Tough tape today for Alloy Steel International (OTCBB: AYSI.OB), which closed at $1.60 per share, down 36% from yesterday's closing price of $2.50 per share.
Alloy Steel's CFO, Alan Winduss, was kind enough to respond to some questions I posed to him last month (See: "Answers from Alloy Steel's CFO"). Today I sent him an e-mail with the following questions about today's 10Q. If he is nice enough to respond again this time, I'll post his answers on this blog.
1) Why was the inventory (particularly the finished goods) number so high? Does this represent a pending shipment that should show up as revenue in the next quarter?
2) Did the natural gas shortage caused by the Varanus Island explosion reduce customer orders or affect deliveries in deliveries in the June quarter?
3) Did the construction of the new mill affect quarterly revenues? E.g., were workers pulled off of production to help with the construction of the new mill?
4) Are there any other specific factors which contributed to the 40% sequential decline in revenues from the March quarter to the June quarter, or is this just a result of 'lumpiness' of revenue?
5) Do you expect that higher revenue quarters will have higher margins, as a result of better allocation of fixed costs?
6) Did you hire a salesman this past quarter (I noticed you were recruiting one in Western Canada)? Was that part of the increased sales and administrative labor costs you cited as a factor in the higher SG&A?
7) Are you considering any measures to increase communications with shareholders? I know you mentioned during our previous correspondence that you were working to complete the investor section of Alloy Steel's website, but are you considering holding quarterly conference calls or issuing periodic press releases?