Akron, Ohio-based plastic compounds and resins supplier A. Schulman, Inc. (SHLM) posted a fourth-quarter net loss due to unusual costs. On an adjusted basis, earnings per share beat analysts' estimates. Sales for the quarter fell 35% due to lower volumes, while gross margin improved by16.3%.
For the fourth quarter ended August 31, net loss applicable to common stock was $7.9 million or $0.30 per share compared with profit of $4.7 million or $0.17 per share a year ago. Translation impact of foreign currencies dented the result by $1.6 million. The result also reflects restructuring expense of $2 million, asset impairment charge of $10.4 million, and other employee termination costs of $0.9 million for the recent quarter.
Excluding unusual items, earnings were $5.4 million or $0.21 per share compared with $6.8 million or $0.26 per share for the fourth quarter in 2008. On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.16 per share. Analysts' estimates typically exclude one-time items.
Income from continuing operations declined to $3.2 million or $0.12 per share from $8.6 million or $0.32 per share for the prior-year quarter.
Fourth-quarter net sales decreased 35.3% to $320.6 million from $495.8 million for the year-ago quarter. Analysts were looking for revenue of $296.79 million for the quarter. Tonnage were down 21.8% owing to sluggish market and exclusion of low margin business. Gross margin reached 16.3%, compared with 12.1% a year ago.
Chief Executive Joseph Gingo said, "We are encouraged that, despite significantly lower volumes, our strategic efforts to focus on higher-value-added products and reduce operating costs have resulted in strong margin gains compared with the fiscal third quarter and the prior-year fourth quarter."
Segmentally, Europe sales decreased 35.3% to $236.1 million from $365.1 million for the prior-year period. Tonnage decreased 19.8%; the translation effect of foreign currency, primarily the euro, reduced sales by an incremental 7.3%.
Sales in NAMB decreased to $25.9 million from $46.6 million, while NADS sales fell down to $14.1 million from $34.2 million a year ago.
Asian sales were up 2.9% to $14.3 million from $13.9 million, with gross margins increasing to 17.4% of sales compared with 12.5% for the prior-year period and volume increasing 16.6%.
The company also said the decline in tonnage reflected the continuation of weak end-markets and efforts in the North American Engineered Plastics segment to move away from low-margin business.
For fiscal 2009, the company posted a net loss of $2.83 million or $0.11 per share compared with net income of $17.99 million or $0.66 per share for fiscal 2008. Translation effect of foreign currencies reduced net income by $7.3 million. Excluding unusual items, earnings were $16.4 million or $0.64 per share compared with $37.1 million or $1.36 per share a year ago.
Analysts' earnings estimates were $0.52 per share, on revenue of $1.26 billion.
Net sales for the period were $1.28 billion, down 35.5% from $1.98 billion last year. Gross margin were 13.3%, compared with 11.8% a year ago.
Looking ahead to fiscal 2010, the company said it anticipates continuing gradual improvement in its master-batch operations and a possible return to lower levels in its Engineered Plastics division until the economy reflects a sustained upswing in durable goods consumption.
SHLM is currently trading up 4.71% at $20.46 on the Nasdaq, higher 92 cents.
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