Late last week, ceramics specialist Ceradyne
- Thirty-eight percent growth in first-quarter 2007 revenues, as compared to Q1 2006's numbers.
- Relatively slower growth in both accounts receivable (up 9%) and inventories (up 3%).
- Fifty-five percent improvement in net profits, to $1.38 per share.
- Ninety-two percent better free cash flow than in last year's first quarter.
- A 130-basis point increase in its gross margin.
- A 14% increase in new orders.
- A 13% increase in backlog.
- A mere 0.5% rise in shares outstanding.
By close of trading Friday, the stock was down 6%. All together now, say it with me: "Huh?!"
Let me get this straight
So let's see. Ceradyne added yet another quarter to its already 18-quarter-long streak of proving its critics misguided. Its sales and profits soared. Its free cash flow nearly doubled. About the only quibble I can find in the entire report is the fact that management again failed to include a cash flow statement for its investors' convenience, requiring them to virtually trudge over to the SEC's site and dig through the filings for the 10-Q report. There, they can also learn that the firm generated $48.9 million in free cash flow, yielding the 92% improvement noted above -- but not mentioned in the earnings release. And the specific numbers on accounts receivable and inventories (likewise), which Ceradyne lumped together under the heading "Other current assets" in its press release.
Speaking of which, c'mon guys! There's no need to be embarrassed by overly good news. Go ahead and tell us straight up -- we can take it. In fact, after last month's report of a 15% decline in earnings at armor-making rival Armor Holdings
So for being the only company in the armor making space, other than General Dynamics
What did we expect out of Ceradyne last quarter, and what did we get? Find out in: