Medical Action Industries Reports Second Quarter Fiscal Year 2014 Results

Medical Action Industries Reports Second Quarter Fiscal Year 2014 Results

BRENTWOOD, N.Y., Oct. 31, 2013 (GLOBE NEWSWIRE) -- Medical Action Industries
Inc. (the "Company") (Nasdaq:MDCI), a leading supplier of medical and surgical
disposable products, today reported financial results for the second quarter
ended September 30, 2013, including net sales of $108.3 million and gross
profit of $18.6 million or 17.2% of net sales. The Company generated net
income of $1.1 million or $0.07 per diluted share and EBITDA, as adjusted of
$5.1 million. The reported gross profit, net income and EBITDA, as adjusted
results represent increases versus the comparable results for the same period
of fiscal year 2013.

"Our financial results reflect the impact of our ongoing efforts to improve
operating efficiencies and reduce costs," said Paul D Meringolo, Chief
Executive Officer of Medical Action Industries. "We will continue to focus on
profit improvement initiatives while investing in areas that will support the
future growth of our business."

Second Quarter Results of Fiscal Year 2014

Net sales for the three months ended September 30, 2013, were $108.3 million,
down $3.8 million or 3% from net sales of $112.1 million for the three months
ended September 30, 2012. This decrease results in part from management's
efforts to focus on profitable business and to decrease or eliminate
unprofitable or non-core sales. The reported gross profit of $18.6 million, or
17.2% of net sales, represents an improvement over the gross profit reported
in the prior year period of $17.5 million or 15.6% of net sales. This
improvement in gross profit is the result of management's cost savings
initiatives, elimination of unprofitable sales and a reduction in raw material
costs.

Net income for the three months ended September 30, 2013, was $1.1 million or
$0.07 per diluted share, compared to a reported net income of $0.1 million or
$0.00 per diluted share for the three months ended September 30, 2012.

Year-to-Date Results of Fiscal Year 2014

Net sales for the six months ended September 30, 2013, were $215.5 million,
down $8.8 million or 4% from net sales of $224.3 million for the six months
ended September 30, 2012. This decrease results in part from management's
efforts to focus on profitable business and to decrease or eliminate
unprofitable or non-core sales. The reported gross profit of $36.3 million, or
16.8% of net sales, represents an improvement over the gross profit reported
in the prior year period of $34.4 million or 15.3% of net sales. This
improvement in gross profit is the result of management's cost savings
initiatives, elimination of unprofitable sales and a reduction in raw material
costs.

Net income for the six months ended September 30, 2013, was $1.4 million or
$0.08 per diluted share, compared to a reported net loss of $0.1 million or
$0.00 per diluted share for the six months ended September 30, 2012. The
after-tax results for the six months ended September 30, 2013, were negatively
impacted by a non-recurring, non-cash write-off of deferred financing costs of
$0.4 million (included in interest expense) related to the repayment and
cancellation of all amounts owed under the Company's Prior Credit Agreement,
as defined below.

Liquidity and Capital Resources

On May 17, 2013, the Company entered into a credit agreement (the "New Credit
Agreement") consisting of term and revolving loans with Wells Fargo Bank,
National Association. A portion of the proceeds from the New Credit Agreement
was used to repay and cancel all amounts owed under the Company's prior credit
agreement (the "Prior Credit Agreement"). The New Credit Agreement removed
certain restrictive covenants and other obligations to which the Company was
subject under the Prior Credit Agreement and will generally result in lower
interest rates.

The New Credit Agreement provides for a maximum borrowing capacity of $65.0
million, consisting of the following loans: (i) a $11.5 million secured term
loan with $11.0 million outstanding at September 30, 2013, (ii) $5.0 million
in secured delayed draw term loans which had not been drawn upon by the
Company as of September 30, 2013 and (iii) up to $53.5 million in secured
revolving loans with $31.4 million outstanding at September 30, 2013, which
secured revolving loans may be reduced by the amount of any outstanding
delayed draw term loans drawn upon by the Company. The Company's outstanding
debt under the New Credit Agreement of $42.3 million at September 30, 2013,
represented a decrease of $10.4 million from outstanding debt under the Prior
Credit Agreement at March 31, 2013. As of September 30, 2013, (i) the Company
had $18.0 million available for additional borrowing under the New Credit
Agreement and (ii) the Company was in compliance with all covenants and
financial ratios applicable under the New Credit Agreement.

Cash and cash equivalents were $0.3 million at September 30, 2013, which
represents a decrease of $0.3 million from March 31, 2013. The Company
believes that the anticipated future cash flow from operations, coupled with
the Company's cash on hand and available funds under the New Credit Agreement
will be sufficient to meet working capital requirements for the next six
months.

Investors Conference Call

The Company invites its stockholders and other interested parties to attend
its conference call at 10:00 a.m. (ET) on October 31, 2013. You may listen to
the conference call by calling (888) 868-9080 (domestic) or (973) 935-8511
(international); conference ID #86937727. The conference call will be
simultaneously web cast on the Company's website: www.medical-action.com. The
complete call and discussion will be available for replay on the Company's
website beginning at 1:00 p.m. (ET) on October 31, 2013 until December 1,
2013.

About Medical Action Industries Inc.

Medical Action Industries Inc. (Nasdaq:MDCI), is a diversified manufacturer
and distributor of disposable medical devices and a leader in many of the
markets where it competes. Its products are marketed primarily to acute care
facilities in domestic and certain international markets. The Company has
expanded its target market to include physician, dental and veterinary
offices, out-patient surgery centers, long-term care facilities and
laboratories. The Company's products are marketed nationally by its direct
sales personnel and extensive network of healthcare distributors. The Company
has preferred vendor agreements with national and regional distributors, as
well as sole and multi-source agreements with group purchasing organizations.
The Company's common stock trades on the NASDAQ Global Select Market under the
symbol MDCI and is included in the Russell 2000^® Index.

This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are forward-looking statements for purposes of
these provisions, including any projections of earnings, revenues or other
financial items, any statements of the plans and objectives for management for
future operations, any statements concerning proposed new products or
services, any statements regarding future economic conditions or performance,
and any statements of assumptions underlying any of the foregoing. All
forward-looking statements included in this news release are made as of the
date hereof and are based on information available to the Company as of such
date. The Company assumes no obligation to update any forward-looking
statement. In some cases, forward-looking statements can be identified by the
use of terminology such as "may," "will," "expects," "plans," "anticipates,"
"intends," "believes," "estimates," "potential," or "continue," or the
negative thereof or other comparable terminology. Although the Company
believes that the expectations reflected in the forward-looking statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the forward-looking statements will prove to be
correct, and actual results could differ materially from those projected or
assumed in the forward-looking statements. Future financial condition and
results of operations, as well as any forward-looking statements, are subject
to inherent risks and uncertainties, including manufacturing inefficiencies,
termination or interruption of relationships with the Company's suppliers,
potential delays in obtaining regulatory approvals, product recalls, product
liability claims, the Company's inability to successfully manage growth
through acquisitions, the Company's failure to comply with governing
regulations, risks of international procurement of raw materials and finished
goods, market acceptance of the Company's products, market price of the
Company's Common Stock, foreign currency fluctuations, resin volatility and
other factors referred to in the Company's press releases and reports filed
with the Securities and Exchange Commission (the "SEC").Please see the
Company's filings with the SEC, including, without limitation, the Company's
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which identify
specific factors that would cause actual results or events to differ
materially from those described in the forward-looking statements.

MEDICAL ACTION INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
                                                                   
                                                      September 30, March 31,
                                                      2013          2013
                                                                   
ASSETS                                                 (unaudited)   
Current Assets                                                      
Cash and cash equivalents                              $0.3        $0.6
Accounts receivable, less allowance for doubtful
accounts of $0.8 at September 30, 2013 and March 31,   30.2         32.6
2013
Inventories, net                                       51.9         53.0
Prepaid expenses                                       1.6          1.4
Deferred income taxes                                  1.4          1.4
Prepaid income taxes                                   0.9          1.0
Other current assets                                   2.1          2.3
                                                                   
Total current assets                                   88.4         92.3
                                                                   
Property, plant and equipment, net of accumulated
depreciation of $39.5 at September 30, 2013 and $38.1  43.1         45.0
at March 31, 2013
Goodwill                                               30.0         30.0
Other intangible assets, net                           35.3         36.6
Other assets, net                                      7.3          3.0
                                                                   
Total assets                                           $204.1      $206.9
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current Liabilities                                                 
Accounts payable                                       $18.9       $13.5
Accrued expenses                                       21.2         25.1
Current portion of capital lease obligations           0.2          0.2
Current portion of long-term debt                      1.6          1.4
                                                                   
Total current liabilities                              41.9         40.2
                                                                   
Other long-term liabilities                            4.8          0.6
Deferred income taxes                                  6.4          6.4
Capital lease obligations, less current portion        13.4         13.5
Long-term debt, less current portion                   40.7         51.3
                                                                   
Total liabilities                                      107.2        112.0
                                                                   
Stockholders' Equity:                                               
                                                                   
Common stock 40.0 shares authorized, $.001 par value;
issued andoutstanding 16.4 shares at September 30,    0.0          0.0
2013 and March 31, 2013
Additional paid-in capital                             36.1         35.5
Accumulated other comprehensive loss                   (0.8)        (0.8)
Retained earnings                                      61.6         60.2
                                                                   
Total stockholders' equity                             96.9         94.9
                                                                   
Total liabilities and stockholders' equity             $204.1      $206.9


MEDICAL ACTION INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
                                                                 
                                        Three Months Ended Six Months Ended
                                         September 30,      September 30,
                                        2013      2012     2013     2012
                                        (Unaudited)        (Unaudited)
                                                                 
Net sales                                $108.3  $112.1 $215.5 $224.3
Cost of sales                            89.7     94.6    179.2   189.9
Gross profit                             18.6     17.5    36.3    34.4
                                                                 
Selling, general and administrative      16.0     16.2    31.5    32.1
expenses
                                                                 
Operating income                         2.6      1.3     4.8     2.3
                                                                 
Interest expense, net                    0.9      1.2     2.6     2.4
                                                                 
Income (loss) before income taxes        1.7      0.1     2.2     (0.1)
Income tax expense (benefit)             0.6      0.0     0.8     (0.0)
                                                                 
Net income (loss)                        $1.1    $0.1   $1.4   $(0.1)
                                                                 
Earnings (loss) per share:                                        
Basic                                                             
Net income (loss)                        $0.07   $0.00  $0.08  $(0.00)
Weighted-average common shares           16.4     16.4    16.4    16.4
outstanding (basic)
                                                                 
Diluted                                                           
Net income (loss)                        $0.07   $0.00  $0.08  $(0.00)
                                                                 
Weighted-average common shares           16.5     16.4    16.5    16.4
outstanding (diluted)

Reconciliation of net income (loss) to EBITDA and EBITDA, as adjusted

The press release includes the use of non-GAAP financial measures that are not
prepared in accordance with U.S. generally accepted accounting
principles.These non-GAAP financial measures should not be considered a
substitute for measures of financial performance prepared in accordance with
GAAP and have been used in this press release because management believes it
is useful to investors by providing greater transparency to the Company's
operating performance.

(in millions)                              Three Months Ended Six Months Ended
                                           September 30,      September 30,
                                          2013      2012     2013    2012
                                          (Unaudited)        (Unaudited)
                                                                  
Net income (loss)                          $1.1    $0.1   $1.4  $(0.1)
Interest expense                           0.9      1.2     2.6    2.4
Income tax expense (benefit)               0.6      --      0.8    (0.0)
Depreciation                               1.2      1.3     2.4    2.6
Amortization                               0.9      0.9     1.8    1.9
EBITDA                                     $4.7    $3.5   $9.0  $6.8
                                                                  
Stock-based compensation                   $0.4    $0.3   $0.6  $0.5
Professional fees related to Prior Credit  --       0.3     --     0.7
Agreement
EBITDA, as adjusted                        $5.1    $4.1   $9.6  $8.0

EBITDA is defined as earnings (loss) before interest (including the write-off
of deferred financing costs of $0.7 million during the six months ended
September 30, 2013), income taxes, depreciation and amortization. EBITDA is a
non-GAAP financial measure.

EBITDA, as adjusted, represents EBITDA as defined above adjusted for
stock-based compensation and certain professional fees which were related to
our Prior Credit Agreement.Stock-based compensation represents compensation
expenses associated with stock options and restricted stock.

Management believes EBITDA and EBITDA, as adjusted, to be meaningful
indicators of our performance that provides useful information to investors
regarding our financial condition and results of operations.Presentations of
EBITDA and EBITDA, as adjusted, are non-GAAP financial measures commonly used
by financial analysts and our lender to measure operating performance.While
management considers EBITDA and EBITDA, as adjusted, to be important measures
of comparative operating performance, they should be considered in addition
to, but not as a substitute for, net income and other measures of financial
performance reported in accordance with GAAP.EBITDA and EBITDA, as adjusted
do not reflect cash available to fund cash requirements.Not all companies
calculate EBITDA or EBITDA, as adjusted in the same manner and the measure as
presented may not be comparable to similarly-titled measures presented by
other companies.

CONTACT: Brian Baker - Vice President of Finance and
         Principal Accounting Officer
         MEDICAL ACTION INDUSTRIES INC.
         (631) 231-4600

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