Wuhan General Group (China), Inc. Announces Second Quarter 2009 Results
Fri Aug 14, 7:00 AMWUHAN, China, Aug. 14 /PRNewswire-Asia-FirstCall/ -- Wuhan General Group (China), Inc. (Nasdaq: WUHN) ("Wuhan General" or the "Company"), a leading manufacturer of industrial blowers and turbines in China, operating through its subsidiaries, Wuhan Blower Co., Ltd. ("Wuhan Blower"), Wuhan Generating Equipment Co., Ltd. ("Wuhan Generating") and Wuhan Xingelin Machinery Equipment Manufacturing Co., Ltd. ("Wuhan Xingelin"), today reported financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights
-- Second quarter revenue was $17.2 million, down 5.1%
quarter-over-quarter
-- Gross profit was $4.1 million, a quarter-over-quarter increase of 7.6%
-- Gross margin was 23.8% compared to 21.0% in the first quarter of 2009
-- Net income was $18,316, while non-GAAP net income excluding the
stock-based penalty payment was $1.2 million, or $0.05 per diluted
share, compared to $1.1 million, or $0.03 per diluted share, for the
first quarter of 2009
-- Launched its new corporate website under the domain name
http://www.wuhangeneral.com in June
-- Joined the Russell Microcap(R) Index in June
"The slowdown in activities of our customers in the steel industry and power plants at the end of 2008 and early 2009 reduced demand for our blowers and turbines in the first half of 2009. Nevertheless, we have seen a pick up in orders recently as the steel industry began to recover in April 2009. Our sales cycle is long compared to other industries as it takes approximately 45 to 90 days to construct a typical blower and three to four months to construct a typical turbine. In July, we began to see improvements as our backlog of turbine and blower orders increased 126% and 210% respectively as compared to the first quarter of 2009," commented Mr. Xu Jie, CEO of Wuhan General. "Our gross margin increased quarter-over-quarter as economic conditions improved and the number of infrastructure projects available for bid increased."
Second Quarter 2009 Results
For the second quarter ended June 30, 2009, total revenue was $17.2 million, compared to $31.0 million for the same period last year. Wuhan Blower generated $10.1 million in revenues, or 58.9% of the total revenues, compared to $14.7 million, or 47.3% of total revenues in the same period last year. Wuhan Generating contributed $6.9 million, or 40.4% of the total revenues, compared to $16.3 million, or 52.7% of total revenues for the same period last year. The remaining $0.1 million in revenues for the second quarter of 2009 was contributed by Wuhan Xingelin through sales of parts and components to unrelated third parties. The decrease in total revenue was primarily due to decreased activities by Chinese steel companies and power plants at the end of 2008 and beginning of 2009. Although these sectors have since rebounded along with the overall economic climate in China, the Company's sales lag recovery by approximately three months. Consequently, the Company expects to see the impact of improved economic conditions in sales for the second half of 2009.
Gross profit for the quarter was $4.1 million, down 57.4% from $9.6 million in the second quarter of 2008. However, gross profit increased 7.6% from $3.8 million in the first quarter 2009. Gross margin was 23.8%, down from 30.9% compared to the same period in 2008. The decrease in gross margin was primarily attributable to a decline in selling prices year-over-year. Compared to the first quarter of 2009, gross margin rose 2.8 percentage points as the Company managed to increase selling prices during the second quarter of 2009 while production costs remained at first quarter levels.
Operating expenses totaled $2.0 million, down 45.6% from $3.7 million from the same period last year. Selling expenses decreased 66.8% to roughly $0.3 million while selling expenses as a percent of revenue decreased from 3.0% to 1.8% year-over-year due to better control of selling expenses. General and administrative expenses declined 30.8% year-over-year, but increased as a percentage of sales from 7.2% for the three months ended June 30, 2009 to 9.0% for the corresponding three months last year due to lower economies of scale as a result of lower revenue. As a percentage of revenue, total operating expenses were 11.7% for the second quarter of 2009, compared to 11.9% for the same period last year.
Operating income was $2.1 million for the quarter compared to $5.9 million for the second quarter of 2008. However, operating income increased 12.5% from the first quarter of 2009 and operating margin improved from 10.2% to 12.1% during the same period.
Net income for the second quarter of 2009 was $18,316, or $0.00 per diluted share, compared to $5.5 million, or $0.12 per diluted share in the same period the prior year.
During the second quarter 2009, the Company incurred a non-cash charge of $1.2 million associated with shares of common stock issued as a penalty. Adjusting for this non-cash charge, non-GAAP net income for the second quarter of 2009 was $1.2 million, or $0.05 per fully diluted earnings per share. For a detailed reconciliation of non-GAAP net income to GAAP net income, see the financial tables at the end of this release.
Six Months Results
Total revenue for the first six months of 2009 declined to $35.2 million, down 37.8% from the first six months of 2008. Wuhan Blower generated $20.4 million in revenues, or 57.8% of total revenues, compared to $27.4 million, or 48.4% of total revenues in the same period last year. Wuhan Generating contributed $14.7 million, or 41.6% of the total revenues, compared to $29.2 million, or 51.6% of total revenues in the same period last year. The remaining $0.1 million in revenues in first half of 2009 was contributed by Wuhan Xingelin. Gross profit for the first six months of 2009 was $7.9 million, down 55.4% from overall gross profit of $17.6 million in the comparable period a year ago. Overall gross margin was 22.3% for the first six months of 2009, compared to 31.1% for the corresponding period in 2008. Income from operations was $3.9 million, down 65.3% from $11.3 million in the first six months of 2008. Net income for the first six months of 2009 was $1.1 million, down 89.0% from $10.3 million in the first six months of 2008. Fully diluted earnings per share were $0.03 for the first six months of 2009 compared to $0.22 in the first six months of 2008. Adjusting for non-cash charges associated with penalty shares, non-GAAP net income for the first six months of 2009 was $2.3 million or $0.08 per fully diluted earnings per share.
Financial Condition
As of June 30, 2009, Wuhan General had $2.0 million in cash and $43.0 million in accounts receivable compared to $2.8 million and $41.5 million respectively as of December 31, 2008. The Company had $34.4 million in working capital with a current ratio of 1.6 and stockholders' equity of $95.6 million as of June 30, 2009. Wuhan General's short-term bank loans and notes were $25.1 million as of June 30, 2009. At the present time, the Company has the option to refinance most of these loans and notes.
For the six months ended June 30, 2009, the Company generated $1.8 million in cash from operating activities compared to $0.9 million in the same period last year.
Business Outlook
"Although the first half of the year has been challenging, we see signs of our sales improving in the second half of 2009 as orders have increased, especially from steel companies and hydropower plants. These sectors should continue to benefit from the Chinese government's economic stimulus package," said Mr. Xu. "We are now focused on rebuilding our order backlog and winning new customers. We have deployed additional resources for collecting outstanding accounts receivable and have aligned our sales commissions more closely with successful collection, which in time should decrease the average collection time for our accounts receivable."
The Company's newly established subsidiary Wuhan Xingelin began production in the first half of 2009. The Company expects the acquisition of Xingelin to allow it to produce parts and components for Wuhan Generating and Wuhan Blower at a lower cost compared to outsourcing production to third parties. Only the revenue from sales of parts and components to third parties is shown as revenue for Xingelin.
As of the end of July 2009, Wuhan Generating had a backlog of RMB 120 million (approximately $17.6 million), while Wuhan Blower had a backlog of RMB 222 million (approximately $32.5 million). The Company expects to realize the revenue from these orders in the third and fourth quarters of 2009.
For fiscal year 2009, Wuhan General maintains its prior guidance of revenues at least $70 million to $80 million and net income at least $7 million to $8 million, excluding the impact of non-cash penalty charge associated with the Company's capital market activities.
Conference Call
The Company will host a conference call at 8:00 a.m. EDT on Friday, August 14, 2009 to discuss the second quarter 2009 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-866-730-5764. International callers should dial +1-857-350-1588. When prompted by the operator, mention conference passcode 833-944-51. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, August 14, 2009 at 10:00 a.m. EDT. To access the replay, please dial 1-888-286-8010 and enter passcode 474-200-84. International callers should dial +1-617-801-6888 and enter passcode 474-200-84.
About Wuhan General Group (China), Inc.
Through its subsidiaries Wuhan Blower, Wuhan Generating, and Wuhan Xingelin, Wuhan General is a leading manufacturer of industrial blowers and turbines in China and the Company is based in Wuhan, Hubei Province, China. Wuhan Blower is a China-based manufacturer of industrial blowers that are principal components of steam-driven electrical power generation plants. Wuhan Generating is a China-based manufacturer of industrial steam and water turbines used for electricity generation in coal, oil, nuclear, and hydroelectric power plants. Wuhan Xingelin manufactures silencers, connectors and other general parts for industrial blowers and electrical equipment, and it produces general machinery equipment. The Company's primary customers are from the iron and steel, power generation, petrochemical and other industries. Led by a strong management team, Wuhan General is well recognized for its technological sophistication and quality construction of blowers and turbines.
Safe Harbor Statement
Certain statements in this press release, including statements regarding future revenue, net income and sales, future demand for our products, improvement in economic conditions, the effects of the Chinese government's stimulus plan on our businesses and our customers' businesses, the synergy between Wuhan Xingelin and our blower and turbine businesses, our ability to refinance our debt and improvement in the collection of our accounts receivable may be forward-looking in nature or "forward-looking statements," as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to vulnerability of our business to general economic downturn, operating in the People's Republic of China (PRC) generally and the potential for changes in the laws of the PRC that affect our operations, our failure to meet or timely meet contractual performance standards and schedules and other factors that may cause actual results to be materially different from those described in such forward-looking statements. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on Wuhan General's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting Wuhan General will be those anticipated by the Company. Wuhan General undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
For more information, please contact:
Wuhan General Group, Inc.
Mr. Haiming Liu, CFO
Tel: +86-27-5970-0069
Email: haiming.liu@wuhangeneral.com
Web: http://www.wuhangeneral.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Ms. Linda Salo, Financial Writer
Email: linda.salo@ccgir.com
Tel: +1-646-922-0894
Web: http://www.ccgirasia.com
Financial Tables Follow
Wuhan General Group (China), Inc.
Consolidated Statements of Income
For the three and six months ended June 30, 2009 and 2008
(Stated in US Dollars)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Revenue 2009 2008 2009 2008
Sales 17,153,287 $31,009,896 $35,229,339 $56,628,798
Cost of Sales (13,072,698) -21,436,174 -27,357,981 -38,997,454
Gross Profit 4,080,589 9,573,722 7,871,358 17,631,344
Operating Expenses
Selling Expenses (306,828) -924,742 -719,990 -1,295,381
General &
Administrative
Expenses (1,550,978) -2,240,758 -2,931,586 -4,489,300
Warranty Expense (149,763) -526,933 -303,736 -557,217
Total Operating
Expense (2,007,569) -3,692,433 -3,955,312 -6,341,898
Operating Income 2,073,020 5,881,289 3,916,046 11,289,446
Other Income (Expenses)
Interest Income 21,065 34,489 205,396 348,449
Other Expenses (52,554) -116,663 -37,884 -117,427
Interest Expense (663,440) -344,030 -1,296,915 -1,257,472
Stock Penalty for late
listing on NASDAQ (1,153,439) -- -1,153,439 --
Total Other Income
(Loss) & Expense (1,848,368) -426,204 -2,282,842 -1,026,450
Earnings before Tax 224,652 5,455,085 1,633,204 10,262,996
Income Tax (206,336) -- -499,813 --
Net Income 18,316 $5,455,085 $1,133,391 $10,262,996
Preferred Dividends
Declared (181,285) -237,095 -360,087 -517,460
Income (Loss) Available to
Common Shareholders (162,969) $5,217,990 $773,304 $9,745,536
Earnings Per Share
Basic (0.006) $0.23 $0.03 $0.46
Diluted (0.006) $0.12 $0.03 $0.22
Weighted Average Shares
Outstanding
Basic 25,233,656 22,289,114 24,995,701 21,333,964
Diluted 25,233,656 47,397,192 31,349,779 47,430,111
Comprehensive Income
Net Income 18,316 $5,455,085 $1,133,391 $10,262,996
Other Comprehensive Income
Foreign Currency
Translation
Adjustment (884,971) 1,532,125 44,868 4,065,817
Total Comprehensive
Income (866,655) $6,987,210 $1,178,259 $14,328,813
Wuhan General Group (China), Inc.
Consolidated Balance Sheets
At June 30, 2009 and December 31, 2008
(Stated in US Dollars)
(Audited)
ASSETS June 30, 2009 December 31, 2008
Current Assets
Cash $2,025,959 $2,817,503
Restricted Cash 6,330,626 13,180,640
Notes Receivable 14,610 --
Accounts Receivable 43,045,061 41,486,856
Other Receivable 660,528 1,719,083
Inventory 21,939,612 8,395,467
Advances to Suppliers 12,707,010 20,274,473
Advances to Employees 166,920 189,516
Prepaid Expenses 180,863 92,279
Prepaid Taxes 393,732 604,610
Deferred Tax Asset 488,332 --
Total Current Assets 87,953,253 88,760,427
Non-Current Assets
Real Property Available for Sale 1,101,888 1,100,376
Property, Plant & Equipment, net 30,669,570 22,274,551
Land Use Rights, net 12,268,030 12,297,429
Construction in Progress 19,726,440 30,276,011
Intangible Assets, net 269,002 363,574
Total Assets $151,988,183 $155,072,368
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Bank Loans & Notes 25,097,327 35,171,690
Accounts Payable 9,482,757 8,420,678
Taxes Payable 1,620,193 1,109,548
Other Payable 9,611,252 7,708,323
Dividend Payable 360,087 193,804
Accrued Liabilities 3,171,567 2,805,558
Customer Deposits 4,162,025 4,614,370
Total Current Liabilities 53,505,208 60,023,971
Long Term Liabilities
Bank Loans and Notes 2,921,926 1,458,959
Total Liabilities 56,427,134 61,482,930
Stockholders' Equity
Preferred Stock - $0.0001 Par
Value, 50,000,000 Shares Authorized;
6,241,453 Shares of Series A
Convertible Preferred Stock Issued &
Outstanding at June 30, 2009 and
December 31, 2008 624 624
Additional Paid-in Capital -
Preferred Stock 8,170,415 8,170,415
Additional Paid-in Capital - Warrants 3,634,297 3,687,794
Additional Paid-in Capital -
Beneficial Conversion Feature 6,371,547 6,371,546
Preferred Stock - $0.0001 Par
Value 50,000,000 Shares Authorized;
6,354,078 Shares of Series B
Convertible Preferred Stock Issued
& Outstanding at June 30, 2009 and
December 31, 2008 635 635
Additional Paid in Capital -
Preferred Stock 12,637,158 12,637,158
Additional Paid in Capital - Warrants 2,274,181 2,274,181
Additional Paid in Capital -
Beneficial Conversion Feature 4,023,692 4,023,692
Common Stock - $0.0001 Par Value
100,000,000 Shares Authorized;
25,299,704 and 24,752,802 Shares
Issued & Outstanding at June 30,
2009 and December 31, 2008,
respectively 2,530 2,475
Additional Paid-in Capital 29,643,715 28,436,835
Statutory Reserve 4,478,066 3,271,511
Retained Earnings 16,600,992 17,034,243
Accumulated Other Comprehensive
Income 7,723,197 7,678,329
Total Stockholders' Equity 95,561,049 93,589,438
Total Liabilities & Stockholders'
Equity $151,988,183 $155,072,368
Wuhan General Group (China), Inc.
Consolidated Statements of Cash Flows
For the six months ended June 30, 2009 and 2008
(Stated in US Dollars)
Cash Flow from Three months ended Six months ended
Operating June 30, June 30, June 30, June 30,
Activities 2009 2008 2009 2008
Cash Received from
Customers $17,890,754 $35,603,733 $34,259,337 $51,894,761
Cash Paid to
Suppliers &
Employees (14,797,136) (29,850,509) (30,808,513) (50,095,068)
Interest Received 21,065 34,489 205,396 348,449
Interest Paid (663,440) (344,030) (1,296,915) (1,257,472)
Taxes Paid (636,443) -- (636,443) --
Miscellaneous Receipts 49,875 -- 68,819 --
Cash Sourced/(Used) in
Operating Activities 1,864,675 5,443,683 1,791,681 890,670
Cash Flows from Investing
Activities
Cash Invested in
Restricted
Time Deposits 304,848 3,692,828 6,850,014 4,686,927
Repayment of/(Investment
in) Notes -- 2,721,354 -- 1,891,127
Purchases of Plant &
Equipment -- (587,490) -- (1,619,028)
Payments for
Construction
of Plant & Equipment (203,141) (8,723,301) (653,393) (9,459,398)
Cash Used/(Sourced) in
Investing Activities 101,707 (2,896,610) 6,196,621 (4,500,373)
Cash Flows from Financing
Activities
Proceeds from/
(Repayment of)
Bank Loans 2,923,216 (4,450,681) 821,563 375,459
(Repayment of Notes) (2,932,740) -- (9,432,960) --
Dividends Paid -- -- (193,804) (852,777)
Cash Sourced/(Used) in
Financing Activities (9,524) (4,450,681) (8,805,201) (477,318)
Net Increase/(Decrease)
in Cash & Cash
Equivalents for
the Period 1,956,858 (1,903,608) (816,899) (4,087,021)
Effect of Currency
Translation (886,580) 1,500,572 25,355 3,842,927
Cash & Cash Equivalents at
Beginning of Period 955,681 1,151,907 2,817,503 992,965
Cash & Cash Equivalents
at End of Period $2,025,959 $748,871 $2,025,959 $748,871
Non-Cash Investing
Activity:
Conversion of Preferred
Stock to Common -- 2,582,061 -- 6,015,944
Wuhan General Group (China), Inc.
Reconciliation of Net Income to Cash Sourced/ (Used) in Operating Activities
For the six months ended June 30, 2009 and 2008
(Stated in US Dollars)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
Net Income $18,316 $5,455,085 $1,133,391 $10,262,996
Adjustments to Reconcile
Net Income to Net Cash
Provided by
Cash Activities:
Reclassification of
assets related to
Huangli Project from
Construction in Progress
to Inventory -- -- 1,745,496 --
Stock 1,153,439 -- 1,153,439 --
Amortization 119,972 27,965 141,973 59,833
Depreciation 495,337 558,002 1,062,449 1,139,860
Decrease/(Increase) in
Notes Receivable 65,734 (106,804) (14,610) (25,635)
Decrease/(Increase) in
Accounts Receivable (4,118,129) 5,869,919 (1,558,205) (4,092,743)
Decrease/(Increase) in
Other Receivable 5,703,276 1,269,676 1,058,555 (844,349)
Decrease/(Increase) in
Inventory (1,031,578) (774,189) (13,544,144) (3,947,480)
Decrease/(Increase) in
Advances to Suppliers 634,570 760,318 7,567,463 (4,881,371)
Decrease/(Increase) in
Advances to Employees 59,056 51,548 22,596 (168,889)
Decrease/(Increase) in
Prepaid Expenses (55,545) -- (88,584) --
Decrease/(Increase) in
Prepaid Taxes 12,546 -- 210,878 --
Decrease/(Increase) in
Deferred Tax Asset (430,107) -- (488,331) 27,033
Increase/(Decrease) in
Accounts Payable 2,525,499 50,876 1,062,080 524,410
Increase/(Decrease) in
Taxes Payable 695,081 (962,625) 510,645 (236,609)
Increase/(Decrease) in
Other Payable (3,249,412) (72,365) 1,902,926 704,947
Increase/(Decrease) in
Accrued Liabilities 176,637 (5,717,102) 366,009 2,139,979
Increase/(Decrease) in
Customer Deposits (910,017) 1,472,333 (452,345) 228,691
Total of all
adjustments 1,846,359 (11,403) 658,290 (9,372,325)
Net Cash Provided by
Operating Activities $1,864,675 $5,443,683 $1,791,681 $890,670
Wuhan General Group (China), Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
Adjusted Net Income Three Months Ended Three Months Ended
Net Income (Loss) June 30, 2009 June 30, 2008
Diluted EPS Net Income Diluted EPS Net Income Diluted EPS
Adjusted Amount
- Non GAAP $1,171,755 $0.05 $5,455,085 $0.12
Stock Penalty for late
listing on NASDAQ (1) $1,153,439 $0.05 -- --
Amount per consolidated
statement of operations $18,316 $0.00 $5,455,085 $0.12
Adjusted Net Income Six Months Ended Six Months Ended
Net Income (Loss) June 30, 2009 June 30, 2008
Diluted EPS Net Income Diluted EPS Net Income Diluted EPS
Adjusted Amount
- Non GAAP $2,286,830 $0.08 $10,262,996 $0.41
Stock Penalty for late
listing on NASDAQ (1) $1,153,439 $0.04 -- --
Amount per consolidated
statement of operations $1,133,391 $0.04 $10,262,996 $0.41
(1) the adjustment to Non-GAAP is related to the stock penalty for late
listing on NASDAQ
SOURCE Wuhan General Group (China), Inc.
