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C&D News
C&D Technologies Reports Improved Sequential Fiscal 2006 Second Quarter Financial Results
BLUE BELL, Pa., Sept. 8 /PRNewswire-FirstCall/ -- C&D Technologies, Inc. (NYSE: CHP), a leading global producer and marketer of electrical power storage and conversion products used in telecommunications and industrial applications, today announced financial results for the second quarter ended July 31, 2005. For the three-month period, the company recorded net income of $1.1 million, or 4 cents per diluted share, on revenues of $123.1 million. Net cash provided by operating activities during the quarter was $11.0 million, and the company completed the quarter with $20.9 million of cash and $127.6 million of long-term debt.
For the six-month period, the net loss was $659,000, or 3 cents per diluted share, on revenues of $245.9 million.
Dr. Jeffrey A. Graves, President and Chief Executive Officer, commented, "I am pleased that C&D has returned to profitability this quarter. My view, since joining the company in early July, is that C&D is a great company with technologically advanced products, world-class design capabilities, and the ability to deliver solid financial results. Unfortunately, for the past few quarters we executed poorly and lost our customer focus, and paid for it with unacceptable financial results. This quarter's improved bottom line is a small step toward a turnaround, but we have much work left to do."
Dr. Graves continued, "Fundamentally, we must provide the technology-leading products our customers have grown to expect from us, with unsurpassed quality and consistent on-time delivery. When we center our efforts on anticipating and fulfilling our customers' needs, execution improves and shareholder value grows. With C&D's existing technology resources and customer relationships, superior execution by the Company is expected to yield marked improvements in our financial performance."
The Motive Power Division posted an operating loss of $2.5 million on revenues of $12.7 million for the quarter. In the comparable prior year period, Motive Power posted an operating loss of $2.0 million on revenues of $13.1 million. On a sequential basis, Motive Power's revenues were down 9%, with the operating loss increasing by 4%. Dr. Graves commented, "Motive Power has struggled for several years to regain traction in the market and reestablish profitability. Quite frankly, most of our problems in this business were of our own making, and we recognize that we sent conflicting signals to the market and our customers about our commitment to this business. Following careful analysis of this business and industry, in early August I endorsed our team's plan to tackle the execution issues that face us. With the cost advantages offered by our new Reynosa, Mexico plant, and our improving product technology and customer focus, I am happy to state that we are in this business to stay. We believe in our Motive Power Division's ability to significantly improve execution. Therefore, we are making the changes needed in the business to return it to growth and profitability. Even today, Motive Power has solid market share and a strong, established base of core customers. We will look to build on these relationships and to develop new ones by focusing intensely on our customers' needs, expanding sales channels and driving operational improvements."
The Standby Power Division posted operating income of $3.7 million on $66.7 million in revenues during the quarter. This is down from operating income of $5.8 million in the comparable prior year period on sales of $61.5 million. However, on a sequential basis, Standby Power's revenues were up 10% and operating profits were up 69% from $2.2 million in the first quarter.
"The Standby Power Division executed better this quarter," said Dr. Graves. "As with the Motive Power Division, costs associated with the transition of manufacturing to Reynosa, Mexico, and higher lead prices continue to impact the division's profitability. We are working hard to improve operations at the Reynosa facility by strengthening the management team and putting processes and procedures in place to facilitate operational excellence. We believe that when these changes take root, the Reynosa facility will become North America's most productive and profitable manufacturing facility for industrial battery production."
The Power Electronics Division returned to profitability in the second quarter, with operating profits of $1.6 million on $43.7 million of revenues. In the comparable prior year period, the Power Electronics Division's operating profit was $2.9 million on $19.0 million of revenues. On a sequential basis, revenues were down 10%, however, operating results improved significantly from an operating loss of $918,000 in the first quarter. Dr. Graves continued, "We are making progress in improving the financial results of our Power Electronics Division, with both the legacy business and our acquired businesses posting improved operating profits this quarter. In visiting customers, it is clear to me that our industry-leading design capabilities are recognized and appreciated and that, as in all of our businesses, we need to closely align our internal business processes with the needs of our customers. I believe we can achieve this goal."
In the third quarter, C&D expects to record special charges, including a $1.5 million charge reflecting continued integration efforts within the Power Electronics Division and also expects to spend approximately $700,000 for capital related integration expenditures. In addition, the company recently initiated an assessment of its intangible assets and expects to complete its assessment in the third quarter. Pending completion of its assessment, impairment charges may be required related to certain intangible assets. The company expects growth in backlog and order rates from customers through the third quarter and beyond.
In commenting on the outlook for the balance of the year, Dr. Graves stated, "We're optimistic that the company has started to turn the corner from an operating perspective. I've visited many of our top customers since I came on board, and the tone of business is sound, in particular for the Standby Power Division, which should benefit from continued build-out of the nation's wireless infrastructure. At the same time, many of the factors that hampered financial performance in the first half of the year - lead pricing and execution-related issues - continue to generate headwinds. Balancing these factors, we are forecasting modest sequential increases for revenues and operating profits in Q3 and Q4, before special charges and potential impairment charges mentioned above, assuming lead pricing remains stable."
C&D Technologies will hold a conference call on Friday, September 9, 2005 at 9:00 AM Eastern Daylight Time to discuss these results. To participate, please call 706-679-4521 approximately five minutes before the conference call start time. A replay of the conference call will be available at approximately 2:00 PM and will remain available until midnight on Friday, September 23, 2005. Please call 800-642-1687 (706-645-9291 for international callers) and enter PIN number 9342658 to access the replay.
A simultaneous webcast of the conference call may be accessed at the investor relations section of our website at http://www.cdtechno.com. To listen to the live call, please go to the web site at least 15 minutes early to register, download and install any necessary audio software. An archive of the conference call will be available approximately two hours after the conference call ends and will remain available on the company's website until Friday, September 23, 2005.
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, 2005, 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
July 31, |
Six months ended
July 31, |
| |
2005 |
2004 |
2005 |
2004 |
| NET SALES |
$123,076 |
$93,627 |
$245,897 |
$179,432 |
| COST OF SALES |
99,639 |
74,106 |
200,709 |
143,370 |
| GROSS PROFIT |
23,437 |
19,521 |
45,188 |
36,062 |
| |
|
|
|
|
| OPERATING EXPENSES: |
|
|
|
|
| Selling, general and
administrative
expenses |
14,345 |
9,667 |
31,024 |
19,701 |
| Research and
development expenses |
6,311 |
3,187 |
12,524 |
5,856 |
| OPERATING INCOME |
2,781 |
6,667 |
1,640 |
10,505 |
| Interest expense, net |
2,309 |
807 |
4,313 |
1,094 |
| Other (income)
expense, net |
(258) |
499 |
56 |
1,059 |
| INCOME (LOSS) BEFORE
INCOME TAXES AND
MINORITY INTEREST |
730 |
5,361 |
(2,729) |
8,352 |
| (Benefit) provision
for income taxes |
(256) |
2,132 |
(1,907) |
3,239 |
| INCOME (LOSS) BEFORE
MINORITY INTEREST |
986 |
3,229 |
(822) |
5,113 |
| Minority interest |
(64) |
23 |
(163) |
(97) |
| NET INCOME (LOSS) |
$1,050 |
$3,206 |
$(659) |
$5,210 |
| Net income (loss) per
common share - basic |
$0.04 |
$0.13 |
$(0.03) |
$0.21 |
| Net income (loss) per
common share - diluted |
$0.04 |
$0.13 |
$(0.03) |
$0.20 |
| Dividends per share |
$0.01375 |
$0.02750 |
$0.02750 |
$0.04125 |
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(UNAUDITED)
| |
July 31,
2005 |
January 31,
2005* |
| ASSETS |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$20,915 |
$26,855 |
| Accounts receivable, less allowance for
doubtful accounts of $2,385 and $2,018 |
75,710 |
73,621 |
| Inventories, net |
81,329 |
77,272 |
| Deferred income taxes |
14,298 |
14,481 |
| Prepaid taxes |
5,928 |
1,644 |
| Other current assets |
2,083 |
2,008 |
| Total current assets |
200,263 |
195,881 |
| |
|
|
| Property, plant and equipment, net |
98,671 |
104,130 |
| Deferred income taxes |
287 |
287 |
| Intangible and other assets, net |
80,363 |
83,863 |
| Goodwill |
95,725 |
97,247 |
| TOTAL ASSETS |
$475,309 |
$481,408 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
| Current liabilities: |
|
|
| Short-term debt |
$1,699 |
$1,874 |
| Accounts payable |
40,742 |
34,808 |
| Book overdrafts |
1,099 |
8,674 |
| Accrued liabilities |
24,695 |
24,254 |
| Other current liabilities |
13,888 |
10,374 |
| Total current liabilities |
82,123 |
79,984 |
| |
|
|
| Deferred income taxes |
11,746 |
12,216 |
| Long-term debt |
127,609 |
135,004 |
| Other liabilities |
37,952 |
36,705 |
| Total liabilities |
259,430 |
263,909 |
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands, except par value)
(UNAUDITED)
| |
July 31,
2005 |
January 31,
2005* |
| Commitments and contingencies |
|
|
| Minority interest |
8,180 |
8,171 |
| Stockholders' equity: |
|
|
| Common stock, $.01 par value, 75,000,000 shares
authorized; 28,749,978 and 28,714,973 shares
issued, respectively |
287 |
287 |
| Additional paid-in capital |
72,105 |
71,956 |
| Treasury stock, at cost 3,382,331 and
3,368,676 shares, respectively |
(47,148) |
(47,151) |
| Accumulated other comprehensive income |
4,852 |
5,275 |
| Retained earnings |
177,603 |
178,961 |
| Total stockholders' equity |
207,699 |
209,328 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$475,309 |
$481,408 |
* Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
| |
Six months ended
July 31, |
| |
2005 |
2004 |
| Cash flows from operating activities: |
|
|
| Net (loss) income |
$(659) |
$5,210 |
| Adjustments to reconcile net (loss) income to
net cash provided by operating activities: |
|
|
| Minority interest |
(163) |
(97) |
| Depreciation and amortization |
11,883 |
11,209 |
| Deferred income taxes |
(256) |
1,407 |
| Loss (gain) on disposal of assets |
214 |
(59) |
| Changes in assets and liabilities: |
|
|
| Accounts receivable |
(2,570) |
(3,991) |
| Inventories |
(4,421) |
(5,110) |
| Other current assets |
(122) |
(54) |
| Accounts payable |
6,492 |
4,183 |
| Accrued liabilities |
375 |
1,147 |
| Income taxes payable |
(4,199) |
(1,899) |
| Other current liabilities |
3,590 |
(867) |
| Other liabilities |
911 |
1,183 |
| Other long-term assets |
906 |
788 |
| Other, net |
1,701 |
659 |
| Net cash provided by operating activities |
13,682 |
13,709 |
| Cash flows from investing activities: |
|
|
| Acquisition of business, net |
- |
(75,024) |
| Acquisition of property, plant and equipment |
(4,136) |
(5,534) |
| Proceeds from disposal of
property, plant and equipment |
71 |
121 |
| Net cash used in investing activities |
(4,065) |
(80,437) |
| Cash flows from financing activities: |
|
|
| Repayment of debt |
(7,014) |
(75) |
| Proceeds from new borrowings |
- |
68,269 |
| (Decrease) increase in book overdrafts |
(7,575) |
1,305 |
| Financing cost of long-term debt |
(735) |
(263) |
| Proceeds from issuance of common stock, net |
47 |
773 |
| Purchase of treasury stock |
(154) |
(2,661) |
| Payment of common stock dividends |
(349) |
(698) |
| Payment of minority interest dividends |
- |
(10) |
| Net cash (used in) provided
by financing activities |
(15,780) |
66,640 |
| Effect of exchange rate changes
on cash and cash equivalents |
223 |
(77) |
| Decrease in cash and cash equivalents |
(5,940) |
(165) |
| Cash and cash equivalents, beginning of period |
26,855 |
12,306 |
| Cash and cash equivalents, end of period |
$20,915 |
$12,141 |
SOURCE C&D Technologies, Inc. 09/08/2005
CONTACT: Stockholder Contacts: Stephen E. Markert, Jr. of C&D: +1-215-619-7835, or Joseph Crivelli of Gregory FCA, for C&D: +1-610-642-8253
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