1400 Union Meeting Road
Blue Bell, PA 19422
Phone: 215-619-2700
Fax: 215-619-7841
Contacts:
Ian Harvie of C&D: 215-619-7835
Joseph Crivelli of Gregory FCA, for C&D: 610-642-8253
For Immediate Release
C&D TECHNOLOGIES ANNOUNCES
FOURTH QUARTER AND FULL YEAR RESULTS
AND REGULAR DIVIDEND
Blue Bell, PA - April 10, 2006 - C&D Technologies, Inc. (NYSE: CHP), 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 fourth quarter and year ended January 31,
2006.
For the quarter, the Company reported a net loss of $20 thousand, break-even on
a diluted share basis, on revenues of $124.5 million. Excluding the impact of
asset impairments and related environmental accruals from both periods,
operating income was down approximately $1.9 million quarter over quarter,
driven principally by higher lead costs.
For the year, the Company lost $60.7 million, or $2.39 per diluted share, on
revenues of $497.4 million. Excluding the impact of asset impairments and
related environmental accruals from both periods, operating income was down
approximately $16.8 million year over year. Higher lead costs, severance and
costs associated with the Company's RoHS compliance efforts, including inventory
write-downs recorded in the Company's third quarter were the principal drivers.
The Company also announced that its Board of Directors declared, at its recent
meeting, its regular fourth quarter cash dividend of 1.375 cents per share,
payable on May 12, 2006, to stockholders of record as of the close of business
on April 28, 2006.
In commenting on the financial results for the year, Dr. Jeffrey A. Graves,
President and CEO of the Company, said, "fiscal year 2006 was challenging for
C&D Technologies, but we are grateful that we exited the year with our
competitive position enhanced on a global basis. We took decisive action to deal
with the many issues that faced the company during the year. We successfully
integrated the companies we acquired in 2005 with our legacy Power Electronics
business, and in the fourth quarter our Power Electronics Division posted record
revenues and significantly turned around its profitability. This growth has been
driven by improved execution of our operations team in Asia and an intense focus
on meeting customer expectations. Exiting the year, our Motive Power Division is
beginning to rebound, with two consecutive quarters of healthy sequential
revenue increases. Our Reynosa, Mexico manufacturing facility ramped up and
today is manufacturing all of our msENDUR(TM) and MSE 2 volt valve regulated
sealed batteries and V-LINE (TM) and EM-LINE (TM) batteries for motive
applications. Our confidence in the Reynosa team is evidenced by our recently
announced plan to move the balance of our Motive Power manufacturing to that
facility."
Dr. Graves continued, "Our biggest disappointment was that increasing raw
material costs outstripped our ability to recapture lost margin through price
increases. To address the continued run-up in lead and other commodity costs,
such as copper and plastics, in January we announced a further, across the board
price increase of 8 percent, which was effective for orders placed after March
1, 2006. The benefits of such pricing actions clearly are not reflected in our
fourth quarter results."
Motive Power Division:
In the fourth quarter, the Motive Power Division posted total net sales of $14.5
million, and an operating loss of $3.1 million. Excluding asset impairments and
related environmental accruals, operating losses were approximately $1.0 million
lower quarter over quarter as benefits from our November announced pricing began
to come through. While operating results in Motive Power were pressured by
rising commodity raw material costs, the Division posted its second consecutive
quarter of sequential topline growth.
Dr. Graves stated, "Our first priority for the Motive Power Division was to
stabilize revenues and protect market share, and we accomplished this goal in
the latter half of fiscal year 2006. Now, we continue to work hard to make sure
we have the right resources in place from a sales channel, quality, customer
service and manufacturing standpoint. While there is much heavy lifting still to
do, we remain optimistic that the Motive Power Division can be restored to
profitability by fiscal year 2008. The recently-announced transition of the
balance of Motive's manufacturing to our Reynosa facility, which we believe is
the premier, low-cost battery manufacturing facility in North America, will be a
key to achieving this goal."
Standby Power Division:
In the fourth quarter, the Standby Power Division posted total net sales of
$59.1 million, and operating income of approximately $2.0 million. Excluding
asset impairments and related environmental accruals, operating income was down
approximately $3.9 million quarter over quarter. Raw material prices,
principally lead, negatively impacted divisional results during the fourth
quarter.
In commenting on the Standby Power Division results, Dr. Graves stated, "In the
Standby Power Division, some missed opportunities on the top line as well as
higher lead costs put a damper on our short term financial results. In mid-March
we made changes in both operating and sales leadership, an action I believed was
necessary to accelerate the improvements we needed to execute on our plans. I am
personally overseeing the division until we name permanent replacements. While
clearly not satisfied with the recent financial performance of this division, I
am pleased with the progress we are making in reestablishing our focus on
driving our position in the marketplace as a technology and quality leader and
the planned launch of new products later in the year to support our top line
goals."
Power Electronics Division:
In the fourth quarter, the Power Electronics Division posted total net sales of
$51 million and an operating loss of $451 thousand. Double digit revenue
increases on both a year-over-year and sequential basis were offset by RoHS
compliance costs and the unfavorable affect of year end physical inventory
adjustments.
Dr. Graves commented, "Power Electronics posted strong sales gains and a record
quarter, the first-ever quarter of over $50 million revenues. We continue to
hear good things from customers about how they appreciate our world-class
product design capabilities. Now, the challenge is to get the right low-cost
manufacturing strategy in place and to better manage our supply chain. One of
the key steps in our execution of these improvements was our announcement last
week of our transition away from Celestica. Over the next nine months, we will
be executing a transition plan that will move third-party manufacturing of our
Power Electronics products to three world-class manufacturers throughout the
Asia-Pacific region, which we expect to improve our competitiveness as well as
delivery reliability."
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 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, 2006, 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.
SOURCE: C&D Technologies, Inc.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31,
(Dollars in thousands, except par value)
2006 2005 *
- ------------------------------------------------------------------------------------ ------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 25,693 $ 26,855
Accounts receivable, less allowance for doubtful accounts
of $2,889 in 2006 and $2,018 in 2005 78,420 73,136
Inventories 83,803 77,272
Deferred income taxes 3,430 14,481
Prepaid taxes 6,838 1,644
Other current assets 8,892 2,008
- ------------------------------------------------------------------------------------ ------------- -----------
Total current assets 207,076 195,396
Property, plant and equipment, net 91,041 104,130
Deferred income taxes 401 287
Intangible and other assets, net 38,450 83,863
Goodwill 81,451 97,247
- ------------------------------------------------------------------------------------ ------------- -----------
TOTAL ASSETS $418,419 $480,923
- ------------------------------------------------------------------------------------ ------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,038 $ 1,389
Accounts payable 50,199 34,808
Book overdrafts 71 8,674
Accrued liabilities 23,440 24,254
Other current liabilities 35,578 10,374
- ------------------------------------------------------------------------------------ ------------- -----------
Total current liabilities 110,326 79,499
Deferred income taxes 11,660 12,216
Long-term debt 133,067 135,004
Other liabilities 24,051 36,705
- ------------------------------------------------------------------------------------ ------------- -----------
Total liabilities 279,104 263,424
- ------------------------------------------------------------------------------------ ------------- -----------
Commitments and contingencies
Minority interest 8,498 8,171
Stockholders' equity:
Common stock, $.01 par value, 75,000,000
shares authorized; 28,828,428 and 28,714,973
shares issued in 2006 and 2005, respectively 288 287
Additional paid-in capital 72,599 71,956
Treasury stock, at cost, 3,380,102 and (47,094) (47,151)
3,368,676 shares in 2006 and 2005, respectively
Accumulated other comprehensive (loss) income (11,876) 5,275
Retained earnings 116,900 178,961
- ------------------------------------------------------------------------------------ ------------- -----------
Total stockholders' equity 130,817 209,328
- ------------------------------------------------------------------------------------ ------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $418,419 $480,923
- ------------------------------------------------------------------------------------ ------------- -----------
* Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three months ended Year ended January 31,
January 31, (unaudited)
2006 2005* 2006 2005*
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
NET SALES $ 124,544 $ 122,574 $ 497,407 $ 414,738
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
COST OF SALES 104,623 100,886 414,499 348,080
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
GROSS PROFIT 19,921 21,688 82,908 66,658
OPERATING EXPENSES:
Selling, general and administrative expenses 15,206 14,935 61,812 47,480
Research and development expenses 6,275 7,322 25,128 18,641
Identifiable intangible asset impairment - 464 20,045 464
Goodwill impairment - 74,233 13,674 74,233
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
OPERATING (LOSS) INCOME (1,560) (75,266) (37,751) (74,160)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
Interest expense, net 3,606 2,027 10,487 5,015
Other (income) expense, net (54) 351 (21) 1,612
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST (5,112) (77,644) (48,217) (80,787)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
(Benefit) provision for income taxes (5,344) (20,402) 12,362 (21,289)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST 232 (57,242) (60,579) (59,498)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
Minority interest 252 108 83 (5)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
NET (LOSS) INCOME $ (20) $ (57,350) $ (60,662) $ (59,493)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net (loss) income per common share - basic $ - $ (2.26) $ (2.39) $ (2.35)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net (loss) income per common share - diluted $ - $ (2.26) $ (2.39) $ (2.35)
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
Dividends per share $ 0.01375 $ 0.01375 $ 0.055 $ 0.055
- ------------------------------------------------------------------------ ------------ ------------ ------------ ------------
* Reclassified for comparative purposes.
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended January 31,
(Dollars in thousands)
2006 2005*
- ------------------------------------------------------------------------------ ------------- ------------
Cash flows from operating activities:
Net (loss) income $ (60,662) $ (59,493)
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Minority interest 83 (5)
Depreciation and amortization 23,622 24,875
Impairment of fixed assets 4,802 9,602
Impairment of goodwill 13,674 74,233
Impairment of identifiable intangible assets 20,045 464
Purchased in-process research and development - 780
Deferred income taxes 10,649 (19,416)
Loss on disposal of assets 234 215
Annual retainer to Board of Directors paid by the issuance of common stock 198 156
Changes in assets and liabilities, net of effects from businesses acquired:
Accounts receivable (5,092) 3,994
Inventories (6,765) (1,288)
Other current assets 290 (2)
Accounts payable 15,467 2,797
Accrued liabilities (39) (623)
Income taxes payable (958) (5,449)
Other current liabilities 4,848 (4,475)
Other liabilities (2,721) 6,450
Other long-term assets 1,624 (2,667)
Other, net 1,519 43
- ------------------------------------------------------------------------------ ------------- ------------
Net cash provided by operating activities 20,818 30,191
- ------------------------------------------------------------------------------ ------------- ------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired - (128,429)
Acquisition of property, plant and equipment (8,773) (11,865)
Proceeds from disposal of property, plant and equipment 73 15,685
- ------------------------------------------------------------------------------ ------------- ------------
Net cash used in investing activities (8,700) (124,609)
- ------------------------------------------------------------------------------ ------------- ------------
Cash flows from financing activities:
Repayment of debt (131,079) (775)
Proceeds from new borrowings 133,142 10,176
(Decrease) increase in book overdrafts (8,603) 3,753
Financing cost of long term debt (6,130) (768)
Proceeds from issuance of common stock, net 584 932
Purchase of treasury stock (163) (3,023)
Common stock dividends paid (1,399) (1,396)
Payment of minority interest dividends - (10)
- ------------------------------------------------------------------------------ ------------- ------------
Net cash (used in) provided by financing activities (13,648) 108,889
- ------------------------------------------------------------------------------ ------------- ------------
Effect of exchange rate changes on cash and cash equivalents 368 78
- ------------------------------------------------------------------------------ ------------- ------------
(Decrease) increase in cash and cash equivalents (1,162) 14,549
Cash and cash equivalents, beginning of fiscal year 26,855 12,306
- ------------------------------------------------------------------------------ ------------- ------------
Cash and cash equivalents, end of fiscal year $ 25,693 $ 26,855
- ------------------------------------------------------------------------------ ------------- ------------
* Reclassified for comparative purposes.