| Plastic compounds and resins supplier, A. Schulman, Inc. (SHLM) Tuesday, reported an increase in profit for the third quarter ended May 31, 2009 from the year-ago quarter on higher margins, helped by realization of cost-reduction efforts and favorable product line mix. Revenues, however, plunged over 41% on weak end markets and the effect of foreign currency translation.
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| | | {loadposition contentad} | | | | | A. Schulman reported third-quarter net income of $7.4 million or $0.29 per share, compared to net income of $7.1 million or $0.26 per share in the same quarter last year. Foreign currency translation reduced net income by $2.7 million or about $0.11 per share in the third quarter of 2009.
Third quarter results included unusual charges of about $1.6 million, after tax, related to ongoing restructuring activities and asset impairments, while the year ago quarter included after-tax unusual charges of $4.2 million related to restructuring activities, asset impairments and curtailment gains.
Excluding charges, net income was $9.0 million or $0.36 per share, compared to $11.4 million or $0.42 per share in the previous year quarter.
On average, four analysts polled by Thomson Reuters expected the company to earn $0.09 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter was $297.7 million, down 41.8% from $511.8 million in the year ago quarter. The company noted that the translation effect of foreign currency, mainly the euro, reduced sales by an incremental 9.3%. In addition, tonnage declined 26.9%, reflecting the continuation of weak end markets and continued right-sizing in the company's North America Engineered Plastics business.
Gross margin increased to 15.4% of net sales, compared with 11.7% a year ago, primarily due to product mix, the realization of benefits from cost-reduction programs and efforts at lowering higher-priced inventory.
Reported net income for the first nine months of fiscal 2009 was $5.1 million or $0.20 per share, compared with net income of $13.3 million or $0.49 per share in the similar period last year. Net income for the nine months included $5.9 million of unusual charges and excluding these unusual items, net income would have been $11.0 million or $0.43 per share.
For the nine months ended May 31, 2009, net sales were $958.8 million, down 35.6% from $1.49 billion recorded last year.
The company said it has initiated further plans to reduce capacity and staff strength at certain international operations. The company expects to incur before-tax costs of $1.0 million to $2.3 million, including approximately $0.6 million to $1.3 million for employee termination costs and around $0.4 million to $1.0 million of charges related to fixed assets at the affected locations.
The actions initiated in July 2009, are expected to be completed in the fourth quarter of fiscal 2009 and anticipated to result in annual pre-tax savings of around $0.6 million to $0.8 million beginning fiscal 2010.
SHLM closed Tuesday's regular trading at $16.49, down $0.15 or 0.90%, on a volume of 0.42 million shares on the Nasdaq. In after hours, the stock gained $0.09 or 0.55%, trading at $16.58.
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