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NOGALES, ARIZONA - November 1, 2006 -- Alpha Pro Tech
(AMEX: APT; CHX:APT), a leading manufacturer of products designed to
protect people, products and environments, including disposable protective
apparel and building products, announced its financial results for the third
quarter and nine-month period ended September 30, 2006.
Consolidated sales for the third quarter ended September 30, 2006 increased
11.1% to $9.0 million from $8.1 million in the comparable 2005 quarter. The
increase was primarily due to increased sales of construction supply
weatherization products and infection control segment sales along with a slight
increase in disposable protective apparel products, offset by a slight decrease
in extended care product sales. Sales for the Disposable Protective Apparel
segment for the quarter increased slightly to $5.2 million compared to $5.1
million for the same period of 2005 and, while sales remain down year to date
compared to last year, sales during this past quarter of $5.2 million were in
fact the third highest in company history next only to the second quarter of
2005 and 2006. Management expects growth from this segment in 2006 as the
Company continues it launch of its ComforTech® line of products. Infection
Control segment sales for the quarter increased 22.8% to $1.48 million compared
to $1.2 million for the same period of 2005. Mask sales in this segment, in
particular sales of the Company’s N-95 NIOSH approved respirator mask,
continued to be strong in the third quarter of 2006 as concerns about Avian Flu
have not abated. Engineered Products segment sales for the quarter increased
41.9% to $1.97 million compared to $1.39 million for the same period of 2005.
This increase is an extremely positive indication of the strength of the
Engineered Products line as the third quarter for 2005 was favorably affected
by hurricane Katrina-related orders and a year-over-year increase measured
against a disaster-related spike in sales should be a good leading indicator.
Al Millar, President of Alpha Pro Tech commented, “Our Engineered Products
segment continues to be a strong growth driver and we expect to see strong
continued growth from this division. Even though sales in the Disposable
Apparel segment are down year to date, we expect that the fourth quarter will
be significantly better than the fourth quarter of last year. On September 16,
2006 we announced the signing of a new distribution contract with our largest
distributor. Under the terms of the multiple-year contract that was effective
January 1, 2006, they will retain the exclusive right to sell our private label
Critical Cover® products. In addition, we will now have the right to sell Alpha
Pro Tech branded products to other new distributors. This new contract further
strengthens our relationship with our largest distributor and will enable us to
gain additional market share as we develop relationships with new
distributors.”
Gross profit increased by 12.5% to $4.1 million for the quarter, or 45.9% gross
profit margin, from $3.65 million, or 45.3% gross profit margin, for the same
period in 2005. Gross profit margin on the Engineered Products segment was
32.6% for the third quarter compared to 28.2% for the same period of 2005,
continuing the Company’s positive trend in improving the segment’s gross profit
margin. Gross profit on this product line is expected to trend into the mid 30%
range.
Selling, general and administrative expenses increased by 8.8% to $2.64 million
for the quarter from $2.42 million for the same quarter last year. Despite the
increase in operating expenses in whole dollars, operating expenses as a
percentage of revenue decreased to 29.4% from 30.1% for the quarter.
Income from operations increased by 23.2%, to $1.35 million for the quarter as
compared to income from operations of $1.1 million for the quarter ended
September 30, 2005. The provision for income taxes for the quarter was $518,000
compared to $407,000 for the quarter ended September 30, 2005, resulting in an
effective tax rate of 37.0% which was relatively unchanged versus last year.
Net income for the quarter was $882,000 compared to net income of $693,000 for
the quarter ended September 30, 2005, an increase of 27.3%. Basic and diluted
income per share for the quarter was $0.04, based on 25.2 million fully diluted
shares, compared to basic and fully diluted earnings per share of $0.03, based
on 25.3 million fully diluted shares, for the third quarter last year.
Mr. Millar added, “We have built the infrastructure required to substantially
grow our business and as our revenue grows our expenses are expected to
continue to decrease as a percentage of sales, showing increasing leverage in
our business model.”
For the first nine months of 2006, consolidated sales increased 11.3% to $26.8
million from $24.1 million for the nine months ended September 30, 2005 due to
increased sales of construction supply weatherization products and infection
control segment sales. The Engineered Products segment sales for the nine
months increased 70.6% to $5.96 million from $3.5 million in the same period of
2005. Infection Control segment sales for the nine months increased 39.3% to
$5.0 million from $3.6 million in the same period of 2005 due in large part to
sales of the Company’s N-95 NIOSH approved Respirator mask. Sales for the
Disposable Protective Apparel segment for the nine months were $14.8 million, a
decrease of 6.2% compared to $15.8 million for the same period of 2005.
Gross profit margin was relatively unchanged at 46.1% for the nine months ended
September 30, 2006 from 45.8% for the same period in 2005. Gross profit margin
for the Engineered Products segment increased to 32.6% for the nine months as
compared to 28.2% for the same period of 2005.
Selling, general and administrative expenses increased 7.7% to $7.8 million, or
29.3% of sales, for the nine months from $7.3 million, or 30.3% of sales, for
the nine months ended September 30, 2005.
Income from operations for the nine months ended September 30, 2006 increased
23.9% to $4.2 million from $3.4 million for the same period last year.
Net income for the nine months was $2.7 million, or $0.11 per basic and fully
diluted share (based on 25.1 million shares) compared to net income of $2.1
million, or $0.09 per basic and fully diluted (based on 25.2 million shares)
for the comparable prior-year period.
The balance sheet continued to remain strong with a current ratio of 10.94 to 1
on September 30, 2006. The Company completed the quarter with cash and cash
equivalents of $805,000 and working capital of $17.6 million. Inventories as of
September 30, 2006 totaled $11.6 million and were up 9% or $1.0 million
compared to inventories as of December 31, 2005. The Company currently has no
outstanding debt and maintains an unused $3.5 million credit facility.
Lloyd Hoffman, Chief Financial Officer commented, “The current inventory levels
have been increased in order to service sales growth, particularly in the
Engineered Products segment.”
About Alpha Pro Tech
Alpha Pro Tech, Ltd. develops, manufactures and markets innovative disposable
and limited-use protective apparel products for the industrial, clean room,
medical and dental markets. In addition, Alpha ProTech Engineered Products,
Inc. manufactures and markets a line of construction weatherization products,
including building wrap, roof underlayment and mold resistant framing sealant.
The Company has manufacturing facilities in Salt Lake City, Utah; Nogales,
Arizona; Janesville, Wisconsin; and Valdosta, Georgia.
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