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Material Sciences Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 11, 2011 10:56PM
Material Sciences Corp. (MASC) filed Quarterly Report for the period ended 2011-05-31. Material Sciences Corp. has a market cap of $91.21 million; its shares were traded at around $7.35 with a P/E ratio of 8.75 and P/S ratio of 0.66.
Highlight of Business Operations:
In April 2010, we sold a portion of our coil coating assets, including the coil coating machinery, related processing equipment, and corresponding customer base associated with our Plant #7 in Elk Grove Village, Illinois, to Roll Coater, Inc. for $10 million ($9.3 million after investment banking fees). Based on fiscal 2010 shipments, the associated business base included approximately $28.6 million in sales of general-line coil coated products. In addition, we entered into a three-year lease agreement to store the purchased equipment. The transaction did not include the sale of any real estate by MSC. The Company recorded a gain on the sale of approximately $4.7 million (net of $0.3 million of legal expenses) in the first quarter of fiscal
Acoustical sales declined $3.8 million due to weaker demand for our products from our automotive customers. Body panel laminate sales for the first quarter of fiscal year 2012 were off $3.2 million, mainly due to lower shipments to 1) General Motors as some models containing Quiet Steel® have gone out of production and the company stopped using the technology on certain models; and 2) lower body panel laminate sales to other automotive companies due to plant shutdowns associated with parts shortages related to the recent crisis in Japan. Brake sales were also lower by $0.5 million
Sales of coated metal products declined overall by $2.6 million. The prior year sale of coil coating assets at the Elk Grove Village Plant #7 and associated revenue accounted for a $6.1 million reduction. This facility primarily served the appliance and building products markets. Fuel tank sales to Ford decreased $3.3 million because certain vehicles at Ford have converted from the coated steel supplied by MSC to plastic fuel tank materials. These lower volumes were offset by $5.1 million in stronger sales of electrogalvanized material products used in automotive body panel applications, as well as, $0.8 million in higher sales from our new ElectroBrite® product. Returns and allowances (a component of net sales) improved by $0.9 million due to improvements in product mix (lower coil coating and higher EG), product quality and scrap sales.
SG&A expenses for the three months ended May 31, 2011, were $5.6 million, or 15.4% of net sales, compared with $5.3 million, or 12.4% of net sales, in the same period last year. SG&A expenses in the first quarter of fiscal 2012 were higher by $0.3 million compared with last year. This is principally due to incentive costs recognized in the current year that did not exist a year ago, partially offset by reduced employee-related expenses and lower director stock incentive expenses in the latest period.
During the first three months of fiscal 2012, we generated $5.7 million of cash from operating activities compared with $2.9 million during the first three months of last fiscal year. The increase was primarily due to a decrease in accounts receivable in the current quarter, compared to an increase in the prior quarterrelated to the timing of sales and cash receipts in the two periodsresulting in $7.5 million more in cash. This increase was partially offset by an increase in inventory of $4.4 million in fiscal 2012 due to higher current year production volumes, the timing of raw material receipts in fiscal 2012 and reductions in inventory in the prior year quarter as part of the sale of the coil coating assets.
In the first three months of fiscal 2012, we invested $1.5 million in capital improvement projects, compared with $0.5 million in the same period last year. The increase was primarily attributable to additional investments in production equipment at our Elk Grove Village, Illinois Plant #2 and Walbridge, Ohio facilities. In the prior year quarter, we generated $9.3 million from the sale of the Elk Grove Village Plant #7 production assets and the collection of $1.7 million from the Morrisville note receivable; these activities did not repeat in the current year quarter.
Stocks Discussed: MASC,