Zoltek Companies, Inc. (NASDAQ:ZOLT) was a great success story during the boom of energy and alternative energy. But since that bubble popped, its bubble has burst as well. Its shares are getting hammered again after it reported results for the third quarter of its fiscal 2009. Zoltek’s revenues were down essentially by one-third from a year ago and came to $30.3 million. It also saw a drop of 32.6% in operating income and was almost break-even. It was actually a loss of $200,000.00, down from operating income of $7.3 million a year ago.
The company said short-term results have “been severely affected by a sudden combination of unfavorable events…” It has generated positive operating cash flow for the quarter and the year, which it says “should position us to ride out the storm.”
The company’s past capacity expansion program for carbon fibers production turned out to be a bad bet considering the slowdown in growth of wind turbine business and a huge decrease in the aerospace market. three other factors leading to a drop in revenue and income are:
First, after years of growing at a 20-25% annual rate, worldwide growth in electricity generation from wind energy has slowed to an estimated 10%.
Second, price cuts and currency fluctuations caused approximately 50% of the revenue decline. Third, the completion of capacity expansion plans came on line at the time of the recession.
As far as guidance, Zoltek continues to believe that the wind energy business will return to much higher growth rates, and noted that autos, deep sea drilling and infrastructure are in advanced development and testing stages that could bring back growth. The company said it is continuing to work toward reaching $500 million in sales, but said that its own targeted time frame may now extend past 2012.
Zoltek is down almost 20% this morning at $8.21 and the 52-week range is $4.29 to $21.02. We have also already seen over a full day’s volume as the volume is over 400,000 shares.
Jon C. Ogg
August 11, 2009
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