Shiloh Industries (SHLO) Q3 Earnings Flat Y/Y, Sales Down

Shiloh Industries Inc. (NASDAQ:SHLO) reported third-quarter fiscal 2016 (ended Jul 31, 2016) results, wherein its adjusted earnings came in at 6 cents per share, matching the year-ago figure.

Weak Top-Line Results

Talking about Shiloh Industries’ top-line, third-quarter’s revenues totaled $248.8 million, down 6.5% year over year. Results were adversely impacted by less number of shipping days in the quarter and by changes in customer production schedule.

Geographically, revenues generated in Europe increased 7.8% while that in the United States and Rest of the World decreased 8.2% and 11%, respectively.

Margin Grew on Low Costs Offsetting Revenue Weakness

In the quarter, Shiloh Industries’ cost of sales declined 8.6% year over year, representing roughly 90.3% of net revenues compared with 92.4% in the year-ago quarter. Gross margin increased 210 basis points to 9.7%. Selling, general and administrative expenses were 7.1% of net revenue, compared with 4.6% in third-quarter fiscal 2015.

Adjusted earnings before interest, tax, depreciation and amortization were $17.2 million, up from $14.9 million in the prior-year quarter. Interest expenses soared nearly 61% year over year.

Balance Sheet and Cash Flow

Exiting third-quarter fiscal 2016, Shiloh Industries’ cash and cash equivalents decreased 6.6% to $4.6 million from $4.9 million at the end of the preceding quarter. Long-term debt decreased 2.7% sequentially to $259.2 million.

In the nine months ended Jul 31, Shiloh Industries generated net cash of $48.2 million from its operating activities, significantly up from $17.5 million in the prior-year quarter. Capital expenditure totaled $18.2 million, down 24.1% year over year.

Conclusion

Shiloh Industries currently has a market capitalization of $125.4 million. Further increases in the company’s new business wins as well as rise in light vehicle production in its prime operating areas will prove advantageous for it.

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 ArcelorMittal (NYSE:MT) sporting a Zacks Rank #1 (Strong Buy), Gerdau S.A. (NYSE:GGB) and Ternium S.A. (NYSE:TX) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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