Exide Technologies: Q4 and Full-Year 2012 Results
Exide Technologies (www.exide.com), a global leader in stored electrical energy solutions, announced its fiscal 2012 fourth quarter and full year financial results for the periods ended March 31, 2012.
Highlights of Fiscal 2012 Fourth Quarter:
Net sales of $782.6 million versus $774.5 million in the prior year fourth quarter;
Operating income was $15.9 million versus $9.3 million in the fourth quarter of fiscal 2011;
Net loss was $2.7 million or ($0.03) per share as compared to the prior year period net loss of $13.7 million or ($0.18) per share; and
Free cash flow generation was approximately $55.7 million compared to a use of cash of ($14.7 million) in the prior year period.
Jim Bolch, President and Chief Executive Officer, stated, "Our fourth quarter results improved over the comparative prior year period, principally due to lower restructuring and impairment charges. We are making steady progress with substantial opportunities for further improvement in the areas of product cost, recovery through pricing and optimization of plant capacity."
Fiscal 2012 fourth quarter consolidated net sales were $782.6 million as compared to net sales of $774.5 million in the fiscal 2011 fourth quarter. Both Transportation segments experienced higher unit volume in original equipment ("OE") sales and Transportation Europe and Rest of World ("ROW") increased its aftermarket unit sales as compared to the prior year period. Additionally, the Company achieved increased sales in both Industrial Energy segments primarily in the motive power channel. Net sales in the fiscal 2012 period were negatively impacted by lead related price decreases of ($12.3 million) and foreign currency translation of ($19.7 million).
Gross profit of $123.1 million was $12.3 million lower than the prior year quarter. This decline was due principally to rising spent battery input costs, particularly in North America, lower production levels in the late third and early fourth quarters to address inventory levels and a continued higher percentage of OE sales in both the transportation and motive power channels.
Selling and administrative expenses for the fiscal 2012 fourth quarter were $100.0 million or 12.8% of net sales versus the comparable prior year period of $101.3 million or 13.1% of net sales.
Restructuring and impairment charges in the current year quarter of $7.2 million included an approximate $3.0 million charge relating to the closure of our New Zealand recycling operation. The remaining $4.2 million charge resulted from continued headcount reductions, principally in sales, marketing and administrative functions as well as targeted reductions in our Industrial Europe aftermarket sales service organization. The current year charge compares with an aggregate restructuring and impairment charge of $24.8 million in the prior year quarter.
Fiscal 2012 fourth quarter operating income was $15.9 million compared to $9.3 million in the prior year fourth quarter. Operating income increased primarily due to lower restructuring and impairment charges as compared to the prior year fiscal fourth quarter.
The Company incurred a net loss in the current year fourth quarter of $2.7 million or ($0.03) per share as compared to the prior period net loss of $13.5 million or ($0.18) per share. The tax provision in the current period included an increase in valuation allowances of $4.2 million principally in Portugal.
Fiscal 2012 Full Year Consolidated Results
Net sales for fiscal 2012 were $3.1 billion as compared with $2.9 billion for the prior fiscal year, an increase of approximately 7%. Net sales benefited from higher unit sales in many of the Company's markets, from lead related price increases of $115.5 million and from favorable foreign currency translation of approximately $59.2 million.
The Company reported net income for fiscal 2012 of $56.7 million or $0.69 per diluted share as compared to net income of $26.4 million or $0.33 per diluted share in the prior fiscal year. During fiscal 2012, the Company recorded the reversal of the valuation allowance in France and established valuation allowances in Portugal and India in the amount of $4.2 million. These valuation allowances aggregated to a net tax benefit of $69.4 million. This benefit was reduced by a $13.4 million tax charge in Spain to settle audit matters related to tax years 2003 -- 2010.
As of March 31, 2012, the Company had cash and cash equivalents of $155.4 million and $152.8 million of availability under its bank revolving credit facility. This compares to cash and cash equivalents of $161.4 million and $144.0 million of availability under the bank revolving credit facility at March 31, 2011. The Company reported free cash flow usage of $17.4 million for fiscal 2012 as compared to a generation of free cash flow of $8.2 million for the comparable prior fiscal year. The impact of working capital initiatives in the current year quarter resulted in positive free cash flow of $55.6 million as compared with a $14.7 million use of cash in the fiscal 2011 comparative period.
Segment Information for the Three and Twelve Months Ended March 31, 2012
Net sales of the Company's combined Transportation segments in the fiscal 2012 fourth quarter was $501.8 million as compared to $501.1 million in the same period of fiscal 2011. Lead related price reductions and unfavorable foreign currency translation negatively impacted net sales by an aggregate $17.3 million. These reductions were offset by organic growth, principally in the OE channel.
Transportation Americas produced approximately 91 thousand tons of lead in our North American recycling operations, up about 11% from 82 thousand tons in the prior year quarter. We sold 17% of this in the open market and 16% under tolling arrangements. This compares to 15% and 20% in the open market and under tolling arrangements, respectively, in the prior year comparable period.
Operating income, excluding restructuring and impairment charges, was $27.8 million in the fiscal 2012 fourth quarter as compared to $29.7 million in the prior year fourth quarter. The decline in operating income versus the prior year fourth quarter is primarily the result of increased mix of lower margin OE sales, lower fixed cost coverage from reduced production to pare inventory and higher commodity costs, principally spent batteries in North America.
Net sales for fiscal 2012 were $1.92 billion as compared to $1.86 billion for fiscal 2011 primarily due to higher unit volumes to OE customers, price increases due to higher average lead prices, and favorable currency translation. Operating income, excluding restructuring and impairment charges, was $65.4 million for fiscal 2012 compared to $128.2 million in the prior year. The decline is the result of higher OE mix, lower aftermarket unit sales, an unseasonably warm winter, lower fixed cost coverage and higher commodity costs, particularly the cost of spent batteries, which reached an all-time high in the Americas.
Industrial Energy Segments
Fiscal 2012 fourth quarter total net sales for the Company's combined Industrial Energy segments increased to $280.7 million as compared to $273.4 million in the comparable fiscal 2011 period. Net sales were unfavorably impacted by foreign currency translation of ($6.4 million). Price decreases resulting from lead escalator agreements negatively impacted net sales by ($8.4 million) in the fiscal 2012 fourth quarter as compared to the net sales reported in the same period of fiscal 2011. Current period operating income, excluding restructuring and impairment charges, was $4.2 million compared to $11.8 million in the prior year period. The decline is due to higher mix of lower margin Motive Power OE sales and lower fixed cost coverage in the Industrial Energy Europe & ROW segment.
Net sales for fiscal 2012 were $1.2 billion as compared to $1.0 billion for fiscal 2011. The increase was due to improved volumes, price increases due to higher average lead prices, and favorable foreign currency translation. Operating income, excluding restructuring and impairment charges, was $56.1 million for current fiscal year compared to $48.4 million in the prior year. The increase in operating income is primarily due to higher motive power and network power sales in the Americas segment.
Bolch said, "Fiscal 2012 was a challenging year that included many headwinds. While some of these were external factors, we clearly had controllable operational issues which also negatively impacted performance. We are committed and confident in our ability to execute on multiple initiatives designed to improve gross margin and operating income as we move into and through fiscal 2013."
Non-GAAP Financial Measure
The Company defines Free Cash Flow as cash from operating activities less cash from investing activities, both as measured in accordance with U.S. Generally Accepted Accounting Principles. We believe that Free Cash Flow provides useful information about the cash generated by our core operations after capital expenditures and the sale of non-core assets.
The foregoing non-GAAP financial measure should be used in addition to, but not in isolation or asa substitute for, the analysis provided in the Company's measures of financial performance prepared in conformity with U.S. GAAP. The non-GAAP financial measure should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
About Exide Technologies
Exide Technologies, with operations in more than 80 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 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.
Senior Director, Investor Relations