When a company makes equipment that can protect soldiers in Iraq from roadside snipers, it’s not surprising that sales are booming.
That’s been the case for Costa Mesa-based Ceradyne Inc. Its ceramic body armor is one of the must-haves for the military, and Ceradyne’s biggest challenge has been trying to keep up with demand.
It continues to rack up multimillion-dollar contracts, pushing the company’s annual sales up 480% to nearly $300 million for the period ended June 30.
In the three years, the company’s income shot up even faster, at a 1,140% clip, to $33.5 million during the last year.
The growth propelled Ceradyne to No. 2 on the Business Journal’s list of fastest-growing public companies, up from No. 9 last year and No. 26 the previous year. Newport Beach investment bank Roth Capital Partners LLC crunched the numbers for the ranking.
Ceradyne sells lightweight body armor that protects soldiers from enemy bullets. The ceramic armor essentially shatters bullets on impact while absorbing their energy.
The company, which sold early versions of armor for helicopters, also sells armor for land, air and sea vehicles.
The armor has emerged as a key tool in protecting military personnel and machines in Iraqi cities, where insurgents often rely on small guns to carry out attacks.
Although the company has been seeing strong sales in its non-military business, sales to the Department of Defense continue to be a key growth driver.
To meet the growing demand, the company has more than doubled its staff to about 1,700 people overall in the past year. The company also has boosted its local employment in Orange County by 30% to more than 800 people.
Those extra people are helping the company keep up with demand, which has been a challenge.
At the start of 2005, the military changed its specifications for body armor from its contractors, including Ceradyne.
Production slowed as the company scrambled to meet the new requirements. In the first quarter, sales were about 20% lower than earlier forecasts, Ceradyne said in a statement. Sales still nearly doubled, but net income was up just 16%.
But the company worked quickly, and by the spring had come up with four new designs.
It also increased its production capacity with the construction of a 115,000-square-foot facility in Lexington, Ky.
In the second quarter, the company beat estimates for sales and earnings.
Sales jumped 129% to $89.9 million compared to Wall Street estimates of $80 million, while net profit rose 75% to $11.4 million compared to estimates of $9.2 million.
“The government has changed the specifications, and we’re one of the few companies in that industry that can meet the new requirements,” said Joel Moskowitz, Ceradyne’s chief executive, in the summer.
Ceradyne has a solid pipeline, thanks to an overall $461 million military contract the company won in 2004. Ceradyne will supply gear to the military under that contract for several years.
The company also has seen a sales boost from an acquisition.
The company said that about 31% of its second-quarter sales gain was connected to Ceradyne’s 2004 buy of ESK Ceramics, a German company specializing in commercial ceramics.
Investors also have taken to the company’s recent performance.
Ceradyne shares, which had been trading around $38 a share late last year, fell to about $18 in April,but since have bounced back to nearly $40 a share.
The company counts a market value of $927 million at recent check.
THE NUMBERS
Employees: 1,664
Market value : $927 million
3-year sales growth: 480%
Annual sales through June 30: $299 million
Annual net income: $33.5 million
Company: ceramic armor maker
