Exide Technologies Misses on Revenues but Beats on EPS

Exide Technologies (Nasdaq: XIDE  ) reported earnings on Feb. 9. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q3), Exide Technologies missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped slightly and GAAP earnings per share increased significantly.

Gross margins contracted, operating margins contracted, net margins expanded.

Revenue details
Exide Technologies logged revenue of $784.1 million. The eight analysts polled by S&P Capital IQ predicted sales of $842.2 million on the same basis. GAAP reported sales were 2.0% lower than the prior-year quarter's $800.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.86. The four earnings estimates compiled by S&P Capital IQ anticipated $0.25 per share on the same basis. GAAP EPS of $0.84 for Q3 were 121% higher than the prior-year quarter's $0.38 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 16.1%, 390 basis points worse than the prior-year quarter. Operating margin was 3.9%, 280 basis points worse than the prior-year quarter. Net margin was 8.7%, 480 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $799.0 million. On the bottom line, the average EPS estimate is $0.21.

Next year's average estimate for revenue is $3.15 billion. The average EPS estimate is $0.36.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 415 members out of 427 rating the stock outperform, and 12 members rating it underperform. Among 104 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 102 give Exide Technologies a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Exide Technologies is outperform, with an average price target of $6.57.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 10, 2012, at 9:41 PM, MaudieNmandevill wrote:

    Has there ever been a stock that Fools overwhelmingly rated underperform? It seems that few who don't own a stock would bother to go to all the stocks they don't own to give them all a thumbs down. What is the time table in everyone's mind who votes? Does a 20% drop in one day due to poor performance rate as an underperform? Are the outperforms based on whenever it is that they outperform? Does a 5-Star lose its meaning after a 20% plunge due to performance?

  • Report this Comment On March 03, 2012, at 3:27 PM, mhy729 wrote:

    The one really important thing about the financial report (and seemingly indicated by the "unusual" event of having a revenue miss but earnings beat--and a big beat at that) is found in one line in the income statement reading:

    Income tax (benefit) provision [of] (60,313)

    The "Notes to Financial Statements" item "(12) INCOME TAXES" states the following:

    ---

    The effective tax rate for the first nine months of fiscal year 2012 and fiscal year 2011 is (7,283.5%) and 6.5% respectively. The effective tax rate for the first nine months of fiscal 2012 included the recognition of taxes on income and losses in almost all of the Company’s jurisdictions with the primary exception of the United Kingdom and Spain, on which full valuation allowances are recorded. The Company released the valuation allowance for France in the third quarter of fiscal 2012 after determining that it was more likely than not that the Company would realize all deductible temporary differences and carryforwards in the foreseeable future. In fiscal 2011, the Company released full valuation allowances for Australia and Italy based on this same more-likely-than-not criteria.

    The effective tax rate for the first nine months of fiscal 2012 was impacted by the following discrete items: release of a valuation allowance in France of ($76.7) million; the settlement of the 2003-2010 Spanish audit for $13.4 million; and recording of a valuation allowance on a Portugal deferred tax asset of $1.6 million.

    ---

    It would appear that this "valuation allowance in France of ($76.7) million" is what accounts for that rather large income tax benefit which boosted earnings for the qtr, despite the poor revenue performance. Can anyone please explain what all of this means? This certainly looks like a one-time thing, and doesn't seem to me to indicate that anything really positive has happened with the company.

    Thanks in advance!

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