CRDN Ceradyne, Inc. (MM)

Ceradyne, Inc. (Nasdaq:CRDN) today reported financial results for the first quarter ended March 31, 2008. Sales for first-quarter 2008 increased slightly to $188.5 million from $188.4 million in first-quarter 2007. Net income for first-quarter 2008 decreased 13.6% to $32.9 million, or $1.20 per fully diluted share, compared to $38.1 million, or $1.38 per fully diluted share, in first-quarter 2007. Fully diluted average shares outstanding for first-quarter 2008 were 27,407,000 compared to 27,528,000 in the same period in 2007. Gross profit margin was 37.9% of net sales in first-quarter 2008 compared to 40.9% in first quarter 2007. The provision for income taxes was 36.3% in first-quarter 2008, compared to 36.1% in first quarter 2007. New orders for first-quarter 2008 were $211.8 million, compared to $176.5 million for the same period last year. Total order backlog as of March 31, 2008 was $262.7 million, compared to $332.3 million at March 31, 2007. Joel P. Moskowitz, Ceradyne president and chief executive officer, commented: �During the first quarter of 2008, we continued to make progress on our strategy of diversification through internal developments, as well as through possible acquisitions. A few brief highlights of Q1 include: Tom Cole Appointed Vice President Business Development. Tom previously served as president of Minco, Inc., which we acquired on July 10, 2007. Tom�s entire career has been in engineering and senior management related to industrial ceramics. I believe he will be a catalyst in moving the Company forward in 2008 on several acquisition opportunities. Solar Energy Ceramic Crucibles. We continue to see increasing demand for our high purity ceramic crucibles used in the manufacture of polycrystalline silicon for photovoltaic solar cells. We anticipate our proposed new 200,000 square foot ceramic crucible manufacturing facility in Tianjin, China, will be in production early in 2009. This is in addition to the 98,000 square foot ceramic crucible manufacturing facility we opened in 2007 in Tianjin, China. Ceradyne Stock Repurchase Plan. On March 4, 2008, we announced that Ceradyne�s Board had authorized the repurchase of up to $100 million worth of our common stock in the open market or in privately negotiated transactions. To date, we have purchased approximately one million shares at an average price of approximately $30 per share.� Mr. Moskowitz further commented: �On February 26, 2008, we provided the following guidance for all of 2008: Sales range from $715 million to $836 million; Earnings range from $4.55 to $5.05 per fully diluted share. Based on our current new order rate, backlog and Q1 results, we are pleased to reiterate the above guidance. �Due to the potential magnitude of the BULL� combat vehicle program, as well as the five-year XSAPI/ESAPI proposal, neither of which has been awarded, we have provided the 2008 guidance with an unusually wide range. The lower range reflects all of our current business units (even though multi-year XSAPI/ESAPI orders will not be issued before Q3 2008), but does not include any production orders for the BULL combat vehicle. The higher end of the range includes the lower end plus production of the BULL combat vehicle in the second half of 2008.� 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 quarter ended March 31, 2008. To participate in the teleconference, please call toll free 877-717-3046 (or 706-634-6364 for international callers). 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 11:00 a.m. PDT today through 9:00 p.m. PDT on April 29, 2008. The playback can be accessed by calling 800-642-1687 (or 706-645-9291 for international callers) and providing Conference ID 43635399. 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 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, 2007, 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. Below is a summary of unaudited comparative results. CERADYNE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) � Three Months Ended March 31, 2008 � 2007 (Unaudited) NET SALES $ 188,537 $ 188,443 COST OF GOODS SOLD � 117,008 � � 111,331 � Gross profit 71,529 77,112 OPERATING EXPENSES Selling 7,855 6,298 General and administrative 11,815 9,777 Research and development � 3,007 � � 3,486 � � 22,677 � � 19,561 � Income from operations � 48,852 � � 57,551 � OTHER INCOME (EXPENSE): Royalty income 31 30 Interest income 2,709 2,778 Interest expense (1,112 ) (1,025 ) Miscellaneous � 1,132 � � 274 � 2,760 2,057 Income before provision for income taxes 51,612 59,608 PROVISION FOR INCOME TAXES � 18,710 � � 21,519 � NET INCOME $ 32,902 � $ 38,089 � BASIC INCOME PER SHARE $ 1.21 � $ 1.40 � DILUTED INCOME PER SHARE $ 1.20 � $ 1.38 � WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 27,150 27,150 DILUTED 27,407 27,528 CERADYNE, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) � � March 31, 2008 December 31, 2007 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 185,766 $ 155,103 Restricted cash 2,678 2,660 Short-term investments 11,488 29,582 Accounts receivable, net of allowances for doubtful accounts of approximately $941 and $792 at March 31, 2008 and December 31, 2007, respectively 89,298 85,346 Other receivables 7,354 5,704 Inventories, net 98,595 92,781 Production tooling, net 15,024 16,632 Prepaid expenses and other 12,372 12,391 Deferred tax asset � 12,590 � 12,455 TOTAL CURRENT ASSETS � 435,165 � 412,654 PROPERTY, PLANT AND EQUIPMENT, net 266,657 243,892 LONG TERM INVESTMENTS 35,564 38,089 INTANGIBLE ASSETS, net 36,533 37,578 GOODWILL 47,685 46,848 OTHER ASSETS � 4,133 � 4,225 TOTAL ASSETS $ 825,737 $ 783,286 � CURRENT LIABILITIES Accounts payable $ 37,450 $ 35,990 Accrued expenses 27,082 22,483 Income taxes payable � 16,389 � 258 TOTAL CURRENT LIABILITIES 80,921 58,731 LONG-TERM DEBT 121,000 121,000 EMPLOYEE BENEFITS 15,126 13,650 OTHER LONG TERM LIABILITY 5,108 4,985 DEFERRED TAX LIABILITY � 5,865 � 6,291 TOTAL LIABILITIES 228,020 204,657 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS� EQUITY Common stock, $0.01 par value, 100,000,000 authorized, 26,334,593 and 27,318,530 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively 263 272 Additional paid in capital 156,268 185,702 Retained earnings 394,203 361,301 Accumulated other comprehensive income � 46,983 � 31,354 TOTAL SHAREHOLDERS� EQUITY � 597,717 � 578,629 TOTAL LIABILITIES AND SHAREHOLDERS� EQUITY $ 825,737 $ 783,286