AEP Industries (AEPI)’s Fourth Quarter Fiscal Year 2014 Earnings Call Transcript

Volume also declined 1% we certainly weren’t expecting to do better than that.  There is a small reason for some of the decline which is that we exited three product lines. Our retail business we exited ceiling lock color business, also in our retail business we exited slider and in our printed division we exited laminations, so total volume involved in those three product lines is about 6 million pounds. Volumes increased in the third and fourth quarter and we will continue increase volumes in 2015. We did a good job on cost control, we were very focused on our overall labor cost. Labor is our second biggest cost after resin so it’s always on our list of the most important projects to take out of costs. As of October 31, 2013 AEP had 2555 employees, at the end of the fiscal year 10/31/14 we had 2486 employees.

I would like to add that we also increased capacity and added staff to some of new lines that we put in and we feel very comfortable that we’ve got those costs very well under control. The other cost that we could not control, we consider out of our control like electric and freight those are function of the market and they also went up dramatically during the year. We did as you know a while ago couple years ago a year-and-half ago two transactions, two acquisitions one was Transco a printer in Canada and we have completed that, consolidation is complete with staff being trained in on new plant and where the equipment went, Bowling Green Kentucky.  We’ve done some consolidations there and we’re ready to roll now [inaudible] staff to meet sales forecasts. In Webster acquisition I would say that the consolidation is— we are considering it complete with the exception that we have two automation projects that are ongoing and kind of long-term projects that are not easy to accomplish what we trying to accomplish so it’s taking longer than we wanted or expected. It’s too early for us to really say how much additional staffing will come out until we get final results with the manufacture of the equipment and as I said that’s an ongoing project but as of right now our staffing has been dropped from the time of the acquisition of 714 to 341 employees.

Also would like to talk a little bit about our 2014 capacity increases.  Most of this capacity is in place now with the exception of a few million pounds of capacity that’s the last extruder that we have coming in and that should be starting around March. In our printer division we added 6 million pounds of shooting capacity.  In our Bowling Green Kentucky plant, in our Matthews North Carolina plant we installed 25 million pounds of stretched capacity.  We will also be shutting down a very old extruder that produces about 6 million pounds so we will have about the net increase in capacity added to that plant in for stretch from 19 million pounds. We also did some significant increases in capacity for the year in our custom films division, in our Mountaintop Pennsylvania plant we added 8 million pounds, in our Alsip Illinois plant would added 10 million  pounds, in our Matthews North Carolina plant we added 14 million  pounds, line upgrades accounted for about another 3 million miscellaneously  over all of the other remaining plants and in Montgomery Alabama which is the home of our retail business, the part of the acquisition that we did with Webster, we have installed 4 million  pounds of capacity, for our custom films division, this is our sixth manufacturing location for custom films. Total for the whole company is about 70 million pound minus 6 million pounds of product that is been mothballed.