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 nine months ended
September 30, 2021.
Lloyd Hoffman, President and Chief Executive
Officer of Alpha Pro Tech, commented, “The company continued to see
the normalization of mask and shield sales to pre-pandemic levels
in the third quarter, consistent with management’s prior guidance.
The third quarter of 2020 was the high point of pandemic-related
mask and shield sales and, as such, creates a higher sales decrease
when compared to the third quarter of 2021. Sales for the
disposable protective garments in the third quarter of 2021 were
down, as inventory levels in the supply chain, primarily with our
major international channel partner, were higher than historical
levels as a result of record sales in the first and second quarters
of 2021. We outlined this expectation in our second quarter
earnings release and believe this should normalize as our channel
partner’s inventory levels return to normal. This partner’s sales
to its end users for the three and nine months ended September 30,
2021 were significantly higher than pre-pandemic levels and through
the first nine months of 2020. Although down in the third quarter,
year to date disposable protective garments sales have increased by
15.9% compared to the same period in 2020.”
“Building Supply segment sales in the third
quarter of 2021 showed continued significant growth, with both our
synthetic roof underlayment and housewrap products achieving record
quarterly sales. We have now achieved consecutive quarterly sales
records in this segment as the second quarter of 2021 was the
previous highest quarter in company history. The synthetic roof
underlayment sales increase of 35.9% from the third quarter of 2020
was due to the increase in inventory requirements at the dealer
level, as well as the expansion of new home construction. The
housewrap family of products continued to show growth with a sales
increase of 25.7% compared to the third quarter of 2020 due to an
increase in new market share and increased demand for new homes
construction. We continue to enjoy the increased acceptance of our
“system sell” of housewrap with the associated accessories in order
to provide customers with a complete solution, adding incremental
revenue.”
“We continue to be optimistic regarding our
expectation for continued growth in future periods and have
committed to increasing production capacity for the Building Supply
segment by investing approximately $4.0 million in new equipment,
part of which became operational in the latter part of the third
quarter of 2021 and began to contribute to the record sales
quarter. As a result of a delay in the supply chain, the most
expensive piece of equipment is now anticipated to arrive in the
latter part of the fourth quarter of 2021 and is expected to be
operational in the first quarter of 2022, which will add additional
capacity for future growth,” added Hoffman
Net Sales
Consolidated sales for the three months
ended September 30, 2021, decreased to $14.5 million, from
$30.0 million for the three months ended September 30, 2020,
representing a decrease of $15.6 million, or 51.8%. This decrease
consisted of decreased sales in the Disposable Protective Apparel
segment of $18.0 million, partially offset by increased sales in
the Building Supply segment of $2.4 million.
Sales for the Disposable Protective
Apparel segment for the three months ended September 30,
2021 decreased by $18.0 million, or 80.3%, to $4.4 million,
compared to $22.4 million for the same period of 2020. This segment
decrease was due to a 92.3% decrease in sales of face masks, a
91.9% decrease in sales of face shields, and a 33.1% decrease in
sales of disposable protective garments.
The sales mix of the Disposable Protective
Apparel segment for the three months ended September 30, 2021 was
approximately 69% for disposable protective garments, 23% for face
masks and 8% for face shields. This sales mix is compared to
approximately 20% for disposable protective garments, 60% for face
masks and 20% for face shields for the three months ended September
30, 2020.
Building Supply segment sales
for the three months ended September 30, 2021, increased by $2.4
million or 31.4%, to a quarterly record of $10.1 million, compared
to $7.7 million for the three months ended September 30, 2020. The
Building Supply segment increase was primarily due to a 35.9%
increase in sales of synthetic roof underlayment, a 25.7% increase
in sales of housewrap and a 26.7% increase in sales of other woven
material compared to the same period of 2020.
The sales mix of the Building Supply segment for
the three months ended September 30, 2021 was approximately 50% for
synthetic roof underlayment, 43% for housewrap and 7% for other
woven material. This compared to approximately 49% for synthetic
roof underlayment, 44% for housewrap and 7% for other woven
material for the three months ended September 30, 2020. Our
synthetic roof underlayment product line includes REX SynFelt®, REX
TECHNOply® and TECHNO SB®, and our housewrap product line consists
of REX Wrap®, REX Wrap® Plus and REX Wrap Fortis®.
Consolidated sales for the nine months
ended September 30, 2021, decreased to $55.4 million from
$73.7 million for the nine months ended September 30, 2020,
representing a decrease of $18.2 million or 24.8%. This decrease
consisted of decreased sales in the Disposable Protective Apparel
Segment of $23.8 million, partially offset by a $5.5 million
increase in sales for the Building Supply segment.
Sales for the Disposable Protective
Apparel segment for the nine months ended September 30,
2021, decreased by $23.8 million, or 46.6%, to $27.2 million,
compared to $51.0 million for the same period of 2020. This segment
decrease was due to a 71.4% decrease in sales of face masks, a
69.6% decrease in sales of face shields and a 15.9% increase in
sales of disposable protective garments, all primarily due to
customer demand associated with the pandemic.
The sales mix of the Disposable Protective
Apparel segment for the nine months ended September 30, 2021 was
61% for disposable protective garments, 28% for masks and 11% for
shields. This sales mix is compared to 28% for disposable
protective garments, 52% for masks and 20% for shields for the nine
months ended September 30, 2020.
Building Supply segment sales
for the nine months ended September 30, 2021, increased by $5.5
million, or 24.4%, to $28.2 million, compared to $22.7 million for
the same period of 2020. The Building Supply segment increase was
primarily due to an increase in sales of synthetic roof
underlayment of 34.4%, an increase in sales of housewrap of 19.6%,
and an increase in sales of other woven material of 4.3% compared
to the same period of 2020. Synthetic roof underlayment sales
increased as a result of increased sales of the Company’s TECHNO
family of products. Synthetic roof underlayment and housewrap sales
were positively affected during the nine months ended September 30,
2021, by an increase in market share as well as improved U.S.
housing starts. The U.S. Commerce Department recently reported that
new home sales growth re-accelerated in the month of September to
14%, but due to supply chain issues for certain housing components
which we do not supply, in addition to inflationary pressures,
there is still uncertainty in the housing industry which could
affect the Company’s sales.
The sales mix of the Building Supply segment for
the nine months ended September 30, 2021 was 50% for synthetic roof
underlayment, 42% for housewrap and 8% for other woven material.
This compared to 46% for synthetic roof underlayment, 45% for
housewrap and 9% for other woven material for the nine months ended
September 30, 2020.
Gross Profit:
Gross profit decreased by $10.2 million, or
67.3%, to $4.9 million for the three months ended September 30,
2021, from $15.1 million for the three months ended September 30,
2020. The gross profit margin was 34.1% for the three months ended
September 30, 2021, compared to 50.4% for the three months ended
September 30, 2020.
Gross profit decreased by $16.0 million, or
43.9%, to $20.4 million for the nine months ended September 30,
2021, from $36.3 million for the same period of 2020. The gross
profit margin was 36.7% for the nine months ended September 30,
2021, compared to 49.3% for the same period of 2020.
Management believes that gross profit margin
will be negatively affected in 2021 as a result of changes in
product mix, as the need for face masks and face shields which have
a higher gross profit margin than our other products, declines from
the surge in customer demand in 2020 as a result of the COVID-19
pandemic. In addition, gross profit is being negatively impacted by
significant increases in ocean freight and other transportation
costs as well as higher than normal increases in raw material costs
which change at a significantly faster pace than the Company can
sometimes fulfill order backlog. Our portfolio of products has been
affected by much higher than normal increases in raw material
costs. In the current environment, cost increases may rise more
rapidly than our sales price increases, which could decrease gross
profit.
Selling, General and Administrative
Expenses
Selling, general and administrative expenses
decreased by $696,000, or 15.2%, to $3.9 million for the three
months ended September 30, 2021, from $4.6 million for the three
months ended September 30, 2020. However, as a percentage of net
sales, selling, general and administrative expenses increased to
26.8% for the three months ended September 30, 2021, up from 15.3%
for the same period of 2020, primarily as a result of lower net
sales.
Selling, general and administrative expenses
decreased by $575,000, or 4.3%, to $12.7 million for the nine
months ended September 30, 2021, from $13.2 million for the nine
months ended September 30, 2020. As a percentage of net sales,
selling, general and administrative expenses increased to 22.8% for
the nine months ended September 30, 2021, up from 18.0% for the
same period of 2020, primarily as a result of lower net sales.
Income from Operations
Income from operations decreased by $9.5
million, or 91.8%, to $849,000 for the three months ended September
30, 2021, compared to $10.4 million for the three months ended
September 30, 2020. The decreased income from operations was
primarily due to a decrease in gross profit of $10.2 million and an
increase in depreciation and amortization expense of $23,000,
partially offset by a decrease in selling, general and
administrative expenses of $696,000. Income from operations as a
percentage of net sales for the three months ended September 30,
2021 was 5.9%, compared to 34.5% for the same period of 2020.
Income from operations decreased by $15.4
million, or 68.6%, to $7.1 million for the nine months ended
September 30, 2021, compared to $22.5 million for the nine months
ended September 30, 2020. The decreased income from operations was
primarily due to a decrease in gross profit of $16.0 million and an
increase in depreciation and amortization expense of $65,000,
partially offset by a decrease in selling, general and
administrative expenses of $575,000. Income from operations as a
percentage of net sales for the nine months ended September 30,
2021 was 12.8%, compared to 30.6% for the same period of 2020.
Net Income
Net income for the three months ended September
30, 2021 was $766,000, compared to net income of $8.1 million for
the three months ended September 30, 2020, representing a decrease
of $7.3 million or 90.6%. Net income as a percentage of net sales
for the three months ended September 30, 2021 was 5.3%, and net
income as a percentage of net sales for the same period of 2020 was
27.0%. Basic earnings per common share for the three months ended
September 30, 2021, and 2020 were $0.06 and $0.60, respectively.
Diluted earnings per common share for the three months ended
September 30, 2021 and 2020 were $0.06 and $0.58, respectively.
Net income for the nine months ended September
30, 2021 was $6.2 million, compared to net income of $19.7 million
for the same period of 2020, representing a decrease of $13.5
million, or 68.7%. The decrease in net income between the nine
months ending 2021 and 2020 was due to a decrease in income before
provision for income taxes of $15.2 million, partially offset by a
decrease in provision for income taxes of $1.7 million. A tax
benefit from stock options exercised positively impacted net income
in the first quarter of 2020 by an estimated $2.0 million. Net
income as a percentage of net sales for the nine months ended
September 30, 2021 was 11.1%, and net income as a percentage of net
sales for the same period of 2020 was 26.7%. Basic earnings per
common share for the nine months ended September 30, 2021 and 2020
were $0.46 and $1.46, respectively. Diluted earnings per common
share for the nine months ended September 30, 2021 and 2020 were
$0.45 and $1.41, respectively.
Balance Sheet
As of September 30, 2021, the Company had cash
of $17.6 million compared to $23.3 million as of December 31, 2020.
The decrease in cash from December 31, 2020 was due to cash used in
investing activities of $2,391,000 and cash used in financing
activities of $3,686,000, partially offset by cash provided by
operating activities of $2,969,000. Working capital totaled $49.7
million and the Company’s current ratio was 17:1, compared to a
current ratio of 9:1 as of December 31, 2020.
Inventory increased by $6.4 million or 38.5%, to
$23.2 million as of September 30, 2021, from $16.7 million as of
December 31, 2020. The increase was primarily due to an increase in
inventory for the Disposable Protective Apparel segment of $4.9
million, or 42.2%, to $16.4 million and an increase in inventory
for the Building Supply segment of $1.6 million, or 30.3%, to $6.8
million.
Colleen McDonald, Chief Financial Officer,
commented, “During the three months ended September 30, 2021, we
repurchased 46,000 shares of the Company’s common stock at a cost
of $369,000. As of September 30, 2021, we had repurchased a total
of 18,492,917 shares of the Company’s common stock at a cost of
approximately $42 million through our repurchase program. We retire
all stock upon repurchase. Future repurchases are expected to be
funded from cash on hand and cash flows from operating activities.
As of September 30, 2021, we had $409,000 available for additional
stock purchases under our stock repurchase program.”
The Company currently has no outstanding debt
and believes that the current cash balance will be sufficient to
satisfy projected working capital needs and planned capital
expenditures for the foreseeable future. The Company
has made approximately $4.0 million in commitments for capital
investments to increase production capacity in the Building Supply
segment, of which $2.5 million has been paid as of September 30,
2021.
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, expectations regarding order volume, timing of
fulfillment of orders, production capacity and our plans to
ramp up production and expand capacity, product
demand, availability of raw materials and supply chain access,
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. Specifically,
these factors include, but are not limited to, changes in global
economic conditions; the effects of the COVID-19 pandemic on our
business and operations, the business and operations of those
within our supply chain and global economic conditions generally;
changes in order volume by our customers; the inability of our
suppliers and contractors to meet our requirements; potential
challenges related to international manufacturing; our partnership
with a joint venture partner; the inability to protect our
intellectual property; competition in our industry; customer
preferences; the timing and market acceptance of new product
offerings; security breaches or disruptions to the information
technology infrastructure; the impact of legal and regulatory
proceedings or compliance challenges; and volatility in our common
stock price and our investments. 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 --
Consolidated Balance Sheets (Unaudited)
|
|
|
|
September 30, |
December 31, |
|
|
|
|
|
|
2021 |
|
2020 (1) |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
17,636,000 |
|
$ |
23,292,000 |
|
|
Accounts receivable, net of allowance for doubtful accounts of |
|
|
|
|
|
|
$64,000 as of September 30, 2021 and $71,000 as of December 31,
2020 |
|
3,991,000 |
|
|
8,132,000 |
|
|
Accounts receivable, related party |
|
1,396,000 |
|
|
905,000 |
|
|
Inventories, net |
|
23,190,000 |
|
|
16,749,000 |
|
|
Prepaid expenses |
|
6,562,000 |
|
|
6,225,000 |
|
|
|
|
Total current assets |
|
52,775,000 |
|
|
55,303,000 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
6,136,000 |
|
|
4,353,000 |
|
Goodwill |
|
55,000 |
|
|
55,000 |
|
Definite-lived intangible assets, net |
|
4,000 |
|
|
7,000 |
|
Right-of-use assets |
|
2,872,000 |
|
|
3,535,000 |
|
Equity investment in unconsolidated affiliate |
|
6,172,000 |
|
|
5,549,000 |
- |
|
|
|
Total assets |
$ |
68,014,000 |
|
$ |
68,802,000 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
1,029,000 |
|
$ |
1,983,000 |
|
|
Accrued liabilities |
|
1,120,000 |
|
|
2,793,000 |
|
|
Customer advance payments of orders |
|
- |
|
|
209,000 |
|
|
Lease liabilities |
|
880,000 |
|
|
867,000 |
|
|
|
|
Total current liabilities |
|
3,029,000 |
|
|
5,852,000 |
|
|
|
|
|
|
|
|
|
Lease liabilities, net of current portion |
|
2,046,000 |
|
|
2,719,000 |
|
Deferred income tax liabilities, net |
|
211,000 |
|
|
211,000 |
|
|
|
|
Total liabilities |
|
5,286,000 |
|
|
8,782,000 |
|
Commitments |
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Common stock, $.01 par value: 50,000,000 shares authorized; |
|
|
|
|
|
|
13,162,341 and 13,419,847 shares outstanding as of |
|
|
|
|
|
|
September 30, 2021 and December 31, 2020, respectively |
|
132,000 |
|
|
135,000 |
|
|
Additional paid-in capital |
|
- |
|
|
409,000 |
|
|
Retained earnings |
|
62,596,000 |
|
|
59,476,000 |
|
|
|
|
Total shareholders' equity |
|
62,728,000 |
|
|
60,020,000 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
68,014,000 |
|
$ |
68,802,000 |
|
|
|
|
|
|
|
|
|
1) The condensed consolidated balance sheet as of December 31,
2020 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 Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
14,475,000 |
|
$ |
30,027,000 |
|
|
$ |
55,442,000 |
|
$ |
73,681,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, excluding depreciation and amortization |
|
|
9,533,000 |
|
|
14,891,000 |
|
|
|
35,089,000 |
|
|
37,378,000 |
|
|
Gross profit |
|
|
4,942,000 |
|
|
15,136,000 |
|
|
|
20,353,000 |
|
|
36,303,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
3,884,000 |
|
|
4,580,000 |
|
|
|
12,661,000 |
|
|
13,236,000 |
|
|
Depreciation and amortization |
|
|
209,000 |
|
|
186,000 |
|
|
|
611,000 |
|
|
546,000 |
|
|
Total operating expenses |
|
|
4,093,000 |
|
|
4,766,000 |
|
|
|
13,272,000 |
|
|
13,782,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
849,000 |
|
|
10,370,000 |
|
|
|
7,081,000 |
|
|
22,521,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
Equity in income of unconsolidated affiliate |
|
|
112,000 |
|
|
250,000 |
|
|
|
623,000 |
|
|
456,000 |
|
|
Gain /(Loss) on marketable securities |
|
|
- |
|
|
(24,000 |
) |
|
|
- |
|
|
(42,000 |
) |
|
Interest income, net |
|
|
1,000 |
|
|
1,000 |
|
|
|
2,000 |
|
|
17,000 |
|
|
Total other income |
|
|
113,000 |
|
|
227,000 |
|
|
|
625,000 |
|
|
431,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
962,000 |
|
|
10,597,000 |
|
|
|
7,706,000 |
|
|
22,952,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
196,000 |
|
|
2,490,000 |
|
|
|
1,550,000 |
|
|
3,284,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
766,000 |
|
$ |
8,107,000 |
|
|
$ |
6,156,000 |
|
$ |
19,668,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.06 |
|
$ |
0.60 |
|
|
$ |
0.46 |
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.06 |
|
$ |
0.58 |
|
|
$ |
0.45 |
|
$ |
1.41 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding |
|
13,177,520 |
|
|
13,588,554 |
|
|
|
13,255,125 |
|
|
13,431,210 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding |
|
|
13,419,485 |
|
|
14,033,027 |
|
|
|
13,555,925 |
|
|
13,977,564 |
|
|
|
|
|
|
|
|
|
|
|
|
Company Contact: |
Investor Relations Contact: |
Alpha Pro Tech,
Ltd. |
HIR Holdings |
Donna Millar |
Cameron Donahue |
905-479-0654 |
651-707-3532 |
e-mail: ir@alphaprotech.com |
e-mail: cameron@hirholdings.com |
Alpha Pro Tech (AMEX:APT)
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From Aug 2024 to Sep 2024
Alpha Pro Tech (AMEX:APT)
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From Sep 2023 to Sep 2024