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8-K - FORM 8-K - MEDICAL ACTION INDUSTRIES INCd250168d8k.htm

EXHIBIT 99.1

LOGO

 

CONTACT:    Charles L. Kelly – Chief Financial Officer
   MEDICAL ACTION INDUSTRIES INC.
   (631) 231-4600

FOR IMMEDIATE RELEASE

MEDICAL ACTION INDUSTRIES REPORTS

SECOND QUARTER 2012 RESULTS

 

 

BRENTWOOD, NY, November 2, 2011 – Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported results for the fiscal 2012 second quarter ended September 30, 2011.

Net sales for the second quarter of fiscal 2012 were $109,655,000, an increase of $23,707,000, or 28%, compared to the $85,948,000 in net sales reported for the comparable prior year period. Net sales for the second quarter of fiscal 2012 included $34,485,000 in custom procedure tray sales generated by AVID Medical Inc. (“AVID”), which was acquired by Medical Action on August 27, 2010. Excluding sales of custom procedure trays, Medical Action’s net sales for the second quarter of fiscal 2012 were $75,170,000, representing an increase of $3,360,000, or 5%, from the comparable prior year period.

Net income for the second quarter of fiscal 2012 was $554,000 or $0.04 per basic and diluted share, versus the $469,000, or $0.03 per basic and diluted share, reported for the comparable prior year period. Included in net income for the second quarter of fiscal 2012 was an extraordinary gain of $700,000 or $0.03 per basic and


diluted share (net of applicable tax expense), due to an insurance settlement related to inventories damaged as a result of weather-related flooding. Included in net income for the second quarter of fiscal 2011 were one-time transaction costs of $1,335,000. These costs were included in our selling, general and administrative expenses and related to the acquisition of AVID.

Net sales for the six months ended September 30, 2011 were $216,128,000, an increase of $63,384,000 or 42% from the $152,744,000 in net sales reported for the comparable six months of fiscal 2011. Net sales for the six months ended September 30, 2011 included $68,082,000 in custom procedure tray sales generated by AVID. Excluding sales of custom procedure trays, Medical Action’s net sales for the six months ended September 30, 2011 were $148,046,000, representing an increase of $9,440,000 or 7% from the comparable prior year period.

Net income for the six months ended September 30, 2011 was $817,000 or $0.05 per basic and diluted share, versus the $965,000 or $0.06 per basic and diluted share reported for the comparable prior year period. Included in net income for the six months ended September 30, 2011 was the aforementioned extraordinary gain. Included in net income for the six months ended September 30, 2010 were the aforementioned one-time transaction costs and an extraordinary loss of $1,455,000 or $0.05 per basic and diluted share (net of applicable tax benefit) due to inventories damaged as a result of weather-related flooding.

“We continue to focus on organic growth and enhancing our product and service offerings,” said Chief Executive Officer and President, Paul D. Meringolo. “Net sales have increased from the comparable prior year period and sequentially. We have recently been notified by Novation LLC that Medical Action has been named as a vendor on their Custom Procedure Tray GPO contract effective February 1, 2012. The

 

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Novation CPT contract is one of the largest GPO contracts in our market and will provide us with the opportunity to generate substantial organic growth in our CPT product line. Persistent volatility in raw material costs, particularly resin and cotton, continue to influence our gross margins. We are managing through this period of volatility by continually reviewing our pricing strategies across our product lines, minimizing product sourcing costs and operating expenses.”

Medical Action invites its shareholders and other interested parties to attend its conference call at 10 a.m. (ET) on November 2, 2011. You may participate in the conference call by calling (888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID #15958799. 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 11 a.m. (ET) on November 2, 2011.

Medical Action is a diversified manufacturer and distributor of disposable medical devices and a leader in many of the markets where it competes. Its products are marketed primarily to acute care facilities in domestic and certain international markets. The Company has expanded its target market to include physician, dental and veterinary offices, out-patient surgery centers, long-term care facilities and laboratories. Medical Action’s products are marketed nationally by its direct sales personnel and extensive network of healthcare distributors. The Company has preferred vendor agreements with national and regional distributors, as well as sole and multi-source agreements with group purchasing organizations. Medical Action’s common stock trades on the NASDAQ Global Select Market under the symbol MDCI and is included in the Russell 2000 Index.

# # # #

 

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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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MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and per share data)

 

     September 30,     March 31,  
     2011     2011  
     (Unaudited)        
ASSETS     

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 801      $ 1,691   

Accounts receivable, less allowance for doubtful accounts of $785 at September 30, 2011 and $804 at March 31, 2011

     35,534        32,330   

Inventories, net

     55,563        54,674   

Prepaid expenses

     2,212        1,702   

Deferred income taxes

     2,992        2,801   

Prepaid income taxes

     1,078        1,938   

Other current assets

     2,429        1,637   
  

 

 

   

 

 

 

Total current assets

     100,609        96,773   

Property, plant and equipment, net

     51,404        53,901   

Goodwill, net

     108,764        108,652   

Other intangible assets, net

     40,541        41,860   

Other assets, net

     3,093        3,319   
  

 

 

   

 

 

 

Total assets

   $ 304,411      $ 304,505   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

CURRENT LIABILITIES:

    

Accounts payable

   $ 15,529      $ 17,069   

Accrued expenses

     21,208        22,235   

Current portion of capital lease obligation

     111        92   

Current portion of long-term debt

     16,000        16,360   
  

 

 

   

 

 

 

Total current liabilities

     52,848        55,756   

Deferred income taxes

     27,956        27,956   

Capital lease obligation, less current portion

     13,724        13,790   

Long-term debt, less current portion

     60,470        58,776   
  

 

 

   

 

 

 

Total liabilities

     154,998        156,278   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY:

    

Common stock - 40,000,000 shares authorized, $.001 par value; issued and outstanding 16,390,628 shares at September 30, 2011 and 16,383,128 shares at March 31, 2011

     16        16   

Additional paid-in capital

     34,168        33,799   

Accumulated other comprehensive loss

     (437     (437

Retained earnings

     115,666        114,849   
  

 

 

   

 

 

 

Total stockholders’ equity

     149,413        148,227   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 304,411      $ 304,505   
  

 

 

   

 

 

 

 

 

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MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

 

     Three Months Ended
September 30,
     Six Months Ended
September 30,
 
     2011      2010      2011      2010  
   (Unaudited)      (Unaudited)  

Net sales

   $ 109,655       $ 85,948       $ 216,128       $ 152,744   

Cost of sales

     92,969         71,102         182,470         125,360   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     16,686         14,846         33,658         27,384   

Selling, general and administrative expenses

     15,355         13,597         30,783         23,748   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     1,331         1,249         2,875         3,636   

Interest expense, net

     1,130         500         2,247         626   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes and extraordinary item

     201         749         628         3,010   

Income tax expense

     87         280         251         1,149   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before extraordinary item

     114         469         377         1,861   

Extraordinary gain (loss) (net of applicable taxes)

     440         —           440         (896
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 554       $ 469       $ 817       $ 965   
  

 

 

    

 

 

    

 

 

    

 

 

 

Per share basis:

           

Basic

           

Income before extraordinary item

   $ 0.01       $ 0.03       $ 0.02       $ 0.11   

Extraordinary gain (loss) (net of applicable taxes)

   $ 0.03       $ —         $ 0.03       $ (0.05
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 0.04       $ 0.03       $ 0.05       $ 0.06   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

           

Income before extraordinary item

   $ 0.01       $ 0.03       $ 0.02       $ 0.11   

Extraordinary gain (loss) (net of applicable taxes)

   $ 0.03       $ —         $ 0.03       $ (0.05
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 0.04       $ 0.03       $ 0.05       $ 0.06   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED SEPTEMBER 30, 2011

(Unaudited)

(dollars in thousands, except share data)

 

     Common Stock      Additional
Paid-In
     Accumulated Other
Comprehensive
    Retained      Total
Stockholders’
 
     Shares      Amount      Capital      Loss     Earnings      Equity  

Balance at March 31, 2011

     16,383,128       $ 16       $ 33,799       ($ 437   $ 114,849       $ 148,227   

Exercise of stock options

     7,500         —           20         —          —           20   

Amortization of deferred compensation

     —           —           11         —          —           11   

Tax benefit from vesting of stock under restricted management stock bonus plan and exercise of options

     —           —           19         —          —           19   

Stock-based compensation

     —           —           319         —          —           319   

Net income

     —           —           —           —          817         817   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Balance at September 30, 2011

     16,390,628       $ 16       $ 34,168       ($ 437   $ 115,666       $ 149,413   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

 

     Six Months Ended September 30,  
     2011     2010  
     (Unaudited)  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 817      $ 965   

Adjustments to reconcile net income to net cash used in operating activities:

    

Extraordinary (gain) loss

     (700     1,455   

Depreciation

     2,963        2,355   

Amortization

     2,190        1,297   

Increase in allowance for doubtful accounts

     6        6   

Deferred income taxes

     (121     (14

Stock-based compensation

     330        392   

Excess tax liability from stock-based compensation

     (70     —     

Tax benefit from vesting of stock under restricted management stock bonus plan and exercise of stock options

     19        9   

Changes in operating assets and liabilities:

    

Accounts receivable

     (3,425     (920

Inventories

     (911     (12,032

Prepaid expenses and other current assets

     (602     (443

Other assets

     (645     (1,382

Accounts payable

     (1,540     350   

Prepaid income taxes

     860        177   

Accrued expenses

     (1,027     1,063   
  

 

 

   

 

 

 

Net cash used in operating activities

     (1,856     (6,722
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchase price and related acquisition costs

     125        (62,475

Purchases of property, plant and equipment

     (469     (1,476

Proceeds from sale of property and equipment

     3        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (341     (63,951
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from revolving line of credit and long-term borrowings

     46,052        122,358   

Principal payments on revolving line of credit and long-term borrowings

     (44,718     (54,996

Principal payments on capital lease obligation

     (47     (5

Proceeds from exercise of stock options

     20        72   
  

 

 

   

 

 

 

Net cash provided by financing activities

     1,307        67,429   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (890     (3,244

Cash and cash equivalents at beginning of period

     1,691        5,641   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 801      $ 2,397   
  

 

 

   

 

 

 

Supplemental disclosures:

    

Interest paid

   $ 1,754      $ 427   

Income taxes (refunded) paid

   $ (174   $ 404   

 

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