BLUE BELL, Pa., June 7 /PRNewswire-FirstCall/ --
- Margins up sequentially and year-over-year
- Operating loss significantly reduced
- Over $1.5 million of Adjusted
EBITDA generated
- Revenues and margins show significant monthly
improvements
- China refinancing completed
to support growth in Asian sales
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 2011 first quarter ended
April 30, 2010.
For the quarter, the Company reported a net loss of ($5.6) million or ($0.21) per diluted share, an improvement both
sequentially from the fourth quarter 2010 net loss of ($6.7) million, or ($0.26) per diluted share, as well as from the
first quarter fiscal 2010 net loss of ($9.8)
million, or ($0.37) per
diluted share. For the quarter, the Company reported a loss
from operations of ($1.0) million, a
significant improvement compared to operating losses of
($5.8) million in the first quarter
of fiscal 2010 and ($2.8) million in
the fourth quarter of fiscal 2010. Adjusted EBITDA for the
first quarter of fiscal 2011 was $1.5
million.
First quarter revenues were $84.7
million up 15% compared to $73.7
million in the first quarter of fiscal 2010. Revenues
in the quarter reflect a significant increase in the average
quarterly cost of lead compared to the average cost of lead in the
year ago quarter, as well as increased pricing discipline and lead
lag recovery. The influence of commodity costs on revenues
was partially offset by a decrease in North American volumes,
particularly driven by weakness in the Company's key
uninterruptible power supply (UPS) market. Revenues in the
first quarter were sequentially down from $88.4 million in the fourth quarter of 2010,
consistent with Company guidance. Within the quarter,
revenues were heavily influenced by weak sales in February, with
significant improvement through the remaining months of the
quarter.
Commenting on the quarter, Dr. Jeffrey
A. Graves, President and CEO said, "After a slow February
sales month following our price increases in the fourth quarter,
our business has rebounded steadily, with bookings, revenues and
margins up sequentially in each month of the first fiscal quarter.
The operating environment has no doubt improved in the first
quarter, with certain of our end markets firming and commodity
prices stabilizing throughout the period. As a result,
through the pricing and cost reduction actions taken late last
year, in the first quarter we were able to reduce our operating
loss to $1.0 million, while
generating $1.5 million of positive
adjusted EBITDA in the quarter. Our gross margins rebounded from 7
percent a year ago to 12 percent in the quarter just completed, and
up from 10 percent sequentially. Importantly, we exited the
quarter with revenues once again exceeding $30 million per month, with gross margins
expanding to approximately 16 percent for April, and with a much
improved backlog over the prior quarter. This consistent
monthly improvement throughout the quarter reflected the
flow-through of business booked at new pricing levels, which had
been adjusted to reflect the higher commodity pricing environment
of late 2009. Results benefitted from continued strength in
our Asian operations, growth in the Energy and Infrastructure
markets and stability in telecom demand in North America. The slowdown in data
center construction, a continuing reflection of last year's weak
economic environment and tight credit markets, resulted in
continued weakness in the uninterruptible power supply (UPS)
markets in the Americas and in Europe, one of C&D's largest segments.
However, encouraging to us was a noticeable strengthening in
UPS quoting activities throughout the quarter, which we believe
reflects a gradual move toward recovery in this key market segment
for C&D. In short, we were pleased by the momentum built
through the first quarter in sales, and with our continued
productivity improvements, that should enable us to accelerate both
top and bottom line growth this year. Looking forward to Q2
and beyond, we believe the decrease in commodity prices late in the
first quarter, combined with continued growth in demand in
Asia and end-market stability in
the developed economies, bodes well for continued improvement in
the fundamental drivers of our business performance."
Gross profit in the first fiscal quarter was up 87% from a year
ago to $10 million. Gross margins in
the first quarter of 2011 were 12%, up sequentially from 10% in the
fourth quarter of 2010 and up significantly from 7% in the
comparable year ago period. Gross margins in the quarter
reflected relative intra-quarter stability in the cost of lead,
pricing actions implemented late last year and into the first
quarter, partially offset by decreased volumes in the America's, a
historically weaker product mix in the UPS segment and the
increasing participation of our Asian business in overall sales.
Sales in Asia are associated
with a lower gross margin, but deliver comparable operating margins
to the developed regions of the world as both SG&A and R&D
expenses are significantly lower.
Selling, general and administrative expenses of $9.2 million in first fiscal quarter of 2011 were
marginally lower than the comparable year ago quarter. On a
sequential basis, selling, general and administrative costs were
down $1.0 million from the previous
quarter.
Dr. Graves continued, "We are entering the second fiscal quarter
with improved margins reflected in our backlog. Moreover, in
Asia, where the markets for our
products are growing at double-digit rates driven by wireless
telecommunications, data center construction and energy
infrastructure expansion, we are continuing to invest aggressively
in new products and new manufacturing capacity. In the first
quarter, our new two-volt battery products that we announced late
last year began entering full production in our new
state-of-the-art China plant.
This new product family will significantly increase our
growth opportunities in the world's largest and fastest growing
market for telecom networks, particularly in China and India where demand for these two-volt products
alone should exceed $1 billion within
the next few years. In addition, just last week, we announced
the launch of our newest C&D TRUE FRONT ACCESS™ 12-volt telecom
products to be manufactured in Asia, which are also essential products for
wireless networks throughout the region. Having both the
2-volt and the 12-volt product lines available to the global
telecom network infrastructure OEM's, manufactured in Asia to achieve the targeted price and
delivery support requirements, is a strong competitive advantage to
C&D as we target higher growth rates in the Asian marketplace.
With over two-thirds of our new Chinese factory yet to fill,
we are extremely excited about the short-term growth opportunities
for our Asian business."
Dr. Graves concluded, "To support our Asian growth initiatives,
in May, we successfully completed a major refinancing of our
Chinese credit arrangements, including converting the term of
existing outstanding loans in China to a single five year amortizing loan,
as well as obtaining additional commitments that provided further
credit availability of up to $7.5M to support our growth in Asia. This new Chinese credit facility,
combined with our new $20 million
term loan in North America
discussed in our last earnings call, provides us with the
flexibility and liquidity to support our cost reduction and growth
initiatives in all of our geographies around the world. The
first quarter has set the stage for a projected meaningful
improvement in our financial performance by providing the momentum,
margins and operational efficiencies on which we may now capitalize
as we move through the rest of the year."
Non-GAAP Financial Measures
The Company uses Adjusted EBITDA as a key measure of its
operational financial performance. This measure is a key
indicator of the Company's operational performance and excludes the
impact of charges related to closed facilities. Adjusted
EBITDA herein is defined as earnings before interest, taxes,
depreciation, amortization and charges related to closed
facilities. Please refer to the reconciliations of net loss
to Adjusted EBITDA below.
Conference call:
C&D management will host a conference call to discuss these
financial results on Tuesday, June 8,
2010 at 10:00 a.m. Eastern Daylight
Time. Those parties interested in participating in the
conference call via telephone should dial 706-679-4521 and enter
conference ID number 78512801. A telephone replay of the conference
call will begin immediately following the call and will be
available through June 22, 2010 at
midnight Eastern Daylight Time. To
access the rebroadcast, please dial 800-642-1687 (706-645-9291 for
international callers) and enter code 78512801. 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:
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements we make. We may, from
time to time, make written or verbal forward-looking statements.
Generally, the inclusion of the words "believe," "expect,"
"intend," "estimate," "anticipate," "will," "guidance," "forecast,"
"plan," "outlook," "may" and similar expressions in filings with
the Securities and Exchange Commission ("SEC"), in this
notification, identify statements that constitute "forward-looking
statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act
of 1934 (the "Exchange Act") and are intended to come within the
safe harbor protection provided by those sections, including, but
not limited to, statements regarding the ability to obtain
additional funding in the future; our ability to implement and fund
business strategies based on current liquidity; our substantial
debt and debt service requirements; litigation proceedings to which
we are subject; our exposure to fluctuations in interest rates on
our variable debt; the realization of the tax benefits of our net
operating loss carry forwards; the fact that lead experiences
significant fluctuations in market price; our ability to
successfully pass along increased material costs to our customers;
failure of our customers to renew supply agreements;
competitiveness of the battery markets; political, economic and
social changes, or acts of terrorism or war; successful collective
bargaining with our unionized workforce; risks involved in our
foreign operations; continued growth in our foreign markets; our
ability to maintain and generate liquidity to meet our operating
needs; our ability to achieve and maintain profitability; the
possibility of additional impairment charges; our ability to
acquire goods and services and/or fulfill labor needs at budgeted
costs; economic conditions or market changes in certain market
sectors in which we conduct business; uncertainty in financial
markets; our ability to stay listed on a national securities
exchange; our success or timing of new product development; impact
of any changes in our management; changes in our product mix;
success of productivity initiatives; costs of our compliance with
environmental laws and regulations and resulting liabilities; and
our ability to protect our proprietary intellectual property and
technology. The forward-looking statements are based upon
management's current views and assumptions regarding future events
and operating performance, and are applicable only as of the dates
of such statements. We caution you not to place undue reliance on
these forward-looking statements. We undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share
data)
(UNAUDITED)
|
|
|
|
|
|
|
Three months
ended
April 30,
|
|
|
2010
|
2009
|
|
NET
SALES
|
$
84,703
|
$
73,665
|
|
COST OF SALES
|
74,725
|
68,320
|
|
|
|
|
|
GROSS PROFIT
|
9,978
|
5,345
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
Selling, general and administrative
expenses
|
9,222
|
9,242
|
|
Research and development
expenses
|
1,788
|
1,878
|
|
|
|
|
|
OPERATING LOSS
|
(1,032)
|
(5,775)
|
|
|
|
|
|
Interest expense, net
|
3,348
|
2,924
|
|
Other
expense, net
|
736
|
174
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAXES
|
(5,116)
|
(8,873)
|
|
Income
tax provision
|
394
|
1,096
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
(5,510)
|
(9,969)
|
|
Net
income (loss) attributable to non-controlling interests
|
94
|
(211)
|
|
|
|
|
|
NET
LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.
|
$
(5,604)
|
$
(9,758)
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
Basic and Diluted:
|
|
|
|
Net
loss
|
$
(0.21)
|
$
(0.37)
|
|
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Dollars in thousands, except
par value)
(UNAUDITED)
|
|
|
|
|
|
|
April 30,
2010
|
January 31,
2010
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash
and cash equivalents
|
$
2,929
|
$
2,700
|
|
Restricted cash
|
9
|
57
|
|
Accounts receivable, less allowance
for doubtful accounts of $710 and $1,114
|
58,991
|
55,183
|
|
Inventories
|
74,017
|
76,041
|
|
Prepaid taxes
|
483
|
425
|
|
Deferred taxes
|
52
|
50
|
|
Other
current assets
|
1,591
|
1,092
|
|
Assets
held for sale
|
500
|
500
|
|
|
|
|
|
Total
current assets
|
138,572
|
136,048
|
|
|
|
|
|
Property, plant and equipment,
net
|
91,355
|
90,001
|
|
Deferred income taxes
|
26
|
26
|
|
Intangible and other assets,
net
|
13,119
|
13,420
|
|
Goodwill
|
59,964
|
59,964
|
|
|
|
|
|
TOTAL ASSETS
|
$
303,036
|
$
299,459
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Current portion of long-term
debt
|
$
656
|
$
8,777
|
|
Accounts payable
|
41,922
|
46,380
|
|
Accrued liabilities
|
13,193
|
12,309
|
|
Deferred income taxes
|
750
|
750
|
|
Other
current liabilities
|
4,519
|
4,565
|
|
|
|
|
|
Total
current liabilities
|
61,040
|
72,781
|
|
|
|
|
|
Deferred income taxes
|
12,913
|
12,529
|
|
Long-term debt
|
150,445
|
131,091
|
|
Other
liabilities
|
40,678
|
40,588
|
|
|
|
|
|
Total
liabilities
|
265,076
|
256,989
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
Common
stock, $.01 par value, 75,000,000 shares authorized; 29,288,186 and
29,228,213 shares issued and 26,362,748 and 26,302,775 outstanding
at April 30, 2010 and January 31, 2010,
respectively
|
293
|
292
|
|
Additional paid-in capital
|
97,263
|
97,033
|
|
|
|
|
|
Treasury stock, at cost, 2,925,438
shares at April 30, 2010 and January 31, 2010
|
(40,091)
|
(40,091)
|
|
Accumulated other comprehensive
loss
|
(42,888)
|
(43,656)
|
|
Retained earnings
|
12,062
|
17,666
|
|
|
|
|
|
Total
stockholders' equity attributable to C&D Technologies,
Inc.
|
26,639
|
31,244
|
|
Non-controlling interest
|
11,321
|
11,226
|
|
|
|
|
|
Total
equity
|
37,960
|
42,470
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
303,036
|
$
299,459
|
|
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in
thousands)
(UNAUDITED)
|
|
|
|
|
|
|
Three months
ended
April 30,
|
|
|
2010
|
2009
|
|
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
$
(5,510)
|
$
(9,969)
|
|
Adjustments to reconcile net loss to
net cash used in operating activities:
|
|
|
|
Share-based compensation
|
230
|
323
|
|
Depreciation and
amortization
|
2,614
|
3,305
|
|
Amortization of debt acquisition and
discount costs
|
1,274
|
1,222
|
|
Deferred income taxes
|
384
|
893
|
|
Loss
on disposal of assets
|
--
|
6
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable, net
|
(3,798)
|
2,421
|
|
Inventories
|
1,871
|
1,701
|
|
Other
current assets
|
(563)
|
(763)
|
|
Accounts payable
|
(1,199)
|
(18)
|
|
Accrued liabilities
|
776
|
54
|
|
Book
overdraft
|
(3,015)
|
6
|
|
Income
taxes payable
|
39
|
93
|
|
Other
current liabilities
|
557
|
(919)
|
|
Other
liabilities
|
638
|
1,072
|
|
Other
long-term assets
|
(38)
|
(46)
|
|
Other,
net
|
(189)
|
1,662
|
|
|
|
|
|
Net
cash (used in) provided by continuing operating activities
|
(5,929)
|
1,043
|
|
Net
cash used in discontinued operating activities
|
(7)
|
(1,208)
|
|
|
|
|
|
Net
cash used in operating activities
|
(5,936)
|
(165)
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Acquisition of property, plant and
equipment
|
(3,871)
|
(4,782)
|
|
Decrease in restricted cash
|
47
|
772
|
|
|
|
|
|
Net
cash used in investing activities
|
(3,824)
|
(4,010)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Borrowings on line of credit
facility
|
29,288
|
22,632
|
|
Repayments on line of credit
facility
|
(37,551)
|
(19,306)
|
|
Repayment of debt
|
(66)
|
(7)
|
|
Proceeds from new
borrowings
|
20,083
|
--
|
|
Financing cost of long term
debt
|
(1,771)
|
--
|
|
|
|
|
|
Net
cash provided by financing activities
|
9,983
|
3,319
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
6
|
39
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
229
|
(817)
|
|
Cash
and cash equivalents, beginning of period
|
2,700
|
3,121
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$
2,929
|
$
2,304
|
|
|
|
|
|
|
|
|
|
|
C&D TECHNOLOGIES, INC. AND
SUBSIDIARIES
ADJUSTED EBITDA
RECONCILIATION
(Dollars in
thousands)
(UNAUDITED)
|
|
|
|
|
|
|
Three months
ended
April 30,
|
|
|
2010
|
2009
|
|
Net
loss
|
$
(5,604)
|
$
(9,758)
|
|
Interest expense, net
|
3,348
|
2,924
|
|
Income tax provision
|
394
|
1,096
|
|
Depreciation and
amortization
|
2,614
|
3,305
|
|
Charges related to closed
facilities
|
732
|
228
|
|
|
|
|
|
Adjusted EBITDA
|
$
1,484
|
$
(2,205)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE C&D Technologies, Inc.