ZOLT Message Board - Msg: 1212819

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Non-Tech : ZOLT

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To: charlie sawyer who wrote (192)	4/17/1997 4:12:00 PM
From: Rob Bonner	of 970

To all: I just got off the phone with the company's IR department. Earnings for this quarter will be out tonight. I hope they don't dissapoint but I am afraid that an earnings dissapointment is due some time in the next few quarters. Viscoca contributed $49 million in FY 96 earnings compared with $20 million for carbon fiber. Current capacity for carbon fiber has remained at 3.5 million pounds. This includes output from the only continuous carbon fiber line in production as well as the batch process facility (Pyron) at the St. Charles plant. Revenue growth in carbon fiber was only up 8% in the first (Dec) quarter over the year earlier and I don't see how this can improve until the five planned new lines are generating revenues. The company expects that will be in the fourth quarter. Revenues and profits at Viscosa have likely improved dramatically since ZOLT took over but how much can they get out of that facility. I do not have figures on a quarterly basis for the Viscosa facility and therefore cannot predict when the year over year earnings increases will start to look sick in relation to the P/E ratio. Also the profit margin is a lot lower in this business than in carbon fiber and Viscosa now contributes the lion's share og the revenues. I wasn't willing to take the risk and sold out today. I hope you all get a pleasant earnings surprise this quarter but would suggest selling into any strength (Only my opinion based on what facts I could get). I will look at buying back in when their production technology is proven and we have several quarters of carbon fiber production off of the new lines to base an investment decision on. Good luck! Rob

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