Xantrex Technology Inc. (TSX:XTX) has reported financial results for the fourth quarter and year ended December 31, 2005. All currency amounts are reported in US dollars unless otherwise indicated, and financial results are reported in accordance with accounting principles generally accepted in Canada.
Revenue for the fourth quarter and year-end 2005 was $37.1 million and $142.5 million, respectively, compared with $38.0 million and $143.1 million in the corresponding periods of 2004. For the year ended December 31, 2005, we reported earnings of $341,000, or $0.01 per diluted share, compared with earnings of $7.6 million, or $0.25 per diluted share, in 2004.
“In 2005, we identified several important execution issues facing our business, which were impairing our growth and profitability,” said Mossadiq S. Umedaly, Xantrex’s Chairman. “After observing the performance of the first half of the year, we began to actively address these issues with initiatives designed to improve business performance starting with the appointment of John Wallace as interim Chief Executive Officer in August 2005. With the assistance of the executive committee of the board and the management team, John Wallace immediately began addressing the execution issues by establishing key initiatives designed to improve the business performance of the Company. After reviewing the proposed strategic initiatives for 2006 and with the advice of the board CEO search committee, the board appointed John Wallace as Chief Executive Officer in November 2005.
“Towards the end of the year, we began realigning the sales and engineering resources with our growth markets, streamlining production processes, improving our outsourcing and supply chain management, as well as continuing to reduce operating expense levels. We will continue these efforts in 2006 and expect noticeable improvements in Company performance, particularly in the second half of the year.”
John Wallace, Xantrex’s CEO, commented, “For the past six months, I have had an opportunity to observe Xantrex’s strengths and weaknesses, strategies, and target markets. We have an excellent set of strategies designed to capture and create value as a leader in advanced power electronics. To realize Xantrex’s full potential, I have implemented two major initiatives. The first, begun last year, is to restructure operations focusing on efficiency, product quality, and customer service. The second, also well underway, is to manage and allocate resources over our diverse portfolio of products and target markets to emphasize growth and return on investment. These initiatives will take time but our momentum and prospects should become increasingly apparent and recognized.”
Mr. Umedaly continued, “With the new management and leadership in place, our strategy and product portfolio enables us to focus on fast growing markets, while other markets contribute to our critical mass, presence, branding, and cash flow.”
Mr. Wallace added, “Currently, advanced power electronics for the renewable and portable markets are our fastest growing markets and we are focusing our resources accordingly. For example, in 2005 we introduced additional models of our solar grid-tie inverters to serve a wider range of system capacities and the high-power wind converter based on a new technology platform making these products more attractive to potential customers and end users in North America and Europe. Similarly, we introduced a large number of leading edge portable products in 2005 that are opening new channels to market. Intensive product development and targeted marketing helped us win two major renewable power orders in 2005, which represented major strategic milestones. These orders represented our first major wind product order since 2003, which is expected to provide at least $12 million in revenue in 2006, and our most significant European solar inverter order received to date, providing at least $10 million in revenue over two years. Our wind and solar businesses are off to a strong start for 2006 and beyond based on these contracts and favorable market conditions.”
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