Exhibit 99.1
[LETTERHEAD OF C&D TECHNOLOGIES, INC.]
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,
Closure of Conyers, Georgia Manufacturing Plant and
Completion of Amendment to Credit Facility
BLUE BELL, PA -- April 16, 2007 -- 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,
2007.
For the quarter, the Company reported a net loss of $12.1 million, or 47 cents
per share on a diluted share basis, on revenues of $132.3 million. This compared
to break-even results in the prior year's fourth quarter on revenues of $124.5
million. Results for the fourth quarter of fiscal 2007 included net
restructuring and other special charges totaling $5.1 million, while results for
the fourth quarter of fiscal 2006 included net restructuring and other special
charges totaling $0.3 million.
For the year, the Company reported a net loss of $46.1 million, or $1.80 per
diluted share, on revenues of $524.6 million. This compares to a net loss of
$60.7 million, or $2.39 per share, on revenues of $497.4 million in fiscal 2006.
Restructuring, impairment and other special charges totaled $26.4 million and
$42.8 million in fiscal 2007 and fiscal 2006, respectively.
In commenting on the financial results for the year, Dr. Jeffrey A. Graves,
President and CEO of the Company, said, "Fiscal 2007 was a tough year, but we
took the hard actions necessary to remain competitive and establish the platform
for our future success. We relentlessly addressed those factors within our
control, aggressively pursuing cost savings initiatives in sourcing,
manufacturing, design, and operations. As a result of these actions, we are well
positioned to benefit as our markets continue to grow and as raw material prices
return to historic levels."
"The continued escalation of lead and other raw material prices negatively
impacted margins and operating income in our core Power Systems Division
throughout fiscal 2007. We increased base prices twice during the fiscal year to
partially recoup these additional costs, and we also implemented an
industry-first lead surcharge mechanism. These efforts helped us to partially
offset rising raw material prices and to generate a 8.6% increase in Power
System Division revenues on a year-over-year basis. Despite these actions,
higher lead and other material costs, net of pricing actions, impacted operating
profit by over $6 million during the year."
Dr. Graves continued, "Our turnaround efforts at the Power Electronics Division
were also a major focus in 2007. During the year, we took decisive action to
improve the division's manufacturing platform and reduce our cost base,
including our move to new contract manufacturers and consolidation of our design
and development activities. These initiatives began to drive improved cost
performance in the fourth quarter and will reap further benefits in fiscal 2008
and beyond. Unfortunately, these improvements were masked by a softening in the
end markets in the third and fourth quarters, and accompanying erosion of
pricing with our Tier One customer base. Our previously announced initiative to
pursue the possible divesture of this division is well underway."
Standby Power Division:
In the fourth quarter, the Standby Power Division posted total net sales of
$74.3 million, and an operating loss of $3.0 million. Revenues were up 25.8%
compared to last year's fourth quarter, and 8.0% on a sequential basis. Price
increases accounted for approximately one-third of the quarterly year-over-year
revenue increase, with higher sales volume from the telecommunications, utility
and cable TV markets accounting for the balance. Restructuring and other special
charges totaled $4.4 million for the quarter, principally severance related to
the elimination of approximately 250 positions in our Chinese joint-venture, and
certain costs associated with the closure and transition of manufacturing from
the Company's Conyers, Georgia facility to our Leola, Pennsylvania facility.
In fiscal 2007, Standby Power's revenues were $279.1 million, an increase of
8.9% from fiscal 2006. Operating income was $3.8 million, compared to $12.6
million in the prior year. Restructuring and other special charges totaled $5.4
million for the year. In fiscal 2006, the positive benefit from a reduction in
environmental remediation accruals fully offset special charges for severance
and warranty costs, resulting in no impact from restructuring and other special
charges for the year.
In commenting on the Standby Power Division results, Dr. Graves stated, "Despite
mixed industry views of end market activity, we were extremely pleased with our
top line achievement during the fourth quarter, with strong sales growth
achieved on both the prior year and sequentially, as we benefited from recent
business wins and the strength and diversification of our customer base. We also
continued our drive for pricing recovery with implementation of a lead surcharge
mechanism in early November, which began to impact results with shipments late
in the year. Lead, however, continued to be unforgiving, rising from over 70
cents per pound on the LME in mid-November to over 90 cents per pound in recent
days, and, as a result, our operating results were lower than expected. While
there remains a time delay in pricing recovery of lead costs, we have reduced
these lags through our surcharge mechanism, and look forward to continued levels
of recovery as we move through the new year."
"For both the Standby Power and Motive Power businesses, we have previously
indicated we believed we could eliminate $25 - $30 million of costs over the
next two years through sourcing initiatives, manufacturing efficiency gains
through Six Sigma and Lean, plant consolidation and design initiatives. With
these programs now fully underway, we are excited by the progress we have made
and opportunities we see. We are now confident of delivering on the high end of
this range, and thereby, realizing over $15 million of these savings in year
one, which is fiscal 2008. On this front our move to a new modern manufacturing
facility in China was recently completed. Moreover, in conjunction with this
move, we reduced the workforce by over two-thirds, providing us with a leaner
organization that will operate with improved efficiencies to further enhance
competitiveness.
Further to our cost reduction plans, today we announced that we are moving
forward with consolidation of our North American facilities, with the closure of
our plant in Conyers, Georgia and consolidation into our Leola, Pennsylvania
plant. While a difficult decision, this consolidation will eliminate excess and
underutilized manufacturing capacity in our operations. Annualized savings are
estimated in the range of $2.5 million and the move will be completed during the
second quarter of this year."
"As we look forward, we exit fiscal 2007 with a strong pipeline of new products
and cost savings projects, combined with continued confidence in our top line
performance. In the UPS market, data center construction and expansion from
continued growth in the technology sector is expected to fuel market demand for
at least the next two years. Telecom and Cable Television markets, in which we
are well positioned with new contract wins from late last year, are expected to
be robust, and our utility end-markets are showing signs of increased
investment. With our industry-leading technology and strong customer
relationships, we believe we are well positioned to benefit from this growth."
Motive Power Division:
In the fourth quarter, the Motive Power Division posted total net sales of $15.2
million, and an operating loss of $1.8 million. Revenues increased 5.4% year
over year, and 4.7% on a sequential basis, driven by increased product selling
prices. Operating results for the fourth quarter included a gain of
approximately $0.4 million from the sale of the company's closed manufacturing
location in Huguenot, New York.
For the year, Motive's revenues were $58.7 million, a 7.1% increase year over
year. Operating loss was $10.3 million, up slightly from $9.9 million in the
prior year. Fiscal 2007 results included restructuring expenses of $2.6 million,
primarily related to the closure of the Huguenot facility. In fiscal 2006, other
special charges, including non-cash impairment charges, totaled $2.1 million.
Dr. Graves stated, "Motive Power's results were generally stable in fiscal 2007,
as price increases, the Huguenot closure, and the benefits of transition of
manufacturing to our low-cost Reynosa facility balanced escalation of raw
material costs and incremental warranty costs. We are gratified that the
division's top line was stable through a year of transition. As our cost
reduction efforts now gain traction, we look to improved performance of this
Division in fiscal 2008."
Power Electronics Division:
In the fourth quarter, the Power Electronics Division posted total net sales of
$42.7 million and an operating loss of $2.9 million. Revenues declined from $51
million in the prior year's fourth quarter and $47.3 million in the third
quarter of fiscal 2007. The division recognized approximately $1.1 million of
restructuring expenses during the quarter primarily related to the closure of
its Portland design facility.
For the year, Power Electronics revenues and operating loss were $186.7 million
and $22.0 million, respectively, compared to $186.3 million and $40.5 million,
respectively, in fiscal 2006. Restructuring and other special charges totaled
$18.4 million for the year and included $13.9 million for goodwill impairment,
with the balance for manufacturing transition, facility closings, RoHS
implementation and management severance. In 2006, restructuring and other
special charges totaled $40.7 million, including $35.9 million of asset
impairment charges.
Dr. Graves commented, "Under the direction of its new leadership team that was
fully installed by the second quarter of last year, it was a year of heavy
lifting for our Power Electronics Division as the task of integrating the
previously acquired businesses was fully tackled. From a design standpoint,
RoHS-compliant product designs were completed in time to meet the challenging
European requirements that drove the industry. From a manufacturing standpoint,
our difficult relationship with Celestica in contract manufacturing was exited
and we successfully relocated all operations to our Asian contract manufacturing
partners that combine the high quality performance needed for power products,
with the low costs required for success. During the year, we also streamlined
our North American design operations, closing our Portland, Oregon center and
consolidating into centers in Toronto, Canada and Mansfield, Massachusetts. As
is usual during times of rapid softening in the market, severe pricing pressures
were encountered which impacted results for the third and particularly the
fourth quarters. While significant cost reduction opportunities continue into
the new year, the changes made over the last fiscal year, combined with our
excellent product designs and customer base, well positions the business as the
market looks to strengthening later in fiscal 2008."
Other:
The Company also announced today that it had executed a fourth amendment to its
Credit Facility. The amendment enhances the company's borrowing capacity and
resultant availability through changes and modification of previously excluded
collateral. In addition, the amendment provides for a reduction in availability
blocks, resetting fixed coverage ratio covenants and an increase in the
permitted foreign indebtedness. Based upon these changes, the Company estimates
that maximum availability, calculated under these new borrowing base provisions,
would increase availability by approximately $20 million.
Dr. Graves commented, "We appreciate the support and confidence from Wachovia
Capital Finance, our lead banker, in securing this amendment, which enhances our
liquidity by providing us greater flexibility and resources to support execution
of our cost reduction programs."
Conference call:
C&D management will host a conference call to discuss these financial results on
April 16, 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 5353085. A telephone replay of the conference call
will begin immediately following the call and will be available through April
30, 2007 at midnight Eastern Daylight Time. To access the rebroadcast, please
dial 800-642-1687 (706-645-9291 for international callers) and enter code
5353085. A webcast of the conference call will also be available at
http://www.cdtechno.com.
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. Through our Power Electronics Division, we manufacture
and market custom, standard and modified-standard electronic power supply
systems, including DC to DC converters, for large OEMs of telecommunications and
networking equipment, as well as office and industrial equipment. The division
also manufactures power conversion products sold into military and CATV
applications as well as digital panel meters and data acquisition components.
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 BALANCE SHEETS
January 31,
(Dollars in thousands, except par value)
2007 2006
===================================================================================
ASSETS
Current assets:
Cash and cash equivalents $ 12,596 $ 25,693
Accounts receivable, less allowance for doubtful accounts
of $1,869 in 2007 and $2,889 in 2006 84,241 78,420
Inventories 88,229 83,803
Deferred income taxes 134 3,430
Prepaid taxes 2,634 6,838
Other current assets 7,082 8,892
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Total current assets 194,916 207,076
Property, plant and equipment, net 100,815 91,041
Deferred income taxes 531 401
Intangible and other assets, net 35,429 38,450
Goodwill 68,520 81,451
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TOTAL ASSETS $ 400,211 $ 418,419
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 6,498 $ 1,038
Accounts Payable 54,215 50,199
Book overdrafts 2,310 71
Accrued liabilities 21,910 23,440
Other current liabilities 32,010 35,578
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Total current liabilities 116,943 110,326
Deferred income taxes 9,155 11,660
Long-term debt 147,925 133,067
Other liabilities 34,750 24,051
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Total liabilities 308,773 279,104
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Commitments and contingencies
Minority interest 7,548 8,498
Stockholders' equity:
Common stock, $.01 par value, 75,000,000
shares authorized; 29,040,960 and 28,828,428
shares issued in 2007 and 2006, respectively 290 288
Additional paid-in capital 74,188 72,599
Treasury stock, at cost, 3,391,536 and
3,380,102 shares in 2007 and 2006, respectively (47,110) (47,094)
Accumulated other comprehensive loss (13,952) (11,876)
Retained earnings 70,474 116,900
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Total stockholders' equity 83,890 130,817
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 400,211 $ 418,419
===================================================================================
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three months ended
January 31, (unaudited) Year ended January 31,
2007 2006 2007 2006
================================================================================================
NET SALES $ 132,276 $ 124,544 $ 524,580 $ 497,407
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COST OF SALES 119,031 104,623 450,995 414,499
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GROSS PROFIT 13,245 19,921 73,585 82,908
OPERATING EXPENSES:
Selling, general and administrative expenses 15,286 15,206 60,907 61,812
Research and development expenses 5,718 6,275 27,302 25,128
Identifiable intangible asset impairment -- -- -- 20,045
Goodwill impairment -- -- 13,947 13,674
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OPERATING LOSS (7,759) (1,560) (28,571) (37,751)
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Interest expense, net 3,781 3,606 13,437 10,487
Other expense (income), net 376 (54) 1,245 (21)
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LOSS BEFORE INCOME TAXES AND MINORITY INTEREST (11,916) (5,112) (43,253) (48,217)
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Provision (benefit) for income taxes 1,094 (5,344) 4,094 12,362
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(LOSS) INCOME BEFORE MINORITY INTEREST (13,010) 232 (47,347) (60,579)
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Minority interest (902) 252 (1,273) 83
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NET LOSS $ (12,108) $ (20) $ (46,074) $ (60,662)
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Net loss per common share - basic and diluted $ (0.47) $ -- $ (1.80) $ (2.39)
================================================================================================
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended January 31,
(Dollars in thousands)
2007 2006*
=====================================================================================================
Cash flows from operating activities:
Net loss $ (46,074) $ (60,662)
Adjustments to reconcile net loss to net cash (used in) provided by
by operating activities:
Minority interest (1,273) 83
Stock option issued 225 --
Depreciation and amortization 18,337 21,843
Amortization of debt acquisition costs 2,207 1,779
Impairment of fixed assets 985 4,802
Impairment of goodwill 13,947 13,674
Impairment of identifiable intangible assets -- 20,045
Deferred income taxes 1,212 10,649
(Gain) loss on disposal of assets (365) 234
Annual retainer to Board of Directors paid by the issuance of common stock 224 198
Changes in assets and liabilities:
Accounts receivable (4,656) (5,092)
Inventories (3,575) (6,765)
Other current assets (519) 290
Accounts payable 3,881 15,467
Accrued liabilities (2,956) (39)
Income taxes payable 4,348 (958)
Other current liabilities (1,347) 4,848
Other liabilities 4,857 (2,721)
Other long-term assets (68) 1,624
Other, net (1,027) 1,519
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Net cash (used in) provided by operating activities (11,637) 20,818
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Cash flows from investing activities:
Acquisition of property, plant and equipment (25,385) (8,773)
Proceeds from disposal of property, plant and equipment 1,725 73
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Net cash used in investing activities (23,660) (8,700)
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Cash flows from financing activities:
Repayment of debt (51,042) (131,079)
Proceeds from new borrowings 72,480 133,142
Increase (decrease) in book overdrafts 2,239 (8,603)
Financing cost of long term debt (3,326) (6,130)
Proceeds from issuance of common stock, net 1,210 584
Purchase of treasury stock (122) (163)
Common stock dividends paid (352) (1,399)
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Net cash provided by (used in) financing activities 21,087 (13,648)
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Effect of exchange rate changes on cash and cash equivalents 1,113 368
- -----------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (13,097) (1,162)
Cash and cash equivalents, beginning of fiscal year 25,693 26,855
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Cash and cash equivalents, end of fiscal year $ 12,596 $ 25,693
=====================================================================================================
*Reclassified for comparative purposes