C&D Technologies Reports Fiscal 2012 Second Quarter Results
- 13% year-over-year revenue growth - Net loss significantly reduced from prior year - $4.1 million of Adjusted EBITDA generated
BLUE BELL, Pa., Sept. 7, 2011 /PRNewswire/ -- C&D Technologies, Inc. (OTC: CHHP), a leading North American producer and marketer of electrical power storage and conversion systems used in telecommunications, uninterrupted power supply (or "UPS") systems, utility and other high reliability applications, today announced financial results for the second quarter of fiscal 2012, ended July 31, 2011.
Fiscal 2012 second quarter revenues were $94.6 million up 13 percent compared to $83.8 million in the second quarter of fiscal 2011. Revenues in the quarter reflected strong growth in Asia and Europe, as well as higher average selling prices resulting from an increase in the average quarterly cost of lead compared to the average cost of lead in the year ago quarter. These increases were partially offset by continued pressures on volumes as a result of the general economic environment, principally in our Americas UPS Flooded markets. Revenues in the second quarter were up from $88.3 million in the first quarter of fiscal 2012 as a result of strong growth in Europe and Asia and improved performance of the Telecom sector in the Americas compared to the first quarter.
Gross profit in the second quarter of fiscal 2012 was up five percent from the comparable quarter a year ago to $11.6 million. Gross margins in the second quarter of fiscal 2012 were 12.2%, down from 13.2% in the comparable year ago quarter and down from 14.5% in the first quarter of fiscal 2012. Gross margins contracted versus the comparable year ago quarter primarily due to increased lead prices during the period which were only partially recovered through increased pricing as well as unfavorable product mix shifts and negative absorption as inventory levels were significantly reduced. During the second quarter inventory levels were reduced by approximately $8 million. Margins were down on a sequential basis as a result of unfavorable product mix shifts and negative absorption as inventory levels were significantly reduced.
Selling, general and administrative expenses of $8.8 million in the second quarter of fiscal 2012 were $0.4 million lower than the comparable year ago quarter as a result of lower warranty costs offset by approximately $0.2 million in severance expenses associated with headcount reductions. On a sequential basis, selling, general and administrative costs were down $1.6 million driven by lower warranty and severance costs and benefits from ongoing cost reduction actions.
For the second quarter of fiscal 2012, the Company reported income from operations of $1.2 million, an improvement compared to operating losses of ($59.7) million (operating income of $0.2 million excluding the goodwill impairment charge) in the second quarter of fiscal 2011 and an increase from $0.8 million in the first quarter of fiscal 2012. For the quarter, the Company reported a net loss of ($1.1) million or ($0.07) per diluted share, compared to a net loss of ($50.7) million, or ($48.91) per diluted share in the second quarter of fiscal 2011 and net loss of ($0.6) million, or ($0.04) per diluted share in the first quarter of fiscal 2012. The reduction in net loss from the comparable year ago quarter was driven by improved operating performance, the benefit from lower interest expense following the Company's fourth quarter fiscal 2011 debt for equity exchange and a goodwill impairment charge of $60.0 million ($46 million net of tax) in the second quarter of fiscal 2011. The increase in the sequential net loss is primarily a result of approximately $0.3 million of costs associated with the Company's consideration of a going private transaction, as well as approximately $0.3 million of non-cash foreign currency remeasurement losses associated with intercompany balances, only partially offset by improved operating performance. Adjusted EBITDA for the second quarter of fiscal 2012 was $4.1 million as compared to $4.1 million in the comparable quarter a year ago and $3.3 million sequentially.
Commenting on the quarter, Dr. Jeffrey A. Graves, President and CEO said, "Our second quarter results were generally in line with our expectations. As we had indicated when releasing our first quarter results, we expected to see revenues in our second quarter rebound as our core markets in Asia continue to expand and as we headed into the quarter with a stronger backlog for our European business. During the quarter we also made great strides on driving down inventory levels, realizing an over $8 million reduction as we continue to focus on improving our working capital performance. These efforts however, resulted in a negative absorption impact on our bottom line as we adjusted our workforce levels in North America to compensate for continued softness in our Americas Flooded UPS markets."
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company has provided additional measures of its operating results, net income and earnings per share, which principally exclude certain costs and expenses related to both the Company's operational and financial restructuring plans. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its historical performance as well as prospects for its future performance.
This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three-month periods ended July 31, 2011, July 31, 2010 and April 30, 2011, as well as the six-month periods ended July 31, 2011 and July 31, 2010 follows:
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' unique ability to offer complete systems, designed and produced to high technical standards, sets it apart from its competition. C&D Technologies is headquartered in Blue Bell, PA. For more information about C&D Technologies, visit http://www.cdtechno.com.
This press release contains forward-looking statements, which are based on management's current expectations and are subject to uncertainties and changes in circumstances. Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. The Company's actual results could differ materially from those anticipated in forward-looking statements as a result of a variety of factors, including those discussed in "Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended January 31, 2011. We caution you not to place undue reliance on these forward-looking statements.
CONTACT: Shareholder Contact: Ian J. Harvie of C&D: +1-215-619-7835