Shiloh Industries' (SHLO) Q2 Earnings Fall Y/Y, Revenues Up

Shiloh Industries Inc. (NASDAQ:SHLO) reported mixed results for second-quarter fiscal 2016 (ended Apr 30, 2016). The company’s adjusted earnings came in at 19 cents per share, way below 40 cents per share in the year-ago quarter. The results excluded 2 cents per share of amortization of intangibles charges.

Organic Growth Boost Top-line

Talking about Shiloh Industries’ top line, revenues in the quarter grew 4.4% year over year to $284.3 million. The company benefited from new business wins as well as roughly 4.2% year-over-year increase in light vehicle production in Europe and North America.

Geographically, revenues generated in Europe and the United States increased 18.5% and 4%, respectively. However, sales generated from Mexico decreased 34.5%.

Margin Profile Weak on High Costs & Expenses

In the quarter, Shiloh Industries’ cost of sales rose 6% year over year, representing roughly 91.1% of net revenues compared with 89.7% in the year-ago quarter. Gross margin decreased 140 basis points (bps) to 8.9%. Selling, general and administrative expenses were 6% of net revenue, compared with 6.2% in second-quarter fiscal 2015.

Adjusted earnings before interest, tax, depreciation and amortization were $18.3 million, down from $19.7 million in the prior-year quarter. Interest expenses soared nearly 118.7% year over year.

Balance Sheet and Cash Flow

Exiting second-quarter fiscal 2016, Shiloh Industries had cash and cash equivalents of $4.9 million, down from $6.8 million at the end of the preceding quarter. Long-term debt decreased 3.7% sequentially to $266.3 million.

In the six months ended Apr 30, Shiloh Industries generated net cash of $31.5 million from its operating activities, significantly up from $3.6 million in the prior-year quarter. Capital expenditure totaled $8.8 million, down 59.5% year over year.

Conclusion

Shiloh Industries currently has a market capitalization of $116.5 million. Further increases in the company’s new business wins as well as increase in light vehicle production in its prime operating areas will prove to be an advantage.

However, Shiloh Industries is facing competition from other players in the steel industry that may restrict its growth momentum. Some stocks worth considering in the industry include Ryerson Holding Corporation (NYSE:RYI) , ArcelorMittal (NYSE:MT) and Olympic Steel Inc. (NASDAQ:ZEUS) . While Ryerson Holding sports a Zacks Rank #1 (Strong Buy), both ArcelorMittal and Olympic Steel carry a Zacks Rank #2 (Buy).


ARCELOR MITTAL (MT): Free Stock Analysis Report

OLYMPIC STEEL (ZEUS): Free Stock Analysis Report

RYERSON HOLDING (RYI): Free Stock Analysis Report

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