Material Sciences Earnings Call Insights: Gross Margins and Changing Costs
Material Sciences Corporation (NASDAQ:MASC) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.
Steven Schwartz – First Analysis: I guess the first question is just around gross margin. In the second quarter, you had some unscheduled downtime and then, Cliff, you just mentioned you had a little bit in the third quarter as well, but really you saw 190 basis point sequential improvement in gross margin on a very little change in sales sequentially. So, is it just that there was less of this unscheduled downtime or were there other factors that helped get you that 190 basis points?
James Pawlak – VP, CFO: The sales mix can have a dramatic change on just a point or two margin either way. We could have done better than 23.8% in the quarter, but once again we continued to have some productivity problems and some downtime, not just associated with equipment downtime, but also some of the product development efforts that we are doing at both Walbridge and Elk Grove Village this has led to some inefficiencies and things of that nature. So, it’s really not a big number for a point of margins, it’s only $300,000 I mean that we actually probably had a tough quarter in just scrap pricing and secondary sales that equal that. So, there is many, many factors that lead to that. Also, the second quarter has the July in it and July is a shutdown month, so it actually has – we did particularly have lower utilization levels in the second quarter when compared to the third quarter.
Steven Schwartz – First Analysis: You mentioned sales mix, so sales mix was more favorable in the third quarter than second quarter, am I hearing that right?