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Span-America Medical Systems, Inc. (SPAN) reported its results after the bell on Thursday for the first quarter ended December 27, 2008.
First quarter sales totaled $13.4 million, which was down 2% compared with $13.7 million in the first quarter of fiscal 2008. Net income for the first quarter declined 15% to $887,000, or $0.32 per diluted share, compared with $1.0 million, or $0.36 per diluted share, in the same quarter last year.
Richard C. Coggins, CFO of Span-America, commented in a conference call, "Our Q1 earnings were down for several reasons, but primarily due to the increase in selling and administrative expenses. These increases, combined with a decrease in custom product sales and a less profitable sales mix in the medical segment, caused our operating profit to decline by 18%. In spite of this decline, our earnings performance held up pretty well under these market conditions."
He added, "Our balance sheet is in excellent shape, and we paid off the remaining $700,000 of long term debt. This left us with no bank debt at the end of the quarter."
James D. Ferguson, President and CEO of Span-America, said, "Even though our results in the first quarter were down from a year ago, we performed very well in a tough business environment. Sales in our medical business were actually up by 2%, even though custom products sales were down in the quarter."
He explained, "We have seen some reductions in our material prices, particularly in foam products. We continue to apply pressure to our vendors for further cuts and expect more to come in the future. We will focus this year on the development and introduction of new products. We have stepped up our efforts in R&D and have asserted ourselves with product innovation concepts. We may release more new products this year than at any other time in the history of the company."
Mr. Ferguson concluded, "I believe that we can continue to grow our base business by double-digits in the medical business. I believe the industrial segment will be a struggle for quite some time. The automotive industy has not hit bottom yet with production forecasts continuing to drop on a weekly basis. The challenge here will be to find new customers outside of the automotive industry."
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