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.
CERADYNE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
(Unaudited) (Unaudited)
NET SALES $ 100,415 $ 95,267 $ 210,453 $ 195,039
COST OF GOODS SOLD 74,570 72,203 159,242 148,388
--------- --------- --------- ---------
Gross profit 25,845 23,064 51,211 46,651
OPERATING EXPENSES
Selling 6,718 6,978 12,573 13,885
General and administrative 8,914 10,475 16,956 20,197
Acquisition related
credit (31) - (119) -
Research and development 3,174 3,272 6,118 6,650
Restructuring - plant
closure and severance - 10,904 7 11,843
Goodwill impairment - 3,832 - 3,832
--------- --------- --------- ---------
18,775 35,461 35,535 56,407
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS 7,070 (12,397) 15,676 (9,756)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 728 795 1,627 1,523
Interest expense (1,609) (1,864) (3,195) (3,949)
Gain on early
extinguishment of debt - 1,785 - 1,785
Gain (loss) on auction rate
securities 949 (1,527) (978) (1,631)
Miscellaneous 881 (494) 1,410 (497)
--------- --------- --------- ---------
949 (1,305) (1,136) (2,769)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 8,019 (13,702) 14,540 (12,525)
PROVISION (BENEFIT) FOR INCOME
TAXES 1,456 (2,492) 2,987 (2,023)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 6,563 $ (11,210) $ 11,553 $ (10,502)
========= ========= ========= =========
BASIC INCOME (LOSS) PER SHARE $ 0.26 $ (0.44) $ 0.45 $ (0.41)
========= ========= ========= =========
DILUTED INCOME (LOSS) PER SHARE $ 0.26 $ (0.44) $ 0.45 $ (0.41)
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 25,431 25,711 25,421 25,766
DILUTED 25,597 25,711 25,576 25,766
CERADYNE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
June 30, December 31,
2010 2009
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 58,916 $ 122,154
Restricted cash - 3,130
Short-term investments 212,294 117,666
Accounts receivable, net of allowances for
doubtful accounts of $802 and $851 at
June 30, 2010 and December 31, 2009,
respectively 42,248 53,269
Other receivables 20,220 11,424
Inventories, net 80,070 100,976
Production tooling, net 11,261 12,006
Prepaid expenses and other 16,318 19,932
Deferred tax asset 12,076 13,796
------------ ------------
TOTAL CURRENT ASSETS 453,403 454,353
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, net 225,593 239,322
LONG TERM INVESTMENTS 15,746 20,019
INTANGIBLE ASSETS, net 85,532 89,409
GOODWILL 42,421 43,880
OTHER ASSETS 2,346 2,721
------------ ------------
TOTAL ASSETS $ 825,041 $ 849,704
============ ============
CURRENT LIABILITIES
Accounts payable $ 20,065 $ 24,683
Accrued expenses 20,248 23,463
------------ ------------
TOTAL CURRENT LIABILITIES 40,313 48,146
LONG-TERM DEBT 83,833 82,163
EMPLOYEE BENEFITS 19,188 21,769
OTHER LONG TERM LIABILITY 38,652 39,561
DEFERRED TAX LIABILITY 8,429 8,348
------------ ------------
TOTAL LIABILITIES 190,415 199,987
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $0.01 par value, 100,000,000
authorized, 25,357,047 and
25,401,005 shares issued and outstanding at
June 30, 2010 and December 31, 2009,
respectively 254 254
Additional paid-in capital 156,847 157,679
Retained earnings 481,809 470,256
Accumulated other comprehensive income (loss) (4,284) 21,528
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 634,626 649,717
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 825,041 $ 849,704
============ ============
CERADYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Six Months Ended
June 30,
--------------------
2010 2009
--------- ---------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 11,553 $ (10,502)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 18,237 19,359
Non cash interest expense on convertible debt 1,670 1,981
(Gain) on early extinguishment of debt - (1,785)
Payments of accreted interest on repurchased
convertible debt - (2,576)
Deferred income taxes 644 (2,457)
Stock compensation 1,969 1,777
Loss on marketable securities 978 1,631
Goodwill impairment - 3,832
Loss on equipment disposal 104 174
Change in operating assets and liabilities (net
of effect of businesses acquired):
Accounts receivable, net 9,069 (3,187)
Other receivables (9,261) 758
Inventories, net 16,340 4,024
Production tooling, net 598 1,224
Prepaid expenses and other assets 3,219 (315)
Accounts payable and accrued expenses (4,667) 8,655
Income taxes payable 49 (219)
Other long term liability (906) 693
Employee benefits 292 670
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITES 49,888 23,737
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (19,172) (12,331)
Changes in restricted cash 3,130 -
Purchases of marketable securities (95,380) (118,505)
Proceeds from sales and maturities of marketable
securities 4,501 61,166
Cash paid for acquisitions - (9,655)
Proceeds from sale of equipment 406 72
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (106,515) (79,253)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock due to exercise of
options 36 9
Excess tax benefit due to exercise of stock
options 7 7
Shares repurchased (3,379) (4,647)
Reduction on long term debt - (17,726)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (3,336) (22,357)
--------- ---------
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (3,275) 215
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (63,238) (77,658)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 122,154 215,282
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 58,916 $ 137,624
========= =========
CERADYNE, INC.
SEGMENT FINANCIAL INFORMATION
(Amounts in thousands)
The financial information for all segments is presented below (in
thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenue from External Customers
Advanced Ceramic Operations $ 39,054 $ 52,612 $ 90,883 $ 108,862
ESK Ceramics 30,961 24,079 62,709 47,665
Semicon Associates 2,321 1,944 4,580 4,020
Thermo Materials 23,513 15,313 43,360 31,524
Ceradyne Canada 1,039 5 1,372 318
Boron 6,401 7,403 12,587 13,452
Inter-segment elimination (2,874) (6,089) (5,038) (10,802)
--------- --------- --------- ---------
Total $ 100,415 $ 95,267 $ 210,453 $ 195,039
========= ========= ========= =========
Depreciation and Amortization
Advanced Ceramic Operations $ 2,314 $ 2,669 $ 4,662 $ 5,268
ESK Ceramics 2,894 3,949 6,259 7,087
Semicon Associates 82 93 166 186
Thermo Materials 1,690 903 3,036 2,251
Ceradyne Canada 342 331 683 641
Boron 1,674 1,949 3,431 3,926
--------- --------- --------- ---------
Total $ 8,996 $ 9,894 $ 18,237 $ 19,359
========= ========= ========= =========
Segment Income (Loss) before
Provision for Income Taxes
Advanced Ceramic Operations $ (647) $ 4,844 $ 1,412 $ 9,091
ESK Ceramics 3,941 (15,690) 6,012 (20,079)
Semicon Associates 448 239 662 473
Thermo Materials 5,998 3,566 10,304 7,198
Ceradyne Canada (545) (4,842) (1,431) (5,611)
Boron (972) (1,899) (2,192) (3,652)
Inter-segment elimination (204) 80 (227) 55
--------- --------- --------- ---------
Total $ 8,019 $ (13,702) $ 14,540 $ (12,525)
========= ========= ========= =========
Segment Assets
Advanced Ceramic Operations $ 405,135 $ 386,754 $ 405,135 $ 386,754
ESK Ceramics 164,567 212,277 164,567 212,277
Semicon Associates 5,852 5,830 5,852 5,830
Thermo Materials 121,215 103,577 121,215 103,577
Ceradyne Canada 18,341 16,689 18,341 16,689
Boron 109,931 115,369 109,931 115,369
--------- --------- --------- ---------
Total $ 825,041 $ 840,496 $ 825,041 $ 840,496
========= ========= ========= =========
Expenditures for Property,
Plant & Equipment
Advanced Ceramic Operations $ 1,838 $ 948 $ 3,150 $ 2,132
ESK Ceramics 380 1,500 836 2,924
Semicon Associates 253 24 441 75
Thermo Materials 9,290 1,924 12,678 6,717
Ceradyne Canada 74 63 120 163
Boron 518 161 1,947 320
--------- --------- --------- ---------
Total $ 12,353 $ 4,620 $ 19,172 $ 12,331
========= ========= ========= =========
CERADYNE, INC.
MARKET APPLICATION INFORMATION
(Dollar amounts in thousands)
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 June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2010 2009 2010 2009
------------- ------------- ------------- -------------
Defense $ 33,772 $ 50,222 $ 79,506 $ 102,450
Industrial 55,387 36,259 107,368 75,240
Automotive/
Diesel 8,258 5,649 17,687 11,169
Commercial 2,998 3,137 5,892 6,180
------------- ------------- ------------- -------------
Total $ 100,415 $ 95,267 $ 210,453 $ 195,039
============= ============= ============= =============
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2010 2009 2010 2009
------------- ------------- ------------- -------------
Defense 33.6% 52.7% 37.8% 52.5%
Industrial 55.2 38.1 51.0 38.6
Automotive/
Diesel 8.2 5.9 8.4 5.7
Commercial 3.0 3.3 2.8 3.2
------------- ------------- ------------- -------------
Total 100.0% 100.0% 100.0% 100.0%
============= ============= ============= =============
Ceradyne, Inc. (MM) (NASDAQ:CRDN)
Historical Stock Chart
From Apr 2024 to May 2024
Ceradyne, Inc. (MM) (NASDAQ:CRDN)
Historical Stock Chart
From May 2023 to May 2024
