Ceradyne Inc. Wins Defense Contract, the Firm’s Largest

Ceradyne Inc., an advanced ceramics manufacturer, said Tuesday that it has won the biggest contract in the company’s history for work on a classified defense project.

James Gardner, chief financial officer, said he expects Bethesda, Md.-based Martin Marietta Corp. to sign the contract awarding the work to Ceradyne today. Ceradyne makes advanced ceramic products for use in the defense, commercial manufacturing and medical industries.

Ceradyne stock closed at $3.875 per share, up 50 cents, in over-the-counter trading Tuesday. The company’s stock is up 33% this week.

Gardner said the company had planned to announce the contract today, but it was forced to do so earlier because of the run-up of its stock.

Ceradyne said the contract has a total value of about $14.8 million, including a $3.4-million initial award plus annual renewal options worth $11.4 million. Gardner said the company beat out four competitors, including General Ceramics in San Diego.

Gardner said the contract is welcome, but he said it does not necessarily ensure steady profits. The company’s earnings have tumbled as it shifted its product line from defense to commercial applications.

In calendar 1989, the company lost $2.6 million on revenue of $23.1 million, compared to a loss of $6 million on revenue of $25.6 million a year earlier. The company has 300 employees at plants in Costa Mesa, Scottdale, Ga., and Lexington, Ky.

The company would say only that the contract is for “custom weapons systems components” similar to ones that Ceradyne produced in the mid-1980s. Gardner declined to discuss further details about the award.