Horsehead Holding (OTC:ZINCQ) is expected to report third-quarter results bright and early Monday morning. The leading producer of zinc and zinc-based products is expected to report revenue of $105.7 million. However, analysts do think the company will lose money again this quarter, as estimates are for a loss of $0.17 per share. That's not all that surprising, as the company is in the middle of a big transition that has hit a few bumps in the road. Let's take a closer look at what we can expect to see when the company reports on Monday.

Expect an impact from Mooresboro
Last month, Horsehead Holding alerted investors to the fact that it was having some problems at its recently launched Mooresboro facility in North Carolina. The facility, which began operations in late May, has been ramping up production. However, during the quarter the company began to notice some quality issues with the zinc being produced. Because of this, production was affected. Horsehead has identified the cause of the issues and has been in the process of implementing solutions. 

The issues at Mooresboro will have an impact on the company's third-quarter results. Not only will it be affected by less production, but additional start-up costs will be associated with the outage at the facility. This will also push up the company's cost of production per ton as fixed costs will be spread across less production. However, what we want to see from the company is that it has since put these issues behind it and that production did begin to ramp back up later in October.

Expect an impact from zinc prices
While Mooresboro will certainly be a headwind on the quarter, the good news is that zinc prices were strong. As the following chart shows, the spot price of zinc jumped early in the third quarter.

Zinc LME Price Chart

Zinc LME Price data by YCharts.

This was something that Horsehead Holding saw coming, as it noted in its second-quarter report: "[W]e believe the outlook for the zinc market remains strong, both in terms of demand and price." This is why the company went into the quarter without any zinc price hedges in place. However, in August and September the company did hedge 6,000 tons of zinc per month in order to reduce volatility as it ramped up production at Mooresboro. What investors will want to see is if this caused any problems given that Mooresboro's production was weaker than expected.

Investor takeaway
Horsehead Holding is counting on Mooresboro to lower its zinc-price break-even point so that it can enjoy higher profits in the future. While stumbles in the third quarter at that facility will have an impact on short-term results, the longer-term outlook is positive as the facility is a key to the company's future. Investors should keep that outlook in mind when the company results hit the wire on Monday.