(NYSE Amex: CCF)
today reported revenues of $32.1 million for the quarter ended November 30, 2011. This represents an increase of 2.6% compared to $31.3 million in first quarter of last year. Net income of $2.33 million decreased $0.6 million from $2.93 million in the prior year period. Earnings per diluted share of $0.26 in the first quarter of fiscal 2012 fell short of the $0.33 per share in fiscal 2011.
Peter R. Chase, Chairman and Chief Executive Officer commented: “While revenues were up slightly from the first quarter of fiscal 2011, profit dropped due to a lower margin product mix, a lag in selling price adjustments to cover raw material cost increases and a few costs of a special nature.
“In the Construction Materials segment sales were strong in pipeline commodities while water containment specialty items were substantially lower than in the previous year's first quarter. In addition, European-produced pipeline products, while increasing significantly in revenue, still retained a higher than normal scrap rate as a result of some processing issues which began in the previous year. We are confident that the quality issues of this period are under control and margins are expected to improve as the year progresses. New orders show that the market is healthy and demand is strong. As we have noted in the past the project-oriented nature and seasonality of this segment make for a certain amount of volatility from quarter to quarter.
“Industrial Materials performed as expected and we project steady results throughout the year.
“Selling price adjustments have lagged raw material cost increases and in some cases cannot be fully recovered in the short run due to customer notice requirements, customary price change dates and competition.
“Certain supplier inconsistencies have resulted in excess waste and some customer adjustments. While we believe these are now behind us they added to expense over the past six months for the reasons described above as well as additional analytical work required to isolate out-of-specification chemicals. This was costly due to the utilization of specialized test facilities using sophisticated equipment. This process is now internal as we have set up our own test operation which will not only fulfill needs for incoming material screening but will also aid in new product development efforts. We feel very strongly that building in additional safeguards will improve quality and costs as well.