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C&D News
C&D Technologies Announces First Quarter Results
BLUE BELL, Pa., June 5 /PRNewswire-FirstCall/ -- C&D Technologies, Inc.
(NYSE: CHP), a leading North American producer and marketer of electrical
power storage and conversion systems used in telecommunications, industrial
and motive applications, today announced financial results for the first
quarter ended April 30, 2006.
For the quarter, the Company reported a net loss of $8.7 million, or
34 cents per diluted share, on revenues of $129.2 million. Results included
costs of approximately $1.7 million associated with RoHS (European Union
mandate on removal of hazardous substances) compliance and manufacturing
changes within the Power Electronics Division.
In commenting on the financial results for the first quarter, Dr. Jeffrey
A. Graves, President and CEO of the Company, said, "The first quarter saw our
Standby Power Division recapture sales momentum while our Motive Power
Division continued to make steady progress. Overall, we have been pleased
that the market appears to have largely accepted our recently announced price
increases. However, despite these price increases, non-lead commodity costs,
such as copper, resins, steel and fuel, continued to escalate and had a large
impact on our profitability in the first quarter."
"Our Power Electronics Division results were negatively impacted by RoHS
compliance and temporary costs associated with the transition to new contract
manufacturing partners in Asia. In addition, as a result of these activities,
it was necessary to source certain new business opportunities domestically in
the first quarter at negative margins. But with the transfer to new Asian
contract manufacturers completed last month, they are now contributing
positive margins."
Dr. Graves continued, "With the first quarter behind us and many of the
key initiatives we have targeted for fiscal 2007 well underway, we expect the
Company will return to profitability in the second half of fiscal 2007. Our
continued focus on technology leadership, quality and customer service, as
well as the successful execution of our manufacturing plans during the year,
will be critical to accomplishing this goal."
Standby Power:
In the first quarter, the Standby Power Division posted total net sales of
$66.7 million, and operating income of $605,000. Revenues grew 10% year over
year and 13% sequentially. Operating income was down from $2.2 million in
last year's first quarter and $2.0 million in the fiscal fourth quarter of
2006.
In commenting on the Standby Power Division results, Dr. Graves said, "The
Standby Power Division regained revenue momentum in Q1 as a result of better
product marketing and more consistent pursuit of new business opportunities.
In addition, we had some significant new contract wins that will serve us well
in the second half and into fiscal 2008. Nevertheless, profitability from the
comparable quarter last year was compromised because of the impact of
commodity costs, net of our pricing actions on a year-over-year basis."
"Additionally, we recently announced that Leonard P. Kiely has been named
Vice President and General Manager of the Power Systems Division, which
consists of the Standby Power and Motive Power Divisions. Mr. Kiely brings a
global perspective honed during many years of managing manufacturing
operations for multinational companies, such as Precision Castparts Corp. and
SPS Technologies, Inc. With his background in both operations and finance,
and a proven track record of success in highly competitive, global industrial
businesses, we are confident that he will restore consistent execution to the
Power Systems Division."
Motive Power:
In the first quarter, the Motive Power Division posted total net sales of
$14.8 million, up 6% year over year and 2% on a sequential basis. The
Division's operating loss improved to $2.0 million in the fiscal 2007 first
quarter, from $2.4 million in the prior year's first quarter.
Dr. Graves stated, "Plans for the closure of our Huguenot, NY facility and
transition of manufacturing operations to our Reynosa, Mexico plant are
progressing on schedule and on budget. We have committed the resources to
bring this critical project to completion in a timely, orderly, and
cost-effective fashion, and expect to realize significant cost and quality
savings from these actions beginning in the second half of fiscal 2007."
Power Electronics Division:
In the first quarter, the Power Electronics Division posted total net
sales of $47.7 million and an operating loss of $2.6 million. Revenues were
down 1% on a year-over-year basis and 6% sequentially. Operating loss
compares to $900,000 in last year's first quarter and $451,000 in the fiscal
fourth quarter of 2006.
Dr. Graves commented, "Revenues for the quarter were in line with our
internal expectations but against a strong fourth quarter were negatively
impacted by product conversion disruptions and raw material component
availability issues related to RoHS. In addition, the Power Electronics
Division incurred approximately $1.7 million of costs related to RoHS
compliance and the transition of manufacturing to new third party contract
manufacturers in Asia. Unfavorable margin performance from certain new
business opportunities, which were unable to be sourced favorably until May
2006, also impacted our reported results. We believe that, entering the
second quarter, these issues are now largely behind us."
Outlook:
Dr. Graves concluded, "We have invested significant time and energy into
ensuring that we have the right management team and the right manufacturing
resources in place to capitalize on our strong customer relationships,
world-class R&D resources and reputation for first-rate quality and customer
service. As we conclude our manufacturing transitions later this year, we
expect to move to profitability, and emerge from fiscal 2007 with a highly
competitive global manufacturing footprint and positive earnings momentum that
will generate significant shareholder value."
C&D Technologies, Inc. provides solutions and services for the switchgear
and control (utility), motive (material handling), 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. Through our Power Electronics Division, we
manufacture and market custom, standard and modified-standard electronic power
supply systems, including DC to DC converters, for large OEMs of
telecommunications and networking equipment, as well as office and industrial
equipment. The division also manufactures power conversion products sold into
military and CATV applications as well as digital panel meters and data
acquisition components. 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, 2006, 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
April 30,
2006 2005
NET SALES $129,167 $122,821
COST OF SALES 110,490 101,070
GROSS PROFIT 18,677 21,751
OPERATING EXPENSES:
Selling, general and administrative expenses 15,196 16,679
Research and development expenses 7,440 6,213
OPERATING LOSS (3,959) (1,141)
Interest expense, net 3,028 2,004
Other expense, net 315 314
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST (7,302) (3,459)
Provision (benefit) for income taxes 1,570 (1,651)
LOSS BEFORE MINORITY INTEREST (8,872) (1,808)
Minority interest (214) (99)
NET LOSS $(8,658) $(1,709)
Net loss per common share - basic $(0.34) $(0.07)
Net loss per common share - diluted $(0.34) $(0.07)
Dividends per share $0.01375 $0.01375
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(UNAUDITED)
April 30, January 31,
2006 2006
ASSETS
Current assets:
Cash and cash equivalents $25,939 $25,693
Accounts receivable, less allowance
for doubtful accounts
of $2,433 and $2,889 84,293 78,420
Inventories 86,783 83,803
Deferred income taxes 3,492 3,430
Prepaid taxes 6,740 6,838
Other current assets 2,506 8,892
Total current assets 209,753 207,076
Property, plant and equipment, net 91,015 91,041
Deferred income taxes 372 401
Intangible and other assets, net 37,715 38,450
Goodwill 81,706 81,451
TOTAL ASSETS $420,561 $418,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $990 $1,038
Accounts payable 51,076 50,199
Book overdrafts 395 71
Accrued liabilities 24,335 23,440
Other current liabilities 30,947 35,578
Total current liabilities 107,743 110,326
Deferred income taxes 12,907 11,660
Long-term debt 141,005 133,067
Other liabilities 31,745 24,051
Total liabilities 293,400 279,104
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands, except par value)
(UNAUDITED)
April 30, January 31,
2006 2006
Commitments and contingencies
Minority interest 8,498 8,498
Stockholders' equity:
Common stock, $.01 par value, 75,000,000
shares authorized; 28,932,928 and
28,828,428 shares issued, respectively 289 288
Additional paid-in capital 73,326 72,599
Treasury stock, at cost 3,378,895 and
3,380,102 shares, respectively (47,067) (47,094)
Accumulated other comprehensive loss (15,775) (11,876)
Retained earnings 107,890 116,900
Total stockholders' equity 118,663 130,817
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $420,561 $418,419
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
Three months ended
April 30,
2006 2005
Cash flows from operating activities:
Net loss $(8,658) $(1,709)
Adjustments to reconcile net loss to net
cash (used) provided by operating activities:
Minority interest (214) (99)
Stock option compensation 50 -
Depreciation and amortization 4,974 6,098
Deferred taxes 1,218 556
(Gain) loss on disposal of assets (11) 128
Changes in:
Accounts and other notes receivable (5,498) (4,504)
Inventories (2,741) (936)
Other current assets 3,306 (432)
Accounts payable 567 4,279
Accrued liabilities 480 188
Current taxes payable (567) (3,253)
Other current liabilities (268) 1,732
Other liabilities 3,701 235
Other long-term assets (88) 463
Other, net (1,567) (73)
Net cash (used) provided by
operating activities (5,316) 2,673
Cash flows provided (used) by investing activities:
Acquisition of property, plant and equipment (3,478) (1,337)
Proceeds from disposal of property,
plant and equipment 18 8
Net cash used by investing activities (3,460) (1,329)
Cash flows provided (used) by financing activities:
Reduction of long-term debt (270) (1,364)
Proceeds from new borrowings 8,507 -
Financing cost of long-term debt (627) (735)
Increase (decrease) in book overdrafts 324 (4,029)
Purchase of treasury stock - (10)
Proceeds from exercise of stock options 695 -
Payment of common stock dividends - (349)
Net cash provided (used) in
by financing activities 8,629 (6,487)
Effect of exchange rate changes
on cash and cash equivalents 393 8
Increase (decrease) in cash and cash equivalents 246 (5,135)
Cash and cash equivalents, beginning of period 25,693 26,855
Cash and cash equivalents, end of period $25,939 $21,720
SOURCE C&D Technologies, Inc.
06/05/2006
CONTACT: Ian Harvie of C&D, +1-215-619-7835 or Joseph Crivelli ofGregory FCA, for C&D, +1-610-642-8253 |
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