Ceradyne Inc. Q3 2009 Earnings Call Transcript

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2009-10-27 12:53:09.0

Tags: Ceradyne Inc., Wells Fargo & Co., Call Transcript, Earnings, ESAPI, Security, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Gary Liebowitz, with Wells Fargo Securities.

Gary Liebowitz - Wells Fargo Securities

Good morning Jerry. Joel, I think I missed it on the first call I think you said there’s a $30 million range for embedded in the body armor expectations for next year. Could you give the actual numbers?

Joel Moskowitz

David, David why don’t you talk about the armor?

David Reed

Well, the range is $90 million to roughly $120 million in sales for the body armor business.

Gary Liebowitz - Wells Fargo Securities

And Thomas, how much XSAPI (inaudible) is included in that and maybe you can just breakout the larger components of that $90 million to $120 million for us?

David Reed

That ranges has spread out over all of the services. The XSAPI number I think is somewhere what is that Jerry, about $15 million?

Jerry Pellizzon

Yeah. $15 million

David Reed

Around $15 million, that’s the continuation of our existing order. We will complete that order in by the end of February now and then we do not anticipate any further XSAPI pass to that point. The rest of these orders and is composed of some anticipated spare orders through [DSPT] for ESAPI anticipated orders for lighter-weight inserts that we believe will be coming out of the army and possibly the marines for the Afghan [theatre] and the campaign there.

We’ll also be composed of continuing orders from our SOCOM on our multi-year contract where the family of scalable body armor that we supplied to the Special Forces right now. So each of those is somewhere in the somewhere in the $12 million to $18 million range and we also have the opportunity to do continued FMS contracts on the existing contract that we won competitively last year. So, that’s kind of how it breaks down.

Gary Liebowitz - Wells Fargo Securities

Okay. Thanks for the color. I just want to follow-up. You’ve mentioned that you are looking to developing at present ESAPI which is 10% or 15% lighter. How would you evaluate the competitive landscape for a replacement the ESAPI?

David Reed

Well I think, Ceradyne is positioned as well as anybody to provide those lightweight products or whether or not the army decides that they are going to go with a lightweight ESAPI or something lighter at a lesser protective level is uncertain at this point really. But certainly we have as much experience and more than anybody in the ESAPI regiment and I think we can supply a lighter weight ESAPI by at least 10%. So, that’s kind of our goal and that’s what we’ll be offering up for the army.

 

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