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Zoltek Reports Strong Growth In Third Quarter Sales

Zoltek will host a conference call to review third quarter results and answer questions on Tuesday, August 10, 2010, at 10:00 am CT. The conference dial-in number is (888) 724-9507. The confirmation code is 6091745. Individuals who wish to participate should dial in 5 to 10 minutes prior to the scheduled start time. This conference call will also be webcast on Zoltek's website ― under "Investor Relations – Events & Presentations." The webcast replay will be available on the website several hours after the call.

This press release contains certain statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "believe," "goal," "plan," "intend," "estimate," and similar expressions and variations thereof are intended to specifically identify forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of us, our directors and officers with respect to, among other things: (1) our financial prospects; (2) our growth strategy and operating strategy, including our focus on facilitating acceleration of the introduction and development of mass market applications for carbon fibers; (3) our current and expected future revenue; and (4) our ability to complete financing arrangements that are adequate to fund current operations and our long-term strategy.

This press release also contains statements that are based on the current expectations of our company. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, our ability to: (1) successfully adapt to recessionary conditions in the global economy and substantial volatility in order rates from our wind energy customers; (2) penetrate existing, identified and emerging markets, including entering into new supply agreements with large volume customers; (3) continue to improve efficiency at our manufacturing facilities on a timely and cost-effective basis to meet current order levels of carbon fibers; (4) successfully add new planned capacity for the production of carbon fiber and precursor raw materials and meet our obligations under long-term supply agreements; (5) maintain profitable operations; (6) increase or maintain our borrowing at acceptable costs; (7) manage changes in customers' forecasted requirements for our products; (8) continue investing in application and market development for a range of applications; (9) manufacture low-cost carbon fibers and profitably market them despite fluctuations in raw material and energy costs; (10) successfully operate our Mexican facility to produce acrylic fiber precursor and carbon fibers; (11) resolve the pending non-public, fact-finding investigation being conducted by the Securities and Exchange Commission; (12) successfully continue operations at our Hungarian facility if natural gas supply disruptions occur; (13) successfully prosecute patent litigation; (14) successfully implement and coordinate our alliance with Global Blade Technology; (15) successfully facilitate adoption of our carbon fibers by the auto industry for use in high-volume applications; and (16) manage the risks identified under "Risk Factors" in our filings with the SEC. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except share and per share data)
(Unaudited)
     
  Three Months Ended
  June 30, June 30,
  2010 2009
Net sales $42,448 $30,306
Cost of sales, excluding available unused capacity costs 34,333 21,515
Available unused capacity costs 3,460 2,631
 Gross profit 4,655 6,160
Application and development costs 2,079 2,063
Selling, general and administrative expenses 3,455 4,322
Operating loss (879) (225)
Interest income 3 18
(Loss) gain on foreign currency transactions (361) 842
Other income 155 51
Gain on derivative liabilities 737 --
Interest expense, excluding amortization of financing fees and debt discount (83) (305)
Amortization of financing fees and debt discount -- (1,137)
 Loss before income taxes (428) (756)
Income tax expense 16 673
Net loss ($444) ($1,429)
     
Basic and diluted loss per share ($0.01) ($0.04)
     
Weighted average common shares outstanding - basic 34,405 34,396
     
Weighted average common shares outstanding - diluted 34,405 34,396
     
 
ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except share and per share data)
(Unaudited)
     
  Nine Months Ended
  June 30, June 30,
  2010 2009
Net sales $97,344 $104,941
Cost of sales, excluding available unused capacity costs 76,776 75,020
Available unused capacity costs 10,514 4,382
Gross profit 10,054 25,539
Application and development costs 6,029 5,513
Selling, general and administrative expenses 12,699 14,726
Operating (loss) income (8,674) 5,300
Interest income 17 343
(Loss) gain on foreign currency transactions (397) 2,092
Other income (expense), net (476) (409)
Gain on derivative liabilities 1,870 --
Interest expense, excluding amortization of financing fees and debt discount (347) (1,250)
Amortization of financing fees and debt discount (289) (4,694)
(Loss) income before income taxes (8,296) 1,382
Income tax expense (benefit) (2,383) 1,803
Net loss ($5,913) ($421)
     
Basic and diluted loss per share ($0.17) ($0.01)
     
Weighted average common shares outstanding - basic 34,416 34,401
     
Weighted average common shares outstanding - diluted 34,416 34,401
     
ZOLTEK COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share and per share data)
(Unaudited)
     
  June 30, September 30,
  2010 2009
Assets    
Current assets:    
Cash and cash equivalents $18,618 $20,943
Accounts receivable, less allowance for doubtful accounts of $186 and $2,356, respectively 28,966 30,507
Inventories, net 35,308 48,058
Other current assets 8,435 10,100
Total current assets 91,327 109,608
Property and equipment, net 219,166 256,910
Other assets 205 327
Total assets $310,698 $366,845
     
Liabilities and Shareholders' Equity    
Current liabilities:    
Borrowings under credit lines $7,980 $12,277
Current maturities of long-term debt 1,006 4,159
Trade accounts payable 5,886 9,408
Accrued expenses and other liabilities 7,587 6,845
Construction payables 592 792
Total current liabilities 23,051 33,481
Long-term debt, less current maturities -- 981
Hungarian grant, long-term 8,069 10,228
Deferred tax liabilities 2,289 6,690
Derivative liabilities 1,408 --
Total liabilities 34,817 51,380
Commitments and contingencies    
Shareholders' equity:    
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued and outstanding -- --
Common stock, $.01 par value, 50,000,000 shares authorized, 34,401,942 and 34,424,441 shares issued and outstanding at June 30, 2010 and September 30, 2009, respectively 344 344
Additional paid-in capital 480,315 494,311
Accumulated other comprehensive loss (50,637) (18,405)
Accumulated deficit (154,141) (160,785)
Total shareholders' equity 275,881 315,465
Total liabilities and shareholders' equity $310,698 $366,845
     
 
ZOLTEK COMPANIES, INC.
OPERATING SEGMENTS SUMMARY
(Amounts in thousands)
(Unaudited)
         
  Three Months Ended June 30, 2010
  Carbon Technical Corporate/  
  Fibers Fibers Other Total
Net sales $35,260 $6,771 $417 $42,448
Cost of sales, excluding available unused  capacity costs 28,914 5,187 232 34,333
Available unused capacity costs 3,189 271 -- 3,460
Gross profit 3,157 1,313 185 4,655
Operating income (loss) 1,279 1,065 (3,223) (879)
Depreciation 3,369 349 212 3,930
Capital expenditures 757 16 -- 773
         
  Three Months Ended June 30, 2009
  Carbon Technical Corporate/  
  Fibers Fibers Other Total
Net sales $25,012 $4,652 $642 $30,306
Cost of sales, excluding available unused  capacity costs 17,204 3,729 582 21,515
Available unused capacity costs 2,392 239 -- 2,631
Gross profit 5,416 684 60 6,160
Operating income (loss) 2,284 297 (2,806) (225)
Depreciation 3,259 413 296 3,968
Capital expenditures 2,374 47 -- 2,421
         
  Nine Months Ended June 30, 2010
  Carbon Technical Corporate/  
  Fibers Fibers Other Total
Net sales $78,856 $17,174 $1,314 $97,344
Cost of sales, excluding available unused  capacity costs 62,293 13,469 1,014 76,776
Available unused capacity costs 9,349 1,165 -- 10,514
Gross profit 7,214 2,540 300 10,054
Operating income (loss) 944 1,857 (11,475) (8,674)
Depreciation 10,082 1,241 1,024 12,347
Capital expenditures 1,966 528 384 2,878
         
  Nine Months Ended June 30, 2009
  Carbon Technical Corporate/  
  Fibers Fibers Other Total
Net sales $86,641 $16,407 $1,893 $104,941
Cost of sales, excluding available unused  capacity costs 61,085 12,363 1,572 75,020
Available unused capacity costs 3,594 788 -- 4,382
Gross profit 21,962 3,256 321 25,539
Operating income (loss) 13,518 1,430 (9,648) 5,300
Depreciation 9,923 1,222 849 11,994
Capital expenditures 14,737 584 154 15,475
         
CONTACT:  Zoltek Companies, Inc.
          Zsolt Rumy, Chairman and CEO
          (314) 291-5110
          3101 McKelvey Road 
          St. Louis, MO 63044

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