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Event Brief of Q3 2008 GenCorp Inc. Earnings Conference Call - Final.

Article Excerpt
PARTICIPANTS

. Linda Cutler, GenCorp Inc., VP of Corporate Communications . Scott Neish, GenCorp Inc., Interim President and Interim CEO, VP and President of Aerojet-General Corporation . Yasmin Seyal, GenCorp Inc., SVP and CFO . Seth Tennant, JPMorgan, Analyst . Andrew Sidoti, Markston International, Analyst

OVERVIEW

GY reported YTD sales of $544m and 3Q08 sales of $173m. 3Q08 net loss was $2.7m or $0.05 per diluted share.

FINANCIAL DATA

A. Key Data From Call 1. YTD sales = $544m. 2. 3Q08 sales = $173m. 3. 3Q08 net loss = $2.7m. 4. 3Q08 net loss per diluted share = $0.05. 5. 3Q08-end cash balance on hand = $58m. 6. Net debt as of 08/31/08 = $383m.

PRESENTATION SUMMARY

S1. Opening Remarks (S.N.) 1. Fire Accident: 1. Last week, an employee at Co.'s Camden facility was fatally injured in a fire that resulted from unplanned ignition of a rocket motor. 1. Formed a team to investigate the accident. 2. Forming an independent review team of highly respected senior government and industry officials to evaluate the work of internal investigation team.

S2. Financial Results (Y.S.) 1. Highlights: 1. 3Q08 net loss of $2.7m or $0.05 per diluted share vs. net income of $15.6m or $0.26 per diluted share in 3Q07. 1. 3Q08 includes: 1. Approx. $7m of charges associated with adjustments to environmental reserves. 2. $1m of unusual items associated with unrecoverable portion of legal settlements. 2. 3Q07 includes: 1. Net benefit of $1m associated with adjustments to environmental reserves. 2. [About] $5m of unusual items. 3. $12m income tax benefit related to certain tax settlements and statute expirations. 2. Sales: 1. 3Q08, $173m vs. $199m in 2007. 2. First nine months of 2008, $544m vs. $542m in 2007. 3. Aerojet Sales: 1. Down for 3Q08 and $8m YTD vs. 2007. 1. Major driver is completion of Titan program in 2007, which had about $31m in sales in 2007. 2. Continues effort to replace this Titan business with NASA and defense programs. 4. Real Estate: 1. YTD totals include proceeds from sale of 400 acres of Sacramento Land to Elliott Homes for $10m in cash, which occurred earlier on in the year. 2. Segment Performance (Non-GAAP): 1. Aerojet: 1. 3Q08 segment performance was $16.3m, representing 9.5% return on sales vs. $22m and 11.2% return on sales for 3Q07, excluding: 1. Environmental remediation provision adjustments. 2. Retirement benefit plan expense. 3. Unusual items. 2. 2007 margins were helped by favorable Titan contract. 3. YTD segment performance was $54.7m, representing 10.3% return on sales vs. $65.7m and 12.2% in first nine months of 2007. 1. 2007 margins were helped by favorable Titan contract. 4. Margins on an overall basis for first nine months of 2008 are holding up to expectations. 2. Real Estate: 1. 3Q08 segment performance was $1.0m vs. $1.4m in 2007. 1. Both periods reflect normal ongoing lease activities. 3. Other Metrics: 1. 3Q08 combined interest expense and interest income, slightly lower at $5.8m vs. $6.3m in 2007. 2. 3Q08 corporate and other expenses, $7.9m vs. $6.2m in 2007. 1. Increase is primarily related to higher legacy environmental provisions, [$4.6m] in 3Q08 vs. $1.6m in 3Q07. 2. Partially offsetting this increase were some lower workers' compensation expenses vs. 2007. 3. Net debt as of 08/31/08, $383m. 1. Represents $29m increase from $354m as of 11/30/07. 2. Increase reflects $35m used to fund grantor trust earlier on in the year. 4. Net cash usage for the year is used by corporate interest, retiree medical and legacy matters, with Aerojet generating cash to offset...

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