Greenville, South Carolina -- Span-America Medical Systems has reported sales down by 9 percent to $12.2 million in the first quarter ended 2 Jan 2010 (Q1), a 28 Jan company statement said.
Span-America, a manufacturer of polyurethane-based pressure-management products for the medical industry, said the decrease in sales was primarily due to lower sales of its private label theraputic support services, which had been provided to a large customer until the contract expired in April 2009. The company said around 97 percent of the decline in Q1 medical sales was related to the expired contract.
Total medical sales were $8.6 million in Q1, down from $9.8 million in the same period last year.
Overall, net income rose 27 percent to $1.1 million in Q1, compared to Q1 2009, due to "reduced operating costs, administrative expenses and improvements in our manufacturing processes," said Span-America ceo Jim Ferguson.
Ferguson said the company had a mixed sales performance in the first quarter but expects sales to improve this year as the economy strengthens and the company introduces new products, including patient positioners, overlays, seating products, bedside safety mats and theraputic support surfaces.
"We are pleased with the progress we have made in improving our manufacturing efficiencies over the past year," Ferguson said, adding that reductions in material scrap rates and labour and overhead costs have improved the company's operating profit and expanded its gross margin.
"Based on input from customers, prospects and our sales team, we are now just beginning to see signs of strength returning to our markets. We are not able to accurately predict when our sales volume might pick up, but we believe we will see gradual improvements during the remainder of the fiscal year," Ferguson concluded. (RD)