COSTA MESA, CA--(Marketwire - April 24, 2012) - Ceradyne, Inc. (NASDAQ: CRDN) reported financial results for the first quarter ended March 31, 2012.

Sales for the first quarter 2012 were $106.3 million, compared with $150.1 million in the first quarter 2011. Net income for the first quarter 2012 decreased to $3.8 million, or $0.16 per fully diluted share, on 24,360,450 shares, compared to a net income of $23.6 million, or $0.94 per fully diluted share on 25,129,924 shares in the first quarter 2011.

Gross profit margin was 27.4% of net sales in the first quarter 2012, compared to 38.7% in the same period in 2011. The provision for income taxes was 36.9% in the first quarter 2012, compared to 32.3% in the same period in 2011.

New orders for the three months ended March 31, 2012 were $80.8 million, compared to $231.7 million for the same period last year. 

Total backlog as of March 31, 2012 was $259.5 million, compared to total backlog at March 31, 2011 of $267.4 million.

Total cash, cash equivalents and short-term investments were $270.1 million at March 31, 2012 compared to $275.0 million at December 31, 2011.

Joel P. Moskowitz, Ceradyne president, chief executive officer and chairman of the board, commented: "Ceradyne's practice is not to provide quarterly guidance but to provide its best outlook for full-year performance. Although we had previously stated an expected soft first quarter, we are disappointed with the above reported results.

"The unusually sharp decline in solar photovoltaic crucible shipments to levels less than 20% of Q1 2011 was a substantial reason for the Q1 2012 results. This decline flies in the face of increasing global solar installation demand from 2010's 22 gigawatts to 2011's estimated 26.7 gigawatts. We believe the problem is the significant over capacity and excessive inventory build by our customers, the Chinese solar module manufacturers. As our customers 'work off' their inventory of silicon wafers and require our ceramic crucibles for new silicon ingot melting, we anticipate very gradual improvement of this market later in 2012.

"Furthermore, the final government approval (after successful First Article Testing) for shipping our large ESAPI body armor sustainment award was not received until very late in March, pushing scheduled ESAPI shipments into Q2.

"We believe our financial performance will improve for the balance of 2012 beginning in Q2."

Mr. Moskowitz further stated: "In February this year, we issued our initial guidance for 2012 of sales ranging from $590 million to $625 million with earnings of $2.30 to $2.65 per fully diluted share. We now feel that the weaker than expected Q1 and the uncertainty of the solar market recovery may result in reduced operating performance and, thus, we are revising the above guidance to a sales range of $540 million to $565 million and fully diluted earnings per share of $1.40 to $1.65. This guidance assumes a very gradual improvement in the solar market later this year, a 'catch up' on our delayed Q1 ESAPI shipments, but reduced helmet revenues due to the delays in receiving the initial low rate production orders."

Mr. Moskowitz continued: "We are continuing to focus on our longer term 'Ceradyne $1 Billion' revenue strategy. Recent positive events in our early stage product introduction should be noted. The Ceradyne/ESK Petro Ceram® ceramic sand screens, which are in place since 2010, continue to perform well above expectations and recent quoting activities from potential new accounts in South America and Europe give us further confidence as to our future in the oil and gas business. Also, in the energy sector, Ceradyne Boron Products continues to establish relationships and partnering opportunities for nuclear reactor related materials for China, as well as with large nuclear reactor companies such as Westinghouse/Toshiba and France's Areva.

"Furthermore, we are currently evaluating several acquisition opportunities in Europe and the U.S.A. Our balance sheet puts us in a strong negotiating position as we look at potential acquisitions. Additionally, our cash position is expected to allow us to increase shareholder value through quarterly dividends, opportunistic share buybacks, as well as expanding our capacity internally with targeted capital expenditures."

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, 2012. To participate in the teleconference, please call toll free 877-440-5788 (or 719-325-4865 for international callers) approximately 10 minutes prior to the above start time and provide Passcode 8895154. 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 24th through 12:00 p.m. PDT on April 26th. The playback can be accessed by calling 888-203-1112 (or 719-457-0820 for international callers) and providing Passcode 8895154.

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, 2011, 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.

   
CERADYNE, INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(Amounts in thousands, except per share data)  
   
    Three Months Ended March 31,  
    2012     2011  
    (Unaudited)  
NET SALES   $ 106,309     $ 150,102  
COST OF GOODS SOLD     77,165       92,014  
  Gross profit     29,144       58,088  
OPERATING EXPENSES                
  Selling, general and administrative     17,510       18,836  
  Research and development     3,630       3,067  
  Restructuring - plant closure and severance     673       -  
  Acquisition related charge     -       584  
TOTAL OPERATING EXPENSES     21,813       22,487  
INCOME FROM OPERATIONS     7,331       35,601  
OTHER INCOME (EXPENSE):                
  Interest income     1,066       798  
  Interest expense     (1,743 )     (1,448 )
  Miscellaneous     (658 )     (87 )
      (1,335 )     (737 )
INCOME BEFORE PROVISION FOR INCOME TAXES     5,996       34,864  
PROVISION FOR INCOME TAXES     2,214       11,269  
NET INCOME   $ 3,782     $ 23,595  
NET INCOME PER COMMON SHARE:                
BASIC   $ 0.16     $ 0.95  
DILUTED   $ 0.16     $ 0.94  
SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS:                
BASIC     24,211       24,839  
DILUTED     24,360       25,130  
                 
 
CERADYNE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 
    March 31, 2012   December 31, 2011
    (Unaudited)
CURRENT ASSETS            
  Cash and cash equivalents   $ 40,285   $ 50,275
  Short-term investments     229,816     224,772
  Accounts receivable, net of allowances for doubtful accounts of $1,950 and $1,547 at March 31, 2012 and December 31, 2011, respectively    
61,377		    
73,646
  Other receivables     8,232     6,040
  Inventories     135,936     117,273
  Production tooling, net     10,406     11,792
  Prepaid expenses and other     44,355     43,860
  Deferred tax asset     4,960     5,782
  TOTAL CURRENT ASSETS     535,367     533,440
PROPERTY, PLANT AND EQUIPMENT, net     244,046     243,376
LONG TERM INVESTMENTS     21,834     15,026
INTANGIBLE ASSETS, net     99,623     100,690
GOODWILL     43,191     42,926
OTHER ASSETS     12,491     12,673
TOTAL ASSETS   $ 956,552   $ 948,131
             
CURRENT LIABILITIES            
  Accounts payable   $ 28,938   $ 29,191
  Accrued expenses     26,713     30,470
  Income taxes payable     6,853     5,331
  Short-term debt     90,264     89,294
  TOTAL CURRENT LIABILITIES     152,768     154,286
EMPLOYEE BENEFITS     24,931     24,462
OTHER LONG TERM LIABILITIES     37,295     37,224
DEFERRED TAX LIABILITY     23,613     23,461
TOTAL LIABILITIES     238,607     239,433
COMMITMENTS AND CONTINGENCIES (Note 12)            
STOCKHOLDERS' EQUITY            
  Common stock, $0.01 par value, 100,000,000 authorized, 24,280,505 and 24,175,051 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively     243     242
  Additional paid-in capital     123,797     121,940
  Retained earnings     583,573     583,420
  Accumulated other comprehensive income     10,332     3,096
  TOTAL STOCKHOLDERS' EQUITY     717,945     708,698
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 956,552   $ 948,131
             
   
CERADYNE, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Amounts in thousands)  
   
   
Three Months Ended March 31,		  
    2012     2011  
    (Unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income   $ 3,782     $ 23,595  
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:                
  Depreciation and amortization     9,143       9,749  
  Amortization of bond premium     109       375  
  Non cash interest expense on convertible debt     971       889  
  Deferred income taxes     (99 )     382  
  Stock compensation     1,225       972  
  (Gain) loss on marketable securities     (54 )     113  
  Loss on equipment disposal     22       49  
  Change in operating assets and liabilities (net of effect of businesses acquired):                
    Accounts receivable, net     12,682       (16,694 )
    Other receivables     (2,137 )     (2,984 )
    Inventories     (17,502 )     (2,502 )
    Production tooling, net     1,399       (3,424 )
    Prepaid expenses and other assets     (298 )     477  
    Accounts payable and accrued expenses     (4,571 )     4,222  
    Income taxes payable     1,344       1,249  
    Other long term liability     73       1,086  
    Employee benefits     325       205  
NET CASH PROVIDED BY OPERATING ACTIVITIES     6,414       17,759  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchases of property, plant and equipment     (5,924 )     (7,677 )
  Purchases of marketable securities     (20,187 )     (240 )
  Proceeds from sales and maturities of marketable securities     11,019       7,000  
  Proceeds from sale of equipment     (1 )     1,339  
  Acquisition of business, net of cash acquired     -       (27,673 )
NET CASH USED IN INVESTING ACTIVITIES     (15,093 )     (27,251 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Proceeds from issuance of stock due to exercise of options     85       897  
  Common stock cash dividends paid     (3,629 )     -  
  Excess tax benefit due to exercise of stock options     203       1,771  
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES     (3,341 )     2,668  
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS     2,030       2,473  
DECREASE IN CASH AND CASH EQUIVALENTS     (9,990 )     (4,351 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     50,275       53,436  
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 40,285     $ 49,085  
                 
 
CERADYNE, INC.
SEGMENT FINANCIAL INFORMATION
(Amounts in thousands)  
 
The financial information for all segments is presented below:
       
    Three Months Ended March 31,  
    2012     2011  
Revenue from External Customers   (Unaudited)  
Advanced Ceramic Operations   $ 48,705     $ 76,630  
ESK Ceramics     42,408       40,123  
Thermo Materials     14,866       31,111  
Boron     7,203       7,940  
Inter-segment elimination     (6,873 )     (5,702 )
Total   $ 106,309     $ 150,102  
                 
Depreciation and Amortization                
Advanced Ceramic Operations   $ 2,293     $ 2,871  
ESK Ceramics     2,975       3,139  
Thermo Materials     2,020       1,686  
Boron     1,855       2,053  
Total   $ 9,143     $ 9,749  
                 
Segment Income (Loss) from Operations and Income before Provision for Income Taxes                
Advanced Ceramic Operations   $ 3,395     $ 17,014  
ESK Ceramics     7,177       7,805  
Thermo Materials     (1,783 )     10,854  
Boron     (876 )     -  
Inter-segment elimination     (582 )     (72 )
Total segment income from operations   $ 7,331     $ 35,601  
Other expense     (1,335 )     (737 )
Total Income before Provision for Income Taxes   $ 5,996     $ 34,864  
                 
Segment Assets                
Advanced Ceramic Operations   $ 489,861     $ 453,886  
ESK Ceramics     172,755       185,070  
Thermo Materials     171,672       161,065  
Boron     122,264       126,509  
Total   $ 956,552     $ 926,530  
                 
Expenditures for Property, Plant & Equipment                
Advanced Ceramic Operations   $ 1,823     $ 1,400  
ESK Ceramics     2,183       678  
Thermo Materials     559       4,949  
Boron     1,359       650  
Total   $ 5,924     $ 7,677  
                 
 
CERADYNE, INC.
SEGMENT FINANCIAL INFORMATION
(Amounts in thousands)  
 
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.
       
    Three Months Ended March 31,  
    2012     2011  
    Sales   %     Sales   %  
Defense   $ 36.6   34.4     $ 64.8   43.1  
Industrial     40.1   37.7       39.5   26.3  
Energy     14.9   14.0       33.1   22.1  
Automotive/Diesel     9.8   9.3       9.7   6.5  
Commercial     4.9   4.6       3.0   2.0  
Total   $ 106.3   100.0 %   $ 150.1   100.0 %