Shiloh Industries Inc. (SHLO, Financial) filed Quarterly Report for the period ended 2010-04-30.
Shiloh Industries Inc. has a market cap of $137.8 million; its shares were traded at around $8.35 with and P/S ratio of 0.5. SHLO is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
GROSS PROFIT. Gross profit for the second quarter of fiscal 2010 was $11,055 compared to a loss of $1,142 in the second quarter of fiscal 2009, an increase of $12,197. Gross profit as a percentage of sales was 9.4% in the second quarter of fiscal 2010 compared to a negative 1.8% for the same period a year ago. Gross profit in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 was favorably affected by the increased volume of sales in the quarter by approximately $15,600. Gross profit was also favorably affected by material costs including improvements in revenue realized from the sale of engineered scrap during the second quarter of 2010 compared to second quarter of 2009. The net effect was reduced material costs of approximately $2,200. These favorable factors resulting in increased gross profit were offset by increasing manufacturing expenses of $5,600. Manufacturing expenses have increased in relation to the increased production volumes experienced in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009. Increased expenses were noted in personnel and personnel related expenses of $4,100 and repairs and maintenance and manufacturing supplies of $1,900. These increases were offset by reduced depreciation expense of $500.
GROSS PROFIT. Gross profit for the first six months of fiscal 2010 was $16,086 compared to a loss of $5,397 in the first six months of fiscal 2009, an increase of $21,483. Gross profit as a percentage of sales was 7.5% in the first six months of fiscal 2010 compared to a negative 4.3% for the same period a year ago. For the first six months of fiscal 2010, gross profit increased as a result of the increased sales volume compared to the prior year first six-month period. The effect of the increased sales volume on gross profit was approximately $24,400. Gross profit was also favorably affected by material costs including improvements in revenue realized from the sale of engineered scrap during the first half of 2010 compared to first half of 2009. The net effect was reduced material costs of approximately $4,700. Increasing manufacturing expenses of approximately $7,600 offset the favorable effects of increasing sales volumes and reduced material costs. Manufacturing expenses increased in personnel and personnel related expenses by approximately $6,300 and in repairs and maintenance and manufacturing supplies by approximately $2,900. These increases were offset by reduced depreciation and utility costs of approximately $1,600.
OTHER. For the first six months of fiscal 2010, interest expense was $2,270, an increase of $883 from interest expense of $1,387 in the first six months of fiscal 2009. The increase in interest expense compared to the prior year six-month period resulted from the net effect of a lower level of average borrowed funds and an increase in the interest rate. The rate of interest increased as a result of the terms of the Fourth Amendment of the Companys Credit Agreement. Borrowed funds averaged $46,920 during the first six months of fiscal 2010 and the weighted average interest rate was 6.95%. For the first six months of fiscal 2009, borrowed funds averaged $62,643 while the weighted average interest rate was 3.55%.
On November 13, 2009, the Company entered into a Fourth Amendment Agreement (the Fourth Amendment) of the Credit Agreement. The Fourth Amendment provides the Company with a revolving line of credit up to $80 million through July 31, 2012, subject to a borrowing formula requirement. The Company also has the opportunity to borrow up to an additional $80 million, at then current market rates. The Company may prepay the borrowings under the revolving credit facility without penalty. The borrowing formula is the sum of the Companys accounts receivable and inventory, minus accounts payable, plus an amount of $35,000 for the period from January 31, 2010 through July 30, 2010, $30,000 for the period from July 31, 2010 through July 30, 2011 and $25,000 for the period from July 31, 2011 to the conclusion of the Credit Agreement. Under the Fourth Amendment, the Company has the option to select the applicable interest rate based upon two indices a Base Rate, a daily rate based on the highest of the prime rate, the Federal Funds Open Rate plus one-half of one percent or the daily Libor Rate plus one percent, as defined in the Fourth Amendment, or the Eurodollar Rate, as defined in the Fourth Amendment. The selected index is combined with a designated margin of 500 basis points for Eurodollar loans or 400 basis points for Base Rate loans. At April 30, 2010, the interest rate for the revolving credit facility was at 7.00% for Eurodollar rate loans and 7.25% for base rate loans.
In July 2009, the Company entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 3.25% and requires monthly payments of $76 through April 2010. In July 2008, the Company entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 3.24% and required monthly payments of $78 through April 2009. As of April 30, 2010 and October 31, 2009, $76 and $529, respectively, remained outstanding under these agreements and were classified as current debt in the Companys consolidated balance sheets.
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Shiloh Industries Inc. has a market cap of $137.8 million; its shares were traded at around $8.35 with and P/S ratio of 0.5. SHLO is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Additionally, the Company reviews specific large insurance claims to determine whether there is a need for additional accrual on a case-by-case basis. Changes in the claim lag periods and the specific occurrences could materially impact the required accrual balance period-to-period. The Company carries excess insurance coverage for group insurance and workers compensation claims exceeding a range of $160-170 and $100-500 per plan year, respectively, dependant upon the location where the claim is incurred. At April 30, 2010 and October 31, 2009, the amount accrued for group insurance and workers compensation claims was $2,080 and $2,277, respectively. The Company does not self-inure for any other types of losses.GROSS PROFIT. Gross profit for the second quarter of fiscal 2010 was $11,055 compared to a loss of $1,142 in the second quarter of fiscal 2009, an increase of $12,197. Gross profit as a percentage of sales was 9.4% in the second quarter of fiscal 2010 compared to a negative 1.8% for the same period a year ago. Gross profit in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 was favorably affected by the increased volume of sales in the quarter by approximately $15,600. Gross profit was also favorably affected by material costs including improvements in revenue realized from the sale of engineered scrap during the second quarter of 2010 compared to second quarter of 2009. The net effect was reduced material costs of approximately $2,200. These favorable factors resulting in increased gross profit were offset by increasing manufacturing expenses of $5,600. Manufacturing expenses have increased in relation to the increased production volumes experienced in the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009. Increased expenses were noted in personnel and personnel related expenses of $4,100 and repairs and maintenance and manufacturing supplies of $1,900. These increases were offset by reduced depreciation expense of $500.
GROSS PROFIT. Gross profit for the first six months of fiscal 2010 was $16,086 compared to a loss of $5,397 in the first six months of fiscal 2009, an increase of $21,483. Gross profit as a percentage of sales was 7.5% in the first six months of fiscal 2010 compared to a negative 4.3% for the same period a year ago. For the first six months of fiscal 2010, gross profit increased as a result of the increased sales volume compared to the prior year first six-month period. The effect of the increased sales volume on gross profit was approximately $24,400. Gross profit was also favorably affected by material costs including improvements in revenue realized from the sale of engineered scrap during the first half of 2010 compared to first half of 2009. The net effect was reduced material costs of approximately $4,700. Increasing manufacturing expenses of approximately $7,600 offset the favorable effects of increasing sales volumes and reduced material costs. Manufacturing expenses increased in personnel and personnel related expenses by approximately $6,300 and in repairs and maintenance and manufacturing supplies by approximately $2,900. These increases were offset by reduced depreciation and utility costs of approximately $1,600.
OTHER. For the first six months of fiscal 2010, interest expense was $2,270, an increase of $883 from interest expense of $1,387 in the first six months of fiscal 2009. The increase in interest expense compared to the prior year six-month period resulted from the net effect of a lower level of average borrowed funds and an increase in the interest rate. The rate of interest increased as a result of the terms of the Fourth Amendment of the Companys Credit Agreement. Borrowed funds averaged $46,920 during the first six months of fiscal 2010 and the weighted average interest rate was 6.95%. For the first six months of fiscal 2009, borrowed funds averaged $62,643 while the weighted average interest rate was 3.55%.
On November 13, 2009, the Company entered into a Fourth Amendment Agreement (the Fourth Amendment) of the Credit Agreement. The Fourth Amendment provides the Company with a revolving line of credit up to $80 million through July 31, 2012, subject to a borrowing formula requirement. The Company also has the opportunity to borrow up to an additional $80 million, at then current market rates. The Company may prepay the borrowings under the revolving credit facility without penalty. The borrowing formula is the sum of the Companys accounts receivable and inventory, minus accounts payable, plus an amount of $35,000 for the period from January 31, 2010 through July 30, 2010, $30,000 for the period from July 31, 2010 through July 30, 2011 and $25,000 for the period from July 31, 2011 to the conclusion of the Credit Agreement. Under the Fourth Amendment, the Company has the option to select the applicable interest rate based upon two indices a Base Rate, a daily rate based on the highest of the prime rate, the Federal Funds Open Rate plus one-half of one percent or the daily Libor Rate plus one percent, as defined in the Fourth Amendment, or the Eurodollar Rate, as defined in the Fourth Amendment. The selected index is combined with a designated margin of 500 basis points for Eurodollar loans or 400 basis points for Base Rate loans. At April 30, 2010, the interest rate for the revolving credit facility was at 7.00% for Eurodollar rate loans and 7.25% for base rate loans.
In July 2009, the Company entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 3.25% and requires monthly payments of $76 through April 2010. In July 2008, the Company entered into a finance agreement with an insurance broker for various insurance policies that bears interest at a fixed rate of 3.24% and required monthly payments of $78 through April 2009. As of April 30, 2010 and October 31, 2009, $76 and $529, respectively, remained outstanding under these agreements and were classified as current debt in the Companys consolidated balance sheets.
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