Company Continues to Manage Impact of Commodity Prices and
Efficiencies at Tennessee Plant
HAUPPAUGE, N.Y.--(Business Wire)--
Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier
of medical and surgical disposable products, today reported higher
revenue for the three and six months ended September 30, 2008.
Net sales for the second quarter amounted to $73,824,000, an
increase of $1,539,000, or 2% over the $72,285,000 in net sales
reported for the three months ended September 30, 2007. Net income for
the second quarter was $480,000, or $.03 per basic and diluted share,
a decrease of $2,788,000, or 85%, as compared with $3,268,000, or $.21
per basic share ($.20 per diluted share), reported for the three
months ended September 30, 2007.
Net sales for the six months ended September 30, 2008 amounted to
$151,219,000, an increase of $8,688,000 or 6% over the $142,531,000 in
net sales reported for the six months ended September 30, 2007. Net
income for the six months ended September 30, 2008 amounted to
$3,026,000 or $.19 per basic and diluted share, a decrease of
$3,754,000 or 55%, as compared with $6,780,000 or $.43 per basic share
($.42 per diluted share) reported for the comparable six months in
fiscal 2008.
"While second quarter and six month revenues reached record
levels, our primary focus is the effective management of three
challenges to our profitability: higher resin prices, increased costs
for Chinese produced products and the efficiency of our Tennessee
plant," said Paul D. Meringolo, Chief Executive Officer and President
of Medical Action Industries Inc. "We've discussed these issues for
some time, including their potential impact on gross margins. Recently
we have seen declines in resin prices which will not benefit the
company until the fourth quarter as a result of significant purchases
made in June and July of 2008 at higher than current market prices."
"To address higher raw material and product costs from China," he
added, "we've continued to implement prudent, strategic price
increases that maintain our unique competitive position and a sound,
loyal customer base. Volatile oil prices, higher Chinese labor costs
and currency fluctuations have had a significant impact on the entire
medical products industry. We'll continue to monitor those factors and
their potential effect on future performance."
"In Tennessee," Meringolo said, "we moved ahead with our plant
upgrades during the second quarter, including installation of
additional injection molding machines and robotic equipment. As we've
stated previously, we expect this work to continue through fiscal
2009. Long-term, our aim is to reduce costs and expand our ability to
manufacture and deliver an even broader range of highly competitive,
resin-based products."
Meringolo said that the total cost of these three challenges was
approximately $6,578,000 and $11,310,000 for the three and six months
ended September 30, 2008, respectively. Of this total, increased resin
costs contributed $2,402,000 and $4,128,000, respectively. Chinese
product expenses were approximately $1,841,000 and $3,312,000 and
efficiency related costs at the Tennessee plant were approximately
$2,335,000 and $3,870,000 for the three and six months ended September
30, 2008, respectively. "We continue to work diligently on eliminating
these inefficiencies, which will provide opportunities for us in the
future," said Paul D. Meringolo, Chief Executive Officer and President
of Medical Action Industries Inc.
Medical Action invites its shareholders and other interested
parties to attend its conference call at 10:00 a.m. (ET) on November
6, 2008. You may participate in the conference call by calling (888)
868-9080 (domestic) or (973) 935-8511 (international); conference ID
#69343822. The conference call will be simultaneously web cast on our
website: www.medical-action.com. The complete call and discussion will
be available for replay on our website beginning at 1:00 p.m. (ET) on
November 6, 2008.
Medical Action is a diversified manufacturer of disposable medical
devices. Its products are marketed primarily to acute care facilities
in domestic and certain international markets. Further, Medical Action
has expanded its target market to include physician, dental and
veterinary office, out-patient surgery centers, long-term care
facilities and laboratories. Medical Action is a leading manufacturer
and distributor of many of its products in the primary markets it
competes in. The Company's products are marketed nationally by its
direct sales personnel and extensive network of healthcare
distributors. Medical Action has preferred vendor agreements with
national and regional distributors, as well as sole and multi source
agreements with group purchasing organizations. The Company's common
stock trades on the NASDAQ Global Select Market under the symbol MDCI
and is included in the Russell 2000 Index.
This news release contains forward-looking statements that involve
risks and uncertainties regarding Medical Action's operations and
future results. Please see the Company's filings with the Securities
and Exchange Commission, including, without limitation, the Company's
Form 10-K and Form 10-Qs, which identify specific factors that would
cause actual results or events to differ materially from those
described in the forward-looking statements.
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*T
MEDICAL ACTION INDUSTRIES INC.
Financial Highlights
(dollars in thousands, except per share data)
For the Three Months For the Six Months
Ended Ended
----------------------- ---------------------
9/30/2008 9/30/2007 9/30/2008 9/30/2007
(Unaudited) (Unaudited)
Statements of
Operations:
Net sales $73,824 $72,285 $151,219 $142,531
Cost of sales 62,552 55,843 124,897 108,980
----------- ----------- ----------- ---------
Gross profit 11,272 16,442 26,322 33,551
Selling, general and
administrative
expenses 9,923 10,229 20,384 20,654
Interest expense, net 629 925 1,113 1,926
----------- ----------- ----------- ---------
Income before income
taxes 720 5,288 4,825 10,971
Income tax expense 240 2,020 1,799 4,191
----------- ----------- ----------- ---------
Net income $480 $3,268 $3,026 $6,780
=========== =========== =========== =========
Net income per share
basic: $0.03 $0.21 $0.19 $0.43
Net income per share
diluted: $0.03 $0.20 $0.19 $0.42
Condensed Balance Sheets as of September 30, 2008 and
March 31, 2008 (dollars in thousands)
September March 31,
30,
2008 2008
----------- ---------
ASSETS (Unaudited)
------------------------
Current Assets:
Cash and cash
equivalents $2,171 $2,104
Receivables, net 21,636 24,038
Inventories, net 43,336 33,493
Prepaid expenses and
other current assets 3,860 4,618
----------- ---------
Total Current
Assets 71,003 64,253
Property and
equipment, net 38,159 33,681
Goodwill 80,699 80,699
Trademarks 1,266 1,266
Other intangible
assets, net 15,369 16,159
Other assets 2,630 2,978
----------- ---------
Total Assets $209,126 $199,036
=========== =========
Liabilities and
Shareholders' Equity
Accounts payable $12,601 $14,112
Accrued expenses,
payroll, payroll
taxes and income
taxes 10,807 11,519
Deferred income taxes 9,170 9,720
Total debt 56,997 47,906
Shareholders' equity 119,551 115,779
----------- ---------
Total Liabilities
and
Shareholders'
Equity $209,126 $199,036
Key Financial
Statistics
------------------------
Current ratio 2.6 1.6
Debt to equity ratio 0.48 0.41
Book value per share $7.46 $7.23
*T
Medical Action Industries Inc.
Charles L. Kelly, 631-231-4600
Chief Financial Officer
Copyright Business Wire 2008
