Solar business hurts Ceradyne earnings

Ceradyne, which manufactures body armor in Lexington, saw sales and profit drop dramatically in its first quarter because its solar business struggled.

The California-based company said Tuesday that sales fell 29 percent, to $106.3 million, in the quarter compared to the same period a year earlier. Net income fell 84 percent, to $3.8 million, or 16 cents a share, from $23.6 million, or 94 cents a share, a year ago.

New orders of products in the period were $80.8 million, a decline of 65 percent from $231.7 million a year ago.

"Although we had previously stated an expected soft first quarter, we are disappointed with the above reported results," chief executive Joel P. Moskowitz said in a statement.

Driving the disappointing quarter was the company's solar business, which saw component shipments to manufacturers fall to less than 20 percent of the level in the first quarter of 2011.

"We believe the problem is the significant over-capacity and excessive inventory ... by our customers, the Chinese solar module manufacturers," Moskowitz said, adding he expects the customers' inventories to decline with time and a "very gradual improvement of this market later in 2012."

The company's body armor product line also took a hit as government approval of the shipment of its ESAPI product wasn't received until late in March, pushing those shipments into the second quarter.

Revenue from external customers for Ceradyne's Advanced Ceramic Operations division, which includes Lexington's operations, fell 36 percent, to $48.7 million from $76.6 million in the same quarter of 2011.

The division's first-quarter operating income was $3.4 million, down 80 percent from $17 million in the first quarter of 2011.

The company revised down its overall sales and profit goals for 2012. For sales, the company now expects a range of $540 million to $565 million from a previous range of $590 million to $625 million. Earnings are expected to be in the range of $1.40 a share to $1.65 a share, down from a range of $2.30 a share to $2.65 a share.