A Schulman Inc Analysis
In this context, the selected company is A. Schulman. It is a recognized and public company in the United States. It is an international plastics supplier and supplies plastic elements and resins which are utilized as raw materials in different markets. It is worth to note that the primary product line incorporates customized engineered plastic products, additives, and color concentrates structured to enhance the performance of plastics (Yahoo Finance, 2017). This is majorly because the firm provides the materials that meets its customers’ needs. Notably, it provides its clients with a wide range of products to select their demanding requirements. For instance, through the provision of Masterbatch, the company ensures that its customers can improve the performance and well as the appearance of resins.
Additionally, by providing the engineered thermoplastics, the company believes that it can enhance performance injection molding and extrusion designs. A. Schulman engages in multiple portfolio of products. These include the production of resins, compounding of custom plastics, converting plastics into different forms, fabricating, and availing the products to the end users. It also worth to note that when delivering the products to its end user, the company ensures that it considers the elements of pricing and timeliness. Hence, it attempts to deliver its orders within the shortest time possible to ensure that the products serve their customers’ required needs. This way, the firm succeeds in providing the best solution at an optimal cost. The technical capacity and expertise also helps the firm to embrace a global scope and ensures that it focuses on the speed for delivery and effectiveness.
Based on the fact that the company invests a lot of funds and expertise in research and development, it achieves superior know-how in process engineering, additives, and polymers. Further, A. Schulman Inc. ’s competitive advantage also emanates from its cost perspective. The expected costs of this form of action are anticipated to be around $2. 5 million in the period of the next one and half years (18 months). Therefore, SSC is then anticipated to provide annual basis of $2 million when entirely working in the first half of the fiscal year 2019. It will also benefit from the last quarter of fiscal 2016 by a value of $300,000 (A. Schulman, 2017). In this aspect, the company succeeds in meeting the needs of its diverse clients such as offering consumer, industrial, automotive, and automotive solutions across the world.
The other rationale for selection of this firm is that it utilizes a renewed focus on clients and the commitment to expand its sales and revenues, reduction of operating and production costs, and a positive sense of timeliness. It also reinvigorates its innovation processes with an aim of fueling additional organic growth in its portfolio. The firm is suitably selected because of its tendency of restructuring product families to establish better client focus and improved market alignment. The optimization of global manufacturing image and streamlines structures and designs is an added advantage for the firm to formulate efficiencies and improve profitability levels. The justification of these manufacturing facilities is that they will result to total annual savings of $3. 5 million. This is because it will ensure that the firm does not hire manufacturing space but uses its individual manufacturing facilities.
Major plans The company’s major initiatives include simplification of its management structures and processes. It also includes the reinvigoration of the sales processes. Desired outcomes As a result of undertaking the various actions above, various positive outcomes are expected. For instance, the company will be able to shift to the application of customer centric sales focus. This means that the firm will focus on its clients when producing and marketing its products. This is vital because it serves as an act of increasing customer satisfaction and retention levels. It will also enable the company to embrace an agile perspective in the sense that it will focus on reducing the cost of production for its quality products. 04 compared to the value of $0.
18 obtained in the previous fiscal year. Its adjusted earnings per share were $0. 49 with comparison to $0. 50 in the previous period. In addition to this, the firm’s segment gross margin increased slightly from the previous year’s 16. 9% (PR Newswire, 2017). The company’s operating income margin decreased from 4% to 3. Despite this scenario, its adjusted operating income margin upheld its consistency of 5. Using the U. Cash flow based on the Balance Sheet The amount of cash offered from operations during the 2017 fiscal year first quarter was $26. 3 million which was lower than the $40 million provided in the previous year. Also, the working capital days turned out to be lower (53 days) and this was a positive mark from the 54 days in the previous financial year (PR Newswire, 2017).
The cash flow was utilized in reducing the company’s net debt, that illustrates total debt minus cash and cash equivalents. It also prepaid $56 million as its term debt and additional $3. 18 from $2. Financial Ratios Liquidity ratios Current ratio = 1. 68 (Poor) Quick ratio = 1. 07 (Poor) Profitability ratios Gross margin = 16. 56 Operating margin = 5. Estimate 0. 5 Low Estimate 0. 4 High Estimate 0. 65 Year Ago EPS 0. 04 Revenue Estimate Current Qtr. 13B High Estimate 642. 5M 635. 03M 2. 47B 2. 57B Year Ago Sales 650. 31 Difference 0. 01 Surprise % 1. 30% Growth Estimates SHLM Industry Sector S&P 500 Current Qtr. 50% N/A N/A 0. 20 Next Qtr. Schulman Inc. would expand its dividends. The fund pension is appropriate for its future investments in long-term with moderate risks of loss of capital. Based on the 9% annually, it would be a guarantee that the funds will have a positive return.
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