Ironclad Performance Wear Corporation, a leader in high-performance gloves and apparel announced financial results for the three and nine months ended September 30, 2007.
Net sales increased 51% in the third quarter of 2007 to $3.59 million, compared to net sales of $2.37 million in the prior year period. This is in line with the Company's pre-announced net sales growth estimate of between 47% and 52%. Third quarter net loss was $1.03 million compared to $0.52 million in the prior year period. The increased loss in the third quarter of 2007, when compared to the third quarter of 2006, is partially due to the following factors: - A 2006 net income benefited from a non-cash fair value adjustment to warrant liability of approximately $392,000 compared to approximately $6,000 in 2007; - Interest expense increased and interest income decreased for a net reduction in net income of approximately $52,000 in 2007; and - The cost of implementing the transition to an outsourced third party warehouse was approximately $70,000 in 2007.
Basic and diluted net loss per share for the third quarter of 2007 were $(0.03) on a weighted average common shares outstanding of 30.9 million, compared to $(0.02) on a weighted average common shares outstanding of 29.7 million in the prior year period.
"This was another strong quarter for Ironclad, with our net sales growth reflecting continued distribution gains in key market segments and growth in our international business," said Ed Jaeger, President and CEO of Ironclad Performance Wear. "I am pleased to report that during the quarter, we completed the transition to our new outsourced warehouse facility which has strengthened our fulfillment and customer service capabilities, and provided capacity for our future sales growth. We believe this new facility will lead to an overall reduction in fulfillment costs."
Gross margin in the third quarter of 2007 was 35%, up from 34% in the third quarter of 2006. Operating expenses improved to 63% of net sales in the third quarter compared to 74% of net sales in the prior year period.
Tom Kreig, interim Chief Financial Officer commented, "Our third quarter gross margin, while an improvement over last year, was impacted by increased costs associated with promotional orders typical for this time of the year, as well as sales of domestically produced, higher-cost apparel inventory. However, we are gradually depleting our higher-cost apparel inventory and all of our apparel line is now being manufactured offshore, thereby providing higher profit margins on a going forward basis."