COSTA MESA, Calif. (AP) — Ceradyne Inc. on Tuesday reported sharply lower second-quarter earnings and revenue as the maker of ceramic components struggled due to lower demand from customers in the solar energy industry.
The results fell far short of Wall Street expectations, and shares of Ceradyne tumbled to their lowest level in more than two years.
Ceradyne reported net income of $6.8 million, or 28 cents a share, in the three months ended June 30. That was down from earnings of $19.1 million, or 76 cents a share, in the same period last year.
Revenue fell 10 percent to $130.6 million from $145.4 million a year earlier.
Analysts' consensus forecast called for a profit of 34 cents a share on revenue of $132.1 million, according to FactSet.
The company ended the quarter with an order backlog valued at $208.8 million, down from $230.8 million a year earlier.
New orders tumbled to $79.4 million, down from $108.8 million in the prior-year period, and the company cited surplus inventories held by Chinese solar companies.
Joel P. Moskowitz, Ceradyne's president, CEO and chairman, said his company has "short-term concerns regarding the anticipated solar rebound, its timing and the reduced gross profit margins we foresee."
The solar industry has struggled after prices fell when more solar panel factories were built, especially in Asia. And demand has dropped in Europe after cash-strapped governments cut renewable energy subsidies.
Moskowitz said Ceradyne's Chinese solar customers "continue to have excess capacity and high levels of inventory, which have yet to be reduced to levels justified by demand."
In the latest quarter, operating losses from Ceradyne's solar crucible business reduced earnings per share by 14 cents. Twelve months ago, that business was the company's most profitable.
Ceradyne's crucibles are used in the manufacture of solar energy modules. The company, based in Costa Mesa, Calif., makes a wide range of ceramic products used in the solar, electronics, medical, energy and defense industries.
"Without improved shipment levels in solar and defense, our second half 2012 operating results will likely be similar or somewhat greater than our first half 2012," Moskowitz said.
Shares of Ceradyne fell $1.27, or 5.9 percent, to $20.38 in morning trading. Earlier in the session, the stock fell as low as $19.45. That's the lowest that the stock has traded since February 2010.
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