Ironclad Performance Wear Corp. reported sales soared 68.6 percent for the third quarter, to $5.71 million from $3.38 million a year ago. The increase is primarily the result of Ironclad's continued strong growth in the industrial/safety sales channel, particularly in the oil & gas market; increased penetration in the retail automotive sector; and the growth of specialty-branded glove styles.
The company also raised annual sales and earnings guidance.
Gross profit increased 52.3 percent to $2.16 million, or 37.8 percent of sales, compared to $1.42 million, or 41.8 percent of sales, in the third quarter of 2010.
Operating expenses as a percent of sales decreased to 27.4 percent, or $1.56 million, compared to 37.0 percent of sales, or $1.25 million, during the same period last year.
Net income from operations increased to $592,313 compared to $163,007 during the same period in 2010.
Net income increased to $543,918, or $0.01 per share, in the third quarter 2011, compared to $140,862, or $0.00 per share, in the same period last year.
“Ironclad continues to see significant growth in the industrial, safety and retail markets, particularly the retail automotive channels,” said Scott Jarus, Chairman and CEO of Ironclad. “Additionally, both our co-branded business, such as the gloves we produce for 5.11 Tactical, along with international sales, have continued to exceed our earlier expectations.”
Year-to-Date 2011 Results
The company reported net sales for the first nine months of 2011 of $13.72 million, an increase of 47.5 percent from the corresponding period in 2010 of $9.30 million.
Gross profit increased 38.4 percent to $5.30 million, or 38.7 percent of sales, compared to $3.83 million, or 41.2 percent of sales, for the first nine months of 2010.
Operating expenses as a percent of sales decreased to 33.5 percent, or $4.60 million, compared to 43.0 percent of sales, or $4.00 million, during the same period last year.
Net income from Operations was $702,776, compared to a loss of $168,523 during the same period of 2010; a 517 percent increase.
Net income increased to $516,311 in the first nine months of 2011, compared to a net loss of ($231,563) in the same period last year; a 323 percent increase.
Balance Sheet Highlights
Cash and investments at September 30, 2011 was $853,307 compared to $871,524 in the prior year. Accounts receivable net, factored and non-factored, were $2.78 million compared to $1.49 million in the prior year, reflecting increased sales volume and the seasonality of significant product deliveries preceding payments. Inventory and deposits on inventory were $5.54 million compared to $4.50 million in the prior year. Net working capital at September 30, 2011 was $4.55 million compared to $3.43 million in the prior year. The company had $2.09 million outstanding on its bank line of credit compared to $1.49 million in the prior year.
Revised Guidance for 2011
Ironclad's year-to-date performance has exceeded expectations and we believe that there are significant opportunities available to us during the final quarter of the year. As a result, we are raising our previously announced guidance for 2011. We expect Net Sales for 2011 to be between $19.8 million and $20.6 million (32 percent to 37 percent over 2010), and EBITDA, which also includes non-cash stock option expenses (i.e. Earnings Before Interest, Taxes, Depreciation, Amortization and ASC 718) will be between $1.2 million and $1.5 million (37 percent to 71 percent over 2010). Ironclad's expected marginal increase in earnings per share is tempered by the fact that there is a legislated deferral of the company's net operating loss carry-forward, or “NOL”, by California the company's home State. This means that Ironclad will be paying State income taxes on its profits during 2011, and will be using the deferred NOL in future years. This does not affect the use of Ironclad's NOL for federal income tax purposes.
Jarus continued, “Ironclad's performance throughout 2011 has been exceptional on both the top-line and bottom-line, and we expect this trend to continue throughout the rest of this year. As previously announced, Ironclad's Snap-on branded gloves are now in Costco stores nationwide, in time for the holiday shopping season; and the initial order of Ironclad and Realtree gloves for NAPA Auto Parts stores have also been delivered. As a result, we have raised our guidance for 2011 to reflect these very significant positive changes to our business.”
