By Kari Williamson
Sales fell 29% to US$106.3m as new orders for the three months ended 31 March 2012 tumbled 65% to US$80.8m.
Joel P. Moskowitz, Ceradyne President, CEO and Chairman of the Board, says: "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 (GW) to 2011's estimated 26.7 GW. 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 armour sustainment award was not received until very late in March, pushing scheduled ESAPI shipments into Q2.”
He is optimistic for Q2, however, saying: "We believe our financial performance will improve for the balance of 2012 beginning in Q2."
In light of the tough Q1, Ceradyne is lowering its sales guidance from US$590-625m, to US$540-565m.
Moskowitz says: “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."
The company is also looking at several acquisition opportunities in Europe and the US.