AEP Industries Q2 net sales decreased $18.3 million
Staff Writer |
AEP Industries reported financial results for its third quarter ended July 31, 2016. Net sales decreased $18.3 million, or 6%, to $283.7 million as compared to Q3 2015.
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The decrease in net sales was the result of a 4% decrease in average selling prices, primarily due to the pass through of lower resin costs, and a 2% decrease in sales volume compared to the same period in the prior fiscal year.
Volume in the prior fiscal year third quarter benefited from customers' buying in to the expected resin price increase while we believe customers in the current fiscal year third quarter delayed purchases in anticipation of a decrease in resin prices.
Net sales for the nine months ended July 31, 2016 decreased $52.7 million, or 6%, to $810.4 million as compared to the same period in the prior fiscal year.
The decrease in net sales for the nine months ended July 31, 2016 was the result of a 7% decrease in average selling prices, primarily due to the pass through of lower resin costs, partially offset by a 2% increase in sales volume compared to the same period in the prior fiscal year.
Net sales for the three and nine months ended July 31, 2016 included a $0.9 million and $4.5 million, respectively, negative impact of foreign exchange relating to the company's Canadian operations.
Gross profit for the third quarter of fiscal 2016 was $46.2 million, a decrease of $2.0 million, or 4%, compared to the same period in the prior fiscal year.
Excluding the impact of the LIFO reserve change of $0.9 million year-over-year, gross profit decreased $1.1 million as compared to the same period in the prior fiscal year primarily resulting from a decrease in volumes sold.
Excluding the impact of increasing the LIFO reserve during the third quarter of fiscal 2016 by approximately $0.02 per pound, gross profit per pound in the third quarter fiscal 2016 was $0.20 per pound.
Gross profit for the nine months of fiscal 2016 was $144.0 million, an increase of $13.5 million, or 10%, compared to the same period in the prior fiscal year.
Excluding the impact of the LIFO reserve change of $14.9 million year-over-year, gross profit increased $28.4 million as compared to the same period in the prior fiscal year primarily resulting from improved material margins and increased volumes sold.
Excluding the impact of LIFO during the periods, gross profit per pound for the nine months ended July 31, 2016 was $0.20 per pound as compared to $0.17 per pound in the prior fiscal year period.
Operating expenses for the third quarter of fiscal 2016 were $32.4 million, an increase of $0.1 million, or 0.3%, compared to the same period in the prior fiscal year primarily due to an increase in share-based compensation expense associated with the company's performance units, partially offset by a decrease in fuel costs and a decrease in bad debt expense primarily due to a customer's bankruptcy filing in the prior year period.
Operating expenses for the nine months of fiscal 2016 were $87.4 million, a decrease of $0.9 million, or 1%, compared to the same period in the prior fiscal year. Operating expenses for the current period were also positively impacted by foreign exchange related to the company's Canadian operations.
Interest expense for the three and nine months ended July 31, 2016 decreased $0.1 million and $0.6 million, respectively, as compared to the prior year periods primarily resulting from lower average borrowings under the company's U.S. credit facility during the comparable periods.
Net income for the three months ended July 31, 2016 was $6.3 million, or $1.22 per diluted share, as compared to net income of $6.6 million, or $1.28 per diluted share, for the three months ended July 31, 2015.
Net income for the nine months ended July 31, 2016 was $27.9 million, or $5.44 per diluted share, as compared to net income of $18.2 million, or $3.56 per diluted share, for the nine months ended July 31, 2015. ■