Exhibit 99.1
GENCORP REPORTS 2006 FIRST QUARTER RESULTS
SACRAMENTO, Calif., April 10 /PRNewswire-FirstCall/ -- GenCorp Inc.
(NYSE: GY) today reported results for the quarter ended February 28, 2006.
Sales for the first quarter 2006 totaled $128.7 million, down $11.2 million
compared to $139.9 million in the first quarter 2005. The decrease primarily
reflects lower volume on the Titan contract in the Company's Aerospace and
Defense business.
The loss from continuing operations before cumulative effect of a change in
accounting principle for the first quarter 2006 was $14.4 million ($0.26 per
share), compared to a loss of $30.0 million ($0.55 per share) for the first
quarter 2005, which included a pre-tax charge of $18.1 million associated with
the Company's recapitalization completed in the first quarter 2005.
"Aerojet received a number of contract awards in the first quarter of 2006,
contributing to the backlog growth. We believe that Aerojet's recent success in
winning new programs, as well as growth in many of its existing programs, will
offset much of the decline in Atlas(R) V and Titan sales from 2005," said Terry
Hall, chairman, president and chief executive officer. "We believe going
forward, Aerojet is well-positioned to participate in NASA's space exploration
initiatives for both manned and unmanned missions."
Regarding the Company's real estate holdings, Hall noted, "The Company has a
unique and valuable asset in the 12,600 acres or 20 square miles of land it owns
in the Sacramento metropolitan market. With approximately half of our property
currently in the entitlement process, we believe we are well- positioned to take
advantage of the 20% growth in new home starts in our market over the next ten
years, as forecasted by the Sacramento Area Council of Governments."
Operations Review
Aerospace and Defense Segment
-----------------------------
First quarter sales decreased 8% to $127.2 million compared to $138.2
million in the first quarter 2005. As noted above, the decrease primarily
reflects lower volume on the Titan contract.
First quarter segment performance was a loss of $0.5 million compared to
income of $1.6 million in the first quarter 2005. Excluding the impact of
employee retirement benefit plan expense, segment performance for the first
quarter 2006 was $8.2 million, compared to $10.2 million in the first quarter
2005. The change in segment performance compared to 2005 is primarily due to
overall lower sales volume, and in particular, the effect of the completion of
our launch support activities on the long running fixed price Titan production
contract which generated a high margin. Segment performance, which is a non-
GAAP financial measure, is defined in the Operating Segment Information table
included in this release.
During the quarter, Aerojet received contract awards/funding on the Standard
Missile, Advanced 2nd and 3rd Stages for the next generation ICBM, TOW
Bunkerbuster, the Non Line of Sight Precision Attack Missile, HyFly and
Minuteman programs. Aerojet also performed well on its existing missile defense
contracts, including a successful flight test of the Ground Based Missile
Defense System, further validating Aerojet hardware on the eleven missiles
currently deployed and operational.
As of February 28, 2006, contract backlog was $742 million compared to $696
million as of November 30, 2005. Funded backlog, which includes only the amount
for which money has been directly authorized by the U.S. Congress, or for which
a purchase order has been received from a commercial customer, was $549 million
as of February 28, 2006, compared to $498 million on November 30, 2005. Overall
backlog growth reflects contract and funded awards in excess of sales on both
production and development programs.
Real Estate Segment
No real estate assets were sold in either the first quarter 2006 or 2005.
Sales for the first quarter 2005 and 2006 consist of rental property operations.
Segment performance was $0.8 million in the first quarter 2006 compared to $1.0
million in the first quarter 2005.
During the quarter, the Company continued its efforts to secure entitlements
on its Sacramento land that are expected to significantly increase its value.
GenCorp currently has approximately 6,400 acres, or 10 square miles, in the
re-zoning process in multiple jurisdictions.
The 2,700-acre Rio Del Oro project, located in the City of Rancho Cordova,
originally expected to be approved in late 2006, has slipped by several months
primarily due to a delay in the City's processing of the required Environmental
Impact Review (EIR). The City is also working on information necessary to
initiate the EIR for the Company's adjacent 1,650-acre Westborough project.
Environmental impact analysis is also ongoing with the County of Sacramento
related to the Company's 1,400-acre Glenborough project.
"The re-zoning and entitlement process in California is complex and subject
to many factors outside the Company's control," said Mr. Hall. "We continue to
work closely with the City of Rancho Cordova and the County of Sacramento on the
various phases of the federal and state environmental impact reviews. Assuming
no further delays occur, we look forward to entitlement of both our Rio Del Oro
project and our Glenborough project in 2007."
Additional Information
Retirement benefit plan expense, which is mostly non-cash, decreased to
$11.0 million in the first quarter 2006 from $11.9 million in the first quarter
2005. The decrease is primarily related to lower amortization of unrecognized
losses.
Corporate and other expenses increased to $5.5 million in the first quarter
2006 from $4.1 million in the first quarter 2005. The increase primarily
reflects higher expenses related to the annual election of the board of
directors.
Interest expense decreased to $6.3 million in the first quarter 2006 from
$7.1 million in the first quarter 2005. The decrease reflects lower average debt
and interest rates.
Total debt decreased to $443.3 million at February 28, 2006 from $443.9
million at November 30, 2005. The cash balance at February 28, 2006 was $50.4
million compared to $91.7 million at November 30, 2005. Total debt less cash
increased from $352.2 million at November 30, 2005 to $392.9 million as of
February 28, 2006. The $40.7 million increase resulted primarily from (i) cash
used by the Aerospace and Defense segment, including capital expenditures; (ii)
interest payments; (iii) costs associated with legacy business matters,
including costs related to postretirement plans; (iv) corporate expenses; and
(v) payment of liabilities accrued as of November 30, 2005 related to the sale
of the Fine Chemicals business, including accrued transaction costs. As of
February 28, 2006, the Company's $80 million revolving credit facility was
unused. During the second quarter 2006, the Company will be issuing $35 million
- - $42 million of additional letters of credit related to environmental
obligations, of which $18 million - $25 million will be issued under the credit
facility, reducing available borrowing capacity.
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. All statements contained herein and in subsequent
discussions with the Company's management that are not clearly historical in
nature are forward-looking and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended to identify
forward-looking statements. A variety of factors could cause actual results or
outcomes to differ materially from those expected and expressed in the Company's
forward-looking statements. Some important risk factors that could cause actual
results or outcomes to differ from those expressed in the forward-looking
statements include, but are not limited to, the following:
-- cancellation or material modification of one or more significant
contracts;
-- future reductions or changes in U.S. government spending;
-- failure to comply with regulations applicable to contracts with the
U.S. government;
-- product failures, schedule delays or other problems with existing or new
products and systems or cost-overruns on the Company's fixed-price
contracts;
-- significant competition and the Company's inability to adapt to rapid
technological changes;
-- the release or explosion of dangerous materials used in the Company's
businesses;
-- disruptions in the supply of key raw materials and difficulties in the
supplier qualification process, as well as increases in the prices of
raw materials;
-- reduction in airbag propellant volume;
-- a strike or other work stoppage or the Company's inability to renew
collective bargaining agreements on favorable terms;
-- the loss of key employees and shortage of available skilled employees
to achieve anticipated growth;
-- environmental claims related to the Company's current and former
businesses and operations;
-- the possibility that the environmental and other government regulations
that impact the Company become more stringent or subject the Company to
material liability in excess of its established reserves;
-- requirements to provide guarantees and/or letters of credit to
financially assure the Company's environmental obligations;
-- changes in economic and other conditions in the Sacramento County,
California real estate market or changes in interest rates affecting real
estate values in that market;
-- the Company's limited experience in real estate activities and the
ability to execute its real estate business plan, including the Company's
ability to obtain all necessary zoning, land use and environmental
approvals;
-- the cost of servicing the Company's debt and compliance with financial
and other covenants;
-- effects of changes in discount rates and returns on plan assets of
defined benefit pension plans could require the Company to increase its
shareholders' deficit;
-- fluctuations in sales levels causing the Company's quarterly operating
results to fluctuate;
-- additional costs related to the Company's recent divestitures;
-- costs and time commitment related to acquisition activities;
-- inability to effectively and efficiently implement the necessary
initiatives to eliminate the material weakness we reported in our
internal controls over financial reporting as of November 30, 2005; and
-- those risks detailed from time-to-time in the Company's reports filed
with the SEC.
This list of factors that may affect future performance and the accuracy of
forward-looking statements are illustrative, but by no means exhaustive. These
and other factors are described in more detail in the Company's Annual Report on
Form 10-K for the year ended November 30, 2005 and in the Company's subsequent
filings with the SEC. All forward-looking statements should be evaluated with
the understanding of their inherent uncertainty. All such risk factors are
difficult to predict, contain material uncertainties that may affect actual
results and may be beyond the Company's control. The Company is under no
obligation to (and expressly disclaims any such obligation to) update or alter
its forward-looking statements whether as a result of new information, future
events or otherwise.
About GenCorp
GenCorp is a leading technology-based manufacturer of aerospace and defense
products and systems with a real estate business segment that includes
activities related to the entitlement, sale, and leasing of the Company's excess
real estate assets. Additional information about the Company can be obtained by
visiting the Company's web site at http://www.GenCorp.com.
/CONTACT: investors, Yasmin Seyal, senior vice president and chief
financial officer, +1-916-351-8585, or Linda Cutler, vice president, corporate
communications +1-916-351-8650, both of GenCorp Inc./
/Web site: http://www.gencorp.com /
Consolidated Statements of Operations
GenCorp Inc.
Three Months Ended
---------------------------
(Dollars in millions, except February 28, February 28,
per-share amounts) 2006 2005
- --------------------------------------------- ------------ ------------
(Unaudited)
Net sales $ 128.7 $ 139.9
Costs and expenses:
Cost of products sold 121.8 130.3
Selling, general and administrative 8.0 7.5
Depreciation and amortization 6.5 6.7
Other (income) expense, net (0.1) 0.2
Interest expense 6.3 7.1
Unusual items -- 18.1
Loss from continuing operations before
income taxes and cumulative effect of
a change in accounting principle (13.8) (30.0)
Income tax provision 0.6 --
Loss from continuing operations before
cumulative effect of a change in
accounting principle (14.4) (30.0)
Loss from discontinued operations,
net of income taxes (0.9) (1.4)
Loss before the cumulative effect of
a change in accounting principle (15.3) (31.4)
Cumulative effect of a change in
accounting principle, net of income taxes (0.7) --
Net loss $ (16.0) $ (31.4)
Loss Per Share of Common Stock
Basic and Diluted:
Loss per share from continuing operations
before cumulative effect of a change in
accounting principle $ (0.26) $ (0.55)
Loss per share from discontinued operations (0.02) (0.03)
Loss per share from cumulative effect of
a change in accounting principle, net of
income taxes (0.01) --
Net loss per share $ (0.29) $ (0.58)
Weighted average shares of common
stock outstanding 55.1 54.2
Operating Segment Information
GenCorp Inc.
Three Months Ended
---------------------------
February 28, February 28,
(Dollars in millions) 2006 2005
- --------------------------------------------- ------------ ------------
(Unaudited)
Net Sales:
Aerospace and Defense $ 127.2 $ 138.2
Real Estate 1.5 1.7
Total $ 128.7 $ 139.9
Segment Performance:
Aerospace and Defense
Segment performance before retirement
benefit plan expense $ 8.2 $ 10.2
Retirement benefit plan expense (8.7) (8.6)
Aerospace and Defense (0.5) 1.6
Real Estate 0.8 1.0
Total $ 0.3 $ 2.6
Three Months Ended
---------------------------
February 28, February 28,
(Dollars in millions) 2006 2005
- --------------------------------------------- ------------ ------------
(Unaudited)
Reconciliation of segment performance to loss
from continuing operations before income
taxes and cumulative effect of a change in
accounting principle:
Segment Performance $ 0.3 $ 2.6
Interest expense (6.3) (7.1)
Corporate retirement benefit plan expense (2.3) (3.3)
Corporate and other expenses (5.5) (4.1)
Unusual items -- (18.1)
Loss from continuing operations before
income taxes and cumulative effect of
a change in accounting principle $ (13.8) $ (30.0)
The Company evaluates its operating segments based on several factors, of
which the primary financial and performance measure is segment performance.
Segment performance represents net sales from continuing operations less
applicable costs, expenses, and provisions for unusual items relating to
operations. Segment performance excludes corporate income and expenses,
provisions for unusual items not related to the operations, interest expense,
and income taxes. The Company believes that segment performance provides
information useful to investors in understanding its underlying operational
performance. Specifically, the Company believes the exclusion of the items
listed above permits an evaluation and a comparison of results for ongoing
business operations, and it is on this basis that management internally assesses
the performance of its segments.
Condensed Consolidated Balance Sheets
GenCorp Inc.
February 28, November 30,
(Dollars in millions) 2006 2005
- --------------------------------------------- ------------ ------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 50.4 $ 91.7
Accounts receivable 73.8 82.1
Inventories 73.2 57.5
Recoverable from U.S. government and
other third parties for environmental
remediation costs 31.9 24.6
Prepaid expenses and other 23.5 24.7
Total current assets 252.8 280.6
Noncurrent assets
Property, plant and equipment, net 137.3 140.2
Recoverable from U.S. government and
other third parties for environmental
remediation costs 162.6 171.4
Prepaid pension asset 222.5 233.2
Goodwill 102.0 102.0
Intangible assets 27.1 27.5
Other noncurrent assets, net 98.2 102.5
Total noncurrent assets 749.7 776.8
Total assets $ 1,002.5 $ 1,057.4
Liabilities and shareholders' deficit
Current liabilities
Short-term borrowings and current
portion of long-term debt $ 1.1 $ 1.4
Accounts payable 30.4 57.1
Reserves for environmental remediation 58.8 51.7
Income taxes payable 6.4 5.9
Postretirement medical and life benefits 11.8 11.9
Other current liabilities 145.1 142.5
Liabilities of discontinued operations 1.8 1.9
Total current liabilities 255.4 272.4
Noncurrent liabilities
Convertible subordinated notes 291.2 291.2
Senior subordinated notes 97.5 97.5
Other long-term debt, net of current portion 53.5 53.8
Reserves for environmental remediation 203.0 216.3
Postretirement medical and life benefits 132.9 137.9
Other noncurrent liabilities 52.6 61.0
Total noncurrent liabilities 830.7 857.7
Total liabilities 1,086.1 1,130.1
Total shareholders' deficit (83.6) (72.7)
Total liabilities and shareholders' deficit $ 1,002.5 $ 1,057.4
SOURCE GenCorp Inc.
-0- 04/10/2006