Power-One Reports 5% Decline In First Quarter Net Sales

April 24, 2008 by Jeff Shepard

Power-One, Inc. announced that for the first quarter ended March 30, 2008, net sales were $117.8 million, a decline of 5.0% from $124.0 million in the first quarter of 2007. Net loss was $0.16 per share compared to a net loss of $0.14 per share for the same period last year. Power-One claims that revenue and earnings for the quarter were below the company’s guidance primarily due to its inability to deliver product on time to its customers.

Bookings of $155.1 million in the first quarter of 2008 increased 24.6% over bookings of $124.5 million in the first quarter of 2007. Bookings were said to be strong due to healthy demand, and included the ramp-up of volumes for several new customer programs in high-growth markets. The company ended the first quarter of 2008 with approximately $133 million in 180-day backlog and $109 million in 90-day backlog.

For the first quarter of 2008, gross margin was 18.1% compared to gross margin of 19.3% in the first quarter of 2007. The company states that gross margin was affected primarily by manufacturing planning inefficiencies and supply chain constraints that had a negative impact on both revenues and cost-of-goods-sold.

Selling, General and Administration expenses were relatively flat at $20.2 million versus $20.5 million in the first quarter of 2007. SG&A included one-time expenses totaling approximately $1.9 million for severance costs, legal fees, and fees related to extending the company’s $50 million debt obligation. Net loss was $13.6 million compared to $12.3 million in the first quarter of 2007.

Richard Thompson, CEO, commented, "Although we continued to face challenges associated with manufacturing inefficiencies and supply chain issues during the first quarter, we are working to improve these areas and move towards profitability. As evidenced by our strong bookings and backlog, we are seeing increased customer demand across many segments of the business, particularly in our custom products and our renewable energy and other high-growth markets. As we outlined in our announcement on April 10th, the company has undertaken a detailed planning process to improve operational performance and drive long-term growth and profitability. We have already launched initiatives to accelerate the transfer of manufacturing to lower-cost areas and are implementing new sales and operations planning processes that are expected to yield a number of supply chain efficiencies. The company expects these steps to improve on-time delivery and lower manufacturing and materials costs. We believe these measures will result in improved financial performance beginning in the second quarter of 2008 and accelerating into the third quarter. Other goals of our programs are to heighten our focus on high-growth, higher-margin markets like renewable energy and products sold through distribution and to improve working capital."