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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ceradyne, Inc. (MM) | NASDAQ:CRDN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 35.00 | 0 | 01:00:00 |
Sales for the third quarter 2010 were $91.8 million, compared with $108.0 million in the third quarter 2009. Net income for the third quarter 2010 was $4.5 million, or $0.18 per fully diluted share, compared to net income of $4.9 million, or $0.19 per fully diluted share in the third quarter 2009.
Fully diluted average shares outstanding for the third quarter 2010 were 25,141,214 compared to 25,797,988 in the same period in 2009.
On July 27, 2010, Ceradyne revised its 2010 guidance to a range of $0.80 to $1.18 per fully diluted share on shipments of $400 million to $430 million in sales. Although the level of Q4 2010 ceramic body armor shipments remains uncertain, we believe we will meet our guidance.
Based on the growth of sales in solar crucibles, nuclear products and the continued turnaround at its ESK Ceramics subsidiary, Ceradyne's 2011 guidance is for sales to range from $445 to $515 million and earnings to range from $1.35 to $1.75 per fully diluted share. The range in sales and earnings per share is caused by a lack of sufficient information to project its body armor and enhanced combat helmets business for most of 2011. This guidance assumes a range in the annual tax rate of 27% to 29% with fully diluted average outstanding shares of 25.3 million.
Gross profit margin was 25.7% of net sales in the third quarter 2010 compared to 26.5% in the same period in 2009. The provision for income taxes was 10.2% in third quarter 2010, compared to a benefit for income taxes of 22.4% in the same period in 2009.
Sales for the nine months ended September 30, 2010 were $302.2 million, compared with $303.0 million in the same period last year. Net income for the nine months ended September 30, 2010 was $16.1 million, or $0.63 per fully diluted share, on 25.5 million shares, compared to a net loss of $5.6 million, or $0.22 per basic share, on 25.7 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 nine months ended September 30, 2009. The special pre-tax charges totaled $17.3 million during the nine month period ending September 30, 2009 which included a pre-tax $11.9 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 $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, 2010 which was the same in the same period in 2009. The provision for income taxes was 17.9% in the nine months ended September 30, 2010, compared to a provision for income taxes of 9.7% in the same period in 2009.
New orders for the three months ended September 30, 2010 were $110.8 million, compared to $100.5 million for the same period last year. For the nine months ended September 30, 2010, new orders were $304.0 million, compared to $330.6 million for the comparable period last year.
Total backlog as of September 30, 2010 was $136.3 million, compared to total backlog at September 30, 2009 of $156.3 million.
Joel P. Moskowitz, Ceradyne President and Chief Executive Officer, commented: "The third quarter continued the recent trend of substantively reduced body armor shipments. At the same time, we continue the trend of extremely strong growth in solar crucible revenues and profits, as well as the major turnaround in our ESK industrial ceramic operations. We are also pleased with recent activities at Ceradyne Boron Products related to our neutron absorbing boron isotopes for nuclear power plant applications.
"We believe these trends will continue into 2011 with increased solar crucible capacity in China based on completion of our new Tianjin 218,000 square foot facility in Q1 2011. We also anticipate strength in the industrial ceramics being produced by our German ESK Ceramics subsidiary with potentially new business emanating from PetroCeram® oil and gas sand filters, directional drilling bearings, and other oil and gas related technical ceramics."
Mr. Moskowitz further stated, "A few recent Ceradyne developments which are of interest include:
-- The German Federal Supreme Court in Karlsruhe, Germany, has upheld ESK Ceramics' basic 'EKagrip®' patents in a long-term battle with an ESK competitor. EKagrip® amounts to approximately 10% of ESK's sales and is expected to grow. The court's ruling protects ESK's position for an additional eight years. -- The Company's first PetroCeram® oil sand filter has been in place in the North Sea off the Danish coast for over four months and is performing as expected. -- Ceradyne's proposed new Enhanced Combat Helmet prototypes are being extensively tested and evaluated by the military with initial very positive results. -- Ceradyne Thermo Materials is developing next generation high purity ceramic crucibles for photovoltaic solar applications. -- Ceradyne Thermo Materials has been asked to respond to recent increases for deliveries in ceramic missile nose cone (radome) requirements in 2011.
"It is interesting to note that as recently as 2007 defense related products, primarily body armor, accounted for 74% of Ceradyne's revenue. This percentage is now about 33% year to date and is projected to be between 20% and 30% in 2011.
"With cash and short-term investments at approximately $258 million, we continue to maintain a healthy balance sheet with over $10 per fully diluted share in cash. We intend to use our cash to support our internal growth plans, particularly related to solar expansion, periodically repurchase Ceradyne stock (494,000 shares repurchased in Q3 2010), and to acquire companies according to our acquisition strategy."
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 third quarter ended September 30, 2010. To participate in the teleconference, please call toll free 877-681-3372 (or 719-325-4886 for international callers) approximately 10 minutes prior to the above start time and provide Conference ID 9789411. 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 October 26, 2010 through 11 a.m. PDT on October 28, 2010. The playback can be accessed by calling 888-203-1112 (or 719-457-0820 for international callers) and providing Conference ID 9789411.
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.
CERADYNE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2010 2009 2010 2009 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) NET SALES $ 91,766 $ 107,954 $ 302,219 $ 302,993 COST OF GOODS SOLD 68,150 79,329 227,392 227,717 ---------- ---------- ---------- ---------- Gross profit 23,616 28,625 74,827 75,276 OPERATING EXPENSES Selling, general and administrative 14,418 17,537 43,947 51,619 Acquisition related charge (credit) 31 (795) (88) (795) Research and development 2,613 2,862 8,731 9,512 Restructuring - plant closure and severance - 88 7 11,931 Goodwill impairment - - - 3,832 ---------- ---------- ---------- ---------- 17,062 19,692 52,597 76,099 ---------- ---------- ---------- ---------- INCOME (LOSS) FROM OPERATIONS 6,554 8,933 22,230 (823) ---------- ---------- ---------- ---------- OTHER INCOME (EXPENSE): Interest income 935 901 2,562 2,424 Interest expense (1,518) (1,520) (4,713) (5,469) Gain on early extinguishment of debt - 96 - 1,881 Loss on auction rate securities - (1,849) (978) (3,480) Miscellaneous (917) (197) 493 (694) ---------- ---------- ---------- ---------- (1,500) (2,569) (2,636) (5,338) ---------- ---------- ---------- ---------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 5,054 6,364 19,594 (6,161) PROVISION (BENEFIT) FOR INCOME TAXES 517 1,428 3,504 (595) ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ 4,537 $ 4,936 $ 16,090 $ (5,566) ========== ========== ========== ========== BASIC INCOME (LOSS) PER SHARE $ 0.18 $ 0.19 $ 0.64 $ (0.22) ========== ========== ========== ========== DILUTED INCOME (LOSS) PER SHARE $ 0.18 $ 0.19 $ 0.63 $ (0.22) ========== ========== ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 24,960 25,681 25,329 25,737 DILUTED 25,141 25,798 25,506 25,737 CERADYNE, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) September 30, December 31, 2010 2009 ------------ ------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 32,168 $ 122,154 Restricted cash - 3,130 Short-term investments 225,549 117,666 Accounts receivable, net of allowances for doubtful accounts of $792 and $851 at September 30, 2010 and December 31, 2009, respectively 50,136 53,269 Other receivables 16,934 11,424 Inventories, net 84,401 100,976 Production tooling, net 11,445 12,006 Prepaid expenses and other 19,140 19,932 Deferred tax asset 11,353 13,796 ------------ ------------ TOTAL CURRENT ASSETS 451,126 454,353 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT, net 240,661 239,322 LONG TERM INVESTMENTS 27,275 20,019 INTANGIBLE ASSETS, net 84,853 89,409 GOODWILL 43,394 43,880 OTHER ASSETS 2,506 2,721 ------------ ------------ TOTAL ASSETS $ 849,815 $ 849,704 ============ ============ CURRENT LIABILITIES Accounts payable $ 23,959 $ 24,683 Accrued expenses 25,052 23,463 ------------ ------------ TOTAL CURRENT LIABILITIES 49,011 48,146 LONG-TERM DEBT 84,713 82,163 EMPLOYEE BENEFITS 21,215 21,769 OTHER LONG TERM LIABILITY 38,539 39,561 DEFERRED TAX LIABILITY 8,568 8,348 ------------ ------------ TOTAL LIABILITIES 202,046 199,987 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Note 13) SHAREHOLDERS' EQUITY Common stock, $0.01 par value, 100,000,000 authorized, 24,902,142 and 25,401,005 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively 249 254 Additional paid-in capital 146,414 157,679 Retained earnings 486,346 470,256 Accumulated other comprehensive income 14,760 21,528 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 647,769 649,717 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 849,815 $ 849,704 ============ ============ CERADYNE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Nine Months Ended September 30, ------------------------ 2010 2009 ----------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 16,090 $ (5,566) ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization 26,979 28,649 Amortization of bond premium 273 - Non cash interest expense on convertible debt 2,550 2,817 (Gain) on early extinguishment of debt - (1,881) Payments of accreted interest on repurchased convertible debt - (2,956) Deferred income taxes 1,376 (3,047) Stock compensation 2,994 2,906 Loss on marketable securities 978 3,480 Goodwill impairment - 3,832 Loss on equipment disposal 510 425 Change in operating assets and liabilities (net of effect of businesses acquired): Accounts receivable, net 2,855 94 Other receivables (5,534) 1,352 Inventories, net 15,132 5,387 Production tooling, net 506 995 Prepaid expenses and other assets 483 477 Accounts payable and accrued expenses 2,480 8,985 Income taxes payable (106) 1,900 Other long term liability (1,063) (510) Employee benefits 386 1,071 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 66,889 48,410 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (30,665) (13,588) Changes in restricted cash 3,130 (428) Purchases of marketable securities (119,956) (136,173) Proceeds from sales and maturities of marketable securities 4,489 64,051 Cash paid for acquisitions - (9,655) Proceeds from sale of equipment 465 72 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (142,537) (95,721) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of stock due to exercise of options 224 14 Excess tax benefit due to exercise of stock options 7 24 Shares repurchased (14,837) (5,099) Reduction on long term debt - (20,239) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (14,606) (25,300) ----------- ----------- EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS 268 1,047 ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (89,986) (71,564) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 122,154 215,282 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 32,168 $ 143,718 =========== =========== CERADYNE, INC. SEGMENT FINANCIAL INFORMATION (Amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Revenue from External Customers Advanced Ceramic Operations $ 25,949 $ 60,591 $ 116,832 $ 169,453 ESK Ceramics 32,134 27,971 94,843 75,636 Semicon Associates 2,328 1,834 6,908 5,854 Thermo Materials 26,458 16,446 69,818 47,970 Ceradyne Canada 1,903 300 3,275 618 Boron 7,291 5,748 19,878 19,200 Inter-segment elimination (4,297) (4,936) (9,335) (15,738) --------- --------- --------- --------- Total $ 91,766 $ 107,954 $ 302,219 $ 302,993 ========= ========= ========= ========= Depreciation and Amortization Advanced Ceramic Operations $ 1,984 $ 2,583 $ 6,646 $ 7,851 ESK Ceramics 3,158 3,818 9,417 10,905 Semicon Associates 85 84 252 270 Thermo Materials 1,522 1,160 4,559 3,411 Ceradyne Canada 343 347 1,026 988 Boron 1,648 1,298 5,079 5,224 --------- --------- --------- --------- Total $ 8,740 $ 9,290 $ 26,979 $ 28,649 ========= ========= ========= ========= Segment Income (Loss) from Operations Advanced Ceramic Operations $ (9,676) $ 7,751 $ (11,261) $ 17,371 ESK Ceramics 6,351 (1,997) 13,704 (20,503) Semicon Associates 365 114 1,020 587 Thermo Materials 8,938 3,815 21,925 11,614 Ceradyne Canada (15) (680) (1,482) (6,323) Boron 1,055 (62) (985) (3,714) Inter-segment elimination (464) (8) (691) 145 --------- --------- --------- --------- Total 6,554 8,933 22,230 (823) Other Income (Expense) (1,500) (2,569) (2,636) (5,338) --------- --------- --------- --------- Income (Loss) before Provision for Income Taxes $ 5,054 $ 6,364 $ 19,594 $ (6,161) ========= ========= ========= ========= Segment Assets Advanced Ceramic Operations $ 394,276 $ 399,021 $ 394,276 $ 399,021 ESK Ceramics 185,682 214,064 185,682 214,064 Semicon Associates 5,732 5,724 5,732 5,724 Thermo Materials 135,995 107,104 135,995 107,104 Ceradyne Canada 17,285 17,038 17,285 17,038 Boron 110,845 113,438 110,845 113,438 --------- --------- --------- --------- Total $ 849,815 $ 856,389 $ 849,815 $ 856,389 ========= ========= ========= ========= Expenditures for Property, Plant & Equipment Advanced Ceramic Operations $ 1,841 $ 629 $ 4,993 $ 2,761 ESK Ceramics 429 (356) 1,416 2,568 Semicon Associates 44 49 485 124 Thermo Materials 8,708 795 21,374 7,512 Ceradyne Canada 33 (44) 153 119 Boron 297 184 2,244 504 --------- --------- --------- --------- Total $ 11,352 $ 1,257 $ 30,665 $ 13,588 ========= ========= ========= ========= CERADYNE, INC. MARKET APPLICATION INFORMATION (Amounts in thousands, except percentages) We categorize our products into four market applications. The tables below show the amount of our total sales of each market application and the percentage contribution in the different time periods. Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Defense $ 18,660 $ 56,637 $ 98,165 $ 159,087 Industrial 61,037 41,642 168,406 116,882 Automotive/Diesel 9,458 6,779 27,145 17,948 Commercial 2,611 2,896 8,503 9,076 --------- --------- --------- --------- Total $ 91,766 $ 107,954 $ 302,219 $ 302,993 ========= ========= ========= ========= Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Defense 20.4% 52.4% 32.5% 52.5% Industrial 66.5 38.6 55.7 38.6 Automotive/Diesel 10.3 6.3 9.0 5.9 Commercial 2.8 2.7 2.8 3.0 --------- --------- --------- --------- Total 100.0% 100.0% 100.0% 100.0% ========= ========= ========= =========
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