Shiloh Industries Fiscal 2014 Earnings Increase Y/Y

Shiloh Industries Inc. (SHLO) reported impressive financial results for fiscal 2014 (ended Oct 31, 2014). Net income increased 4.1% year over year to $22.4 million, while earnings came in at $1.30 per share, up compared with $1.27 earned in fiscal 2013.

Revenues

Shiloh Industries generated net revenue of $878.7 million in fiscal 2014, reflecting an increase of 25.5% or $178.6 million from the previous year. Top-line growth was driven by $122 million of revenue generated from acquisitions and $56.5 million of growth in organic sales.

Margins

Shiloh Industries’ cost of sales escalated 26.2% year over year, representing roughly 90.9% of net revenue versus 90.4% in fiscal 2013. Gross margin decreased 50 basis points (bps) to 9.1%. Selling, general and administrative expenses stood at 5.7% of net revenue versus 4.5% recorded in fiscal 2013.

Operating income was $31.2 million, down 9.9% year over year, while operating margin was recorded at 3.5% versus 4.9% in the prior year. Interest expenses soared nearly 73.2% year-over-year, reflecting increased financial obligations of the company due to higher debt levels.

Balance Sheet and Cash Flow

Exiting fourth-quarter fiscal 2014, Shiloh Industries’ cash and cash equivalents grew 8.1% to $12 million from $11.1 million in the previous quarter. Long-term debt increased 30.3% sequentially to $268.1 million.

In fiscal 2014, Shiloh Industries generated cash of $29.6 million from its operating activities, down compared with $38.8 million in the previous year. Capital expenditure incurred was $40.2 million, up 46.3% year over year.

Acquisition

During fiscal 2014, Shiloh Industries closed acquisitions worth $124.5 million (net of cash acquired). Among the deals, the acquisitions of Radar Industries and Finnveden Metal Structures (FMS) deserve a special mention. While the former expanded the company’s stamping business in Central Mexico and Michigan, the latter added magnesium die casting technology to the company’s portfolio.

Shiloh Industries, currently, has a market capitalization of $233.5 million. Some stocks worth considering in the steel industry include Synalloy Corporation (SYNL), LB Foster Co. (FSTR) and Mechel OAO (MTL). While Synalloy Corporation sports a Zacks Rank #1 (Strong Buy), both LB Foster and Mechel OAO carry a Zacks Rank #2 (Buy).

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