Ceradyne, Inc. Reports Third-Quarter 2002 Results
COSTA MESA, Calif.--Oct. 28, 2002--Ceradyne, Inc. today reported financial results for the third-quarter and nine-months ended September 30, 2002.Sales for the third quarter rose 40% to $14.3 million, compared to $10.2 million in third quarter 2001. Net income was $662,000, or $0.08 per basic and diluted share, compared to $658,000, or $0.08 per basic and diluted share, for the year-ago quarter.
Pre-tax income for the quarter was $1.02 million versus $.88 million in the 2001 comparable period.
Provision for taxes for both the quarter and year-to-date were 35% compared to 25% in 2001. The lower tax rate in 2001 was the result of the Company's complete recognition for financial statement purposes of all net operating loss carryforwards in 2001.
Sales increased 31% for the nine-month period to $43.6 million, compared to $33.3 million in the prior-year period. Net income after establishing a warranty reserve of $.7 million in the second quarter 2002 fell to $1.7 million, or $0.20 per basic and diluted share, compared to $3.1 million, or $0.36 per basic and diluted share, in the prior-year period.
New bookings for the third quarter reached a record $16.0 million, compared to $11.6 million in the year-earlier quarter. For the first nine months of 2002, new bookings increased 45% to a record $44.1 million, compared to $30.7 million for the same 2001 period. Total backlog as of September 30, 2002 increased to a record $28.2 million (including options of $1.4 million), compared to the year-ago backlog of $25.6 million (including options of $2.2 million).
Joel P. Moskowitz, Ceradyne's president and chief executive officer, commented: "The increasing level of shipments and particularly the record level of new orders is extremely encouraging. However, Ceradyne management must focus on widening its profit margins as the Company moves forward. To this end, we have engaged the consulting firm of JCIT International to assist Ceradyne in implementing a manufacturing strategy aimed at reducing inventory and work-in-process `queue' times with a goal of lower unit costs and increasing productivity. This strategy, known as Demand Flow(R) Technology, will be implemented by Ceradyne's Advanced Ceramic Operations over the next 12 months, with emphasis on the Company's three core product lines -- armor, diesel engine components, and Clarity(TM) orthodontic brackets."
Moskowitz continued: "I believe that the newly formed executive committee consisting of myself, Ceradyne Vice President Dave Reed, and Ceradyne's new Chief Financial Officer Jerry Pellizzon, will create a more effective, executive structure for managing the Company and implementing improvements. Furthermore, our marketing strategy will focus on industrial, automotive and consumer products that generally represent recurring orders with long-range visibility to complement the growing defense market, which tends to be less predictable. We will continue Ceradyne's entrepreneurial, technology-driven strategies which will allow us to take advantage of targets of opportunity."
Ceradyne develops, manufactures and markets advanced technical ceramics for industrial, electronic, defense and consumer applications. Additional information about the Company can be found at www.ceradyne.com.
Below is a summary of unaudited comparative results. Amounts in
thousands except per share data.
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
NET SALES $14,300 $10,178 $43,598 $33,264
Cost of product sales 11,058 7,377 34,466 23,375
GROSS PROFIT 3,242 2,801 9,132 9,889
Operating expenses:
Selling 514 497 1,504 1,554
General and administrative 1,233 1,200 3,514 3,667
Research and development 506 302 1,537 838
2,253 1,999 6,555 6,059
INCOME FROM OPERATIONS 989 802 2,577 3,830
Other income (expense):
Other income 60 81 176 328
Interest (expense) (31) (6) (64) (20)
29 75 112 308
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,018 877 2,689 4,138
Provision for income taxes 356 219 941 1,034
NET INCOME $662 $658 $1,748 $3,104
Earnings per share, basic $0.08 $0.08 $0.21 $0.37
Earnings per share, diluted $0.08 $0.08 $0.20 $0.36
Avg. shares outstanding, basic 8,512 8,364 8,475 8,331
Avg. shares outstanding, diluted 8,769 8,722 8,718 8,676
Condensed Consolidated Balance Sheets (in thousands):
Sept. 30, Dec. 31,
2002 2001
Cash and Cash Equivalents $ 186 $ 1,017
Other Current Assets 32,872 29,407
Net Property, Plant and Equipment 18,955 16,016
Other Assets 1,577 1,511
Total Assets $ 53,590 $ 47,951
Current Liabilities 10,035 7,257
Long Term Debt 83 158
Deferred Revenue 67 270
Warranty Reserve 650 ---
Deferred Tax Liability 609 609
Stockholders' Equity 42,146 39,657
Total Liabilities and Stockholders' Equity $ 53,590 $ 47,951