Zoltek Companies, Inc. (Nasdaq: ZOLT) reported accelerated sales growth trends and strong improvement in operating performance in the first quarter of its 2007 fiscal year ended December 31, 2006. On a year-over-year basis, Zoltek’s sales nearly doubled — increasing to $30.3 million for the quarter, compared to $15.6 million in the first quarter of the previous year. On a sequential quarter basis, Zoltek’s sales increased 27% (from $23.8 million) in the quarter ended September 30, 2006.
Operating income from continuing operations of $3.0 million for recently completed quarter, compared to an operating loss from continuing operations of $1.0 million in the prior year quarter. Similarly, Zoltek reported a positive cash flow from operating activities of $3.5 million for the three months ended December 31, 2006, compared to a negative cash flow from operating activities of $5.7 million for the three months ended December 31, 2005.
“It was an excellent quarter in every important operating respect,” said Zsolt Rumy, Zoltek’s Chairman and Chief Executive Officer. “Given the continuing growth in demand for our carbon fibers, our principal challenge is simply to execute, and that is what we are doing — with increasing success.”
“We achieved a significant improvement in utilization rates at our carbon fiber production facilities, with more improvement possible in the near future,” Rumy continued. “Our gross margin rose from 16% in the year ago quarter to 26% in the latest quarter. We expect to have two new carbon fiber production lines up and running in Hungary in March, and another two lines should be operational in April. In January, we successfully implemented a double-digit price increase for our carbon fibers, which will mitigate the effect of recent cost increases and provide for higher margins in the remainder of fiscal 2007.”
Zoltek’s expansion program calls for the planned addition of four more production lines to be completed by as early as September 2007. This will represent an additional 5 million pounds (2,250 tons) per year of rated carbon fiber production capacity. In addition to the carbon fiber expansion, the Company plans to expand its precursor capacity to meet the new capacity requirements and the anticipated expansion in fiscal 2008. “We are reviewing our expansion requirements past the 2007 plans and expect to announce those plans shortly,” Rumy said.
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