Alpha Pro Tech, Ltd. (NYSE:APT)


Thursday, April 22, 2010

GeoBargain Notes

Alpha Pro Tech Ltd removed from the GeoBargain on the Radar List due to weak 2010 estimates. Plan to revisit as we approach 2011.

Added to the GeoBargain list on August 18, 2009 @ $3.50.

Removed from the GeoBargain List on February 23, 2010 @ $3.40

Current Price: $2.29

 Reached a high $7.60 in October of 2009.

Tuesday, March 9, 2010

Comments & Business Outlook

Al Millar, President of Alpha Pro Tech, commented, "Our fourth quarter revenues and profitability continued the positive momentum that we experienced in our earlier quarters in 2009, which allowed us to deliver record results. We continued to see substantial sales growth in our REX Synfelt synthetic roof underlayment and, to a lesser extent, our house wrap products. We are currently working on opportunities with existing and new distributors, and we are optimistic about the Building Supply segment throughout 2010 and further into the future. In the Disposable Protective Apparel segment, we expect increased sales from a broad base of our distributors in 2010, but sales to our largest distributor, which were up in 2009, are expected to soften in 2010. Our N-95 Particulate Respirator face mask sales started to slow down in the latter part of the fourth quarter and are expected to return to pre-H1N1 levels in 2010, unless concerns relating to the global H1N1 Influenza A pandemic resume."

Source: Business Wire (March 9, 2010)

Thursday, December 10, 2009

GeoBargain Notes

Alpha Pro Tech return on equity now exceeds 15%.

Monday, November 2, 2009

GeoBargain Notes

On August 6, 2009, the GeoTeam coded Alpha Pro Tech (NYSE Amex:APT) as a GeoSpecial at $3.57 after the company reported strong 2009 second quarter financial results.  It was subsequently added to the GeoBargain list on August 18, 2009.  Although we never established a large investment position in Alpha Pro Tech, we had been monitoring the company for several years.  Over the past three years the Company's revenues were relatively stagnant and its earnings per share growth was far from spectacular. 

  Full Year 2008 Reported Full Year 2007 Reported Full Year 2006 Reported
GAAP Revenue $35.8 million $35.5 million $37.3
GAAP EPS  $0.07 $0.10 $0.15

When the company reported that second quarter revenues increased 63% to $14.5 million and earnings per share increased 400% $0.10 vs. $0.07 for all of 2008, the APT story became more compelling, prompting us to dig a bit deeper. 

  Second Quarter 2009 Reported Second Quarter 2008 Reported Percent Change
GAAP Revenue $14.5 million $8.9 million 62.9%
GAAP EPS  $0.10 $0.02 400.0%

Major topics to be addressed:

1. Was this quarter an aberration? Will the company revert back to reporting earnings per share figures between $0.02 to $0.05 as it has over the past three years.

2.  The Company has seen a significant contribution to its revenues from its N-95 respirator masks.  It has been able to take advantage of public concern over the swine influenza A (H1N1 Influenza A) virus infection pandemic.  How long will this trend last? What happens when influenza concerns are alleviated?

3.  Alpha ProTech manufactures and markets a line of construction weatherization products, including building wrap and roof underlayment.  What are the prospects of this product line in the midst of the current economic environment? As the housing market has suffered, how has the company been able to experience robust growth in this product line?

As we listened to a replay of the company's second quarter conference call, we heard the company portray a sense of bullishness and confidence in the continuation of its current growth trend, possibly alleviating our concerns that this quarter's financial results were an anomaly.

The GeoTeam® will have more details soon.

Wednesday, August 26, 2009

GeoBargain Notes

GeoNuggets® - Quick Check List Highlighting Undiscovered Opportunities
Reclassified from a GeoSpecial to a GeoBargain on August 18, 2009 at $3.50 

Alpha Pro Tech Inc. (NYSE AMEX:APT)

Company Description: Alpha Pro Tech, Inc. 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 and roof underlayment.

Data Ended 8/24/09

  • Price = $4.25
  • Trailing EPS = $0.16
  • P/E based on Trailing EPS = 26.6

Reasons for Optimism

  1. APT meets 9 out of 10 GeoBargain® Requirements

      Requirement Comments
    Yes Recent 52-week High (generally within 3 months) Attained on August 25, 2009
    Yes 30% EPS Growth Rate
    • 2nd Qtr. 2009 EPS increased 400.0%
    • GeoTeam Expects APT Full year 2009  EPS growth rate to be Substantially greater than 30%
    Yes 10% Revenue Growth
    • 2nd Qtr. 2009 revenue increased 62.9%.
    Yes Strong Balance Sheet As of 2nd Qtr 2009
      Positive Cash Flow
    • $ 3.9 Million for 6 months 2009
    • $ 3.8 Million for full year 2008
      L-T Debt to Equity Ratio less than 20% 0.0%
      Current Ratio is at least 2:1 7.1:1
    Yes Return on Equity is at least 15% 13.5%
    No Minimum Pre-tax Operating Margins of 8% 8.3% as of 2nd Qtr. 2009
    Yes Preferably Under 50 Million Shares 23.5 Million shares as of 2nd Qtr. 2009
    Yes High Insider Ownership (generally greater than 15%) >20%
    No Limited Institutional Ownership (generally less than 20%) <10%
    No P/E Divided by Growth Rate (PEG Ratio) is Less Than 1. 0.07

  2. Alpha Pro Tech generates stable operating cash flow from its protective apparel division. This division is currently benefiting from face masks it manufactures in response to the swine flu, which is forecasted to be a problem for the next two to five years.

  3. Stable cash flow enables Alpha Pro Tech to expand its Engineered Products division; In 2005 it commenced the manufacturing of synthetic roof underlayment and building wrap products.

    “This line of products is a natural extension of our core capabilities: creating proprietary products designed to protect people and environments.” (Source: 2008 10K )

    In just 4 years Alpha Pro Tech has become the world's largest manufacturer of synthetic underlayment products as well as the low cost provider.

    What is underlayment?  The main purpose of an underlayment is to provide an extra layer to safeguard a home from extreme weather and external elements. Traditionally, underlayment constructed from felt is less resistant than newer technologies to moisture problems, overheating, and tearing. 

    Alpha Pro Tech manufactures synthetic underlayment which:
    • is more resistant to external elements
    • provides a safer working environment for roofers.
    • is lighter than traditional felt
    • provides a more convenient, less labor-intensive option for builders.

    In 2007 APT abandoned its exclusive distribution strategy by selling direct to the end user. This has opened to the door to a much larger customer base and has become an important factor to the recent growth in its underlayment product line sales.

    What is building wrap? Typically, it is a plastic or spun-fiber polyethylene textile material, with the thin film installed beneath exterior siding on a house or other building during the framing stage; it is breathable, but acts as an air barrier to make the structure more energy efficient. It also blocks rain from soaking the walls, which can lead to mold and rot.

    Alpha Pro Tech 's house wrap, REX Wrap, offers a weather resistive barrier and years of lower energy consumption for home owners. 

    Competitive advantage: Alpha Pro Tech can print, cut and deliver its building wrap from one location, lending to customizable product solutions.

    In a nutshell, Alpha Pro Tech is able to provide efficient, low cost customized building products to its customers that can be manufactured and delivered quicker than its competitors' products.

  4. Significant opportunity for growth. 

    How can APT building products thrive in a stagnant economy?

    • The building market that Alpha Pro Tech serves is estimated to a $1 Billion dollar market in normal conditions and is currently about a $500 million market.
    • Synthetic underlayment currently only represents $50 million of industry sales, leaving much more market share to penetrate to fuel future growth.

  5. A strong balance sheet combined with a new level of EPS growth may lend to the possibility of above average valuation multiples

    These comments are not intended to be investment advice. They are provided to aid investors in making their own investment decisions.

Monday, August 24, 2009

GeoBargain Notes
Reclassified from a GeoSpecial to a GeoBargain on August 18, 2009 at $3.50 .