GenCorp keeps up profitable streak

GenCorp Inc. reported its third consecutive profitable quarter Wednesday, boosted by gains in the company's defense and aerospace business as well as a substantial one-time tax benefit.

But the good news was tempered, given that the company's long-standing Titan engine contract ended in August. The contract generated about $40 million a year for GenCorp.

For the third quarter, the Rancho Cordova-based firm earned $15.6 million, or 24 cents a share, a sharp improvement over a loss of $13.1 million, or 24 cents a share, in the same period last year. Revenue soared 25.4 percent to $198.5 million, boosted by higher sales in space and defense projects, including NASA's Orion manned moon exploration vehicle and missile programs.

Earnings also were helped by a number of one-time tax benefits that totaled $12.6 million and a reduction in retirement plan expenses, which shrunk to $5.6 million in the quarter from $10.8 million a year ago.

"It's been a successful year for us," said Terry Hall, GenCorp's president and chief executive. "Our strategy to focus on space propulsion and missile defense ... has driven our success."

But Hall noted that the company's 50-year involvement in the Titan rocket engine program expired at the end of the third quarter. "We'll need to replace $40 million in revenue to stay equal," he said.

In a conference call with analysts, Hall said some of that revenue could be made up by broader involvement in current missile defense and space exploration programs, though he acknowledged that funding of those programs is in flux.

"Right now we have some uncertainty," he said. "The defense budget has not passed yet," and a key NASA program budget is being revised.

The company's efforts to develop its property in Rancho Cordova also have hit some speed bumps. Hall said a portion of its environmental impact report on the 2,700-acre Rio Del Oro mixed-use project had to be rewritten.

The revision was forced because of rulings in unrelated lawsuits dealing with wetlands and water issues, Hall said. He expects the revised report will go before the Rancho Cordova City Council in March or April.

GenCorp's results appeared to please Wall Street, which bid the company's stock up 68 cents to close Wednesday at $11.99 on the New York Stock Exchange.

About the writer:

• The Bee's Clint Swett can be reached at (916) 321-1976 or cswett@sacbee.com.