COSTA MESA, CA--(Marketwire - July 27, 2010) - Ceradyne, Inc. (NASDAQ: CRDN) reported financial results for the second quarter and six months ended June 30, 2010.
Sales for the second quarter 2010 were $100.4 million, compared with $95.3 million in the second quarter 2009. Net income for the second quarter 2010 increased to $6.6 million, or $0.26 per fully diluted share, compared to a net loss of $11.2 million, or $0.44 per basic share in the second quarter 2009. The net income for the second quarter 2010 included a pre-tax gain on auction rate securities of $0.9 million or an increase of approximately $0.03 to fully diluted earnings per share. The loss in the second quarter 2009 included special charges that had a negative impact by reducing earnings per share by approximately $0.48 for the second quarter. The special charges totaled $15.3 million during the second quarter which included a pre-tax $10.9 million restructuring charge for the closure of the Company's 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 its Ceradyne Canada reporting unit to reflect the current industry and economic environment and accelerated depreciation of $0.6 million resulting from a revision of the estimated useful lives of certain assets.
Fully diluted average shares outstanding for the second quarter 2010 were 25,596,968 compared to 25,710,721 in the same period in 2009.
Taking into consideration the strong non-defense financial results in the first half of 2010 tempered by the continued uncertainty of body armor shipments in second half 2010, the Company increased its 2010 full year guidance to a range of $0.80 to $1.18 fully diluted earnings per share and a range of $400 million to $430 million in sales. The prior 2010 guidance was $0.65 to $1.05 earnings per share and $380 million to $430 million in sales.
Gross profit margin was 25.7% of net sales in the second quarter 2010 compared to 24.2% in the same period in 2009. The provision for income taxes was 18.2% in second quarter 2010, compared to a benefit for income taxes of 18.2% in the same period in 2009.
Sales for the six months ended June 30, 2010 were $210.5 million, compared with $195.0 million in the same period last year. Net income for the six months ended June 30, 2010 was $11.6 million, or $0.45 per fully diluted share, on 25.6 million shares, compared to a net loss of $10.5 million, or $0.41 per basic share, on 25.8 million shares in the prior year period. The loss included special charges that had a negative impact by reducing earnings per share by approximately $0.51 for the six months ended June 30, 2009. The special charges totaled $16.3 million during the six month period ending June 30, 2009 which included a pre-tax $11.8 million restructuring charge for the closure of its plant in Bazet, France and other severance expenses and a non-cash pre-tax impairment charge of $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 $0.6 million resulting from a revision of the estimated useful lives of certain assets.
Gross profit margin was 24.3% of net sales in the six months ended June 30, 2010 compared to 23.9% in the same period in 2009. The provision for income taxes was 20.5% in the six months ended June 30, 2010, compared to a provision for income taxes of 16.2% in the same period in 2009.
New orders for the three months ended June 30, 2010 were $87.6 million, compared to $79.5 million for the same period last year. For the six months ended June 30, 2010, new orders were $193.3 million, compared to $230.2 million for the comparable period last year.
Total backlog as of June 30, 2010 was $118.0 million, compared to total backlog at June 30, 2009 of $163.8 million.
Joel P. Moskowitz, Ceradyne president, chief executive officer and chairman of the board, commented: "I am particularly pleased with the second quarter 2010 financial results reported above. The Company continues to successfully pursue its strategy of implementing a wider range of technical ceramic industrial products which is more than offsetting the decline in first half 2010 lightweight ceramic body armor inserts, which had been anticipated. We believe this trend will continue in the short run while the Company is discussing various substantive defense opportunities with the U.S. government. The chief military areas that are currently under discussions with Ceradyne include various lightweight ceramic body armor systems including improved areas of protection, next generation ballistic helmets, and future ceramic missile radomes.
"Of note, in Q2 2010 is the dramatic turnaround in the Company's ESK Ceramics operation in Kempten, Germany. Most of the improvements in the ESK operation are due to cost reduction and the closing of the Bazet, France facility, coupled with increasing demand in ESK's strong traditional industrial ceramic product lines. Additionally, ESK continues to pursue its R&D efforts and, where appropriate, patent new ceramic products for oil and gas sand and proppant filtration, pharmaceutical micro reactors, refractory coatings for steel oxygen furnaces, and new, future applications in advanced state-of-the-art structural components for next generation lithium-ion batteries for the automobile industry.
"We continue to see well above average growth in the polycrystalline photovoltaic solar industry related to our high purity, large ceramic crucibles. Our new 218,000 square foot solar factory in Tianjin, China, is well underway with a tentative opening date of February 2011. This new China manufacturing facility will substantially increase Ceradyne solar capacity and become the Chinese corporate and sales office for Ceradyne U.S.A., as well as its non-American operations.
"The recent $8.3 million order from the French nuclear power plant utility (Electricité de France, EDF) for Ceradyne Boron Products' boron-ten (B10) nuclear absorbing isotope is anticipated to be an order in a series of procurements, not only in France but also the U.S., China, Japan and other countries. We view the proprietary nuclear waste containment and other nuclear chemicals produced in our Quapaw, Oklahoma plant as a future core Ceradyne alternative energy product line.
"The Q2 2010 financial statements show continuing profitability and positive cash flow with over $270 million in cash, cash equivalents and short-term investments. This cash position is anticipated to be used for capex and plant expansion (e.g., Tianjin, China plant), acquisitions and share buyback (approximately $42 million remaining on original authorization)."
Conference Call and Webcast Information
Ceradyne will host a conference call today at 8:00 a.m. PDT (11:00 a.m. EDT) to review the financial results for the second quarter ended June 30, 2010. To participate in the teleconference, please call toll free 888-523-1225 (or 719-325-2117 for international callers) approximately 10 minutes prior to the above start time and provide Conference ID 4417760. Investors or other interested parties may listen to the teleconference live via the Internet at www.ceradyne.com or www.earnings.com. These web sites will also host an archive of the teleconference. A telephone playback will be available beginning at 11 a.m. PDT on July 27 through 11 a.m. PDT on July 31, 2010. The playback can be accessed by calling 888-203-1112 (or 719-457-0820 for international callers) and providing Conference ID 4417760.
Information about Ceradyne, Inc.
Ceradyne develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, automotive/diesel and commercial applications.
In many high performance applications, products made of advanced technical ceramics meet specifications that similar products made of metals, plastics or traditional ceramics cannot achieve. Advanced technical ceramics can withstand extremely high temperatures, combine hardness with light weight, are highly resistant to corrosion and wear, and often have excellent electrical capabilities, special electronic properties and low friction characteristics. Additional information can be found at the Company's web site: www.ceradyne.com.
Except for the historical information contained herein, this press release contains forward-looking statements regarding future events and the future performance of Ceradyne that involve risks and uncertainties that could cause actual results to differ materially from those projected. Words such as "anticipates," "believes," "plans," "expects," "intends," "future," and similar expressions are intended to identify forward-looking statements. These risks and uncertainties are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and its quarterly Reports on Form 10-Q, as filed with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date thereof.
Please visit the Investor Relations page at www.ceradyne.com to view Ceradyne, Inc. Consolidated Statements of Income.
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