Material Sciences Corp. today posted results for its first quarter ended May 31, 2010, reflecting improving markets, sales increase and a more flexible financial condition.

Material Sciences CEO Clifford D. Nastas noted three variables contributing to the company’s improved results.

“Three factors were instrumental in our return to profitability this quarter,” Nastas stated in the press release. “First, for the past year we have focused on lowering our cost base by increasing operating efficiencies, using stringent expense controls, selling non-core assets, and sizing our operations to current market opportunities. Second, we continued to invest in improving the quality of existing products and bringing several new ones to market. So when the third factor – improved global demand for our products – began to materialize during our first fiscal quarter, we were able to leverage the first two accomplishments into strong earnings growth.”

The company reported net sales for the first quarter up 33.4 percent to $42.5 million from $31.8 million for the same period last year. Net income for the latest quarter was $4.0 million, or 31 cents per share, compared with a net loss of $4.1 million, or 30 cents per share, for the first quarter of last year.

Sales of acoustical materials, which were mostly to auto manufacturers, were reported at $21.4 million, up 40.5 percent from $15.2 million in the first quarter of last year.

Material Sciences reported that revenues for coated materials, which were used primarily in the automotive and building products industries, increased 27.0 percent to $21.1 million, as compared to $16.6 million for the same period last year. The company attributes the increase to improved performance and stronger demand for Material Sciences’ existing fuel tank, gasket and electro galvanized products, as well as initial orders for some new ElectroBrite® and automotive sealing product applications.

Gross profit of $9.5 million during the latest quarter nearly quadrupled over last year’s $2.5 million. Gross profit margin for the quarter reached 22.3 percent, up from 7.7 percent in the prior year period. Several factors accounted for the significant increase: higher product sales, improvements in productivity and quality-related costs and stronger secondary scrap sales.

The company reported that selling, general and administrative expenses were 20.6 percent lower in the latest period, representing $5.3 million, or 12.4 percent of sales, in contrast to $6.7 million, or 20.9 percent of sales for last year’s first quarter. This is due to lower salary and headcount costs (from restructurings in fiscal 2010) and reduced professional fees.

Income from operations in the first quarter totaled $4.1 million compared with a loss from operations of $4.2 million during the year ago period.

For the latest quarter, the company reported net cash provided by operating activities at $2.9 million, compared with $6.4 million during the prior year period. The decrease reflects changes in working capital because of higher sales in the current year. In addition, the company said last year’s favorable cash flows was from inventory reductions that were mainly due to higher inventory levels at the end of fiscal 2009, caused by significant automotive shutdowns and production cutbacks, and benefited from early payments from GM before it filed for bankruptcy.

As of May 31, 2010, Material Sciences had cash on hand of $26.1 million, more than two times the $12.9 million at February 28, 2010.

The company also gave an overview of its current position and where it expects to be in the upcoming year.

“Our objective was to return to profitable growth in fiscal 2011, and in the latest period we posted our first profit since the third quarter of fiscal 2008. Operationally and financially, Material Sciences is in a good position. We sold assets that were non-strategic, which allows us to focus on areas that provide greater opportunity. During the quarter, we had a number of new business wins in North America and abroad for our rubber coated brake and gasket materials, as well as ElectroBrite® and VivaColor®. Improving markets—plus the combination of a high level of cash and no debt—will help us continue on the path of prudently investing in new products and technologies to bring further profitable growth,” Nastas said.