Sales for the Disposable Protective Apparel increased by 8.5% to $4.8 million compared to $4.5 million for the same period of 2008. Building Supply Products (formerly known as Engineered Products) segment sales for the three months ended March 31, 2009 increased by 65.8% to $2.3 million as compared to $1.4 million for the same period of 2008. The increase for the quarter is primarily due to a 90.0% increase in sales of REX™ Synfelt synthetic roof underlayment and a 30.0% increase in sales of REX™ Wrap house wrap. Infection Control segment sales for the three months ended March 31, 2009 increased by 30.8% to $2.2 million compared to $1.7 million for the same period of 2008. The Infection Control segment consists of face masks, eye shields and medical bed pads as well as a line of pet beds. Previously the line of medical bed pads and pet beds were reported as a separate segment under the name of Extended Care. Because management is now looking at the Extended Care segment in conjunction with the Infection Control segment, and the majority of the extended care revenue is now generated from the medical bed pads, which prevent decubitus ulcers or bed sores, it is now appropriate that these segments be consolidated in the Infection Control segment. All numbers reflect the updated segmentation.
Gross profit increased by 19.4% to $4.1 million for the first quarter 2009, or 44.2% gross profit margin, from $3.5 million, or 45.9% gross profit margin, for the same period in 2008. The decrease in gross margin was primarily due to the higher mix of Engineered Product sales which have lower margins.
Selling, general and administrative expenses increased by 3.2% to $3.2 million for the first quarter 2009 from $3.1 million for the same quarter last year. The increase is primarily due to a $225,000 severance agreement for the Company’s previous Senior Vice President of Marketing in February 2009. The increase was partially offset by decreased travel expenses and decreased industrial sales and marketing expenses. Excluding the severance cost, SG&A expense decreases by 4.0% as compared to the first quarter of 2008 and decreased as a percentage of sales to 32.3% in the quarter compared to 41.8% in the prior years first quarter.
The balance sheet continued to remain strong with a current ratio of 14.3:1 to 1 on March 31, 2009. The Company completed the quarter with cash and cash equivalents of $4.6 million, unchanged from $4.6 million as of December 31, 2008 and working capital of $22.0 million. Inventories as of March 31, 2009 decreased by $1.1 million to $10.9 million compared to $12.1 million as of December 31, 2008.
Mr. Hoffman concluded, “On April 8, 2009, our Board of Directors authorized an additional share repurchase program of the Company’s common stock for up to $2.0 million beyond the current share repurchase program already in place. For the three months ended March 31, 2009, we have repurchased and retired 309,800 shares of common stock at a cost of $285,000. Subsequent to the end of the first quarter the Company has repurchased and will retire 483,400 shares of common stock at a cost of $513,000. In total the Company through its buyback program has repurchased a total of 5,432,100 shares of common stock at a cost of $6,348,000. Future repurchases are expected to be funded from cash on hand and cash-flow from operations.”
