Spartech Corp. (SEH) posted fiscal 2009 fourth-quarter results after the closing bell on Monday. The company swung to a net profit of $8.2 million, from a net loss of $197.4 million in the year-ago quarter. The prior-year quarter included an asset impairment charge of $226.9 million.
Excluding non-recurring items, earnings per share during the company’s fiscal 2009 fourth quarter came in at 15 cents, missing the Zacks Consensus Estimate of 21 cents.
Spartech is an intermediary processor of engineered thermoplastics. The company converts base polymers or resins into extruded plastic sheet and rollstock, thermoformed packaging, specialty film laminates, acrylic products, specialty plastic alloys, color concentrates and blended resin compounds, and injection molded and profile products.
The Clayton, MO-based company’s revenue declined 26.7% year-over-year to $242.6 million, missing the Zacks Consensus Estimate of $256.3 million. The decline was caused by a 15% fall in volumes due to sluggish demand in its end-markets comprising automotive, building and construction, and recreation and leisure sectors. Moreover, sales were also impacted by a 12% decrease in selling price as the company passed on lower raw material costs to customers.
Custom Sheet & Rollstock, the flagship segment, recorded a 22% year-over-year decline in sales to $126.8 million due to a 5% decrease in volumes coupled with a 17% reduction in price. Packaging Technologies division’s revenue declined 23% to $52.6 million amid a 9% dip in volume and 14% decrease in price. Color & Specialty Compound segment’s sales reduced 36% to $63.2 million as volume and price fell by 28% and 8% respectively, compared to the year-ago period.
Gross margin grew by 390 basis points (bps) year over year to 13.2% primarily due to management’s stringent initiatives towards controlling costs. Operating income, excluding asset impairments, restructuring and exit costs, grew to $11.8 million from $5.3 million in the year-ago period due to higher gross margin and temporary reduction in compensation and benefits.
During the fiscal, Spartech generated $65.3 million of cash from operations and utilized $8.1 million towards capital expenditure, which resulted in free cash flow of $57.2 million. The company also made debt repayments of $61.7 million in the fiscal and its total debt stood at $216.4 million at the end of the fiscal.
Looking ahead, although Spartech is cautiously optimistic about the general stabilization in sales volumes, it expects low demand levels to continue through 2010. The Zacks Consensus Estimate, derived from 4 covering analysts, on the company’s earnings for the fiscal year ending Oct 2010 has climbed 4 cents over the past month and is currently pegged at 82 cents per share.
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