Sales of Alpha Pro's Disposable Protective Apparel down
Alpha Pro Tech Ltd, a leading manufacturer of products designed to protect people, products and environments, including disposable protective apparel and building products, announced financial results for the first quarter ended March 31, 2011.
Consolidated sales for the first quarter of 2011 decreased 23.1% to $8.9 million from $11.6 million in the comparable quarter of 2010. Sales for the Disposable Protective Apparel segment for the three months ended March 31, 2011 decreased by 42.8% to $2.9 million, compared to $5.1 million for the same period of 2010.
Al Millar, President of Alpha Pro Tech, commented, “The decrease in sales consisted of decreased sales in the Disposable Protective Apparel segment and in the Infection Control segment, partially offset by a slight increase in sales for the Building Supply segment. The Company continues to broaden and diversify the distribution network for its Disposable Protective Apparel segment as it shifts its Critical Cover product line from its previous exclusive distributor relationship to a network of distributors. The first quarter decrease was partially offset by a strong increase in sales to a major international supply chain partner with whom we have achieved preferred vendor status and from whom the Company received two awards in 2010 for sales and performance. The overall mask sales decrease for the first quarter of 2011 was primarily due to a decline in industrial mask sales as a result of our previous largest industrial distributor launching its own line of masks.”
Mr. Millar concluded, “We entered into two asset purchase agreements, with the same principal purchaser, to sell our line of pet beds and line of medical bed pads. As consideration the Company received $235,000, which was comprised of $181,000 of inventory sold at cost, plus an additional $54,000 in compensation for non inventory assets and goodwill. The net gain on the sale of these assets was $41,000. Both of the transactions were executed in the three months ended March 31, 2011. Sales of these two lines, which amounted to approximately $150,000 per quarter on average last year and were not profitable, have previously been reported in the Infection Control segment, so going forward the segment will reflect only mask and shield sales.”
Gross profit for the three months ended March 31, 2011 decreased 34.4% to $3.3 million, or 36.6% gross profit margin, from a gross profit of $5.0 million, or 42.9% gross profit margin, for the same period in 2010.
Gross profit margin for the first quarter of 2011 was affected by a reduction in gross margin in the Building Supply segment and a continuing change in product mix in which Building Supply segment sales, which have lower margins, increased as a percentage of total sales. Gross profit margin in the Disposable Protective Apparel segment, although similar to the average of last three quarters of 2010, was down in the first quarter of 2011 as compared to the same quarter of 2010. Management expects gross margin to increase by approximately a percentage point in the coming quarters.