A. Schulman Earnings: Here’s Why the Stock is Up Now

A. Schulman, Inc. (NASDAQ:SHLM) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 3.77%.

A. Schulman, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 27.54% to $0.5 in the quarter versus EPS of $0.69 in the year-earlier quarter.

Revenue: Decreased 3.6% to $548.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: A. Schulman, Inc. reported adjusted EPS income of $0.5 per share. By that measure, the company missed the mean analyst estimate of $0.65. It missed the average revenue estimate of $576.1 million.

Quoting Management: Joseph M. Gingo, Chairman, President and Chief Executive Officer, said, “The weak economic environment in Europe has lingered. We continue to face inconsistent order patterns in our European markets, but the strong performance of our Americas and Asia Pacific segments had helped to offset this challenge in prior periods; however, this did not occur during the fiscal 2013 third quarter, and we have taken the following actions to resolve current challenges:
In Brazil, we began streamlining our costs and consolidating two existing facilities into one new facility. However, the costs and disruption to our Latin American operations and the related requirements to service our customers during the transition were greater than anticipated, which resulted in a negative impact on our third-quarter results. The new plant will be operational during the fiscal 2014 first quarter and will better position us to meet customer demand in an efficient manner.
In Mexico, our operating costs increased as we anticipated improved local market demand that did not materialize. Additionally, we increased capacity needs to serve the shortfall in production caused by the Brazilian consolidation. We have taken actions to better align our capacity with demand; thus our cost structure in Mexico will be more competitive.
We continue to move our global Specialty Powders product family into higher value-added products and optimize our market position. As previously announced, in our Asia Pacific (NASDAQ:APAC) segment we are selling our rotational compounding business in Brisbane, Australia. In June, we decided to downsize capacity in Grand Junction, Tennessee for an expected annual run rate savings of $1.5 million to $1.7 million in fiscal 2014.
As we’ve previously announced, we’ve implemented restructuring in EMEA, which is expected to generate approximately $4 million in annual run rate savings in fiscal 2014, bringing the total annualized run rate savings to approximately $10 million from actions taken since 2010.”

Key Stats (on next page)…

Revenue increased 5.02% from $522.37 million in the previous quarter. EPS increased 85.19% from $0.27 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.56 to a profit $0.58. For the current year, the average estimate has moved down from a profit of $2.18 to a profit of $2.01 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)