Exhibit 99.1
[ZOLTEK logo]
FOR IMMEDIATE RELEASE
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ZOLTEK REPORTS THIRD QUARTER RESULTS
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ST. LOUIS, MISSOURI -- AUGUST 10, 2009 -- Zoltek Companies, Inc.
(Nasdaq: ZOLT) today reported results for the third quarter of its 2009 fiscal
year.
Zoltek's net sales for the third quarter of fiscal 2009, ended June
30, totaled $30.3 million, compared to $45.0 million in the third quarter of
fiscal 2008, a decrease of 32.6%. Zoltek's operating income for the quarter
was essentially break-even (an operating loss of approximately $0.2 million),
which compares with operating income of $7.3 million in the third quarter of
fiscal 2008. Zoltek reported a net loss of $1.4 million in the third quarter
of fiscal 2009, compared to net income of $2.3 million in the third quarter of
fiscal 2008.
For the first nine months of fiscal 2009, Zoltek's net sales
decreased 22.1% at $104.9 million, from $134.6 million in the first nine
months of fiscal 2008. Operating income was $5.3 million for the first nine
months of fiscal 2009, compared to $20.4 million in the first nine months of
fiscal 2008. Zoltek reported a slight net loss (approximately $0.4 million)
for the first nine months of fiscal 2009, compared to net income of $9.2
million in the first nine months of fiscal 2008.
"Our short-term results have been severely affected by a sudden
combination of unfavorable events - truly, a perfect storm," said Zsolt Rumy,
Zoltek's Chairman and Chief Executive Officer. "The good news is that we have
generated positive operating cash flow - both for the quarter and the year.
That should position us to ride out the storm. More than that, we remain as
confident as ever in the long-term future of our business as the world leader
in the commercialization of carbon fibers."
"Almost two years ago," Rumy continued, "we launched a major capacity
expansion program in order to demonstrate that future availability of carbon
fibers would be adequate to meet the anticipated demand. At that time, the
divergence of the commercial markets and the aerospace markets for carbon
fibers seemed virtually complete - due to fantastic growth in the wind turbine
business and significant growth in other commercial applications, combined
with an unprecedented increase in the anticipated aerospace markets demand
resulting from the adaptation of carbon fibers as the primary structural
material in commercial aircraft. Since then, we have seen a sudden, if only
temporary, slowdown in the growth of wind turbine business, combined with a
dramatic decrease in the aerospace market due to the adverse impact of
unexpected delays in the introduction of new jetliners. All of this has led to
blurring the line between commercial and aerospace markets and put a sudden
stop in market expansion."
In addition to the adverse impact of the global economic downturn,
Rumy listed three other key factors leading to declines in revenues, operating
earnings and margins. 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%. Ironically, in the United States, anticipation of greatly
increased government spending aimed at stimulating wind energy production is
having the opposite short-term effect. It has caused many wind farm developers
to delay the
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Zoltek Reports Third Quarter Results
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August 10, 2009
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initiation of new projects - as they wait to see what benefits will be
available from new government programs. At the same time, financing of major
wind farm developments disappeared. The combined effect caused the
introduction of large capacity wind turbines with carbon fiber reinforced
blades to develop slower than expected.
Second, price decreases and the currency fluctuations caused
approximately 50% of the revenue decline. The volume of Zoltek's carbon fibers
shipments declined, but by considerably smaller percentage than net sales.
Although they did not have a corresponding impact on gross margins, falling
raw material and energy costs passed along to customers through decreased
prices, were responsible for a substantial proportion of the decline in sales
in the current year periods.
Third, with the completion of our expansion plans, Zoltek also
essentially doubled its capacity, adding new carbon fiber production lines in
Hungary and Mexico late in fiscal 2008. That capacity came on line just as
world trade dropped and the global economy began to experience the worst
recession in 60 years. While Zoltek is confident that the additional capacity
will be quickly absorbed as soon as the wind energy business returns to a more
robust growth rate and new customers and applications develop, available
unused capacity will continue to be a significant drag on gross margins and
operating income. The now-idled new lines were responsible for $2.6 million in
carrying costs (including depreciation) in the third quarter, without
contributing to revenues or gross profit. Zoltek's gross profit margin
declined from 30.3% in the third quarter of fiscal 2008 to 20.3% in the third
quarter of fiscal 2009. Without the excess capacity charges, gross profit
margins would have been roughly equivalent to fiscal 2008 in the current
quarter and year-to-date. We could take steps to significantly reduce these
charges in the future, but we view this as an investment in maintaining our
facilities and core staff in a ready mode to minimize the cost and time to
restart facilities as the market conditions change. "We launched our capital
expansion program in Hungary and Mexico after four years of strong consistent
growth in revenues and profitability made possible by the emergence of wind
energy as the first large-scale commercial application for carbon fibers
outside of aerospace," Rumy added. "Though 2009 has been an extremely
disappointing year in terms of sales, we are very optimistic that the wind
energy business will return to much higher growth rates and fulfill long-term
expectations of becoming a much bigger part of the energy mix. Additionally,
several other applications - autos, deep sea drilling and infrastructure - are
in advanced stages of development and testing and offer enormous potential.
For all these reasons, we are continuing to work to a plan of achieving $500
million in sales. Our targeted timeframe may now extend past 2012, as
originally planned - but it is still absolutely within our reach."
Zoltek will host a conference call to review third quarter results
and answer questions on Tuesday, August 11, 2009, at 10:00 am CT. The
conference dial-in number is (877) 440-5807. The confirmation code is 9248603.
Individuals who wish to participate should dial in 5 to 10 minutes prior to
the scheduled start time. This conference call will also be webcast on
Zoltek's website - under "Investor Relations - Events & Presentations." The
webcast replay will be available on the website several hours after the call.
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August 10, 2009
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FOR FURTHER INFORMATION CONTACT:
ZSOLT RUMY, CHAIRMAN AND CEO
3101 MCKELVEY ROAD
ST. LOUIS, MO 63044
(314) 291-5110
This press release contains certain statements that constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words "expect," "believe," "goal," "plan,"
"intend," "estimate," and similar expressions and variations thereof are
intended to specifically identify forward-looking statements. Those statements
include statements regarding the intent, belief or current expectations of us,
our directors and officers with respect to, among other things: (1) our
financial prospects; (2) our growth strategy and operating strategy, including
our focus on facilitating acceleration of the introduction and development of
mass market applications for carbon fibers; (3) our current and expected
future revenue; and (4) our ability to complete financing arrangements that
are adequate to fund current operations and our long-term strategy.
This press release also contains statements that are based on the current
expectations of our company. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
The factors that might cause such differences include, among others, our
ability to: (1) successfully adapt to recessionary conditions in the global
economy; (2) penetrate existing, identified and emerging markets, including
entering into new supply agreements with large volume customers; (3) continue
to improve efficiency at our manufacturing facilities on a timely and
cost-effective basis to meet current order levels of carbon fibers; (4)
successfully add new planned capacity for the production of carbon fiber and
precursor raw materials and meet our obligations under long-term supply
agreements; (5) maintain profitable operations; (6) increase our borrowing at
acceptable costs; (7) manage changes in customers' forecasted requirements for
our products; (8) continue investing in application and market development in
a range of industries; (9) manufacture low-cost carbon fibers and profitably
market them despite increases in raw material and energy costs; (10)
successfully operate our Mexican facility to produce acrylic fiber precursor
and add carbon fiber production lines; (11) resolve the pending non-public,
fact-finding investigation being conducted by the Securities and Exchange
Commission; (12) successfully continue operations at our Hungarian facility if
natural gas supply disruptions occur; (13) successfully prosecute patent
litigation; and (14) manage the risks identified under "Risk Factors" in our
filings with the SEC. Because forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or
quantified, you should not rely upon forward-looking statements as predictions
of future events. The events and circumstances reflected in the
forward-looking statements may not be achieved or occur and actual results
could differ materially from those projected in the forward-looking
statements.
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ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
June 30, June 30,
2009 2008
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Net sales................................................................................. $ 30,306 $ 44,950
Cost of sales, excluding available unused capacity costs.................................. 21,515 31,320
Available unused capacity costs........................................................... 2,631 -
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Gross profit........................................................................ 6,160 13,630
Application and development costs......................................................... 2,063 1,982
Selling, general and administrative expenses.............................................. 4,322 4,377
OPERATING (LOSS) INCOME................................................................... (225) 7,271
Interest income........................................................................... 18 543
Gain (loss) on foreign currency transactions.............................................. 842 (2,081)
Other, net................................................................................ 51 (23)
Interest expense, excluding amortization of financing fees and debt discount.............. (305) (288)
Amortization of financing fees and debt discount.......................................... (1,137) (1,648)
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(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES......................................... (756) 3,774
Income tax expense........................................................................ 673 1,465
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NET (LOSS) INCOME......................................................................... $ (1,429) $ 2,309
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Basic and diluted (loss) income per share................................................. $ (0.04) $ 0.07
Weighted average common shares outstanding - basic........................................ 34,396 34,201
Weighted average common shares outstanding - diluted...................................... 34,396 34,215
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ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
(Unaudited)
Nine Months Ended
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June 30, June 30,
2009 2008
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Net sales................................................................................. $ 104,941 $ 134,603
Cost of sales, excluding available unused capacity costs.................................. 75,020 96,181
Available unused capacity costs........................................................... 4,382 -
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Gross profit........................................................................ 25,539 38,422
Application and development costs......................................................... 5,513 5,939
Selling, general and administrative expenses.............................................. 14,726 12,103
OPERATING INCOME.......................................................................... 5,300 20,380
Interest income........................................................................... 343 2,581
Gain (loss) on foreign currency transactions.............................................. 2,092 (2,011)
Other, net................................................................................ (409) (460)
Interest expense, excluding amortization of financing fees and debt discount.............. (1,250) (1,340)
Amortization of financing fees and debt discount.......................................... (4,694) (5,045)
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INCOME FROM OPERATIONS BEFORE INCOME TAXES.......................................... 1,382 14,105
Income tax expense........................................................................ 1,803 4,874
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NET (LOSS) INCOME......................................................................... $ (421) $ 9,231
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Basic and diluted (loss) income per share................................................. $ (0.01) $ 0.27
Weighted average common shares outstanding - basic........................................ 34,401 33,951
Weighted average common shares outstanding - diluted...................................... 34,401 34,040
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CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share and per share data)
(Unaudited)
June 30, September 30,
2009 2008
ASSETS
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Current assets:
Cash and cash equivalents................................................................. $ 17,246 $ 29,224
Restricted cash........................................................................... - 23,500
Accounts receivable, less allowance for doubtful accounts of $1,734 and
$1,754, respectively................................................................... 29,402 42,690
Inventories, net.......................................................................... 51,802 45,659
Other current assets...................................................................... 10,975 9,432
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Total current assets.................................................................. 109,425 150,505
Property and equipment, net.................................................................... 253,659 288,894
Other assets................................................................................... 407 765
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Total assets.......................................................................... $ 363,491 $ 440,164
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Legal liabilities......................................................................... $ - $ 29,083
Credit lines.............................................................................. 11,750 5,175
Current maturities of long-term debt...................................................... 6,145 7,426
Trade accounts payable.................................................................... 8,593 15,093
Accrued expenses and other liabilities.................................................... 6,511 9,278
Construction payables..................................................................... 693 8,450
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Total current liabilities............................................................. 33,692 74,505
Long-term debt, less current maturities........................................................ 1,117 3,562
Hungarian grant, long-term .................................................................... 10,030 10,882
Deferred tax liabilities....................................................................... 8,636 4,521
Other long-term liabilities.................................................................... 21 28
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Total liabilities..................................................................... 53,496 93,498
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Commitments and contingencies.................................................................. - -
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
no shares issued and outstanding........................................................ - -
Common stock, $.01 par value, 50,000,000 shares authorized,
34,394,441 and 34,389,428 shares issued and outstanding at
June 30, 2009 and September 30, 2008, respectively..................................... 344 344
Additional paid-in capital................................................................ 493,560 491,175
Accumulated other comprehensive (loss) income............................................. (26,905) 11,730
Accumulated deficit ...................................................................... (157,004) (156,583)
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Total shareholders' equity............................................................ 309,995 346,666
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Total liabilities and shareholders' equity............................................ $ 363,491 $ 440,164
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OPERATING SEGMENTS SUMMARY
(Amounts in thousands)
(Unaudited)
THREE MONTHS ENDED JUNE 30, 2009
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CARBON TECHNICAL CORPORATE/
FIBERS FIBERS OTHER TOTAL
------ ------ ----- -----
Net sales.............................................. $ 25,012 $ 4,652 $ 642 $ 30,306
Cost of sales.......................................... 17,204 3,729 582 21,515
Available unused capacity costs........................ 2,392 239 - 2,631
Gross profit........................................... 5,416 684 60 6,160
Operating income (loss)................................ 2,284 297 (2,806) (225)
Depreciation........................................... 3,259 413 296 3,968
Capital expenditures................................... 2,374 47 - 2,421
THREE MONTHS ENDED JUNE 30, 2008
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CARBON TECHNICAL CORPORATE/
FIBERS FIBERS OTHER TOTAL
------ ------ ----- -----
Net sales.............................................. $ 37,689 $ 6,487 $ 774 $ 44,950
Cost of sales.......................................... 25,121 5,323 876 31,320
Gross profit........................................... 12,568 1,164 (102) 13,630
Operating income (loss)................................ 9,931 651 (3,311) 7,271
Depreciation........................................... 3,670 375 252 4,297
Capital expenditures................................... 31,959 439 27 32,425
NINE MONTHS ENDED JUNE 30, 2009
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CARBON TECHNICAL CORPORATE/
FIBERS FIBERS OTHER TOTAL
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Net sales.............................................. $ 86,641 $ 16,407 $ 1,893 $ 104,941
Cost of sales.......................................... 61,085 12,363 1,572 75,020
Available unused capacity costs........................ 3,594 788 - 4,382
Gross profit........................................... 21,962 3,256 321 25,539
Operating income (loss)................................ 13,518 1,430 (9,648) 5,300
Depreciation........................................... 9,923 1,222 849 11,994
Capital expenditures................................... 14,737 584 154 15,475
NINE MONTHS ENDED JUNE 30, 2009
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CARBON TECHNICAL CORPORATE/
FIBERS FIBERS OTHER TOTAL
------ ------ ----- -----
Net sales.............................................. $ 113,666 $ 18,084 $ 2,853 $ 134,603
Cost of sales.......................................... 79,552 14,120 2,509 96,181
Gross profit........................................... 34,114 3,964 344 38,422
Operating income (loss)................................ 28,091 1,593 (9,304) 20,380
Depreciation........................................... 9,200 1,384 875 11,459
Capital expenditures................................... 53,598 1,062 2,470 57,130