Exhibit 99.1
500 Expressway Drive South, Brentwood, NY 11717
Phone: 631.231.4600
www.medical-action.com
| | |
| CONTACT: | | Charles L. Kelly – Chief Financial Officer |
| | MEDICAL ACTION INDUSTRIES INC. |
| | (631) 231-4600 |
FOR IMMEDIATE RELEASE
MEDICAL ACTION INDUSTRIES REPORTS
STRONG THIRD QUARTER 2010 FISCAL RESULTS
Company Reports Gains in Net Income and Gross Profit;
Increase in Cash Flow Facilitates a $9.7 Million Debt Reduction
in the Third Quarter and a $30.7 Million Debt Reduction Year to Date
BRENTWOOD, N.Y., February 4, 2010 – Medical Action Industries Inc. (NASDAQ/MDCI), a leading supplier of medical and surgical disposable products, today reported strong third quarter 2010 results marked by significant gains in net income and gross margin versus the prior year period, as well as an increase in cash flow that allowed the company to reduce debt by another $9,715,000 during the quarter.
Chief Executive Officer and President Paul D. Meringolo stated, “Our third quarter performance benefited from stable resin prices for its U.S. and Chinese-made products, from continuous improvements at its Tennessee plant and from ongoing investments in sales and marketing.”
Net sales for the three months ended December 31, 2009 totaled $73,176,000, an increase of $1,181,000, or 1.6% above the $71,995,000 in net sales reported for the three months ended December 31, 2008. Net income for the third quarter of fiscal 2010 was $4,010,000, or $0.25 per basic and diluted share, up significantly from the
$157,000, or $.01 per basic and diluted share, reported for the comparable three months of fiscal 2009.
Net sales for the nine months ended December 31, 2009 amounted to $218,923,000, a decrease of $4,291,000, or 1.9%, from the $223,214,000 in net sales reported for the nine months ended December 31, 2008. Net income for the nine months ended December 31, 2009 was $11,647,000, or $0.72 per basic and diluted share, an increase of $8,464,000 or $0.52 per basic and diluted share from the $3,183,000, or $0.20 per basic and diluted share, reported for the comparable nine months of fiscal 2009.
Medical Action continued to report strong gross profit, with gross profit for the third quarter of 2010 reaching 23.5% versus 23.0%, 23.9% and 19.9%, respectively, for the previous three quarters, and 14.0% reported in the third quarter of fiscal 2009.
“In fiscal 2010”, Meringolo noted, “we have continued to invest in capital equipment and personnel at our Tennessee plant so that it is now stable and poised to give us the additional manufacturing benefits we strive to achieve. We’ve made important advancements in sales and marketing as we create a new structure to take us to the next level of growth and maximize our competitive advantages. We are not finished with our work in these functional areas and intend to make continual investments in each department over the foreseeable future. On the financial side, the benefit of lower resin costs as well as our focus on revenue and costs has delivered gross margins in the 23% range. We have also continued to generate strong cash flow, allowing us to consider potential acquisitions and reduce our debt by $30,721,000 over the last nine months.
“While we’re proud of this year’s achievements and see many opportunities for future growth,” Meringolo added, “we also need to prepare for potentially higher resin
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costs in fiscal 2011 as a competitive marketplace limits our ability to pass along price increases to customers. Our goal is to continue to grow the Company by focusing on the core strategies under our control, including an emphasis on revenue growth, bringing added value and innovation to customer relationships, extracting additional benefits from our manufacturing facilities and pursuing appropriate acquisition candidates.”
Medical Action invites its shareholders and other interested parties to attend its conference call at 10:00 a.m. (ET) on February 4, 2010. The dial-in number for the conference call is(888) 868-9080 (domestic) or (973) 935-8511 (international); conference ID # 49918181. The conference call will be simultaneously web cast on ourwebsite: www.medical-action.com. The complete call and discussion will be available for replay on our website beginning at 1:00 p.m. (ET) on February 4, 2010.
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.
Financial Highlights
(dollars in thousands, except per share data)
| | | | | | | | | | | | |
| | | For the Three Months
Ended December 31, | | For the Nine Months
Ended December 31, |
| | | 2009 | | 2008 | | 2009 | | 2008 |
| | | (Unaudited) | | (Unaudited) |
Statements of Operations: | | | | | | | | | | | | |
Net sales | | $ | 73,176 | | $ | 71,995 | | $ | 218,923 | | $ | 223,214 |
Cost of sales | | | 55,961 | | | 61,912 | | | 167,557 | | | 186,809 |
| | | | | | | | | | | | |
| | | | |
Gross profit | | | 17,215 | | | 10,083 | | | 51,366 | | | 36,405 |
| | | | |
Selling, general and administrative expenses | | | 10,262 | | | 8,886 | | | 30,894 | | | 29,270 |
Interest expense, net | | | 289 | | | 945 | | | 1,122 | | | 2,058 |
| | | | | | | | | | | | |
Income before income taxes | | | 6,664 | | | 252 | | | 19,350 | | | 5,077 |
Income tax expense | | | 2,654 | | | 95 | | | 7,703 | | | 1,894 |
| | | | | | | | | | | | |
| | | | |
Net income | | $ | 4,010 | | $ | 157 | | $ | 11,647 | | $ | 3,183 |
| | | | | | | | | | | | |
| | | | |
Net income per share basic | | $ | .25 | | $ | .01 | | $ | .72 | | $ | .20 |
Net income per share diluted | | $ | .25 | | $ | .01 | | $ | .72 | | $ | .20 |
Condensed Balance Sheets as of December 31, 2009 and
March 31, 2009 (dollars in thousands)
| | | | | | |
| | | December 31,
2009 | | March 31,
2009 |
| | | (Unaudited) | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 8,504 | | $ | 3,459 |
Accounts receivable, net | | | 17,285 | | | 21,459 |
Inventories, net | | | 36,554 | | | 43,221 |
Prepaid expenses and other current assets | | | 4,408 | | | 6,404 |
| | | | | | |
Total Current Assets | | | 66,751 | | | 74,543 |
| | |
Property, plant and equipment, net | | | 40,344 | | | 40,313 |
Goodwill | | | 80,699 | | | 80,699 |
Other intangible assets, net | | | 14,805 | | | 15,886 |
Other assets, net | | | 3,885 | | | 3,725 |
| | | | | | |
Total Assets | | $ | 206,484 | | $ | 215,166 |
| | | | | | |
| | |
Liabilities and Shareholders’ Equity: | | | | | | |
Accounts payable | | $ | 13,940 | | $ | 8,190 |
Accrued expenses | | | 12,526 | | | 10,643 |
Deferred income taxes | | | 14,282 | | | 14,282 |
Total debt | | | 29,325 | | | 60,046 |
Shareholders’ equity | | | 136,411 | | | 122,005 |
| | | | | | |
| | |
Total Liabilities and Shareholders’ Equity | | $ | 206,484 | | $ | 215,166 |
| | | | | | |
| | |
Key Financial Statistics | | | | | | |
Current ratio | | | 1.7 | | | 2.9 |
Debt to equity ratio | | | .21 | | | .49 |
Book value per share | | $ | 8.44 | | $ | 7.61 |
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