,
coupled with our continued focus on controlling costs, contributed
to our financial results for 2018, including 38% net income growth
for the year. Our consistent generation of net income allows us to
return value to our shareholders through our share repurchase
program, which enabled us to increase earnings per share by 48%
during 2018. Earnings per share of $0.26 in 2018 has only been
exceeded one time in our history, in 2009, which resulted, in large
part, from record sales in connection with the unusual global H1N1
Influenza A pandemic.”
Net sales
Consolidated sales for the fourth quarter of
2018 were $11.0 million, compared to $9.9 million for the fourth
quarter of 2017, an increase of 10.3%. Building Supply segment
sales for the three months ended December 31, 2018 increased by
8.8% to $5.8 million, compared to $5.3 million for the same period
of 2017. Sales for the Disposable Protective Apparel segment for
the three months ended December 31, 2018 increased 22.0% to $4.1
million, compared to $3.3 million for the same period of 2017.
Infection Control segment sales for the three months ended December
31, 2018 declined by 14.2% to $1.1 million, compared to $1.3
million for the same period of 2017.
Consolidated sales for the year ended December
31, 2018 were $46.6 million, compared to $44.0 million for the year
ended December 31, 2017, an increase of 5.9%. Revenue growth in
2018 was driven by increased sales in the Building Supply segment
of $1.4 million and increased sales of $1.4 million in the
Disposable Protective Apparel segment, partially offset by a
decline in Infection Control segment sales of $0.2 million.
Building Supply segment sales in 2018 increased
by $1.4 million, or 5.7%, to $26.0 million, compared to $24.6
million in 2017, primarily driven by an increase in sales of
housewrap and other woven material, partially offset by a decrease
in sales of synthetic roof underlayment. The sales mix of the
Building Supply segment for the year ended December 31, 2018 was
44% for synthetic roof underlayment, 44% for housewrap and 12% for
other woven material. This compared to a sales mix of 50% for
synthetic roof underlayment, 41% for housewrap and 9% for other
woven material for the year ended December 31, 2017.
Sales for the Disposable Protective Apparel
segment for the year ended December 31, 2018 increased by $1.4
million, or 9.6%, to $15.6 million, compared to $14.3 million for
the year ended December 31, 2017. The increase was primarily due to
increased sales to our major international supply chain partner,
our national distributors and to a lesser extent, regional
distributors.
Infection Control segment sales for the year
ended December 31, 2018 declined by $157,000, or 3.1%, to $5.0
million, compared to $5.1 million for the year ended December 31,
2017, driven by weak mask sales which were down 8.3%, or $293,000,
to $3.3 million, primarily due to lower sales to private label
distributors. Shield sales were up 8.6%, or $136,000, to $1.7
million, driven by higher sales to a national distributor.
Gross profit
Gross profit for the fourth quarter of 2018
decreased by 0.2% to $4.0 million, or 36.0% gross profit margin,
compared to $4.0 million, or 39.8% gross profit margin, for the
same period of 2017.
Gross profit for the year ended December
31, 2018 increased by $259,000, or 1.5%, to $17.7 million, compared
to $17.5 million for the year ended December 31, 2017. The gross
profit margin was 38.0% for the year ended December 31, 2018,
compared to 39.6% for the year ended December 31, 2017. Gross
profit margins were impacted by increased rebates, increased
freight costs and a change in product mix in the Building Supply
segment. Management expects 2019 gross profit margins to be similar
to those in 2018.
Selling, general and administrative
expenses
Selling, general and administrative expenses
decreased by $398,000, or 10.8%, to $3.3 million for the fourth
quarter of 2018, compared to $3.7 million for the same period of
2017. The decrease was primarily due to an accrual during the
fourth quarter of 2017 of $619,000 related to the death benefit
provided for by the employment agreement of Alexander Millar, our
former President and Chairman who passed away in December 2017.
Selling, general and administrative expenses
decreased by $643,000, or 4.6%, to $13.3 million for the year ended
December 31, 2018, from $14.0 million for the year ended December
31, 2017. The decline in selling, general and administrative
expenses for 2018 was also driven by the $619,000 death benefit
accrual during 2017, as discussed above, which was not repeated in
2018.
Income from Operations
Income from operations increased by $441,000, or
344.5%, to $569,000 for the three months ended December 31, 2018,
compared to $128,000 for the three months ended December 31, 2017.
Income from operations for the fourth quarter of 2018 was
positively affected by the decline of $398,000 in selling, general
and administrative expenses.
Income from operations increased by $948,000, or
32.4%, to $3.9 million for the year ended December 31, 2018,
compared to $2.9 million for the year ended December 31, 2017. The
increase in income from operations was primarily driven by the
increase in gross profit of $259,000 and the decrease in selling,
general and administrative expenses of $643,000.
Net income
Net income increased for the fourth quarter of
2018 to $618,000, compared to $176,000 for the same period of 2017,
an increase of $442,000, or 251.1%. Net income as a percentage of
net sales for the fourth quarter of 2018 was 5.6%, compared to 1.8%
for the fourth quarter of 2017. Basic and diluted earnings per
common share for the fourth quarters of 2018 and 2017 were $0.05
and $0.01, respectively.
Net income for the year ended December 31, 2018
was $3.6 million, compared to $2.6 million for the year ended
December 31, 2017, an increase of $1.0 million, or 37.7%. The
increase in net income was due to an increase in income from
operations of $948,000 and a decrease in provision for income taxes
of $248,000, partially offset by a decrease in other income of
$204,000, primarily due to the gain on sale of property during 2017
that was not repeated in 2018. Net income as a percentage of net
sales for the year ended December 31, 2018 was 7.8%, up from 6.0%
for the year ended December 31, 2017. Basic and diluted earnings
per common share for the years ended December 31, 2018 and 2017
were $0.26 and $0.18, respectively.
Balance Sheet
The consolidated balance sheet remained strong
with a cash balance of $7.0 million as of December 31, 2018,
compared to $8.8 million as of December 31, 2017. The decrease in
cash was due to cash used in financing activities of $3.2 million,
primarily in connection with the repurchase of common stock, and
cash used in investing activities of $570,000, partially offset by
cash provided by operating activities of $2.0 million. The Company
ended the 2018 year with working capital of $24.5 million and a
current ratio of 14:1.
Inventory decreased by $371,000, or 3.6%, to
$9.9 million as of December 31, 2018, down from $10.3 million as of
December 31, 2017. The decrease was primarily due to a decrease in
inventory for the Building Supply segment of $267,000, or 5.8%, to
$4.3 million, a decrease in inventory for the Disposable Protective
Apparel segment of $10,000, or 0.3%, to $3.5 million, and a
decrease in inventory for the Infection Control segment of $94,000,
or 4.2%, to $2.1 million.
Colleen McDonald, Chief Financial Officer,
commented, “On December 20, 2018, the Board of Directors authorized
a $2.0 million expansion of the existing share repurchase program,
and, as of year end, the amount available for additional
repurchases under our stock repurchase program was $2.7 million.
During the year ended December 31, 2018, we repurchased 999,900
shares of common stock at a cost of $3.6 million, bringing the
program total to 17,203,907 shares of common stock repurchased at a
cost of $32.8 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,
new or expanded products or 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.
-- Tables follow --
Condensed Consolidated Balance Sheets
|
December
31, |
|
2018 |
|
2017 |
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash |
$ |
7,007,000 |
|
|
$ 8,763,000 |
|
Investments |
258,000 |
|
|
343,000 |
|
Accounts
receivable, net of allowance for doubtful accounts of |
|
|
|
|
$64,000
and $83,000 as of December 31, 2018 and 2017, respectively |
4,935,000 |
|
|
4,597,000 |
|
Accounts
receivable, related party |
383,000 |
|
|
361,000 |
|
Inventories |
9,878,000 |
|
|
10,249,000 |
|
Prepaid
expenses |
3,999,000 |
|
|
2,665,000 |
|
Total
current assets |
26,460,000 |
|
|
26,978,000 |
|
|
|
|
|
|
Property and equipment,
net |
3,244,000 |
|
|
3,158,000 |
|
Goodwill |
55,000 |
|
|
55,000 |
|
Definite-lived
intangible assets, net |
16,000 |
|
|
21,000 |
|
Deferred income tax
assets |
- |
|
|
19,000 |
|
Equity investments in
unconsolidated affiliate |
4,480,000 |
|
|
3,893,000 |
|
Total assets |
$ |
34,255,000 |
|
|
$ |
34,124,000 |
|
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
578,000 |
|
|
$ |
1,236,000 |
|
Accrued
liabilities |
1,342,000 |
|
|
1,565,000 |
|
Total
current liabilities |
1,920,000 |
|
|
2,801,000 |
|
|
|
|
|
|
Deferred income tax
liabilities |
141,000 |
|
|
|
- |
|
Total
liabilities |
2,061,000 |
|
|
2,801,000 |
|
|
|
|
|
|
Commitments |
|
|
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
|
Common
stock, $.01 par value: 50,000,000 shares authorized; |
|
|
|
|
13,502,684 and 14,290,749 shares outstanding as of |
|
|
|
|
December
31, 2018 and 2017, respectively |
135,000 |
|
|
143,000 |
|
Additional paid-in capital |
2,669,000 |
|
|
5,415,000 |
|
Accumulated other comprehensive loss |
- |
|
|
(458,000 |
) |
Retained
earnings |
29,390,000 |
|
|
26,223,000 |
|
Total
shareholders' equity |
32,194,000 |
|
|
31,323,000 |
|
Total
liabilities and shareholders' equity |
$ |
34,255,000 |
|
|
$ |
34,124,000 |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Income Statements
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
10,969,000 |
|
|
$ |
9,943,000 |
|
|
$ |
46,624,000 |
|
|
$ |
44,025,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold,
excluding depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization |
7,017,000 |
|
|
5,984,000 |
|
|
28,913,000 |
|
|
|
26,573,000 |
|
Gross
profit |
3,952,000 |
|
|
3,959,000 |
|
|
17,711,000 |
|
|
|
17,452,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
3,288,000 |
|
|
3,686,000 |
|
|
13,312,000 |
|
|
|
13,955,000 |
|
Depreciation and
amortization |
95,000 |
|
|
145,000 |
|
|
525,000 |
|
|
|
571,000 |
|
Total
operating expenses |
3,383,000 |
|
|
3,831,000 |
|
|
13,837,000 |
|
|
|
14,526,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations |
569,000 |
|
|
128,000 |
|
|
3,874,000 |
|
|
|
2,926,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of
unconsolidated affiliate |
194,000 |
|
|
16,000 |
|
|
587,000 |
|
|
|
355,000 |
|
Gain on sale of
property |
- |
|
|
- |
|
|
- |
|
|
|
385,000 |
|
Losses from marketable
securities |
(10,000 |
) |
|
- |
|
|
(50,000 |
) |
|
|
- |
|
Interest income,
net |
1,000 |
|
|
1,000 |
|
|
3,000 |
|
|
|
4,000 |
|
Total
other income, net |
185,000 |
|
|
17,000 |
|
|
540,000 |
|
|
|
744,000 |
|
Income before
provision |
|
|
|
|
|
|
|
|
|
|
|
|
for (benefit
from) income taxes |
754,000 |
|
|
145,000 |
|
|
4,414,000 |
|
|
|
3,670,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes |
136,000 |
|
|
(31,000 |
) |
|
789,000 |
|
|
|
1,037,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
618,000 |
|
|
$ |
176,000 |
|
|
$ |
3,625,000 |
|
|
$ |
2,633,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.05 |
|
|
$ |
0.01 |
|
|
$ |
0.26 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.05 |
|
|
$ |
0.01 |
|
|
$ |
0.26 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
common shares outstanding |
13,548,170 |
|
|
14,419,049 |
|
|
13,909,688 |
|
|
|
14,825,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding |
13,623,714 |
|
|
14,704,296 |
|
|
13,962,819 |
|
|
|
14,993,009 |
|
|
|
Company Contact: |
Investor Relations
Contact: |
Alpha Pro Tech, Ltd. |
Hayden IR |
Donna Millar |
Cameron Donahue |
905-479-0654 |
651-653-1854 |
e-mail: ir@alphaprotech.com |
e-mail: cameron@haydenir.com |
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