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C&D News
C&D Technologies Reports Continued Revenue Growth, Profitability Improvement for Third Quarter
- Revenue Rises Sequentially Driven by 7% Unit Volume Growth - Gross Margin Expands Sequentially to 17.7% - Cash Flow From Operations Strengthens Sequentially to $6.3 million
BLUE BELL, Pa., Dec 08, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- 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 systems, utility and other high reliability applications, today announced financial results for the fiscal 2009 third quarter ended October 31, 2008.
For the third quarter, the Company reported net income of $964,000 or $0.04 per basic and $0.02 per diluted share, compared to a net loss of $9.3 million or ($0.36) per basic and diluted share in the prior year's third quarter. Earnings for the third quarter of this year reflected $0.03 per share in charges related to balance sheet currency remeasurement losses following the significant devaluation of certain foreign currencies against the $US dollar in the third quarter and $0.01 per share for fees associated with amendment of the Company's bank agreement. Results in the prior year's third quarter included a $2.3 million or ($0.09) per fully diluted share loss from discontinued operations.
Third quarter revenues were $93.8 million, up 3% compared to $91.3 million in the prior year's third quarter, driven by both pricing and estimated volume growth of 2%. On a sequential basis revenues were up from $92.5 million in spite of lead prices being strongly down in the quarter, reflecting an approximate 7% sequential volume improvement in sales.
Against the prior year quarter, gross profits increased 184% to $16.6 million from $5.9 million, driven by pricing recoveries, lower lead costs and significant cost reduction initiatives. On a sequential basis gross margins continued their improving trend, rising to 17.7% in the quarter. The strong combination of higher revenues from unit volume growth and efficiency-driven margin expansion resulted in operating cash flow of $6.3 million, the best quarter of cash flow in the last three years.
Dr. Jeffrey A. Graves, President and CEO said, "We are pleased with our financial results this quarter, as the decisive actions we have taken to sharpen C & D's strategic focus are taking hold. In the quarter, we were very pleased with our revenue performance, with unit volume growth of 7% sequentially from the second quarter, despite the headwinds all industries face from global economic and credit market uncertainties. Our focus on the standby power market has enabled us to increase our investment in innovative new technology while strengthening our organization and expanding our industry leading brand on a global basis. The resulting top line achievements are a clear signal that our strategy is working. This top line growth is being leveraged into faster bottom line profitability growth through the implementation of our cost reduction initiatives that have gross margins continuing to improve towards our previously communicated target of 20% exiting this fiscal year. Our strong third quarter cash flow has contributed to continued improvement in our overall liquidity and financial position. And, for the third consecutive quarter, earnings increased on a sequential basis, adjusted for the non-operating and other unusual charges incurred in the quarter."
Looking to the future, the third quarter book to bill ratio was 1-to-1 as near-term demand in the uninterrupted power supply (UPS) and utility markets remained resilient. Results in the quarter also benefited from international volume growth, driven by project business in Europe and our expanding core operations in China, where positive Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was achieved for the quarter as the trend of steady sales growth and operational improvements continued.
The Company generated $7.2 million of Adjusted EBITDA in the quarter, excluding $1.1 million of unusual items for balance sheet currency remeasurement losses and bank amendment fees. With strong EBITDA performance and continued working capital management, liquidity continues to improve, with approximately $7 million in cash balances and a little under $40 million of unused capacity available on our credit facility that is committed thru December 2010. With positive cash flow's and our committed credit facility the Company's financial position continues to stengthen and provides the resources needed to fund capital and other planned investment activities for continued growth and profitability improvement initiatives.
During the quarter, total debt was also reduced through the conversion of $2.5 million of our Series 2006 Notes into 516,795 shares of common stock.
Dr. Graves continued, "Our performance has improved sequentially every quarter this fiscal year reflecting effective execution of our strategy and the success of our productivity-enhancing initiatives. We continue to build momentum that will allow us to leverage our strong foundation as the industry leader in the standby power market. From this strong base, we are now expanding our channels to market globally, to accelerate growth in China and other international markets where infrastructure investment is greatest, as well as developing the new products and channels necessary to penetrate adjacent markets in North America. We are also exploring opportunities to invest in exciting new energy storage technologies, as well as innovative utilization of our core technological expertise, such as our recent agreement to establish a partnership with Firefly Energy to manufacture lead-acid microcell batteries for the trucking and off-highway equipment markets. Through the first three quarters of fiscal 2009, we have achieved significant progress on all of our key strategic initiatives in a difficult economic climate and while completing a major corporate transition. Over the long term, we believe we are making the right investments to capitalize on our core competencies and to position the company to generate attractive shareholder returns."
Conference call:
C&D management will host a conference call to discuss these financial results on December 8, 2008 at 10:00 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 76743654. A telephone replay of the conference call will begin immediately following the call and will be available through December 22, 2008 at midnight Eastern Standard Time. To access the rebroadcast, please dial 800-642-1687 (706-645-9291 for international callers) and enter code 76743654. 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' 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.
Forward-looking Statements:
This press release may contain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934), 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. Factors that appear with the forward- looking statements, or in the company's Securities and Exchange Commission filings (including without limitation the company's annual report on Form 10-K for the fiscal year ended January 31, 2008, or the quarterly and current reports filed on Form 10-Q and Form 8-K thereafter), could cause the company's actual results to differ materially from those expressed in any forward- looking statements made herein.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(UNAUDITED)
Three months ended Nine months ended
October 31, October 31,
2008 2007 2008 2007
NET SALES $93,822 $91,253 $280,083 $251,586
COST OF SALES 77,222 85,403 234,147 222,939
GROSS PROFIT 16,600 5,850 45,936 28,647
OPERATING EXPENSES:
Selling, general and
administrative
expenses 10,178 8,563 30,198 25,820
Research and
development expenses 1,657 1,725 5,051 4,949
Gain on sale of
Shanghai, China plant - - - (15,162)
OPERATING INCOME (LOSS)
FROM CONTINUING
OPERATIONS 4,765 (4,438) 10,687 13,040
Interest expense, net 2,121 1,880 6,672 6,190
Other (income)
expense, net 1,208 (1,181) 910 (2,120)
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES AND
MINORITY INTEREST 1,436 (5,137) 3,105 8,970
Income tax provision
from continuing
operations 551 2,186 846 1,281
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE MINORITY INTEREST 885 (7,323) 2,259 7,689
Minority interest (79) (330) (484) 3,672
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS 964 (6,993) 2,743 4,017
LOSS FROM DISCONTINUED
OPERATIONS BEFORE
INCOME TAXES - (4,167) - (10,564)
Income tax (benefit)
provision from
discontinued operations - (1,862) - 1,703
LOSS FROM DISCONTINUED
OPERATIONS - (2,305) - (12,267)
NET INCOME (LOSS) $964 $(9,298) $2,743 $(8,250)
Income (Loss) per share:
Basic:
Net income (loss) from
continuing operations $0.04 $(0.27) $0.11 $0.16
Net loss from
discontinued operations $- $(0.09) $- $(0.48)
Net income (loss) $0.04 $(0.36) $0.11 $(0.32)
Diluted:
Net income (loss) from
continuing operations $0.02 $(0.27) $0.09 $0.15
Net loss from
discontinued operations $- $(0.09) $- $(0.48)
Net income (loss) $0.02 $(0.36) $0.09 $(0.32)
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and par value)
(UNAUDITED)
October 31, January 31,
2008 2008
ASSETS
Current assets:
Cash and cash equivalents $6,883 $6,536
Restricted cash 2,100 4,383
Accounts receivable, less allowance
for doubtful accounts of $668 and $1,148 64,595 62,946
Inventories 68,878 85,832
Prepaid taxes 840 800
Other current assets 1,450 835
Assets held for sale - 450
Total current assets 144,746 161,782
Property, plant and equipment, net 84,313 79,782
Deferred income taxes 32 32
Intangible and other assets, net 15,120 16,091
Goodwill 59,960 59,870
TOTAL ASSETS $304,171 $317,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $5,848 $5,568
Accounts payable 36,089 51,382
Accrued liabilities 16,058 15,593
Other current liabilities 6,857 9,767
Total current liabilities 64,852 82,310
Deferred income taxes 10,346 10,020
Long-term debt 122,904 124,133
Other liabilities 17,281 20,568
Total liabilities 215,383 237,031
Minority interest 11,524 11,418
Stockholders' equity:
Common stock, $.01 par value,
75,000,000 shares authorized; 29,162,101
and 29,081,110 shares issued, respectively 292 291
Additional paid-in capital 71,436 74,995
Treasury stock, at cost, 2,914,852
and 3,414,633 shares, respectively (40,158) (47,243)
Accumulated other comprehensive income (22,386) (24,270)
Retained earnings 68,080 65,335
Total stockholders' equity 77,264 69,108
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $304,171 $317,557
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
Nine months ended
October 31,
2008 2007
Cash flows from operating activities:
Net income (loss) $2,743 $(8,250)
Net loss from discontinued operations - (12,267)
Net income from continuing operations 2,743 4,017
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Minority interest (484) 3,672
Share-based compensation 704 444
Depreciation and amortization 8,468 8,315
Amortization of debt acquisition costs 1,272 1,208
Annual retainer to Board of Directors
paid by the issuance of common stock 190 236
Deferred income taxes 327 628
Gain on disposal of assets - (15,295)
Changes in assets and liabilities:
Accounts receivable (3,160) (14,127)
Inventories 16,300 (18,146)
Other current assets (668) 702
Accounts payable (13,746) 9,977
Accrued liabilities 463 3,762
Income taxes payable (697) 1,792
Other current liabilities (2,498) 864
Funds provided to discontinued
operations - (22,170)
Other long-term assets 82 232
Other liabilities (3,041) 4,410
Other, net 3,248 (2,356)
Net cash provided by (used in)
continuing operating activities 9,503 (31,835)
Net cash used in discontinued
operating activities - (1,249)
Net cash provided by (used in)
operating activities 9,503 (33,084)
Cash flows from investing activities:
Proceeds from the divestiture of businesses - 85,700
Acquisition of property, plant and equipment (12,017) (7,071)
Proceeds from disposal of property,
plant and equipment 484 2,248
Decrease in restricted cash 2,283 -
Net cash (used in) provided by continuing
investing activities (9,250) 80,877
Net cash used in discontinued
investing activities - (298)
Net cash (used in) provided by
investing activities (9,250) 80,579
Cash flows from financing activities:
Repayment of debt, net - (24,123)
Proceeds from new borrowings - 3,993
Increase (decrease) in overdrafts 54 (2,241)
Financing cost of long term debt - (459)
Proceeds from exercise of stock options 247 -
Purchase of treasury stock (115) (134)
Net cash provided by (used in) continuing
financing activities 186 (22,964)
Net cash used in discontinued financing
activities - (5,212)
Net cash provided by (used in) financing
activities 186 (28,176)
Effect of exchange rate changes on cash and
cash equivalents (92) 169
Increase in cash and cash equivalents from
continuing operations 347 26,247
Cash and cash equivalents, beginning of period 6,536 5,384
Cash and cash equivalents, end of period $6,883 $31,631
SOURCE C&D Technologies, Inc.
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