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Company News:
Xantrex Technology Inc. Reports Fourth Quarter and Year End 2006 Results
VANCOUVER, BC, February 27, 2007 — Xantrex Technology Inc. (TSX:XTX) reported financial results for the fourth quarter and year ended December 31, 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 fourth quarter of 2006, revenue rose 18 percent to $42.6 million from $36.0 million for the year-ago quarter. Net income was $1.1 million, or $0.04 per diluted share, compared with a loss of $276,000 or $0.01 per diluted share, a year ago. For the year 2006, revenue was $158.1 million, compared with $139.2 million for the year-ago period, an increase of 14 percent. Net income was $5.5 million, or $0.19 per share, compared with $341,000, or $0.01 per diluted share. Cash flow from operations was $14.5M compared with $2.3M used in the prior year. Mr. Mossadiq S. Umedaly, Chairman of Xantrex, commented, "Strong growth in sales of Renewable Power products in 2006 enabled Xantrex to post significantly higher revenue, and net earnings compared with a break even a year ago. We increased sales of Renewable Power products by 87% by using our ability to design and deliver quality products to win major contracts from a number of key Renewable Power customers including Clipper, GE Energy, ProSol, Solon, SunPower, and SunEdison. Also, near the end of the year we held discussions and negotiations which ultimately led to our agreement, announced on January 29, 2007 to acquire Elgar Electronics in a transaction expected to close in March. This acquisition will position us as a market leader in the Programmable Power business and provide synergies, technology and experienced management that will benefit all areas of our business." John Wallace, Xantrex's CEO stated, "The year 2006 was a mix of achievements and challenges. Xantrex's growth and profitability improved but were restrained on both the revenue and expense sides. On the revenue side, offsetting the significant growth in Renewable Power, we saw Portable Power revenue decrease significantly due to lower sales in Canada. There were delays in new product introductions and securing marketing channels in the United States to reposition the business from automotive after-market to consumer electronics. To help accelerate this change, Xantrex has partnered with a prestigious consumer goods company to use their strong brand for our Portable Power products. We believe this alliance opens exciting new possibilities for rebuilding our Portable Power business. In other markets, Mobile Power revenue in 2006 was slightly lower due to industry declines in the RV and Marine business. Programmable Power revenue was up 6 percent, for the year, in line with the growth of the market.” With regards to the expense side, Mr. Wallace continued, "While gross margin grew slightly in 2006, we did experience significant commodity cost increases which we are working to mitigate by redesigning affected products. Our operating expenses were contained to a growth of only $1 million or 2 percent despite significant increases in R&D for Renewable Power, which we view as an investment in the long term growth of our business, a negative foreign exchange impact of $2 million due to unfavorable Canadian/US dollar exchange rates and higher compensation expenses.” Mr. Wallace concluded, "Although the pending acquisition of Elgar Electronics will significantly enhance Xantrex's financial and operational outlook, we will provide comments at this time on the outlook for Xantrex without Elgar since the transaction is not expected to close until March. For 2007, we expect increased overall revenue consistent with the growth we experienced in 2006 and better profitability, as we continue to focus on realizing our potential for long-term growth, and improving profitability and cash flow, with the second half of the year stronger than the first half. We plan to comment on the consolidated outlook, after the completion of the Elgar acquisition, at our next quarterly earnings report."
Note: On December 31, 2006, the Bank of Canada’s exchange rate for one Canadian dollar was $0.858 compared with $0.860 on December 30, 2005. The complete fourth quarter and year-end 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 Conference Call About Xantrex For further information, please contact: | ||
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