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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (25911)	2/2/2007 1:16:00 PM
From: gcrispin	Respond to of 78702

"It appears that management came through with a better than expected report." I don't agree. The consensus estimate for the fourth quarter was 17 cents, so it looks like they missed by two cents. A couple of other points from the quarter: "Consolidated net sales for the first quarter were $411.9 million, compared to $480.4 million versus the same period last year. Declines in the residential housing market contributed to lower revenues, but the resulting decline in volumes was partially offset by product price increases." This stock is as much a play on housing starts as it is on water infrastructure. "U.S. Pipe operating income was $7.2 million, compared to a loss of $27.8 million in the prior period, which included $40.0 million of closure costs related to the Chattanooga valve and hydrant plant." If you take out the restructuring charge,the operating income for US Pipe was down. Anvil Segment "Operating income was $13.0 million versus a loss of $1.5 million during last year's first quarter. Excluding the prior year acquisition-related inventory charges of $12.2 million, operating income increased $2.3 million, primarily due to higher pricing and approximately $1.2 million of dumping duty proceeds awarded by the federal government." Higher pricing and one time charge led to the increase in this division. It appears to me that lots of restructuring charges are built into the earnings report. The company cut their debt which helps with interest expense. But there are just too many moving parts in the financials for me to see this as a pure water infrastructure play that is increasing sales. The company isn't overly expensive, but I'm not sure if they will make their yearly estimates without lots of restructuring charges. Just my opinion, of course. Good luck with your investment.