GenCorp, Inc. (GY)
F1Q08 Earnings Call
March 26, 2008 8:00 am ET
Linda Cutler – Vice President Corporate Communications
J. Scott Neish – Interim President & Interim Chief Executive Officer
Yasmin R. Seyal – Chief Financial Officer & Senior Vice President
Joseph B. Nadol, III – JP Morgan
Pascal Flores – Trident Capital
[Jim Fong – Carbelli & Company]
Robert Smith – Center Performance Investments
» GenCorp Q2 2008 Earnings Call Transcript
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Ladies and gentlemen thank you for standing by. Welcome to the GenCorp 2008 first quarter earnings conference call. At the request of Ms. Linda Cutler all participants are in a listen only mode. (Operator Instructions) As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host Ms. Linda Cutler. Please go ahead.
Good morning everyone and welcome to GenCorp’s first quarter 2008 conference call. Before we start I’d like to remind you that during this conference call GenCorp’s management team may make forward-looking statements as defined by the Private Litigation Reform Act of 1995. All statements in this conference call and in subsequent discussions other than historical information are forward-looking statements. These statements represent management’s current judgment on expectations for future operations. We encourage you to review the cautionary language regarding forward-looking statements and the factors contained in the earnings release issued today as well as management’s discussion and analysis and elsewhere in our most recent Form 10K and other filings with the SEC. These statements and factors could cause business conditions and actual results to differ materially from those expected by the company or expressed in our forward-looking statements.
Now, I’d like to turn the call over to Scott Neish.
J. Scott Neish
Good morning. It’s my pleasure to join you this morning to share our results for the first quarter of this year. Here with me this morning is Yasmin Seyal, our Chief Financial Officer. As most of you know Terry Hall resigned as GenCorp’s CEO in early March and I’ve been asked by the board to assume the position of interim CEO while a search is undertaken for Terry’s replacement. I’d like to take this opportunity to thank Terry for his many contributions to the business and we wish him well in his future endeavors. And, I want you to know that we are continuing our efforts to maintain and accelerate the progress that our company has made in the last several years and increase the value to our shareholders.
To that end I’m pleased to report that the first quarter was marked by a number of successes. Aerojet’s revenues remained strong and Real Estate completed a key milestone towards realizing the value of the Rio del Oro portion of our real estate plans. At Aerojet we were able to replace sharply declining sales from the Titan program now nearing completion; revenue increases on the NASA Orion program as our scope on that program increases and the program ramps up into full scale development. Additionally, strong performance on the Atlas-5 contract helped to partially offset the absence of Titan profits that we enjoyed in the first quarter of 2007. On the defense side of our business, we benefitted from higher sales volume on a number of programs including TOW and standard missile and new work in production contracts in our specialty metals product division in Tennessee. Real Estate segment received notification from the California Department of Toxic Substances Control that they had released from environmental order 2,300 acres designated as Rio del Oro clearing an important hurdle to our monetizing a significant portion of the land in the planned Easton Development.
Now, I’m going to turn this over to Yasmin Seyal to share with you our financial highlights for the quarter.
Yasmin R. Seyal
Good morning to everyone. My comments this morning will focus on the financial results of our continuing operations, Aerojet and Real Estate. I will comment on the company’s first quarter sales, income, cash flows and net debt results and also on the financial implications associated with the recent restated shareholder agreement the company entered into with Steel Partners.
Today, the company reported income from continuing operations of $3.3 million or $0.06 per share for the first quarter compared to a loss from continuing operations of $2.1 million or $0.04 per share in the first quarter of 2007. The improvement reflects decreased retirement benefit plan expenses and lower costs associated with our environmental cleanup and related activities partially offset by the favorable performance recognized last year on the Titan closeout effort.
Let me comment first on sales which for the first quarter of 2008 were $177 million compared to $150 million in 2007 reflecting a year-over-year increase but, the first quarter of 2008 does include an extra week as compared to 2007 as we noted in the release that we issued this morning. However, we did have some growth most notably on standard missiles, TOW and our Orion program as Scott commented on a few minutes ago. This was offset by a decrease in the Titan program as we completed the closeout activities of this program last year. As I noted on the January call, our goal in 2008 is to replace the Titan business which in 2007 accounted for approximately $30 million of sales and we intend to replace this business with the missile defense program and the continued development of our Orion related effort. From a sales standpoint we are encouraged with the good start to the year.