23 May 2003
23 May 2003
Weak demand in the European textile/acrylic market, overcapacity and distressed price selling for carbon fiber contributed to a wider net loss in the first quarter for Zoltek Cos. Inc.
The company reported a net loss of $4.3 million, compared to a $1.99 million loss in the same quarter last year. Revenue dropped about 8.6 percent to $15.95 million.
Zsolt Rumy, chairman and chief executive, said the company will continue to face "significant challenges" in improving its operating results in the remainder of the year and in 2004, and said it will "aggressively" sell its existing inventory to generate cash. However, it expects the weak European demand, and distressed price selling will continue to have an impact on its results, as will the downturn in the aircraft brake market from the airline industry recession. The company said it is the leading supplier of carbon fibers used in advanced commercial and military aircraft braking systems.
Finally, Zoltek said it is not in compliance with its debt coverage covenant under its credit agreements as of March 31, and is seeking a waiver from the bank, but said it cannot assure that it will obtain the waiver or obtain it on favorable terms.
In February, Zoltek completed a refinancing package with Southwest Bank and a group of investors, including Rumy and three other board members, who invested $8 million in the company. At the time, Rumy said the refinancing means that the company should have the working capital it needs over the next two years to continue to invest in the application of carbon fibers.