Tuesday June 10 5:57 PM EDT
INTERVIEW-Alpha Pro may be takeover target
By Scott DiSavino
NEW YORK, June 10 (Reuter) - Alpha Pro Tech Ltd President Al Millar sees the disposable protective apparel manufacturer as a possible takeover target, he said in an interview.
Millar said he hopes Alpha Pro is not taken over; but he said it is undervalued, has no debt and has a lot of cash in the bank.
He also told Reuters he expects the company to post net income of about $1.5 million and sales in the range of $20 million this year after two years of losses.
Millar said, ``Everybody looks at the company as a takeover target because the company is greatly undervalued, trading at (1-1/4 per share in late afternoon), with no debt, probably $1.5 million in the bank and 1997 is going to be an extremely profitable year.''
``I think that if somebody is looking for a company with rapid growth, showing a good, strong profit picture and lots of cash in the bank, there's no reason why somebody wouldn't want to take you over,'' the executive continued.
``I'd prefer it not happen now, but there's not much you can do about that,'' Millar concluded.
In 1996, Alpha Pro posted a loss of $2.1 million on revenues of $14.9 million. In 1995, it lost $6.0 million on revenues of $13.0 million.
The company posted net income of $66,000 on revenues of $4.0 million for 1997's first quarter.
Millar forecast that the company ``will have a much stronger second quarter and certainly stronger third and fourth quarters.''
``With the company's new reusable products and restaurant sales kicking in in the third quarter, we have a good chance of picking that up,'' Millar added.
In January, the company signed a $1.3 million manufacturing contract with Standard Textile Co Inc, headquartered in Cincinnati, Ohio, to produce reusable apparel items at its factory in Nogales, Mexico.
A reusable garment is one that is laundered up to 75 times and then disposed of.
``We think the value of the (Standard Textile) contract will be increasing above $1.3 million; it will become a very nice annualized rate by the fourth quarter -- much higher than $1.3 million,'' the executive said.
``We would like to get into the reusable manufacturing business'' and hope to build on this contract...the reusable market is much greater than the disposable market,`` Millar stated. Prior to the Standard Textile contract, Alpha Pro manufactured only disposable apparel items. Millar said a primary benefit of the contract is that ''someone else paid for our learning period.``
Three-fourths of Alpha's business comes from the sale of its ``clean room'' garments, which are used in hospitals, doctor's and dentist's offices and by high technology firms such as Intel Corp (INTC) and Motorola Inc (MOT), he said.
Millar added that ``there is potentially unlimited growth in the clean room area.''
``One of the really exciting (areas) for the company in 1997 and beyond is that we are now going into the restaurant industry,'' said Millar.
Restaurants lose $71 billion in actual damages and lost time each year from slip and falls, he said.
There are 750,000 restaurants in the United States. ``If only five percent of those restaurants use the Aqua Trak Black (Alpha Pro's new anti-slip shoe cover), we would have revenue of $100 million a year,'' said the executive.
``It is very possible and very probable that the company could capture five percent of the restaurant business,'' Millar said. ``There is no other way to stop this slip and fall carnage.''
Millar said, ``there are maybe a dozen major chains testing (Aqua Trak Black) right now.''
Last October, Hardee's Food Systems Inc, being purchased by CKE Restaurants Inc (CKR) from Imasco Ltd (IMS.TO), signed a contract to test the Aqua Trak Black in North Carolina. Millar said the Hardee's contract ``will probably turn into $600,000 to $1 million in sales per year.''
Finally, Millar said the company would ``love to move its stock onto the (Nasdaq) National Market. It has the assets, the only thing that is missing is a bid price.'' The stock now trades on the OTC bulletin board.
------------------------------------------------------------------------
More news for referenced ticker symbols: CKR, INTC, MOT, and related categories and industries: Semiconductor, leisure, treasury, international.
Additional news and quotes: Alpha Pro Tech - APTD. |
