Exide Technologies Reports EBIT Up 120% for its Fiscal 2011 Second Quarter

Exide Technologies has announced across the board strong results for its fiscal 2011 second quarter.
The company reports that net sales for the fiscal 2011 second quarter of $668.0 million compared to $631.8 million in the prior year quarter on estimated 2.3% higher unit volumes; fiscal 2011 second quarter earnings before interest and taxes (EBIT) were $35.0 million compared to EBIT of $15.9 million in the fiscal 2010 second quarter; net income in the current year period was $18.0 million or $0.22 per diluted share as compared to the prior year period net loss of $8.0 million or ($0.11) per share; and adjusted net income for the fiscal 2011 second quarter was $13.9 million or $0.17 per share as compared to adjusted net income of $3.8 million or $0.05 per share in the fiscal 2010 comparative period.
Jim Bolch, president and chief executive officer said, “I am pleased to report improved gross profit, lower operating expenses and higher unit volumes in our second quarter results. We expect continued improvement in the second half of our fiscal year as global markets strengthen, reflecting increased demand in substantially all channels.”

Fiscal 2011 second quarter consolidated net sales were $668.0 million as compared to net sales of $631.8 million in the fiscal 2010 second quarter. Net sales in the fiscal 2011 period were positively impacted by price increases of $45.6 million resulting from lead escalator agreements and overall higher unit volumes of $20.8 million. These increases were partially offset by the negative impact of foreign currency translation of ($30.2 million). The increase in unit sales over the fiscal 2010 second quarter is driven by increased aftermarket sales in Transportation Europe and Rest of World, and overall increased sales in the global Motive Power and Network Power channels.
Consolidated net income for the fiscal 2011 second quarter was $18.0 million, or $0.22 per diluted share, compared to a net loss for the fiscal 2010 second quarter of $8.0 million or ($0.11) per share. The results for the fiscal 2011 second quarter were primarily impacted by the following items:
Restructuring and related asset impairment charges of $2.8 million or ($0.03) per share ($5.3 million pre-tax) compared to $10.4 million or ($0.14) per share ($11.2 million pre-tax) in the second quarter of the prior fiscal year.
Currency remeasurement gain in the amount of $4.3 million or $0.05 per share ($9.6 million pre-tax), compared to a gain of $4.2 million or $0.06 per share ($7.6 million pre-tax) in the fiscal 2010 second quarter.
The tax provision was positively impacted by $3.1 million or $0.04 per share due to valuation allowance decreases compared to the negative impact of valuation allowance increases of $5.8 million or ($0.08) per share in the fiscal 2010 second quarter.
Excluding the impact of the above described items, adjusted net income for the fiscal 2011 second quarter was $13.9 million or $0.17 per share. This compares with adjusted net income for the comparable prior year period of $3.8 million or $0.05 per share. A reconciliation of net income or loss and net income or loss per share to adjusted net income or loss and adjusted net income or loss per share is provided as an attachment to this release.
Consolidated Adjusted EBITDA for the fiscal 2011 second quarter increased approximately 18% to $53.7 million from $45.6 million in the prior fiscal year second quarter. Gross profit increased approximately 5.3% to $136.7 million compared to $129.9 million in the prior fiscal year second quarter. Fiscal 2011 second quarter EBIT more than doubled to $35.0 million from $15.9 million in the prior fiscal year second quarter on higher gross profit, lower operating expenses and reduced restructuring charges.
Selling, general and administrative expenses for the fiscal 2011 second quarter decreased approximately 4.5% to $105.2 million versus the comparable prior year period of $110.2 million. Approximately $3.4 million of the decrease resulted from favourable foreign currency translation, with the remainder attributable to lower sales commissions, head count reductions and the Company’s continued focus on spending controls.

Net sales for the first six months of fiscal 2011 aggregated $1.31 billion as compared with $1.22 billion for the prior fiscal year period, an increase of approximately 7%. Net sales in the fiscal 2011 period were positively impacted by price increases estimated at $102.5 million due to 15.5% higher average lead prices period over period and overall higher unit volumes, partially offset by unfavourable foreign currency translation of ($44.7 million).
The company reported net income for the six months ended September 30, 2010 of $8.9 million or $0.11 per diluted share as compared to a net loss of $62.0 million or ($0.82) per share in the six months ended September 30, 2009. The improvement in year-to-date net income is driven by significantly lower restructuring and impairment charges, higher gross profit, lower operating expenses and a shift from a tax provision in fiscal 2010 to a net tax benefit in the fiscal 2011 period. Adjusted net income for the six months ended September 30, 2010 was $17.6 million or $0.22 per share. This compares to an adjusted net loss of $7.2 million or ($0.09) per share for the prior year six month period.
Adjusted EBITDA for the six months ended September 30, 2010 aggregated $95.3 million versus $68.8 million in the comparable prior year period. Consolidated EBIT for the first six months of fiscal 2011 amounted to $35.2 million versus an EBIT loss of $18.5 million in the comparable fiscal 2010 period. Lower restructuring costs and higher gross profit were the major drivers for the improvement.
As of September 30, 2010, the company had cash and cash equivalents of $77.4 million and $126.6 million availability under its revolving bank credit facility. This compares to cash and cash equivalents of $89.6 million and $124.6 million availability under the revolving bank credit facility at March 31, 2010. The Company used $3.4 million free cash flow for the six months ended September 30, 2010 as compared to a free cash flow generation of $28.2 million for the same period of fiscal 2010.

Net sales of the company’s combined Transportation segments in the fiscal 2011 second quarter were $432.4 million as compared to $407.2 million in the same period of fiscal 2010. Net sales were negatively impacted by unfavorable foreign currency translation of ($17.8 million). Net sales increased approximately 10.6% excluding the unfavorable foreign currency translation. Price increases resulting from lead escalator agreements positively impacted total Transportation net sales by $30.6 million in the fiscal 2011 second quarter as compared to the same period of fiscal 2010.
Transportation Americas fiscal 2011 second quarter unit volume was 3% higher in the OE channel and approximately 4% lower in the Aftermarket channel versus the prior year second quarter. Aftermarket unit volumes for Transportation Europe & ROW were 14% higher in the fiscal 2011 second quarter as compared to the prior fiscal year period while the OE channel declined approximately 8% in the comparative period. The decline in the OE channel is primarily due to the elimination of vehicle scrapping programs in many European countries. Bolch commented, “Despite the elimination of scrapping programs in Europe, the automobile manufacturers appear to have underestimated consumer demand for micro-hybrid vehicles requiring AGM batteries. As a result, we will be increasing capacity for AGM batteries in order to meet this increasing demand.”
Net sales for the first six months of fiscal 2011 were $840.9 million as compared to $784.5 million for the same period of fiscal 2010 primarily due to higher unit volumes, price increases due to higher average lead prices, partially offset by unfavourable currency translation.
Adjusted EBITDA for the combined Transportation segments was $43.7 million in the fiscal 2011 second quarter versus $40.
4 million in the comparable fiscal 2010 period. Adjusted EBITDA for the Transportation segments increased in the current fiscal quarter from the prior year period primarily due to savings achieved from restructuring initiatives, principally in Europe. Adjusted EBITDA for the first six months of fiscal 2011 was $74.4 million versus $56.5 million for the comparable fiscal 2010 period.

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