Alpha Tech 1Q sales up 52%; margins hit net

Electronic News, March 25, 1996

New York--Alpha Technologies Group Inc. reported 1Q96 sales rose 52.2 percent to $17.0 million from $11.2 million in 1Q95.

Thermal management revenues in the quarter ended Jan. 28, 1996 were $12.3 million versus $7.6 million in 1Q95. The increase was said to be due to internal growth of 45 percent and the inclusion of sales by Specialty Extrusion Corp., acquired in June; internal growth was primarily due to higher sales of Penguin Coolers, which serve the microprocessor market.

Connector revenues were $4.7 million in 1Q96 versus $3.6 million in 1Q95.

Net income for the quarter ended Jan. 28, 1996 was $133,000, or 2 cents per share, versus $101,000, or 2 cents per share, in the prior-year quarter. Net income as a percent of total revenues was said to be adversely affected by the decrease in gross profit percentage caused primarily by the significant increase in sales of Penguin Coolers, which have a lower gross profit percentage than the company's average, and the inclusion of Specialty's sales, which also were said to have lower gross profit margins.

CEO Lawrence Butler said: "Despite the increased sales and slightly higher earnings in 1Q96 compared to the same period in FY95, our results for the 1996 quarter fell below the earnings reported in the last three quarters of FY95. During the quarter, sales of Penguin Coolers were adversely affected due to a shortfall in manufacturing capacity at the end of FY95. The extended lead times resulted in decreased bookings. We corrected the situation by adding manufacturing capacity to our Penguin Cooler line to accommodate future growth."

Mr. Butler continued: "Sales of thermal management products in 1Q96 also were negatively impacted as some customers withheld orders during November and December of 1995 to avoid adding inventories at their fiscal year ends. Additionally, we experienced lower sales and a change in the mix of connector products sold during this quarter compared to the recent FY95 quarters, resulting in lower gross margins."