Wonder Auto Reports Its Second Quarter 2009 Financial Results
JINZHOU CITY, China, Aug. 3, 2009 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or "the Company"), a leading manufacturer of automotive electrical parts, suspension products and engine accessories in China, today announced its financial results for the Second quarter ended June 30, 2009.
Highlights:
-- Sales revenue increased 35.4% year-over-year to $49.7 million;
-- Export increased 26.6% year-over-year to $6.5 million.
-- Net income increased 2.1% year-over-year to $5.4 million;
-- EPS Non-GAAP earnings per share was $0.22 for the second quarter of
2009, regardless the non-cash foreign exchange loss/gain, an increase
of $0.03 for the second quarter of 2008. The fully diluted net income
per share was $0.20, the same as the second quarter of 2008.
Business outlook
For the third quarter of 2009, our sales revenue is expected to be over $55.5 million with the net income to be over $6.3 million.
Growth drivers
Our products are increasingly demanded attributable to the following advantages:
-- Market oriented focus. Our alternator and starter products are
primarily for mid- to small-sized engine vehicles, which are encouraged
in sales by China's government in the stimulus plans.
-- New joint development programs. In the second quarter of 2009, we
developed 18 joint programs, among which 3 were with international
customers. Most of these programs will turn into sales contracts.
-- Strategic acquisitions. We will be able to achieve market expansion and
cross-selling synergies through acquisitions.
-- Favourable government policies. China has implemented a series of
stimulus policies to bolster its auto industry.
Financial performance
Our sales revenue increased by approximately $13.0 million, or 35.4%, to approximately $49.7 million for the three months ended June 30, 2009, compared with $36.7 million of the same period last year. This increase was mainly attributable to the increased sales volume of alternators and starters, and the inclusion of engine valves and tappets.
Our export increased $1.4 million year over year, or 26.6% to $6.5 million, compared with $5.1million of the same period last year. As a percentage of sales revenue, our export increased to 13.1% for the three months ended June 30, 2009, as compared to 7.5% for the first quarter in 2009, which represents a 116.6% or $3.5 million increase, compared to $3.0 million for the first quarter of 2009.
Sales revenue from alternators and starters was approximately $32.4 million, decreased $632,099 or 1.9% from $33.1 million of the same quarter in 2008. Such decrease was mainly due to the decreased average selling prices resulted by the fact that a large portion of our revenue was generated from alternators and starters for mid-to-small displacement vehicles, the decreased raw material prices during this quarter, as well as the higher percentage of starters in the mix, which had lower average selling prices. Sales revenue from rods and shafts was approximately $4.7 million, up $1.1 million, or 30.1% from $3.6 million of the same period in 2008.
Our gross profit increased by approximately $2.7 million, or 28.6%, to approximately $12.2 million for the three months ended June 30, 2009, compared with approximately $9.5 million for the same period in 2008 as a result of increased demand for and sales of our starters, rods and shafts and valve and tappet products. Gross margin was 24.6% for the three-month period ended June 30, 2009, as compared to 25.9% of the same period in 2008. Such decrease was mainly due to the increase of cost of sales on a percentage basis as discussed above.
Our total operating expenses increased by approximately $2.0 million, or 74.4%, to approximately $4.7 million for the three months ended June 30, 2009, compared with approximately $2.7 million for the same period in 2008. As a percentage of sales revenue, our total expenses increased to 9.5% for the three months ended June 31, 2009, compared from 7.4% for the same period in 2008.
Our administrative expenses increased $1.3 million, or 92.6%, to approximately $2.8 million for the three months ended June 30, 2009, from approximately $1.4 million for the same period in 2008. As a percentage of sales revenue, administrative expenses increased to 5.5% for the three months ended June 30, 2009, as compared to 3.9% for the same period in 2008. The increase in the amount and percentage of administrative expenses was primarily due to the consolidation of the financial results of Yearcity.
Our research and development expenses increased $174,010, or 59.9%, to $464,675 for the three months ended June 30, 2009 from $290,665 for the same period in 2008. As a percentage of sales revenue, research and development costs increased to 0.9% from 0.8% for the three months ended June 30, 2008. The Company expects to increase the amount of investments in research and development as revenues increase and will maintain the ratio of research and development costs to total sales revenue at approximately 1.0%.
Our selling expenses increased $523,511, or 52.6% to approximately $1.5 million for the three months ended June 30, 2009 from $994,993 for the same period in 2008. As a percentage of sales revenue, our selling expenses were 3.1% for the three months ended June 30, 2009, which was 2.7% in the second quarter last year. The increase in the amount and percentage of selling expenses was mainly due to the consolidation of Yearcity.
Our net finance cost increased $1.4 million, or 243.5% to $1.9 million for the three months ended on June 30, 2009 from $566,630 for the same period last year. The increase was mainly due to the non-cash exchange loss of $709,991 for the three months ended June 30, 2009, as compared to the non-cash exchange gain of $299,429 for the same period of 2008, resulting from the EUR8.3 million loan from DEG Bank
Our income taxes decreased $163,042 to $633,024 during the three months ended June 30, 2009 from $796,426 during the same period in 2008.
Net Income attributable to Noncontrolling Interests. Our net income attributable to noncontrolling interests decreased $423,636, or 61.1% to $270,098 for the second quarter in 2009 from $693,734 for the same period in 2008. The net income attributable to noncontrolling interests were held by third parties in Jinzhou Dong Woo, Jinzhou Hanhua and Jinzhou Karham.
Net Income attributable to Wonder Auto Technology, Inc. common stockholders. Our net income attributable to Wonder Auto Technology, Inc. common stockholders increased by $109,738, or 2.1%, to approximately $5.4 million during the three months ended June 30, 2009 from approximately $5.3 million during the same period in 2008, as a result of the factors described above.
Net income attributable to the Company increased $0.11 million, or 2.0%, to $5.4 million in the second quarter 2009 from $5.3 million of the same quarter last year.
EPS Non-GAAP earnings per share was $0.22 for the second quarter of 2009, regardless of the non-cash foreign exchange loss/gain, an increase of $0.03 for the second quarter of 2008. The fully diluted net income per share was $0.20, the same as the second quarter of 2008.
As of June 30, 2009, Wonder Auto had $31.7 million in cash and cash equivalents, a current ratio of 1.2, working capital of $31.2 million. Shareholders' equity increased to $110.3 million.
Events overview
On July 3, 2009, our subsidiary, Jingzhou Halla closed the acquisition of 100% ownership of Yearcity Limited, or Yearcity, a BVI company, upon the approval of the acquisition by the Department of Foreign Trade and Economic Cooperation, Liaoning Province of China. Yearcity does not have any asset except for its 100% equity ownership of Jinan Worldwide. Jinan Worldwide is a Chinese company engaged in the manufacturing of engine valves and tappets. As a result of our acquisition of Jinan Worldwide, we have become one of the largest engine valves and tappets manufacturers in China.
Mr. Zhao, Chairman and CEO of Wonder Auto Technology, Inc. commented, "Significant changes have taken place in the world economy during the process of fighting against the financial crisis globally. For example, China's economy is recovering steadily. There is no doubt that China's auto industry will be the world's leader. Therefore the US capital markets have begun to re-evaluate and focus on Chinese companies. The adjustments we made in our strategies to response to the financial crisis worked well as we expected. In a word, at the moment, our competitiveness is even greater than before the crisis."
Conference call
The company will host a conference call on Monday, August 3 at 8:00 a.m. U.S. Eastern Daylight time. A question and answer session will follow management's presentation. Mr. Qingjie Zhao (Chairman & CEO), Mr. Ryan Yuan (CFO), Mr. He Sun (Investor Relations Officer) and Mr. Rui Wang (Assistant CFO) will be the primary speakers for the call.
To participate, please call the following numbers ten minutes before the call start time:
Phone number: +1 866 242 1388 (United States) Phone number: +852 800 968 831 (Hong Kong) Phone number: +86 10 800 264 0084 (China) Phone number: +86 10 800 640 0084 (China) Conference ID: 21844553
A live webcast of the conference call will be available on the investor relations page of Wonder Auto's web site at http://www.watg.cn/ . In addition, a set of slides for management's presentation will be available to download from the same website, 30 minutes prior to the webcast.
About Wonder Auto
Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc., through its Chinese subsidiaries, designs, develops, manufactures and sells automotive electrical parts, suspension products and engine accessories. Wonder Auto was ranked second in sales revenue in the China market for automotive alternators and starters in 2007. With respective 5 different series and over 150 models of alternators, 70 models of starters, various suspension and engine related parts, the Company supplies to a wide range of automakers, engine producers and auto parts suppliers both in domestic China and overseas. Wonder Auto's main customers include Beijing MOBIS Auto Parts & Components Co., Ltd, Harbin Dongan Automotive Engine Co., Ltd, Shenyang Xinguang Huachen Auto Engine Co., Ltd, SWT, Shenyang Aerospace Mitsubishi Motors Engine Co., Ltd., Shanghai VW and Weifang Diesel Engine. For more information, please log on http://www.watg.cn/ .
Safe harbor statement
This press release may contain forward-looking information about Wonder Auto Technology, Inc. and its wholly owned subsidiaries which are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, statements about industry trends and Wonder Auto Technology, Inc.'s future performance, operations and products. This and other "Risk Factors" are contained in Wonder Auto Technology, Inc.'s public filings with the SEC.
Wonder Auto Technology, Inc.
Condensed Consolidated Financial Statements
Three and six months ended June 30, 2009 and 2008
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
For the three months ended June 30, 2009 and 2008
Three months ended
June 30
(unaudited)
2009 2008
Sales revenue $49,651,214 $36,658,896
Cost of sales 37,431,981 27,154,953
Gross profit 12,219,233 9,503,943
Operating expenses
Administrative expenses 2,752,054 1,428,980
Research and development expenses 464,675 290,665
Selling expenses 1,518,504 994,993
4,735,233 2,714,638
Income from operations 7,484,000 6,789,305
Other income 563,381 308,263
Government grants 177,476 --
Net finance costs (1,946,097) (566,630)
Equity in net income of an
unconsolidated affiliate -- 225,122
Income before income taxes and
noncontrolling interests 6,278,760 6,756,060
Income taxes (633,024) (796,426)
Net income before noncontrolling interests 5,645,736 5,959,634
Net income attributable to
noncontrolling interests (270,098) (693,734)
Net income attributable to Wonder Auto
Technology, Inc. common stockholders $5,375,638 $5,265,900
Net income before noncontrolling interests $5,645,736 $5,959,634
Other comprehensive income
Foreign currency translation adjustments 9,817 1,675,768
Comprehensive income 5,655,553 7,635,402
Comprehensive income attributable to
noncontrolling interests (275,411) (866,896)
Comprehensive income attributable to
Wonder Auto Technology, Inc.
common stockholders $5,380,142 $6,768,506
Earnings per share attributable to
Wonder Auto Technology, Inc.
common stockholders:
basic and diluted $0.20 $0.20
Weighted average number of shares
outstanding:
basic and diluted 26,959,994 26,959,994
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2009 and December 31, 2008
June 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $31,717,804 $8,159,156
Restricted cash 25,106,229 24,181,645
Trade receivables, net 50,443,830 46,571,619
Bills receivable 14,044,235 8,388,926
Other receivables, prepayments and deposits 7,774,820 16,408,304
Inventories 46,420,925 44,016,192
Amount due from Hony Capital -- 7,637,216
Income tax recoverable 25,181 289,000
Deferred taxes 637,747 1,075,766
Total current assets 176,170,771 156,727,824
Intangible assets 22,130,289 22,062,560
Property, plant and equipment, net 71,049,014 69,131,579
Land use rights 10,257,807 10,391,527
Deposit for acquisition of property,
plant and equipment 2,410,867 3,845,774
Deferred taxes 1,124,442 870,500
TOTAL ASSETS $283,143,190 $263,029,764
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Trade payables
$34,944,961 $21,616,932
Bills payable 35,348,985 31,247,100
Other payables and accrued expenses 14,339,195 20,465,014
Provision for warranty 2,433,238 2,377,620
Payable to Hony Capital -- 10,187,216
Secured borrowings 57,481,977 44,055,803
Early retirement benefits cost 380,696 419,301
Total current liabilities 144,929,052 130,368,986
Secured borrowings 17,205,355 16,054,478
Deferred revenue - government grants 3,443,742 2,806,777
Early retirement benefits cost 620,294 798,115
TOTAL LIABILITIES 166,198,443 150,028,356
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: par value $0.0001 per
share; authorized 10,000,000 shares in 2009
and 2008; none issued and outstanding -- --
Common stock: par value $0.0001 per share
Authorized 90,000,000 shares in 2009 and
2008; issued and outstanding 26,959,994
shares in 2009 and 2008 2,696 2,696
Additional paid-in capital 67,711,999 71,349,599
Statutory and other reserves 7,944,120 7,628,541
Accumulated other comprehensive income 9,453,430 8,424,270
Retained earnings 25,201,849 14,654,587
TOTAL WONDER AUTO TECHNOLOGY, INC.
STOCKHOLDERS' EQUITY 110,314,094 102,059,693
NONCONTROLLING INTERESTS 6,630,653 10,941,715
TOTAL EQUITY 116,944,747 113,001,408
TOTAL LIABILITIES AND EQUITY $283,143,190 $263,029,764
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2009 and 2008
Six months ended June 30
(Unaudited)
2009 2008
Cash flows from operating activities
Net income attributable to Wonder Auto
Technology, Inc. common stockholders $10,547,262 $9,251,683
Adjustments to reconcile net income attributable
to Wonder Auto Technology, Inc. common
stockholders to net cash provided by
operating activities:
Depreciation 2,781,143 1,536,209
Amortization of intangible assets and
land use rights 198,573 58,020
Deferred taxes 180,716 (164,912)
Loss (gain) on disposal of property,
plant and equipment 19,549 (1,205)
Provision for doubtful debts 87,484 15,676
Provision of obsolete inventories 45,923 23,570
Exchange (gain) loss on translation of
monetary assets and liabilities (52,045) 180,952
Equity net income of a
non-consolidated affiliate -- (225,122)
Noncontrolling interests 493,533 1,177,479
Deferred revenue amortized (127,735) --
Changes in operating assets and liabilities:
Trade receivables (4,021,736) (8,287,289)
Bills receivable (5,324,675) 3,337,080
Other receivables, prepayments and deposits 2,736,977 (1,708,399)
Inventories (2,515,195) (6,304,964)
Trade payables 13,366,276 4,432,755
Other payables and accrued expenses (4,123,986) (2,210,222)
Amount due from a related company -- 78,516
Early retirement benefit costs (214,840) --
Provision for warranty 58,769 318,877
Income tax recoverable 251,285 221,870
Net cash flows provided by operating activities $14,387,278 $1,730,574
Cash flows from investing activities
Payments to acquire intangible assets $(146,600) $(4,152)
Payments to acquire and for deposit for
acquisition of property, plant and
equipment and land use right (3,345,040) (7,581,996)
Proceeds from sales of property,
plant and equipment 23,877 85,533
Net cash paid to acquire Jinzhou Hanhua
Electrical Systems Co., Ltd. -- (3,042,676)
Net cash paid to acquire Money
Victory Limited -- (5,000,000)
Net cash paid to acquire Jinzhou
Karham Co., Ltd. -- (703,712)
Net cash paid to acquire Fuxin Huirui
Mechanical Co., Ltd. -- (140,990)
Net cash paid to acquire Yearcity (3,986,057) --
Net cash paid to acquire Jinzhou Wanyou
Mechanical Parts Co., Ltd. (1,705,437) --
Net cash flows used in investing activities (9,159,257)(16,387,993)
Cash flows from financing activities
Government grants received 769,006 --
Decrease in bills payable 3,809,457 (2,616,886)
(Increase) decrease in restricted cash (965,778) 3,025,786
New bank loans 57,383,801 16,643,208
Repayment of bank loans (42,664,550) (6,987,856)
Net cash flows provided by financing activities 18,331,936 10,064,252
Effect of foreign currency translation on cash
and cash equivalents (1,309) 866,879
Net increase (decrease) in cash and cash
equivalents 23,558,648 (3,726,288)
Cash and cash equivalents - beginning of period 8,159,156 26,102,993
Cash and cash equivalents - end of period $31,717,804 $22,376,705
Supplemental disclosures for cash flow
information:
Cash paid for:
Interest $2,500,563 $1,117,712
Income taxes $1,057,966 $1,568,403
Non-cash investing and financing
activities:
Acquisition of Yearcity by offsetting
with receivable from disposal of
an unconsolidated affiliate $5,950,000 $--
Settlement of amount due to Hony
Capital II, L.P. ("Hony Capital") by
offsetting with amount due from
Hony Capital $7,626,804 $--
For more information, please contact:
Sun He
Investor Relations Officer
Tel: +86-10-8478-5339
Cell: +86-153-1161-1742
Email: sunhe@watg.cn
Yechon Xie
Investor Relations Manager
Tel: +86-416-266-1186
Cell: +86-137-0006-1685
Email: ycxie@watg.cn