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Magnetek Announces Fiscal 2008 Third Quarter Results

April 29, 2008 by Jeff Shepard

Magnetek, Inc. reported the results of its fiscal 2008 third quarter ended March 30, 2008. In its fiscal 2008 third quarter Magnetek recorded revenue of $26.3 million compared to $23.3 million in the third quarter of fiscal 2007.

All product lines with the exception of Telecom Power Systems achieved double-digit year-over-year sales growth which together with reduced operating expenses led to a significant improvement in operating income. Sales in Material Handling increased 17%, to $16.0 million compared to $13.7 million in the third quarter of the prior fiscal year. Elevator Systems revenue of $5.4 million represented a significant year-over-year and sequential sales gain. Energy Systems third quarter revenue was $3.2 million, an increase of $1.6 million from the prior year third quarter, primarily due to the delivery of 15 E-Force™ wind power inverters. Sales for Telecom Power Systems amounted to $1.7 million in the third quarter compared to $3.7 million in the prior year quarter, due to lower demand from key OEM’s.

Sales in Material Handling, the company’s largest product line, tend to follow capital budgeting and spending patterns of its customer base which generally result in relatively lower revenues in the third fiscal quarter. This factor, combined with significantly lower Telecom Power Systems sales, resulted in a 9% sequential decline in third quarter sales from second quarter sales of $29.0 million. Excluding the results of Telecom Power Systems, third quarter sales increased 25% on a year-over-year basis and declined sequentially by 3%.

Third quarter gross profit amounted to $6.8 million (26% of sales) compared to $6.9 million (30% of sales) in the prior year third quarter. The company claims that gross profit was negatively impacted by the lower sales volume in Telecom Power Systems and relatively low margins on wind inverters.

Income from continuing operations, net of taxes, in the third quarter of fiscal 2008 amounted to $1.2 million or $.04 per share compared to income from continuing operations of $0.2 million or $.01 per share in the fiscal 2007 third quarter.

Including the results of discontinued operations, Magnetek reported net income of $0.5 million or $.02 per share on a diluted basis in the third quarter of fiscal 2008, which reflects the impact of a net settlement gain of $2.9 million with Federal-Mogul Corp. and a charge of $3.2 million related to the Nilssen patent infringement judgment. The company reported a net loss of $0.4 million or a $.01 loss per share in the third quarter of fiscal 2007.