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Alpha Pro Tech, Ltd. Announces Financial Results for the Second Quarter

Income From Operations Increased 343% for the Second Quarter


/EINPresswire.com/ -- NOGALES, AZ -- (Marketwired) -- 08/03/16 -- Alpha Pro Tech, Ltd. (NYSE MKT: APT)

  • Consolidated sales increased 5.1% to $12.7 million for the quarter ended June 30, 2016, compared to $12.1 million for the quarter ended June 30, 2015.
  • Income from operations increased 343% to $1.1 million for the quarter ended June 30, 2016, compared to $246,000 for the quarter ended June 30, 2015.
  • Net income for the second quarter of 2016 increased 177% to $797,000, compared to $288,000 for the same period in 2015.
  • Diluted earnings per common share for the quarter ended June 30, 2016 were $0.05, compared to $0.02 for the quarter ended June 30, 2015.

Alpha Pro Tech, Ltd. (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, 2016.

Consolidated sales for the second quarter of 2016 increased 5.1% to $12.7 million from $12.1 million for the comparable quarter of 2015. Building Supply segment sales for the three months ended June 30, 2016 increased by 12.0% to a second quarter record of $7.9 million, compared to $7.1 million for the same period of 2015. The sales mix of the Building Supply segment for the three months ended June 30, 2016 was 63% for synthetic roof underlayment, 32% for housewrap and 5% for other woven material. This compared to 63% for synthetic roof underlayment, 33% for housewrap and 4% for other woven material for the second quarter of 2015. Sales for the Disposable Protective Apparel segment for the three months ended June 30, 2016 decreased 5.6% to $3.6 million, compared to $3.8 million for the same period of 2015. Infection Control segment sales for the three months ended June 30, 2016 decreased by $25,000, or 2.1%, to $1.16 million, compared to $1.19 million for the same period of 2015.

Lloyd Hoffman, Chief Executive Officer of Alpha Pro Tech, commented, "Double-digit sales growth in our Building Supply segment was driven by strong demand across all of our product lines. We are optimistic about continued low, double-digit growth in this segment for all of 2016. Market demand coupled with our continued focus on reducing costs are having a positive impact on our income as well as our competitive positioning."

"As part of our continuing commitment to our shareholders, the board of directors authorized a $2.0 million expansion of our existing share repurchase program during the quarter," said Hoffman. "This program expansion, combined with our efforts to reduce costs to drive margin expansion, demonstrates our focus on delivering increased value to our shareholders."

Consolidated sales for the six months ended June 30, 2016 increased 7.9% to a first half of the year record of $24.6 million, up from $22.7 million for the comparable period of 2015. This increase was due to increased sales in the Building Supply and the Infection Control segments, which was partially offset by decreased sales in the Disposable Protective Apparel segment.

Building Supply segment sales for the six months ended June 30, 2016 increased by $1.8 million, or 13.9%, to a first half of the year record of $14.7 million, compared to $12.9 million for the same period of 2015. This increase was due to increased sales across all product lines, including a 10.5% increase in sales of housewrap, a 13.2% increase in sales of synthetic roof underlayment and a 15.1% increase in sales of other woven material.

Gross profit for the three months ended June 30, 2016 increased by 15.9% to $4.5 million, compared to $3.9 million for the same period in 2015. The gross profit margin was 35.7% for the three months ended June 30, 2016, compared to 32.4% for the same period of 2015. Gross profit for the six months ended June 30, 2016 increased 13.5% to $8.8 million, or 35.8% gross profit margin, from $7.7 million, or 34.0% gross profit margin, for the same period of 2015. Management expects gross profit margin to be in a similar range for the balance of 2016 and is continuing to work on reducing product costs.

Selling, general and administrative expenses decreased by 5.3% to $3.3 million for the second quarter of 2016 from $3.5 million for the same quarter of 2015. As a percentage of net sales, selling, general and administrative expenses decreased to 26.2% for the three months ended June 30, 2016 from 29.1% for the same period of 2015. Selling, general and administrative expenses decreased by $306,000, or 4.3%, to $6.8 million for the six months ended June 30, 2016, from $7.1 million for the six months ended June 30, 2015. As a percentage of net sales, selling, general and administrative expenses decreased to 27.7% for the six months ended June 30, 2016, from 31.2% for the same period of 2015.

Income from operations increased by 342.7% to $1.1 million for the three months ended June 30, 2016, compared to $246,000 for the three months ended June 30, 2015. Income from operations increased by 433.4% to $1.7 million for the six months ended June 30, 2016, compared to $323,000 for the six months ended June 30, 2015. The increased income from operations for the three and six month periods ended June 30, 2016 was primarily due to an increase in gross profit, a decrease in selling, general and administrative expenses and a decrease in depreciation and amortization expense.

Net income increased for the three months ended June 30, 2016 to $797,000, compared to $288,000 for the same period in 2015, an increase of $509,000, or 176.7%. This increase was due to an increase in income before provision for income taxes of $806,000, partially offset by an increase in provision for income taxes of $297,000. Net income as a percentage of net sales for the three months ended June 30, 2016 and 2015 was 6.3% and 2.4%, respectively. Basic and diluted earnings per common share for the three months ended June 30, 2016 and 2015 were $0.05 and $0.02, respectively.

Net income for the six months ended June 30, 2016 was $1.3 million, compared to $436,000 for the same period in 2015, an increase of $868,000, or 199.1%. Net income as a percentage of net sales for the six months ended June 30, 2016 was 5.3%, and net income as a percentage of net sales for the same period of 2015 was 1.9%. Diluted earnings per common share for the six months ended June 30, 2016 and 2015 were $0.07 and $0.02, respectively.

The consolidated balance sheet remained strong with a current ratio of 16:1 as of June 30, 2016, compared to a 15:1 current ratio as of December 31, 2015, and a cash balance of $10.6 million. The Company ended the second quarter of 2016 with working capital of $30.3 million.

Inventory decreased by $3.7 million, or 22.8%, to $12.7 million as of June 30, 2016 from $16.4 million as of December 31, 2015. The decrease was primarily due to a decrease in inventory for the Disposable Protective Apparel segment of $1.0 million, or 17.4%, a decrease in inventory for the Building Supply segment of $2.5 million, or 31.3%, and a decrease in inventory for the Infection Control segment of $287,000, or 10.2%.

Colleen McDonald, Chief Financial Officer, commented, "At the end of the second quarter of 2016, we had $1.5 million available for additional stock purchases under our stock repurchase program. Year-to-date we have repurchased 890,100 shares of common stock at a cost of $1.8 million, bringing the program total to 13,407,731 shares of common stock at a cost of $19,994,000 since the program's inception. 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 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,
                                                    2016         2015 (1)
                                               -------------  -------------
Assets
Current assets:
  Cash                                         $  10,588,000  $   9,681,000
  Investments                                        574,000        656,000
  Accounts receivable, net of allowance for
   doubtful accounts of $61,000 and $46,000 as
   of June 30, 2016 and December 31, 2015,
   respectively                                    5,113,000      2,762,000
  Accounts receivable, unconsolidated
   affiliate                                           2,000          8,000
  Inventories                                     12,656,000     16,398,000
  Prepaid expenses and other current assets        2,942,000      3,092,000
  Deferred income tax assets                         484,000        484,000
                                               -------------  -------------
    Total current assets                          32,359,000     33,081,000

Property and equipment, net                        2,806,000      2,907,000
Goodwill                                              55,000         55,000
Definite-lived intangible assets, net                 42,000         51,000
Equity investments in unconsolidated affiliate     3,231,000      3,040,000
                                               -------------  -------------
    Total assets                               $  38,493,000  $  39,134,000
                                               =============  =============

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                             $     965,000  $   1,027,000
  Accrued liabilities                              1,087,000      1,128,000
                                               -------------  -------------
    Total current liabilities                      2,052,000      2,155,000

Deferred income tax liabilities                      820,000        867,000
                                               -------------  -------------
    Total liabilities                              2,872,000      3,022,000
                                               -------------  -------------

Commitments
Shareholders' equity:
  Common stock, $.01 par value: 50,000,000
   shares authorized; 16,960,356 and
   17,850,456 shares outstanding as of June
   30, 2016 and December 31, 2015,
   respectively                                      170,000        178,000
  Additional paid-in capital                      14,817,000     16,526,000
  Accumulated other comprehensive loss              (226,000)      (148,000)
  Retained earnings                               20,860,000     19,556,000
                                               -------------  -------------
    Total shareholders' equity                    35,621,000     36,112,000
                                               -------------  -------------
    Total liabilities and shareholders' equity $  38,493,000  $  39,134,000
                                               =============  =============
(1) The condensed consolidated balance sheet as of December 31, 2015 has
    been prepared using information from the audited consolidated balance
    sheet as of that date.



Condensed Consolidated Income Statements (Unaudited)

                        For the Three Months Ended  For the Six Months Ended
                                  June 30,                  June 30,
                         ------------------------- -------------------------
                             2016         2015         2016         2015
                         ------------ ------------ ------------ ------------

Net sales                $ 12,708,000 $ 12,095,000 $ 24,555,000 $ 22,749,000

Cost of goods sold,
 excluding depreciation
 and amortization           8,168,000    8,179,000   15,770,000   15,008,000
                         ------------ ------------ ------------ ------------
    Gross profit            4,540,000    3,916,000    8,785,000    7,741,000
                         ------------ ------------ ------------ ------------

Operating expenses:
  Selling, general and
   administrative           3,334,000    3,520,000    6,791,000    7,097,000
  Depreciation and
   amortization               117,000      150,000      271,000      321,000
                         ------------ ------------ ------------ ------------
    Total operating
     expenses               3,451,000    3,670,000    7,062,000    7,418,000
                         ------------ ------------ ------------ ------------

Income from operations      1,089,000      246,000    1,723,000      323,000
                         ------------ ------------ ------------ ------------

Other income:
  Equity in income of
   unconsolidated
   affiliate                   93,000      117,000      191,000      215,000
  Interest income, net          1,000       14,000        2,000       15,000
                         ------------ ------------ ------------ ------------
    Total other income         94,000      131,000      193,000      230,000
                         ------------ ------------ ------------ ------------

Income before provision
 for income taxes           1,183,000      377,000    1,916,000      553,000

Provision for income
 taxes                        386,000       89,000      612,000      117,000
                         ------------ ------------ ------------ ------------

Net income               $    797,000 $    288,000 $  1,304,000 $    436,000
                         ============ ============ ============ ============


Basic earnings per
 common share            $       0.05 $       0.02 $       0.07 $       0.02
                         ============ ============ ============ ============

Diluted earnings per
 common share            $       0.05 $       0.02 $       0.07 $       0.02
                         ============ ============ ============ ============

Basic weighted average
 common shares
 outstanding               17,211,268   18,208,947   17,440,299   18,254,188
                         ============ ============ ============ ============

Diluted weighted average
 common shares
 outstanding               17,211,268   18,308,806   17,440,299   18,388,228
                         ============ ============ ============ ============

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