Alpha Pro Tech Ltd (APT) Reports Strong Earnings Growth in Q3 2023
Alpha Pro Tech Ltd (APT) announces a 9.0% increase in overall sales, reaching $16.1 million in Q3 2023.
Net income for Q3 2023 surged to $1.4 million, marking a significant 184.3% increase from the same period in 2022.
Building Supply segment records a 19.2% sales increase, while Disposable Protective Apparel segment sales decline by 10.0%.
Gross profit margin improves to 37.6% in Q3 2023, up from 32.7% in Q3 2022.
On November 7, 2023, Alpha Pro Tech Ltd (APT), a leading manufacturer of protective apparel and building products, released its financial results for the third quarter of 2023. The company reported a robust increase in net income and overall sales, despite facing a soft housewrap market and the ongoing challenges of excess inventory in the protective apparel segment.
Performance and Challenges
APT's President and CEO, Lloyd Hoffman, acknowledged the decrease in housing starts by 6.0% but highlighted the company's success in outperforming the market with a 25.7% increase in housewrap sales. Hoffman attributed this success to market diversification, product development, and sales team expansion. The company's REX Wrap and REX Wrap Plus products saw a 16.9% sales increase, and the premium housewrap line, REX Wrap Fortis, experienced a 24.8% increase in sales. Despite the downward trend in housing starts, APT's management remains optimistic about growth opportunities, particularly in the multi-family and commercial construction sectors.
Financial Achievements
APT's financial achievements in Q3 2023 were notable, with consolidated sales increasing to $16.1 million, up from $14.7 million in the same quarter of the previous year. The Building Supply segment was a significant contributor to this growth, with record sales of $11.4 million, a 19.2% increase. However, the Disposable Protective Apparel segment saw a decrease in sales, primarily due to a significant drop in face mask and face shield sales.
Income Statement and Balance Sheet Highlights
The company's gross profit margin improved significantly, reaching 37.6% for the quarter, compared to 32.7% in Q3 2022. This improvement was partly due to reduced ocean freight rates. Selling, general and administrative expenses increased slightly as a percentage of net sales, rising to 27.3% for the quarter. Income from operations also saw a substantial increase, jumping 119.9% to $1.4 million for the quarter.
APT's balance sheet remains strong, with cash and cash equivalents totaling $18.2 million as of September 30, 2023, an increase from $16.3 million at the end of 2022. The company's working capital totaled $50.7 million, and it maintains a robust current ratio of 27:1. Inventory levels decreased by 11.8%, reflecting a decrease in both the Disposable Protective Apparel and Building Supply segments.
Stock Repurchase Program and Outlook
Chief Financial Officer Colleen McDonald commented on the company's stock repurchase program, noting that APT repurchased 724,110 shares of common stock at a cost of $3.0 million during the nine months ended September 30, 2023. The company has no outstanding debt and believes that its current cash balance and cash flow from operations will be sufficient to meet projected working capital needs and planned capital expenditures.
APT's financial results for Q3 2023 demonstrate the company's ability to navigate market challenges and capitalize on growth opportunities. With a strong balance sheet, improved gross profit margins, and strategic initiatives in place, APT is well-positioned for continued success in the protective apparel and building products markets.
For more detailed information on Alpha Pro Tech Ltd's financial results, please visit www.alphaprotech.com.
Explore the complete 8-K earnings release (here) from Alpha Pro Tech Ltd for further details.
This article first appeared on GuruFocus.
