Alternative Energy Technology boosts Zantrex sales and stock price

by TYLER HAMILTON, ENERGY REPORTER for TheStar.com


Xantrex shares rise on clean power revenue growth


Shares in Xantrex Technology Inc. jumped 3 per cent yesterday after the company said "excellent" growth in the sale of wind and solar power products boosted revenues and profits in its second quarter.

Revenue for the period rose 18 per cent to $40.5 million compared to a year ago, based largely on 72-per-cent growth in the sale of inverters and other products for renewable power markets in North America, Europe and parts of Asia.

Profit soared to $2.3 million, up from a loss of $515,000 a year ago and more than quadrupling net income over its first quarter. Cash flow from operations grew to $3.5 million compared to $558,000 a year earlier.

The company said efforts at improving operational efficiency over the past year helped contribute to the higher profits and gross margins.

"These are solid results," said MacMurray Whale, an energy analyst with Sprott Securities, which upgraded Xantrex after its first quarter on signs the Burnaby, B.C.-based company was on the path to recovery after struggling in 2005. "These results support that."

The company's stock closed the day up 22 cents at $8.52 on the Toronto Stock Exchange.

Xantrex's inverters are the brains of renewable energy systems, managing the conversion and flow of electrical power generated by solar and wind systems.

Xantrex chairman Mossadiq Umedaly said rising energy prices, energy security concerns, and environmental issues continue to drive high interest in renewable energy.

This, he said, is leading to increased government support through subsidies.

Ontario is among a growing list of jurisdictions now offering incentives for wind development and increasingly solar.

"France and Greece recently announced incentives to encourage the use of solar energy, further increasing potential demand for our products," Umedaly said in a statement.

"During the second quarter, Xantrex began shipping solar products to Korea, which last year enacted renewable energy incentives."

In conclusion, Umedaly added, "we believe we're on track to realize our outlook of improved growth and profitability for 2006."

Also yesterday San Jose, Calif.-based SunPower Corp., a major player in the solar panel market, announced that it had selected Xantrex's inverters as part of its offering of complete solar system packages for its North American customers.

In the wind segment, which suffered from a major slowdown in 2005, Umedaly said the company could also benefit significantly over the long term from an announcement that BP Plc and Clipper Windpower PLC plan to co-develop five wind farms in the United States totalling more than 2,000 megawatts. Clipper is one of Xantrex's largest customers.

"These guys are really growing, and these deals are solid," said Whale.

Tom Astle, energy analyst with National Bank Financial, called growth in Xantrex's renewable business "impressive." But he warned that other areas need improvement.

This would include the mobile power business for commercial and recreational vehicles and marine craft, which saw revenues fall 12 per cent compared to a year ago.

"Unfortunately, the other businesses aren't performing quite as well," Astle said.