material costs
-- FY 2006 sales increase slightly, but orders decline
ST. LOUIS, Sept. 7 - Allied Healthcare Products, Inc. (Nasdaq: AHPI) reported that its net income fell about 58 percent to $629,000, or 8 cents per share, in the fourth quarter ended June 30, 2006, versus $1.5 million, or 19 cents per share, in the fourth quarter of 2005.
For the year, net income declined about 30 percent to $1.6 million, or 21 cents per share, compared to $2.3 million, or 30 cents per share, for fiscal 2005.
Although sales for the quarter increased slightly, to about $14.5 million from $14.2 million the previous year, orders for the fourth quarter of 2006 slipped by about 2.6 percent compared to the 2005 period.
Sales for fiscal 2006 increased by almost $1.4 million to about $57.5 million from $56.1 million the previous year. Orders for 2006 fell about 6 percent from 2005 levels.
The comparison of fourth quarter 2006 to previous year quarterly results is distorted by the effects of a tax adjustment taken in 2005's fourth quarter and a subsequent tax adjustment in 2006's fourth quarter. The 2005 adjustment accounted for a 12 cent increase in earnings per share for the fourth quarter of 2005. The subsequent tax adjustment in 2006's fourth quarter, resulting from a favorable settlement of state tax contingencies, was of smaller magnitude and added 4 cents earnings per share.
Increased material costs were the second largest drag on fourth quarter results. Led by a 77 percent jump in the price of copper, which is a major component of the brass fittings used in many Allied products, material costs in the fourth quarter increased more than 7 percent over those of 2005. Higher material costs accounted for 5 cents of the quarter's decline in earnings per share.
Calling 2006 results "disappointing, particularly because of our poor sales performance," Allied President and CEO Earl Refsland said the company would emphasize increased sales in 2007 and seek to recover higher costs through price adjustments where possible.
The company's operations focus in 2007 will be automation and other projects that reduce operating costs, Refsland said.
Allied Healthcare Products, Inc. is a leading manufacturer of respiratory care products, medical gas equipment and emergency medical products used in a wide range of hospital and alternate care settings.
"SAFE HARBOR" STATEMENT: Statements contained in this release that are not historical facts or information are "forward-looking statements." Words such as "believe," "expect," "intend," "will," "should," and other expressions that indicate future events and trends identify such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause the outcome and future results of operations and financial condition to be materially different than stated or anticipated based on the forward- looking statements. Such risks and uncertainties include both general economic risks and uncertainties, risks and uncertainties affecting the demand for and economic factors affecting the delivery of health care services, and specific matters which relate directly to the Company's operations and properties as discussed in its periodic filings with the Securities and Exchange Commission. The Company cautions that any forward-looking statement contained in this report reflects only the belief of the Company or its management at the time the statement was made. Although the Company believes such forward-looking statements are based upon reasonable assumptions, such assumptions may ultimately prove inaccurate or incomplete. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement was made.
ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended Twelve months ended
June 30, June 30,
2006 2005 2006 2005
Net sales $14,462,919 $14,184,419 $57,545,589 $56,120,150
Cost of sales 11,161,944 10,285,548 43,292,746 41,669,290
Gross profit 3,300,975 3,898,871 14,252,843 14,450,860
Selling,
general and
administrative
expenses 2,918,066 2,844,236 12,112,624 11,843,037
Income from
operations 382,909 1,054,635 2,140,219 2,607,823
Interest
expense - 4,849 - 123,076
Interest income (17,002) - (52,988) -
Other, net 8,904 10,041 37,758 42,604
(8,098) 14,890 (15,230) 165,680
Income before
provision
(benefit) for
income taxes 391,007 1,039,745 2,155,449 2,442,143
Provision
(benefit) for
income taxes (238,345) (473,644) 506,845 100,779
Net income $629,352 $1,513,389 $1,648,604 $2,341,364
Basic earnings
per share $0.08 $0.19 $0.21 $0.30
Diluted
earnings per
share $0.08 $0.19 $0.20 $0.29
Weighted
average shares
outstanding -
basic 7,852,077 7,829,577 7,840,858 7,821,943
Weighted
average shares
outstanding -
diluted 8,081,626 8,085,599 8,066,311 8,080,890
ALLIED HEALTHCARE PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, 2006 June 30, 2005
ASSETS
Current assets:
Cash and cash equivalents $2,696,324 $317,775
Short-term investments - -
Accounts receivable, net of
allowances of $430,000 and $565,000,
respectively 7,429,355 7,215,799
Inventories, net 11,491,305 10,775,550
Other current assets 224,853 168,431
Total current assets 21,841,837 18,477,555
Property, plant and equipment, net 11,252,934 11,308,866
Goodwill 15,979,830 15,979,830
Other assets, net 255,845 330,969
Total assets $49,330,446 $46,097,220
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,208,699 $2,110,599
Other accrued liabilities 2,834,495 2,940,763
Deferred income taxes 689,942 711,416
Deferred revenue 465,000 465,000
Total current liabilities 7,198,136 6,227,778
Deferred revenue 1,472,500 1,007,500
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value;
1,500,000 shares authorized; no
shares issued and outstanding - -
Series A preferred stock; $0.01 par
value; 200,000 shares authorized;
no shares issued and outstanding - -
Common stock; $0.01 par value;
30,000,000 shares authorized;
10,155,569 shares issued at June 30,
2006 and 10,133,069 shares issued at
June 30, 2005; 7,852,077 outstanding
at June 30, 2006 and 7,829,577
shares outstanding June 30, 2005,
respectively 101,556 101,331
Additional paid-in capital 47,258,182 47,109,143
Retained earnings 14,031,500 12,382,896
Less treasury stock, at cost;
2,303,492 shares at June 30, 2006
and June 30, 2005, respectively (20,731,428) (20,731,428)
Total stockholders' equity 40,659,810 38,861,942
Total liabilities and
stockholders' equity $49,330,446 $46,097,220
