Power-One Announces Third Quarter 2007 Results

October 30, 2007 by Jeff Shepard

Power-One, Inc. announced that net sales for the third fiscal quarter ended September 30, 2007 were $131.5 million, compared with $123.8 million for the second quarter of 2007; and $78.7 million for the third quarter of 2006. Net loss for the third quarter ended September 30, 2007 was $6.5 million, or $0.07 per share, compared with a net loss of $11.1 million, or $0.13 per share, for the second quarter in 2007; versus net income of $1.3 million, or $0.01 per share in the third quarter in 2006.

The net loss during the third quarter of 2007 included $1.5 million, or approximately $0.02 per share, of restructuring and asset impairment charges related to the previously announced consolidation of the company’s operations. The net loss for the second quarter of 2007 included approximately $2.8 million, or $0.03 per share, of restructuring and asset impairment charges.

The 67% year-over-year revenue growth was driven mainly from the late 2006 acquisition of Magnetek’s Power Electronics Group, which did not account for any sales in the third quarter of 2006; as well as organic growth. Net new orders and backlog typically decline in the third quarter due to cyclical seasonal demand, and this year was no exception with third quarter bookings at $118 million compared with $127 million in the second quarter of 2007. The company ended the third quarter 2007 with approximately $91 million in 180-day backlog and $84 million in 90-day backlog.

Bill Yeates, Chief Executive Officer, commented, "We are very pleased with the improved performance in the third quarter, as the summer months are typically a challenge in our industry. Coupled with the increase in sales is our improved, and now positive EBITDA of $1.5 million, which indicates that we are following through and on track with our plans to reduce SG&A. Our steps to reduce SG&A included the announcement and notice to affected employees of plans to close operations in our Dallas, Texas and Hungary facilities with additional reductions in higher-cost functions in Ireland and California. On the COGS side, we continue to make improvements in both material costs and factory efficiencies."

Yeates continued, "We are seeing strengthening demand across our business, especially in our telecom power system products and our products that we obtained with our PEG acquisition, namely alternative energy, motor controls, and custom products. In the alternative energy business, we are seeing tremendous growth opportunities, and in fact, just this quarter, we announced our new line of modular solar power inverters with a range of 30kW to 300kW that will considerably expand our potential market. The PEG acquisition was very strategic in terms of new applications like renewable energy and positioning us to compete in higher-volume markets."

Yeates concluded, "On the digital power management side of the business, we continue to win designs and as we indicated last quarter, our new high-power Point of Load dc-dc modules targeting the server/storage markets are generating strong interest. Further, we anticipate a favorable outcome of Power-One’s patent infringement lawsuit, which is set to go to jury trial in early November."