Material Sciences shares lower on Q2 loss
Shares of Material Sciences Corp. (NYSE: MSC) are trading lower following news the Elk Grove Village, Ill.-based maker of coated steel products reported a first-quarter loss.
The net loss for the three months ended May 31 was $0.3 million, or $0.02 per share, compared with net income of $2.3 million, or $0.15 per share, a year earlier, the company said before the opening bell. Wall Street was expecting a profit of $0.04 per share.
Net sales also disappointed, dropping to $60.7 million, a decline of 19.9%, from $75.8 million a year earlier. The street was looking for revenues of $66.2 million.
“Production cuts at the three largest North American automobile manufacturers stretched into calendar year 2007 and hurt Materials Sciences’ first quarter sales,” CEO Clifford D. Nastas said.
The company is developing new markets in an attempt to offset the slowdown in America’s domestic auto industry.
For example, Material Sciences reported that European brake sales increased about 47%.
However, total brake sales fell 27.9% to $6.7 million, compared with sales of $9.3 million in the same quarter a year earlier. Sales of automotive gas tanks also suffered, falling 17.1% to $10.8 million from $13.0 million in the first quarter of fiscal 2007.
Sales of coated metals, which are the biggest segment of the company’s business, were $29.5 million, a decline of 19.5% million, compared with $36.6 million a year earlier.
Looking ahead, Material Science’s chief said that he expects the slowdown in the U.S. auto market to continue throughout the current fiscal year.
Still, he remains convinced that the company can grow by diversifying.
“We closed MSC’s first contract with a transplant manufacturer this quarter, a milestone in our efforts to diversify our customer base,” Nastas said. Transplant manufacturing refers to a company setting up a production facility in a foreign country.
At 2:38 p.m. ET shares were down $0.69, or 5%, to $12.14. The 52-week high of $13.59 was established on June 21. The 52-week low of $8.59 was reached on July 6, 2006.
