C&D Technologies, Inc. Reports Preliminary Fiscal 2010 Fourth Quarter and Full Year Results
BLUE BELL, Pa., April 19, 2010 /PRNewswire via COMTEX/ --Highlights
C&D Technologies, Inc. (NYSE: CHP), a leading North American producer and marketer of electrical power storage and conversion systems used in telecommunications, uninterrupted power supply ("UPS") systems, energy generation and transmission infrastructure, and other high reliability applications, today announced preliminary financial results for its fiscal 2010 fourth quarter and year ended January 31, 2010.
For the fourth quarter on a preliminary basis, C&D Technologies, Inc. (the "Company" or "C&D") reported net sales of $88.4 million compared to $85.4 million reported in the fourth quarter of 2009, with the increase largely attributable to (1) the impact of rising commodity costs on pricing in North America, and (2) a tripling of volumes in Asia. On a sequential basis, net sales were down slightly from $91.2 million in the third quarter due to sequentially weaker volumes in North America, reflecting continued softness in demand for UPS flooded product, as well as some impact from the implementation of pricing actions required to enhance margins. The weaker volumes in North America were partially offset by a fourth quarter increase in sequential Asian revenues of approximately 6%, reflecting the continued strengthening of the Asian markets and new product sales.
The Company reported a preliminary fourth quarter net loss of $6.7 million, or ($0.26) per diluted share, compared to a net loss of $15.2 million, or ($0.58) per diluted share, in the year ago quarter. In the third quarter of the current fiscal year, the net loss was $3.4 million or ($0.13) per diluted share. The increase in the sequential net loss is primarily a result of the effect of higher lead costs impacting the income statement during the fourth quarter and the related lag in pricing recovery as contracts with major customers adjusted through the period. New prices were largely in effect as the quarter ended and the new fiscal year began. Fourth quarter results were also impacted by geographic and product mix changes.
Preliminary reported net sales for fiscal year 2010 were $335.7 million in comparison to $365.5 million in fiscal year 2009. The reduction in revenues was largely attributable to the impact of lead costs on pricing, with lower North American volumes from the economic downturn being partially offset by volume growth through expansion in Asian markets.
The Company reported a preliminary net loss of $25.5 million or ($0.97) per diluted share for fiscal year 2010 in comparison to $16.9 million or ($0.66) per diluted share in fiscal year 2009.
Dr. Jeffrey A. Graves, President and CEO, said, "The fourth quarter was an important transitional period for C&D as we managed through what we now believe was the conclusion of a sustained period of end market contraction, combined with simultaneous increases in input commodity raw material costs. As the market leader, in North America, we drove significant price increases in Q4 which, while painful to our customers, were necessary to address our rising material and other costs. The result was a lower bookings and shipment rate during this quarter. Our new product introductions and Asian expansion strategies were essentially unaffected by these actions, but economic challenges and our pricing strategies, at least in the short term, trimmed North American volumes as our customers' weakened capital budgets were exhausted. The steady increase in input commodity prices, the lag in our cost recovery programs and some deleveraging from lower North American volumes, temporarily stalled the progress recently achieved in expanding margins from their low point in the first quarter. Productivity enhancements and efficiency improvements achieved through cost reductions and other actions remain on track."
"Over the past few months as we entered our new fiscal year, we have seen improving strength in all of our end markets, with the exception of the largest UPS systems that utilize our 'flooded' battery products. These systems are used in large data center environments which have been the hardest hit in the recession and a rebound is yet to occur. All other markets, including telecommunications, energy and infrastructure and smaller UPS systems, are showing meaningful increases in the new fiscal year as the economy rebounds and new, more robust capital budgets are released by our customers. This momentum has reflected itself in a strong rebound in our order intake in recent months, with our current backlog up substantially since the end of the fiscal year. Most importantly, the backlog we have been building in the new fiscal year 2011 reflects significant margin improvement over actual performance in Q4 of fiscal year 2010, reflecting our recovery of higher lead costs, the benefits from other pricing actions, and continued optimization of product, customer and channel mix. These improving margins will be seen as our bookings flow through into shipments in the months and quarters ahead. With this momentum building, we are excited about the new year."
Revolving Credit Facility Renewed; Additional Financing Efforts Anticipated
Dr. Graves further commented, "We are pleased to report that on April 9, 2010, we completed the closure of a new revolving credit facility with our primary lender in the principal amount of $55 million. We are working diligently toward completing a further amendment to this credit facility that would provide us with additional liquidity in the form of a $20 million term loan tranche. The incremental term loan tranche would also be secured by our assets with the right of repayment being fully subordinated to the repayment of the indebtedness owed under the revolving credit facility tranche. We have received a commitment letter from the proposed term loan lender, which contains certain conditions to be satisfied prior to closing, including the approval from our revolving credit facility lender."
"As a result of the focus on these refinancing efforts, we expect to file our annual report on Form 10-K for the year ended January 31, 2010 on or before April 30, 2010 to allow us time to complete negotiations with respect to the new term loan tranche of our credit facility with our lenders."
In that regard, C&D filed a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission today, delaying the filing of its Annual Report on Form 10-K for the Year ended January 31, 2010 for up to an additional 15 days. C&D cannot be certain that the supplemental term loan discussed herein will be completed on acceptable terms, on a timely basis, as an amendment to the existing credit facility or as a stand-alone financing, or at all. If the term loan is not obtained prior to the time C&D ultimately files its fiscal 2010 Form 10-K, management anticipates that C&D's independent registered public accounting firm would include an explanatory paragraph in their report on our financial statements for the fiscal year ended January 31, 2010, as there would be substantial doubt about C&D's ability to continue as a going concern. Such an explanatory paragraph, unless waived by C&D's lenders, would constitute a covenant default under C&D's credit facility. As a result, absent any waiver, forbearance or similar agreement, the lenders under C&D's credit facility would have the right to cause all amounts borrowed to become due and payable immediately and cease further borrowings by C&D under the credit facility, thereby significantly impacting C&D's liquidity.
C&D management will host a conference call to discuss these preliminary financial results on April 20, 2010 at 9:00 a.m. Eastern Standard Time. Those parties interested in participating in the conference call via telephone should dial (706) 679-4521 and enter conference ID number 69864418. A telephone replay of the conference call will begin immediately following the call and will be available through May 4, 2010 at midnight Eastern Standard Time. To access the rebroadcast, please dial (800) 642-1687 (706-645-9291 for international callers) and enter code 69864418. A webcast of the conference call will also be available at http://www.cdtechno.com.
About C&D Technologies:
C&D Technologies, Inc. provides solutions and services for the switchgear and control (utility), telecommunications, and uninterruptible power supply (UPS), as well as emerging markets such as solar power. C&D Technologies engineers, manufactures, sells and services fully integrated reserve power systems for regulating and monitoring power flow and providing backup power in the event of primary power loss until the primary source can be restored. C&D Technologies, Inc. is headquartered in Blue Bell, PA. For more information about C&D Technologies, visit http://www.cdtechno.com.
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