BLUE BELL, Pa., Sept. 7 /PRNewswire-FirstCall/ -- C&D Technologies, Inc. , 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 fiscal 2008 second quarter ended July 31, 2007.
Results for the quarter and all comparative financial data included herein reflects the presentation of the Power Electronics Division ("PED") as a discontinued operation and the retrospective application of a change in the Company's accounting for inventories from the Last in First Out ("Lifo") method to the First in First Out ("Fifo") method. With the divestiture of the Power Electronics Division, C&D's remaining business is all battery-related, and as a result the Company believes the FIFO inventory method provides better comparability with industry peers, more accurate matching of the Company's revenues and expenses, a relevant and meaningful balance sheet valuation methodology and a more efficient financial closing process. A reconciliation of the impact of the change in method on the company's financial statements is included in the Company's 10-Q as filed with the SEC today.
For the quarter, the Company reported a consolidated net loss of $3.1 million or $0.12 per diluted share on consolidated revenues of $135.7 million. This compared to a net loss of $3.6 million or $0.14 per diluted share on consolidated revenues of $132.4 million in the prior year's second quarter. Revenues from continuing operations were $94.6 million in the second quarter as compared to $83.4 million in the prior year's second quarter.
Net loss from continuing operations was $1.8 million or $0.07 per diluted share during the quarter, compared to $3.9 million or $0.15 per diluted share in the second quarter of fiscal 2007. The Power Electronics Division was classified as a discontinued operation during the quarter and was divested through a sale to Murata Manufacturing that closed after quarter end. Net loss from discontinued operations was $1.3 million or $0.05 per diluted share, compared to net income of $264,000 or $0.01 per share in the second quarter of fiscal 2007.
Dr. Jeffrey A. Graves, President and CEO said, "We were pleased with our progress in the second quarter despite a further rapid escalation in the price of lead, which touched another all-time high during the period. We are benefiting from sales momentum in the UPS and Cable TV industries, and our plan to deliver current year cost reductions of approximately $15 million is ahead of schedule with the closure of our Conyers facility and other sourcing and design improvements driving good results."
Dr. Graves added, "With the sale of Power Electronics Division, which was completed at the end of August, C&D Technologies is now focused in the growing power storage industry with world-class technology, leading market share in North America, and an improving low-cost manufacturing platform. In addition, the sale proceeds from PED enabled us to recast our balance sheet by repaying all outstanding balances under our revolving line of credit, which provides us with greatly improved flexibility to support our cost reduction and growth initiatives for the foreseeable future. We presently have a cash balance in excess of $40 million as well as a PED adjusted line of credit availability of nearly $45 million"
Standby Power Division:
In the second quarter, Standby Power Division net sales were $81 million, and operating profit was $2.7 million, compared to $69.3 million and $2.7 million, respectively, in the second quarter of fiscal 2007. Revenues were up 17% compared to last year's second quarter, with a little less than half of the increase resulting from price increases and the balance from robust sales volume growth in the UPS and Cable TV industries. On a sequential basis, revenues were up 7% with most of the increase coming from price increases. Results for the second quarter included one-time costs associated with the closure of the Conyers, Georgia facility of $924,000.
Dr. Graves stated, "The Standby Power division delivered a solid quarter in a difficult market. We are holding and in some segments gaining market share, cutting costs, and improving the operational effectiveness at our manufacturing facilities. Our lead management programs and pricing actions are helping to defray the rapid escalation in lead costs, although with time lags as we have previously covered. Importantly over the last three months many of the contracts that historically had fixed prices have been renegotiated to reflect higher lead costs."
Motive Power Division:
The Motive Power Division posted total net sales of $13.6 million, and an operating loss of $2.8 million. Revenues decreased 3.5% compared to last year's second quarter, but increased 6% sequentially. Results for the quarter were impacted by an increase in warranty reserves for the division by approximately $918,000 in light of higher raw material costs for future warranty replacements.
Dr. Graves stated, "When we announced our revitalization plan for the Motive Power Division last year, we had a clear understanding of the issues we needed to tackle to turn the business around, namely to streamline our Motive manufacturing footprint with the closure of our Huguenot, New York facility, to reinvest in product development and design, and to improve execution in our manufacturing processes. While these internal actions have been completed per plan, the rapid escalation in lead costs, combined with continued high warranty costs, have negatively impacted the business performance. In addition, even though the Motive Power Division has a great reputation for manufacturing a rugged and durable high-end product, it is a relatively small player in a large, fragmented market. Given this backdrop we have recently begun reviewing strategic alternatives for the Motive Power Division. We will share more information on these plans when that process is completed."
Dr. Graves continued, "We would like to emphasize, however, that there can be no assurance that any action or transaction involving our Motive Power Division will occur or, if one is undertaken, of its potential terms or timing. We may not update its progress or disclose developments with respect to potential strategic alternatives unless our Board of Directors has approved a definitive course of action or transaction."
Conference call:
C&D management will host a conference call to discuss these financial results on September 10, 2007 at 10 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 15761313. A telephone replay of the conference call will begin immediately following the call and will be available through September 24, 2007 at midnight Eastern Daylight Time. To access the rebroadcast, please dial 800-642-1687 (706-645-9291 for international callers) and enter code 15761313. 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), 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. 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, 2007, 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 par value) (UNAUDITED) Three months ended Six months ended July 31, July 31, 2007 2006 2007 2006 NET SALES $94,590 $83,411 $183,055 $164,890 COST OF SALES 80,636 70,566 156,346 138,828 GROSS PROFIT 13,954 12,845 26,709 26,062 OPERATING EXPENSES: Selling, general and administrative expenses 12,267 11,638 24,304 22,927 Research and development expenses 1,801 1,736 3,308 3,572 Gain on sale of Shanghai, China plant - - (15,162) - OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS (114) (529) 14,259 (437) Interest expense, net 2,133 2,834 4,322 5,502 Other (income) expense, net (308) 445 (940) 717 LOSS (INCOME) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST (1,939) (3,808) 10,877 (6,656) Income tax provision (benefit) from continuing operations 346 155 403 (282) (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST (2,285) (3,963) 10,474 (6,374) Minority interest (526) (102) 4,002 (315) (LOSS) INCOME FROM CONTINUING OPERATIONS(1,759) (3,861) 6,472 (6,059) (LOSS) INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES (1,219) 963 (3,167) (1,858) INCOME TAX PROVISION FROM DISCONTINUED OPERATIONS 104 699 2,257 2,706 (LOSS) INCOME FROM DISCONTINUED OPERATIONS (1,323) 264 (5,424) (4,564) NET (LOSS) INCOME $(3,082) $(3,597) $1,048 $(10,623) Income (loss) per share: Basic: Net (loss) income from continuing operations $(0.07) $(0.15) $0.25 $(0.24) Net (loss) income from discontinued operations $(0.05) $0.01 $(0.21) $(0.18) Net (loss) Income $(0.12) $(0.14) $0.04 $(0.42) Diluted: Net (loss) income from continuing operations $(0.07) $(0.15) $0.22 $(0.24) Net (loss) income from discontinued operations $(0.05) $0.01 $(0.12) $(0.18) Net (loss) income $(0.12) $(0.14) $ 0.10 $(0.42) Dividends per share $- $- $- $0.01375
Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except par value) (UNAUDITED) July 31, January 31, 2007 2007 ASSETS Current assets: Cash and cash equivalents $5,046 $5,384 Accounts receivable, less allowance for doubtful accounts of $1,064 and $1,203 57,142 55,397 Inventories 67,859 57,041 Deferred income taxes 197 134 Prepaid taxes 2,561 2,634 Other current assets 4,186 6,121 Assets held for sale 122,925 125,485 Total current assets 259,916 252,196 Property, plant and equipment, net 81,316 83,984 Deferred income taxes 642 531 Intangible and other assets, net 16,593 15,543 Goodwill 59,778 59,733 TOTAL ASSETS $418,245 $411,987 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $39,501 $1,286 Accounts payable 42,614 40,282 Book overdrafts 3,495 2,310 Accrued liabilities 13,473 13,708 Other current liabilities 8,836 28,983 Liabilities held for sale 36,212 36,532 Total current liabilities 144,131 123,101 Deferred income taxes 9,346 9,155 Long-term debt 123,421 147,925 Other liabilities 31,193 28,591 Total liabilities 308,091 308,772 Minority interest 11,846 7,548 Stockholders' equity: Common stock, $.01 par value, 75,000,000 shares authorized; 29,081,110 and 29,040,960 shares issued; 25,667,267 and 25,649,424 shares outstanding, respectively 291 290 Additional paid-in capital 74,776 74,188 Treasury stock, at cost, 3,413,843 and 3,391,536 shares, respectively (47,239) (47,110) Accumulated other comprehensive loss (14,423) (13,952) Retained earnings 84,903 82,251 Total stockholders' equity 98,308 95,667 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $418,245 $411,987
Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands, except par value) (UNAUDITED) Six months ended July 31, 2007 2006 Cash flows from operating activities: Net income (loss) $1,048 $(10,623) Net loss from discontinued operations (5,424) (4,564) Net income (loss) from continuing operations 6,472 (6,059) Adjustments to reconcile net (loss) to continuing operations net cash used in continuing operating activities: Minority interest 4,002 (315) Share-based compensation 315 174 Depreciation and amortization 6,341 6,557 Amortization of debt acquisition costs 791 583 Annual retainer to Board of Directors paid by the issuance of common stock 273 224 Deferred income taxes (267) 918 Gain on disposal of assets (15,174) (24) Changes in assets and liabilities: Accounts receivable (4,148) (9,081) Inventories (10,526) (137) Other current assets (2,138) 224 Accounts payable 435 (8,685) Accrued liabilities (294) 1,480 Income taxes payable 355 (267) Other current liabilities (365) (578) Funds provided to discontinued operations (3,844) (11,451) Other long-term assets 270 32 Other long-term liabilities 3,451 2,133 Other, net 1,306 403 Net cash used in continuing operating activities (12,745) (23,869) Net cash provided by discontinued operating activities 713 5,358 Net cash used in operating activities (12,032) (18,511) Cash flows from investing activities: Acquisition of property, plant and equipment (4,316) (8,816) Proceeds from disposal of property, plant and equipment 1,893 30 Net cash used in continuing investing activities (2,423) (8,786) Net cash used in discontinued investing activities (236) (1,431) Net cash used in investing activities (2,659) (10,217) Cash flows from financing activities: Proceeds from new borrowings 14,107 24,924 Increase in book overdrafts 1,185 4,159 Financing cost of long term debt (459) (700) Proceeds from exercise of stock options - 975 Purchase of treasury stock (130) (122) Common stock dividends paid - (352) Net cash provided by continuing financing activities 14,703 28,884 Net cash used in discontinued financing activities (405) (524) Net cash provided by financing activities 14,298 28,360 Effect of exchange rate changes on cash and cash equivalents 127 225 Decrease in cash and cash equivalents from continuing operations (338) (3,546) Cash and cash equivalents, beginning of period 5,384 17,439 Cash and cash equivalents, end of period $5,046 $13,893
Certain classifications to these statements have been reflected for the presentation of the Power Electronics Division as discontinued operations as well as the change in method of accounting for inventories.
