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What's in Store for Polypore?

Neha Chamaria
August 17, 2011

Filtration company Polypore International (NYSE: PPO  ) surprised the Street with an astounding 91% jump in its second-quarter EPS, with strong end product demand driving the top line. However, in spite of the robust numbers, its shares took a beating, plummeting 10% as the company laid out its expansion plans.

The numbers
Revenues for the quarter jumped 31% from the year-ago period to $196.4 million, with the larg Energy Storage segment's sales climbing by 38%. The primary driving factor has been the growing demand for consumer electronics and electric-drive vehicles (EDVs). Polypore makes membranes for lithium batteries used in these products.

The Separations segment, which makes membranes catering to the health-care sector, saw sales climb by 14% from the year-ago quarter. Peer Valence Technology (Nasdaq: VLNC  ) also reported a more than twofold jump in its fiscal 2012 first-quarter revenues, as demand for medical products increased overall.

Strong revenue growth helped Polypore's operating margin improve from 21.6% to 27% year-on-year. As a result, the company's net income surged from $15.9 million last year to $29.5 million.

From a balance-sheet perspective, Polypore's total debt-to-equity ratio stands at 158% in the latest quarter. Although that might seem high, the ratio has improved over the past few quarters and it down from 230% in the second quart