Ceradyne, Inc. Reports 2005 Third Quarter, Nine-Month Results; Sales and Net Income Record Results Continue
October 27 2005 - 7:30AM
Business Wire
Ceradyne, Inc. (Nasdaq:CRDN) today reported financial results for
the third quarter and nine months ended September 30, 2005,
including record sales and record net income. Sales for the third
quarter 2005 rose to a record $94.4 million from $56.3 million in
third quarter 2004. Net income for the third quarter 2005 increased
to a record $13.3 million, or 53 cents per diluted share, compared
to net income of $7.3 million, or 30 cents per diluted share, in
the third quarter of 2004. Fully diluted average shares outstanding
for the third quarter were 25.1 million compared to 24.7 million in
the same period in 2004. Operations of ESK Ceramics have been
consolidated since September 1, 2004, and contributed $26.2 million
to third quarter 2005 sales compared to $8.7 million in third
quarter 2004 sales. Gross profit margin improved to a record 36.9%
of net sales in the third quarter of 2005 from 31.9% of net sales
in the third quarter of 2004. During the third quarter of 2004, in
connection with the acquisition of ESK Ceramics, the Company
incurred expenses relating to the step up of ESK's inventory and
backlog. These charges reduced gross profit margin for the third
quarter of 2004 from 33.4% of net sales to 31.9%. The provision for
income taxes was 35.2% in the third quarter 2005, compared to 38.7%
in the third quarter 2004. Sales for the nine months ended
September 30, 2005 reached a record $254.1 million, up from $132.2
million in the comparable period last year. Net income for the
first nine months of 2005 increased to a record $30.7 million, or
$1.23 per diluted share, on 25.0 million shares, from $18.8
million, or 77 cents per diluted share, on 24.5 million shares, for
the nine-month period in 2004. New bookings for the third quarter
of 2005 were $67.8 million, compared to $63.9 million for the same
period last year. For the first nine months of 2005, new bookings
increased to a record $242.8 million, compared to $131.7 million
for the comparable period last year. Total backlog as of September
30, 2005 amounted to $189.6 million compared to total backlog at
September 30, 2004 of $122.1 million. Joel Moskowitz, Ceradyne
president and chief executive officer, commented: "Our record
setting results for third quarter 2005 were primarily due to
ceramic body armor production at an elevated rate and at high
quality levels, which are directly attributable to our having
increased manufacturing capacity at our Lexington, Kentucky, and
California plants. We are anticipating that these factors, plus
achieving record shipping rates, will result in higher order rates,
as our customers gain greater comfort in our manufacturing and
delivery capabilities. Further strengthening our position is the
fact that our August 2004 acquisition of ESK insures a continuing
high-volume, high-quality source of the boron carbide starting
powders we use to manufacture body armor. "Although our lightweight
ceramic body armor business is clearly the current driver of sales
and earnings growth reported today, we remain focused on our
industrial technology and product base as well," Moskowitz stated.
"Diversification was a prime motivation for acquiring ESK, and that
purchase represents a major commitment and step forward toward
diversifying the Company's intermediate and longer-term growth. As
part of this strategy, we are now in the process of coordinating
research and development efforts in the U.S. and Germany under a
newly created position of Chief Technology Officer," added
Moskowitz. "In addition to our defense related efforts, R&D
will focus primarily on industrial and energy related applications
where the ability to perform in high temperature
environments--while exhibiting excellent resistance to corrosion
and erosion--are mandated." Ceradyne will host a conference call
today at 8:00 a.m. PDT to discuss its 2005 third quarter results.
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 telephonic playback will be available beginning
at 11:30 a.m. PDT on October 27 through 9:00 pm. PDT on October 30,
2005. The playback can be accessed by calling 800-642-1687 (or
706-645-9291 for international callers) and providing Conference ID
1305919. Ceradyne develops, manufactures and markets advanced
technical ceramic products and components for defense, industrial,
automotive/diesel and commercial applications. Additional
information can be found at the Company's web site:
www.ceradyne.com. Except for the historical information contained
herein, this news 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 include the ability of
Ceradyne to successfully integrate the Ceradyne and ESK business
and achieve anticipated operating synergies, and fluctuations
between the value of the dollar and Euro. Other risks and
uncertainties are described in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2004, and its Quarterly
Reports on Form 10-Q as filed with the Securities and Exchange
Commission. Below is a summary of unaudited comparative results.
Amounts in thousands except per share data: -0- *T Three Months
Nine Months Ended Ended September 30, September 30, 2005 2004 2005
2004 -------- -------- --------- --------- NET SALES $94,406
$56,329 $254,100 $132,240 Cost of product sales 59,576 38,373
164,823 89,238 -------- -------- --------- --------- GROSS PROFIT
34,830 17,956 89,277 43,002 -------- -------- --------- ---------
OPERATING EXPENSES: Selling 5,015 2,064 15,309 3,572 General and
administrative 5,442 3,698 15,179 9,028 Research and development
2,037 858 5,641 1,881 -------- -------- --------- --------- 12,494
6,620 36,129 14,481 -------- -------- --------- --------- INCOME
FROM OPERATIONS 22,336 11,336 53,148 28,521 Other income (expense):
Other income 129 948 528 2,391 Interest (expense) (1,872) (382)
(4,987) (382) -------- -------- --------- --------- (1,743) 566
(4,459) 2,009 INCOME BEFORE PROVISION FOR INCOME TAXES 20,593
11,902 48,689 30,530 Provision for income taxes 7,254 4,608 17,965
11,742 -------- -------- --------- --------- NET INCOME $13,339
$7,294 $30,724 $18,788 ======== ======== ========= =========
Earnings per share, basic $0.54 $0.30 $1.25 $0.78 Earnings per
share, diluted $0.53 $0.30 $1.23 $0.77 Avg. shares outstanding,
basic 24,586 24,303 24,530 24,095 Avg. shares outstanding, diluted
25,092 24,699 25,006 24,491 Condensed Consolidated Balance Sheets
(in thousands): September 30, December 31, 2005 2004
----------------- ----------------- Cash and cash equivalents
$4,108 $4,521 Short term investments 7,830 10,041 Other current
assets 140,950 120,085 Net property, plant and equipment 154,066
162,278 Other assets 19,084 19,429 -----------------
----------------- Total Assets $326,038 $316,354 =================
================= Current liabilities $49,556 $56,258 Long term
debt 107,800 108,625 Non current liabilities 10,236 10,735 Deferred
tax liability 7,031 5,695 Stockholders' equity 151,415 135,041
----------------- ----------------- Total Liabilities and
Stockholders Equity $326,038 $316,354 =================
================= *T
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