Q2 2008 Earnings Call
June 30, 2008 5:00 pm ET
Linda Cutler - Vice President, Corporate Communications
J. Scott Neish - Interim President, Interim Chief Executive Officer
Yasmin Seyal - Senior Vice President and Chief Financial Officer
Joseph B. Nadol III - JP Morgan
Vin Lawrence - Suttenberg Capital
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Good afternoon everyone and welcome to GenCorp’s second quarter 2008 conference call. Before we start I would 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 just issued today, as well as managements discussion and analysis and elsewhere in our most recent Form 10-K 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 would like to turn the call over to Scott Neish.
Good afternoon everyone. Also joining me today to discuss GenCorp’s second quarter results is our Chief Financial Officer, Yasmin Seyal.
Let me start out by first commenting on the recent board changes during the quarter. As most of you are aware, Tim Wicks, Dr. Sheila Widnall and Todd Snyder resigned from the board in May. I would like to thank them for their years of service and contributions to the Company as members of the Board of Directors and wish each of them well in their future endeavors.
Jim Henderson, who joined the board in March, was elected to replace Tim Wicks as the non- executive Chairman of the Board and Jim Perry, who brings both finance and aerospace and defense expertise, was appointed to the board in May. The new board and management are working closely together to evaluate how to best enhance shareholder value and have begun the process of looking at various options and scenarios, which at this point we cannot comment further upon, but we do expect to be in a position to do so in the late summer timeframe.
Next let me say that the company is pleased with its overall operating performance for the quarter. In my prepared remarks this morning I will briefly address how Aerojet is doing and some successes it has had in the last three months since we last talked. I will also give you an update of where we are with regards to our real estate projects; but first I would like to turn the call over to Yasmin to review with you our financial results.
Thanks Scott and good afternoon to everyone. My comments this afternoon will focus on the financial results of our two continuing operations, Aerojet, and real estate. I will comment on the company’s second quarter sales, income, cash flow, and net debts results and also discuss the 401k shares matter and rescission offer which we talked about in the release that we just issued a little while ago.
Today the company reported net income of $6.9 million or $0.12 diluted earnings per share for the second quarter 2008, compared to net income of $12.5 million or $0.21 diluted earnings per share in the second quarter of 2007. As you may have noticed in the release, the second quarter of 2008 does include a $12.7 million charge associated with the restated shareholder agreement the company entered into with Steel Partners in March of this year. I will touch upon that charge in my comments later on.
Commenting on sales first, which for the second quarter of 2008 were $195 million, compared to $192 million in 2007. Sales for the first half of 2008 were $371 million in 2008, compared to $343 million in 2007.
With regards to Aerojet, second quarter sales were down $8 million; however year-to-date sales are up $18 million. We saw growth on Standard Missile, Tube and the Orion programs, which was partially offset by a decrease in the Titan program, which as many of you know, we completed the close out activities for in 2007.
Also as I have noted in my prior two calls, our goal from a sales perspective for Aerojet is to replace the Titan business, which accounted for approximately $30 million of sales in 2007 and it is our objective to replace those sales to the Missile Defense Program and the continued development of our Orion related efforts. We remain focused on achieving this goal and Scott, in his comments, will comment upon some of the successes that Aerojet has experienced that points to this.
With respect to our real estate segment both the second quarter and year-to-date totals include proceeds from the sale of the 400 acres of the Rio Del Oro property to Elliott Homes for $10 million in cash.
Commenting next on segment performance which is a non-GAAP financial measure and is defined in the operating segment information table included in the release that we issued a little while ago: