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
three and six month periods ended June 30, 2018.
Lloyd Hoffman, President and Chief Executive
Officer of Alpha Pro Tech, commented, “Increased sales in the
second quarter were led by significant growth in our Disposable
Protective Apparel segment as a result of increased sales to our
major international supply chain partner and national distributors.
In addition, housewrap sales in the Building Supply segment grew
for the tenth consecutive quarter on a comparative basis, as we
capitalize on increased demand for our innovative products amid
higher levels of construction activity. We are encouraged by the
rollout of our new REX™ Wrap Fortis and expect continued growth of
housewrap sales in the coming quarters. Just as important and as
expected, we are maintaining gross profit margins in the high
thirty percent range as we grow.”
Hoffman continued, “Our balance sheet remains
healthy, with ample cash and working capital to support our
business and a solid base of assets that is unencumbered by debt.
Our business model enables the generation of consistent free cash
flow that enables us to repurchase stock on an on-going basis. At
the same time, we continue to balance the repurchase of stock with
investment in the business for growth and sustained profitability.
We believe that this balanced approach ultimately optimizes the
value of our business for the long term.”
Net sales
Consolidated sales for the second quarter of
2018 were $12.1 million, compared to $11.3 million for the second
quarter of 2017, representing an increase of $827,000, or 7.3%. The
increase was primarily due to increased sales in the Building
Supply segment of $289,000 and increased sales in the Disposable
Protective Apparel of $614,000, partially offset by decreased sales
in the Infection Control segment of $76,000.
Building Supply segment sales for the three
months ended June 30, 2018 increased by 4.6% to $6.6 million,
compared to $6.3 million for the same period of 2017. The sales mix
of the Building Supply segment for the three months ended June 30,
2018 was 49% for housewrap, 39% for synthetic roof underlayment and
12% for other woven material. Comparatively, the sales mix for the
second quarter of 2017 was 40% for housewrap, 51% for synthetic
roof underlayment and 9% for other woven material.
Sales for the Disposable Protective Apparel
segment for the three months ended June 30, 2018 increased by
$614,000, or 16.3% to $4.4 million, compared to $3.8 million for
the same period of 2017.
Infection Control segment sales for the three
months ended June 30, 2018 decreased by $76,000, or 6.2%, to $1.15
million, compared to $1.23 million for the same period of
2017.
Consolidated sales for the six months ended June
30, 2018 increased 6.9% to $23.6 million, compared to $22.0 million
for the same period of 2017. The increase was primarily due to
increased sales in the Building Supply segment of $1,019,000 and
increased sales in the Disposable Protective Apparel of $552,000,
partially offset by decreased sales in the Infection Control
segment of $52,000.
Building Supply segment sales for the first six
months of 2018 increased by $1.0 million, or 8.3%, to $13.2
million, compared to $12.2 million for the same period of 2017. The
increase was primarily due to an increase in sales of housewrap and
an increase in sales of other woven material, partially offset by a
decrease in sales of synthetic roof underlayment.
Sales for the Disposable Protective Apparel
segment for the six months ended June 30, 2018 increased by
$552,000, or 7.8%, to $7.6 million, compared to $7.1 million for
the same period of 2017. The increase was primarily due to
increased sales to the Company’s major international supply chain
partner, as well as national and regional distributors.
Infection Control segment sales for the six
months ended June 30, 2018 decreased by $52,000, or 1.9%, to $2.69
million, compared to $2.74 million for the same period of
2017.
Gross profit
Gross profit for the second quarter of 2018
increased by 5.2% to $4.7 million, or 39.0% gross profit margin,
compared to $4.5 million, or 39.8% gross profit margin, for the
same period of 2017.
Gross profit for the six months ended June 30,
2018 increased by 4.5% to $9.2 million, compared to $8.8 million
for the same period of 2017. The gross profit margin was 39.0% for
the six months ended June 30, 2018, compared to 39.9% for the same
period of 2017. Management expects gross profit margin to be
reduced in 2018 but still to be in the high thirty percent
range.
Selling, general and administrative
expenses
Selling, general and administrative expenses
increased by $122,000, or 3.6%, to $3.5 million for the second
quarter of 2018, compared to $3.3 million for the same period of
2017. The increase was driven by sales team expansion and
enhancement of marketing programs in the Building Supply and
Disposable Protective Apparel segments.
Selling, general and administrative expenses
increased by $530,000, or 7.8%, to $7.3 million for the six months
ended June 30, 2018, up from $6.8 million for the same period of
2017. The increase was primarily the result of expenses associated
with the settlement of a litigation matter. Excluding the
expense for the settlement, selling, general and administrative
expenses would have been relatively flat as compared to the same
period last year.
Net income
Net income for the second quarter of 2018 was
$959,000, compared to $804,000 for the same period of 2017, an
increase of $155,000, or 19.3%. Net income as a percentage of net
sales for the second quarter of 2018 was 7.9%, compared to 7.1% for
the second quarter of 2017. Basic and diluted earnings per common
share for the second quarters of 2018 and 2017 were $0.07 and
$0.05, respectively.
Net income for the six months ended June 30,
2018 was $1.5 million, compared to $1.4 million for the same period
of 2017, an increase of 8.3%. The increase in net income was due to
a decrease in provision for income taxes of $270,000, partially
offset by a decrease in income before provision for income taxes of
$157,000. Net income as a percentage of net sales for the six
months ended June 30, 2018 was 6.2%, compared to 6.1% for the same
period of 2017. Basic and diluted earnings per common share for the
six months ended June 30, 2018 and 2017 were $0.10 and $0.09,
respectively. Net income for the six months ended June 30, 2018,
excluding the settlement expense mentioned above, would have been
significantly higher than the six months ended June 30, 2017.
Balance Sheet
The consolidated balance sheet remained strong
with a cash balance of $7.2 million as of June 30, 2018, a decrease
of $1.6 million from $8.8 million as of December 31, 2017. The
decrease in cash was due to cash used in financing activities of
$1,497,000, primarily from the repurchase of common stock, and cash
used in investing activities of $240,000, partially offset by cash
provided by operating activities of $132,000. The Company ended the
second quarter of 2018 with working capital of $24.1 million and a
current ratio of 12:1.
Inventory decreased by $558,000, or 5.4%, to
$9.7 million as of June 30, 2018, down from $10.2 million as of
December 31, 2017. The decrease was primarily due to a decrease in
inventory for the Disposable Protective Apparel segment of
$386,000, or 11.2%, to $3.1 million and a decrease in inventory for
the Building Supply segment of $315,000, or 6.9%, to $4.3 million,
partially offset by an increase in inventory for the Infection
Control segment of $143,000, or 6.5%, to $2.4 million.
Colleen McDonald, Chief Financial Officer,
commented, “At the end of the second quarter of 2018, we had $2.7
million available for additional stock purchases under our stock
repurchase program. During the six months ended June 30, 2018, we
repurchased 453,000 shares of common stock at a cost of $1.6
million, bringing the program total to 16,657,007 shares of common
stock repurchased at a cost of $30.6 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. Management
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 sales growth 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
(Unaudited)
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
|
2018 |
|
2017 (1) |
Assets |
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash |
|
|
$ |
7,158,000 |
|
$ |
8,763,000 |
|
|
Investments |
|
278,000 |
|
|
343,000 |
|
|
Accounts
receivable, net of allowance for doubtful accounts of $73,000 and
$83,000 as of June 30, 2018 and December 31, 2017 |
|
4,838,000 |
|
|
4,597,000 |
|
|
Accounts
receivable, related party |
|
641,000 |
|
|
361,000 |
|
|
Inventories |
|
9,691,000 |
|
|
10,249,000 |
|
|
Prepaid
expenses |
|
3,688,000 |
|
|
2,665,000 |
|
|
|
|
Total
current assets |
|
26,294,000 |
|
|
26,978,000 |
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
3,111,000 |
|
|
3,158,000 |
|
Goodwill |
|
|
55,000 |
|
|
55,000 |
|
Definite-lived intangible assets, net |
|
18,000 |
|
|
21,000 |
|
Deferred
income tax assets |
|
19,000 |
|
|
19,000 |
|
Equity
investment in unconsolidated affiliate |
|
4,183,000 |
|
|
3,893,000 |
|
|
|
|
Total
assets |
$ |
33,680,000 |
|
$ |
34,124,000 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
457,000 |
|
$ |
1,236,000 |
|
|
Accrued
liabilities |
|
1,734,000 |
|
|
1,565,000 |
|
|
|
|
Total
current liabilities |
|
2,191,000 |
|
|
2,801,000 |
|
|
|
|
|
|
|
|
|
|
|
Commitments |
|
|
|
Shareholders' equity: |
|
|
|
|
Common
stock, $.01 par value: 50,000,000 shares authorized; 13,909,416 and
14,290,749 shares outstanding as of June 30, 2018 and December 31,
2017, respectively |
|
139,000 |
|
|
143,000 |
|
|
Additional
paid-in capital |
|
4,118,000 |
|
|
5,415,000 |
|
|
Accumulated
other comprehensive loss |
|
- |
|
|
(458,000 |
) |
|
Retained
earnings |
|
27,232,000 |
|
|
26,223,000 |
|
|
|
|
Total
shareholders' equity |
|
31,489,000 |
|
|
31,323,000 |
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
33,680,000 |
|
$ |
34,124,000 |
|
(1) The condensed consolidated balance sheet as of December 31,
2017 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, |
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
12,109,000 |
|
|
$ |
11,282,000 |
|
$ |
23,551,000 |
|
|
$ |
22,032,000 |
|
|
|
|
|
|
|
|
|
Cost of
goods sold, excluding depreciation and amortization |
|
|
7,390,000 |
|
|
|
6,795,000 |
|
|
14,377,000 |
|
|
|
13,252,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
4,719,000 |
|
|
|
4,487,000 |
|
|
9,174,000 |
|
|
|
8,780,000 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
|
3,468,000 |
|
|
|
3,346,000 |
|
|
7,349,000 |
|
|
|
6,819,000 |
|
Depreciation and amortization |
|
|
144,000 |
|
|
|
125,000 |
|
|
290,000 |
|
|
|
279,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
3,612,000 |
|
|
|
3,471,000 |
|
|
7,639,000 |
|
|
|
7,098,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
1,107,000 |
|
|
|
1,016,000 |
|
|
1,535,000 |
|
|
|
1,682,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income: |
|
|
|
|
|
|
|
|
|
Equity in
income of unconsolidated affiliate |
|
|
151,000 |
|
|
|
129,000 |
|
|
290,000 |
|
|
|
234,000 |
|
Unrealized
loss on marketable securities |
|
|
(97,000 |
) |
|
|
- |
|
|
(65,000 |
) |
|
|
- |
|
Interest
income, net |
|
|
1,000 |
|
|
|
1,000 |
|
|
1,000 |
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income |
|
|
55,000 |
|
|
|
130,000 |
|
|
226,000 |
|
|
|
236,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
|
1,162,000 |
|
|
|
1,146,000 |
|
|
1,761,000 |
|
|
|
1,918,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
203,000 |
|
|
|
342,000 |
|
|
294,000 |
|
|
|
564,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
959,000 |
|
|
$ |
804,000 |
|
$ |
1,467,000 |
|
|
$ |
1,354,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share |
|
$ |
0.07 |
|
|
$ |
0.05 |
|
$ |
0.10 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share |
|
$ |
0.07 |
|
|
$ |
0.05 |
|
$ |
0.10 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average common shares outstanding |
|
|
14,086,277 |
|
|
|
14,953,217 |
|
|
14,151,734 |
|
|
|
15,079,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average common shares outstanding |
|
|
14,127,934 |
|
|
|
15,006,089 |
|
|
14,219,063 |
|
|
|
15,151,032 |
Company Contact:
Alpha Pro
Tech, Ltd.
Donna Millar
905-479-0654
e-mail: ir@alphaprotech.com
Investor Relations Contact:Hayden IRCameron
Donahue651-653-1854e-mail: cameron@haydenir.com
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