Shares of AAI parent fall 20%

United Industrial 1Q net down 32%


Shares of United Industrial Corp. tumbled more than 20 percent yesterday after the Hunt Valley company reported first-quarter profit down nearly one-third from a year ago.

While the manufacturer of unmanned aerial vehicles and aircraft training simulators saw a 28 percent increase in revenue for the quarter, officials blamed the sharp drop in profit on a property sale a year ago that boosted earnings. Excluding the one-time gain, the company missed analysts' forecasts by 5 cents a share.

United Industrial stock fell $13.81 to close at $53.99 on the New York Stock Exchange.

Net income from continuing operations was $8.9 million, or 69 cents a share, compared with $12.6 million, or 84 cents a share for the first quarter of 2005. Net income from both continuing and noncontinuing operations dropped 32.4 percent to $8.6 million, or 67 cents a share, from $12.7 million, or 84 cents a share, a year earlier.

The $4.7 million sale of undeveloped property adjacent to the company's headquarters last year contributed 29 cents a share to earnings for first quarter 2005. Costs related to stock-based compensation reduced the most recent quarter's earnings by 2 cents a share. Analysts polled by Thomson Financial expected United Industrial to earn an average 74 cents a share.

Revenue rose 28 percent to $138 million, compared with $108 million a year ago. Sales grew at both of United Industrial's subsidiaries - AAI Corp., the defense contractor, and Detroit Stoker Co., which makes combustion equipment for the energy industry.

With more of its unmanned aircraft deployed over the battlefield, net defense sales grew 28.5 percent to $128.7 million, up from $100.2 million a year ago. Net energy sales increased 20.7 percent to $8.9 million, driven by sales of wood- and coal-burning stokers in response to rising oil and natural gas prices.

Spokeswoman Sharon Corona said the company, which employs 2,200 people, does not comment on fluctuations in its stock price.

In a conference call with analysts yesterday morning, Chief Executive Officer Frederick Strader remained optimistic about the rest of the year, buoyed by an $87 million contract from the U.S. Army for more unmanned aerial vehicle systems.

The Army ordered nine Shadow 200 Tactical Unmanned Aircraft Systems to be delivered between April 2007 and March 2008.

Each system includes four unmanned aircraft and ground control stations. Since 1999, the Army has ordered 64 systems, or 256 aircraft, which are used to collect images and conduct surveillance. The deal was announced yesterday morning, along with earnings.

Strader told analysts that 2006 "has begun with a very productive quarter."

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