ST. LOUIS, Nov. 28, 2007 (PRIME NEWSWIRE) -- Zoltek Companies, Inc. (Nasdaq:ZOLT) today reported continued strong gains in sales for the fourth quarter of its 2007 fiscal year and for the year as a whole.
For the quarter ended September 30, 2007, Zoltek's net sales totaled $43.6 million, compared to $23.8 million in the fourth quarter of the previous fiscal year, an increase of 83%. Gross profit for the quarter ended September 30, 2007 totaled $13.0 million or 30% of net sales compared to $5.1 million or 21% of net sales in the forth quarter of the previous year. Prior to litigation charges and convertible debt expenses, operating income from continuing operations (a non-GAAP measure; see reconciliation below) totaled $7.9 million, compared to $1.7 million in the prior year quarter, close to a fourfold increase.
For fiscal 2007, Zoltek reported net sales of $150.9 million, compared to $92.4 million for fiscal 2006, an increase of 63%. Gross margin for the year ended September 30, 2007 totaled $43.4 million or 29% of net sales compared to $22.4 million or 25% of net sales in the previous year. Operating income from continuing operations prior to litigation charges and convertible debt expenses (a non-GAAP measure; see reconciliation below) totaled $21.6 million, or 14% of net sales for fiscal 2007, compared to income of $7.4 million, or 8% of net sales for fiscal 2006.
"All-around, it was a very good year for Zoltek," Zsolt Rumy, Zoltek's Chairman and Chief Executive Officer, said. "In addition to achieving record sales, we signed several long-term carbon fiber supply agreements with major customers; successfully completed a secondary stock offering to fund our continued expansion program; made a strategic acquisition in Mexico which, after an ongoing retrofit process expected to be completed toward the end of the current fiscal year, should provide a substantial portion of our increasing precursor requirements for our carbon fiber expansion; we continued to make operational improvements at our facilities in Texas and Hungary; and we significantly strengthened the balance sheet, with total shareholders' equity increasing from $112 million at the beginning of the fiscal year to $321 million at the end of the year."
"Our objective is to achieve $500 million in sales in fiscal 2010, while continuing to improve gross margins," Rumy said. "In striving to meet those objectives, our principal focus continues to be on execution. The fundamentals of our business have never been stronger and we believe that our strategy, existing and planned capacity and financial resources, position us well to capitalize on the historic opportunities for us to lead the commercialization of carbon fibers as a transformational advanced material."
Zoltek will host a conference call to review fourth quarter and fiscal year-end 2007 results and answer questions on Thursday, November 29, 2007, at 9:00 am CT. The conference dial-in number is (888) 737-3713. The confirmation code is 6040303. Individuals who wish to participate should dial in 5 to 10 minutes prior to the scheduled start time.
Zoltek currently expects to file its Form 10-K for fiscal 2007 on or about November 30, 2007.
This press release 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 resolve pending litigation; (2) continue to improve efficiency at our manufacturing facilities on a timely and cost-effective basis to meet current order levels of carbon fibers; (3) successfully add new planned capacity for the production of carbon fiber and precursor raw materials and meet our obligations under long-term supply agreements; (4) achieve profitable operations; (5) raise new capital and increase our borrowing at acceptable costs; (6) manage changes in customers' forecasted requirements for our products; (7) continue investing in application and market development in a range of industries; (8) manufacture low-cost carbon fibers and profitably market them; (9) penetrate existing, identified and emerging markets; (10) successfully retrofit our recently acquired Mexican facility to manufacture acrylic fiber precursor and add carbon fiber production lines, and (11) manage the risks identified under "Risk Factors" in our filings with the SEC.
ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended
September 30
2007 2006
--------------------
Net sales $ 43,579 $ 23,814
Cost of sales 30,584 18,681
Gross profit 12,995 5,133
Application and development costs 1,833 1,251
Selling, general and administrative expenses 3,221 2,197
Operating income from continuing operations
prior to litigation charge* 7,941 1,685
Interest income 931 222
Interest expense related to non-convertible
debt* (334) (157)
Other, net 154 (703)
Income tax expense (1,182) (200)
Income from continuing operations before
convertible debt expense and litigation
charge* 7,510 847
Expense related to convertible debt issuances* (3,451) (630)
Litigation charge (5,400) (23,110)
Loss from continuing operations (1,341) (22,893)
Income (loss) from discontinued operations,
net of taxes (503) 14
Net loss (1,844) (22,879)
Net loss per share:
Basic and diluted loss per share:
Continuing operations before convertible
debt and litigation charge* $ 0.24 $ 0.03
Convertible debt charge* (0.11) (0.02)
Litigation charge (0.17) (0.90)
-------- --------
Continuing operations (0.04) (0.89)
Discontinued operations (0.02) (0.00)
-------- --------
Total $ (0.06) $ (0.89)
======== ========
Weighted average common shares outstanding --
basic and diluted 31,542 25,648
-------------------------
* To provide transparency about measures of the Company's financial
performance which management considers relevant, we supplement the
reporting of Zoltek's consolidated financial information under
GAAP with "operating income from continuing operations prior to
litigation charge," " interest expense related to non-convertible
debt," "income (loss) from continuing operations before
convertible debt expense and litigation charge," and "expense
related to convertible debt issuances" which are a non-GAAP
financial measures. Operating income (loss) in accordance with
GAAP was $2,541 and ($21,425) for fiscal 2007 and fiscal 2006,
respectively. These non-GAAP financial measures should be
considered in addition to, and not as a substitute or superior to,
the other measures of financial performance prepared in accordance
with GAAP. Using only the non-GAAP financial measures to analyze
our performance would have material limitations because their
calculation is based on the subjective determination of management
regarding the nature and classification of events and
circumstances that investors may find significant. Management
compensates for these limitations by presenting both the GAAP and
non-GAAP measures of its results. Zoltek believes the presentation
of these measures is useful to investors because (1) they are
indicative of the company's underlying business performance, (2)
the litigation charge in fiscal 2007 related to a dispute with an
investment banking firm in connection with certain financing
transactions and the litigation charge in fiscal 2006 related
primarily to a dispute with a customer regarding a supply
agreement under which the customer recently ceased ordering
product; and (3) expense related to convertible debt issuances
(which amount includes amortization of debt discount and interest
expense) arises out of convertible debt obligations that we expect
will be converted into Zoltek common stock if the market price of
our common stock continues to exceed the conversion price.
ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts In Thousands Except Per Share Data)
(Unaudited)
Fiscal Year Ended
September 30
2007 2006
--------------------
Net sales $ 150,880 $ 92,357
Cost of sales 107,506 69,994
Gross profit 43,374 22,363
Application and development costs 7,230 4,887
Selling, general and administrative expenses 12,635 10,041
Operating income from continuing operations
prior to litigation charge* 23,509 7,435
Interest income 1,829 281
Interest expense related to non-convertible
debt* (613) (490)
Other, net (1,130) (1,003)
Income tax expense (1,986) (888)
Income from continuing operations before
convertible debt expense and litigation
charge* 21,609 5,335
Expense related to convertible debt issuances* (18,182) (47,990)
Litigation charge (5,400) (23,110)
Loss from continuing operations (1,973) (65,765)
Loss from discontinued operations, net of taxes (544) (37)
Net loss (2,517) (65,802)
Net loss per share:
Basic and diluted loss per share:
Continuing operations before convertible debt
and litigation charge* $ 0.76 $ 0.24
Convertible debt charge* (0.64) (2.13)
Litigation charge (0.19) (1.02)
--------- ---------
Continuing operations (0.07) (2.91)
Discontinued operations (0.02) (0.00)
--------- ---------
Total $ (0.09) $ (2.91)
========= =========
Weighted average common shares outstanding -
basic and diluted 28,539 22,575
--------------
* To provide transparency about measures of the Company's financial
performance which management considers relevant, we supplement the
reporting of Zoltek's consolidated financial information under
GAAP with "operating income from continuing operations prior to
litigation charge," "interest expense related to non-convertible
debt," "income (loss) from continuing operations before
convertible debt expense and litigation charge," and "expense
related to convertible debt issuances" which are a non-GAAP
financial measures. Operating income (loss) in accordance with
GAAP was $18,108 and ($15,675) for fiscal 2007 and fiscal 2006,
respectively. These non-GAAP financial measures should be
considered in addition to, and not as a substitute or superior to,
the other measures of financial performance prepared in accordance
with GAAP. Using only the non-GAAP financial measures to analyze
our performance would have material limitations because their
calculation is based on the subjective determination of management
regarding the nature and classification of events and
circumstances that investors may find significant. Management
compensates for these limitations by presenting both the GAAP and
non-GAAP measures of its results. Zoltek believes the presentation
of these measures is useful to investors because (1) they are
indicative of the company's underlying business performance, (2)
the litigation charge in fiscal 2007 related to a dispute with an
investment banking firm in connection with certain financing
transactions and the litigation charge in fiscal 2006 related
primarily to a dispute with a customer regarding a supply
agreement under which the customer recently ceased ordering
product; and (3) expense related to convertible debt issuances
(which amount includes amortization of debt discount and interest
expense) arises out of convertible debt obligations that we expect
will be converted into Zoltek common stock if the market price of
our common stock continues to exceed the conversion price.
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share and per share data)
September 30
2007 2006
---------------------
Assets
--------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 121,761 $ 10,802
Restricted cash 13,815 6,634
Accounts receivable, less allowance for
doubtful accounts of $729 and $718,
respectively 37,495 17,009
Inventories 27,941 21,721
Other current assets 7,640 6,915
--------- ---------
Total current assets 208,652 63,081
Property and equipment, net 188,801 122,284
Other assets 3,501 2,319
--------- ---------
Total assets $ 400,954 $ 187,684
========= =========
Liabilities and shareholders' equity
--------------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt $ 13,813 $ 1,365
Trade accounts payable 17,253 11,935
Legal liabilities (see Note 8) 24,543 23,725
Accrued expenses and other liabilities 8,305 6,014
--------- ---------
Total current liabilities 63,914 43,039
Hungarian grant, long-term 7,969 --
Other long-term liabilities 1,453 79
Value of warrants and beneficial conversion
feature associated with convertible debt
obligations -- 903
Long-term debt, less current maturities 6,851 32,002
--------- ---------
Total liabilities 80,187 76,023
--------- ---------
Commitments and contingencies (see Note 8)
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, 33,653,735 and 25,652,982
shares issued and outstanding in 2007 and
2006, respectively 337 258
Additional paid-in capital 476,205 287,299
Accumulated other comprehensive income (loss) 8,249 (14,389)
Accumulated deficit (164,024) (161,507)
--------- ---------
Total shareholders' equity 320,767 111,661
--------- ---------
Total liabilities and shareholders' equity $ 400,954 $ 187,684
========= =========
OPERATING SEGMENTS SUMMARY
(Amounts in thousands, except share and per share data)
Three Months Ended September 30, 2007
-------------------------------------
Carbon Technical Corporate/
Fibers Fibers Other Total
------ ------ ----- -----
Net sales $ 35,323 $ 7,340 $ 916 $ 43,579
Cost of sales 24,420 5,613 551 30,584
Operating income (loss) 8,910 1,409 (7,778) 2,541
Capital expenditures 8,766 -- 1,858 10,624
Three Months Ended September 30, 2006
-------------------------------------
Carbon Technical Corporate/
Fibers Fibers Other Total
------ ------ ----- -----
Net sales $ 17,305 $ 5,903 $ 614 $ 23,822
Cost of sales 13,744 4,449 798 18,991
Operating income (loss) 2,329 1,272 (25,329) (21,728)
Capital expenditures 8,787 2,701 410 11,898
Fiscal Year Ended September 30, 2007
------------------------------------
Carbon Technical Corporate/
Fibers Fibers Other Total
------ ------ ----- -----
Net sales $ 116,365 $ 31,697 $ 2,818 $ 150,880
Cost of sales 82,223 23,689 1,594 107,506
Operating income (loss) 26,536 7,435 (15,862) 18,109
Capital expenditures 47,321 2,148 3,943 53,412
Fiscal Year Ended September 30, 2006
------------------------------------
Carbon Technical Corporate/
Fibers Fibers Other Total
------ ------ ----- -----
Net sales $ 65,677 $ 25,195 $ 1,485 $ 92,357
Cost of sales 49,386 19,211 1,397 69,994
Operating income (loss) 10,383 4,620 (30,678) (15,675)
Capital expenditures 31,742 7,833 1,220 40,795