Exhibit 99.1
1400 Union Meeting Road
Blue Bell, PA 19422
Phone: 215-619-2700
Stockholder Contacts:
Stephen E. Markert, Jr. of C&D: 215-619-7835
Joseph Crivelli of Gregory FCA, for C&D: 610-642-8253 Ext. 23
For immediate release
C&D TECHNOLOGIES REPORTS IMPROVED SEQUENTIAL
FISCAL 2006 SECOND QUARTER FINANCIAL RESULTS
Blue Bell, PA--September 8, 2005--C&D Technologies, Inc., a leading global
producer and marketer of electrical power storage and conversion products used
in telecommunications and industrial applications, today announced financial
results for the second quarter ended July 31, 2005. For the three month period,
the company recorded net income of $1.1 million, or 4 cents per diluted share,
on revenues of $123.1 million. Net cash provided by operating activities during
the quarter was $11.0 million, and the company completed the quarter with $20.9
million of cash and $127.6 million of long-term debt.
For the six month period, the net loss was $659,000, or 3 cents per diluted
share, on revenues of $245.9 million.
Dr. Jeffrey A. Graves, President and Chief Executive Officer, commented, "I
am pleased that C&D has returned to profitability this quarter. My view, since
joining the company in early July, is that C&D is a great company with
technologically-advanced products, world-class design capabilities, and the
ability to deliver solid financial results. Unfortunately, for the past few
quarters we executed poorly and lost our customer focus, and paid for it with
unacceptable financial results. This quarter's improved bottom line is a small
step toward a turnaround, but we have much work left to do."
Dr. Graves continued, "Fundamentally, we must provide the
technology-leading products our customers have grown to expect from us, with
unsurpassed quality and consistent on-time delivery. When we center our efforts
on anticipating and fulfilling our customers' needs, execution improves and
shareholder value grows. With C&D's existing technology resources and customer
relationships, superior execution by the company is expected to yield marked
improvements in our financial performance."
The Motive Power Division posted an operating loss of $2.5 million on
revenues of $12.7 million for the quarter. In the comparable prior year period,
Motive Power posted an operating loss of $2.0 million on revenues of $13.1
million. On a sequential basis, Motive Power's revenues were down 9%, with the
operating loss increasing by 4%. Dr. Graves commented, "Motive Power has
struggled for several years to regain traction in the market and reestablish
profitability. Quite frankly, most of our problems in this business were of our
own making, and we recognize that we sent conflicting signals to the market and
our customers about our commitment to this business. Following careful analysis
of this business and industry, in early August I endorsed our team's plan to
tackle the execution issues that face us. With the cost advantages offered by
our new Reynosa, Mexico plant, and our improving product technology and customer
focus, I am happy to state that we are in this business to stay. We believe in
our Motive Power Division's ability to significantly improve execution.
Therefore, we are making the changes needed in the business to return it to
growth and profitability. Even today, Motive Power has solid market share and a
strong, established base of core customers. We will look to build on these
relationships and to develop new ones by focusing intensely on our customers'
needs, expanding sales channels and driving operational improvements."
The Standby Power Division posted operating income of $3.7 million on $66.7
million in revenues during the quarter. This is down from operating income of
$5.8 million in the comparable prior year period on sales of $61.5 million.
However, on a sequential basis, Standby Power's revenues were up 10% and
operating profits were up 69% from $2.2 million in the first quarter.
"The Standby Power Division executed better this quarter," said Dr. Graves.
"As with the Motive Power Division, costs associated with the transition of
manufacturing to Reynosa Mexico, and higher lead prices continue to impact the
division's profitability. We are working hard to improve operations at the
Reynosa facility by strengthening the management team and putting processes and
procedures in place to facilitate operational excellence. We believe that when
these changes take root, the Reynosa facility will become North America's most
productive and profitable manufacturing facility for industrial battery
production."
The Power Electronics Division returned to profitability in the second
quarter, with operating profits of $1.6 million on $43.7 million of revenues. In
the comparable prior year period, the Power Electronics Division's operating
profit was $2.9 million on $19.0 million of revenues. On a sequential basis,
revenues were down 10%, however, operating results improved significantly from
an operating loss of $918,000 in the first quarter. Dr. Graves continued, "We
are making progress in improving the financial results of our Power Electronics
Division, with both the legacy business and our acquired businesses posting
improved operating profits this quarter. In visiting customers, it is clear to
me that our industry-leading design capabilities are recognized and appreciated
and that, as in all of our businesses, we need to closely align our internal
business processes with the needs of our customers. I believe we can achieve
this goal."
In the third quarter, C&D expects to record special charges, including a
$1.5 million charge reflecting continued integration efforts within the Power
Electronics Division and also expects to spend approximately $700,000 for
capital related integration expenditures. In addition, the company recently
initiated an assessment of its intangible assets and expects to complete its
assessment in the third quarter. Pending completion of its assessment,
impairment charges may be required related to certain intangible assets. The
company expects growth in backlog and order rates from customers through the
third quarter and beyond.
In commenting on the outlook for the balance of the year, Dr. Graves
stated, "We're optimistic that the company has started to turn the corner from
an operating perspective. I've visited many of our top customers since I came on
board, and the tone of business is sound, in particular for the Standby Power
Division, which should benefit from continued build-out of the nation's wireless
infrastructure. At the same time, many of the factors that hampered financial
performance in the first half of the year - lead pricing and execution-related
issues - continue to generate headwinds. Balancing these factors, we are
forecasting modest sequential increases for revenues and operating profits in Q3
and Q4, before special charges and potential impairment charges mentioned above,
assuming lead pricing remains stable."
C&D Technologies will hold a conference call on Friday, September 9, 2005
at 9:00 AM Eastern Daylight Time to discuss these results. 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
2:00 PM and will remain available until midnight on Friday, September 23, 2005.
Please call 800-642-1687 (706-645-9291 for international callers) and enter pin
number 9342658 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 15 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 Friday,
September 23, 2005.
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, 2005, 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 per share data)
(UNAUDITED)
Three months ended Six months ended
July 31, July 31,
2005 2004 2005 2004
=================================================================================================================
NET SALES $ 123,076 $ 93,627 $ 245,897 $ 179,432
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COST OF SALES 99,639 74,106 200,709 143,370
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GROSS PROFIT 23,437 19,521 45,188 36,062
OPERATING EXPENSES:
Selling, general and administrative expenses 14,345 9,667 31,024 19,701
Research and development expenses 6,311 3,187 12,524 5,856
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OPERATING INCOME 2,781 6,667 1,640 10,505
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Interest expense, net 2,309 807 4,313 1,094
Other (income) expense, net (258) 499 56 1,059
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INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST 730 5,361 (2,729) 8,352
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(Benefit) provision for income taxes (256) 2,132 (1,907) 3,239
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INCOME (LOSS) BEFORE MINORITY INTEREST 986 3,229 (822) 5,113
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Minority interest (64) 23 (163) (97)
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NET INCOME (LOSS) $ 1,050 $ 3,206 $ (659) $ 5,210
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Net income (loss) per common share - basic $ 0.04 $ 0.13 $ (0.03) $ 0.21
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Net income (loss) per common share - diluted $ 0.04 $ 0.13 $ (0.03) $ 0.20
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Dividends per share $ 0.01375 $ 0.02750 $ 0.02750 $ 0.04125
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(UNAUDITED)
July 31, January 31,
2005 2005*
=========================================================================================
ASSETS
Current assets:
Cash and cash equivalents $ 20,915 $ 26,855
Accounts receivable, less allowance for doubtful accounts
of $2,385 and $2,018 75,710 73,621
Inventories, net 81,329 77,272
Deferred income taxes 14,298 14,481
Prepaid taxes 5,928 1,644
Other current assets 2,083 2,008
- ---------------------------------------------------------------------------------------
Total current assets 200,263 195,881
Property, plant and equipment, net 98,671 104,130
Deferred income taxes 287 287
Intangible and other assets, net 80,363 83,863
Goodwill 95,725 97,247
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TOTAL ASSETS $475,309 $481,408
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,699 $ 1,874
Accounts payable 40,742 34,808
Book overdrafts 1,099 8,674
Accrued liabilities 24,695 24,254
Other current liabilities 13,888 10,374
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Total current liabilities 82,123 79,984
Deferred income taxes 11,746 12,216
Long-term debt 127,609 135,004
Other liabilities 37,952 36,705
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Total liabilities 259,430 263,909
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C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands, except par value)
(UNAUDITED)
July 31, January 31,
2005 2005*
======================================================================================================
Commitments and contingencies
Minority interest 8,180 8,171
Stockholders' equity:
Common stock, $.01 par value, 75,000,000 shares
authorized; 28,749,978 and 28,714,973 shares issued, respectively 287 287
Additional paid-in capital 72,105 71,956
Treasury stock, at cost 3,382,331 and 3,368,676 shares, respectively (47,148) (47,151)
Accumulated other comprehensive income 4,852 5,275
Retained earnings 177,603 178,961
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Total stockholders' equity 207,699 209,328
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 475,309 $ 481,408
=====================================================================================================
* Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
Six months ended
July 31,
2005 2004
================================================================================================
Cash flows from operating activities:
Net (loss) income $ (659) $ 5,210
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Minority interest (163) (97)
Depreciation and amortization 11,883 11,209
Deferred income taxes (256) 1,407
Loss (gain) on disposal of assets 214 (59)
Changes in assets and liabilities:
Accounts receivable (2,570) (3,991)
Inventories (4,421) (5,110)
Other current assets (122) (54)
Accounts payable 6,492 4,183
Accrued liabilities 375 1,147
Income taxes payable (4,199) (1,899)
Other current liabilities 3,590 (867)
Other liabilities 911 1,183
Other long-term assets 906 788
Other, net 1,701 659
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Net cash provided by operating activities 13,682 13,709
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Cash flows from investing activities:
Acquisition of business, net -- (75,024)
Acquisition of property, plant and equipment (4,136) (5,534)
Proceeds from disposal of property, plant and equipment 71 121
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Net cash used in investing activities (4,065) (80,437)
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Cash flows from financing activities:
Repayment of debt (7,014) (75)
Proceeds from new borrowings -- 68,269
(Decrease) increase in book overdrafts (7,575) 1,305
Financing cost of long-term debt (735) (263)
Proceeds from issuance of common stock, net 47 773
Purchase of treasury stock (154) (2,661)
Payment of common stock dividends (349) (698)
Payment of minority interest dividends -- (10)
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Net cash (used in) provided by financing activities (15,780) 66,640
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Effect of exchange rate changes on cash and cash equivalents 223 (77)
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Decrease in cash and cash equivalents (5,940) (165)
Cash and cash equivalents, beginning of period 26,855 12,306
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Cash and cash equivalents, end of period $ 20,915 $ 12,141
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