Yael Pipano

Alloy Steel Submits the Perfect Quarter

ROA: 38% , double WOW..

Alloy Steel Submits the Perfect Quarter

Revenues (in thousands)

June 08: 2,542
March 08: 4,200
December 07: 3,180
September 07: 3,434
June 07: 1,884
March 07: 1,754
December 06: 1,658
September 06: 929
June 06: 795

Wow!

Alloy Steel Submits the Perfect Quarter

anybody know, now that it's mid August, what is the update on the below?:
The quenched & tempered (QT) carbon steel plate that Alloy Steel Int'l will be replacing (as soon as they patent the process and commercialize it around mid August 2008), is estimated to have a current $3 billion+ market worldwide. Potential customers such as BHP, CVRD, Rio Tinto, Xstrata and Codelco are nothing to sneeze at!

Alloy Steel Submits the Perfect Quarter

6 months ended march 31 2008 & 2007 respectively:
The increase in gross profit margin (from 48% to 52%) has been achieved through negotiation of better raw materials prices for some supplies during the period, as well as increased production through the mill without the need to increase direct labor costs.

Alloy Steel International: Explosive Growth at a Reasonable Price

Most important point to take away from all this Fredman is:
The quenched & tempered (QT) carbon steel plate that Alloy Steel Int'l will be replacing (as soon as they patent the process and commercialize it around mid August 2008), is estimated to have a current $3 billion+ market worldwide. Potential customers such as BHP, CVRD, Rio Tinto, Xstrata and Codelco are nothing to sneeze at!

Alloy Steel International: Explosive Growth at a Reasonable Price

According to the info on their website there is no substitute for their product (which is patented), so no competition...

Alloy Steel International: Explosive Growth at a Reasonable Price

as of today: NEW ARCOPLATE PRODUCTION MILL

The Directors of Alloy Steel International, Inc. have been advised by the Company's Engineering Department that the new Arcoplate Production Mill is expected to be ready for trialing in June 2008.

This is a realistic target date which will only not be met if there is a delay in the supply of machine components from local and international suppliers. At this point in time, we are not aware of any possible delays.

Testing and real time proving production runs are expected to take approximately six weeks, and on this basis, the machine should be producing commercial product prior to the end of August 2008.

As the new production mill has a significant amount of new innovations, including mechanical, electronic and parameter control software, we have allowed additional time of six weeks for proving and tuning.

The Company is at present looking at patent protection for the new innovations.

Alloy Steel International: Explosive Growth at a Reasonable Price

good news on Alloy:NEW Arcoplate Super Plate


22 February, 2008
The company through its manufacturing subsidiary Alloy Steel Australia (Int) Pty Ltd, has successfully concluded preliminary proving trials on developing new technology that will allow the company to produce a much thicker alloy deposit (“SUPER ARCOPLATE”) in a single pass using the company’s unique patented manufacturing method. To the best of the company’s knowledge no other manufacturer of clad wear plate can offer the market anything thicker in an alloy clad overlay than 5/16th or 7.5mm in a single pass as we can do with the new “SUPER ARCOPLATE”

The new plate has a 16mm (3/4”) alloy overlay bonded to an 11mm (1/2”) mild steel backing plate using a single manufacturing pass.

Conventional weld overlay plates from other manufacturers which do not compare with the new single pass 16mm (3/4) alloy may need up to 5 overlay passes to achieve the same thickness during its manufacture. Multiple passes caused by the bulk welding method create both structural and metallurgical weaknesses and in the wearplate and in many cases the material is subject to premature failure when in service.

The company believes that with the single pass technology the new “SUPER ARCOPLATE” will outlast the plate presently being used by consumers by up to 10 times even though it is less than half the thickness of the current plate used.

The new plate has a total thickness of 1¼” or 28mm and will replace quenched and tempered (QT) carbon steel plate of up to 4”or 100mm thick in surge bins, feed hoppers and shutes in most mineral mining operations.

Users of this type of plate are mining giants such as BHP Billiton, CVRD, Rio Tinto, Xstrata and Codelco.

The company estimates that the market worldwide for (QT) and foundry cast white iron castings wearplate used in these applications to be in excess of 3 billion dollars.

The new thicker “SUPER ARCOPLATE” has the potential to capture a significant portion of that market where down time is a critical factor in the mining or mineral processing operation.

The company anticipates releasing the “SUPER ARCOPLATE” commercially on to the market in the second half of this year.

Alloy Steel International: Explosive Growth at a Reasonable Price

remarkl: here's some communication for you-
Just called Australia and talked with CFO 13-Feb-08 08:01 pm
Allen Winduss. This is a copy of my post on Value Microcaps where my screenname is Wadegarret.

He was very knowledgable, and I have good news! I will go over one by one the questions I asked him. He was in a hurry to get to a meeting, so I had to go kind of quick.

The men work 6-6.5 days/week. In the Dec qtr, there were around 14 days of downtime, however in the Mar qtr there is expected to be only 4 days. He couldn't remember the number of days down in the Sept qtr, but there were little. I then asked about the second shift. The second shift worked 95% in the Sept qtr, but only 60-70% in the Dec qtr, and are expected to work 100% in the Mar qtr.

Next topic was margins- They were bad in the Dec qtr for a couple reasons. First there was a sudden chrome and steel cost increase in the Dec qtr which was temperary, and has already come back down to about Sept qtr levels for the Mar qtr. Second, they had a couple of large contracts they had to get out which brought lower margins than normal.

Next I asked about seasonality- there isn't much, except that the Dec qtr is usually their weakest because of so much downtime. I asked when the second Mill was going in production. Alan told me by July. I then asked him what tax rate going forward- he said 30%.

Alloy Steel International: Explosive Growth at a Reasonable Price

Sorry Brett, the gross profit actually increased by $500,000, that's what I wanted to see! Especially if it is organic! How'd you find this company and all the info on it?

Alloy Steel International: Explosive Growth at a Reasonable Price

Brett: you are misleading about the 155% growth in sales and the 25% reduction in SG&A. The following was taken directly from the company's 10Q filing for 12/31/07 and shows a reduction of almost $500,000 in gross profit due to things that really count which are COGS consisting of material costs and labor. In the grand scheme of things SG&A is an unimportant factor, especially when raw materials for steel are on a huge rising trend. From 10QSB: Alloy Steel had cost of sales of $1,800,866 for the three months ended December 31, 2007, compared to $738,563 for the three months ended December 31, 2006. The gross profit amounted to $1,379,473 for the three months ended December 31, 2007, compared to $919,744 for the three months ended December 31, 2006. The gross profit percentage decreased from 55.5% to 43.4%. The decrease in gross profit percentage is attributable mainly to increased raw material and direct labor costs which has decreased margins on our products sold.