Third Quarter Revenues, Unit Volume, Margins and Earnings All
Sequentially Improve Relative to Second Quarter BLUE BELL, Pa.,
Dec. 8 /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, uninterrupted power supply systems, utility and
other high reliability applications, today announced financial
results for its fiscal 2010 third quarter ended October 31, 2009.
For the third fiscal quarter, the Company reported its second
consecutive quarter of double-digit sequential revenue growth, with
revenues of $91.2 million up, 10.7% from $82.4 million reported in
this year's second fiscal quarter. The sequential improvement in
third fiscal quarter revenues was largely attributable to an
approximately 5 percent growth in unit volume, principally driven
by growth in Asia, as well as increased pricing due to higher
commodity costs. Volumes in the third fiscal quarter were also up
approximately 3 percent from the third fiscal quarter of last year,
with commodity based price reductions correspondingly impacting
revenues. In the third fiscal quarter a year ago, revenues were
$93.8 million. The Company also reported continued sequential
improvement in quarterly earnings, with net loss of $3.4 million or
($0.13) per diluted share for the third quarter of fiscal 2010, a
significant improvement from a net loss of $5.6 million, or ($0.21)
per diluted share, in this year's second fiscal quarter. The rate
of sequential improvement was partially impacted by lags in the
recovery of rising lead costs, higher warranty experience during
the quarter and costs associated with the ramp-up of operations in
Asia. In the comparable prior year third fiscal quarter, the
Company reported a net loss of $146,000, or ($0.02) per diluted
share. Gross margins also continued their trend of steady
sequential improvement, rising to 14.3% in the third fiscal quarter
from 12.1% in the second fiscal quarter and 7.3% in the first
fiscal quarter. This trend reflects improved pricing, improved
sales mix and higher volumes, offset by the higher cost of lead in
the third fiscal quarter. Dr. Jeffrey A. Graves, President and CEO,
said, "In the third fiscal quarter, we continued to achieve volume
growth and margin improvement, encouraging signs that the
implementation of our strategy has fundamentally strengthened the
business and provided us with a clear path to profitability.
Despite persistent economic challenges, we grew unit volumes both
sequentially and in comparison to the year ago quarter, reflecting
the success of our products in targeting new vertical and
geographic markets. In particular, the introduction of new products
now manufactured in our China facility has led to significant and
continued growth in our Asian business during the year. For the
second consecutive quarter, we managed to expand margins through
mix optimization and cost management programs, despite the
transient impact on margins from commodity price volatility. We are
confident that we are establishing a strong foundation from which
we can leverage C&D's reputation for innovative technological
leadership, reliability, and product quality into further strong
growth and improved returns for our shareholders." Dr. Graves
continued, "Over the course of the current fiscal year, we have
made significant progress building a stronger, more agile company
despite the severe economic challenges to our end markets from weak
overall global economic conditions. With our investments in
manufacturing expansion and new product development, we have
achieved real growth and consistent margin expansion over the last
few quarters, resulting in an improving bottom line. All of these
accomplishments highlight effective implementation of our strategy
as we look to expand the value of the C&D franchise. The
trajectory and timing of an enhanced earnings improvement that was
expected to accompany our progress was affected late in the third
quarter by the time lag between rising lead costs and customer
price adjustments. Based upon current stable market conditions and
our accelerating new product sales throughout the world, we
anticipate continuing improvements in our operating margins in our
fiscal fourth quarter, and in the coming new year. However, the
rise in commodity costs, particularly lead prices that occurred in
the late summer time frame, will continue to be a drag on margins
in the fourth quarter. Taking into account our typical pricing
recovery cycle of three to six months, which is largely driven by
contracted price adjustments with our largest customers, we now
believe that it is more likely that our return to profitability
will occur in the first quarter of our next fiscal year." Dr.
Graves concluded, "We are extremely confident that C&D is well
positioned in the market to capitalize on the growing world-wide
demand for standby power, and further that these energy storage
needs are expected to greatly accelerate as the global economy
recovers. Through our continued focus on innovative new products,
improved manufacturing efficiency and productivity, and
world-leading customer service, we believe we can leverage this
future demand growth into strong returns for our shareholders in
the years ahead." Conference call: C&D management will host a
conference call to discuss these financial results on December 9,
2009 at 9:30 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 45391977. A telephone
replay of the conference call will begin immediately following the
call and will be available through December 23, 2009 at midnight
Eastern Standard Time. To access the rebroadcast, please dial
800-642-1687 (706-645-9291 for international callers) and enter
code 45391977. 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 contains 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, 2009, 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, including but not limited
to 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; our ability to maintain
and generate liquidity to meet our operating needs; our ability to
achieve and maintain profitability, including improvements in
quarterly earnings and gross margins; 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. Any forward-looking
statements should be considered in light of these factors. The
Company undertakes no obligation to publicly release any
forward-looking information to reflect anticipated or unanticipated
events or circumstances after the date of this document. 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, ----------- ----------- 2009 2008(1) 2009 2008(1) ----
----- ---- ----- NET SALES $91,210 $93,822 $247,309 $280,083 COST
OF SALES 78,200 77,645 218,951 236,767 ------ ------ -------
------- GROSS PROFIT 13,010 16,177 28,358 43,316 OPERATING
EXPENSES: Selling, general and administrative expenses 11,457
10,178 30,810 30,198 Research and development expenses 2,108 1,657
5,785 5,051 ----- ----- ----- ----- OPERATING (LOSS) INCOME (555)
4,342 (8,237) 8,067 ---- ----- ------ ----- Interest expense, net
3,069 2,869 8,909 8,843 Other (income) expense, net (23) 1,208 (57)
910 --- ----- --- --- (LOSS) INCOME BEFORE INCOME TAXES (3,601) 265
(17,089) (1,686) Income tax provision (benefit) (120) 490 2,052 502
---- --- ----- --- NET LOSS (3,481) (225) (19,141) (2,188) Net loss
attributable to noncontrolling interests (41) (79) (327) (484) ---
--- ---- ---- NET LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.
$(3,440) $(146) $(18,814) $(1,704) ------- ----- -------- -------
Loss per share attributable to C&D Technologies, Inc.: Basic:
$(0.13) $(0.01) $(0.72) $(0.07) ------ ------ ------ ------
Diluted: $(0.13) $(0.02) $(0.72) $(0.08) ------ ------ ------
------ (1) Certain items have been adjusted on these statements to
reflect changes as required to present retroactive adoption of new
accounting standards, regarding accounting for non-controlling
interests, accounting for convertible debt instruments that may be
settled in cash upon conversion and restatement of prior quarterly
information. C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except par
value) (UNAUDITED) October 31, January 31, 2009 2009(1) -----------
---------- ASSETS Current assets: Cash and cash equivalents $1,920
$3,121 Restricted cash 329 906 Accounts receivable, less allowance
for doubtful accounts of $864 and $775 57,678 55,852 Inventories
71,217 61,128 Prepaid taxes 774 927 Other current assets 2,103
1,110 Assets held for sale 500 500 ------- ------- Total current
assets 134,521 123,544 Property, plant and equipment, net 87,657
85,055 Deferred income taxes 626 626 Intangible and other assets,
net 13,822 14,729 Goodwill 59,964 59,961 ------- ------- TOTAL
ASSETS $296,590 $283,915 ------- ------- LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $8,819
$5,881 Accounts payable 45,430 32,396 Accrued liabilities 15,737
13,018 Deferred income taxes 1,492 1,492 Other current liabilities
3,895 8,267 ------- ------- Total current liabilities 75,373 61,054
Deferred income taxes 12,504 10,972 Long-term debt 117,456 107,637
Other liabilities 39,403 39,349 ------- ------- Total liabilities
244,736 219,012 Stockholders' equity: Common stock, $.01 par value,
75,000,000 shares authorized; 29,228,213 and 29,162,101 shares
issued and 26,302,775 and 26,266,755 outstanding at October 31,
2009 and January 31, 2009, respectively 292 292 Additional paid-in
capital 96,697 95,724 Treasury stock, at cost, 2,925,438 and
2,895,346 shares, respectively (40,091) (40,035) Accumulated other
comprehensive loss (40,574) (45,733) Retained earnings 24,390
43,204 ------- ------- Total stockholders' equity attributable to
C&D Technologies, Inc. 40,714 53,452 Noncontrolling interest
11,140 11,451 ------- ------- Total stockholders' equity 51,854
64,903 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$296,590 $283,915 ------- ------- (1) Certain items have been
adjusted on these statements to reflect changes as required to
present retroactive adoption of new accounting standards, regarding
accounting for non-controlling interests, accounting for
convertible debt instruments that may be settled in cash upon
conversion and restatement of prior quarterly information. C&D
TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (UNAUDITED) Nine months ended October
31, ----------------- 2009 2008(1) ------- --------- Cash flows
from operating activities: Net loss $(19,141) $(2,188) Adjustments
to reconcile net loss to net cash (used in) provided by operating
activities: Share-based compensation 949 704 Depreciation and
amortization 8,694 8,468 Amortization of debt acquisition and
discount costs 3,600 3,443 Annual retainer to Board of Directors
paid by the issuance of common stock 24 190 Deferred income taxes
1,535 (17) Changes in assets and liabilities: Accounts receivable
(856) (3,160) Inventories (9,631) 16,300 Other current assets (780)
(668) Other long-term assets (112) 82 Accounts payable 11,536
(11,126) Accrued liabilities 2,387 463 Book overdraft 1,205 -
Income taxes payable 491 (697) Other current liabilities (2,437)
(1,231) Other liabilities 2,057 (518) Other, net 1,378 3,248 ------
------ Net cash provided by continuing operating activities 899
13,293 Net cash used in discontinued operating activities (1,656)
(3,790) ------ ------ Net cash (used in) provided by operating
activities (757) 9,503 ------ ------ Cash flows from investing
activities: Acquisition of property, plant and equipment (10,302)
(12,017) Proceeds from disposal of property, plant and equipment 18
484 Change in restricted cash, net 577 2,283 ------ ------ Net cash
used in investing activities (9,707) (9,250) ------ ------ Cash
flows from financing activities: Borrowings on line of credit
facility 82,750 62,223 Repayments on line of credit facility
(76,546) (62,223) Repayment of debt (83) - Proceeds from new
borrowings 3,072 - Proceeds from the exercise of stock options -
247 Purchase of treasury stock (56) (115) Other - 54 ------ ------
Net cash provided by financing activities 9,137 186 ------ ------
Effect of exchange rate changes on cash and cash equivalents 126
(92) ------ ------ (Decrease) increase in cash and cash equivalents
(1,201) 347 Cash and cash equivalents, beginning of period 3,121
6,536 ------ ------ Cash and cash equivalents, end of period $1,920
$6,883 ------ ------ (1) Certain items have been adjusted on these
statements to reflect changes as required to present retroactive
adoption of new accounting standards, regarding accounting for
non-controlling interests, accounting for convertible debt
instruments that may be settled in cash upon conversion and
restatement of prior quarterly information. DATASOURCE: C&D
Technologies, Inc. CONTACT: Shareholders: Ian J. Harvie of C&D,
+1-215-619-7835, or Joe Hassett of Gregory FCA, for C&D,
+1-610-228-2110 Web Site: http://www.cdtechno.com/
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