EXIDE TECHNOLOGIES REPORTS FISCAL FIRST QUARTER 2006 RESULTS
Alpharetta, Georgia (July 27, 2005) –Exide Technologies (NASDAQ: XIDE), a global leader in stored electrical energy solutions, today announced financial results for the first quarter of fiscal 2006 ended June 30, 2005.
Consolidated net sales for the first quarter of fiscal 2006 rose 9.2 percent to $669.3 million from $612.5 million in the first quarter of fiscal 2005. Quarterly net sales results benefited from higher average selling prices as a result of lead-related pricing actions across the business, as well as continued strong Motive Power demand worldwide. Favorable currency exchange rates also benefited net sales Company-wide.
“While all of our divisions contributed to the increase in sales, three out of the four divisions delivered better operating performance. During the first quarter and in the month of July, we began taking a number of steps to make Exide a stronger and more competitive organization,” said Gordon Ulsh, President and Chief Executive Officer. “Although progress is being made, there clearly remains much more to do. Looking forward to the full year, we remain focused on delivering profitable revenue growth and continued expense rationalization to enhance shareholder value.”
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Consolidated income for the first quarter of fiscal 2006 was a net loss of $35.7 million, or $1.43 per share. Results include restructuring costs and reorganization items of approximately $4.3 million, a $10.6 million currency remeasurement losses and a loss on sale of capital assets of $1.5 million. The results were offset by an unrealized gain on the re-evaluation of warrants of $8.1 million. The results compare to reported first quarter fiscal 2005 net income of $1,782.2 million, which includes the impact of Fresh Start accounting and a gain on the discharge of indebtedness totaling $1,787.2 million.
The Company uses adjusted EBITDA as a key measure of the Company’s operational and financial performance because the Company believes it provides useful information for investors. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and restructuring charges. The Company’s adjusted EBITDA definition also adjusts reported earnings for the effect of non-cash currency re-measurement gains or losses, the non-cash gain or loss from revaluation of the Company’s warrants liability, impairment charges and non-cash gains or losses on asset sales. A reconciliation of adjusted EBITDA to income reported under Generally Accepted Accounting Principals (“GAAP”) is attached hereto.
Adjusted EBITDA for the first quarter of fiscal 2006 declined $6.7 million to $19 million principally driven by higher commodity prices. Average lead prices increased 16.5 percent over the prior-year period to€784 ($987) per metric tonne. The strength of the Euro against the U.S. dollar offset lower results by $0.5 million.
Conference Call Details
Exide President and CEO Gordon A. Ulsh and other members of senior management will host a conference call on Wednesday, July 27, 2005 for members of the investment community to discuss the Company’s financial results and general business operations at 11:00 a.m. Eastern Daylight Saving Time.
The conference call information follows:
Date: July 27, 2005 Time: 11 a.m. Eastern Daylight Saving Time Domestic Dial-In Number: 800-706-7741 International Dial-In Number: 617-614-3471 Passcode: 55868061
For individuals unable to participate in the conference call, a telephone replay will be available from 1 p.m. on July 27, 2005 until midnight on August 27, 2005 at:
Domestic Replay Number: 888-286-8010 International Replay Number: 617-801-6888 Passcode: 95331965
An audio webcast of the conference call can also be accessed viawww.exide.com and will be available for 12 months. RealPlayer or Windows Media Player will be required in order to access the webcast.
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About Exide Technologies Exide Technologies, with operations in 89 countries, is one of the world’s largest producers and recyclers of lead-acid batteries. The Company’s four global business groups – Transportation Americas, Transportation Europe and Rest of World, Industrial Energy Americas and Industrial Energy Europe and Rest of World – provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications.
Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive-power applications including lift trucks, mining and other commercial vehicles.
Further information about Exide, including its financial results, is available atwww.exide.com.
Forward-Looking Statements Except for historical information, this report may be deemed to contain “forward-looking” statements. The Company desires to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) and is including this cautionary statement for the express purpose of availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a) projections of revenues, cost of raw materials, income or loss, earnings or loss per share, capital expenditures, growth prospects, dividends, the effect of currency translations, capital structure and other financial items, (b) statements of plans of and objectives of the Company or its management or Board of Directors, including the introduction of new products, or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities, (c) statements of future economic performance, (d) statements of assumptions, such as the prevailing weather conditions in the Company’s market areas, underlying other statements and statements about the Company or its business and (e) statements regarding the ability to obtain amendments under the Company’s debt agreements.
Factors that could cause actual results to differ materially from these forward looking statements include, but are not limited to, the following general factors such as: (i) adverse reactions by creditors, vendors, customers, and others to the going-concern qualification contained in the audit report in the Company’s 10-K for fiscal year 2005; (ii) the Company’s ability to implement and fund based on current liquidity business strategies and restructuring plans, (iii) the Company’s substantial debt and debt service requirements which may restrict the Company’s operational and financial flexibility, as well as imposing significant interest and financing costs and the Company’s ability to comply with the covenants in its debt agreements or obtain waivers of noncompliance, (iv) the litigation proceedings to which the Company is subject, the results of which could have a material adverse effect on the Company and its business, (v) the fact that lead, a major ingredient in most of the Company’s products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims, (vi) the substantial management time and financial and other resources needed for the Company’s consolidation and rationalization of acquired entities, (vii) the Company’s exposure to fluctuations in interest rates on its variable debt, (vii) general economic conditions, (viii) the ability to acquire goods and services and/or fulfill labor needs at budgeted costs, and (ix) our ability to attract and retain key personnel. Some of the factors contained herein, and other factors, are enumerated in further detail in the Company’s most recent Form 10-K filed on June 29, 2005 and the Company’s Registration Statement on Form S-3 filed with the Commission on July 15, 2005.
Therefore, the Company cautions each reader of this press release carefully to consider those factors hereinabove set forth, because such factors have, in some instances, affected and in the future could affect, the ability of the Company to achieve its projected results and may cause actual results to differ materially from those expressed herein.
[TABLES FOLLOW]
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Predecessor Company
Succcessor Company
Succcessor Company
for the Period April
for the Three Months
for the Period May 6,
1, 2004 to May 5,
Ended June 30, 2005
2004 to June 30, 2004
2004
NET SALES
$
669,332
$
397,928
$
214,607
COST OF SALES
567,116
333,129
179,137
Gross profit
102,216
64,799
35,470
EXPENSES:
Selling, marketing and advertising
71,073
41,288
24,504
General and administrative
43,738
23,389
17,940
Restructuring and impairment
2,901
2,447
602
Other (income) expense, net
3,400
(42,876
)
6,222
Interest expense, net
16,100
6,026
8,870
137,212
30,274
58,138
Income (loss)
before
reorganization
items, income taxes
and minority
interest
(34,996
)
34,525
(22,668
)
REORGANIZATION ITEMS, NET
1,372
1,693
18,434
FRESH START ACCOUNTING ADJUSTMENTS, NET
-
-
(228,371
)
GAIN ON DISCHARGE OF LIABILITIES SUBJECT TO COMPROMISE
-
-
(1,558,839
)
INCOME TAX BENEFIT
(754
)
(828
)
(2,482
)
MINORITY INTEREST
95
33
26
Net income (loss)
$
(35,709
)
$
33,627
$
1,748,564
NET INCOME (LOSS) PER SHARE
Basic and Diluted
$
(1.43
)
$
1.35
$
63.86
WEIGHTED AVERAGE SHARES
Basic and Diluted
25,000
25,000
27,383
1
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Successor Company
June 30, 2005
March 31, 2005
Cash
$
66,862
$
76,696
Current assets, excluding cash
$
1,042,176
$
1,114,032
Property, plant and equipment, net
752,668
799,763
Other assets
291,668
300,289
Total assets
$
2,153,374
$
2,290,780
Current liabilities, excluding current maturities
$
677,344
$
738,784
Long term debt, including current maturities
653,828
652,163
Non current retirement obligations
317,616
329,628
Other liabilities
121,356
130,182
Total liabilities
1,770,144
1,850,757
Minority interest
12,215
12,764
Stockholders’ equity
371,015
427,259
Total liabilities and stockholders’ equity
$
2,153,374
$
2,290,780
2
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Succcessor Company
Predecessor Company
Succcessor Company
for the Period May
for the Period
for the Three Months
6, 2004 to June 30,
April 1, 2004 to
Ended June 30, 2005
2004
May 5, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(35,709
)
$
33,627
$
1,748,564
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization
30,341
21,699
7,848
Gain on discharge of liabilities subject to compromise
-
-
(1,558,839
)
Fresh Start accounting adjustments, net
-
-
(228,371
)
Unrealized gain on warrants
(8,126
)
(43,612
)
—
Net change in working capital
1,181
(19,522
)
14,084
Other, net
(3,193
)
(8,001
)
9,528
Net cash used in operating activities
(15,506
)
(15,809
)
(7,186
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(11,545
)
(8,332
)
(7,152
)
Proceeds from asset sales
9,982
3,600
2,800
Net cash used in investing activities
(1,563
)
(4,732
)
(4,352
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under Senior Credit facility
-
-
500,000
Net borrowings and repayments under Replacement DIP
Credit Facility and 9.125% Senior Notes
—
—
(464,832
)
Currency swap
(12,084
)
—
—
Other
21,085
3,152
—
Net cash provided by financing activities
9,001
3,152
35,168
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
(1,766
)
766
(1,447
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(9,834
)
(16,623
)
22,183
CASH AND CASH EQUIVALENTS, END OF PERIOD
76,696
59,596
37,413
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
66,862
$
42,973
$
59,596
Footnote: Working capital represents receivables, inventories and accounts payable
EXIDE TECHNOLOGIES AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
SUCCESSOR COMPANY FOR THE THREE MONTHS ENDED JUNE 30, 2005
(In millions)
Transportation
Industrial Energy
North America
Europe and ROW
North America
Europe and ROW
Other
Total
Net income (loss)
$
4.1
$
(1.6
)
$
4.4
$
9.6
$
(52.2
)
$
(35.7
)
Interest expense, net
—
—
—
—
16.1
16.1
Income tax provision (benefit)
—
—
—
—
(0.8
)
(0.8
)
EBIT
4.1
(1.6
)
4.4
9.6
(36.9
)
(20.4
)
Depreciation and amortization
7.0
8.6
2.7
8.4
3.6
30.3
Reorganization items, net
—
—
—
—
1.4
1.4
Restructuring and impairment
0.4
0.4
0.4
1.1
0.6
2.9
Other restructuring costs included in cost of sales &
general and administrative expenses
0.2
0.2
—
—
0.2
0.6
Currency remeasurement loss (gain)
—
—
—
—
11.7
11.7
Gain on revaluation of foreign currency forward contract
—
—
—
—
(1.1
)
(1.1
)
Minority interest
—
—
—
—
0.1
0.1
Unrealized gain on revaluation of warrants
—
—
—
—
(8.1
)
(8.1
)
Loss (gain) on sale of capital assets
0.3
0.1
—
—
1.1
1.5
Other non-cash losses (gains)
1.0
—
(0.1
)
0.1
(0.9
)
0.1
Adjusted EBITDA
$
13.0
$
7.7
$
7.4
$
19.2
$
(28.3
)
$
19.0
EXIDE TECHNOLOGIES AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
FOR THE THREE MONTHS ENDED JUNE 30, 2004
(In millions)
Succcessor Company
Predecessor Company
for the Period May
for the Period
6, 2004 to June 30,
April 1, 2004 to
2004
May 5, 2004
Transportation
Industrial Energy
North America
Europe and ROW
North America
Europe and ROW
Other
Total
Total
Net income (loss)
$
8.5
$
3.0
$
3.2
$
6.1
$
1,761.4
$
1,782.2
$
33.6
$
1,748.6
$
1,782.2
Interest expense, net
—
—
—
—
14.8
14.8
6.0
8.8
14.8
Income tax provision (benefit)
—
—
—
—
(3.3
)
(3.3
)
(0.8
)
(2.5
)
(3.3
)
Fresh Start accounting adjustments, net
—
—
—
—
(228.4
)
(228.4
)
—
(228.4
)
(228.4
)
Gain on discharge of liabilities subject to compromise
—
—
—
—
(1,558.8
)
(1,558.8
)
—
(1,558.8
)
(1,558.8
)
EBIT
8.5
3.0
3.2
6.1
(14.3
)
6.5
38.8
(32.3
)
6.5
Depreciation and amortization
7.3
9.0
3.2
8.0
2.1
29.6
21.7
7.9
29.6
Reorganization items, net
—
—
—
—
20.1
20.1
1.7
18.4
20.1
Restructuring and impairment
0.2
1.6
—
1.1
0.1
3.0
2.4
0.6
3.0
Currency remeasurement loss (gain)
—
—
—
—
7.4
7.4
1.1
6.3
7.4
Minority interest
—
—
—
—
0.1
0.1
0.1
—
0.1
Unrealized gain on revaluation of warrants
—
—
—
—
(43.6
)
(43.6
)
(43.6
)
—
(43.6
)
Non-cash increase in cost of sales from
Fresh Start inventory step-up
0.7
0.8
0.1
1.0
—
2.6
2.6
—
2.6
Other non-cash losses (gains)
0.1
—
—
—
(0.1
)
—
—
—
—
Adjusted EBITDA
$
16.8
$
14.4
$
6.5
$
16.2
$
(28.2
)
$
25.7
$
24.8
$
0.9
$
25.7
3
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