Alpha Pro Tech's net income increases 118.6% to $905,000 in third quarter 2013

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 nine months ended September 30, 2013.

Consolidated sales for the 2013 third quarter increased 18.2% to $12.7 million from $10.7 million for the comparable quarter of 2012. Building Supply segment sales for the three months ended September 30, 2013 increased by 41% to a record $8.2 million, compared to $5.8 million for the same period of 2012. The sales mix of the Building Supply segment for the three months ended September 30, 2013 was 66% for synthetic roof underlayment, 30% for housewrap and 4% for other woven material. This compared to 66% for synthetic roof underlayment and 34% for housewrap for the third quarter of 2012. Sales for the Disposable Protective Apparel segment for the three months ended September 30, 2013 decreased 11.7% to $3.3 million, compared to $3.8 million for the same period of 2012. Infection Control segment sales for the three months ended September 30, 2013 remained flat at $1.1 million as compared to the same period of 2012. Mask sales were up by 0.8% to $773,000, and shield sales were down by 1.4% to $345,000, both as compared to the same period of 2012.

Al Millar, President of Alpha Pro Tech, commented, "We again delivered record revenues for our Building Supply segment in the third quarter of 2013, as we did in the second quarter of 2013. The increase was primarily due to 40.7% increase in sales of REX™ SynFelt synthetic roof underlayment, a 24.6% increase in sales of REX™ Wrap housewrap and an increase in other woven material sales. The other woven material sales have been insignificant in the past and should continue but will be a small percentage of the segment sales. Synthetic roof underlayment sales were positively affected by pent up demand in relation to an extended and harsher than normal winter that affected construction activity earlier this year in many of the markets where our products are used. The increased revenues positively leveraged our infrastructure, which decreased our expenses as a percentage of sales and generated triple digit increases in our operating and net income for the third quarter of 2013 compared to the same period a year ago."

Consolidated sales for the nine months ended September 30, 2013 increased 6.7% to $33.3 million from $31.2 million for the comparable period of 2012. This increase consisted of increased sales in the Building Supply and Infection Control segments, partially offset by decreased sales in the Disposable Protective Apparel segment.

Building Supply segment sales for the nine months ended September 30, 2013 increased 14.4% to $20.5 million, compared to $17.9 million for the same period of 2012. The sales mix of the Building Supply segment for the nine months ended September 30, 2013 was 62% for synthetic roof underlayment, 34% for housewrap and 4% for other woven material sales. This compared to 68% for synthetic roof underlayment and 32% for housewrap for the same period of 2012. Sales for the Disposable Protective Apparel segment for the nine months ended September 30, 2013 decreased 5.6% to $9.6 million, compared to $10.2 million for the same period of 2012. Infection Control segment sales for the nine months ended September 30, 2013 increased by 2.5% to $3.2 million, compared to $3.1 million for the same period of 2012. Mask sales were up by 8.5% to $2.3 million, and shield sales were down by 9.3% to $961,000, both as compared to the same period of 2012.

Gross profit for the three months ended September 30, 2013 increased by 20.6% to $4.6 million, or 36.1% gross profit margin, compared to $3.8 million, or 35.4% gross profit margin, for the same period of 2012. Gross profit for the nine months ended September 30, 2013 increased 11.1% to $12.3 million, or 36.9% gross profit margin, compared to $11.1 million, or 35.5% gross profit margin, for the same period of 2012. The gross profit margin for the three and nine months was positively affected by an increase in the Building Supply segment margin.

Selling, general and administrative expenses increased by 3.7% to $3.2 million for the third quarter of 2013 from $3.1 million for the same quarter of 2012. As a percentage of net sales, selling, general and administrative expenses decreased to 25.1% for the three months ended September 30, 2013 from 28.6% for the same period of 2012.

Selling, general and administrative expenses for the nine months ended September 30, 2013 increased by 3.5% to $9.9 million from $9.6 million for the same period of 2012. As a percentage of net sales, selling, general and administrative expenses decreased to 29.7% for the nine months ended September 30, 2013 from 30.6% for the same period of 2012.

Net income increased by 118.6% for the three months ended September 30, 2013 to $905,000, compared to $414,000 for the three months ended September 30, 2012. Net income as a percentage of net sales for the three months ended September 30, 2013 and 2012 was 7.1% and 3.9%, respectively. Both basic and diluted net income per common share for the three months ended September 30, 2013 and 2012 were $0.05 and $0.02, respectively.

Net income increased by 62.4% to $1.4 million for the nine months ended September 30, 2013, compared to $859,000 for the comparable prior year period. Net income as a percentage of net sales for the nine months ended September 30, 2013 and 2012 was 4.2% and 2.8%, respectively. Both basic and diluted net income per common share for the nine months ended September 30, 2013 and 2012 were $0.07 and $0.04, respectively.

The consolidated balance sheet remained strong with a current ratio of 25:1 as of September 30, 2013, compared to 19:1 as of December 31, 2012. The Company completed the third quarter of 2013 with working capital of $29.8 million.

Cash and cash equivalents increased by 69.3%, or $3.1 million, to $7.7 million as of September 30, 2013, compared to $4.6 million as of December 31, 2012.

Inventory decreased by $3.5 million, or 20.5%, to $13.6 million as of September 30, 2013 from $17.2 million as of December 31, 2012. The decrease was primarily due to a decrease for the Building Supply segment inventory of $3.0 million, or 37.3%, to $5.0 million, a decrease for the Disposable Protective Apparel segment inventory of $470,000, or 8.5%, to $5.1 million and a decrease for the Infection Control segment inventory of $77,000, or 2.1%, to $3.6 million.

Lloyd Hoffman, the Company's Chief Financial Officer commented, "As of September 30, 2013, we had $2,306,000 available for additional stock purchases under our stock repurchase program. For the nine months ended September 30, 2013, we repurchased 1,543,250 shares of common stock at a cost of $2,422,000. As of September 30, 2013, we had repurchased a total of 10,136,878 shares of common stock at a cost of $13,214,000 through our repurchase program. We retire all stock upon its repurchase. 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 cash generated from operations, 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.