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Polypore International Inc. Reports Operating Results (10-Q)

August 02, 2012 | About:
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10qk

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Polypore International Inc. (PPO) filed Quarterly Report for the period ended 2012-06-30.

Polypore International, Inc. has a market cap of $1.71 billion; its shares were traded at around $32.21 with a P/E ratio of 18 and P/S ratio of 2.2. Polypore International, Inc. had an annual average earning growth of 11.9% over the past 5 years.

Highlight of Business Operations:

Gross profit. Gross profit was $70.2 million, a decrease of $17.3 million, or 19.8%, from the same period in the prior year. Gross profit as a percent of net sales was 37.8% for the three months ended June 30, 2012, compared to 44.6% for the three months ended July 2, 2011. The decrease in consolidated gross profit and gross profit margin was primarily due to lower sales and the costs associated with capacity investments, including $2.3 million of additional depreciation expense. We expect gross profit and gross profit margins to improve as the costs associated with our capacity expansions are offset by higher sales. During the third quarter, operations at our European facilities shut down production for a period of time for employee vacations, which typically results in lower gross profit margins in the transportation and industrial and separations media segments in the third quarter as compared to the rest of the year.

Segment operating income. Segment operating income, which excludes stock-based compensation and certain non-recurring and other costs, was $85.1 million, a decrease of $19.4 million, or 18.6%, from the same period in the prior year. Segment operating income as a percent of net sales was 23.7% for the six months ended June 30, 2012, compared to 27.3% for the six months ended July 2, 2011. The decrease in segment operating income and segment operating income margin was the result of lower sales and the costs associated with capacity investments, including non-cash depreciation expense, partially offset by a decline in performance-based incentive compensation expense. We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Segment operating income. Segment operating income was $14.5 million, a decrease of $9.3 million, or 39.1%, from the same period in the prior year. Segment operating income as a percent of net sales was 30.6% for the three months ended June 30, 2012, compared to 46.9% for the three months ended July 2, 2011. The decrease in segment operating income and segment operating income margin was due to lower sales and the costs associated with new capacity, including an additional $2.2 million of non-cash depreciation expense. In addition, we elected to use a portion of our available capacity for process and product trials related to new technology. We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Segment operating income. Segment operating income was $31.3 million, a decrease of $10.9 million, or 25.8%, from the same period in the prior year. Segment operating income as a percent of net sales was 34.9% for the six months ended June 30, 2012, compared to 45.4% for the six months ended July 2, 2011. The decrease in segment operating income and segment operating income margin was due to lower sales and the costs associated with new capacity, including an additional $3.5 million of non-cash depreciation expense. In addition, we elected to use a portion of our available capacity for process and product trials related to new technology. We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Net sales. Net sales for the six months ended June 30, 2012 were $91.5 million, a decrease of $6.2 million, or 6.3%, from the same period in the prior year, including the negative effect of foreign currency translation of $5.9 million. Healthcare sales decreased by $4.4 million primarily due the effect of foreign currency translation and production shutdowns at three customers due to recent earthquakes in Italy. We expect the majority of that production to resume by the end of the third quarter and estimate that the total impact on our sales will be approximately $5.0 million, with a slightly higher impact in the third quarter as compared to the second quarter. Filtration and specialty product sales decreased by $1.8 million due to the impact of foreign currency translation.

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