C&D Technologies Releases Second Quarter 2009 Financial Results
C&D Technologies, Inc. announced financial results for the fiscal 2009 second quarter ended July 31, 2008. For the quarter, the company reported consolidated net income of $1.2 million or $0.05 per diluted share, compared to a consolidated net loss of $3.1 million or ($0.12) per diluted share in the prior year’s second quarter. Results in the prior year’s second quarter included a $4.7 million loss, or ($0.18) per diluted share, from discontinued operations.
Second quarter revenues were $92.5 million, up 12% compared to $82.9 million in the prior year’s second quarter, primarily price related. In the second quarter the company reported a 26% increase in gross profit to $15.6 million. According to the company, continued progress on cost reduction initiatives, pricing discipline, and favorable product mix drove gross margins to 16.9% in the quarter, up sequentially from 14.6% in the first quarter of fiscal 2009. The gross margin was 14.9% in the year ago second quarter.
Dr. Jeffrey A. Graves, President and CEO said, "Results in the second quarter reflect the continued progress of our operating strategy, and we are pleased that we are building on the bottom line momentum established in the first quarter. We are particularly satisfied with our continued success in improving margins as our cost reduction initiatives drive increasing efficiency of our operations. The trend of expanding margins throughout the first half of this year has kept us firmly on pace to achieve our stated target of 20% gross margins exiting this fiscal year. With the benefits from our continued new product introductions through the first two quarters, we have established a solid foundation to reach our target of 25% gross margins exiting next fiscal year, along with accelerating top line growth as these new products begin fully penetrating the market.
"Our book to bill ratio for the second quarter remained positive, reflecting continued stability in our core end markets of uninterrupted power supply (UPS) systems, wire line and wireless telecommunications and utilities, which remain largely insulated from this year’s general economic weakness. In the second quarter, the company experienced positive unit volume growth in these core end markets, supported by continued strength internationally, overall consistent with observed market trends. In the Cable TV end-market, growth returned to more normalized long-term rates from the above-average growth rate experienced in last year’s second quarter when new infrastructure build-outs were at their recent peak levels.
"The company’s China operations were also vastly improved in the quarter, continuing the momentum established in the first quarter, and they are rapidly moving towards breakeven EBITDA performance. These improvements reflect the benefits from disciplined pricing, cost control and increasing revenues as we continue to expand our regional sales force.
"In the second quarter, cash flow from operating activities was $2.6 million, against a use last year of $5.7 million, supporting the funding of capital required to drive our new product introductions and future growth plans. The company continues to reduce its investment in working capital, with inventory alone down $14.6 million since the beginning of the year."
Dr. Graves concluded, "With mechanisms now in place to effectively address lead price volatility, we are focusing intently on meeting our profitability objectives in the Standby Power market. Moreover, looking forward we intend to leverage our strong technology reputation, brand strength and global customer relationships to not only grow our leading North American market share, but to more aggressively build sales momentum around the world. Over the first half of this year, we have introduced or significantly upgraded two new families of products that capitalize on some of the most attractive segments of our traditional markets, while extending our product line to enter some equally attractive new markets for C&D. And, with our North American customers strongly positioned in rapidly industrializing economies, we have the opportunity to leverage these relationships and capitalize on their global success to grow our share in international markets as well. Each of these exciting growth initiatives will complement our improving margins to generate attractive returns for our shareholders both this year and well beyond."
