BEIJING, June 29 /PRNewswire-Asia/ --
-- Financial reports reflect Company's recent change in fiscal year-end
from August 31 to December 31
-- Financial results below guidance
-- Results impacted by long lead-times for major equipment purchases
associated with government spending windows
-- Recent sales activity improves as backlog grows
-- Management to host earnings conference call and corporate presentation
webcast June 29, 2010 at 10:00 a.m. EDT
Wowjoint Holdings Limited ("Wowjoint," or the "Company") (Nasdaq
GM: BWOW, BWOWU, BWOWW), a leading provider of customized heavy
duty lifting and carrying machinery used in large scale
infrastructure projects such as railway, highway and bridge
construction, having recently changed its fiscal year-end from
August 31 to December 31, reported
today unaudited financial results for the first quarter of its
newly established fiscal year ending December 31, 2010 and for the four-month
transition period ended December 31,
2009.
First-quarter Ended March 31,
2010
Revenues for the Company's first quarter ended March 31, 2010 were $1.7
million as compared to $16.3
million in the three month period ended March 31, 2009. The decline in revenue is
primarily attributable to a shift in China's governmental policies from stimulus to
a restrictive one in later 2009, which includes measures to slow
the country's rapidly expanding economy. The tightening included
curtailment of certain government spending on large infrastructure
projects resulting in a significant reduction in new contracts
being awarded for railway, highway and bridge projects. Recently,
government budgeting for large infrastructure projects has
accelerated, which has in turn positively impacted Wowjoint's sales
pipeline and backlog.
Cost of sales for the three months ended March 31, 2010 was approximately $1.5 million as compared to $11.4 million for the three months ended
March 31, 2009. For the first quarter
of 2010, the Company reported gross profit of $0.3 million, or 16.3% of sales compared to gross
profit of $5.0 million, or 30.4% of
total revenues, for the first quarter of 2009.
Operating expenses for the three months ended March 31, 2010 were approximately $0.8 million, compared to $0.5 million in the same period of 2009. Selling
expenses for the first three months of 2010 totaled $74,000 compared to $53,000 in the same period of 2009, as the
Company hired additional marketing staff. General and
administrative expenses increased to $0.7
million from $0.4 million in
the first three months of 2010 and 2009, respectively, with the
increase primarily due to costs related with being a public
company.
For the three months ending March 31,
2010, the Company reported a net loss of $0.4 million, or $.05 per share based on 7.9 million weighted
average shares outstanding, compared to net income of $3.8 million for the three months ending
March 31, 2009.
"Our financial results for first quarter of 2010 and for the
transition period covering September 1,
2009 through December 31, 2009
were well below our expectations," stated Mr. Yabin Liu, Chief Executive Officer of Wowjoint.
"The success of our business is impacted directly by government
decisions and timing associated with major infrastructure purchases
for new projects. This means our business can be one of extremes,
and to put things into perspective it has not been uncommon that
the vast majority of a year's revenue might be generated during two
quarters. Specifically, we saw robust orders and spending in 2008
which positively impacted our results, and then a period of
restraint in the second half of 2009 as the government agencies
were focused on cooling economic growth. Wowjoint is not alone in
feeling the effects of this policy shift, as our competitors also
appear to have met with similar shortfalls in performance. While
the effects of this policy will continue to be reflected in our
financial results through the second quarter ending June 30, 2010, China's fiscal policy is becoming more
accommodative again, which is resulting in an increase in
government budgeting for large infrastructure projects and in the
current flow of potential contract activity. As a result, we expect
to see a significant improvement in our financial performance in
the second half of 2010. It is important to note that the recent
short-term shift in government spending means only a delay in these
high-value infrastructure projects, and does not have an impact on
the long-term plans for these projects."
Contract Backlog and Pipeline
The Company's current backlog of signed contracts consists of
four contracts totaling $13.1 million
to be delivered by October. One of these pieces of equipment
representing approximately $3.7
million in sales was previously built and is carried in
inventory. In addition, the Company has three contracts in the
closing stages with a potential value of $14.9 million.
Balance Sheet
Cash and cash equivalents totaled $7.6
million at March 31, 2010, as
compared to $0.7 million at
December 31, 2009. Accounts
receivable were $11.4 million at
March 31, 2010 as compared to
$13.4 million at December 31, 2009, and inventories amounted to
$5.3 million versus $3.6 million in the respective periods. The
Company had total stockholders' equity of $19.2 million, with total assets of $32.6 million versus total liabilities of
$13.4 million on March 31, 2010.
Four-month Transition Period Ended December 31, 2009
Revenues for the four month period ended December 31, 2009 were $1.7 million as compared to $17.2 million in the four month period ended
December 31, 2008. The decline in
revenue is primarily attributable to a shift by China in its fiscal polices resulting in
curtailment in government spending on large infrastructure
projects.
Cost of sales for the four months ended December 31, 2009 was approximately $6.2 million as compared to $12.3 million for the three months ended
December 31, 2008. For the 2009
four-month transition period, the Company reported gross profit of
negative $4.5 million, compared to
gross profit of $4.9 million, or
28.6% of total revenues, for the 2008 four-month transition period.
Key reasons for the negative gross margins include additional
production costs associated with anticipated customer orders and
certain cost overruns.
Operating expenses for the four months ended December 31, 2009 were approximately $1.8 million, compared to $0.7 million in the same period of 2008. Selling
expenses for the 2009 transition period increased to $0.4 million from $54,000 in the same period of 2008, as the
Company increased spending on the pursuit of new business
opportunities, including in international markets such as the US
and Korea. General and administrative expenses were $1.4 million and $0.7
million for the 2009 and 2008 transition periods,
respectively, with the increase due to additional staff hires as
well as bad-debt write-offs.
For the four months ending December 31,
2009, the Company reported a net loss of $5.1 million, compared to net income of
$3.5 million for the four months
ending December 31, 2008.
"Given the fact that the construction equipment business
consists of large, long lead-time contracts subject to
macro-economic factors, our business and our financial results are,
by definition, difficult to predict and are extremely "lumpy" in
nature on a quarter to quarter basis," added Mr. Liu. "Recognizing
that reality, we have structured our business and operations in a
manner that maximizes our flexibility and ability to respond to
changing market conditions, reduces exposure to fixed overhead, and
reduces inventory buildups. We have achieved this in part by being
a value-added design and engineering company rather than a pure
manufacturing company. As a result, we focus our resources on
designing and developing customized heavy machinery to solve
complex lifting and bridge building problems. While we do
manufacture machinery, we have not overbuilt our manufacturing
capacity knowing that when necessary due to spikes in demand that
we can outsource this relatively low value-added function. Our
current operations are capable of producing more than $25 million in sales per quarter.
"The pace of contract activity is increasing and our sales and
marketing team has seen improvements, as we look for business
opportunities both domestically and abroad. Given the proprietary
design of our equipment, our innovative engineering expertise and
our market position, we expect to capitalize on long-term secular
trends which benefit our business. To complement our growth and
speed the sales cycle, we are investigating alternative business
models, such as equipment leasing, which would enable us to capture
additional share of customer expenditures on construction
equipment."
Conference Call
The conference call and webcast will take place at 10:00 am EDT on Tuesday,
June 29, 2010. Interested participants should call
1-877-941-4774 when calling within the
United States or 1-480-629-9760 when calling internationally
(pass code 4318447).
This conference call will be broadcast live over the Internet
and can be accessed by all interested parties by clicking on this
link: http://www.talkpoint.com/viewer/starthere.asp?pres=131361 ,
or visiting http://www.viavid.net , where the webcast can be
accessed through July 7, 2010.
A playback will be available through July
7, 2010. To listen, please call 1-877-870-5176 within
the United States or
1-858-384-5517 when calling internationally. Utilize the pass code
4318447 for the replay.
About Wowjoint Holdings Limited
Wowjoint is a leading provider of customized heavy duty lifting
and carrying machinery used in such large scale infrastructure
projects as railway, highway and bridge construction. Wowjoint's
main product lines include launching gantries, tyre trolleys,
special carriers and marine hoists. The company's innovative design
capabilities have resulted in patent grants and proprietary
products. Wowjoint is well positioned to benefit directly from
China's rapid infrastructure
development by leveraging its extensive operational experience and
long-term relationships with established blue chip customers.
Information on Wowjoint's products and other relevant information
are available on its website at http://www.wowjoint.com .
Forward Looking Statements
This press release includes "forward-looking statements" within
the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Words such as
"expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements in this press release
include matters that involve known and unknown risks, uncertainties
and other factors that may cause actual results, levels of
activity, performance or achievements to differ materially from
results expressed or implied by this press release. Wowjoint
undertakes no obligation and does not intend to update these
forward-looking statements to reflect events or circumstances
occurring after the date of this communication. You are cautioned
not to place undue reliance on these forward- looking statements,
which speak only as of the date of this communication. All
forward-looking statements are qualified in their entirety by this
cautionary statement. All subsequent written and oral
forward-looking statements concerning Wowjoint or other matters and
attributable to Wowjoint or any person acting on their behalf are
expressly qualified in their entirety by the cautionary statements
above. Wowjoint does not undertake any obligation to update any
forward-looking statement, whether written or oral, relating to the
matters discussed in this news release.
For additional information contact:
Company:
Anthony (Tony) Hung
Chief Financial Officer
Tel: +86-10-8957-9330 x8011
Email: tony@email.wowjoint.com
Investors:
Scott Powell
HC International, Inc.
Tel: +1-917-721-9480
Email: scott.powell@hcinternational.net
Web: http://www.hcinternational.net
- Financial Tables Follow -
WOWJOINT HOLDINGS LTD
Unaudited Consolidated Statement of Income
(US dollars in thousands, except for EPS and share data)
Three Three Four Four
months months months months
ended ended ended ended
March March Dec. Dec.
31,2010 31,2009 31,2009 31,2008
Sales
Machinery sales 1,653 16,164 1,324 17,134
Technical service 79 180 372 74
Total sales 1,732 16,344 1,696 17,208
Cost of goods sold 1,450 11,380 6,165 12,290
Gross profit 282 4,964 (4,469) 4,918
Operating expenses:
Selling expenses 74 53 366 54
General and administrative expenses 715 405 1,386 654
Total operating expenses 789 458 1,752 708
Income from operations (507) 4,506 (6,221) 4,210
Other expenses:
Interest expense 10 10 11 9
Bank expense 1 5 5 2
Foreign currency exchange loss (gain) -- -- -- 39
Other expense (profit) (8) (1) 40 32
Total other expenses 3 14 56 82
Income before income taxes (510) 4,492 (6,277) 4,128
Income taxes (Benefits) (85) 674 (1,165) 619
Net income attributed to ordinary
shareholders (425) 3,818 (5,112) 3,509
Earnings per share
Basis -0.05 N/A N/A N/A
Diluted -0.05 N/A N/A N/A
Weighted average number of shares used
in computing earnings per share
Basis 7,949,965 N/A N/A N/A
Diluted 7,949,965 N/A N/A N/A
WOWJOINT HOLDINGS LTD
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
March March December December
31, 2010 31, 2009 31, 2009 31, 2008
ASSETS
Current Assets:
Cash and cash equivalents 7,554 1,077 675 955
Accounts receivable(net) 11,410 27,611 13,410 16,214
Other receivables 313 236 43 292
Advances to suppliers 1,306 2,138 790 3,169
Inventories 5,304 2,584 3,636 3,529
Costs and estimated earnings in
excess of billings 2,437 1,203 2,321 1,211
Amount due from related parties 62 3 62 3
Total Current Assets 28,386 34,852 20,937 25,373
Property, plant and equipment 1,664 1,782 1,630 1,722
Intangible asset, net 1,033 1,059 1,040 1,066
Deferred tax assets 1,251 -- 1,165 --
Restricted cash 264 113 188 --
Prepaid expense - Long-term 5 4 5 5
Total Assets 32,603 37,810 24,965 28,166
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Short-term loans 732 731 732 732
Accounts payable and accrued expenses 5,535 4,728 4,437 5,075
Advances from customers 928 10,534 480 6,031
Taxes payable 5,747 6,012 6,169 4,493
Other payables 486 187 258 157
Billings in excess of costs and
estimated earnings -- -- 23 --
Total Current Liabilities 13,428 22,192 12,099 16,488
Stockholders' Equity:
Common stock 8 1 1 1
Additional paid in capital 4,718 3,576 3,575 3,576
Warrants 5,581 -- -- --
Statutory surplus reserves 2,674 1,122 2,674 1,122
Retained earnings 5,335 9,968 5,760 6,150
Accumulated other comprehensive
income 859 951 856 829
Total Stockholders' Equity 19,175 15,618 12,866 11,678
Total Liabilities and Stockholders'
Equity 32,603 37,810 24,965 28,166
SOURCE Wowjoint Holdings Limited
