American Power Conversion Announces Third Quarter 1999 Net Income Growth of 33 Percent
Highest Net Income Growth Since June 1997
Third Quarter 1999 Revenue, Net Income and Earnings Per Share Reach Record Levels
WEST KINGSTON, R.I., Oct. 21 /PRNewswire/ -- American Power Conversion Corporation (Nasdaq: APCC) today reported record results for the third quarter ended September 26, 1999.
Net income for the third quarter of 1999 increased 33 percent to a record $62.1 million ($.32 per share), versus $46.6 million ($.24 per share) for the quarter ended September 27, 1998. Net sales for the third quarter of 1999 were also a record at $355.9 million, an increase of nine percent from $327.4 million reported in the third quarter of 1998. This marks the 15th consecutive quarter that the Company has met or exceeded the consensus earnings per share estimate published by First Call.
"Our third quarter results reflect an extremely solid performance from the worldwide APC team," said Rodger B. Dowdell Jr., APC president and CEO. "We are particularly pleased with our resilient financial model, which has continued to consistently generate strong earnings growth despite challenging global economic conditions and ever changing market dynamics," continued Dowdell.
"Global demand for our power protection solutions remains robust as evidenced by our solid sequential revenue growth of 13 percent versus the second quarter of 1999. Geographically, sequential growth in the Americas (North and Latin America) was 16 percent versus the second quarter of 1999, Europe, the Middle East and Africa (EMEA) 4 percent and Asia 17 percent. On a year-over-year basis, quarterly revenue growth in international markets was robust with EMEA growing 16 percent and Asia up 42 percent. The Americas year-over-year growth rate of one percent was impacted by inventory reductions at the Company's large distributors in the US as well as continued softness in Latin America," added Dowdell.
"We are extremely pleased with our current position of financial strength and the improvements we have made during 1999 in our balance sheet," said Dowdell. "We have benefited from strong cash flow and prudent working capital management as cash balances grew $59.1 million during the quarter to $330.9 million while inventories shrank in the quarter by $33.3 million to $198.6 million. Since the beginning of 1999, cash has increased over 50 percent, up $111.0 million, and inventories have declined 13 percent, down $30.1 million."
Relationship and product update
"The current global e-business environment, specifically the need for 24x7 business availability, is an ideal market for APC's products. The portfolio of solutions we offer our customers on a global basis, including products, sales, marketing, service, support and logistics, is very difficult for our competition to match," said Dowdell. "The addition of the three-phase Silcon uninterruptible power supplies (UPS) and our Global Services organization over the past year have been key elements in helping us to win deals like the IBM Global Services worldwide re-marketer agreement recently announced."
Through this new agreement, IBM Global Services can now resell APC's entire product and services offering, from surge protectors to large three- phase UPSs to power management software, in each country IBM Global Services does business. Over the past eight years, IBM Global Services has offered APC products and services throughout North America and in selected European countries. This agreement not only expands the APC product offering available to IBM customers, it also more than triples the number of countries in which IBM can sell the complete line of APC solutions.
During the third quarter, APC also announced that Hewlett-Packard Company tested select APC UPSs and is recommending them through HP's Network Design Center, which provides free, customized network designs to qualified HP resellers worldwide. HP will specify to resellers who request HP-designed network solutions both APC's PowerStack(TM) 450 to protect HP ProCurve internetworking equipment including hubs, switches, routers and remote access internetworking equipment from power disturbances and APC's Smart-UPS(R) NS series specifically designed for HP NetServer systems. APC is the first power protection vendor being recommended by HP's Network Design Center for the HP ProCurve and HP NetServer systems lines.
"We continue to build relationships and alliances with a wide range of global partners whose customers can't afford to have power problems interrupt their operations," explained Dowdell. "These relationships help to escalate the need for power protection to the end user, while providing key vehicles of distribution and recommendation for APC solutions. Sales to our direct strategic partners was a highlight during the quarter, growing approximately 40 percent worldwide."
Supporting these efforts, APC continues to build its reputation as a leader in the technology and power protection markets. In the October 19 issue of PC Magazine, APC was named one of the "Top 100 Most Influential Companies" in the personal computing industry. The list was built around the premise that the " ... Internet economy is ushering in the new millennium" and that "[s]uccess in this new era will come to those companies ... that get people online at work and at home and make them more productive in both environments." Of the 100 companies identified in this list, APC was 29th highest in terms of 1998 net income, 52nd highest in terms of 1998 revenues, and 32nd highest for percentage revenue growth from 1997 to 1998.
In the power protection market, Power Quality magazine recognized APC, giving it top billing in their list of the "Top 50 Power Quality Vendors in North America." This publication, which identifies itself as the "leading magazine for ensuring power system reliability" is particularly well read among consumers of three-phase UPS systems.
Business Outlook
"Based on continued strong end-user demand and healthy global IT markets, we expect to see fourth quarter revenues increase sequentially from the record levels achieved in the third quarter. This would result in an acceleration in the year-over-year revenue growth rate from third quarter levels. Additionally, we are revising our annual earnings per share guidance upward to indicate that we now expect full year earnings per share to increase approximately 30 percent versus 1998 EPS of $.80 per share, which excludes $.04 per share of acquired R&D charges recorded in 1998. This upward revision is roughly a dime higher than our previous guidance of $.93 per share," concluded Dowdell.
The statements contained in the "Business Outlook" section are forward- looking statements based on current expectations that involve a number of risks and uncertainties including those which are described below under the heading "Safe Harbor Provision." While the Company believes that it has a reasonable prospect of achieving these results in 1999, it cannot provide any assurance that these expectations will actually be met.
Safe Harbor Provision
Statements contained in this press release which are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those projected. The factors that could cause actual results to differ materially include the following: APC's ability to successfully integrate Silcon's operations; the timely development and acceptance of new products; ramp up, expansion and rationalization of global manufacturing capacity; general worldwide economic conditions; growth rates in the power protection industry and related industries, including but not limited to the PC, server, networking and enterprise hardware industries; competitive factors and pricing pressures; changes in product mix; changes in the seasonality of demand patterns; inventory risks due to shifts in market demand; the effects of any other possible acquisitions; component constraints and shortages; risk of nonpayment of accounts receivable; changes in customer order patterns and product demand related to year 2000 purchasing issues; impact on the Company's business due to internal systems or systems of suppliers and other third parties adversely affected by year 2000 problems; the uncertainty of the litigation process including risk of an unexpected, unfavorable result of current or future litigation; and the risks described from time to time in the Company's filings with the Securities and Exchange Commission.
Note: Earnings per share data reflect a two-for-one stock split effected May 28, 1999.
About American Power Conversion
Founded in 1981, American Power Conversion (Nasdaq: APCC) is a leading provider of global, end-to-end power protection products and services, which include surge suppressors, uninterruptible power supplies (UPS), power conditioning equipment, related software, and professional and consulting services for Nonstop Networking(TM). APC's comprehensive solutions, which are designed for both home and corporate environments, improve the manageability, availability and performance of sensitive electronic, network, communications and industrial equipment of all sizes. APC, which is headquartered in West Kingston, Rhode Island, reported sales of $1.126 billion for the year ended December 31, 1998.
All trademarks are the property of their owners. Additional information about APC and its global end-to-end solutions can be found by accessing the APC World Wide Web site at www.apcc.com or by calling 800-877-4080. |
