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Zoltek Companies Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2010 05:19PM

Zoltek Companies Inc. (ZOLT) filed Quarterly Report for the period ended 2010-03-31. Zoltek Companies Inc. has a market cap of $311.84 million; its shares were traded at around $9.06 with and P/S ratio of 2.25.

ZOLT is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Carbon fiber sales decreased 32.0%, or $9.2 million, to $19.7 million in the second quarter of fiscal 2010 from $28.9 million in the second quarter of fiscal 2009. Technical fiber sales decreased 8.0%, or $0.5 million, to $6.0 million in the second quarter of fiscal 2010 from $6.5 million in the second quarter of fiscal 2009. Technical fiber sales decreased as shipments to its primary aircraft brake customers declined. Other revenues decreased $0.2 million to $0.4 million during the second quarter of fiscal 2010 from $0.6 million during the second quarter of fiscal 2009. Many of our customers are being impacted by the global economic downturn and difficult capital market conditions. Management believes that these customers’ reactions of reducing inventories and slowing orders is temporary and that Zoltek is best positioned to supply our current customers and new customers with their commercial carbon fiber needs as opportunities arise and economic conditions and capital markets improve.

The Company’s cost of sales decreased by 8.6%, or $2.3 million, to $24.6 million in the second quarter of fiscal 2010 from $26.9 million in the second quarter of fiscal 2009. Included in the Company’s cost of sales were available unused capacity costs of $4.3 million and $1.5 million for the second quarter of fiscal 2010 and second quarter of fiscal 2009, respectively. During the second quarter of fiscal 2010, these costs were comprised of fixed production costs allocated to manufacturing lines which were producing below normal levels and amounted to $3.7 million for the carbon fiber segment and $0.6 million for the technical fiber segment. During the second quarter of fiscal 2009, these costs amounted to $1.1 million for the carbon fiber segment and $0.4 million for the technical fiber segment. The Company believes maintaining this available unused capacity has been necessary to encourage development of significant large-scale applications and maintain a level of readiness as we anticipate a near-term return to more robust market conditions.

Operating loss from the second quarter of fiscal 2010 was $5.0 million, a decrease of $7.1 million from the operating income of $2.1 million incurred during the second quarter of fiscal 2009. This decline resulted primarily from a decrease in gross profit of $7.6 million. Carbon fiber operating income declined from $4.7 million of operating income in the second quarter of fiscal 2009 to an operating loss of $1.6 million in the second quarter of fiscal 2010. The decline resulted from lower sales as discussed above. Operating income from technical fibers increased from $0.6 million in the second quarter of fiscal 2009 to $0.7 million in the second quarter of fiscal 2010. The Company reclassified certain research and development personnel from technical fiber to the other products segment during fiscal 2010. Other products/ headquarters operating loss increased from a loss of $3.3 million in the second quarter of fiscal 2009 to a loss of $4.2 million in the second quarter of fiscal 2010 due to increases in application and development and selling, general, and administrative costs as discussed.

Carbon fiber sales decreased 29.3%, or $18.0 million, to $43.6 million in the first six months of fiscal 2010 from $61.6 million in the first six months of fiscal 2009. Technical fiber sales decreased 11.5%, or $1.4 million, to $10.4 million in the first six months of fiscal 2010 from $11.8 million in the first six months of fiscal 2009. Technical fiber sales decreased as shipments to primary aircraft brake customers declined. Other revenues decreased $0.4 million to $0.9 million during the first six months of fiscal 2010 from $1.3 million during the first six months of fiscal 2009. Many of our customers are being impacted by the global economic downturn and difficult capital market conditions. Management believes that these customers’ reactions of reducing inventories and slowing orders is temporary and that Zoltek is best positioned to supply our current customers and new customers with their commercial carbon fiber needs as opportunities arise and economic conditions and capital markets improve.

The Company’s cost of sales decreased by 10.4%, or $5.8 million, to $49.5 million in the first six months of fiscal 2010 from $55.3 million in the first six months of fiscal 2009. Included in the Company’s cost of sales were available unused capacity costs of $7.1 million and $1.8 million for the first six months of fiscal 2010 and 2009, respectively. During the first six months of fiscal 2010, these costs are comprised of fixed production costs allocated to manufacturing lines which were producing below normal levels and amounted to $6.2 million for the carbon fiber segment and $0.9 million for the technical fiber segment. During the first six months of fiscal 2009, these costs amounted to $1.2 million for the carbon fiber segment and $0.6 million for the technical fiber segment. The Company believes maintaining this available unused capacity has been necessary to encourage development of significant large-scale applications and maintain a level of readiness as we anticipate a return to more robust market conditions.

Operating loss from the first six months of fiscal 2010 was $7.8 million, a decrease of $13.3 million from the operating income of $5.5 million incurred during the first six months of fiscal 2009. This decline resulted primarily from a decrease in gross profit of $14.0 million. Carbon fiber operating income declined from income of $11.2 million in the first six months of fiscal 2009 to a loss of $0.3 million in the first six months of fiscal 2010. The decline resulted from a decrease in gross profit as discussed above. Operating income from technical fibers decreased from $1.1 million in the first six months of fiscal 2009 to $0.8 million in the first six months of fiscal 2010. The Company reclassified certain research and development personnel from technical fiber to the other products segment during fiscal 2010. Other products/ headquarters operating loss increased from a loss of $6.8 million in the first six months of fiscal 2009 to a loss of $8.3 million in the first six months of fiscal 2010 due to increases in application and development costs.

Read the The complete Report



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