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[November 2009]
Sales Down at Ceradyne
Ceradyne Inc (Costa Mesa, CA, USA) has reported financial results for the third quarter and nine months ended 30 September 2009.
Sales for the third quarter 2009 were US$108.0 million, compared with US$167.7 million in third quarter 2008. Net income for the three months ended 30 September 2009 was US$4.9 million, or US$0.19 per fully diluted share. The net income for the third quarter 2009 included a pre-tax charge for losses on auction rate securities of US$1.8 million that reduced earnings per share by approximately US$0.07.
The company is adjusting its guidance for the full fiscal year 2009 from US$.70 per fully diluted share to approximately US$.60 per fully diluted share and from sales of US$420 to US$440 million to sales of US$410 to US$415 million. The forward looking estimated fully diluted earnings per share guidance does not include the impact of the total restructuring and impairment pre-tax charges for all of 2009, which are estimated to be approximately US$0.55 per fully diluted share.
Gross profit margin was 26.5% of net sales in the third quarter 2009 compared to 39.7% in the same period in 2008. The provision for income taxes was 22.4% in third quarter 2009, compared to a provision for income taxes of 36.1% in the same period in 2008.
Sales for the nine months ended 30 September 2009 were US$303.0 million, compared with US$541.3 million in the same period last year. Net loss for the nine months was US$5.6 million, or US$0.22 per fully diluted share. The loss included charges for restructuring and impairment that had a negative impact by reducing fully diluted earnings per share by approximately US$0.51 for the nine-month period. The charges for restructuring and impairment totalled US$17.3 million during the nine months which included a pre-tax US$11.9 million restructuring charge for the closure of its plant in Bazet, France and other severance expenses, a non-cash pre-tax impairment charge of US$3.8 million to write down the value of goodwill of its Ceradyne Canada reporting unit to reflect the current industry and economic environment and accelerated depreciation of US$1.6 million resulting from a revision of the estimated useful lives of certain assets.
Gross profit margin was 24.8% of net sales in the nine-month period compared to 39.5% in the same period in 2008. The provision for income taxes was 9.7% in the nine-month period, compared to a provision for income taxes of 36.2% in the same period in 2008.
New orders for the three months ended 30 September 2009 were US$100.5 million, compared to $119.4 million for the same period last year. For the nine months, new orders were US$330.6 million, compared to US$476.6 million for the comparable period last year.
Total backlog as of 30 September 2009 was US$156.3 million, compared to total backlog at 30 September 2008 of US$174.9 million.
Joel Moskowitz, Ceradyne President and CEO, commented: “Our target of a balanced advanced technical ceramic company with sales approximately equally divided between defense and non-defense markets has been achieved in 2009 with defense sales of about 52% of the Company’s total. As we look forward to 2010, again we see significant opportunities in the non-defense sector, particularly in solar energy, aluminum smelting, oil and gas drilling, and certain novel, entirely new applications of our materials used in the manufacturing of glass and automobile-related components.
“Although lightweight ceramic body armor programs declined significantly in 2009, we believe that in 2010 body armor along with other defense programs will reach a sustainable level. Future defense opportunities include a new lighter weight generation of body armor, body armor for our Allies, vehicle armor components for as well as European vehicle manufacturers, and potential new business for our recently acquired military helmet operation.
“Recent examples of our progress towards 2010 product and market objectives include:
- A recently completed successful oil and gas drilling event in which Ceradyne’s proprietary ceramic bearing allowed the drilling of a directional hole through a difficult Texas formation without removing the drill and changing the bearing. We believe this bearing is the beginning of a series of proprietary ceramic bearing products for oil and gas drilling.
- Our ESK Ceramics subsidiary received its first order for its newly developed oil/particle separator designed for removing hard erosive particles from the oil in offshore applications, particularly in the North Sea. This initial component is expected to be put into use early in 2010.
- Ceradyne together with its Fortune 500 customer have developed several new products used in the fabrication of a new glass system.
- Our long-time research efforts in the field of aluminum smelting are beginning to show promise. Recent orders in North America and interest expressed in for our cathode product are encouraging.
- The US Marines have requested that our Ceradyne/Diaphorm division further develop the ECH (Enhanced Combat Helmet) design based on our original submission. Although we expect this will delay final evaluation by several months, we continue to expect a decision by early 2010.”
ENDS