Magnetek, Inc. reported its results for its fiscal 2007 third quarter, which ended on April 1, 2007. The company recorded revenue of $23.3 million, down from $26.6 million in the third quarter of fiscal 2006, due primarily to lower sales of telecom power systems. Gross profit on the reduced revenues amounted to $6.9 million (29.6% of sales) versus $7.3 million (27.5% of sales) in the same period a year ago.
Magnetek’s operating expenses, consisting of research and development (R&D) and selling, general and administrative (SG&A) costs, declined $2.0 million (23%) to $6.5 million from $8.5 million in the third quarter of fiscal 2006. This reduction resulted from cuts in corporate overhead costs made possible by the Company’s restructuring of operations, as well as executive staff downsizing, and substantial completion of the development phases of R&D programs related to the company’s new Quattro™ elevator drive systems and E-Force™ wind turbine power inverters.
Income from continuing operations in the third quarter of fiscal 2007 amounted to $235,000 or $.01 per share versus a loss from continuing operations of $1.9 million or $.08 per share in the same period last year. Magnetek also reported a loss of $654,000 or $.02 per share related to discontinued operations in third quarter. This loss primarily resulted from final settlement of the closing balance sheet related to the divestiture of the company’s power electronics business in the prior quarter. As a result, the company reported a net loss of $.01 per share in third quarter against a net loss of $.15 per share in last year’s third quarter.
Compared to the prior year, higher third-quarter revenues of the company’s Material Handling business were more than offset by lower sales in Telecom Power systems and to a lesser extent, Energy Delivery systems. The revenue decline in Telecom Power was due primarily to the physical relocation of telecom systems manufacturing from Dallas to Magnetek’s manufacturing center in Menomonee Falls, Wisconsin, resulting in some production inefficiencies and shipment delays. The decline was magnified because the company’s Telecom Power group had a particularly strong third quarter last year, shipping large orders of wireless cells on wheels (COWs) and cells on light trucks (COLTs) to telecom customers. Production efficiencies are improving in the current quarter and late shipments have been eliminated. The decline in Energy Systems revenue was primarily due to the divestiture of the company’s residential solar power inverter product line with the sale of its power electronics business.
As of the end of its fiscal third quarter, Magnetek had no debt and $27.3 million in cash, including $22.6 million to pay a patent arbitration award, if necessary, that the company is contesting in court. Capital expenditures in the fiscal third quarter were over $650,000, mainly related to investments in alternative energy and telecom systems production capacity.
