- Net sales in the quarter were $6.0 million, up $1.3 million, driven by growth in all product lines
- Achieved gross margin in quarter of 19.2%, a 7.6 point expansion
- Year-to-date net sales increased 20.2%; gross margin expanded to 19.7%
- Generated cash from operations of $0.6 million in the quarter and $1.5 million year to date
FITCHBURG, Mass., Nov. 12, 2014 (GLOBE NEWSWIRE) -- Arrhythmia Research Technology, Inc. (NYSE MKT:HRT) (the “Company”), operating through its wholly-owned subsidiary, Micron Products, Inc., manufactures highly engineered, complex components, devices and equipment for OEM customers in the medical, military, law enforcement, automotive and other industries. The Company also manufactures its proprietary silver/silver chloride coated and conductive resin sensors used as component parts in the manufacture of integrated disposable electrophysiological sensors. Today, the Company announced results for its third quarter ended September 30, 2014.
Salvatore Emma, Jr., President and CEO, commented, “The Company had strong sales across all product lines as it executed its strategy to increase market share. Micron has gained new sensor customers and is realizing greater volume with existing customers through reliable delivery, high quality products and responsive customer service. The Company also believes higher demand of orthopedic implants by its OEM customers was driven by Micron’s rapid production capabilities of both standardized and individualized implant devices.”
Strong Growth Across All Product Lines
Third quarter 2014 sales of $6.0 million increased $1.3 million, or 27.9%, over the third quarter of 2013. Sensor sales dollars increased 26.6%, primarily as a result of a 32.3% increase in volume over the prior-year period. Sensor sales dollars attributable to silver increased despite an 8.1% decline in the average price of silver over the prior-year period.
Sales of contract manufacturing of machined orthopedic implants increased 24.5% due to higher order volume, while the 26.0% increase in custom thermoplastic injection molding was due to product mix and increased order volume of automotive and medical device components, as well as less-lethal ordinance products for the military and law enforcement markets.
Higher Volume Drives Margin Expansion
Mr. Emma added, “The improvements made in its operations over the last year have enabled the Company to leverage fixed costs and convert higher sales into earnings. The Company is realizing expanded margins and has delivered its third consecutive quarter of positive net income.”
| 2014 | 2013 | $ Change | % Change | |
| Gross Profit | $ 1,161 | $ 550 | $ 611 | 111.1% |
| Gross Margin | 19.2% | 11.6% | ||
| Total net income (loss) | $ 130 | $ (566) | $ 696 | * |
| Diluted earnings (loss) per share** | $ 0.05 | $ (0.21) | $ 0.26 | * |
*Not material or meaningful
**Discontinued operations did not affect per share results
Gross profit more than doubled in the third quarter to $1.2 million, or 19.2% of sales, over the prior-year period, while gross margin expanded 7.6 points as a result of higher volume, improved productivity and cost efficiencies.
Selling and marketing expenses grew 20.8% to $253 thousand, or 4.2% of sales, in the third quarter of 2014, primarily driven by higher commissions due to the increase in sales.
Third quarter 2014 general and administrative expenses declined $130 thousand, or 17.9%, to $597 thousand, or 9.9% of sales, compared with $728 thousand, or 15.4% of sales, for the same period last year. Wages, taxes, benefits and travel decreased $152 thousand over the prior period, due primarily to executive management changes in 2013. Additionally, accounting fees were lower by $68 thousand by eliminating audit and review overruns. These decreases were partially offset by increased investor relations expenses of $46 thousand.
Research and Development (“R&D”) expenses for the third quarter of 2014 were $110 thousand, or 1.8% of sales, compared with $131 thousand, or 2.8% of sales, in the prior-year period, and reflects the development of new products and capabilities related to machined orthopedic implants. The Company has also dedicated resources to customer funded research and development of new products in the military and law enforcement industry. Mr. Emma noted, “Micron is recognized for our solutions-oriented contract manufacturing of highly engineered, complex products for OEM customers. Micron is investing with its customers to create new products, as well as new capabilities and process improvements.”
Net income was $130 thousand, or $0.05 per diluted share, during the third quarter of 2014, compared with a net loss of $570 thousand, or $0.21 per diluted share, in the same period in 2013. The significant improvement reflects the leverage gained from higher volume.
Adjusted EBITDA (income from continuing operations adjusted for income taxes, other income and expense, interest, depreciation and amortization, and share-based compensation expense) for the third quarter of 2014 was $621 thousand, or 10.3% of sales, compared with an Adjusted EBITDA loss of $129 thousand for the same period of the prior year. See the table on page 8 for additional important disclosures regarding the Company’s use of Adjusted EBITDA, as well as a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA.
Summary Year-to-Date 2014 Results
Sales for the nine months ended September 30, 2014 were $18.3 million, up 20.2% from $15.3 million for the same period in 2013. Sales growth was driven primarily by strong demand for machined orthopedic implants and higher sensor sales. The increase in sensor sales dollars was due primarily to a 21.8% increase in volume over the prior-year period. Sensor sales dollars attributable to silver increased despite a 19.8% decline in the average price of silver for the comparable prior-period.
Sales of contract manufacturing of machined orthopedic implants increased 76.5% due to higher order volume, while the 7.7% increase in custom thermoplastic injection molding and tooling was due to product mix and increased order volume of automotive and medical device components, as well as less-lethal ordinance products for the military and law enforcement markets.
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