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Alloy Steel International, Inc. Message Board

  • chris_cs16 chris_cs16 Feb 19, 2013 9:59 AM Flag

    Excellent Q1 Results

    AYSI – Alloy posted a solid $0.05 per share in earnings for their Q1 2013 through December 31, 2012. Revenues were a solid $6.6 million, which was down a bit from their record Q1 last year. However, the most important part of the release is related to their gross margins and gross profit. Gross margin increased from 33% last year, to 45% in this year’s Q1.
    According to the CFO, “Though the Company recorded lower sales for the quarter compared to same period last year, the Gross Margin has improved significantly. This can be attributed to a continued focus on customer’s needs, a change in sales mix towards higher margin product and lower wastage due to a mill upgrade leading to a better yield.”
    As I had expected, the balance sheet also improved meaningfully, with A/R and inventory coming down from unusually high levels at year end. Tangible book value improves to over $1.13 per share. More importantly, they paid down their overdraft, reducing total debt from $1.1 million to $0.5 million. Even with the debt paydown, the cash balance improved to $2.8 million from $0.5 million. So they paid down $0.6 million of debt and increased cash by $2.3 million!
    This is a solid start to the year and I’m hopeful given the improvement of the iron ore industry on the back of an improving Chinese economy will mean an exciting year for the company.

    At $0.60, the company is trading at a 2.5x trailing P/E and 0.53x book value, with $0.16 per share in cash on the balance sheet and over $3-$4 million in land in Indonesia. I’m looking for AYSI to trade over $1.00 per share as they continue to post solid results and the ultimate catalyst will be the company announcing that it has found financing to complete its Indonesian expansion.

    Sentiment: Strong Buy

1.350.00(0.00%)Sep 2 3:02 PMEDT