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      C&D Technologies Reports Fiscal 2012 First Quarter Results

      -- Margins up year-over-year

      -- Net loss significantly reduced from prior year

      -- $3.3 million of Adjusted EBITDA generated


      News provided by

      C&D Technologies, Inc.

      Jun 08, 2011, 04:12 ET

      Share this article

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      BLUE BELL, Pa., June 8, 2011 /PRNewswire/ -- C&D Technologies, Inc. (OTC: CHHP), a leading North American producer and marketer of electrical power storage and conversion systems used in telecommunications, uninterrupted power supply (or "UPS") systems, utility and other high reliability applications, today announced financial results for the first quarter of fiscal 2012, ended April 30, 2011.

      First quarter revenues were $88.3 million up 4 percent compared to $84.7 million in the first quarter of fiscal 2011.  Revenues in the quarter reflect strong demand in Asia and Europe, as well as an increase in the average quarterly cost of lead compared to the average cost of lead in the year ago quarter.  These increases were partially offset by a reduction in North American volumes, primarily driven by weakness in the Company's original equipment manufacturer (OEM) UPS market. Revenues in the first quarter were sequentially down from $98.7 million in the fourth quarter of fiscal 2011 as a result of previously announced expected lower sales in Asia due to timing of shipments under the Agriculture Bank of China contract and lower sales volume in the Americas OEM UPS market.

      Gross profit in the first fiscal quarter was up 28 percent from a year ago to $12.8 million. Gross margins in the first quarter of fiscal 2012 were 14.5%, up from 11.8% in the comparable year ago period and down sequentially from 17.4% in the fourth quarter of fiscal 2011.  Gross margins expanded versus the prior year as a result of increased volume in Asia, customer and product mix improvements and pricing.  Margins were down on a sequential basis as a result of lower Asia and North American sales volume and higher lead costs.

      Selling, general and administrative expenses of $10.4 million in first fiscal quarter of fiscal 2012 were $1.2 million higher than the comparable year ago quarter as a result of approximately $0.6 million in severance expenses associated with Corporate headcount reductions and higher warranty costs. On a sequential basis, selling, general and administrative costs were down $0.5 million from the previous quarter.

      For the quarter, the Company reported income from operations of $0.8 million, a significant improvement compared to operating losses of ($1.0) million in the first quarter of fiscal 2011 but a reduction from $4.2 million in the fourth quarter of fiscal 2011.  For the quarter, the Company reported a net loss of ($0.6) million or ($0.04) per diluted share, compared to a net loss of ($5.6) million, or ($5.42) per diluted share in the first quarter of fiscal 2011 and net income of $6.6 million, or $0.92 per diluted share on a sequential basis.  The reduction in net loss from the prior year is driven by significantly improved operating and margin performance as well as the benefit from lower interest expense following the Company's fourth quarter fiscal 2011 debt for equity exchange.  The reduction of the sequential net income is primarily a result of recognition of a book gain in the fourth quarter from the Company's debt for equity exchange of $12.0 million offset by other expenses associated with the Company's recapitalization and refinancing efforts of approximately $5.3 million.  Adjusted EBITDA for the first quarter of fiscal 2012 was $3.3 million as compared to $1.6 million in the comparable period a year ago and $6.7 million sequentially.

      Commenting on the quarter, Dr. Jeffrey A. Graves, President and CEO said, "Our first quarter results were generally in line with our expectations. As we had indicated when releasing our year end results, we expected to report lower revenues this quarter given the timing of shipments under a large contact in Asia and the impact of Chinese New Year shutdowns, as well as historical seasonality in North American Telecom buying patterns as new budgets were released throughout the quarter.  As we move into the second quarter of fiscal 2012 we expect to see revenues rebound from this base in both of these key geographic markets, as our core markets in Asia continue to expand and the recovery in North America continues, although at a much slower pace.  In addition to these market dynamics, following two years of development efforts, in the second quarter we will be launching an exciting new 2V product family for wireless telecom and renewable energy applications, that will combine the demanding quality and performance characteristics that our customers expect of C&D products, while being cost competitive in the marketplace. This expansion of our 2V product family complements our new 12 volt 'true front access' battery family that we have introduced over the last year, positioning C&D with one of the broadest and most modern product offerings for wireless telecom in the world.  These products are essential to the global wireless network expansions required to support the growing use of 'smart phones' and tablets by both individual consumers and businesses alike.  We also expect further product announcements in the coming quarters reflecting the benefits of our aggressive R&D efforts over the last several years."  Dr. Graves concluded, "In addition to these developments in North America, with our new products reaching full implementation in our Asian plant in the second quarter, we expect further growth from customer project awards related to core UPS and telecommunications business in Asia during the second half of the year."

      Use of Non-GAAP Financial Measures

      To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company has provided additional measures of its operating results, net income and earnings per share, which principally exclude certain costs and expenses related to both the Company's operational and financial restructuring plans. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its historical performance as well as prospects for its future performance.

      This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three month periods ended April 30, 2011, April 30, 2010 and January 31, 2011 follows:

      C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

      ADJUSTED EBITDA RECONCILIATION

      (Dollars in thousands)

      (UNAUDITED)






      Three months ended
      April 30,

      Three Months
      Ended January 31,


      2011

      2010

      2011

      Net (loss) income 

      $      (625)

      $   (5,604)

      $     6,583

      Interest expense, net

      1,231

      3,348

      2,895

      Income tax provision       

      66

      394

      32

      Depreciation and amortization       

      2,556

      2,614

      2,567

      Gain on debt to equity exchange

      -

      -

      (12,050)

      EBITDA

      3,228

      752

      27

      Other expenses associated with debt to equity exchange

      -

      -

      5,353

      Non-cash stock expense

      231

      260

      137

      Foreign exchange

      (340)

      (52)

      142

      Environmental charges closed facilities

      110

      664

      616

      Restructuring charges     

      97

      -

      455





      Adjusted EBITDA 

      $  3,326

      $     1,624

      $    6,730












      About C&D Technologies:

      C&D Technologies, Inc. provides solutions and services for the switchgear and control (utility), telecommunications, and uninterruptible power supply (UPS), as well as emerging markets such as solar power.  C&D Technologies engineers, manufactures, sells and services fully integrated reserve power systems for regulating and monitoring power flow and providing backup power in the event of primary power loss until the primary source can be restored.  C&D Technologies' unique ability to offer complete systems, designed and produced to high technical standards, sets it apart from its competition.  C&D Technologies is headquartered in Blue Bell, PA.  For more information about C&D Technologies, visit http://www.cdtechno.com/.

      Forward-looking Statements:

      This press release contains forward-looking statements, which are based on management's current expectations and are subject to uncertainties and changes in circumstances.  Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  The Company's actual results could differ materially from those anticipated in forward-looking statements as a result of a variety of factors, including those discussed in "Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended January 31, 2011.  We caution you not to place undue reliance on these forward-looking statements.

      C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS

      (Dollars in thousands, except per share data)

      (UNAUDITED)





      Three months ended
      April 30,


      2011

      2010

      NET SALES      

      $  88,311

      $  84,703

      COST OF SALES 

      75,507

      74,725




      GROSS PROFIT   

      12,804

      9,978




      OPERATING EXPENSES:   



      Selling, general and administrative expenses    

      10,435

      9,222

      Research and development expenses 

      1,595

      1,788




      OPERATING INCOME (LOSS)       

      774

      (1,032)




      Interest expense, net       

      1,231

      3,348

      Other (income) expense, net 

      (120)

      736







      LOSS BEFORE INCOME TAXES     

      (337)

      (5,116)

      Income tax provision       

      66

      394







      NET LOSS       

      (403)

      (5,510)

      Net income attributable to non-controlling interests       

      222

      94




      NET LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.

      $  (625)

      $  (5,604)







      Loss per share: 



      Basic and Diluted:       



      Net loss 

      $  (0.04)

      $  (5.42)






      C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONSOLIDATED BALANCE SHEETS

      (Dollars in thousands, except par value)

      (UNAUDITED)





      April 30,
      2011

      January 31,
      2011

      ASSETS



      Current assets:



      Cash and cash equivalents     

      $  5,456

      $  3,708

      Restricted cash     

      120

      -

      Accounts receivable, less allowance for doubtful accounts of $830 and $981

      63,009

      61,188

      Inventories 

      79,601

      80,772

      Deferred taxes      

      257

      251

      Other current assets 

      4,424

      4,508




      Total current assets     

      152,867

      150,427




      Property, plant and equipment, net    

      86,636

      86,891

      Deferred income taxes     

      250

      249

      Intangible and other assets, net       

      13,455

      13,726




      TOTAL ASSETS       

      $  253,208

      $  251,293







      LIABILITIES AND EQUITY



      Current liabilities:



      Current portion of long-term debt

      $  2,607

      $  2,596

      Accounts payable   

      35,366

      39,477

      Accrued liabilities    

      12,861

      13,847

      Deferred income taxes

      27

      97

      Deferred revenue    

      2,489

      3,588

      Other current liabilities 

      6,482

      5,955




      Total current liabilities   

      59,832

      65,560




      Deferred income taxes     

      99

      98

      Long-term debt   

      39,041

      32,934

      Long-term debt – related party       

      20,000

      20,000

      Other liabilities    

      39,831

      39,169




      Total liabilities  

      158,803

      157,761







      Equity:



      Common stock, $.01 par value, 25,000,000 shares authorized; 15,306,936
      and 15,306,915 shares issued and 15,196,563 and 15,196,542 outstanding
      at April 30, 2011 and January 31, 2011, respectively

      153

      153

      Additional paid-in capital       

      202,581

      202,350




      Treasury stock, at cost, 110,373 shares at April 30, 2011 and January 31, 2011

      (39,200)

      (39,200)

      Accumulated other comprehensive loss   

      (42,661)

      (43,489)

      Accumulated deficit   

      (39,105)

      (38,480)




      Total stockholders' equity attributable to C&D Technologies, Inc.  

      81,768

      81,334

      Non-controlling interest       

      12,637

      12,198




      Total equity   

      94,405

      93,532




      TOTAL LIABILITIES AND EQUITY 

      $  253,208

      $  251,293





      C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CASH FLOWS

      (Dollars in thousands)

      (UNAUDITED)




      Three months ended
      April 30,


      2011

      2010

      Cash flows from operating activities:



      Net loss   

      $  (403)

      $  (5,510)

      Adjustments to reconcile net loss to net cash used in operating activities:



      Share-based compensation    

      231

      230

      Depreciation and amortization   

      2,556

      2,614

      Amortization of debt acquisition and discount costs 

      132

      1,274

      Deferred income taxes

      (72)

      384

      Changes in assets and liabilities:



      Accounts receivable, net 

      (1,030)

      (3,798)

      Inventories    

      1,766

      1,871

      Other current assets    

      136

      (563)

      Accounts payable      

      (5,313)

      (1,199)

      Accrued liabilities       

      (988)

      776

      Book overdraft 

      835

      (3,015)

      Income taxes payable   

      (119)

      39

      Other current liabilities   

      (871)

      557

      Other liabilities 

      1,463

      638

      Other long-term assets   

      (21)

      (38)

      Other, net     

      (1,099)

      (189)




      Net cash used in continuing operating activities  

      (2,797)

      (5,929)

      Net cash used in discontinued operating activities

      -

      (7)




      Net cash used in operating activities   

      (2,797)

      (5,936)




      Cash flows from investing activities:



      Acquisition of property, plant and equipment       

      (1,311)

      (3,871)

      (Increase) decrease in restricted cash

      (120)

      47




      Net cash used in investing activities

      (1,431)

      (3,824)




      Cash flows from financing activities:



      Borrowings on line of credit facility      

      21,052

      29,288

      Repayments on line of credit facility     

      (15,092)

      (37,551)

      Repayment of debt   

      (25)

      (66)

      Proceeds from new borrowings 

      15

      20,083

      Financing cost of long term debt 

      (106)

      (1,771)




      Net cash provided by financing activities     

      5,844

      9,983




      Effect of exchange rate changes on cash and cash equivalents    

      132

      6




      Increase in cash and cash equivalents 

      1,748

      229

      Cash and cash equivalents, beginning of period 

      3,708

      2,700




      Cash and cash equivalents, end of period      

      $  5,456

      $  2,929







      SOURCE C&D Technologies, Inc.

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