Exhibit 99.1
1400 Union Meeting Road
Blue Bell, PA 19422
Phone: 215-619-2700
Shareholder Contacts:
Stephen E. Markert, Jr. of C&D: 215-619-7835
Joseph Crivelli of Gregory FCA, for C&D: 610-642-8253
FOR IMMEDIATE RELEASE
C&D TECHNOLOGIES ANNOUNCES
REVISED OUTLOOK FOR THIRD QUARTER RESULTS
Blue Bell, PA - November 16, 2004 - C&D Technologies (NYSE: CHP), a leading
North American producer and marketer of electrical power storage and conversion
products used in telecommunications and industrial applications, today announced
that the company is revising the outlook for its third quarter of fiscal 2005.
C&D now expects earnings from operations in the range of 5 to 6 cents per share
on a fully diluted basis for its fiscal 2005 third quarter ended October 31,
2004 prior to special charges. The company anticipates one-time special charges
totaling approximately 40 cents per share, for a net loss in the range of 34 to
35 cents per share. These estimates reflect:
o One-time, asset impairment charges of approximately $13.6 million or 32
cents per share, of which $9.7 million are non-cash, associated with
property, plant and equipment at the company's Leola, Pennsylvania and
Huguenot, New York manufacturing facilities. These contemplated asset
impairments, which C&D previously announced, are being recognized at this
time as a result of the completion of feasibility analysis and successful
product start-up testing in the quarter and are directly associated with
the company's relocation of certain manufacturing activities to its
Reynosa, Mexico facility, acquired in September 2003.
o One-time, non-cash charge of approximately $2.0 million or 8 cents per
share to write off purchased in-process R&D associated with the June 30,
2004 acquisition of Datel Inc. which, under current accounting convention,
must be expensed. This determination, still under review, confirms that
Datel brought considerable power electronics technology to C&D.
o Start-up costs of approximately $1.5 million, which include $200K of moving
expense incurred during the quarter in connection with the transition of
certain manufacturing operations to the Reynosa facility.
o Lead cost pressure, negatively affected operating profits by approximately
$1.3 million compared to the second quarter and $7.3 million versus the
third quarter of fiscal 2004.
o Incremental general and administrative expenses associated with the
implementation of Sarbanes-Oxley Act Section 404 internal control
regulations of approximately $1.1 million in the quarter.
o Lower-than-expected earnings in the Power Electronics Division, resulting
from lower legacy business profitability as a consequence of a shift in
product mix as well as the slower than anticipated "ramp up" of CPS (the
former Power Systems Division of Celestica, Inc.) operations, acquired
September 30, 2004.
In addition, the company received $15.5 million from the Chinese government as
partial payment for the company's existing battery manufacturing facility
located in Shanghai. These funds are dedicated to construction of a new battery
manufacturing facility in Shanghai. The company anticipates a gain of at least
$4.1 million upon relocation to the new facility within 12-18 months.
Operationally, revenues for the quarter are expected to be in the range of $112
to $113 million, or an increase of approximately 33% over the prior year's third
quarter and up sequentially over the second quarter by 20%. Sales growth
primarily reflects the contributions of three acquisitions (Celab, Datel and
CPS) completed by the company during fiscal 2005. On an organic basis, revenue
growth was 4.2% compared to the third quarter of last year.
Wade H. Roberts, Jr., President and Chief Executive Officer of C&D Technologies,
said: "The third quarter presented numerous challenges, but many of the factors
that hampered third quarter performance represent repositioning costs associated
with strategic initiatives that are anticipated to drive long term value for the
company. We expect the Reynosa facility to provide a significant financial
benefit to the company; however, as previously reported, the transfer of
production to this facility entails asset impairment charges at our Leola and
Huguenot plants. The transition is now essentially complete."
Mr. Roberts continued, "Lead pricing continues to be an issue, and last week the
price spiked to 44 cents per pound, which is within 10% of its historic high.
Where possible, we are passing through price increases, and have hedged, at
lower than current prices, over 20% of anticipated first half of calendar 2005
requirements. Additionally, our lower cost manufacturing location in Mexico will
help us recapture some of the margin lost to the high price of lead while
ultimately enhancing our competitive position.
"Following its acquisition on September 30th, CPS encountered a slower then
anticipated "ramp up" in its first full month with C&D due to general market
conditions and disappointing performance by a key supplier. In response, we are
accelerating the integration process. We remain convinced that, longer term, the
recently acquired companies will add considerable value to our Power Electronics
Division, while expanding our served market dramatically."
Separately, in commenting on the company's balance sheet, Mr. Roberts stated,
"The company's balance sheet remains strong. We have decreased our debt level
from a peak of approximately $147 million to just below $133 million at quarter
close. The company's strong balance sheet positions us well for future growth
and remains one of the company's key strengths."
In commenting on the outlook, Mr. Roberts said, "We are targeting earnings per
share in the range of 8 to 12 cents per share in the fourth quarter, assuming
the price of lead does not worsen."
C&D Technologies will hold a conference call on Wednesday, November 17, 2004 at
8:45 a.m. Eastern Standard Time to discuss its third quarter earnings
expectations and to elaborate on this announcement. To participate, please call
706-679-4521 approximately five minutes before the conference call start time. A
replay of the conference call will be available at approximately 12:00 p.m. and
will remain available until midnight on December 1, 2004. Please call
800-642-1687 (706-645-9291 for international callers) and enter pin number
2297643 to access the replay.
A simultaneous webcast of the conference call may be accessed at the investor
relations section of our website at http://www.cdtechno.com. To listen to the
live call, please go to the web site at least fifteen minutes early to register,
download and install any necessary audio software. An archive of the conference
call will be available approximately two hours after the conference call ends
and will remain available on the company's website until December 1, 2004.
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, 2004, or the quarterly reports filed on Form 10-Q thereafter), could
cause the company's actual results to differ materially from those expressed in
any forward-looking statements made herein.
Section 404 of the Sarbanes-Oxley Act of 2002 requires management to perform an
evaluation of its internal control over financial reporting and have our
independent auditors attest to such evaluation. Along with many other companies
whose fiscal year ends January 31, we must implement these requirements for the
first time in connection with the preparation of the annual report for the year
ending January 31, 2005. We have been actively preparing for the implementation
of this requirement by, among other things, establishing an ongoing program to
document, evaluate and test the systems and processes necessary for compliance.
While we anticipate that we will be able to comply on a timely basis with these
requirements, unforeseen delays may occur which could prevent us from achieving
timely compliance. If we fail to complete our evaluation on a timely basis and
in a satisfactory manner, or if our external auditors are unable to attest on a
timely basis to the adequacy of the Company's internal control, we may be
subject to additional scrutiny surrounding our internal control over financial
reporting.
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SOURCE: C&D Technologies, Inc.