Ceradyne Posts Lower Q3 Profit; Trims FY09 View; Forecasts FY10 Earnings Above Estimates

10/27/2009 2:46 PM ET

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(RTTNews) - Tuesday, military body-armor maker Ceradyne, Inc. (CRDN: News ) reported a drop in third-quarter profit on lower revenues while its gross margin and number of new orders took a hit. The company trimmed its fiscal 2009 guidance and provided fiscal 2010 earnings outlook above Wall Street estimates.

The Costa Mesa, California-based company's third quarter net income dropped to $4.9 million or $0.19 per share from $18.82 million or $0.71 per share a year ago.

On average, 10 analysts polled by Thomson Reuters estimated earnings of $0.28 per share for the quarter. Analysts' estimates typically exclude special items. Third-quarter net income included a pre-tax charge for losses on auction rate securities of $1.8 million that reduced earnings by $0.07 per share.

Revenue for the third quarter declined to $108 million from $167.7 million in the third quarter of 2008. Analysts expected revenue of $109.98 million for the quarter. Gross profit declined to $28.63 million from $66.66 million while gross profit margin eased to 26.5% from 39.7% in the same period in 2008.

New orders for the third quarter were $100.5 million, compared to $119.4 million for the same period last year.

Income from operations for the quarter came down to $8.9 million from $32.21 million in the prior-year quarter.

For the nine-month period, the company reported a net loss of $5.6 million or $0.22 per share, compared to a net income of $83.81 million or $3.12 per share in the similar period last year. Third-quarter loss included charges for restructuring and impairment that had a negative impact of $0.51 per share. Revenue for the period slid to $303 million from $541.3 million in the year-earlier period.

Looking forward to fiscal 2009, the company trimmed its earnings guidance to $0.60 per share from $0.70 per share and adjusted its sales guidance to range from $410 to $415 million from the previous guidance range of $420 to $440 million.

Earnings guidance does not include the impact of the total restructuring and impairment pre-tax charges for all of 2009, which are estimated to be $0.55 per share, the company said. On a consensus, analysts estimate earnings of $0.65 per share on revenues of $419.04 million for fiscal 2009.

For fiscal 2010, the company estimates earnings to range from $0.60 to $1.05 per share and sales to range from $380 million to $430 million. Analysts, on a consensus, expect earnings of $1.08 per share on revenues of $420.53 million.