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Technitrol Reports Q4 and FY09 Results, Board Declares Dividend

Posted by Dana in February 5th 2010

Technitrol, Inc. (NYSE: TNL) announced financial results for its fourth quarter and fiscal year ended December 25, 2009. The presentation of these results and comparative results in prior periods treats the Medtech and MEMS businesses and the Electrical Contact Products Group (Electrical) as discontinued operations. Fourth-quarter highlights from continuing operations include:

* revenues of $105.4 million, up 3.9% from $101.4 million in the prior quarter due to recently recovering demand, but down 15.2% from $124.3 million in the fourth quarter of 2008 due to the impact of the global recession;
* operating profit of $4.5 million, up 16.3% from comparable non-GAAP operating profit (excluding severance, impairment and other associated costs) of $3.8 million in the prior quarter. Non-GAAP operating loss was $1.7 million in the fourth quarter of 2008 (see non-GAAP tables). Relative to the third quarter, fourth-quarter operating profit reflects higher gross profit and lower selling, general and administrative expenses, with the continuing negative effects of increased direct labor cost for overtime, recruitment and retention;
* GAAP earnings per diluted share of $0.08. Excluding accelerated amortization (reported as interest expense) of capitalized fees related to amending the company’s credit facility, non-GAAP earnings per diluted share were $0.09, compared with $0.11 in the prior period and a loss of ($0.03) in the fourth quarter of 2008. The sequential-quarter earnings decrease reflects foreign-exchange losses in the fourth quarter versus gains in the third quarter;
* Adjusted EBITDA of $9.1 million, compared with $8.4 million in the prior quarter and $3.5 million in the fourth quarter of 2008;
* repayment of approximately $46 million of revolving debt through the issuance of senior convertible notes; and
* the announcement of the sale of Electrical’s North American operations, which was completed in early January of 2010. Divestiture proceeds were used to repay additional debt. Negotiations continue toward an agreement to sell Electrical’s remaining operations.
* Sales of Network products increased 15.3% from the third quarter, led again by demand in the local area networking (LAN) market. Despite the increase, recent sales in this product group continue to understate demand levels due to capacity constraints in China. The labor recruitment challenges producing these constraints are expected to continue through the first quarter of 2010. Based on conversations with customers, the company believes that all similarly situated competing suppliers face the same issue.
* Wireless component revenues decreased 10.0% from the third quarter. Very strong demand for smart-phone acoustical components was not enough to offset lower shipments of handset antennas that resulted from a significant OEM customer’s decision to transition out of handset hardware development and manufacturing and instead purchase full handset modules (with all components) from single manufacturing sources. To eventually offset the impact of this transition, the Wireless Group has reallocated engineering and marketing resources toward:
o antennas for competing handset OEMs and the major OEM’s manufacturing sources;
o acoustical products; and
o antennas for GPS, WiFi/WiMax, “smart grid” and other remote metering and monitoring applications.
* Fourth-quarter revenues in the Power Group were up 9.3% from the previous quarter, as demand increased for both power management and automotive components.

Separately, Technitrol announced that its board of directors declared a quarterly shareholder dividend of $0.025 per common share, an amount equal to that declared in the previous quarter, payable April 16, 2010 to shareholders of record on April 2, 2010.