Medical Action Industries Reports First Quarter 2012 Results

Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported results for the fiscal 2012 first quarter ended June 30, 2011.

Net sales for the first quarter of fiscal 2012 were $106,473,000, an increase of $39,677,000, or 59%, compared to the $66,796,000 in net sales reported for the comparable prior year period. Net sales for the first quarter of fiscal 2012 included $33,597,000 in custom procedure tray sales generated by AVID Medical Inc., which was acquired by Medical Action on August 27, 2010. Excluding sales of custom procedure trays, Medical Action’s net sales for the first quarter of fiscal 2012 were $72,876,000, representing an increase of $6,080,000, or 9%, from the comparable prior year period.

Net income for the first quarter of fiscal 2012 was $263,000 or $0.02 per basic and diluted share, versus the $496,000, or $0.03 per basic and diluted share, reported for the comparable prior year period.

“Our management team is focused on growing sales and enhancing our product and service offerings while improving operational efficiencies,” said Chief Executive Officer and President Paul D. Meringolo. “Net sales have increased from the comparable prior year period and the fourth quarter of fiscal 2011. We are pleased with the progress made in increasing sales and with the momentum our sales team has generated in the market,” Meringolo said. “Raw material costs, particularly resin and cotton, continue to influence our gross margins. In response to rising material costs we have continued to implement price increases on product lines with high resin and cotton components while managing our operating expenses.”

Medical Action invites its shareholders and other interested parties to attend its conference call at 10 a.m. (ET) on August 3, 2011. You may participate in the conference call by calling (888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID #80118261. 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 August 3, 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.

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.
CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and per share data)
 
  June 30,   March 31,
  2011     2011  
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,862 $ 1,691

Accounts receivable, less allowance for doubtful accounts of$782 at June 30, 2011 and $804 at March 31, 2011
31,252 32,330
Inventories, net 53,530 54,674
Prepaid expenses 2,037 1,702
Deferred income taxes 2,871 2,801

Prepaid income taxes
1,361 1,938
Other current assets   1,755     1,637  
 

Total current assets
94,668 96,773
 
Property, plant and equipment, net 52,638 53,901
Goodwill, net 108,652 108,652
Other intangible assets, net 41,201 41,860
Other assets, net   3,245     3,319  
 
Total assets $ 300,404   $ 304,505  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,329 $ 17,069
Accrued expenses 20,081 22,235
Current portion of capital lease obligation 101 92
Current portion of long-term debt   16,360     16,360  
 
Total current liabilities 50,871 55,756
 
Deferred income taxes 27,956 27,956
Capital lease obligations, less current portion 13,757 13,790
Long-term debt, less current portion   59,100     58,776  
 
Total liabilities   151,684     156,278  
 
STOCKHOLDERS' EQUITY:

Common stock - 40,000,000 shares authorized, $.001 par value;issued and outstanding 16,390,628 shares at June 30, 2011 and16,383,128 shares at March 31, 2011
16 16
Additional paid-in capital 34,029 33,799
Accumulated other comprehensive loss (437 ) (437 )
Retained earnings   115,112     114,849  
 
Total stockholders’ equity   148,720     148,227  
 
Total liabilities and stockholders’ equity $ 300,404   $ 304,505  
 

 

MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)
 
  Three Months Ended June 30,
  2011     2010  
(Unaudited)
 
Net sales $ 106,473 $ 66,796
Cost of sales   89,501   54,258  
Gross profit 16,972 12,538
 
Selling, general and administrative expenses   15,428   10,151  
Operating income 1,544 2,387
 
Interest expense, net   1,117   126  
 
Income before income taxes and extraordinary item 427 2,261
Income tax expense   164   869  
 
Income before extraordinary item 263 1,392
Extraordinary loss (net of tax benefit of $559)   -   (896 )
 
Net income $ 263 $ 496  
 
Per share basis:
Basic
Income before extraordinary item $ 0.02 $ 0.09
Extraordinary loss $ - $ (0.06 )
Net income $ 0.02 $ 0.03  
 
Diluted
Income before extraordinary item $ 0.02 $ 0.08
Extraordinary loss $ - $ (0.05 )
Net income $ 0.02 $ 0.03  
 
     
MEDICAL ACTION INDUSTRIES INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED JUNE 30, 2011
(Unaudited)
(dollars in thousands, except share data)
                 
Additional Accumulated Other Total

Common Stock
Paid-In Comprehensive Retained 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 - - 6 - - 6
 

Tax benefit from vesting of stock underrestricted management stock bonus planand exercise of options
- - 20 - - 20
 
Stock-based compensation - - 184 - - 184
 
Net income - - - - 263 263
           
Balance at June 30, 2011 16,390,628 $16 $34,029 ($437) $115,112 $148,720
 
 
MEDICAL ACTION INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 
      Three Months Ended June 30,
2011     2010  
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 263 $ 496

Adjustments to reconcile net income to net cash provided byoperating activities:
Extraordinary loss - 1,455
Depreciation 1,461 1,085
Amortization 1,097 539
Increase in allowance for doubtful accounts 3 3
Deferred income taxes - 136
Stock-based compensation 190 72
Excess tax liability from stock-based compensation (70 ) -

Tax benefit from vesting of stock under restricted managementstock bonus plan and exercise of stock options
20 8
Changes in operating assets and liabilities:
Accounts receivable 1,075 11
Inventories 1,144 (4,042 )
Prepaid expenses and other current assets (453 ) (502 )
Other assets (367 ) (59 )
Accounts payable (2,740 ) 913
Prepaid income taxes 577 131
Accrued expenses (2,154 ) (2 )
   
Net cash provided by operating activities   46     244  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (198 ) (847 )
Proceeds from sale of property and equipment   3     -  
Net cash used in investing activities   (195 )   (847 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit and long-term borrowings 12,202 12,460
Principal payments on revolving line of credit and long-term borrowings (11,878 ) (15,685 )
Principal payments on capital lease obligation (24 ) -
Proceeds from exercise of stock options   20     65  
Net cash provided by (used in) financing activities   320     (3,160 )
 
Net increase (decrease) in cash and cash equivalents 171 (3,763 )
Cash and cash equivalents at beginning of period   1,691     5,641  
Cash and cash equivalents at end of period $ 1,862   $ 1,878  
 
Supplemental disclosures:
Interest paid $ 950 $ 119
Income taxes (refunded) paid $ (362 ) $ 36
 

Copyright Business Wire 2010

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