C&D Technologies Reports Fiscal 2011 Fourth Quarter and Full Year Results
C&D Technologies, Inc. announced financial results for its fiscal 2011 fourth quarter and year ended January 31,2011. For the fourth quarter, the company reported net sales of $98.7 million, up sequentially from $87.6 million in the third quarter of this fiscal year and the highest quarterly revenues from its core Standby Power business in the past five years. This compared to net sales of $88.4 million reported in the fourth quarter of fiscal 2010. The increase both sequentially and from the comparable fourth quarter a year ago, was driven by growth of the company’s Asian operations, including the benefit from significant UPS shipments under one of the largest single customer orders the company has ever secured.
Fourth quarter gross profit was $17.2 million, up significantly from $10.8 million sequentially, and $9.2 million reported in the fourth quarter of fiscal 2010. Gross margins improved to 17.4% in the fourth quarter of fiscal 2011 from 12.3% sequentially and 10.4% in the fourth quarter a year ago. Gross margins expanded as a result of customer and product mix improvements, cost reduction actions and pricing focus. In addition, higher sales volumes in the company’s Asian operations resulted in improved plant performance.
The company reported fourth quarter net income of $6.6 million, or $0.92 cents per diluted share, (after giving effect to the one for thirty-five reverse stock split on March 14, 2011) compared to a net loss of $6.4 million, or $6.28 per diluted share on a sequential basis and a net loss of $6.7 million or $6.53 per diluted share in the fourth quarter a year ago. The reduction of the sequential net loss is primarily a result of recognition of a book gain in the fourth quarter from the company’s debt for equity conversion of $12.0 million, other expenses associated with the company’s recapitalization and refinancing efforts of approximately $5.3 million and significantly improved operating and margin performance. Excluding the non operating items described above and included in the reconciliation of Non GAAP measures herein, the Company reported Adjusted Net Income of $957,000 or $0.13 cents per diluted share for the fourth quarter compared to an Adjusted Net Loss of $6.8 million or $6.54 per share in the fourth quarter a year ago.
Net Sales for fiscal year 2011 were $354.8 million in comparison to $335.7 million in fiscal 2010. The increase resulted from a combination of factors including lead pricing recovery, other specific pricing actions and growth in the company’s Asian business, partially offset by continued pressures on North American volumes as a result of the general economic environment, particularly in the company’s UPS markets.
Gross profit for fiscal year 2011 was $49.0 million, up from $37.5 million in fiscal 2010. Gross margins improved to 13.8% in fiscal 2011 as compared to 11.2% in fiscal 2010. Gross margins year over year improved primarily due to more favorable customer and product mix, cost reduction actions and pricing. During the year the company experienced a temporary labor disruption at its Shanghai China facility for approximately three weeks, which negatively impacted gross profit in the second quarter of fiscal 2011.
The company reported a net loss of $56.1 million, or $21.81 per diluted share for fiscal 2011, compared to a net loss of $25.5 million or $24.78 per diluted share in fiscal 2010. Fiscal 2011 results included goodwill impairment charges, net of tax of approximately $45.7 million, a book gain from the debt for equity conversion of approximately $12 million and other expenses associated with the company’s recapitalization and refinancing efforts of approximately $6.6 million. Excluding the non operating items described above and included in the reconciliation of non GAAP measures herein, the company reported an Adjusted Net Loss of $12.1 million or $4.68 per diluted share for fiscal 2011 compared to an Adjusted Net Loss of $25.1 million or $24.21 per diluted share in fiscal 2010.
Dr. Jeffrey A. Graves, President and CEO, said, "Fiscal 2011 represented a year of many challenges, but with our financial restructuring completed in December last year, and significantly improved top line and bottom line performance realized in our recently completed fourth quarter, we believe the global strength of the C & D brand is now beginning to be fully demonstrated. Dr. Graves continued, "Revenues in the fourth quarter reflected over ten percent growth from both the third quarter of the current year and fourth quarter a year ago, driven by strong performance in Asia, as well as the success of our new products globally, partially offset by the ongoing softness in the North American large Uninterruptible Power Supply market. In addition, we continued to make progress throughout the year in modernizing our manufacturing operations and in reducing Selling and Administrative costs. Through these efforts we were very pleased to report today that we generated $6.7 million of Adjusted EBITDA in the fourth quarter and approximately $15.9 million of Adjusted EBITDA for the full fiscal year, in comparison to $1.3 million for fiscal 2010."
Dr. Graves commented further, "With our new capital structure in place we are now fully focused on supporting continued rapid growth of our business in Asia, improving our operational efficiency and driving sustained earnings performance. Looking ahead, I remain most excited about our prospects for growth in Asia, where infrastructure investment in developing countries is very strong. For C&D this means large opportunities in wireless telecommunications and data center power, in addition to energy generation and transmission expansion and the growth of rail systems. As an example of these exciting opportunities which we are now positioned to capture, separately we announced today details regarding one of the largest single projects ever secured by our Company, a contract award of $28 million from the Agriculture Bank of China ("ABC") for batteries to power their data centers as they expand throughout China and beyond. We were proud to be granted a sole source contract from ABC for this project, reflecting their confidence in the C&D brand in Asia. This project contributed to our strong fourth quarter performance, with approximately $10 million shipped to date."
Dr. Graves concluded, "With the economy continuing to slowly recover in North America we expect a gradual rebound in sales volume and improving margin performance in this part of the world throughout the coming year. Globally, Asia will remain an exciting growth environment as we expect to add to our list of project wins in a highly supportive, long term marketplace. These early product deliveries may be somewhat irregular in timing, but viewed over a full year will lead to strong year over year growth in Asia and improving plant efficiency as our new manufacturing facility is more fully utilized. We will also be more exposed to the annual Asian business cycles, including holiday seasons, which we would expect to impact sales in a different manner than North America. Given this impact as well as the timing of shipments under the ABC order, in the first quarter of fiscal 2012 ended April 30,2011 we expect to report lower sales than in our most recently completed fourth quarter. Going forward, with our improved balance sheet, a strong brand, and a very healthy new product pipeline, we look forward to an exciting new year ahead for our company."
