For Immediate Release, February 15, 1995
* Strengthening Position to attack business opportunities
American Power Conversion Corporation, the worldwide market share leader in Uninterruptible Power Supplies (UPS) and software for networks and similar mission-critical applications, today announced record sales and earnings for the fourth quarter and year ended December 31, 1994. Sales for the fourth quarter of 1994 were $113.5 million, up 51 percent from $75.0 million for the fourth quarter of 1993. Earnings for the fourth quarter of 1994 were $22.9 million ($.25 per share), up 40 percent from $16.3 million ($.18 per share) in the fourth quarter of 1993.
For the year ended December 31, 1994 sales were $378.2 million, up 51 percent from $250.2 million for the same time period in 1993. Earnings for the twelve months ended December 31, 1994 were $71.2 million ($0.77 per share), up 47 percent from $48.5 million ($0.53 per share) in 1993.
Product introductions to continue
"This is an exciting time at APC," commented Rodger B. Dowdell Jr., CEO and President. "Our record results reflect the strength of APC's product offerings and our increasing presence in the category."
Dowdell said that product strength is being exhibited from both the high and low end of the company's offerings. For example, the company's most expensive UPS, Matrix-UPS™, presently exhibits the most momentum in the 3-5 kVA UPS category while the new PowerManager™, a power director oriented towards retail sales, has been winning rave reviews for its performance and design.
"November marked the largest product introduction in the company's history," added Dowdell. "In addition to offering the best positioned product and price combination for virtually any computer based application, our new lines form a significant competitive advantage. This is most notable in large corporate accounts which often look to one vendor for all their power protection needs."
Fourth quarter product introductions included UPS solutions for the small office/LAN server (Smart-UPS® v/s) and advanced workstation (Back-UPS® Pro™) applications, surge protection for data and network connections (ProtectNet™) as well as a dramatically enhanced new version of the industry leading Smart-UPS® line. Despite the breadth of the new introductions, Dowdell said the Company continues to see opportunity to extend lines to better address current and future customer needs.
"Our development pace and product introduction schedule is proceeding aggressively, and we expect to make significant product introductions at both the high and low end of our product offerings in calendar 1995," he said.
Dowdell said the company's innovative solutions garnered more than a dozen independent awards for reliability and performance throughout 1994, including recent awards from the trade press in Russia and Brazil.
"The market continues to be one of intense competition; however, APC has continued to gain market share throughout the world, even as the market itself expands. End users, computer distribution channels and the media continue to recognize APC as a leading world wide vendor of power protection products," commented Dowdell.
Software development a key edge as network management business grows
On the high end of the product line, further development efforts continue within the software management and communications arena.
"Network management provides a great opportunity to add value to a network manager with our products," noted Dowdell. "Instead of a passive power protection device, our customers can get a valuable tool that will save them time and money while enhancing overall productivity."
Dowdell said the Company's dedicated software development staff continues to provide significant differentiating features over other UPS competitors, who tend to source their UPS software from third parties.
In addition to product advantages, the Company continues to forge strong alignments within the networking industry.
An example of this continued dedication was the certification by Novell of APC's PowerChute® plus, PowerNet™ SNMP agent for Netware 4.1. "We are very excited to have American Power Conversion's ongoing support for Novell NetWare," said Dave Owen, Vice President, Novell Labs. "PowerChute plus enhances the reliability and up-time of servers in a NetWare environment by protecting them from all types of common power problems."
In addition, the Company has completed co-development work and begun a series of marketing programs with Lotus in support of their fast-growing Notes application.
November also marked the introduction of several new software accessories. These introductions included Call-UPS® II, a remote management device for modem communications with APC Smart-UPS and Matrix-UPS, and an improved PowerNet SNMP line, for enhanced server communications during extended power outages and support of HP OpenView and IBM NetView operating systems via PowerNet SMNP.
Investment in educating end user showing good return
Dowdell said marketing and promotional investments continue in the Small Office Home Office (SOHO) and consumer markets, and have helped drive several new consumer oriented distribution locations for SurgeArrest®, PowerManager, Back-UPS and PowerCell® UPS products as well as a heightened interest from shoppers in these channels. "The investment we are making into this market is essential to growing this virtually unpenetrated business segment," commented Dowdell. "APC is working to deliver the products, channels and brand preference necessary to dominate the consumer market as we have in the networking market. The strong number of Pentium units being shipped to the home user is an indication of the strength of this group."
According to a poll by HOMEPC Magazine, the number of readers expecting to purchase a UPS tripled during 1994.
Extending dominance in distribution channel
Dowdell said the Company continues to strengthen its relationships within the distribution channel. The Company recently won the Computer Reseller News, "Vision Award", with approximately three times the votes as its closest competitor while its Matrix-UPS was also voted "UPS Product of the Year" by VARBusiness magazine.
"Resellers count on UPS reliability," said Dowdell. "APC is the most reliable UPS they can sell, and this reliability drives our reseller loyalty."
According to a recent poll by CRN, slightly more than 60% of resellers sell UPS product regularly. Dowdell noted this result as evidence of the continued opportunity to educate resellers as to the advantages UPS protection can deliver in the form of more reliable networks and happier customers.
International manufacturing meeting expectations
"From a review of market research data, we believe we are currently out-shipping our next largest competitor approximately 5-to-1 on a unit basis," said Dowdell. "These efficiencies of scale translate directly into a competitive advantage."
"APC's business outside the US continues to grow, both as an absolute figure and as a percentage of sales. Russia has recently become our largest European territory and we continue to see strong results in Japan," added Dowdell. "A strong manufacturing presence in these growing territories strengthens APC's comprehensive product and sales offerings to help further penetrate the international markets. As shipments increase from the Ireland facility, inventory levels continue to normalize."
Within the US, manufacturing efforts are underway in Fort Meyers, FL. This facility is producing Back-UPS products for the Southeast US and Latin American markets. Product shipments are anticipated to begin during 1Q 1995.
Execution is the key
"Entering 1995 we are better positioned to take advantage of the significant opportunities before us than at any other time in the company's history," said Dowdell.
"We have the enviable advantage of being the low cost producer, the high end innovator, and the vendor with the strongest distribution," said Dowdell. "In addition, we are delivering a 99% customer satisfaction rate in a heavily repeat business."
"This combination of strengths will continue to make things difficult for competitors to grow their share at APC's expense at the same time we will use these advantages to grow new and existing business," said Dowdell.
"Going forward, we expect to continue to invest heavily in product development, sales and marketing in order to maximize our return," said Dowdell. "Strong execution by the APC team and our suppliers is the key to continued growth."
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American Power Conversion (NASDAQ:APCC) is the market share leader in Uninterruptible Power Supplies (UPS) and software for networks and similar mission-critical applications. Product lines include the Back-UPS®, Smart-UPS®, Matrix-UPS™, Line-R® power conditioners, PowerChute® software, PowerNet™ SNMP adapters and software, SurgeArrest® surge suppressors and PowerManager™ Power Center.