EnerSys Reports First Fiscal Quarter 2010 Results.
Net earnings for the first fiscal quarter of 2010 were $8.4 million or $0.17 per diluted share, including the unfavorable highlighted charges of $0.06 per share impact from the $2.5 million, $3.5 million pre-tax, charge for our restructuring plans and the $0.3 million, $0.4 million pre-tax, expense related to potential acquisition activities.
This compares to diluted net earnings per share of $0.50 for the first fiscal quarter of 2009, which included favorable highlighted credits of $0.03 per share or $1.3 million, ($0.1) million pre-tax.
Adjusted net earnings for the first fiscal quarter of 2010, on a non-GAAP basis, were $0.23 per diluted share. This compares to our previous guidance of $0.13 to $0.17 per diluted share and to the prior year first quarter of $0.47 per diluted share on an adjusted and restated non-GAAP basis. These earnings were achieved despite the anticipated decline in revenue, which was partially offset by the positive effects of our cost reduction activities and further reductions in commodity costs, net of pricing. Please refer to the section included herein under the heading "Reconciliation of Non-GAAP Financial Measures" for a discussion of the Company's use of non-GAAP adjusted financial information.
Net sales for the first fiscal quarter of 2010 were $340.3 million, a decrease of 42.5% from the prior year first fiscal quarter net sales of $592.1 million and a 13.5% sequential quarterly decrease from the fourth fiscal quarter of 2009's net sales of $393.2 million. The 42.5% decline was attributed to a 32% decline in organic volume, 6% from weaker foreign currencies, primarily the euro, and 5% from reduced pricing related to lower commodity costs. The decline in organic volume was a direct result of reduced end-user demand caused by the global economic recession.
The Company's operating results for its reporting segments for the first fiscal quarters of 2010 and 2009 are as follows (in millions):
Reserve Power Motive Power Consolidated ------------- ------------ ------------ Three months ended June 28, 2009: Net sales $182.8 $157.5 $340.3 ====== ====== ====== Operating earnings before highlighted items $20.8 $2.6 $23.4 Restructuring charges (1.0) (2.5) (3.5) Acquisition activity expense (0.4) - (0.4) ---- ---- ---- Total operating earnings $19.4 $0.1 $19.5 ===== ==== ===== Three months ended June 29, 2008: Net sales $258.8 $333.3 $592.1 ====== ====== ====== Operating earnings before highlighted items $21.0 $21.7 $42.7 Gain on sale of manufacturing facility 10.9 - 10.9 Legal proceedings charge (3.4) - (3.4) Restructuring charges (1.3) (0.9) (2.2) ---- ---- ---- Total operating earnings $27.2 $20.8 $48.0 ===== ===== =====
"As anticipated, we experienced a sequential quarterly decline in sales, which is a reflection of current economic conditions. However, as a result of our continued strong execution of our business plan, including our cost reduction efforts, we reported adjusted earnings per diluted share of $0.23 for our first fiscal quarter, which exceeded our previous earnings guidance of $0.13 to $0.17 per share," said John D. Craig, chairman, president and chief executive officer of EnerSys. "There are several positive developments in our business. Recently, we have experienced stable incoming order rates, which lead us to believe that we may have reached the bottom of the declining order patterns we had been experiencing. Also, we ended our first quarter with cash and short term investments of $218 million, an increase of $55 million over the previous quarter end. Finally, our restructuring programs remain on schedule to achieve the targeted savings of $33 million per year when fully implemented."
Craig added, "Our second quarter guidance for non-GAAP adjusted net earnings per diluted share will be between $0.25 and $0.29, which excludes an expected charge of $0.06 per diluted share from our ongoing restructuring and acquisition activities."
Reconciliation of Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). EnerSys' management uses the non-GAAP measure "adjusted net earnings" in their analysis of the Company's performance. This measure, as used by EnerSys in past quarters and years, adjusts net earnings determined in accordance with GAAP to reflect changes in financial results associated with the Company's restructuring initiatives and highlighted charges and credits. Management believes the presentation of this financial measure reflecting these non-GAAP adjustments provides important supplemental information in evaluating the operating results of the Company as distinct from results that include items that are not directly related to operating unit performance and are unusual in nature and, accordingly, are not indicative of ongoing operating results. Management believes these charges or credits are not valid measures of the performance of the Company's underlying business. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for net earnings determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding the Company's ongoing operating results. This supplemental presentation should not be construed as an inference that the Company's future results will be unaffected by similar adjustments to net earnings determined in accordance with GAAP.
Included below is a reconciliation of non-GAAP adjusted financial measures to reported amounts for the first fiscal quarters ended June 28, 2009 and June 29, 2008. Non-GAAP adjusted net earnings are calculated excluding highlighted charges and credits. The following table provides additional information regarding certain non-GAAP measures:
Fiscal quarter ended -------------------- June 28, 2009 June 29, 2008 ------------- ------------- (In millions, except share and per share data) Net earnings reconciliation (Restated)(1) As reported net earnings $8.4 $25.2 Non-GAAP adjustments (net of tax): Restructuring charges 2.5 (2) 1.4 (2) Acquisition activity expense 0.3 (3) - Gain on sale of manufacturing facility - (8.5) (4) Legal proceedings charge - 2.2 (5) Refinancing related charges - 3.4 (6) Secondary offering fees - 0.2 (7) --- --- Non-GAAP adjusted net earnings $11.2 $23.9 ===== ===== Outstanding shares used in per share calculations: Basic 47,936,401 49,329,724 ========== ========== Diluted 48,454,695 50,507,516 ========== ========== Non-GAAP adjusted net earnings per share: Basic $0.23 $0.48 ===== ===== Diluted $0.23 $0.47 ===== ===== Reported net earnings per share: Basic $0.18 $0.51 ===== ===== Diluted $0.17 $0.50 ===== ===== (1) As more fully explained in our Quarterly Report on Form 10-Q, filed today, we adopted the new accounting for convertible notes as required by FSP APB14-1. The new accounting pronouncement resulted in a decrease in net earnings related to non-cash interest of approximately $0.9 million ($1.3 million pre-tax) in our first fiscal quarter of 2010 results and caused a restatement of our first fiscal quarter of 2009 results by a comparable reduction in net earnings of $0.3 million ($0.5 million pre-tax). (2) Resulting from pretax charges of approximately $3.5 million in the first fiscal quarter of 2010 and $2.2 million in the first fiscal quarter of 2009, primarily for severance costs related to staff reductions. (3) Resulting from pretax charge of approximately $0.4 million in the first fiscal quarter of 2010 for acquisition activity expense. (4) Resulting from pretax gain of approximately $10.9 million, net of fees and expenses, from the sale of the Manchester, England manufacturing facility, recorded in the first fiscal quarter of 2009. (5) Resulting from pretax charge of approximately $3.4 million in the first fiscal quarter of 2009 for a litigation accrual related to an award against the Company. (6) Resulting from pretax charges of approximately $5.2 million in the first fiscal quarter of 2009, related to the refinancing of amounts borrowed under the Company's prior senior secured credit facility. These charges are comprised of an approximate $4.0 million write-off of deferred financing fees and $1.2 million of losses incurred in terminating certain interest rate swap agreements. (7) Resulting from pretax charge of approximately $0.3 million for professional fees related to secondary stock offerings which occurred in the first fiscal quarter of 2009. EnerSys Summary of Earnings (In millions, except share and per share data) Fiscal quarter ended -------------------- (Unaudited) June 28, June 29, 2009 2008 ---- ---- (Restated) (1) Net sales $340.3 $592.1 Gross profit 77.5 112.6 Operating expenses 54.4 69.9 Gain on sale of manufacturing facility - (10.9) Restructuring charges 3.5 2.2 Legal proceedings charge - 3.4 Operating earnings 19.5 48.0 Earnings before income taxes 12.3 33.6 Net earnings $8.4 $25.2 ==== ===== Net earnings per common share: Basic $0.18 $0.51 ===== ===== Diluted $0.17 $0.50 ===== ===== Weighted average shares outstanding: Basic 47,936,401 49,329,724 ========== ========== Diluted 48,454,695 50,507,516 ========== ==========
EnerSys will host a conference call to discuss the Company's first fiscal quarter 2010 financial results and provide an overview of the business. The call will conclude with a question and answer session.
The call, scheduled for Thursday, August 6, 2009, at 9:00 a.m. Eastern Time, will be hosted by John D. Craig, Chairman, President and Chief Executive Officer and Michael T. Philion, Executive Vice President - Finance and Chief Financial Officer.
The call will also be Webcast on EnerSys' website. There will be a free download of a compatible media player on the Company's website at http://www.enersys.com/.
The conference call information is: Date: Thursday, August 6, 2009 Time: 9:00 a.m. Eastern Time Via Internet: http://www.enersys.com/ Domestic Dial-In Number: 800-591-6930 International Dial-In Number: 617-614-4908 Passcode: 51097073 A replay of the conference call will be available from 11:00 a.m. on Thursday, August 6, 2009 through midnight on September 6, 2009. The replay information is: Via Internet: http://www.enersys.com/ Domestic Replay Number: 888-286-8010 International Replay Number: 617-801-6888 Passcode: 44821048
For more information, please contact Richard Zuidema, Executive Vice President, EnerSys,
P.O. Box 14145, Reading, PA 19612-4145. Tel: 800-538-3627; Website http://www.enersys.com/.
EDITOR'S NOTE: EnerSys, the world leader in stored energy solutions for industrial applications, manufactures and distributes reserve power and motive power batteries, chargers, power equipment, and battery accessories to customers worldwide. Motive power batteries are utilized in electric fork trucks and other commercial electric powered vehicles. Reserve power batteries are used in the telecommunications and utility industries, uninterruptible power suppliers, and numerous applications requiring standby power. The Company also provides aftermarket and customer support services to its customers from over 100 countries through its sales and manufacturing locations around the world.
More information regarding EnerSys can be found at http://www.enersys.com/. Caution Concerning Forward-Looking Statements
This press release (and oral statements made regarding the subjects of this release) contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act) which may include, but are not limited to, statements regarding EnerSys' earnings estimates, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, including statements identified by words such as "believe," "plan," "seek," "expect," "intend," "estimate," "anticipate," "will," and similar expressions. All statements addressing operating performance, events, or developments that EnerSys expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance, and are inherently subject to significant business, economic, and competitive uncertainties and contingencies and changes in circumstances, many of which are beyond EnerSys' control. The statements in this press release are made as of the date of this press release, even if subsequently made available by EnerSys on its website or otherwise. EnerSys does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Although EnerSys does not make forward-looking statements unless it believes it has a reasonable basis for doing so, EnerSys cannot guarantee their accuracy. The foregoing factors, among others, could cause actual results to differ materially from those described in these forward-looking statements. For a list of other factors which could affect EnerSys' results, including earnings estimates, see EnerSys' filings with the Securities and Exchange Commission, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Forward-Looking Statements," set forth in EnerSys' Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2009. No undue reliance should be placed on any forward-looking statements.
CONTACT: Richard Zuidema, Executive Vice President, EnerSys, +1-800-538-3627
Web Site: http://www.enersys.com/
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|Date:||Aug 5, 2009|
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