Alpha Pro Tech, Ltd. Announces 27% Increase in Net Income for the Third Quarter of 2006.* 11% Increase in Net Revenue to $9.0 Million * Earnings Per Share of $0.11 for the Nine Months * 42% Growth in Engineered Product Sales NOGALES Nogales (nōgä`lās), city (1990 pop. 19,489), Santa Cruz co., S Ariz. on the Mexican border with its adjacent city, Nogales (1990 pop. 105,873), Sonora, NW Mexico. There are copper, silver, and lead mines. , Ariz. -- Alpha Pro Tech (AMEX AMEX See: American Stock Exchange :APT)(CHX See Chicago Stock Exchange. CHX See Chicago Stock Exchange (CHX). :APT) a leading manufacturer of products designed to protect people, products and environments, including disposable protective apparel and building products, announced its financial results for the third quarter and nine-month period ended September 30, 2006. Consolidated sales for the third quarter ended September 30, 2006 increased 11.1% to $9.0 million from $8.1 million in the comparable 2005 quarter. The increase was primarily due to increased sales of construction supply weatherization products and infection control segment sales along with a slight increase in disposable protective apparel products, offset by a slight decrease in extended care product sales. Sales for the Disposable Protective Apparel segment for the quarter increased slightly to $5.2 million compared to $5.1 million for the same period of 2005 and, while sales remain down year to date compared to last year, sales during this past quarter of $5.2 million were in fact the third highest in company history next only to the second quarter of 2005 and 2006. Management expects growth from this segment in 2006 as the Company continues it launch of its ComforTech[R] line of products. Infection Control segment sales for the quarter increased 22.8% to $1.48 million compared to $1.2 million for the same period of 2005. Mask sales in this segment, in particular sales of the Company's N-95 NIOSH NIOSH National Institute for Occupational Safety & Health, see there NIOSH Recommendations for Safety & Health Standards Agent NIOSH REL*/OSHA PEL† Health effects approved respirator respirator /res·pi·ra·tor/ (res´pi-ra?ter) ventilator (2). cuirass respirator see under ventilator. mask, continued to be strong in the third quarter of 2006 as concerns about Avian Flu avian flu: see influenza. have not abated Abated, an ancient technical term applied in masonry and metal work to those portions which are sunk beneath the surface, as in inscriptions where the ground is sunk round the letters so as to leave the letters or ornament in relief. From 1911 Encyclopædia Britannica . Engineered Products segment sales for the quarter increased 41.9% to $1.97 million compared to $1.39 million for the same period of 2005. This increase is an extremely positive indication of the strength of the Engineered Products line as the third quarter for 2005 was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected by hurricane Katrina-related orders and a year-over-year increase measured against a disaster-related spike A burst of extra voltage in a power line that lasts only a few nanoseconds. See power surge, power swell, sag and surge suppression. (jargon) spike - To defeat a selection mechanism by introducing a (sometimes temporary) device that forces a specific result. in sales should be a good leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. . Al Millar, President of Alpha Pro Tech commented, "Our Engineered Products segment continues to be a strong growth driver and we expect to see strong continued growth from this division. Even though sales in the Disposable Apparel segment are down year to date, we expect that the fourth quarter will be significantly better than the fourth quarter of last year. On September 16, 2006 we announced the signing of a new distribution contract with our largest distributor. Under the terms of the multiple-year contract that was effective January 1, 2006, they will retain the exclusive right to sell our private label Critical Cover[R] products. In addition, we will now have the right to sell Alpha Pro Tech branded products to other new distributors. This new contract further strengthens our relationship with our largest distributor and will enable us to gain additional market share as we develop relationships with new distributors." Gross profit increased by 12.5% to $4.1 million for the quarter, or 45.9% gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , from $3.65 million, or 45.3% gross profit margin, for the same period in 2005. Gross profit margin on the Engineered Products segment was 32.6% for the third quarter compared to 28.2% for the same period of 2005, continuing the Company's positive trend in improving the segment's gross profit margin. Gross profit on this product line is expected to trend into the mid 30% range. Selling, general and administrative expenses increased by 8.8% to $2.64 million for the quarter from $2.42 million for the same quarter last year. Despite the increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in whole dollars, operating expenses as a percentage of revenue decreased to 29.4% from 30.1% for the quarter. Income from operations increased by 23.2%, to $1.35 million for the quarter as compared to income from operations of $1.1 million for the quarter ended September 30, 2005. The provision for income taxes for the quarter was $518,000 compared to $407,000 for the quarter ended September 30, 2005, resulting in an effective tax rate of 37.0% which was relatively unchanged versus last year. Net income for the quarter was $882,000 compared to net income of $693,000 for the quarter ended September 30, 2005, an increase of 27.3%. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. income per share for the quarter was $0.04, based on 25.2 million fully diluted shares, compared to basic and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.03, based on 25.3 million fully diluted shares, for the third quarter last year. Mr. Millar added, "We have built the infrastructure required to substantially grow our business and as our revenue grows our expenses are expected to continue to decrease as a percentage of sales, showing increasing leverage in our business model." For the first nine months of 2006, consolidated sales increased 11.3% to $26.8 million from $24.1 million for the nine months ended September 30, 2005 due to increased sales of construction supply weatherization products and infection control segment sales. The Engineered Products segment sales for the nine months increased 70.6% to $5.96 million from $3.5 million in the same period of 2005. Infection Control segment sales for the nine months increased 39.3% to $5.0 million from $3.6 million in the same period of 2005 due in large part to sales of the Company's N-95 NIOSH approved Respirator mask. Sales for the Disposable Protective Apparel segment for the nine months were $14.8 million, a decrease of 6.2% compared to $15.8 million for the same period of 2005. Gross profit margin was relatively unchanged at 46.1% for the nine months ended September 30, 2006 from 45.8% for the same period in 2005. Gross profit margin for the Engineered Products segment increased to 32.6% for the nine months as compared to 28.2% for the same period of 2005. Selling, general and administrative expenses increased 7.7% to $7.8 million, or 29.3% of sales, for the nine months from $7.3 million, or 30.3% of sales, for the nine months ended September 30, 2005. Income from operations for the nine months ended September 30, 2006 increased 23.9% to $4.2 million from $3.4 million for the same period last year. Net income for the nine months was $2.7 million, or $0.11 per basic and fully diluted share (based on 25.1 million shares) compared to net income of $2.1 million, or $0.09 per basic and fully diluted (based on 25.2 million shares) for the comparable prior-year period. The balance sheet continued to remain strong with a current ratio of 10.94 to 1 on September 30, 2006. The Company completed the quarter with cash and cash equivalents of $805,000 and working capital of $17.6 million. Inventories as of September 30, 2006 totaled $11.6 million and were up 9% or $1.0 million compared to inventories as of December 31, 2005. The Company currently has no outstanding debt and maintains an unused $3.5 million credit facility. Lloyd Hoffman, Chief Financial Officer commented, "The current inventory levels have been increased in order to service sales growth, particularly in the Engineered Products segment." About Alpha Pro Tech, Ltd. Alpha Pro Tech, Ltd. is a leader in protecting people, products and environments. Alpha Pro Tech develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets. In addition, Alpha ProTech Engineered Products, Inc. manufactures and markets a line of construction weatherization products, including building wrap, roof underlayment and mold mold, name for certain multicellular organisms of the various classes of the kingdom Fungi, characteristically having bodies composed of a cottony mycelium. The colors of molds are caused by the spores, which are borne on the mycelium. resistant framing sealant Sealant A thin plastic substance that is painted over teeth as an anti-cavity measure to seal out food particles and acids produced by bacteria. Mentioned in: Tooth Decay sealant see bone sealant. . The Company has manufacturing facilities in Salt Lake City, Utah For ships of the United States Navy of the same name, see . Salt Lake City is the capital and the most populous city of the U.S. state of Utah. The name of the city is often shortened to Salt Lake, or its initials, S.L.C. ; Nogales, Arizona Nogales is a city in Santa Cruz County, Arizona, United States. The population was 20,878 at the 2000 census. According to 2005 Census Bureau estimates, the population of the city is 20,833.[1] The city is the county seat of Santa Cruz County. ; Janesville, Wisconsin Janesville is a city in southern Wisconsin. It is the county seat of Rock CountyGR6 and the principal municipality of the Janesville, Wisconsin Metropolitan Statistical Area. As of the 2000 census, the city had a population of 59,498. ; Valdosta, Georgia The city of Valdosta is the county seat of Lowndes County, Georgia, United States. It is the principal city of the Valdosta, Georgia Metropolitan Statistical Area. As of the 2000 census, the city had a total population of 43,724. ; and a joint venture in India. For more information and copies of all news releases and financials visit Alpha Pro Tech's website at http://www.alphaprotech.com . The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 ("Act") provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking information made on behalf of the Company. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involve risks, uncertainties and assumptions as described from time to time in registration statements, annual reports and other periodic reports and filings of the Company filed with the Securities and Exchange Commission. All statements, other than statements of historical facts which address the Company's expectations of sources of capital or which express the Company's expectations for the future with respect to financial performance or operating strategies, can be identified as forward-looking statements. As a result, there can be no assurance that the Company's future results will not be materially different from those described herein as "believed," "anticipated," "estimated" or "expected," which reflect the current views of the Company with respect to future events. We caution readers that these forward-looking statements speak only as the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company hereby expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which such statement is based. - tables follow -
[TABLE OMITTED]
Balance Sheet Highlights > >
> > September 30
December 31 st
> > 2006
2005
> >
Cash > > $805,000
$1,163,000
Total Current Assets > > $19,416,000
$16,874,000
Net Property and Equipment > > $3,378,000
$3,389,000
Total Assets > > $24,142,000
$21,871,000
> >
Total Current Liabilities > > $1,775,000
$2,576,000
Total Liabilities > > $2,433,000
$3,228,000
Shareholder's Equity > > $21,709,000
$18,643,000
Total Liabilities and Equity > > $24,142,000
$21,871,000
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