WEST KINGSTON, R.I., April 27 /PRNewswire-FirstCall/ -- American Power
Conversion Corporation (Nasdaq: APCC) (APC) today reported financial
results for the first quarter ended March 26, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20031003/NEAPCLOGO )
Revenue for the first quarter 2006 was $478.8 million, up 17 percent
from $408.0 million in the first quarter 2005. On a constant currency
basis, total company revenue in the first quarter increased 20 percent
year-over-year. Net income for the first quarter 2006 was $14.5 million or
$0.07 per diluted share, down 60 percent from $36.0 million or $0.18 per
diluted share in the first quarter 2005.
First Quarter 2006 Financial Summary
(In millions, except per share amounts)
YOY
Q1 2006 Q1 2005 Change
Revenue $478.8 $408.0 17 %
Operating Income $13.3 $43.6 (70)%
Net Income $14.5 $36.0 (60)%
Diluted EPS $0.07 $0.18 (60)%
"We are strategically investing in the areas where APC solutions are
delivering substantial benefits to IT and data center managers,
particularly related to the power, thermal and network-critical physical
infrastructure (NCPI) demands of server and data center implementation. Our
strong top line performance illustrates that our solutions and message are
on target with the challenges customers are addressing while implementing
new data centers in an always on, high-density world," said Rodger B.
Dowdell, Jr., APC's president and chief executive officer. "The end result
of these investments was very strong performance across our principal
operating segments and solid growth in all major geographies as the company
extended its quarterly double-digit year-over-year revenue growth streak to
eleven consecutive quarters. Additionally, InfraStruXure(R) sales continue
to provide a growth engine for the company, increasing more than 50 percent
year-over-year. However, net income in the quarter declined 60 percent
year-over-year primarily due to a year-over-year decrease in gross margin
of 7.3 percentage points and a 20 percent increase in operating expenses."
At 33 percent, gross margin in the first quarter stabilized and
increased slightly from the fourth quarter, while year-over-year gross
margin declined approximately 7.3 percentage points. Nearly 3 percentage
points of the year-over-year decline are associated with price actions and
the change in currency. Additionally, 4 percentage points are attributable
to higher operational costs, primarily freight and logistics costs
resulting from production shifts to lower cost locations and distribution
center transitions.
"Despite the typical seasonal sequential decline in revenue and volume,
gross margins stabilized and even increased slightly from the fourth
quarter. Operationally, the work on our supply chain and its supporting
processes is ongoing, delivering early customer benefits in our order
fulfillment process and the reduction of extraordinary airfreight. As we
develop into a lean, customer-centric, ambidextrous organization, there is
more work ahead to reach optimal efficiencies in our processes and our
freight and logistics costs remain at higher levels than normal," continued
Dowdell. "Additionally, we were pleased to return nearly $90 million to
shareholders during the quarter, including approximately $70 million on the
repurchase of 3.4 million shares in addition to our regular cash dividend
program."
Segment Review
For the first quarter 2006, revenue in APC's Large Systems segment,
consisting primarily of 3-phase uninterruptible power supplies (UPSs), APC
Global Services, precision cooling and ancillary products for data centers,
facilities and communication applications, increased 33 percent
year-over-year to $107.1 million.
The Small Systems segment, which provides power protection, UPS and
management products for the PC, server and networking markets, recorded
first quarter revenue of $350.9 million, an increase of 14 percent
year-over-year.
Business Outlook
Dowdell continued, "Perhaps now more than ever, as companies deal with
the compaction of IT equipment, growth of high-density applications and
requirements for 24 x 7 availability, APC's suite of software, services and
solutions is aligned with some of the most significant challenges facing
data center and IT managers. In fact, research indicates that the cost of
powering and cooling IT applications is increasing dramatically, elevating
the importance of NCPI to a priority level. With a technological head start
on the competition, we must remain invested in furthering our technology,
market and sales development to effectively capitalize on this new reality.
At the same time, operational initiatives to support our evolution to a
lean, customer-centric, ambidextrous organization are ongoing. These
initiatives are essential to meet our customers' global needs for on demand
data center requirements while preserving our leadership position in the
desktop and network markets."
Non-GAAP Results
The Company believes that the non-GAAP results, i.e., results excluding
certain charges or one-time events, are useful for an understanding of its
ongoing operations. Non-GAAP results discussed in this announcement include
net revenue in constant currency. The Company cautions that non-GAAP
results are not a substitute for GAAP results.
Conference Call and Webcast
In conjunction with the first quarter 2006 earnings announcement, APC
management is hosting a conference call to discuss the Company's results.
This conference call will be held today, April 27, at 5:00 p.m. Eastern
time and will be available live and archived, in its entirety, to the
public via the Company's Web site at http://investor.apcc.com or live by
dialing 913-981- 5592. A replay will be accessible via telephone at
approximately 8:00 p.m. on April 27 by dialing 719-457-0820 and entering
the access code 3264725 and will continue through May 4 at midnight Eastern
Time.
Safe Harbor Provision
This press release contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. All
statements in this press release that do not describe historical facts,
such as statements concerning the Company's future plans or prospects and
those contained in the "Business Outlook" section of the press release, are
forward- looking statements. All forward-looking statements are not
guarantees and are subject to risks and uncertainties that could cause
actual results to differ from those projected. The factors that could cause
actual results to differ materially include the following: the Company's
ability to improve the execution of its operations processes and eliminate
operational waste and excess expense; depending on market circumstances,
the Company may not complete its previously approved stock repurchase
program; the impact of increasing competition which could adversely affect
the Company's revenues and profitability; the impact of foreign currency
exchange rate fluctuations; the impact on demand, component availability
and pricing, and logistics, and the disruption of manufacturing operations
that result from labor disputes, war, acts of terrorism or political
instability; ramp up, expansion, transfer and rationalization of global
manufacturing capacity; the potential impact of complying with changing
environmental regulations; impact on order management and fulfillment,
financial reporting and supply chain management processes as a result of
the Company's reliance on a variety of computer systems; the discovery of a
latent defect in any of the Company's products; the Company's ability to
effectively align operating expenses and production capacity with the
current demand environment; general worldwide economic conditions, and, in
particular, the possibility that the PC and related markets decline; growth
rates in the power protection industry and related industries; product mix
changes and the potential negative impact on gross margins from such
changes; changes in the seasonality of demand patterns; inventory risks due
to shifts in market demand; component constraints, shortages, pricing and
quality; risk of nonpayment of accounts receivable; the uncertainty of the
litigation process including risk of an unexpected, unfavorable result of
current or future litigation; and the risks described from time to time in
the Company's filings with the Securities and Exchange Commission.
About American Power Conversion
Founded in 1981, American Power Conversion (Nasdaq: APCC) (APC) is a
leading provider of global, end-to-end solutions for real-time
infrastructure. APC's comprehensive products and services for home and
corporate environments improve the availability, manageability and
performance of sensitive electronic, network, communication and industrial
equipment of all sizes. APC offers a wide variety of products for
network-critical physical infrastructure including InfraStruXure(R), its
revolutionary architecture for on-demand data centers, as well as physical
threat management products through the company's NetBotz(R) division. These
products and services help companies increase the availability and
reliability of their IT systems. Headquartered in West Kingston, Rhode
Island, APC reported sales of $2.0 billion for the year ended December 31,
2005, and is a Fortune 1000, Nasdaq 100 and S&P 500 Company. All trademarks
are the property of their owners. Additional information about APC and its
global end-to-end solutions is available at http://www.apc.com or by
calling 800-877-4080.
For more information contact:
Investors:
Richard Thompson, chief financial officer, 401-789-5735, ext. 2325,
Richard.thompson@apcc.com
Debbie Hancock, director, investor relations, 401-789-5735, ext. 2994,
Debbie.hancock@apcc.com
Media:
Chet Lasell, APC director, public relations-North America, 800-788-2208
ext. 2693, chet.lasell@apcc.com
Supplemental Financial Information for American Power Conversion Corporation
First Quarter 2006 Financial Summary
(In millions, except per share amounts)
YOY
Q1 2006 Q1 2005 Change
Revenue $478.8 $408.0 17 %
Operating Income $13.3 $43.6 (70)%
Net Income $14.5 $36.0 (60)%
Diluted EPS $0.07 $0.18 (60)%
First Quarter Segment Summary
YOY
Q1 2006 Q1 2005 Change
Revenue (In millions)
Small Systems $350.9 $307.5 14 %
% of revenue 74 % 76 %
Large Systems $107.1 $80.7 33 %
% of revenue 23 % 20 %
Other $17.5 $17.3 1 %
% of revenue 4 % 4 %
Shipping and
Handling $3.3 $2.5
Net Sales $478.8 $408.0 17 %
YOY Basis
Q1 2006 Q1 2005 Point Change
Gross Margin Percentage
Small Systems 41.3 % 47.7 % (640)
Large Systems 16.2 % 21.6 % (540)
Other 54.0 % 59.2 % (520)
First Quarter Geographic Summary
YOY
Q1 2006 Q1 2005 Change
Revenue (In millions)
Americas $247.3 $204.2 21 %
% of revenue 52 % 50 %
EMEA $137.0 $116.7 17 %
% of revenue 29 % 29 %
Asia $94.5 $87.1 9 %
% of revenue 20 % 21 %
Net Sales $478.8 $408.0 17 %
Note: Totals may not add to 100% due to rounding
YOY = year-over-year
AMERICAN POWER CONVERSION CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
IN THOUSANDS
(UNAUDITED)
MARCH 26, DECEMBER 31,
2006 2005
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $224,794 $262,414
SHORT TERM INVESTMENTS 425,574 511,181
ACCOUNTS RECEIVABLE, NET 366,553 374,694
INVENTORIES 589,563 541,823
PREPAID EXPENSES AND
OTHER CURRENT ASSETS 60,462 59,181
DEFERRED INCOME TAXES 63,808 60,139
TOTAL CURRENT ASSETS 1,730,754 1,809,432
PROPERTY, PLANT & EQUIPMENT 475,866 459,736
LESS: ACCUMULATED DEPRECIATION
AND AMORTIZATION 303,572 293,692
NET PROPERTY, PLANT & EQUIPMENT 172,294 166,044
LONG TERM INVESTMENTS 587 562
GOODWILL 17,951 15,781
OTHER INTANGIBLES, NET 32,810 36,115
DEFERRED INCOME TAXES 50,789 42,427
OTHER ASSETS 4,891 5,101
TOTAL ASSETS $2,010,076 $2,075,462
CURRENT LIABILITIES
ACCOUNTS PAYABLE $173,555 $176,345
ACCRUED EXPENSES 206,270 204,702
INCOME TAXES PAYABLE 44,387 39,755
TOTAL CURRENT LIABILITIES 424,212 420,802
DEFERRED TAX LIABILITY 11,380 14,911
TOTAL LIABILITIES 435,592 435,713
SHAREHOLDERS' EQUITY
COMMON STOCK 1,927 1,958
ADDITIONAL PAID-IN CAPITAL 71,493 131,862
RETAINED EARNINGS 1,499,060 1,504,093
ACCUMULATED OTHER
COMPREHENSIVE INCOME 2,004 1,836
TOTAL SHAREHOLDERS' EQUITY 1,574,484 1,639,749
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,010,076 $2,075,462
Note: The data reported above are based on an unaudited balance sheet,
but include all adjustments that the Company considers necessary for a fair
presentation of financial condition for this period.
AMERICAN POWER CONVERSION CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 26, 2006 MARCH 27, 2005
NET SALES $478,793 $408,003
COST OF GOODS SOLD 321,005 243,552
GROSS PROFIT 157,788 164,451
MARKETING, SELLING, GENERAL
AND ADMINISTRATIVE 121,984 100,579
RESEARCH AND DEVELOPMENT 22,535 20,239
TOTAL OPERATING EXPENSES 144,519 120,818
OPERATING INCOME 13,269 43,633
OTHER INCOME, NET 5,434 3,794
EARNINGS BEFORE INCOME TAXES 18,703 47,427
INCOME TAXES 4,208 11,382
NET INCOME $14,495 $36,045
DILUTED EARNINGS PER SHARE $0.07 $0.18
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 197,305 198,258
Note: The data reported above are based on unaudited statements of
income, but include all adjustments that the Company considers necessary
for a fair presentation of results for these periods.
SOURCE American Power Conversion
 back to top
Related links:
http://www.apc.com/
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20031003/NEAPCLOGO
AP Archive: http://photoarchive.ap.org PRN Photo Desk
photodesk@prnewswire.com
http://www.prnewswire.com/comp/046187.html /
CONTACT:
Richard Thompson, chief financial officer,
+1-401-789-5735, ext. 2325, Richard.thompson@apcc.com, or Debbie
Hancock, director, investor relations, +1-401-789-5735, ext.
2994, Debbie.hancock@apcc.com, or Chet Lasell, director, public
relations-North America, +1-800-788-2208 ext. 2693,
chet.lasell@apcc.com, all of American Power Conversion
|
