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Ceradyne, Inc. recently reported financial results for the first quarter ended March 31, 2010. Sales for the first quarter of 2010 were $110.0 million, compared with $99.8 million in the first quarter of 2009. Net income for the 2010 first quarter increased to $5.0 million, or $0.20 per fully diluted share, compared to $0.7 million, or $0.03 per fully diluted share, in the first quarter of 2009.
Net income for the first quarter of 2010 included a pre-tax charge for losses on auction rate securities of $1.9 million, or a reduction of approximately $0.05 to fully diluted earnings per share. Fully diluted average shares outstanding for the first quarter of 2010 were 25,585,369, compared to 26,033,194 in the same period in 2009.
Gross profit margin was 23.1% of net sales in the first quarter of 2010, compared to 23.6% in the same 2009 period. The provision for income taxes was 23.5% in first quarter of 2010, compared to 39.8% in the first quarter of 2009.
New orders for the 2010 first quarter were $105.7 million, compared to $150.7 million for the same period last year. Total order backlog as of March 31, 2010, was $130.8 million, compared to $177.2 million at March 31, 2009.
“Although today’s reported financial results for the first quarter of 2010 were well within our projections, I believe a more interesting and positive analysis can be obtained by examining what areas contributed to the total company performance,” said Joel P. Moskowitz, president and CEO.
“Lightweight Ceramic Body Armor. Sales in Q1 2010 were $30.9 million, down $15.4 million from $46.3 million in shipments in Q1 2009. To date, we have not received additional delivery orders for either XSAPI or ESAPI against the remaining $2.2 billion ID/IQ (indefinite delivery/indefinite quantity) contract that runs through October 2013. The wide range in our projections is based on the uncertainty of body armor delivery orders in time to ship in 2010. We have recently accelerated our marketing efforts related to lightweight ceramic body armor.
“ESK Ceramics. Sales of ESK’s products increased $8.1 million in Q1 2010 from $23.6 million in Q1 2009 to $31.7 million in Q1 2010. ESK’s pre-tax income turned sharply around from a pre-tax loss in Q1 of last year of $4.4 million to pre-tax income in Q1 2010 of $2.1 million. Furthermore, gross margins this quarter were 23.3%, compared to 14.3% in last year’s first quarter.
“Although ESK experienced about $1.4 million in revenue in Q1 2010 that may not repeat going forward, we believe that many of ESK’s core product lines, as well as some pricing strength, will continue to produce positive results from our Germany-based operation.
“Solar Energy (Thermo Materials Division). Ceradyne’s Thermo Materials division, which includes ceramic crucibles used in the manufacture of photovoltaic solar cells, ceramic missile radomes and PIC (precision investment casting) materials, saw their sales increase 36.8% to $22.2 million from Q1 2009’s $16.2 million. Related gross profits increased to $7.8 million from last year’s Q1 of $5.8 million. In Q1 2010, the company began construction of its new 218,000-square-foot solar crucible manufacturing plant in Tianjin, China. This new facility is expected to be operational early in 2011.
“Nuclear (Power Plant) Energy. Ceradyne’s entry into the nuclear energy market is predicated on the neutron-absorbing properties of the element boron (B) and its isotope 10B. Our products consist of nuclear chemicals and ceramics based on our ability to separate the 10B isotope at our Ceradyne Boron Products subsidiary, nuclear waste containment structural components produced at our Ceradyne Canada subsidiary, and boron carbide powder used for control rods made in Kempten, Germany, by our ESK Ceramics subsidiary.
“New bookings for our nuclear product lines increased to $14.7 million in Q1 2010 from $4.9 million in Q1 2009, with backlog of nuclear-related materials at $23.8 million at March 31, 2010, up from $12.7 million at March 31, 2009.
“Our goal of a more-balanced, diversified product line with increasing levels of non-defense products while maintaining our military products at a reduced level from prior years is falling into place. Our strong balance sheet with $252.0 million in cash, cash equivalents and short-term investments should provide the financial strength to continue to invest in internal expansion, possible acquisitions, and stock and/or convertible bond repurchases.”
For additional information, including an archived conference call discussing these results, visit www.ceradyne.com.