Alloy Steel Inc. (fka AYSI)

[Swick984]

Q2 Recap:

Sales up 8.5%, even though the quarter as likely impacted by the cyclone that hit all Western Australia iron ore operations - https://www.freightwaves.com/news/maritime/20190402-miners-admit-damage-production-losses

Gross profit margins increased and earnings per share excluding the one-time Indonesian land costs / write-offs come out to roughly $0.04 per share using a normal 30% tax rate. Excluding the currency losses (likely due to Indonesia as well), we are closer to $0.048 per share in earnings.

Working capital remains at elevated levels, due to higher A/R and inventory levels, likely due to the disruption caused by Cyclone Veronica at the end of the quarter. I expect a better Q3 as well as the conversion of that excess working capital into even more cash. My estimate is that they have $2.5 million of cash tied up in excess working capital. So the current cash balance of $15.2 million ($0.89 per share) should jump to over $18 million by the end of Q3 (over $1.05 per share in cash).

As discussed, the strong iron ore prices, as well as the increased regulatory pressure of operating in Brazil will provide tailwinds for AYSI's core business for the foreseeable future.