Product category:
DC/DC Convertors
News Release from: Emerson Network Power - Embedded Power
Edited by the Electronicstalk Editorial
Team on 11 November 2005
Artesyn reports third-quarter 2005
results
Artesyn Technologies has reported its financial results for the third quarter ended 30th September 2005.
Artesyn Technologies has reported its financial results for the third quarter ended 30th September 2005 Sales for the third quarter of 2005 were $102.0 million compared with $107.0 million for the corresponding quarter in 2004
This article was originally published on Electronicstalk on 4 Feb 2000 at 8.00am (UK)
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Net income for the third quarter of 2005 was $4.0 million, or $0.09 per share, compared with net income of $3.6 million, or $0.09 per share in the third quarter of 2004.
Included in net income for the third quarter of 2005 was approximately $0.4 million, or $0.01 per share, of restructuring charges associated with the closure of the company's manufacturing facility in Hungary.
Additionally, the company realised a net tax benefit of $1.6 million, or $0.03 per share, from the elimination of previously established tax contingencies that are no longer required.
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Total orders received during the quarter were $106.1 million, yielding a book-to-bill ratio of 1.04.
Backlog at the end of the quarter was $81.8 million with approximately 92% shippable during the fourth quarter.
During the third quarter, Artesyn had 23 major design wins that the company estimates will realise approximately $184 million in lifetime project revenues.
Over the past 12 months, the company had a record 99 major design wins and estimates lifetime revenues of approximately $1.1 billion to be realised in the next two to four years.
Sales for the first nine months of 2005 were $312.5 million compared with $309.0 million for the same period last year.
Net income for the first nine months of 2005 was $6.0 million, or $0.15 per share, compared with net income of $8.6 million, or $0.22 per share for the same period in 2004.
Included in net income for the first nine months of the year are restructuring charges of $3.7 million, or $0.08 per share net of tax.
Commenting on the quarter, Joseph O'Donnell, Artesyn's Chief Executive Officer, stated: "While sales of rectifier and amplifier products contributed to 33% sales growth in our wireless infrastructure division during the quarter, sales were pressured from end of life server programs and certain 3G orders not materialising as expected".
"Replacement programs, currently in design, for the end of life programs did not overlap to offset the decline in revenue this quarter".
"We expect these programs to begin production in the first quarter of 2006".
"Additionally, we continue to expect 3G orders for embedded systems that have been pushed back since the second quarter to materialise in the beginning of next year".
"Gross margins of 24.2% for the quarter were also pressured from lower sales in the embedded systems segment, as well as from the recent action to close the facility in Hungary and outsource European manufacturing".
"The closure of the factory and transition to outsourcing should be complete by the end of the year", added O'Donnell.
Third quarter sales for the Power Conversion segment decreased 2% to $85.2 million compared with $86.7 million for the third quarter of 2004.
The decline in sales resulted primarily from older programs in the server division going end of life during the quarter.
Gross margins in this segment were also negatively impacted from pricing pressures with a new large wireless infrastructure customer during the quarter.
The profitability from this customer will increase significantly as production shifts from Hungary.
Operating income for Power Conversion was $1.6 million for the third quarter compared with $1.5 million for the same period last year.
The reduction of executive incentive awards resulting from weaker than anticipated financial performance contributed to improved profitability this quarter.
However, operating income in the third quarter of 2005 also included restructuring charges of approximately $0.4 million related to closing the Company's manufacturing facility in Hungary.
Third quarter sales for the Embedded Systems segment decreased 18% to $16.7 million compared with $20.3 million for the third quarter of 2004.
Similar to the second quarter, the decline in sales was primarily due to a large wireless infrastructure customer experiencing delays in 3G deployments.
In addition to lower sales, a change in the product mix sold during the quarter reduced gross margins, resulting in operating income of $4.7 million for the third quarter compared with $6.8 million for the same period last year.
Sales for the fourth quarter are expected to increase sequentially from the third quarter.
The 3G delays and end of life programs discussed above are anticipated to impact sales for the remainder of the year, and the company now expects fourth quarter revenue to range between $108 million and $111 million.
Including estimated restructuring expenses of $1.0 million, and $1.2 million of operating inefficiencies, related to the closure of the manufacturing facility in Hungary, earnings per share for the fourth quarter should range between $0.07 and $0.09.
Based on the design wins over the last 12 months, we expect 2006 revenue to increase 15% to 20% from this year.
As previously announced, the company is working with Lehman Brothers to evaluate strategic alternatives for the company and that process continues.
The company will not have any further announcement on this subject unless and until a definitive agreement with another party is reached or the company chooses to terminate pursuing such an evaluation.
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