Oct. 8, 2009 (PR Newswire) -- SACRAMENTO, Calif., Oct. 8 /PRNewswire-FirstCall/ -- GenCorp Inc. (NYSE: GY) today reported results for the third quarter of 2009.
Sales for the third quarter of 2009 totaled $201.4 million compared to $172.5 million for the third quarter of 2008. The increase in sales is primarily the result of growth in the various Standard Missile programs and increased deliveries on the Patriot Advanced Capability - 3 and Atlas V programs.
Sales for the first nine months of 2009 totaled $555.3 million compared to $543.8 million for the first nine months of 2008. The Company reports its fiscal year sales under a 52/53 week accounting convention. Fiscal 2008 was a 53 week year with the extra week of sales totaling $19.1 million reported in the first quarter of that fiscal year.
The Company reported a cash balance of $158.3 million at August 31, 2009, an increase of $65.6 million from November 30, 2008. The increase in cash is primarily due to improvements in the operating performance and working capital of the Aerospace and Defense operating segment and the receipt of $10.4 million from the grantor trust. Subsequent to August 31, 2009, the Company received $26.3 million of cash from federal income tax refunds, including interest of $2.1 million.
Net income for the third quarter of 2009 was $12.1 million, or $0.20 diluted earnings per share on 66.6 million weighted average shares outstanding, compared to a net loss of $2.7 million, or $0.05 diluted loss per share on 57.4 million weighted average shares outstanding, for the third quarter of 2008. The increase in net income was primarily due to higher net sales and lower charges for future estimated environmental remediation obligations and retirement benefit costs in the third quarter of 2009 compared to the third quarter of 2008.
Net income for the first nine months of 2009 was $44.3 million, or $0.72 diluted earnings per share on 66.5 million weighted average shares outstanding, compared to net income of $7.2 million, or $0.13 diluted earnings per share on 57.1 million weighted average shares outstanding, for the first nine months of 2008. Net income for the first nine months of 2009 includes an income tax benefit of $19.7 million, primarily as a result of new guidance clarifying which costs qualify for ten-year carryback of tax net operating losses for refund of prior years' taxes, and lower retirement benefit costs compared to 2008. Net income for the first nine months of 2008 included a $13.8 million charge related to the second amended and restated shareholder agreement (Shareholder Agreement) with respect to the election of Directors at the 2008 Annual Meeting and other related matters.
"We are very pleased to report continued improvement in our quarterly and year-to-date results, said Scott Neish, GenCorp's interim chief executive officer. "Aerojet had another strong quarter in both its space and defense programs, and we continue to work on our re-zoning efforts in anticipation of a real estate market recovery," concluded Mr. Neish.
Operations Review
Aerospace and Defense Segment
Sales of $198.1 million for the third quarter of 2009 increased from $171.0 million in the third quarter of 2008. Sales of $548.9 million for the first nine months of 2009 increased from $528.6 million in the first nine months of 2008, including the additional week of net sales totaling $19.1 million in 2008, as discussed above. The increase in net sales during both periods is primarily due to growth in the various Standard Missile programs and increased deliveries on the Patriot Advanced Capability - 3 and Atlas V programs, partially offset by lower sales volume on the Orion program as a result of NASA funding constraints.
Segment performance was income of $20.6 million in the third quarter of 2009 compared to income of $8.8 million in the third quarter of 2008. Segment performance was income of $58.5 million in the first nine months of 2009 compared to income of $37.0 million in the first nine months of 2008. The increase in both periods in segment performance was primarily due to lower retirement benefit costs and future estimated environmental remediation obligations.
Funded backlog was $0.9 billion and $0.7 billion at August 31, 2009 and November 30, 2008, respectively. As of August 31, 2009, our total contract backlog was $1.1 billion compared with $1.0 billion as of November 30, 2008. Total backlog includes both funded backlog (the amount for which money has been directly appropriated by the U.S. Congress, or for which a purchase order has been received from a commercial customer) and unfunded backlog (firm orders for which funding has not been appropriated). Indefinite delivery and quantity contracts and unexercised options are not reported in total backlog. Backlog is subject to delivery delays or program cancellations which are beyond our control.
Real Estate Segment
Sales and segment performance for the third quarter of 2009 was $3.3 million and $1.5 million, respectively, compared to $1.5 million and $1.0 million for the third quarter of 2008, respectively. The increase in sales and segment performance is primarily due to a $1.7 million land sale in the third quarter of fiscal 2009 resulting in a gain of $0.5 million.
Sales and segment performance for the first nine months of 2009 was $6.4 million and $3.5 million, respectively, compared to $15.2 million and $9.4 million for the first nine months of 2008, respectively. The decrease in sales and segment performance is primarily due to the sale of 400 acres of unimproved land for $10.0 million in the second quarter of 2008 resulting in a gain of $6.8 million partially offset by the $1.7 million land sale in the third quarter of 2009.
Additional Information
Retirement benefit plan expense, which is mostly non-cash, includes income of $3.5 million for the third quarter of 2009 and income of $8.4 million for the first nine months of 2009 compared to expense of $1.8 million in the third quarter of 2008 and expense of $5.7 million in the first nine months of 2008. The improvement is primarily related to the freeze of the defined benefit pension and benefit restoration plans as well as the increase in the discount rate used to determine benefit obligations, partially offset by lower expected investment returns.
Corporate and other expenses decreased to $4.6 million for the third quarter of 2009 compared to $7.9 million for the third quarter of 2008 primarily due to lower charges for future environmental remediation obligations, partially offset by an increase in non-cash stock based compensation charges. Corporate and other expenses for the first nine months of 2009 were $13.3 million compared to $13.1 million for the first nine months of 2008.
Total debt decreased to $438.7 million at August 31, 2009 from $440.6 million at November 30, 2008. As of August 31, 2009, the Company had $84.5 million in outstanding letters of credit issued under the $125.0 million letter of credit subfacility, and the Company's $80.0 million revolving credit facility, currently restricted to $60.0 million availability, was unused.
The Company's 4% Contingent Convertible Subordinated Notes (4% Notes) that were issued in January 2004 provide the holders of the 4% Notes with the right to require the Company to repurchase for cash all or a portion of the outstanding $125.0 million 4% Notes on January 16, 2010 at a price equal to 100% of the principal amount, plus accrued and unpaid interest. The Company's $280.0 million senior credit facility (Senior Credit Facility) contains certain restrictions surrounding the ability of the Company to refinance its 4% Notes. Accordingly, the Company is seeking an amendment to its Senior Credit Facility in connection with the potential required repurchase of the 4% Notes. If the Company is unable to amend the Senior Credit Facility and obtain financing to repurchase the 4% Notes on terms favorable to the Company before January 2010, the Company may be required to redeem the 4% Notes on January 16, 2010 which is allowed under the existing Senior Credit Facility. Given the Company's current and forecasted liquidity through January 2010, in the event the 4% Notes are put to the Company, the Company believes it has the liquidity to immediately repay the holders of the 4% Notes. The Company has engaged Imperial Capital, LLC to facilitate its efforts to amend the Senior Credit Facility and to refinance the subordinated debt. For additional discussion of the Company's debt instruments, please see the discussion in the Company's Quarterly Report to the SEC on Form 10-Q for the period ended May 31, 2009 and the Company's Annual Report to the SEC on Form 10-K for the fiscal year ended November 30, 2008.
Forward-Looking Statements
This release may contain certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such statements in this release and in subsequent discussions with the Company's management are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements.
