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Zoltek Reports First Quarter Results
GlobeNewswire
2010-02-08
ST. LOUIS, Feb. 8, 2010 (GLOBE NEWSWIRE) -- Zoltek Companies, Inc.
(Nasdaq:ZOLT) today reported financial results for the first quarter of
its 2010 fiscal year.
Zoltek's net sales for the quarter ended December 31, 2009, totaled
$28.9 million, compared to $38.6 million in the first quarter of fiscal
2009, a decrease of 25%. On a sequential quarter basis, net sales for
the latest quarter declined $4.9 million, or 14.6%, from the fourth
quarter of fiscal 2009.
Zoltek reported a net loss of $0.5 million, or $0.01 per share, in the
first quarter of fiscal 2010, which compared to net income of $0.5
million, or $0.02 per share, in the first quarter of fiscal 2009. Net
income in the recently completed quarter reflected an income tax
benefit of $1.8 million and a $0.9 million gain on derivative
liabilities. Operating loss totaled $2.7 million in the first quarter
of fiscal year 2010, compared to operating income of $3.5 million in
the first quarter of fiscal 2009. In the fourth quarter of fiscal 2009,
Zoltek reported an operating loss of $1.9 million.
Zsolt Rumy, Zoltek's Chairman and Chief Executive Officer, said the
company's first quarter results were "disappointing, though not quite
as bad they might look at first." He said that while the downturn in
demand resulting from recessionary conditions in the global economy
continued during the quarter, the fundamental outlook for carbon fiber
sales into wind energy and other applications remains strong and the
company expects that orders will begin to reflect positive trends in
the second half of fiscal 2010.
Rumy added that most of the 14.6% decrease in sales on a sequential
quarter basis was due to the decision of one of Zoltek's biggest
customers to move to a just-in-time inventory system which resulted in
it postponing purchases as it draws down existing inventories of carbon
fibers and other inputs. "In the first quarter we shipped carbon fibers
to new customers for final demonstration and qualification. We believe
this will result in new revenue in fiscal 2010. Our major customer has
indicated that it expects to resume significant growth later in the
year and will require carbon fibers to support that growth," Rumy said.
"But in the short run, their decision to move to a new inventory system
will defer significant purchases of Zoltek product from the first half
of the year to the second half. Our second quarter results also will
likely be similarly affected, but that should be offset by accelerating
sales to the customer in our third and fourth quarters."
Available unused capacity costs of $2.8 million caused Zoltek's gross
margin for the first quarter to decrease to 13.7%, compared to 15.1% in
the fourth quarter of fiscal 2009. A principal element of Zoltek's
business strategy is to maintain excess capacity so the company can
increase production rapidly when demand from existing customers
strengthens and identified emerging applications mature. Despite the
modest net loss reported for the quarter, Zoltek generated $6.5 million
of net cash flow from operating activities. The company completed the
quarter with only $12.2 million in debt, including borrowings under
bank credit lines, while its total shareholders' equity was $307.5
million. Consequently, Zoltek believes it is well positioned to sustain
its business and market development activities pending a resumption in
demand for carbon fibers from its current customers and new
applications.
"Many businesses -- and most of our customers -- went into 2010
expecting to finish strong after a weak first half of the year," Rumy
said. "That is our expectation as well."
Zoltek will host a conference call to review first quarter results and
answer questions on Tuesday, February 9, 2010, at 10:00 am CT. The
conference dial-in number is (800) 768-6544. The confirmation code is
4191015. Individuals who wish to participate should dial in 5 to 10
minutes prior to the scheduled start time. This conference call will
also be webcast on Zoltek's website ― www.zoltek.com ―
under "Investor Relations -- Events & Presentations." The webcast
replay will be available on the website several hours after the call.
This press release contains certain statements that constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The words "expect," "believe,"
"goal," "plan," "intend," "estimate," and similar expressions and
variations thereof are intended to specifically identify
forward-looking statements. Those statements include statements
regarding the intent, belief or current expectations of us, our
directors and officers with respect to, among other things: (1) our
financial prospects; (2) our growth strategy and operating strategy,
including our focus on facilitating acceleration of the introduction
and development of mass market applications for carbon fibers; (3) our
current and expected future revenue; and (4) our ability to complete
financing arrangements that are adequate to fund current operations and
our long-term strategy.
This press release also contains statements that are based on the
current expectations of our company. You are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements as a
result of various factors. The factors that might cause such
differences include, among others, our ability to: (1) successfully
adapt to recessionary conditions in the global economy and the slowdown
in order rates from our wind energy customers; (2) penetrate existing,
identified and emerging markets, including entering into new supply
agreements with large volume customers; (3) continue to improve
efficiency at our manufacturing facilities on a timely and
cost-effective basis to meet current order levels of carbon fibers; (4)
successfully add new planned capacity for the production of carbon
fiber and precursor raw materials and meet our obligations under
long-term supply agreements; (5) maintain profitable operations; (6)
increase or maintain our borrowing at acceptable costs; (7) manage
changes in customers' forecasted requirements for our products; (8)
continue investing in application and market development for a range of
applications; (9) manufacture low-cost carbon fibers and profitably
market them despite fluctuations in raw material and energy costs; (10)
successfully operate our Mexican facility to produce acrylic fiber
precursor and carbon fibers; (11) resolve the pending non-public,
fact-finding investigation being conducted by the Securities and
Exchange Commission; (12) successfully continue operations at our
Hungarian facility if natural gas supply disruptions occur; (13)
successfully prosecute patent litigation (14) successfully implement
and coordinate our alliance with Global Blade Technology; and (15)
manage the risks identified under "Risk Factors" in our filings with
the SEC. Because forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or
quantified, you should not rely upon forward-looking statements as
predictions of future events. The events and circumstances reflected in
the forward-looking statements may not be achieved or occur and actual
results could differ materially from those projected in the
forward-looking statements.
ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands except share and per share data)
(Unaudited)
Three Months Ended
December December
31 31
2009 2008
---------- ----------
Net sales $28,867 $38,629
Cost of sales, excluding available
unused capacity costs 22,149 28,092
Available unused capacity costs 2,771 273
---------- ----------
Gross profit 3,947 10,264
Application and development costs 1,983 1,721
Selling, general and administrative
expenses 4,713 5,068
Operating (loss) income (2,749) 3,475
Interest income 8 219
Gain on foreign currency transactions 345 178
Other expense, net (412) (254)
Gain on derivative liabilities 858 --
Interest expense, excluding
amortization of financing fees and
debt discount (134) (568)
Amortization of financing fees and
debt discount (197) (1,965)
---------- ----------
Income (loss) from continuing
operations before income taxes (2,281) 1,085
Income tax (benefit) expense (1,798) 550
---------- ----------
Net (loss) income $(483) $535
========== ==========
Basic and diluted (loss) income per
share $(0.01) $0.02
Weighted average common shares
outstanding - basic 34,424,441 34,404,631
Weighted average common shares
outstanding - diluted 34,424,441 34,476,681
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share
data)
(Unaudited)
December September
31, 30,
2009 2009
--------- ---------
Assets
------------------------------- --------- ---------
Current assets:
Cash and cash equivalents $21,229 $20,943
Accounts receivable, less
allowance for doubtful
accounts of
$2,475 and $2,356,
respectively 23,778 30,507
Inventories, net 47,095 48,058
Deferred tax assets 6,047 3,262
Other current assets 6,347 6,838
--------- ---------
Total current assets 104,496 109,608
Property and equipment, net 250,239 256,910
Other assets 249 327
--------- ---------
Total assets $354,984 $366,845
========= =========
Liabilities and Shareholders'
Equity
------------------------------- --------- ---------
Current liabilities:
Borrowings under credit lines $9,607 $12,277
Current maturities of
long-term debt 1,613 4,159
Trade accounts payable 8,575 9,408
Accrued expenses and other
liabilities 6,991 6,845
Construction payables 659 792
--------- ---------
Total current liabilities 27,445 33,481
Long-term debt, less current
maturities 955 981
Hungarian grant, long-term 9,732 10,228
Deferred tax liabilities 7,178 6,690
Derivative liabilities 2,203 --
--------- ---------
Total liabilities 47,513 51,380
--------- ---------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par
value, 1,000,000 shares
authorized,
no shares issued and
outstanding -- --
Common stock, $.01 par value,
50,000,000 shares authorized,
34,424,441 and 34,424,441
shares issued and
outstanding
in December 31, 2009 and
September 30, 2009 344 344
Additional paid-in capital 479,343 494,311
Accumulated other
comprehensive loss (23,505) (18,405)
Accumulated deficit (148,711) (160,785)
--------- ---------
Total shareholders' equity 307,471 315,465
--------- ---------
Total liabilities and
shareholders' equity $354,984 $366,845
========= =========
OPERATING SEGMENTS SUMMARY
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, 2009
----------------------------------------
Technical Corporate/
Carbon
Fibers Fibers Other Total
-------- --------- ---------- -------
Net sales $23,942 $4,430 $495 $28,867
Cost of sales, excluding
available unused capacity
costs 17,884 3,795 470 22,149
Available unused capacity
costs 2,427 344 -- 2,771
Gross profit 3,631 291 25 3,947
Operating income (loss) 1,319 73 (4,141) (2,749)
Depreciation 3,437 458 420 4,315
Capital expenditures 239 224 187 650
Three Months Ended December 31, 2008
----------------------------------------
Carbon Technical Corporate/
Fibers Fibers Other Total
-------- --------- ---------- -------
Net sales $32,716 $5,265 $648 $38,629
Cost of sales, excluding
available unused capacity
costs 23,639 3,821 632 28,092
Available unused capacity
costs 91 182 -- 273
Gross profit 8,986 1,262 16 10,264
Operating income (loss) 6,507 530 (3,562) 3,475
Depreciation 3,371 419 283 4,073
Capital expenditures 7,825 436 73 8,334
CONTACT: Zoltek Companies, Inc.
Zsolt Rumy, Chairman and CEO
(314) 291-5110
3101 McKelvey Road
St. Louis, MO 63044
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