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Retractable Technologies, Inc.'s Gross Profit Increased 6.2% In The Second Quarter Of 2012 Over The Second Quarter Of 2011

Retractable Technologies, Inc. (NYSE MKT: RVP) reported a 6.2% increase in gross profit for the three months ended June 30, 2012 over the three months ended June 30, 2011.

Comparison of Three Months Ended June 30, 2012 and June 30, 2011

Domestic sales accounted for 77.9% and 73.5% of the revenues for the three months ended June 30, 2012 and 2011, respectively. Domestic revenues increased 16.0% principally due to higher average sales prices and increased sales volumes. Domestic unit sales increased 6.3%. Domestic unit sales were 64.1% of total unit sales for the three months ended June 30, 2012. International revenues and unit sales decreased 8.8% and 14.1%, respectively due to lower sales volumes in South America. Overall unit sales decreased 2.1%.

Gross profit increased 6.2% primarily due to increased revenues. The cost of manufactured product increased by 12.7% due to higher unit cost because of lower volumes produced in 2012 versus 2011, as well as a write-off of expired product. Gross profit as a percentage of net sales was 38.2% in the three months ended June 30, 2012 as compared to 39.3% in 2011 due to higher unit cost of manufacture. 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 3.3% due to higher gross sales revenues.

Operating expenses decreased 6.3% or $261 thousand. The decrease in General and administrative expense was the most significant decrease. The decrease in General and administrative expense was due primarily to a lower accrual for bad debt. We also donated product for humanitarian use. The increase of $221 thousand in Sales and marketing expense was due to hiring additional Sales and marketing personnel and a related increase in travel and entertainment expense. Research and development costs decreased $14,000 or 7.9%.

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