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Company News:
Xantrex Technology Inc. Reports Third Quarter 2006 Results
VANCOUVER, BC, October 31, 2006 — Xantrex Technology Inc. (TSX: XTX) reported financial results for the third quarter and nine months ended September 30, 2006. All currency amounts are reported in US dollars unless otherwise indicated, and financial results are reported in accordance with accounting principles generally accepted in Canada. For the third quarter of 2006, revenue rose 13.5 percent to $40.3 million from $35.5 million for the year-ago quarter. Net income was $1.5 million, or $0.05 per diluted share, compared with a loss of $349,000, or $0.01 per diluted share a year ago. For the first nine months of 2006, revenues were $115.5 million compared with $103.2 million for the year-ago period, an increase of 12 percent. Net income was $4.4 million, or $0.15 per diluted share, compared with $617,000, or $0.02 per diluted share. Cash flow from operations, which was negative for the third quarter in response to higher working capital requirements, remained positive $7.3 million for the nine months. Mr. Mossadiq S. Umedaly, Chairman of Xantrex, commented, "Xantrex's third quarter results continued the improved operating performance achieved in the 2006 second quarter, driven by strength in Renewable Power products and benefits from improvements in operational efficiency. The third and second quarters were operationally similar in many ways, and their bottom lines differed primarily because of a foreign exchange translation gain that added $0.03 per share to second quarter results.” John Wallace, Xantrex's CEO stated, "Compared with the year ago quarter, third quarter financial results have improved. Revenue has increased, led by Renewable Power, with a 91 percent growth from a year ago. Gross margin increased to 28.8 percent from 26.4 percent a year ago despite higher cost of commodity-based raw materials which amounted to approximately $650,000 this quarter. We are working to reduce the impact of these raw material cost increases by improving operating efficiencies, product redesigns, and selected price increases. Operating expenses fell in absolute terms, and decreased significantly as a percentage of revenues, despite the effects of a strong Canadian dollar as earlier protective currency hedges expired.” Mr. Wallace continued, “Within Renewable Power we achieved record sales in the North American solar market, where demand for our recently broadened line of GT series residential inverters was particularly strong. We also added and began shipping to several new solar customers in North America and Europe. In Europe we received several orders from Spain and Germany for commercial solar inverters which we expect to ship over the next six months. In wind products, our North American business is on track, and we are continuing to explore other global opportunities. Portable Power products revenues for the quarter were lower than a year ago, although higher than those in the second quarter. We continued to focus our Portable Power products and market channels on consumer electronics applications. During the quarter, we introduced three Portable Power products and received an order from a US-based home improvement retailer, its first major order for Xantrex powerpacks. We expect Portable Power product growth to resume as the up-market transition is completed beginning in the 2007 timeframe. Mobile Power revenues were lower reflecting continued weakness in Class A recreational vehicle OEM sales, attributed primarily to the high price of fuel. Finally, Programmable Power revenues for the quarter held fairly steady with those of a year ago but were lower than those of the unusually strong second quarter. Fluctuations we attribute to quarterly variability." Mr. Umedaly concluded, "Evidence for the sustainability of growth in renewable power continues to mount despite fluctuations in crude oil and gasoline prices. Solar and wind power address energy security, grid reliability, transmission availability, and energy environmental impact. In addition, long-term cost trends for these sources are falling rather than rising, as in the case of fossil fuels. Recent developments underscore these trends. A few days ago, the North American Electricity Reliability Council warned that reserve electricity capacity margins are projected to fall below minimum target levels in five major areas in the next two to three years, and, subsequently, in other areas. In September, a month after launching its 10-year, $2.9 billion program of solar energy incentives, California enacted a law that mandates reduced emissions of carbon dioxide and other greenhouse gases by 25% by 2020. If the extraordinarily well-attended Solar Power 2006 conference in San Jose, California was any measure, interest in solar energy in North America has reached a new and unprecedented level."
Note: On September 30, 2006, the Bank of Canada’s exchange rate for one Canadian dollar was $0.89 compared with $0.86 on September 30, 2005. The complete third quarter of 2006 Management’s Discussion and Analysis and Financial Statements for Xantrex Technology Inc. are available on the Xantrex web site www.xantrex.com/reports.asp or from the SEDAR web site www.sedar.com. Cautionary Note on Forward-looking Information
About Xantrex For further information, please contact Donna Clark | ||
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