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The company is adjusting its guidance for the full fiscal year 2009 from $.70 per fully diluted share to approximately $.60 per fully diluted share and from sales of $420 to $440 million to sales of $410 to $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 $0.55 per fully diluted share.
Gross profit margin was 26.5% of net sales in the third quarter of 2009, compared to 39.7% in the same period in 2008. The provision for income taxes was 22.4% in the 2009 third quarter, compared to a provision for income taxes of 36.1% in the same period in 2008.
Sales for the nine months ended September 30, 2009, were $303.0 million, compared with $541.3 million in the same period last year. The net loss for the nine months ended September 30, 2009, was $5.6 million, or $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 $0.51 for the nine months ended September 30, 2009. The charges for restructuring and impairment totaled $17.3 million during the nine months ended September 30, 2009, and included a pre-tax $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 $3.8 million to write down the value of goodwill of the Ceradyne Canada reporting unit to reflect the current industry and economic environment; and accelerated depreciation of $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 months ended September 30, 2009, compared to 39.5% in the same period in 2008. The provision for income taxes was 9.7% in the nine months ended September 30, 2009, compared to a provision for income taxes of 36.2% in the same period in 2008.
New orders for the three months ended September 30, 2009, were $100.5 million, compared to $119.4 million for the same period last year. For the nine months ended September 30, 2009, new orders were $330.6 million, compared to $476.6 million for the comparable period last year. Total backlog as of September 30, 2009, was $156.3 million, compared to total backlog at September 30, 2008, of $174.9 million.
“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,” said Joel P. Moskowitz, president and CEO. “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 U.S. as well as European vehicle manufacturers, and potential new business for our recently acquired military helmet operation. We are also more actively evaluating non-defense opportunities in China.
- 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 China for our cathode product are encouraging.
- The U.S. 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.
For additional information, including an archived conference call discussing these results, visit www.ceradyne.com.