AEP Industries Inc. (AEPI, Financial) filed Quarterly Report for the period ended 2009-07-31.
AEP Industries Inc. is a manufacturer of plastic packaging films. They manufacture both commodity films which are made to general specifications and specialty films which are made to customer specifications. The films are used in the packaging transportation beverage food automotive pharmaceutical chemical electronics construction agriculture and textile industries. Aep Industries Inc. has a market cap of $270.6 million; its shares were traded at around $39.92 with and P/S ratio of 0.4. Aep Industries Inc. had an annual average earning growth of 4.4% over the past 10 years.
Gross profit for the third quarter of fiscal 2009 increased $19.4 million to $37.5 million from $18.1 million in the same quarter of the prior fiscal year. The improvement in gross profit is primarily due to increased volume combined with cost saving programs including the shut down of the Fontana, California plant and internal efficiency initiatives designed to align production with demand at our manufacturing facilities. The gross profit for the third quarter of fiscal 2009 included an increase in the LIFO reserve of $5.0 million which negatively impacted gross profit for the quarter. The third quarter of fiscal 2009 also included $0.5 million of negative impact of foreign exchange relating to our Canadian operations.
Net sales for the nine months ended July 31, 2009 decreased $9.4 million, or 1.7%, to $552.5 million from $561.9 million in the same period of the prior fiscal year. The decrease was the result of a 12.0% decrease in average selling prices negatively affecting net sales by $67.4 million, partially offset by a 13.4% increase in sales volume driven primarily by the Atlantis acquisition and positively affecting net sales by $66.3 million. Consolidated sales volume for the first nine months of fiscal 2009 was below managements expectations due to the adverse effects of the economic recession, primarily in our construction and housing related products. The first nine months of fiscal 2009 also included an $8.3 million negative impact of foreign exchange relating to our Canadian operations.
Gross profit for the first nine months of fiscal 2009 increased $59.0 million to $127.2 million from $68.2 million in the same period in the prior fiscal year. The increase in gross profit was primarily due to higher sales volume, combined with a $21.3 million decrease in the LIFO reserve during the current period resulting from a decrease in resin prices and inventory quantities during the first nine months of fiscal 2009. The first nine months of fiscal 2009 also included $1.4 million of negative impact of foreign exchange relating to our Canadian operations.
Operating expenses for the nine months ended July 31, 2009 increased $7.3 million, or 11.0%, to $73.8 million from the comparable period in the prior fiscal year. The increase in operating expenses is primarily due to higher delivery and selling expenses resulting from greater volumes sold in the current period, combined with increased general and administrative expenses due to an increase in compensation costs recorded in accordance with SFAS 123R for stock options and performance units, and increased accruals related to potential current year bonuses. General and administrative expenses in the current period also include costs related to transitional services associated with the Atlantis acquisition. General and administrative expenses in the nine month period ended July 31, 2008 included approximately $1.6 million, excluding professional fees, related to a commercial dispute and approximately $0.4 million of advisory costs incurred as a result of our exploration of strategic alternatives related to our subsidiary in the Netherlands (sale was completed in April 2008). The first nine months of fiscal 2009 includes $1.1 million favorable effect of foreign exchange decreasing reported total operating expenses.
On April 1, 2009, we repurchased and retired $14.8 million (principal amount) of the Companys 2013 Notes at a price of 62.8% of par. The cash paid was $9.4 million, which included $0.1 million of accrued interest. In connection with the partial retirement, we recognized a $5.3 million gain on extinguishment of debt, which is the difference between the repurchase amount of $9.3 million and the principal amount retired of $14.8 million, net of the pro-rata write-off of the unamortized debt financing costs related to the 2013 Notes of $0.2 million.
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AEP Industries Inc. is a manufacturer of plastic packaging films. They manufacture both commodity films which are made to general specifications and specialty films which are made to customer specifications. The films are used in the packaging transportation beverage food automotive pharmaceutical chemical electronics construction agriculture and textile industries. Aep Industries Inc. has a market cap of $270.6 million; its shares were traded at around $39.92 with and P/S ratio of 0.4. Aep Industries Inc. had an annual average earning growth of 4.4% over the past 10 years.
Highlight of Business Operations:
Net sales for the third quarter of fiscal 2009 decreased $17.3 million, or 8.3%, to $189.7 million from $207.0 million for the third quarter of fiscal 2008. The decrease was the result of a 17.1% decrease in average selling prices coinciding with decreases in resin costs from the prior year, negatively affecting net sales by $35.5 million, partially offset by a 12.1% increase in sales volume driven primarily by the Atlantis acquisition and positively affecting net sales by $20.8 million. We continued to experience the adverse effects of the economic recession, primarily in our construction and housing related products, causing total volume to be below managements expectations. The third quarter of fiscal 2009 also included a $2.6 million negative impact of foreign exchange relating to our Canadian operations.Gross profit for the third quarter of fiscal 2009 increased $19.4 million to $37.5 million from $18.1 million in the same quarter of the prior fiscal year. The improvement in gross profit is primarily due to increased volume combined with cost saving programs including the shut down of the Fontana, California plant and internal efficiency initiatives designed to align production with demand at our manufacturing facilities. The gross profit for the third quarter of fiscal 2009 included an increase in the LIFO reserve of $5.0 million which negatively impacted gross profit for the quarter. The third quarter of fiscal 2009 also included $0.5 million of negative impact of foreign exchange relating to our Canadian operations.
Net sales for the nine months ended July 31, 2009 decreased $9.4 million, or 1.7%, to $552.5 million from $561.9 million in the same period of the prior fiscal year. The decrease was the result of a 12.0% decrease in average selling prices negatively affecting net sales by $67.4 million, partially offset by a 13.4% increase in sales volume driven primarily by the Atlantis acquisition and positively affecting net sales by $66.3 million. Consolidated sales volume for the first nine months of fiscal 2009 was below managements expectations due to the adverse effects of the economic recession, primarily in our construction and housing related products. The first nine months of fiscal 2009 also included an $8.3 million negative impact of foreign exchange relating to our Canadian operations.
Gross profit for the first nine months of fiscal 2009 increased $59.0 million to $127.2 million from $68.2 million in the same period in the prior fiscal year. The increase in gross profit was primarily due to higher sales volume, combined with a $21.3 million decrease in the LIFO reserve during the current period resulting from a decrease in resin prices and inventory quantities during the first nine months of fiscal 2009. The first nine months of fiscal 2009 also included $1.4 million of negative impact of foreign exchange relating to our Canadian operations.
Operating expenses for the nine months ended July 31, 2009 increased $7.3 million, or 11.0%, to $73.8 million from the comparable period in the prior fiscal year. The increase in operating expenses is primarily due to higher delivery and selling expenses resulting from greater volumes sold in the current period, combined with increased general and administrative expenses due to an increase in compensation costs recorded in accordance with SFAS 123R for stock options and performance units, and increased accruals related to potential current year bonuses. General and administrative expenses in the current period also include costs related to transitional services associated with the Atlantis acquisition. General and administrative expenses in the nine month period ended July 31, 2008 included approximately $1.6 million, excluding professional fees, related to a commercial dispute and approximately $0.4 million of advisory costs incurred as a result of our exploration of strategic alternatives related to our subsidiary in the Netherlands (sale was completed in April 2008). The first nine months of fiscal 2009 includes $1.1 million favorable effect of foreign exchange decreasing reported total operating expenses.
On April 1, 2009, we repurchased and retired $14.8 million (principal amount) of the Companys 2013 Notes at a price of 62.8% of par. The cash paid was $9.4 million, which included $0.1 million of accrued interest. In connection with the partial retirement, we recognized a $5.3 million gain on extinguishment of debt, which is the difference between the repurchase amount of $9.3 million and the principal amount retired of $14.8 million, net of the pro-rata write-off of the unamortized debt financing costs related to the 2013 Notes of $0.2 million.
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