News

C&D Technologies Reports First Quarter Results

June 08, 2009 by Jeff Shepard

C&D Technologies, Inc. announced financial results for the fiscal 2010 first quarter, ended April 30, 2009. For the quarter, the company reported a net loss of $9.8 million or $0.37 per diluted share, a sequential improvement from the fourth quarter 2009 net loss of $14.4 million or $0.55 per diluted share.

First quarter net income includes $798,000 non-cash interest expense related to the adoption of new accounting standards, as well as approximately $1.0 million non-cash tax charges, front end phased based on the company’s full year earnings forecast. Given the rapid and accelerating deterioration in the economy experienced over the past year, the company believes sequential comparisons are more indicative of trends in financial performance relative to prior periods. For the first quarter of fiscal 2009, the company reported a net loss of $124,000 or $0.00 per diluted share. On a cash basis, operations were essentially break even in the first quarter of fiscal 2010.

For the first quarter of fiscal 2010, revenues were $73.7 million compared on a sequential basis to $85.5 million in the fourth quarter of 2009. Revenues in the first quarter of fiscal 2009 were $93.8 million. Revenues in the first quarter of fiscal 2010 were consistent with the company’s previously stated expectations that the market would continue to contract in the near term due to weakness in global capital spending, compounded by the significant year-over-year decrease in commodity costs. Though unit volume in the quarter was down sequentially, estimated at approximately 8 percent, the decrease was less than the decrease in the overall available market, indicating continued gains in market share for the company versus its competitors. Compared to a year ago, quarter volumes were estimated to be down 2%.

Dr. Jeffrey A. Graves, President and CEO said, "Results in the first quarter were consistent with our expectations relative to the impact of weakness in global capital spending, the residual effect of higher cost lead in our pipeline, and some manufacturing inefficiencies experienced in the transition of our new products into full scale production. While we are not happy with bottom line performance, in the aggregate the first quarter came in around what we had expected due to the economic weakness and uncertainty that existed early in the year. Encouragingly, in addition to increasing sales volumes in each month of the quarter, we also experienced increases in quotation activity and bookings in most of our largest end markets, as well as improvements in operating efficiency. These trends are expected to continue as our new products gain traction and the overall markets improve for Standby Power. We are also pleased in the first quarter with our ability to essentially produce a breakeven operating cash flow, which has enabled us to maintain the liquidity and financial flexibility needed to execute our growth strategy."

Gross margins in the first quarter of 2010 were 7.3%, a sequential improvement from 3.7% in the fourth quarter of 2009, though down from gross margins of 14.6% in the comparable year ago period. Gross margin comparisons with the prior year quarter reflect the loss of lead tolling savings that were realized last year as LME prices have declined significantly, as well as higher tolled lead costs that were recognized this quarter. With completion of the first quarter, C&D has now absorbed the full impact on the company’s financial performance from the significant disparity in the price paid and the price received from customers for lead. The sequential improvement in gross margins from the fourth quarter of 2009 to the current quarter can be principally attributed to improved operating efficiencies, the impact of restructuring charges and the partial elimination of start up costs associated with new product introductions.