Ceradyne, Inc. Reports First Quarter 2010 Financial Results

Ceradyne, Inc. (Nasdaq: CRDN) reported financial results for the first quarter ended March 31, 2010.

Sales for the first quarter 2010 were $110.0 million, compared with $99.8 million in first quarter 2009. Net income for the first quarter 2010 increased to $5.0 million, or $0.20 per fully diluted share, compared to $0.7 million, or $0.03 per fully diluted share in the first quarter 2009. The net income for the first quarter 2010 included a pre-tax charge for losses on auction rate securities of $1.9 million or a reduction of approximately $0.05 to fully diluted earnings per share. Fully diluted average shares outstanding for first quarter 2010 were 25,585,369 compared to 26,033,194 in the same period in 2009.

The Company is again reiterating its guidance for the full fiscal year 2010 initially given on October 27, 2009 and reiterated on January 11, and again on February 27, 2010 of $.60 per fully diluted share to approximately $1.05 per fully diluted share and sales from $380.0 to $430.0 million.

Gross profit margin was 23.1% of net sales in the first quarter 2010 compared to 23.6% in the same period in 2009. The provision for income taxes was 23.5% in first quarter 2010, compared to 39.8% in the first quarter 2009.

New orders for first quarter 2010 were $105.7 million, compared to $150.7 million for the same period last year. Total order backlog as of March 31, 2010 was $130.8 million, compared to $177.2 million at March 31, 2009.

Joel P. Moskowitz, Ceradyne president and chief executive officer, commented: “Although today’s reported financial results for the first quarter of 2010 were well within our projections, I believe a more interesting and positive analysis can be obtained by examining what areas contributed to the total Company performance.

“ Lightweight Ceramic Body Armor. Sales in Q1 2010 were $30.9 million, down $15.4 million from $46.3 million in shipments in Q1 2009. To date, we have not received additional delivery orders for either XSAPI or ESAPI against the remaining $2.2 billion ID/IQ (Indefinite Delivery/Indefinite Quantity) contract which runs through October 2013. The wide range in our projections is based on the uncertainty of body armor delivery orders in time to ship in 2010. We have recently accelerated our marketing efforts related to lightweight ceramic body armor.

“ ESK Ceramics. Sales of ESK’s products increased $8.1 million in Q1 2010 from $23.6 million in Q1 2009 to $31.7 million in Q1 2010. ESK’s pre-tax income turned sharply around from a pre-tax loss in Q1 of last year of $4.4 million to a pre-tax income in Q1 2010 of $2.1 million. Furthermore, gross margins this quarter were 23.3% compared to 14.3% in last year’s first quarter.

“Although ESK experienced about $1.4 million in revenue in Q1 2010 that may not repeat going forward, we believe that many of ESK’s core product lines, as well as some pricing strength, will continue to produce positive results from our Germany based operation.