Gross margin fell 4% points from 20% to 16% of sales. While cost cutting measures taken in 2008 had a favorable impact on margins, this was more than offset by under-absorption of overhead resulting from lower first quarter production together with costs and inefficiencies experienced as a result of a major ice storm in January which disrupted manufacturing operations for several weeks.
SG&A costs were reduced by $2.9 million or 47%. The company recorded an operating loss of $0.5 million for the quarter on reduced sales, down $0.2 million from $0.7 million for the quarter ended March 31, 2008.
Commenting on the results, Joe Brooks, chief executive officer of AERT noted, A key goal for 2009 is to reduce AERT’s overall cost structure and operating costs while maintaining our ability to react to the increase in consumer demand that will inevitably occur. Our AERT associates have achieved significant cost reductions in the face of a severe ice storm which resulted in our area being declared a Federal Disaster Area. The storm caused significant disruption of our operations, several days without power, raw material supply interruption, logistical challenges, and safety concerns.
AERT, however, has confidence in the ability of the American economy to recover and grow, and in our readiness to participate in that recovery while positively addressing the needs of our nation. Accordingly, we continue with the support of our lenders, suppliers, customers, and associates, to invest in bringing our next generation technologies and products to commercial fruition at our new Watts facility which will be commissioned later this year, Brooks concluded.
