Shiloh Industries Inc. (SHLO) reported solid year-over-year results for third-quarter fiscal 2014 (ended Jul 31, 2014). Net income soared 58% year over year to $8.3 million. Earnings came in at 49 cents per share, up compared with 31 cents earned in the year-ago quarter.
Revenues
Shiloh Industries generated net revenues of $216.4 million, increasing 30.3% over the year-ago comparable quarter. Top-line growth was driven by new product offerings, market share gains and acquisitions.
Margins
Cost of sales grew 29.8% year over year while representing 89.8% of net revenues, down 30 basis points (bps) year over year. Gross margin was 10.2% compared with 9.9% in the year-ago quarter. Selling, general and administrative expenses were 5.7% of net revenue versus 5% recorded in the year-ago quarter.
Operating income was $9.7 million, up 18.8% year over year, while operating margin was recorded at 4.5% versus 4.9% in the year-ago quarter. Interest expenses surged nearly 77.5% year-over-year, reflecting increased financial obligations of the company due to higher debt levels.
Balance Sheet and Cash Flow
Exiting third-quarter fiscal 2014, Shiloh Industries had cash and cash equivalents of $11.1 million, down significantly from $579 million in the previous quarter. Long-term debt increased 73.5% sequentially to $205.8 million.
In nine months ended Jul 2014, Shiloh Industries generated cash of $16.2 million from its operating activities, down compared with $29.4 million in the year-ago comparable period. Capital expenditure incurred was $24 million, up 29.3% year over year.
Acquisition
During the quarter, Shiloh Industries completed the acquisition of Finnveden Metal Structures (FMS) from FinnvedenBulten AB for approximately $56.6 million. The transaction added FinnvedenBulten’s stamping business and magnesium die casting technology, along with 800 employees and a revenue generation capacity of $180 million, to the company’s portfolio.
Shiloh Industries currently has a $314.7 million market capitalization. Some stocks worth considering in the steel industry include Grupo Simec S.A.B. de C.V. (SIM), TimkenSteel Corporation (TMST) and United States Steel Corp. (X). All these stocks sport a Zacks Rank #1 (Strong Buy).
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