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Ladish Slides on Caution Flag

Managing the Airbus delays will be a 'challenge' next quarter.

Ladish (LDSH) slumped late Friday after the Airbus supplier posted a mixed third quarter and made cautious comments about the end of the year.

The Cudahy, Wis., metals company made $6.4 million, or 45 cents a share, for the quarter ended Sept. 30, up from the year-ago $3.3 million, or 23 cents a share. Sales rose to $90.7 million from $64.8 million a year earlier.

Analysts surveyed by Thomson Financial were looking for a 31-cent profit on sales of $92 million.

"The 40% sales increase in 2006 compared to 2005 is due to the continued strength of the aerospace industry and the integration of the acquisitions of ZKM and Valley Machining," said CEO Kerry L. Woody. "Due to increased sales volumes, product mix, favorable by-product sales and continued focus on cost reductions, the Company's operations improved in the third quarter of 2006 as gross margins were 16.8% in contrast to 15.8% in the third quarter of 2005.

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"Currently, orders supporting the Airbus A380 have moved out of the remainder of 2006 and 2007 and into 2008 and beyond," he added. "Managing the associated raw material issues will be a challenge in the fourth quarter.

"Alternative program demands will utilize the capacity of the rescheduled A380 orders in 2007.

"Our backlog continues to grow and reached a record high of $559 million at the end of the third quarter of 2006 in contrast to $395 million at the same date in 2005. We expect 2007 to reflect this strength with improved revenues and earnings. We are seeking opportunities to capitalize on this upturn to grow our business both internally and externally to better position our company for the future. All of the operating units of Ladish are experiencing an improvement in business and profitability. We continue to be optimistic in the sustainability of the overall aerospace market. Our investment plans and established cost reduction programs remain focused on sustaining the profitability of the business and improving our cash position while serving the needs of our customers."

Shares fell 96 cents late Friday to $32.70.