Allied Healthcare Products reduces cost of sales for third-quarter 2010

May 10 2010

Budget constraints for hospitals and municipalities continued to depress sales for Allied Healthcare Products, Inc. (Nasdaq: AHPI) but the company managed to improve its third quarter results over last year's performance by reducing overhead and operating costs.

Sales for the quarter ending March 31, 2010, fell about 6 percent, from about $12.4 million to $11.6 million in the current quarter.  However, Allied reduced its cost of sales even more in the quarter, from approximately $9.9 million to less than $8.8 million, or more than 11 percent.  Allied also managed to cut its selling, general and administrative costs for the quarter from almost $3.2 million to $2.7 million, or more than 15 percent.

As a result, Allied earned net income of about $37,500, equating to zero cents per share, compared to a loss of $450,000, or negative 6 cents per share, in the same quarter last year.

Cost controls also enabled the company to increase its profit margins and improve its cash position for the quarter.

For the nine-month period ending March 31, 2010, Allied sales declined by almost 13 percent, from about $39.4 million to $34.4 million in the current period.  Net income for the two nine-month periods remained virtually flat at approximately a negative $686,000, or negative 9 cents per share, for the current period versus a negative $678,000, also equating to a negative 9 cents per share, for the previous year.

"Allied is not losing sales to competitors," said Earl Refsland, Allied president and chief executive officer.  "We're losing sales to recession-driven budget reductions by hospitals and state and local governments.

"When our markets return to more normal levels, Allied has built a strong cost position that will drive increased profits," Refsland said.