Wed Nov 15, 2017
FORT LAUDERDALE, Fla.—Hurricanes Harvey and Irma adversely affected Ocean Bio-Chem’s third quarter, with a decline of about 44 percent in the quarter overall. However, with strong first and second quarters, the company announced its net income through nine months as an increase of 40.5 percent.
For the nine months ended Sept. 30, net income was about $2.31 million, compared to $1.64 million for the first nine months of 2016, an increase of about $700,000 or 40.5 percent. Net income for the nine months ended Sept. 30 constituted the highest first nine months net income in the company's history.
Earnings per share for the first nine months of 2017 were $0.25 compared to $0.18 for the same period in 2016.
The company also reported record net sales for the nine months. For the first nine months of 2017, net sales were $29.95 million, as compared to $27.68 million for the same period of 2016, an increase of about 8.2 percent.
The third quarter net income, however, decreased to $854,000, compared to about $1.53 million for the third quarter of 2016, a decline of about $675,000 or 44 percent. Earnings per share for the third quarter of 2017 were $0.09, compared to $0.17 during the same period in 2016.
Net sales for the three months were about $11.65 million, compared to about $12.21 million for the same period in 2016, a decline of about $424,000 or 3.5 percent.
“The third quarter sales were adversely affected by Hurricane Harvey and Hurricane Irma, which caused some of our customers in the Houston metropolitan area and in numerous Florida locations to temporarily close retail and warehouse/distribution operations,” Ocean Bio-Chem President and CEO Peter Dornau says. “Moreover, some shipments of our products in these areas were delayed because trucking companies that we utilize to ship our products gave priority to relief efforts in support of victims of the hurricanes. On a positive note, the company had increased sales of its Odor Star/Performacide products in the affected hurricane areas. We believe that demand for these products, increased use in homes and commercial restoration as a result of damage caused by the hurricanes. The sales of Odor Star/Performacide products offset a portion of the third quarter 2017 sales decrease. The company also donated our chlorine dioxide disinfectant and sanitizer products (Performacide) to organizations active in the cleanup efforts, to kill mold, mildew and odors in houses and businesses.
"Despite the challenges presented by the hurricanes, we achieved the highest first nine months net sales and net income in the company's 44-year history. Our nine-month financial results reflect the strong sales growth of our Star Brite and Star Tron branded products in the marine sector of our business. Our results also reflect lower operating expenses during the first nine months of 2017 as compared to the same period in 2016, principally due to a decline in legal expenses. During the 2016 period, we incurred legal expenses of approximately $1.13 million in connection with a lawsuit that is now concluded.
"The combination of higher sales volume, higher gross profit and lower operating expenses resulted in record operating income of approximately $3.4 million during the nine months ended Sept. 30, 2017, a 42.1 percent increase as compared to the nine months ended Sept. 30, 2016.
"The 84,000 square-foot expansion of our manufacturing and distribution facilities in Montgomery, Alabama is expected to be completed in the first quarter of 2018, positioning us well for anticipated increased sales of our Performacide products in addition to both Star Tron and Star Brite branded products in 2018 and beyond."
"The financial condition of the company continues to be strong,” Ocean Bio-Chem CFO Jeffrey Barocas says. “In the third quarter of 2017, we completed long term financing derived from the issuance of a $4.5 million industrial development bond. Our obligations to fund repayment of the bond effectively bear an annual interest rate of approximately 3 percent. In addition, we renewed our revolving line of credit, which increased from a maximum amount of $4 million to a maximum amount of $6 million. Currently, the company does not have any outstanding borrowings under the line of credit. As a result of these financings, the company is well positioned for continued growth."