Companies that "tell it like it is" and give their shareholders (read: "owners") straight talk about their problems as well as their prospects are few and far between. Are you listening, Xybernaut (NASDAQ:XYBR)? MCI (NASDAQ:MCIP), can you hear me? And how about you, Time Warner (NYSE:TWX)? Global Crossing (NASDAQ:GLBCE)? Hello? Is this thing turned on?

Ladies and gentle-Fools, I am pleased to introduce you to a straight talker today. Meet American Standard Companies (NYSE:ASD), maker of kitchen and bathroom fixtures and fittings, as well as air conditioning systems and vehicle control systems. Three months ago, after reporting strong sales and earnings growth and a return to free cash flow profitability, American Standard made some bold claims. Among these: that the company would pull in $500 million worth of free cash flow over the course of 2004 and that it would use some of that cash to reduce its debt load. In its earnings report released yesterday, American Standard showed admirable progress on goal No. 1 (the jury is still out on goal No. 2).

Free cash flow, which was under $1 million last quarter, skyrocketed to $180 million in the second quarter. Multiply that number by three to cover the rest of the year, and even if American Standard does not grow at all between now and December 31, the company should easily exceed its $500 million free cash flow target.

On the debt-reduction front, things are a little less clear. The company says it saved $1.6 million in interest expense this quarter "because of a lower debt level." But frankly, whatever debt reduction was accomplished was so small that I can find no evidence of it. According to the company's April 10-Q filing, long-term debt stood at $1.73 billion three months ago. Today, it stands at $1.74 billion. But I won't quibble over the details. Whether or not the company has already begun to pay down debt, it is certainly building up the means to do so. Cash on hand more than doubled over the past six months to just under $240 million.

Finally, I saved the best news for last: American Standard's overall inventories grew a mere 6.6%, versus 14% sales growth. Moreover, while finished products rose less than 2%, raw materials leapt more than 23%! That's called "positive inventory divergence," folks. And it's just the kind of thing we look for over at Hidden Gems, the Motley Fool's premier small-cap research arm. Numbers like these mean that American Standard's products are leaping out the door nearly as fast as the company can build them, hardly spending any time at all on the shelves. They also suggest that now may be a great time to consider buying into American Standard.

Fool contributor Rich Smith owns no shares in American Standard. The Motley Fool is investors writing for investors.