EX-99.1 2 a5318982ex991.htm TECHNITROL, INC. EXHIBIT 99.1 Technitrol, Inc. Exhibit 99.1
     
FOR IMMEDIATE RELEASE
Contact: David Stakun
January 25, 2007
(215) 942-8428
          

Technitrol Reports Q406 Results

PHILADELPHIA -- Technitrol, Inc. (NYSE: TNL) reported consolidated revenues of $236.1 million for its fourth fiscal quarter ended December 29, 2006. Revenues were $257.7 million in the previous quarter and $184.5 million in the fourth quarter of 2005.
According to U.S. Generally Accepted Accounting Principles (GAAP), fourth-quarter net earnings from continuing operations were $14.4 million, or $0.35 per diluted share, compared to $15.3 million, or $0.38 per diluted share, in the prior quarter and $7.8 million, or $0.19 per diluted share, in the fourth quarter of 2005 including the cumulative effect of an accounting change. Fourth-quarter 2006 earnings included after-tax severance and asset-impairment expenses totaling approximately $2.1 million ($0.05 per share). Excluding these items, earnings per diluted share in the fourth quarter were $0.40 compared to $0.49 in the prior quarter and $0.29 in the fourth quarter of 2005, excluding similar charges. (See the attached "Non-GAAP Measures" table that reconciles net earnings per diluted share excluding these items to GAAP net earnings per diluted share.)
 
Earnings before interest, taxes, depreciation and amortization (EBITDA, a non-GAAP measure reconciled with GAAP net earnings in the attached "Non-GAAP Measures" table) were $26.5 million in the fourth quarter of 2006, compared with $32.8 million in the previous quarter and $21.1 million in the fourth quarter of 2005.

--more--

Technitrol Reports Q406 Results - two
 
Net cash at December 29, 2006 was $28.0 million (cash and equivalents of $87.2 million less debt of $59.2 million), compared with $10.5 million (cash and equivalents of $68.4 million less debt of $57.9 million) at the end of the previous quarter. Technitrol's capital spending in the fourth quarter of 2006 was approximately $8.9 million.
 
For fiscal 2006, Technitrol’s revenues from continuing operations were $954.1 million, compared with $616.4 million in fiscal 2005. GAAP earnings from continuing operations were $56.9 million, or $1.40 per diluted share, for the year, compared with a loss of ($24.4 million), or ($0.61) per share, in fiscal 2005. Excluding severance and asset impairment expenses and other unusual items in all periods, earnings per share in fiscal 2006 were $1.69, compared with $0.72 a year earlier.
 
Pulse
 
Pulse designs and manufactures a wide variety of passive electronic components and modules, electronic connector products, antennas for wireless communication / information devices, and a variety of coils for automotive uses. Revenues for the fourth quarter were $154.0 million, compared with $174.0 million in the prior quarter and $121.0 million in the fourth quarter of 2005. The sequential-quarter revenue decline reflects heavy pre-holiday consumer electronics production which favored the third quarter to the detriment of the fourth, a temporary antenna market share gain in the third quarter not carried into the fourth quarter and a broad fourth-quarter overall electronics slowdown which has been widely reported across the electronics industry. This market entrenchment is expected to continue into the first half of 2007.
 
Unsatisfactory fourth-quarter operating margin reflected operational inefficiencies resulting from decreased production volumes, particularly in the antenna and automotive divisions, where shipments sharply declined in December, as well as the effect of a full quarter of wage increases in China. In addition, Pulse’s automotive division incurred significant expenses in the quarter related to continued integration and cost elimination efforts, which are expected to be resolved by the end of the first quarter.

--more--

Technitrol Reports Q406 Results - three
 
GAAP operating profit in the fourth quarter was $10.9 million at Pulse, compared with $15.3 million in the third quarter and $9.6 million in the fourth quarter of 2005. Excluding pre-tax severance and asset-impairment expenses of $2.2 million, related primarily to restructuring of European operations and a loss on the sale of a building, and a pre-tax charge of $0.1 million of accelerated depreciation, fourth-quarter 2006 operating profit was approximately $13.2 million, compared with $20.4 million in the third quarter and $12.4 million in the fourth quarter of 2005, excluding similar charges. (See "Non-GAAP Measures" table).
 
AMI Doduco
 
AMI Doduco manufactures a full range of electrical contacts, contact materials and contact assemblies. Fourth-quarter shipments reflected sustained strength in electrical contact markets, particularly in Europe, which reported an especially strong December despite the effect of numerous holidays on industrial activity. Revenues in the fourth quarter were $82.1 million, compared with $83.7 million in the previous quarter and $63.5 million in the fourth quarter of 2005. In addition to favorable market demand trends and share gains (particularly in Europe and Asia) significantly higher pass-through costs for silver and other metals continued to drive year-over-year revenue growth.
AMI Doduco's fourth-quarter GAAP operating profit from continuing operations, including $0.2 million in pre-tax severance and asset-impairment expenses related to the recent closure of a facility in France, was $6.1 million, compared with $4.6 million in the previous quarter and $1.2 million in the fourth quarter of 2005. Excluding severance and asset-impairment expense in all periods, fourth-quarter 2006 operating profit was $6.3 million, compared with $4.9 million a quarter ago and $2.3 million in the fourth quarter of 2005. (See "Non-GAAP Measures" table). AMI Doduco’s operating margin in the most recent quarter reflects the results of earlier restructuring and expense reduction efforts, the ongoing phase-in of lean manufacturing processes, price increases and good production capacity utilization.

--more--

Technitrol Reports Q406 Results - four
 
Outlook
 
Based on customer forecasts, publicly available market and peer data, internal analysis and normal seasonal trends, Technitrol expects first-quarter 2007 consolidated revenues to be in the range of $233 million to $236 million, assuming a continuation of current market conditions, including near-term sluggishness in the electronics supply chain. Excluding severance and asset-impairment expense, if any, first-quarter consolidated operating profit is expected to be between $16 million and $17 million, and the effective tax rate approximately 20%. As is normally the case, Technitrol expects the first quarter to be the weakest of the year. Improving overall market fundamentals and the impact of integration and cost elimination efforts at Pulse’s automotive division will drive continuing progressive profit improvement in the second through fourth quarters.
 
The company plans to provide no further outlook information until results are reported for the first quarter of 2007. In the absence of public announcements from Technitrol, changes in forecasts, positive or negative, from equity analysts are unofficial and should be considered with due caution.

Cautionary Note
 
Statements in the above report are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. Actual results may differ materially due to the risk factors listed below as well as others listed from time to time in Technitrol’s SEC reports including, but not limited to, those discussed in the company’s 10-Q report for the quarter ended September 29, 2006 in Item 2 under the caption “Factors That May Affect Our Future Results (Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995).”

These risk factors include, but are not limited to, the following:
 
·
Cyclical changes in the markets we serve could result in a significant decrease in demand for our products and reduce our profitability.
   
·
Reduced prices for our products may adversely affect our profit margins if we are unable to reduce our costs of production.

--more--

Technitrol Reports Q406 Results - five
 
 ·
An inability to adequately respond to changes in technology or customer needs may decrease our sales.
   
 ·
If our inventories become obsolete, our future performance and operating results will be adversely affected.
   
 ·
An inability to capitalize on our recent or future acquisitions may adversely affect our business.
   
 ·
Integration of acquisitions into the acquiring segment may limit the ability of investors to track the performance of individual acquisitions and to analyze trends in our operating results.
   
 ·
An inability to identify additional acquisition opportunities may slow our future growth.
   
 ·
If our customers terminate their existing agreements, or do not enter into new agreements or submit additional purchase orders for our products, our business will suffer.
   
 ·
If we do not effectively manage our business in the face of fluctuations in the size of our organization, our business may be disrupted.
   
 ·
Uncertainty in demand for our products may result in increased costs of production, an inability to service our customers, or higher inventory levels which may adversely affect our results of operations and financial condition.
   
 ·
A decrease in availability or increase in cost of our key raw materials could adversely affect our profit margins.
   
 ·
Costs associated with precious metals and base metals may not be recoverable.
   
 ·
Competition may result in lower prices for our products and reduced sales.
   
 ·
Fluctuations in foreign currency exchange rates may adversely affect our operating results.
   
 ·
Our international operations subject us to the risks of unfavorable political, regulatory, labor and tax conditions in other countries.
 
--more--

Technitrol Reports Q406 Results - six
 
 ·
Shifting our operations between regions may entail considerable expense.
   
 ·
Liquidity requirements could necessitate movements of existing cash balances which may be subject to restrictions or cause unfavorable tax and earnings consequences.
   
 ·
Losing the services of our executive officers or our other highly qualified and experienced employees could adversely affect our business.
   
 ·
Public health epidemics (such as flu strains or severe acute respiratory syndrome) or other natural disasters (such as earthquakes or fires) may disrupt operations in affected regions and affect operating results.
   
 ·
The unavailability of insurance against certain business risks may adversely affect our future operating results.
   
 ·
Environmental liability and compliance obligations may affect our operations and results.
 
Based in Philadelphia, Technitrol is a worldwide producer of electronic components, electrical contacts and assemblies and other precision-engineered parts and materials for manufacturers in the data networking, broadband/Internet access, consumer electronics, telecommunications, military/aerospace, automotive and electrical equipment industries. For more information, visit Technitrol’s Web site at http://www.technitrol.com.

Investors: Technitrol’s quarterly conference call will take place on Thursday, January 25, 2007 at 5:00 p.m. Eastern Time. The dial-in number is (412) 858-4600. Also, the call will be broadcast live over the Internet. Visit www.technitrol.com. On-demand Internet and telephone replay will be available beginning at 7:00 p.m. on January 25, 2007 and concluding at midnight, February 1, 2007. For telephone replay, dial (412) 317-0088 and enter access code 374010#. For Internet replay, use the link from our home page mentioned above.

--more--

Technitrol Reports Q406 Results - seven

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     
(in thousands, except per-share amounts)
          
   
Quarter Ended
 
Twelve Months Ended
 
   
12/29/06
 
12/30/2005
 
12/29/06
 
12/30/2005
 
                   
Net sales
 
$
236,082
 
$
184,465
 
$
954,096
 
$
616,378
 
Cost of goods sold
   
186,218
   
142,136
   
735,006
   
473,535
 
Gross profit
   
49,864
   
42,329
   
219,090
   
142,843
 
Selling, general and administrative expenses
   
30,452
   
29,109
   
138,971
   
106,797
 
Severance and asset-impairment expenses
   
2,414
   
2,395
   
8,829
   
53,036
 
Operating profit (loss)
   
16,998
   
10,825
   
71,290
   
(16,990
)
                           
Interest income (expense), net
   
(782
)
 
194
   
(5,328
)
 
1,352
 
Other income (expense), net
   
1,703
   
(596
)
 
4,124
   
(1,690
)
Net earnings (loss) from continuing operations before income taxes, minority interest and cumulative effect of accounting changes
   
17,919
   
10,423
   
70,086
   
(17,328
)
Income taxes
   
3,312
   
2,136
   
11,680
   
6,161
 
Net earnings (loss) from continuing operations before minority interest and cumulative effect of accounting changes
   
14,607
   
8,287
   
58,406
   
(23,489
)
Minority interest, net of income taxes
   
(189
)
 
106
   
(1,511
)
 
(939
)
Net earnings (loss) from continuing operations before cumulative effect of accounting changes
   
14,418
   
8,393
   
56,895
   
(24,428
)
Cumulative effect of accounting changes, net of income taxes
   
0
   
(564
)
 
75
   
(564
)
Net income (loss) from discontinued operations, net of income taxes
   
354
   
(77
)
 
233
   
(472
)
Net earnings (loss)
   
14,772
   
7,752
   
57,203
   
(25,464
)
                           
Basic earnings (loss) per share from continuing operations before cumulative effect of accounting changes
   
0.35
   
0.20
   
1.41
   
(0.61
)
Cumulative effect of accounting changes, net of income taxes
   
--
   
(0.01
)
 
0.00
   
(0.01
)
Basic earnings (loss) per share from discontinued operations
   
0.01
   
(0.00
)
 
0.01
   
(0.01
)
Basic earnings (loss) per share
   
0.36
   
0.19
   
1.42
   
(0.63
)
                           
Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting changes
   
0.35
   
0.20
   
1.40
   
(0.61
)
Cumulative effect of accounting changes, net of income taxes
   
--
   
(0.01
)
 
0.00
   
(0.01
)
Diluted (loss) per share from discontinued operations
   
0.01
   
(0.00
)
 
0.01
   
(0.01
)
Diluted earnings (loss) per share
   
0.36
   
0.19
   
1.41
   
(0.63
)
                           
Weighted average common and equivalent shares outstanding
   
40,738
   
40,407
   
40,594
   
40,297
 

--more--

Technitrol Reports Q406 Results - eight
 
BUSINESS SEGMENT INFORMATION (UNAUDITED)
         
(in thousands)
                 
   
Quarter Ended
 
Twelve Months Ended
 
   
12/29/2006
 
12/30/2005
 
12/29/2006
 
12/30/2005
 
Net sales
                 
Pulse
 
$
153,961
 
$
120,998
 
$
627,505
 
$
361,552
 
AMI Doduco
   
82,121
   
63,467
   
326,591
   
254,826
 
Total net sales
   
236,082
   
184,465
   
954,096
   
616,378
 
Operating profit (loss)
                         
Pulse
   
10,903
   
9,646
   
54,037
   
(20,218
)
AMI Doduco
   
6,095
   
1,179
   
17,253
   
3,228
 
Total operating profit (loss)
   
16,998
   
10,825
   
71,290
   
(16,990
)
                           
                           
FINANCIAL POSITION
                         
(in thousands, except per-share amounts)
   
12/29/2006
 
 
12/31/2005
             
 
   
(unaudited) 
                   
                           
Cash and equivalents
 
$
87,195
 
$
173,664
             
Trade receivables, net
   
160,083
   
136,115
             
Inventories
   
106,397
   
73,598
             
Other current assets
   
31,724
   
20,174
             
Fixed assets
   
107,346
   
92,898
             
Other assets
   
284,668
   
189,853
             
Total assets
   
777,413
   
686,302
             
Current portion of long-term debt
   
60
   
50,795
             
Short-term debt
   
1,771
   
3,219
             
Accounts payable
   
97,593
   
67,929
             
Accrued expenses
   
99,291
   
71,767
             
Long-term debt
   
57,331
   
32,697
             
Other long-term liabilities
   
30,758
   
28,605
             
Total liabilities
   
286,804
   
255,012
             
Minority interest
   
9,691
   
12,626
             
Shareholders' equity
   
480,918
   
418,664
             
Net worth per share
   
11.80
   
10.33
             
Shares outstanding
   
40,751
   
40,529
             

--more--

Technitrol Reports Q406 Results - nine
 
NON-GAAP MEASURES UNAUDITED
(in thousands except per-share amounts)
                     
                       
1. EBITDA from continuing operations
                     
   
Quarter Ended
         
   
12/29/06
 
9/29/06
 
12/30/05
         
                       
Net earnings
 
$
14,772
 
$
15,245
 
$
7,752
             
Net (earnings) loss from discontinued operations
   
(354
)
 
29
   
77
             
Cumulative effect of accounting changes, net
   
0
   
0
   
564
             
Minority interest
   
189
   
(233
)
 
(106
)
           
Income taxes
   
3,312
   
1,953
   
2,136
             
Interest expense (income), net
   
782
   
2,085
   
(194
)
           
Other expense (income)
   
(1,703
)
 
775
   
596
             
Depreciation and amortization
   
6,951
   
7,408
   
6,350
             
Impact of accelerated depreciation and purchase accounting adjustments
   
115
   
2,895
   
1,500
             
EBITDA from continuing operations
   
24,064
   
30,157
   
18,675
             
Severance and asset-impairment expenses
   
2,414
   
2,604
   
2,395
             
                                 
EBITDA from continuing operations excluding severance, asset-impairment expenses, and cumulative effect of accounting changes
   
26,478
   
32,761
   
21,070
             
                                 
2. Net earnings per diluted share from continuing operations, excluding severance and asset-impairment expense, cumulative effect of accounting change, accelerated depreciation and purchase accounting adjustments 
 
                                 
     
Quarter Ended
   
Fiscal Year Ended
 
 
   
12/29/06
   
9/29/06
   
12/30/05
   
12/29/06
   
12/30/05
 
                                 
Net earnings per diluted share, GAAP
 
$
0.36
 
$
0.38
 
$
0.19
 
$
1.41
 
$
(0.63
)
Diluted (earnings) per share from discontinued operations
   
(0.01
)
 
0.00
   
0.00
   
(0.01
)
 
0.01
 
After-tax severance and asset-impairment expense, per share
   
0.05
   
0.05
   
0.05
   
0.18
   
1.29
 
                                 
                                 
Cumulative effect of accounting changes, net
   
--
   
--
   
0.01
   
0.00
   
0.01
 
Impact of insurance settlement, accelerated depreciation and purchase accounting adjustments, per share
   
0.00
   
0.06
   
0.04
   
0.11
   
0.04
 
Net earnings per diluted share from continuing operations, excluding severance and asset-impairment expenses, cumulative effect of accounting change, impact of accelerated depreciation and purchase accounting adjustments
   
0.40
   
0.49
   
0.29
   
1.69
   
0.72
 

--more--

Technitrol Reports Q406 Results - ten
 
3. Segment operating profit excluding severance and asset-impairment expense, accelerated depreciation and purchase accounting adjustments
 
   
Quarter Ended
 
   
12/29/06
 
9/29/06
 
12/30/05
 
               
Pulse operating profit, GAAP
 
$
10,903
 
$
15,269
 
$
9,646
 
Pre-tax severance and asset-impairment expense
   
2,206
   
2,254
   
1,266
 
Pre-tax impact of accelerated depreciation and purchase accounting adjustments
   
115
   
2,895
   
1,500
 
Pulse operating profit, excluding severance and asset-impairment expense, accelerated depreciation and purchase accounting adjustments
   
13,224
   
20,418
   
12,412
 
                     
AMI Doduco operating profit, GAAP
   
6,095
   
4,585
   
1,179
 
Pre-tax severance and asset-impairment expense
   
210
   
350
   
1,129
 
AMI Doduco operating profit, excluding severance and asset-impairment expense
   
6,305
   
4,935
   
2,308
 

    1. EBITDA from continuing operations (net income plus income taxes, depreciation and amortization, excluding interest and other expense/income and excluding equity method investment earnings/losses) is not a measure of performance under accounting principles generally accepted in the United States. EBITDA should not be considered a substitute for, and an investor should also consider, net income, cash flow from operations and other measures of performance as defined by accounting principles generally accepted in the United States as indicators of our profitability or liquidity. EBITDA is often used by shareholders and analysts as an indicator of a company’s ability to service debt and fund capital expenditures. We believe it enhances a reader’s understanding of our financial condition, results of operations and cash flow because it is unaffected by capital structure and, therefore, enables investors to compare our operating performance to that of other companies. We understand that our presentation of EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the method of calculation.
 
    2,3. Based on discussions with investors and equity analysts, we believe that a reader’s understanding of Technitrol’s operating performance is enhanced by references to these non-GAAP measures. Removing charges for severance and asset impairment and unusual gains or losses facilitates comparisons of operating performance among financial periods and peer companies. Severance charges result exclusively from production relocations and capacity reductions and / or restructuring of overhead and operating expenses to enhance or maintain profitability in an increasingly competitive environment. Impairment charges represent adjustments to asset values and are not part of the normal operating expense structure of the relevant business in the period in which the charge is recorded.
 
 
Copyright © 2006 Technitrol, Inc. All rights reserved. All brand names and trademarks are properties of their respective holders.
 
-##-