- THE MAGAZINE
Ceradyne is again reiterating its guidance of $0.60 per fully diluted share to approximately $1.05 per fully diluted share and sales from $380.0 to $430.0 million. On January 11, 2010, the company announced that its preliminary sales figure for 2009 would be approximately $401.0 million and gave guidance that the full-year earnings would meet or slightly exceed approximately $0.60 per fully diluted share (excluding special items). Based on the final results, sales for the 12 months ended December 31, 2009, were $400.6 million, and earnings (excluding special items) were approximately $0.73 per fully diluted share.
Gross profit margin was 27.0% of net sales in the fourth quarter of 2009, compared to 37.1% in the same period in 2008. There was a benefit from income taxes for the 2009 fourth quarter of $7.5 million, compared to a provision for income taxes of $8.9 million in the same period in 2008.
Sales for the 12 months ended December 31, 2009, were $400.6 million, compared with $680.2 million in the same period last year. Net income for the year was $8.5 million, or $0.33 per fully diluted share, compared with net income in 2008 of $104.5 million, or $3.91 per fully diluted share. Net income for 2009 was favorably impacted by a tax benefit of $8.1 million due to a reversal of liabilities for uncertain tax positions, as well as the tax benefits from the expenses and losses due to the closure of the Bazet, France, manufacturing facility.
Net income for 2009 included charges for restructuring and impairment that had a negative impact by reducing fully diluted earnings per share by approximately $0.40 for the year. The charges for restructuring and impairment totaled $18.7 million during 2009, which included a pre-tax $10.3 million restructuring charge for the closure of the plant in Bazet, France, $2.7 million in 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, and accelerated depreciation of $1.9 million resulting from a revision of the estimated useful lives of certain assets.
Gross profit margin was 25.4% of net sales for the full year, compared to 39.0% in the same period in 2008. There was a tax benefit of $8.1 million for the 12 months ended December 31, 2009, compared to a provision for income taxes of $56.4 million in 2008.
“We are pleased that the fourth quarter sales and earnings allowed us to meet our revised 2009 guidance for Q4 and all of 2009,” said Joel P. Moskowitz, president and CEO. “During 2009, our management took a number of actions related to the decrease in lightweight body armor sales, as well as to reflect the realities of the global economic downturn. As summarized above, these 2009 restructuring and impairment charges totaled $18.7 million and were partially offset by an $8.3 million tax benefit associated with these charges.
“Although we are still concerned regarding the global economic outlook, the 2009 decisions should lay the groundwork for our future growth predicated on Ceradyne’s diversified advanced technical ceramic products and markets. We anticipate that there will continue to be less reliance on our military lightweight ceramic body armor, with increasing sales of our energy-related product offerings, particularly nuclear power plant applications and photovoltaic solar cell related components.
“Our strong year-end balance sheet with cash and cash equivalents, and short-term investments of approximately $240 million, will allow us to finance our growth or possible acquisitions from internally generated funds.
“On January 11, 2010, Ceradyne held an investors’ reception entitled ‘Ceradyne-The Global Path Forward.’ The company displayed its military and non-military products, with the intent to demonstrate our commitment to a balanced global product line. In line with this strategy, we will begin construction this month of a new 218,000-square-foot manufacturing facility at an estimated cost of $34.0 million in Tianjin, China, to primarily support our Asian solar customers. Additionally, for the first time, we will also put in place Chinese manufacturing capacity for Ceradyne’s ESK Ceramics’ industrial, fluid handling, silicon carbide seals and bushings.
“Early in 2010, we have seen strong demand in China for our ceramic solar crucibles, which supports our decision to increase capacity. Also, we continue to see increasing interest related to nuclear power plant requirements for our neutron-absorbing 10B isotope, spent fuel rod storage products and special proprietary ceramics for nuclear fuel fabrication.
“In summary, we enter 2010 cautiously as our company continues to evolve. Although we have accelerated our defense-related technical and marketing efforts, additional body armor orders are uncertain. However, we are also focusing our efforts on a wide product base, with particular emphasis on solar, nuclear, and oil and gas opportunities.”
For additional details, including an archive of a recent conference call discussing these results, visit www.ceradyne.com.