Retractable Technologies, Inc. (NYSE AMEX: RVP), a leading maker of safety medical devices, reported net income of $1,723,957 for the first quarter of 2011, compared to a net loss of $2,271,496 for the first quarter of 2010.
Domestic sales accounted for 74.9% and 88.2% of the revenues for the three months ended March 31, 2011 and 2010, respectively. International sales accounted for the remaining revenues. Domestic revenues decreased 2.1% principally due to lower average prices mitigated by higher volumes. International revenues increased 142.9% due to higher volumes as well as higher prices. Overall, unit sales increased 32.4%. Domestic unit sales increased 9.6%. International unit sales increased 112.6%. Domestic unit sales were 64.6% of total unit sales for the three months ended March 31, 2011.
Gross profit decreased 4.6% primarily due to lower average domestic sales prices. The average cost of manufactured product sold per unit decreased by 1.3%. Profit margins can fluctuate depending upon, among other things, the cost of manufactured product and the capitalized cost of product recorded in inventory, as well as product sales mix. Royalty expense increased 15.2% due to higher gross sales.
Operating expenses decreased 39.8% or $2.2 million. The decrease in General and administrative expense was the most significant. The decrease of $2.0 million in General and administrative expense was due mainly to the reduction in litigation costs and some decrease in employee expenses, principally stock option expense. Patent maintenance fees increased. Sales and marketing expense decreased $92 thousand due principally to reduced employee expenses. There were no impairment charges in 2011. Research and development costs were flat.Our operating loss was $100 thousand compared to an operating loss for the same period last year of $2.2 million. Interest expense decreased due to lower loan balances. Litigation settlements, net reflects cash proceeds of $2.0 million from Hospira less royalty expense of $100,000.