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Medical Action Industries Inc. (ticker: MDCI, exchange: NASDAQ Global Market (.O)) News Release - 7-Feb-2007
Medical Action Industries Reports Record Revenues and Record Earnings for the Three and Nine Months Ended December 31, 2006
Record 3rd Quarter Earnings Increase 32% on Record Revenue Increase of 69% HAUPPAUGE, N.Y., Feb 07, 2007 (BUSINESS WIRE) -- Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported the highest revenue and earnings in its history for the three and nine months ended December 31, 2006. Net sales for the third quarter reached a record $66,719,000, an increase of $27,280,000 or 69%, over the $39,439,000 in net sales reported for the three months ended December 31, 2005. Net income for the period was a record $4,148,000 or $.39 per basic share ($.38 per diluted share), an increase of $1,010,000 or 32%, as compared with $3,138,000 or $.30 per basic share ($.30 per diluted share), reported for the comparable quarter in fiscal 2006. Net income for the three months ended December 31, 2006 includes the after tax negative impact of $220,000 or $.02 per basic and diluted share, resulting from the expensing of stock-based compensation associated with the adoption of Statement of Financial Accounting Standard ("SFAS") No. 123(R), "Share-Based Payment". In accordance with this adoption method, the Company is not adjusting its historical financial statements to reflect the impact of stock-based compensation. Based on the pro forma application of SFAS No. 123 for the calculation of employee stock-based compensation expense prior to April 1, 2006 (as previously disclosed in the Company's financial statements), pro forma employee stock-based compensation expense during the three months ended December 31, 2005 (after tax) was $250,000 or $.02 per basic and $.03 per diluted share. Net sales for the nine months ended December 31, 2006 totaled a record $147,923,000 an increase of $34,913,000 or 31%, over the $113,010,000 in net sales reported for the nine months ended December 31, 2005. Net income for the nine months ended December 31, 2006 was a record $9,742,000 or $.93 per basic share ($.91 per diluted share), an increase of $1,155,000 or 13%, compared with $8,587,000 or $.83 per basic share ($.81 per diluted share), reported for the comparable quarter in fiscal 2006. Net income for the nine months ended December 31, 2006 includes the after tax negative impact of $713,000 or $.07 per basic and diluted share, resulting from the expensing of stock-based compensation associated with the adoption of Statement of Financial Accounting Standard ("SFAS") No. 123(R), "Share-Based Payment". In accordance with this adoption method, the Company is not adjusting its historical financial statements to reflect the impact of stock-based compensation. Based on the pro forma application of SFAS No. 123 for the calculation of employee stock-based compensation expense prior to April 1, 2006 (as previously disclosed in the Company's financial statements), pro forma employee stock-based compensation expense during the three months ended December 31, 2005 (after tax) was $778,000 or $.08 and $.07 per basic and diluted share, respectively. "Our record operating results are extremely satisfying given the challenges of our SAP implementation, managing raw material and transportation costs together with the acquisition of Medegen Medical Products ("MMP"), by far the largest acquisition in our history. There is no doubt that our results would not have been possible without the tireless efforts of all our employees. In the third quarter, MMP accounted for $21,000,000 of our total revenues, in line with our expectations," 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 4:30 p.m. (ET) on February 7, 2007. You may participate in the conference call by calling 1-888-858-4756; conference ID# 8321016. The conference call will be simultaneously webcast on our website: www.medical-action.com. The complete call and discussion will be available for replay on our website beginning at 6:30 p.m. (ET) on February 7, 2007. In connection with the recent adoption of new SEC rules on corporate disclosure, Medical Action is providing limited guidance on several aspects of its fiscal 2007 performance. The following statements are based on current expectations. These are forward-looking statements and actual results may differ materially, as discussed later in this release.
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 and long-term facilities. Medical Action is a leading manufacturer and distributor of many of its products in the markets we compete in. Our products are marketed through an extensive network of direct sales personnel and independent distributors. Medical Action has preferred vendor agreements with national distributors, as well as contracts with nearly every major group purchasing alliance. 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.
MEDICAL ACTION INDUSTRIES INC.
Financial Highlights
(dollars in thousands, except per share data)
For the Three Months For the Nine Months
Ended Ended
------------------------- -----------------------
12/31/2006 12/31/2005 12/31/2006 12/31/2005
(Unaudited) (Unaudited)
Statements of
Operations:
Net sales $66,719 $39,439 $147,923 $113,010
Cost of sales 50,112 28,959 110,989 83,723
----------- ------------- ----------- -----------
Gross profit 16,607 10,480 36,934 29,287
Selling, general
and
administrative
expenses 8,978 5,393 20,603 15,522
Interest (income)
expense, net 811 (81) 490 (63)
----------- ------------- ----------- -----------
Income before
income taxes 6,818 5,168 15,841 13,828
Income tax expense 2,670 2,030 6,099 5,241
----------- ------------- ----------- -----------
Net income $4,148 $3,138 $9,742 $8,587
=========== ============= =========== ===========
Net income per share
basic: 0.39 0.30 0.93 0.83
Net income per share
diluted: 0.38 0.30 0.91 0.81
Balance Sheets as of December 31, 2006 and
March 31, 2006 (dollars in thousands)
December 31, March 31,
2006 2006
------------- -----------
ASSETS (Unaudited)
--------------------
Current Assets:
Cash and cash
equivalents $3,177 $16,068
Receivables, net 20,846 11,045
Inventories, net 34,054 18,836
Prepaid expenses
and other
assets 2,727 1,260
------------- -----------
Total Current
Assets 60,804 47,209
Property and
equipment, net 29,287 12,303
Goodwill 79,895 37,085
Trademarks 1,266 666
Other intangible
assets, net 18,208 1,675
Other assets 2,487 1,453
------------- -----------
Total Assets $191,947 $100,391
============= ===========
Liabilities and
Shareholders'
Equity
Accounts payable 15,598 6,135
Accrued
expenses,
payroll,
payroll taxes
and income
taxes 12,683 3,284
Total capital
lease
obligations 291 -
Deferred income
taxes 4,890 5,029
Total debt 64,530 2,800
Shareholders'
equity 93,955 83,143
------------- -----------
Total
Liabilities
and
Shareholders'
Equity $191,947 $100,391
============= ===========
Key Financial
Statistics
--------------------
Current ratio 1.5 4.8
Debt to equity ratio 0.69 0.03
Book value per share $8.92 $7.90
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