| Exide Announces Second Quarter Results for Fiscal Year 2006 |
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Net sales increased 7.7 percent primarily due to higher volumes in the Industrial Energy business and higher pricing in all of the Company’s business segments
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Adjusted EBITDA improved 15.7 percent, led by a 72 percent increase in Industrial Energy’s results
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Consolidated net loss widened to $33 million due to higher interest costs in the current quarter and a $12 million gain from the revaluation of warrants in the prior-year quarter
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Alpharetta, Ga. - (November 9, 2005) - Exide
Technologies (NASDAQ: XIDE, www.exide.com)
today announced financial results for the second quarter of fiscal 2006 ended September 30, 2005.
Consolidated Net Sales
Consolidated net sales for the second quarter of fiscal 2006 rose 7.7 percent to $686.5 million from $637.6 million in the second quarter of fiscal 2005. The improved results, which include favorable currency impacts of $2.3 million, benefited from higher average selling prices in all businesses as a result of the pass-through of continued commodity-related price increases, as well as increased demand in the Industrial Energy business.
“Our business delivered improved performance on an adjusted EBITDA basis,” said Gordon Ulsh, President and Chief Executive Officer of Exide Technologies. “Our work on improving productivity, reducing our cost structure and continued material cost-reduction initiatives while enhancing our product lines is beginning to show positive results.”
Mr. Ulsh added: “While the management team is encouraged by the progress made over the past two quarters, we fully recognize that much remains to be done to get the Company’s performance to levels commensurate with its potential.”
Consolidated Net Loss
The consolidated net loss for the second quarter of fiscal 2006 was $33.0 million compared to a net loss of $17.1 million reported in the second quarter of fiscal 2005. The results reflect restructuring costs of $6.6 million, continuing reorganization items of $1.7 million, and a loss on the revaluation of warrants of $0.4 million. The results also include an increase in interest expense of $5.2 million resulting from higher rates and debt levels. The year-over-year difference also reflects a $12.0 million mark-to-market gain associated with the revaluation of the Company’s warrant liability in the prior-year quarter.
Adjusted EBITDA
Adjusted EBITDA -- a key measure of the Company’s operational and financial performance and defined as earnings before interest, taxes, depreciation, amortization and restructuring charges – showed a quarter-over-quarter improvement of $3.4 million or 15.7 percent to $24.9 million, driven principally by strong volumes in the Company’s Industrial Energy business.
These results have also been adjusted to exclude the impact of $1.4 million related to a non-cash, currency re-measurement loss, a $0.4 million non-cash loss from the revaluation of the Company’s warrants, and a $1.0 million adjustment associated with impairment charges and non-cash losses related to asset sales.
A reconciliation of adjusted EBITDA to net loss reported under Generally Accepted Accounting Principals (“GAAP”) has been included in the financial supplements of this earnings release.
Industrial Energy Business
Consolidated global net sales in the Company’s Industrial Energy business increased 16.9 percent to $273 million during the second quarter of fiscal 2006. The increase was largely driven by strong performance in North America where sales increased 40 percent primarily as a result of higher product demand in Network Power and favorable pricing, principally in Motive Power. Sales in Europe and the Rest of Word (Europe-ROW) increased 10 percent driven by volume and price in the Motive Power segment.
Operating expenses, which increased 8 percent due to continued business growth, were partially offset by reduced spending and staff reductions.
Adjusted EBITDA increased 72 percent to $27.5 million. These results were driven by exceptional growth in Europe-ROW, where results increased 94.2 percent to $19.4 million due to growing product demand, favorable price and mix and benefits from continued restructuring activities. Performance in the North America division improved 35 percent to $8.1 million.
Net income for the period increased $10.6 million to $12.5 million due largely to higher results in Europe-ROW.
Transportation Business
Consolidated global net sales in Transportation increased 2.4 percent over the prior-year period to $414 million. These results were primarily due to higher sales in North America, which increased approximately 5 percent compared to a 1 percent decrease in Europe-ROW. The improved sales in North America were attributable to growing volumes from original equipment manufacturers and pricing actions in the aftermarket segment.
Operating expenses decreased 4.7 percent to $45 million as a result of the Company’s continued cost-rationalization efforts.
Adjusted EBITDA for the period was $25.6 million, down $3.9 million due to the inability to fully pass through higher commodity, freight and distribution costs in both regions.
Net income for the period decreased to $8.1 million from $10.6 million, impacted by lower results in both divisions.
Conference Call Details
Members of Exide’s senior management team will host a conference call on November 9, 2005 for members of the investment community to discuss the Company’s financial results and general business operations at 11:00 a.m. Eastern Standard Time.
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Date: November 9, 2005
Time: 11 a.m. Eastern Standard Time
Domestic Dial-In Number: 800-646-4713
International Dial-In Number: 706-643-7699
Passcode: 9996968
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For individuals unable to participate in the conference call, a
telephone replay will be available from 2 p.m. on November 9, 2005
until midnight on December 9, 2005 at:
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Domestic Replay Number: 800-642-1687
International Replay Number: 706-645-9291
Passcode: 9996968
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An audio webcast of the conference call can also be accessed via www.exide.com
and will be available for 12 months. RealPlayer or Windows Media Player will be
required in order to access the webcast.
About Exide Technologies
Exide Technologies, with operations in 89 countries, is one of the world’s largest producers and recyclers of lead-acid batteries. The Company’s four global business groups – Transportation Americas, Transportation Europe and Rest of World, Industrial Energy Americas and Industrial Energy Europe and Rest of World – provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications.
Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply (UPS), and motive-power applications including lift trucks, mining and other commercial vehicles.
Further information about Exide, including its financial results, are available at
www.exide.com.
Forward-Looking Statements
Except for historical information, this report may be deemed to contain “forward-looking” statements. The Company desires to avail itself of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 (the “Act”) and is including this cautionary statement for the express purpose of availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a) projections of revenues, cost of raw materials, income or loss, earnings or loss per share, capital expenditures, growth prospects, dividends, the effect of currency translations, capital structure and other financial items, (b) statements of plans of and objectives of the Company or its management or Board of Directors, including the introduction of new products, or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities, (c) statements of future economic performance, (d) statements of assumptions, such as the prevailing weather conditions in the Company’s market areas, underlying other statements and statements about the Company or its business and (e) statements regarding the ability to comply with or alternatively obtain amendments under the Company’s debt agreements.
Factors that could cause actual results to differ materially from these forward looking statements include, but are not limited to, the following general factors such as: (i) adverse reactions by creditors, vendors, customers, and others to the going-concern modification in the Company’s audit report for the fiscal year ended March 31, 2005, (ii) the Company’s ability to implement and fund based on current liquidity business strategies and restructuring plans, (iii) unseasonable weather (warm winters and cool summers) which adversely affects demand for automotive and some industrial batteries, (iv) the Company’s substantial debt and debt service requirements which may restrict the Company’s operational and financial flexibility, as well as imposing significant interest and financing costs (v) the Company’s ability to comply with the covenants in its debt agreements or obtain waivers of noncompliance, (vi) the litigation proceedings to which the Company is subject, the results of which could have a material adverse effect on the Company and its business, (vii) the realization of the tax benefits of the Company’s net operating loss carry forwards, of which is dependent upon future taxable income, (viii) the fact that lead, a major constituent in most of the Company’s products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims, (ix) competitiveness of the battery markets in North America and Europe, (x) the substantial management time and financial and other resources needed for the Company’s consolidation and rationalization of acquired entities, (xi) risks involved in foreign operations such as disruption of markets, changes in import and export laws, currency restrictions, currency exchange rate fluctuations and possible terrorist attacks against U.S. interests, (xii) the Company’s exposure to fluctuations in interest rates on its variable debt, (xiii) the Company’s ability to maintain and generate liquidity to meet its operating needs, (xiv) general economic conditions, (xv) the ability to acquire goods and services and/or fulfill labor needs at budgeted costs, (xvi) the Company’s reliance on a single supplier for its polyethylene battery separators, and (xvii) the Company’s ability to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002. Some of the factors contained herein, and other factors, are enumerated in further detail in the Company’s most recent Form 10-Q filed on August 9, 2005 and the Company’s Registration Statement on Form S-3 (file no. 333-126619) and amendments thereto.
Therefore, the Company cautions each reader of this press release carefully to consider those factors hereinabove set forth, because such factors have, in some instances, affected and in the future could affect, the ability of the Company to achieve its projected results and may cause actual results to differ materially from those expressed herein.
FINANCIAL INFORMATION
EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share data)
Successor Successor
Company Company
for the for the
Three Months Three Months
Ended Ended
September 30, September 30,
2005 2004
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NET SALES $ 686,485 $ 637,599
COST OF SALES 582,587 542,587
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Gross profit 103,898 95,012
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EXPENSES:
Selling, marketing and advertising 67,615 68,326
General and administrative 43,138 37,847
Restructuring and impairment 6,640 4,826
Other expense (income) net 1,412 (9,161)
Interest expense net 16,658 11,411
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135,463 113,249
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Loss before reorganization items, income
taxes and minority interest (31,565) (18,237)
REORGANIZATION ITEMS, NET 1,715 1,725
INCOME TAX BENEFIT (202) (2,874)
MINORITY INTEREST (55) 13
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Net loss $ (33,023) $ (17,101)
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NET LOSS PER SHARE
Basic and Diluted $ (1.32) $ (0.68)
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WEIGHTED AVERAGE SHARES
Basic and Diluted 25,000 25,000
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per-share data)
Successor Company
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September 30, March 31,
ASSETS 2005 2005
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CURRENT ASSETS:
Cash and cash equivalents $ 30,085 $ 76,696
Restricted cash 704 1,323
Receivables, net of allowance for
doubtful accounts of $23,226 and
$22,471 640,485 687,715
Inventories 406,158 397,689
Prepaid expenses and other 32,946 21,275
Deferred financing costs, net 1,761 1,725
Deferred income taxes 3,755 4,305
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Total current assets 1,115,894 1,190,728
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PROPERTY, PLANT AND EQUIPMENT, NET 733,324 799,763
OTHER ASSETS:
Intangible assets, net 189,932 192,854
Investments in affiliates 7,075 9,010
Deferred financing costs, net 11,593 12,784
Deferred income taxes 50,445 55,896
Other 27,341 29,745
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286,386 300,289
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Total assets $ 2,135,604 $ 2,290,780
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 13,317 $ 1,595
Current maturities of long-term debt 59,667 632,116
Accounts payable 297,116 340,480
Accrued expenses 335,053 385,521
Warrants liability 3,438 11,188
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Total current liabilities 708,591 1,370,900
LONG-TERM DEBT 636,815 20,047
NONCURRENT RETIREMENT OBLIGATIONS 313,702 329,628
NONCURRENT DEFERRED TAX LIABILITY 26,709 24,178
OTHER NONCURRENT LIABILITIES 102,359 106,004
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Total liabilities 1,788,176 1,850,757
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COMMITMENTS AND CONTINGENCIES -- --
MINORITY INTEREST 12,098 12,764
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STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 1,000
shares authorized, 0 shares issued and
outstanding -- --
Common stock, $0.01 par value, 61,500
shares authorized, 24,523 and 24,407
shares issued and outstanding 245 234
Additional paid-in capital 888,312 888,157
Accumulated deficit (535,655) (466,923)
Accumulated other comprehensive (loss)
income (17,572) 5,791
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Total stockholders' equity 335,330 427,259
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Total liabilities and stockholders'
equity $ 2,135,604 $ 2,290,780
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Successor Successor
Company Company Predecessor
for the for the Company
Six Period for the
months May 6, Period
Ended 2004 to April 1,
September September 2004 to
30, 2005 30, 2004 May 5, 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(68,732) $ 16,526 $ 1,748,564
Adjustments to reconcile net income
(loss) to net cash used in operating
activities
Depreciation and amortization 60,343 52,519 7,848
Gain on discharge of liabilities
subject to compromise -- -- (1,558,839)
Fresh Start accounting adjustments,
net -- -- (228,371)
Unrealized gain on Warrants (7,748) (55,675) --
Net loss on asset sales 2,669 11 --
Provision for doubtful accounts 3,357 2,521 473
Deferred income taxes -- 680 --
Non-cash provision for restructuring 448 98 18
Reorganization items, net 3,087 3,418 18,434
Minority interest 40 46 26
Amortization of deferred financing
costs 897 -- 1,251
Changes in assets and liabilities,
excluding effects of Fresh Start
accounting, acquisitions and
divestitures
Receivables 12,176 (12,849) 45,924
Inventories (23,497) (17,956) (10,873)
Prepaid expenses and other (11,722) 2,524 286
Payables (28,945) 2,387 (20,967)
Accrued expenses (37,421) (19,315) (20,564)
Noncurrent liabilities (4,587) 915 (294)
Other, net 14,896 (4,938) 9,898
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Net cash used in operating activities (84,739) (29,088) (7,186)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (24,092) (26,018) (7,152)
Proceeds from sales of assets 11,333 10,034 2,800
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Net cash used in investing activities (12,759) (15,984) (4,352)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 12,420 2,407 2,425
Repayments under Senior Notes -- -- (110,082)
Borrowings under Credit Facility -- 8,962 621,258
Repayments under Credit Facility -- -- (452,875)
Currency swap (12,084) -- --
Increase (decrease) in other debt 52,277 659 (2,412)
Financing costs and other -- (681) (23,146)
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Net cash provided by financing
activities 52,613 11,347 35,168
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EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (1,726) 1,422 (1,447)
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (46,611) (32,303) 22,183
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 76,696 59,596 37,413
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CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 30,085 $ 27,293 $ 59,596
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EXIDE TECHNOLOGIES AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
SUCCESSOR COMPANY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
Industrial
Transportation Energy
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Europe Europe
North and North and
America ROW America ROW Other TOTAL
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Net income (loss) $ 3.5 $ 4.5 $ 4.9 $ 7.5 ($53.4) ($33.0)
Interest expense, net - - - - 16.7 16.7
Income tax provision
(benefit) - - - - (0.2) (0.2)
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EBIT $ 3.5 $ 4.5 $ 4.9 $ 7.5 ($36.9) ($16.5)
Depreciation and
amortization 7.4 7.9 2.8 8.3 3.6 30.0
Reorganization items,
net 0.0 0.0 0.0 0.0 1.7 1.7
Restructuring and
impairment, net (0.1) 1.6 (0.4) 3.5 2.0 6.6
Other restructuring
costs included in
cost of sales
and general and
administrative
expenses 0.1 0.1 0.1 0.0 (0.1) 0.2
Currency
remeasurement loss
(gain) 0.0 0.0 0.0 0.0 1.4 1.4
Gain on revaluation
of foreign currency
forward contract 0.0 0.0 0.0 0.0 0.0 0.0
Minority interest 0.0 0.0 0.0 0.0 (0.1) (0.1)
Unrealized gain on
revaluation of
warrants 0.0 0.0 0.0 0.0 0.4 0.4
Loss (gain) on sale
of capital assets 0.0 0.0 0.0 0.0 1.0 1.0
Other non-cash losses
(gains) 0.7 (0.1) 0.7 0.1 (1.2) 0.2
Adjusted EBITDA $ 11.6 $14.0 $ 8.1 $19.4 ($28.2) $ 24.9
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