Exide Technologies Reports Fiscal 2013 First Quarter Results

MILTON, Ga., Aug. 2, 2012 (GLOBE NEWSWIRE) -- Exide Technologies (Nasdaq:XIDE) (www.exide.com), a global leader in stored electrical energy solutions, announced today its fiscal 2013 first quarter financial results for the period ended June 30, 2012.

Consolidated Results

Fiscal 2013 first quarter consolidated net sales were $693.4 million as compared to net sales of $745.1 million in the fiscal 2012 first quarter. Net sales in the fiscal 2013 period were negatively impacted by lead-related price decreases of approximately $26.8 million and foreign currency translation loss of $45.8 million. We achieved higher unit volume in aftermarket sales for Transportation Europe and Rest of World ("ROW"), and realized higher original equipment ("OE") unit sales in both Transportation segments when compared to the fiscal 2012 first quarter. Additionally in the current year period, the Company recorded higher sales throughout its global Network Power channels.

Selling and administrative expenses for the fiscal 2013 first quarter were $93.7 million or 13.5% of net sales versus the comparable prior year period of $102.7 million or 13.7% of net sales. Currency translation favorably impacted these expenses by $5.7 million.

In spite of lower selling and administrative costs and higher unit volumes in certain markets, operating income declined $12.6 million to $1.1 million. Core costs as a percent of LME continued to rise, principally in the Americas. With input costs driven higher by the price of spent batteries ("cores") combined with lower LME based pricing, margins were compressed. We estimate the impact of this to be about $15.0 million for the first quarter of fiscal 2013. Of this amount, approximately $5.0 million is related to lower profits on third party lead sales. Jim Bolch, President and Chief Executive Officer, stated, "The benefit of price increases announced earlier this year was insignificant in the fiscal first quarter, but will be realized in July and beyond. In addition, we will continue to reduce third party lead sales as we move to close our recycling operation in Frisco, Texas."

With the decline in profitability of the Americas business, the evaluation of our deferred tax asset in the United States has resulted in the establishment of a valuation allowance in the amount of $87.6 million or ($1.14) per share, in the fiscal 2013 first quarter. This non-cash charge when coupled with the difficult operating environment resulted in a net loss for the quarter of $106.5 million or ($1.38) per share compared with the prior year net loss of $5.2 million or ($0.07) per share.

With respect to the tax valuation charge, Phil Damaska, Executive Vice President and Chief Financial Officer, stated, "The Company continues to execute its strategy to right-size Transportation Americas through the announced closure of our Bristol, Tennessee battery plant and the closure and land sale of our Frisco, Texas lead recycling facility. We believe these actions, among other ongoing initiatives will return the overall Americas region to profitability and allow us to ultimately utilize this long-lived deferred tax benefit."

As of June 30, 2012, the Company had cash and cash equivalents of $130.1 million and $152.5 million of availability under its revolving bank credit facility. This compares to cash and cash equivalents of $155.4 million and $152.8 million of availability under the revolving bank credit facility at March 31, 2012. Given the seasonal nature of a large portion of our business, inventory is built during the first and second fiscal quarters. This resulted in a use of free cash flow in the amount of $21.0 million in the fiscal 2013 period, down from a use of $31.3 million in the prior year comparable period.

Segment Information for the Three Months Ended June 30, 2012

Transportation Segments

Net sales of the Company's combined Transportation segments in the fiscal 2013 first quarter decreased to $409.3 million from $444.8 million in the same period of fiscal 2012. Net sales were unfavorably impacted by currency translation in the amount of ($25.5) million. Price decreases resulting from the carryover impact of the competitive European market late last fiscal year and lead escalator agreements negatively impacted total Transportation net sales by ($19.3) million. Globally, fiscal 2013 first quarter aftermarket unit volume was flat as compared to the prior year first quarter while units sold to OE customers increased approximately 23% quarter-over-quarter.

Transportation Americas produced approximately 80 thousand tons of lead in our North American recycling operations, roughly flat to the prior year quarter. Open market sales were 11% of production and 12% was sold under tolling arrangements. This compares to 12% and 13% in the open market and under tolling arrangements, respectively, in the prior year comparable period. While market sales in tonnage are down only slightly, the 23% decline in lead pricing on the LME reduced third party lead revenue by approximately 26%.

Fiscal 2013 first quarter operating loss, excluding restructuring and impairment charges, was $5.4 million as compared to operating income of $7.7 million in the prior year first quarter. Operating income in our Europe and ROW segment declined $8.2 million to $4.0 million in the current year, the result of negative carryover pricing from the competitive market dynamics of late fiscal 2012, a $3.4 million mark-to-market loss on lead forward contracts and approximately $1.0 million year-over-year change in our New Zealand recycling operation as we wound down this business. In the Americas segment we experienced margin compression of approximately $13 million; a combination of higher spent battery input costs and lower LME based pricing that offset positive fiscal 2012 year-over-year carryover pricing and improved manufacturing performance.

Bolch stated, "It was a difficult quarter made extremely challenging by unprecedented high core prices in the Americas. We remain committed to our strategy to turnaround our Americas transportation business while driving continued improvement in the other three segments. I am encouraged by the progress of our productivity initiatives and we remain on track with the closure of the Bristol and Frisco facilities later this year. While it is difficult to predict the future cost of acquiring used batteries, the actions we have taken including new pricing should begin to mitigate this issue for the rest of the year."

Industrial Energy Segments

Fiscal 2013 first quarter total net sales for the Company's combined Industrial Energy segments was $284.2 million as compared to $300.3 million in the comparable fiscal 2012 period. Net sales were unfavorably impacted by currency translation of ($20.3) million. Price decreases resulting from lead escalator agreements negatively impacted net sales by ($8.4) million in the fiscal 2013 first quarter as compared to the same period of fiscal 2012.

Fiscal 2013 first quarter operating income, excluding restructuring and impairment charges, was $12.6 million compared to $13.3 million in the prior year period. While our Europe and ROW segment had some recovery sequentially and year-over-year, the high cost of spent batteries and lower pricing of lead caused a reduction in the profitability of our Americas segment. Higher pricing initiated late in the first quarter is expected to mitigate this issue going forward.

The backlog of orders in our Global Industrial Energy business at the end of June 2012 is at the highest level of the most recent four years. The backlog in the Americas is up roughly 30% year-over-year and up more than 27% sequentially. In the Europe and ROW segment, backlog at June 30, 2012 is up over 16% and is roughly flat sequentially.

Non-GAAP Financial Measures

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 as a 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 condensed consolidated financial statements prepared in accordance with GAAP.

Conference Call

The Company previously announced that it will hold a conference call to discuss its results on Friday, August 3, 2012 at 9:00 a.m. Eastern Time.

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.

The Exide Technologies logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3300

Forward-Looking Statements

Except for historical information, this news release 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 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, and (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.

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) 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, (ii) the Company's ability to implement and fund business strategies based on current liquidity, (iii) the Company's ability to realize anticipated efficiencies and avoid additional unanticipated costs related to its restructuring activities, (iv) the cyclical nature of the industries in which the Company operates and the impact of current adverse economic conditions on those industries, (v) unseasonable weather (warm winters and cool summers) which adversely affects demand for automotive and some industrial batteries, (vi) 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, (vii) 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, (viii) the realization of the tax benefits of the Company's net operating loss carry forwards, which is dependent upon future taxable income, (ix) competitiveness of the battery markets in the Americas and Europe, (x) 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, (xi) the ability to acquire goods and services and/or fulfill later needs at budgeted costs, (xii) general economic conditions, (xiii) the Company's ability to successfully pass along increased material costs to its customers, and (xiv) recently adopted U.S. lead emissions standards and the implementation of such standards by applicable states, and (xv) those risk factors described in the Company's fiscal 2012 Form 10-K filed on June 7, 2012.

The Company cautions each reader of this news release to carefully consider those factors set forth above. 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 tables follow