Spartech Corp. (SEH, Financial) filed Quarterly Report for the period ended 2010-05-01.
Spartech Corp. has a market cap of $370.5 million; its shares were traded at around $11.99 with a P/E ratio of 17.4 and P/S ratio of 0.4. SEH is in the portfolios of Chuck Royce of Royce& Associates, Charles Brandes of Brandes Investment, Jim Simons of Renaissance Technologies LLC.
Selling, general and administrative expenses were $20.5 million and $38.9 million in the second quarter and first six months of 2010 compared to $17.8 million and $39.9 million in the same periods of the prior year. These amounts include foreign currency losses of $1.9 million and $2.5 million in the second quarter and first half of 2010, and $0.2 million and $0.4 million in the second quarter and first half of 2009. The losses in 2010 were mostly caused by a weakening U.S. dollar to the Canadian dollar. In the second quarter of 2010, most of the Companys exposure to the Canadian dollar was mitigated. Refer to Note 13, Comprehensive Income (Loss) for further discussion of the Companys foreign currency positions as of the end of the second quarter. In addition, the Companys comparisons were impacted by the prior year change in vacation policy which resulted in a $1.0 million one-time reduction in selling, general and administrative expenses in the second quarter of 2009. The first half comparison also reflected $3.3 million of lower bad debts expense in 2010 due to improving credit markets. Our bad debts expense was $0.3 million in the second quarter of 2010 and $0.1 million in the first half of 2010.
Amortization of intangibles was $1.0 million and $1.9 million in the second quarter and first six months of 2010 compared to $1.2 and $2.3 million in the same periods of the prior year. The decreases in both period comparisons reflect intangibles which became fully amortized in 2009.
Restructuring and exit costs were $1.6 million and $2.3 million in the second quarter and first six months of 2010 compared to $3.6 million and $4.4 million in the same periods of the prior year. For both period comparisons, restructuring and exit costs are mostly comprised of employee severance, facility consolidation and shut-down costs and accelerated depreciation. We expect to incur approximately $2.3 million of additional restructuring expenses for initiatives announced through May 1, 2010, which will be mostly comprised of cash employee severance, facility consolidation and shut-down costs. The Companys announced facility consolidations and shut-downs are expected to be substantially complete by the end fiscal 2010.
Interest expense, net of interest income, was $3.3 million and $6.8 million in the second quarter and first six months of 2010 compared to $3.8 million and $8.1 million in the same periods of the prior year. These decreases were primarily driven by the $87.7 million pay down in debt during the last 12 months.
Corporate expenses are reported as selling, general and administrative expenses in the consolidated condensed statement of operations and include corporate office expenses, shared services costs, information technology costs, professional fees and the impact of foreign currency exchange. Corporate operating expenses were $9.6 million and $18.0 million in the second quarter and first half of 2010, respectively, compared to $8.4 million and $17.9 million in the same periods of the prior year. The increase of expense in the second quarter and first half of 2010 over the prior year same periods was mostly caused by an increase in foreign currency expense. Both period comparisons were impacted by foreign currency expense of $1.9 million and $2.5 million in the second quarter and first half of 2010 which represented a $1.7 million and $2.1 million increase, respectively, over the same periods of the prior year.
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Spartech Corp. has a market cap of $370.5 million; its shares were traded at around $11.99 with a P/E ratio of 17.4 and P/S ratio of 0.4. SEH is in the portfolios of Chuck Royce of Royce& Associates, Charles Brandes of Brandes Investment, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
In our second quarter of 2010, we saw demand recovery in the automotive sector of our transportation market and in the construction and recreation and leisure markets for our sheet business. This demand recovery coupled with strong volume increases of sheet used in refrigerators and sheet used for material handling applications led to a 12% and 7% increase in underlying sales volume for our second quarter and first half of 2010 over the same periods of the prior year. Despite the sales volume increase, our operating earnings decreased $0.7 million from the second quarter of last year to $7.9 million in the second quarter of 2010. This decrease was caused by higher resin prices that were not fully passed along to customers which resulted in a reduction in margins in this years second quarter, foreign currency expense of $1.9 million in this years second quarter representing a $1.7 million increase versus our prior year second quarter, and the Companys prior year change in vacation policy which resulted in a $3.7 million one-time earnings benefit in the second quarter of 2009. These negative impacts on our second quarter operating earnings comparison were partially offset by the volume increase and benefits from our improvement initiatives.Selling, general and administrative expenses were $20.5 million and $38.9 million in the second quarter and first six months of 2010 compared to $17.8 million and $39.9 million in the same periods of the prior year. These amounts include foreign currency losses of $1.9 million and $2.5 million in the second quarter and first half of 2010, and $0.2 million and $0.4 million in the second quarter and first half of 2009. The losses in 2010 were mostly caused by a weakening U.S. dollar to the Canadian dollar. In the second quarter of 2010, most of the Companys exposure to the Canadian dollar was mitigated. Refer to Note 13, Comprehensive Income (Loss) for further discussion of the Companys foreign currency positions as of the end of the second quarter. In addition, the Companys comparisons were impacted by the prior year change in vacation policy which resulted in a $1.0 million one-time reduction in selling, general and administrative expenses in the second quarter of 2009. The first half comparison also reflected $3.3 million of lower bad debts expense in 2010 due to improving credit markets. Our bad debts expense was $0.3 million in the second quarter of 2010 and $0.1 million in the first half of 2010.
Amortization of intangibles was $1.0 million and $1.9 million in the second quarter and first six months of 2010 compared to $1.2 and $2.3 million in the same periods of the prior year. The decreases in both period comparisons reflect intangibles which became fully amortized in 2009.
Restructuring and exit costs were $1.6 million and $2.3 million in the second quarter and first six months of 2010 compared to $3.6 million and $4.4 million in the same periods of the prior year. For both period comparisons, restructuring and exit costs are mostly comprised of employee severance, facility consolidation and shut-down costs and accelerated depreciation. We expect to incur approximately $2.3 million of additional restructuring expenses for initiatives announced through May 1, 2010, which will be mostly comprised of cash employee severance, facility consolidation and shut-down costs. The Companys announced facility consolidations and shut-downs are expected to be substantially complete by the end fiscal 2010.
Interest expense, net of interest income, was $3.3 million and $6.8 million in the second quarter and first six months of 2010 compared to $3.8 million and $8.1 million in the same periods of the prior year. These decreases were primarily driven by the $87.7 million pay down in debt during the last 12 months.
Corporate expenses are reported as selling, general and administrative expenses in the consolidated condensed statement of operations and include corporate office expenses, shared services costs, information technology costs, professional fees and the impact of foreign currency exchange. Corporate operating expenses were $9.6 million and $18.0 million in the second quarter and first half of 2010, respectively, compared to $8.4 million and $17.9 million in the same periods of the prior year. The increase of expense in the second quarter and first half of 2010 over the prior year same periods was mostly caused by an increase in foreign currency expense. Both period comparisons were impacted by foreign currency expense of $1.9 million and $2.5 million in the second quarter and first half of 2010 which represented a $1.7 million and $2.1 million increase, respectively, over the same periods of the prior year.
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