On June 14,
Medical Action Industries
), a manufacturer and distributer of medical and surgical
disposable products, reported its fiscal fourth quarter loss per
share of 15 cents. This compares with the Zacks Consensus Estimate
of an earnings of 4 cents and the year-ago earnings of 7 cents. For
fiscal 2012, loss per share of 2 cents also missed both the Zacks
Consensus Estimate and fiscal 2011 earnings of 17 cents and 32
Net loss for the quarter came in at $2.5 million compared with a
net income of $1.1 million in the prior-year quarter. The
deterioration resulted from higher resin costs, increased price
paid for products from vendors in China and one-time tax valuation
On a GAAP basis, net income for fiscal 2012 was $0.2 million (or
1 cent a share) versus $4.4 million (or 27 cents a share) for
fiscal 2011. Net income for fiscal 2012 includes an extra-ordinary
pre-tax gain of $0.7 million (or 3 cents per share) related to the
insurance settlement of its inventories damaged in a
weather-related flooding in fiscal 2011.
Revenues increased 3% year-over-year to $108.2 million for the
reported quarter, missing the Zacks Consensus Estimate of $111.0
For fiscal 2012, revenues soared 21% year-over-year to $437.3
million, marginally missing the Zacks Consensus Estimate of $440.0
million. The year-over-year increase can be attributed to the
synergies from the AVID Medical Inc. acquisition.
Barring the acquisition, annual sales rose 6% year-over-year to
$298.9 million. The higher sales volume contributed $17.0 million
as market penetration in the Patient Care and Clinical Care
segments contributed $10.5 million and $6.5 million, respectively.
On the other hand, contributions from higher average selling price
was $0.8 million for the fiscal year. This can be attributed to a
$1.4 million rise from increase in net price of certain products,
partially offset by a decrease of $0.6 million in the average
selling price in the company's Patient Care market.
Gross margin for fiscal 2012 came in at 14.8%, compared to 17.6%
in the prior year. Operating margin decreased to 1.3% from 3.3% in
fiscal 2011. Selling, general and administrative expenses, as a
percentage of sales, decreased to 13.6% from the year-ago
Medical Action exited fiscal 2012 with cash and cash equivalents
of $5.4 million, up more than two-fold from the previous year. The
long term debt stood at $75.7 million, up 0.7% year-over-year.
The company entered into the Second Amended and Restated Credit
Agreement on June 7, 2012. As of June 2012, Medical Action has
outstanding borrowings of $70.7 million, under the Credit
Agreement. It plans to allocate available funds for capital
expenditures, improving its marketing and product development. The
agreement is expected to enable the company to focus on its
Medical Action is attempting to enhance profitability through
its continued focus on organic growth and improved customer
services. It has also realigned its business into strategic
business units to increase focus on the target markets. However,
the company expects pricing pressure and volatility in raw material
prices, especially cotton and resin, to hamper gross profit.
Another concern is tough competition from larger players like
Becton Dickinson and Company
The stock currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
BECTON DICKINSO (BDX): Free Stock Analysis
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MEDICAL ACTION (MDCI): Free Stock Analysis
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