Attached files
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| 8-K - CERADYNE, INC. - FORM 8-K - 04-26-11 - CERADYNE INC | form8-k.htm |
Exhibit 99.1
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Jerrold J. Pellizzon
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Phil Bourdillon/Gene Heller
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Chief Financial Officer
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Silverman Heller Associates
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(714) 549-0421
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(310) 208-2550
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CERADYNE, INC. REPORTS FIRST QUARTER
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2011 FINANCIAL RESULTS
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Costa Mesa, Calif.– April 26, 2011–Ceradyne, Inc. (Nasdaq: CRDN) reported financial results for the first quarter ended March 31, 2011.
Sales for the first quarter 2011 were $150.1 million, compared with $110.0 million in the first quarter 2010. Net income for the first quarter 2011 increased to $23.6 million, or $0.94 per fully diluted share, compared to $5.0 million, or $0.20 per fully diluted share in the first quarter 2010. The net income for the first quarter 2011 included an acquisition related charge of $0.6 million or a reduction of approximately $0.01 to fully diluted earnings per share. The net income for the first quarter 2010 included a pre-tax charge for losses on auction rate securities of $1.9 million and an acquisition related credit of $84,000 which, combined, resulted in a reduction of approximately $0.04 to fully diluted earnings per share. Fully diluted average shares outstanding for the first quarter 2011 were 25,129,924 compared to 25,585,369 in the same period in 2010.
Taking into consideration the strong financial results in the first quarter of 2011 tempered by the continued uncertainty of body armor shipments in the latter part of the second half of 2011, the Company is increasing its 2011 full-year guidance to a range of $3.10 to $3.50 fully diluted earnings per share and a range of $570 million to $600 million in sales. The prior 2011 guidance issued on March 9, 2011 was $2.35 to $2.70 earnings per fully diluted share and $505 million to $560 million in sales.
Gross profit margin was 38.7% of net sales in the first quarter 2011 compared to 23.1% in the same period in 2010. The provision for income taxes was 32.3% in the first quarter 2011, compared to 23.5% in the first quarter 2010.
New orders for the first quarter 2011 were $231.7 million, compared to $105.7 million for the same period last year. Total order backlog as of March 31, 2011 was $267.4 million, compared to $130.8 million at March 31, 2010.
Joel P. Moskowitz, Ceradyne president and chief executive officer, commented: “We are extremely pleased with Ceradyne’s first quarter performance. Almost all areas reflected an excellent start to 2011. New orders of $231.7 million and an order backlog of $267.4 million indicate a strong 2011, as these numbers are double the Q1 2010 results as well as reflect a positive book-to-bill ratio of 1.54:1.00. Perhaps the most encouraging Q1 operating result is the continuing increase in gross margins. These Q1 results and a cautiously optimistic outlook for the balance of 2011 are the basis for increasing our 2011 guidance.”
Mr. Moskowitz further stated, “Our recently acquired VIOX operation continued to exceed internal expectations and we have committed to significantly increase its capacity in the field of bio-active materials in anticipation of increasing demand for VIOX materials as a component in consumer dental products.
“The new high purity fused silica ceramic solar crucible factory in Tianjin, China, commenced initial shipments of its crucibles to Ceradyne’s key accounts for qualification in February and March. All Ceradyne customers who received initial crucibles from the new Tianjin factory have approved them for production quantities which will begin shipping in Q2, 2011.
"While the projected Enhanced Combat Helmet (ECH) procurement has been delayed, our outlook for the recently introduced PetroCeram® ceramic sand screens has strengthened."
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 first quarter ended March 31, 2011. To participate in the teleconference, please call toll free 800-949-2163 (or 719-325-2250 for international callers) approximately 10 minutes prior to the above start time and provide Conference ID 7738791. 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 12:00 p.m. PDT on April 26 through 11 a.m. PDT on April 28, 2011. The playback can be accessed by calling 888-203-1112 (or 719-457-0820 for international callers) and providing Conference ID 7738791.
Information about Ceradyne, Inc.
Ceradyne develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, energy, 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, 2010, 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.
-more-
CERADYNE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
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Three Months Ended March 31,
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2011
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2010
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(Unaudited)
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NET SALES
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$ | 150,102 | $ | 110,038 | ||||
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COST OF GOODS SOLD
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92,014 | 84,672 | ||||||
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Gross profit
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58,088 | 25,366 | ||||||
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OPERATING EXPENSES
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Selling, general and administrative
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18,836 | 13,904 | ||||||
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Acquisition related charge (credit)
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584 | (88 | ) | |||||
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Research and development
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3,067 | 2,944 | ||||||
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TOTAL OPERATING EXPENSES
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22,487 | 16,760 | ||||||
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INCOME FROM OPERATIONS
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35,601 | 8,606 | ||||||
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OTHER INCOME (EXPENSE):
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Interest income
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798 | 899 | ||||||
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Interest expense
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(1,448 | ) | (1,586 | ) | ||||
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Loss on auction rate securities
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- | (1,927 | ) | |||||
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Miscellaneous
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(87 | ) | 529 | |||||
| (737 | ) | (2,085 | ) | |||||
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INCOME BEFORE PROVISION FOR INCOME TAXES
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34,864 | 6,521 | ||||||
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PROVISION FOR INCOME TAXES
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11,269 | 1,531 | ||||||
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NET INCOME
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$ | 23,595 | $ | 4,990 | ||||
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NET INCOME PER COMMON SHARE:
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BASIC
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$ | 0.95 | $ | 0.20 | ||||
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DILUTED
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$ | 0.94 | $ | 0.20 | ||||
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SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS:
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BASIC
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24,839 | 25,411 | ||||||
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DILUTED
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25,130 | 25,585 | ||||||
CERADYNE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
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March 31, 2011
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December 31, 2010
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(Unaudited)
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 49,085 | $ | 53,436 | ||||
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Short-term investments
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191,855 | 192,860 | ||||||
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Accounts receivable, net of allowances for doubtful accounts of $1,060
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and $685 at March 31, 2011 and December 31, 2010, respectively
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73,099 | 53,019 | ||||||
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Other receivables
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20,829 | 17,553 | ||||||
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Inventories
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101,509 | 94,258 | ||||||
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Production tooling, net
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18,831 | 10,037 | ||||||
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Prepaid expenses and other
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33,565 | 38,653 | ||||||
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Deferred tax asset
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6,832 | 6,808 | ||||||
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TOTAL CURRENT ASSETS
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495,605 | 466,624 | ||||||
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PROPERTY, PLANT AND EQUIPMENT, net
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251,879 | 243,681 | ||||||
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LONG TERM INVESTMENTS
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20,186 | 26,187 | ||||||
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INTANGIBLE ASSETS, net
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105,432 | 83,475 | ||||||
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GOODWILL
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50,781 | 43,219 | ||||||
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OTHER ASSETS
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2,647 | 2,127 | ||||||
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TOTAL ASSETS
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$ | 926,530 | $ | 865,313 | ||||
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CURRENT LIABILITIES
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Accounts payable
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$ | 27,536 | $ | 25,738 | ||||
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Accrued expenses
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30,033 | 24,603 | ||||||
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Income taxes payable
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3,217 | 1,869 | ||||||
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TOTAL CURRENT LIABILITIES
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60,786 | 52,210 | ||||||
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LONG-TERM DEBT
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86,489 | 85,599 | ||||||
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EMPLOYEE BENEFITS
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23,357 | 22,269 | ||||||
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OTHER LONG TERM LIABILITIES
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54,477 | 41,902 | ||||||
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DEFERRED TAX LIABILITY
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11,776 | 11,124 | ||||||
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TOTAL LIABILITIES
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236,885 | 213,104 | ||||||
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COMMITMENTS AND CONTINGENCIES (Note 13)
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STOCKHOLDERS’ EQUITY
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Common stock, $0.01 par value, 100,000,000 authorized, 24,893,158 and 24,713,126 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
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250 | 247 | ||||||
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Additional paid-in capital
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144,755 | 141,973 | ||||||
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Retained earnings
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523,127 | 499,532 | ||||||
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Accumulated other comprehensive income
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21,513 | 10,457 | ||||||
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TOTAL STOCKHOLDERS’ EQUITY
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689,645 | 652,209 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 926,530 | $ | 865,313 | ||||
1
CERADYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
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Three Months Ended March 31,
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2011
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2010
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(Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$ | 23,595 | $ | 4,990 | ||||
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ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
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Depreciation and amortization
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9,749 | 9,178 | ||||||
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Amortization of bond premium
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375 | - | ||||||
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Non cash interest expense on convertible debt
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889 | 827 | ||||||
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Deferred income taxes
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382 | 174 | ||||||
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Stock compensation
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972 | 964 | ||||||
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Loss on marketable securities
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113 | 1,927 | ||||||
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Loss on equipment disposal
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49 | 4 | ||||||
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Change in operating assets and liabilities (net of effect of businesses acquired):
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Accounts receivable, net
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(16,694 | ) | (7,035 | ) | ||||
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Other receivables
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(2,984 | ) | (8,863 | ) | ||||
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Inventories
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(2,502 | ) | 9,672 | |||||
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Production tooling, net
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(3,424 | ) | 1,498 | |||||
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Prepaid expenses and other assets
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477 | 3,300 | ||||||
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Accounts payable and accrued expenses
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4,222 | (134 | ) | |||||
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Income taxes payable
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1,249 | - | ||||||
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Other long term liability
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1,086 | (328 | ) | |||||
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Employee benefits
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205 | 140 | ||||||
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NET CASH PROVIDED BY OPERATING ACTIVITES
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17,759 | 16,314 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property, plant and equipment
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(7,677 | ) | (6,851 | ) | ||||
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Changes in restricted cash
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- | 3,130 | ||||||
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Purchases of marketable securities
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(240 | ) | (344 | ) | ||||
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Proceeds from sales and maturities of marketable securities
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7,000 | 12 | ||||||
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Proceeds from sale of equipment
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1,339 | 284 | ||||||
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Acquisition of business
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(27,673 | ) | - | |||||
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NET CASH USED IN INVESTING ACTIVITIES
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(27,251 | ) | (3,769 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from issuance of stock due to exercise of options
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897 | 24 | ||||||
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Excess tax benefit due to exercise of stock options
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1,771 | 7 | ||||||
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NET CASH PROVIDED BY FINANCING ACTIVITIES
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2,668 | 31 | ||||||
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EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
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2,473 | (963 | ) | |||||
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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(4,351 | ) | 11,613 | |||||
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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53,436 | 122,154 | ||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 49,085 | $ | 133,767 | ||||
CERADYNE, INC.
SEGMENT FINANCIAL INFORMATION
(Amounts in thousands)
The financial information for all segments is presented below (in thousands):
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Three Months Ended March 31,
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2011
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2010
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Revenue from External Customers
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Advanced Ceramic Operations
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$ | 76,630 | $ | 54,088 | ||||
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ESK Ceramics
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40,123 | 31,748 | ||||||
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Thermo Materials
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31,111 | 19,847 | ||||||
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Boron
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7,940 | 6,519 | ||||||
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Inter-segment elimination
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(5,702 | ) | (2,164 | ) | ||||
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Total
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$ | 150,102 | $ | 110,038 | ||||
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Depreciation and Amortization
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Advanced Ceramic Operations
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$ | 2,871 | $ | 2,432 | ||||
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ESK Ceramics
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3,139 | 3,303 | ||||||
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Thermo Materials
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1,686 | 1,345 | ||||||
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Boron
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2,053 | 2,098 | ||||||
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Total
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$ | 9,749 | $ | 9,178 | ||||
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Segment Income (Loss) from Operations and Income before Provision for Income Taxes
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Advanced Ceramic Operations
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$ | 17,014 | $ | 2,823 | ||||
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ESK Ceramics
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7,805 | 2,710 | ||||||
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Thermo Materials
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10,854 | 5,253 | ||||||
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Boron
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- | (2,157 | ) | |||||
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Inter-segment elimination
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(72 | ) | (23 | ) | ||||
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Total segment income from operations
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$ | 35,601 | $ | 8,606 | ||||
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Other expense
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(737 | ) | (2,085 | ) | ||||
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Total Income before Provision for Income Taxes
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$ | 34,864 | $ | 6,521 | ||||
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Segment Assets
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Advanced Ceramic Operations
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$ | 453,886 | $ | 416,875 | ||||
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ESK Ceramics
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185,070 | 192,166 | ||||||
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Thermo Materials
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161,065 | 107,995 | ||||||
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Boron
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126,509 | 128,223 | ||||||
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Total
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$ | 926,530 | $ | 845,259 | ||||
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Expenditures for Property, Plant & Equipment
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Advanced Ceramic Operations
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$ | 1,400 | $ | 1,500 | ||||
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ESK Ceramics
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678 | 487 | ||||||
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Thermo Materials
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4,949 | 3,389 | ||||||
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Boron
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650 | 1,475 | ||||||
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Total
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$ | 7,677 | $ | 6,851 | ||||
CERADYNE, INC.
OPERATING SEGMENT AND MARKET APPLICATION INFORMATION
(Amounts in thousands)
The tables below show, for each of our four operating segments, revenues and operating income in the periods indicated.
Segment revenues (in millions):
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Three Months Ended March 31,
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2011
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2010
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Change
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Advanced Ceramic Operations
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$ | 76.7 | $ | 54.1 | 41.7 | % | ||||||
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ESK Ceramics
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40.1 | 31.7 | 26.4 | % | ||||||||
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Thermo Materials
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31.1 | 19.8 | 56.8 | % | ||||||||
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Boron
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7.9 | 6.5 | 21.8 | % | ||||||||
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Inter-segment elimination
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(5.7 | ) | (2.1 | ) | 162.8 | % | ||||||
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Total
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$ | 150.1 | $ | 110.0 | 36.4 | % | ||||||
Segment operating income (loss) (in millions):
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Three Months Ended March 31,
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2011
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2010
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Change
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Advanced Ceramic Operations
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$ | 17.0 | $ | 2.8 | 502.7 | % | ||||||
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ESK Ceramics
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7.8 | 2.7 | 188.0 | % | ||||||||
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Thermo Materials
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10.9 | 5.3 | 106.6 | % | ||||||||
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Boron
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- | (2.2 | ) | n/m | * | |||||||
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Inter-segment elimination
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(0.1 | ) | - | n/m | * | |||||||
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Total
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$ | 35.6 | $ | 8.6 | 313.7 | % | ||||||
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* Not meaningful
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We categorize our products into five market applications. The table below shows our sales by market application and the percentage contribution to our total sales of each market application in the different time periods.
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Three Months Ended March 31,
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2011
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2010
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Sales
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%
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Sales
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%
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Defense
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$ | 64.8 | 43.1 | $ | 45.7 | 41.5 | ||||||||||
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Industrial
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39.5 | 26.3 | 33.3 | 30.3 | ||||||||||||
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Energy
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33.1 | 22.1 | 18.7 | 17.0 | ||||||||||||
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Automotive/Diesel
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9.7 | 6.5 | 9.4 | 8.6 | ||||||||||||
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Commercial
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3.0 | 2.0 | 2.9 | 2.6 | ||||||||||||
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Total
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$ | 150.1 | 100.0 | % | $ | 110.0 | 100.0 | % | ||||||||
CERADYNE, INC.
NON-GAAP FINANCIAL INFORMATION
(Amounts in thousands, except per share data)
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Three Months Ended March 31,
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2011
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2010
|
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(Unaudited)
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GAAP income from operations
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$ | 35,601 | $ | 8,606 | ||||
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1. Acquisition related charge (credit)
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584 | (88 | ) | |||||
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Non-GAAP income from operations before acquisition charges
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$ | 36,185 | $ | 8,518 | ||||
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GAAP net income
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$ | 23,595 | $ | 4,990 | ||||
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Reconciling items:
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Special charges
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||||||||
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1. Acquisition related charge (credit)
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584 | (88 | ) | |||||
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2. Loss on auction rate securities
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- | 1,927 | ||||||
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Total special charges
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584 | 1,839 | ||||||
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Total tax effect on non-GAAP adjustments (A)
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(231 | ) | (726 | ) | ||||
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Non-GAAP net income
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$ | 23,948 | $ | 6,103 | ||||
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Diluted non-GAAP income per share
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$ | .95 | $ | .24 | ||||
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Increase due to Non-GAAP adjustments
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$ | .01 | $ | .04 | ||||
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Diluted GAAP income per share
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$ | .94 | $ | .20 | ||||
(A) The tax effect on pre-tax non-GAAP adjustments is calculated using the relevant tax jurisdictions’ statutory tax rates.
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