company stock analysis

Conrad Industries Inc.

Introduction:

Conrad Industries, Inc. (PINK:CNRD) was founded in 1948 and is headquartered in Morgan City, Louisiana. The Company constructs, converts, and repairs marine vessels for commercial and governmental customers. The Company also fabricates modular components of offshore drilling rigs and floating, production, storage, and off-loading vessels. The Company operates shipyards along the Gulf Coast in Louisiana and Texas. It serves marine service companies, offshore support companies, rig fabricators, offshore and inland barge and support vessel operators, offshore construction and drilling contractors, diving companies, energy companies, the U.S. Army, the U.S. Army Corps of Engineers, the U.S. Coast Guard, and state and local governmental agencies.

Stock Snapshot:

As of Oct 11’ 2012, the stock for Conrad Industries, Inc. (PINK:CNRD) closed on USD 17.50 with total market capitalization of USD 109.58 million. Over the last year, the stock has traded between a range of USD 13.77 and USD 19.79. The stock has been trading at a P/E ratio of 6.08, a P/B ratio of 1.09 and a P/S ratio of 0.45.

Financial Highlights:

Revenue Analysis:

For 6MFY12, Conrad Industries, Inc. reported total revenues of USD 109.5 million as compared to USD 121.8 million for the corresponding period last year; representing a YoY decline of 10.09%. The repair segment of the business was negatively affected by the slow-down in activity in the Gulf of Mexico related to Bp PLC (NYSE:BP) (LON:BP)’s Deepwater Horizon incident and the resulting continued uncertainties surrounding the issuance of drilling permits by the Department of the Interior and new regulations. For 6MFY12, 9.1% of total revenue was government related. 5.5% was energy and 85.4% was other commercial related revenue. This compares to 19.5% government revenue, 7.2% energy related revenue and 73.3% for other commercial revenue for the corresponding period last year.

Gross Profit:

For 6MFY12, the gross profit decreased margin was recorded at 14.75% as compared to 13.77% for the corresponding period last year. Vessel construction gross profit margins increased to 14.3% for 6MFY12, compared to gross profit margins of 13.5% for 6MFY11 mainly due to increased production hours and

the positive impact on overhead rates. Repair and conversion gross profit margins increased to 16.7% for 6MFY12, compared to gross profit margins of 14.9% for the corresponding period last year. Repair and conversion gross profit increased for the six month periods primarily as a result of increased repair and conversion production hours.

Net Income:

For 6MFY12, the net income decreased to USD 8.5 million as compared to USD 8.9 million for the corresponding period last year; representing a YoY decrease of 4.49%. The Company had diluted earnings per share of USD 1.39 for 6MFY12 as compared diluted earnings per share of USD 1.39 for 6MFY11. The diluted shares for 6MFY12 and6MFY11 were 6.1 million and 6.4 million, respectively

The net profit margin was recorded at 7.7% for 6MFY12 as compared to 7.3% for the corresponding period last year. The net profit margin declined mainly due to higher selling general and administration expenses which increased 10.7% YoY during 6MFY12 and negatively impacted the bottom line.

Factors to Watch Out For:

* Strong sales and profitability performance even during difficult time periods.

* Diversified its customer and business portfolio