Ceradyne, Inc. recently reported lower-than-anticipated financial results for the first quarter ended March 31, 2009. The company noted that despite the disappointing first quarter, it currently expects that full-year 2009 results will fall within previously announced guidance regarding sales and earnings per share.
Sales for the first quarter of 2009 were $99.8 million, compared with $188.5 million in first-quarter 2008. Net income for first-quarter 2009 decreased to $0.7 million, or $0.03 per fully diluted share, compared to $32.4 million, or $1.18 per fully diluted share, in the 2008 quarter. These results include pre-tax non-cash interest expense of $1.0 million and $0.9 million for the first quarter of 2009 and 2008, respectively, due to the change in accounting for convertible debt, which reduced earnings per share by $.02 in each quarter. Fully diluted average shares outstanding for first-quarter 2009 were 26,033,194 vs. 27,406,500 in the same period in 2008.
Gross profit margin was 23.0% of net sales in the 2009 first quarter, compared to 37.9% in first-quarter 2008. The provision for income taxes was 39.8% in first-quarter 2009, compared to 36.2% in first-quarter 2008.
New orders for first-quarter 2009 were $150.7 million, compared to $211.8 million for the same period last year. Total order backlog as of March 31, 2009, was $177.2 million, compared to $262.7 million at March 31, 2008.
According to Joel P. Moskowitz, president and chief executive officer, “Although we had stated and continue to believe that the first quarter of 2009 would be the weakest quarter of the year, nonetheless, we were disappointed in the above reported results and are taking actions to reduce our current operating costs without affecting our future operations, which will be dependent on increasing solar energy related business, new product introductions, as well as opportunities in our current business lines, such as military ballistic protection, and newer industrial applications particularly related to oil drilling using our advanced technical ceramics.
“Over the past 15 months, we have reduced our headcount in the United States by approximately 592, or 33%. The bulk of the reductions have been in our California and Kentucky operations, primarily related to military ceramic body armor, as well as certain non-defense areas such as automobile/diesel.
“In Europe, where we have seen further reductions in our industrial ceramic business, we have been reducing our costs and will continue to do so throughout 2009. An example of this includes ‘short work weeks’ at ESK Ceramics, utilizing German and French government subsidies. We are also in the process of evaluating more permanent headcount reductions, as well as the closure of a manufacturing facility.
“Our strong cash position and balance sheet will allow us to continue our previously announced $22 million expansion of our photovoltaic solar cell related ceramic crucible capacity in China, as well as maintaining our R&D activities in Germany and the U.S. We also are continuing our efforts to identify and implement appropriate acquisitions in both defense and non-defense markets.
“On March 31, we received our first XSAPI production delivery order of approximately $77 million issued against the $2.37 billion five-year ID/IQ (indefinite delivery/indefinite quantity) award announced earlier in October 2008. We began shipping this XSAPI delivery order this month and expect to complete shipments this year.
“In February, we had provided 2009 guidance of a sales range of $465 million to $500 million with earnings of $1.60 to $2.00 per fully diluted share. Although the XSAPI order was issued later than originally anticipated with as yet no additional side plate (‘X’ threat) releases, and despite the downturn in our European industrial advanced technical ceramic markets, at this time we continue to reiterate our February guidance with a higher probability of being at the low end of the range for all of 2009.
“Our management is focused on the challenges of the global economic downturn. Our plan is to continue to ‘tighten our belt’ without compromising our strategic goals and emerge from this recession as a more efficient company. Our strong balance sheet and positive cash flow of $10.5 million in the first quarter of 2009 will provide the financial wherewithal to carry out our plans.”
for additional information, including an archive of a recent conference call discussing these results.