GenCorp released first quarter earnings today that showed the aerospace and defense company lost money during the first quarter, which ended February 28th. The Rancho Cordova, California based company reported earnings per share loss of -$0.07 per share on revenue of $318.6 million. Analysts were forecasting earnings per share gains of $0.08 on revenue of $361.8 million. GenCorp said that adjusted earnings for one time gains and costs came in at $0.11 earnings per share. Shares of GenCorp are down nearly -7% in morning trading Friday.
GenCorp to change name, cut workforce in new refocused plan on business efficiency
GenCorp is said to be changing its name later on this month to Aerojet Rocketdyne Holdings Inc and trade under the symbol “AJRD”. Additionally, the company is moving to cut 10% of its work staff in an effort to regain efficiency and a leaner business model. Being that GenCorp is generally a subcontractor of larger defense contractors, the company is certainly at the mercy of the overall health of the defense industry, which is certainly not as vibrant as it was several years ago. With US Government continuing to find ways to cut its spending, defense spending has often come into the cross hairs and has received numerous cuts over the past five years. As GenCorp helps build the propulsion systems for attack, high altitude defense and other military weapons systems, the cuts have forced the company to slim down, cut jobs and move production from the Sacramento, California region to various other areas nationally, such as Orange, Virginia.
GenCorp slimming real estate division
Aside from being a aerospace and defense company, GenCorp does have a real estate division that holds excess land for sale, leasing, entitlement purposes. Just a month ago, the company sold off 703 acres of its 6,000 acres in the Folsom, California area for $57 million. All in all, GenCorp has around 12,000 acres of land stretching across the entire Sacramento region. The buyer was housing developer WestLand Capital Partners, who has already laid the ground work for a community development called “Hillsborough”. The community in development will feature 2,000 housing units, with numerous commercial units, schools, parks, etc.
Overall, GenCorp is looking to slim down and refocus its business. The company struggled during its first quarter, but management is currently laying down the frame work to getting the business leaner during a time of defense contract decline. The company’s real estate holdings certainly provide a “hedge” for the company, as they could liquidate assets to raise cash if need be. It will be interesting to see how the newly named company is able to operate after its changes.