C&D Technologies Reports Revenue Growth, Profitability Improvement for Third Quarter
C&D Technologies, Inc. announced financial results for the fiscal 2009 third quarter ended October 31, 2008.
For the third quarter, the company reported net income of $964,000 or $0.04 per basic and $0.02 per diluted share, compared to a net loss of $9.3 million or ($0.36) per basic and diluted share in the prior year’s third quarter. Earnings for the third quarter of this year reflected $0.03 per share in charges related to balance sheet currency remeasurement losses following the significant devaluation of certain foreign currencies against the $US dollar in the third quarter and $0.01 per share for fees associated with amendment of the Company’s bank agreement. Results in the prior year’s third quarter included a $2.3 million or ($0.09) per fully diluted share loss from discontinued operations.
Third quarter revenues were $93.8 million, up 3% compared to $91.3 million in the prior year’s third quarter, driven by both pricing and estimated volume growth of 2%. On a sequential basis revenues were up from $92.5 million in spite of lead prices being strongly down in the quarter, reflecting an approximate 7% sequential volume improvement in sales.
Against the prior year quarter, gross profits increased 184% to $16.6 million from $5.9 million, driven by pricing recoveries, lower lead costs and significant cost reduction initiatives. On a sequential basis gross margins continued their improving trend, rising to 17.7% in the quarter. The strong combination of higher revenues from unit volume growth and efficiency-driven margin expansion resulted in operating cash flow of $6.3 million, the best quarter of cash flow in the last three years.
Dr. Jeffrey A. Graves, President and CEO said, "We are pleased with our financial results this quarter, as the decisive actions we have taken to sharpen C & D’s strategic focus are taking hold. In the quarter, we were very pleased with our revenue performance, with unit volume growth of 7% sequentially from the second quarter, despite the headwinds all industries face from global economic and credit market uncertainties. Our focus on the standby power market has enabled us to increase our investment in innovative new technology while strengthening our organization and expanding our industry leading brand on a global basis. The resulting top line achievements are a clear signal that our strategy is working. This top line growth is being leveraged into faster bottom line profitability growth through the implementation of our cost reduction initiatives that have gross margins continuing to improve towards our previously communicated target of 20% exiting this fiscal year. Our strong third quarter cash flow has contributed to continued improvement in our overall liquidity and financial position. And, for the third consecutive quarter, earnings increased on a sequential basis, adjusted for the non-operating and other unusual charges incurred in the quarter."
Dr. Graves continued, "Our performance has improved sequentially every quarter this fiscal year reflecting effective execution of our strategy and the success of our productivity-enhancing initiatives. We continue to build momentum that will allow us to leverage our strong foundation as the industry leader in the standby power market. From this strong base, we are now expanding our channels to market globally, to accelerate growth in China and other international markets where infrastructure investment is greatest, as well as developing the new products and channels necessary to penetrate adjacent markets in North America. We are also exploring opportunities to invest in exciting new energy storage technologies, as well as innovative utilization of our core technological expertise, such as our recent agreement to establish a partnership with Firefly Energy to manufacture lead-acid microcell batteries for the trucking and off-highway equipment markets. Through the first three quarters of fiscal 2009, we have achieved significant progress on all of our key strategic initiatives in a difficult economic climate and while completing a major corporate transition. Over the long term, we believe we are making the right investments to capitalize on our core competencies and to position the company to generate attractive shareholder returns."
