Wonder Auto Reports Its Record Fourth Quarter and Full Year 2009 Financial Results
JINZHOU CITY, China, Feb. 11, 2010 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company"), a leading supplier of automotive electric parts, suspension products and engine components in China, today announced its financial results for the fourth quarter and full year ended December 31, 2009.
Operational Highlights for Year 2009:
-- Established a foundation for capacity expansion and strategic
acquisition through recent financing of approx $70 million;
-- Sales revenue increased 49.5% year-over-year to a record $211.0 million;
-- Gross profit rose 41.0% year-over-year to $51.4 million;
-- Net income attributable to Wonder Auto increased 20.9% year-over-year
to $22.9 million;
-- Non-GAAP EPS* was $ 0.86 for the full year 2009, compared with Non-GAAP
EPS $0.73 in 2008.
*[Notes]:
For the year ended For the year ended
December 31, 2009 December 31, 2008
GAAP EPS $0.82 $0.70
Stock-based compensation $0.04 $0.03
Non-GAAP EPS $0.86 $0.73
Mr. Zhao, CEO and Chairman of Wonder Auto commented, "Although we have experienced economic downturn, China's auto popularization was still improving. In 2009, Wonder Auto has successfully captured the dramatic development of China's auto market and our sales revenue increased nearly 50% year over year. Our management team is quite optimistic to Wonder Auto's rapid growth in both market share and capitalization in the following years, especially with the recent financing from the stock market last November."
Business outlook
For the first quarter of 2010, sales revenue is expected to be approximately $58.0 million.
Growth drivers
-- China economy growth, as GDP growth rate was 8.7% in 2009
-- The purchasing desire from Chinese car buyers had been activated
-- Stimulus programs from Chinese government for Chinese auto industry,
such as purchase tax reduction, cars to the countryside program,
subsidy for trade-in cars.
Selected Financial Results for the Full Year Ended December 31, 2009
Sales revenue in 2009 rose to a record high of $211.0 million, which was a 49.5% increase from $141.2 million in 2008. Revenue from alternators and starters increased $27.8 million, and the sales of rod and shaft products contributed $21.2 million and engine valves valve tappets contributed $46.6 million to revenue. The increase was mainly attributable to the growing market demand for our cost effective and high quality products.
In 2009, gross profit increased 41.0% to a record of $51.4 million from a gross profit of $36.4 million in 2008. Gross margin was 24.3% in 2009 compared with 25.8% for the year 2008. The decreased gross margin was due to the changes of product portfolio, when the majority of our products sold for mid- to small-sized engine vehicles. And this category of products has relatively low gross margin.
Operating expenses for 2009 increased $10.4 million, to $23.6 million from $13.3 million of 2008. The increase was primarily due to the new non-cash stock-based compensation, which was $1.2 million, and from the operating expenses of Jinan Worldwide, which was $7.1 million for the year 2009 compared to $1.4 million in the last quarter of 2008.
The increased administrative expenses were primarily due to administrative expenses of the newly acquired subsidiaries, higher expenses on legal, audit, and due diligence work for acquisitions, maintenance fees as a Nasdaq-listed company. In addition, a non-cash stock-based compensation of $1.2 million was incurred from the newly launched stock option plan. The increase of research and development costs is primarily attributable to the research and development of new and existing products, especially for alternative energy vehicle parts. As a percentage of revenue, research and development expenses increased 83.7% year-over-year from $1.6 million, or 1.2% of sales revenue, in 2008, to $3.0 million, or 1.4% of sales revenue, in 2009. Selling expenses increased to $7.8 million compared with $4.1 million in 2008. The increased selling expenses were mainly caused by the newly acquired subsidiaries.
Income before income taxes and non-controlling interests increased $3.5 million, or 15.0%, to $27.1 million in 2009 from $23.5 million in 2008. Income before income taxes and non-controlling interests as a percentage of revenue was 12.8% in 2009.
Net income attributable to Wonder Auto increased $3.9 million, or 20.9%, to $22.9 million in 2009 from $18.9 million in 2008. The Non-GAAP net income increased $4.4 million, or 22.5%, to $24.0 million in 2009 from $19.6 million in 2008. Non-GAAP EPS was $0.86 in 2009, without considering the non-cash stock-based compensation of $1.2 million incurred from the stock option plan.
As of December 31, 2009, Wonder Auto had $82.4 million in cash and cash equivalents and restricted cash of $15.8 million, a current ratio of 1.7-to-1, working capital of $97.8 million, and $20.9 million long-term bank loan. Total Wonder Auto Stockholders' equity increased to $192.7 million. As of December 31, 2009, the value of property, plant and equipment rose to $73.8 million from $69.1 million as of December 31, 2008.
Events overview
On November 2009, Wonder Auto closed a follow-on offering of 6.9 million shares of common stock at a public offering price of $10.75 per share.
On October 30, 2009, Wonder Auto's subsidiaries Jinzhou Wonder Motor Co., Ltd. and Jinzhou Halla Electrical Equipment Co., Ltd. have entered into framework agreements with Jinzhou Wonder Alternative Energy Vehicle Technology Co., Ltd., for the supply of electric motors to Jinzhou AEV for use in its electric and alternative energy vehicles. The Company expects the aggregate value of the agreements to be approximately US$6.13 million.
On September 28, 2009, Wonder Auto's subsidiary Jinzhou Halla entered into a joint development agreement with Shenzhen BYD Auto Company Limited ("Shenzhen BYD") to design and develop alternator prototypes for Shenzhen BYD's F3/F3R sedan models, which have engine sizes between 1.3 liters and 1.5 liters, and were among the top ten best-selling models in China in the first nine months in 2009.
On September 22, 2009, Wonder Auto's subsidiary Jinzhou Wanyou Mechanical Parts Co., Ltd. acquired Friend Birch Limited. By the acquisition, Jinzhou Wanyou expanded its capacity to meet increasing customer demand.
On July 3, 2009, our subsidiary, Jingzhou Halla closed the acquisition of 100% ownership of Yearcity Limited. As a result of our acquisition of Jinan Worldwide, we have become one of the largest engine valves and tappets manufacturers in China.
In April 2009, Mr. Xiaoyu Zhang and Mr. Xianzhang Wang were appointed to be the Company's new independent directors. The Company values the two outstanding experts as tremendous assets for the company as they will be of immense benefit to the company attributable to their background. Mr. Xiaoyu Zhang is the president of the Society of Automotive Engineers of China and the vice president of China Machinery Industry Federation. Mr. Xianzhang Wang is the president of the Insurance Association of China and vice president of China Insurance Academy.
In February 2009, the Company won the bid to supply starters to Dongfeng Automotive Co., Ltd with prototype deliveries for road testing to be commenced in 2009. The expected revenue under this agreement will be approximately $20 million during the period of 2011 to 2015 progressively.
Conference call
The company will host a conference call on Thursday, February 11 at 8:00 a.m. U.S. Eastern Standard time. A question and answer session will follow management's presentation. Mr. Qingjie Zhao (Chairman & CEO), Mr. Ryan Yuan (CFO) and Mr. Patrick Sun (IR Manager) will be the primary speakers for the call.
To participate, please call the following numbers ten minutes before the call start time:
International Toll Free Dial-in Number(s): Phone number: +1 8662421388 (United States) Phone number: +852 800968831 (Hong Kong) Phone number: +86 10 8002640084 (China, China Telecom) Phone number: +86 10 8006400084 (China, NetCom Users) Phone number: +44 08082347860 (United Kingdom) Conference ID: 54026566
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/ .
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 components. Wonder Auto ranked second and third in sales revenue in the Chinese market for automobile alternators and starters in 2008, respectively. Wonder Auto's products are used in a wide range of passenger and commercial automobiles with special focus on the fast-growing small- to medium-engine passenger vehicle market. For more information, please log on http://www.watg.cn/ .
Safe Harbor Statement
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expected 2009 financial results, our expected financial performance in 2010 and future strategic and operational plans, our future operating results, our expectations regarding the market for our products, our expectations regarding the continued growth of the automobile market, as well as all assumptions, expectations, predictions, intentions or beliefs about our relative strength and about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "believe," "expect," "may," "should," "potential," "continue," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" or similar expressions. Such information is based upon assumptions and expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions and expectations are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release, except as required under applicable law. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov/ . All information provided in this press release and in the attachments is as of the date of this press release.
For more information, please contact:
Patrick Sun
Investor Relations Manager
Tel: +86-10-8478-5339
Cell: +86-153-1161-1742
Email: ir@watg.cn
Wonder Auto Technology, Inc.
Consolidated Statements of Income and Comprehensive Income (Loss)
(Stated in US Dollars)
Year ended December 31,
2009 2008 2007
Sales revenue $211,024,016 $141,189,559 $102,083,722
Cost of sales 159,659,681 104,750,150 76,459,944
Gross profit 51,364,335 36,439,409 25,623,778
Operating expenses
Administrative expenses 11,673,683 6,827,200 3,565,332
Stock-based
compensation 1,171,935 706,295 --
Research and
development expenses 3,026,895 1,647,888 1,135,997
Selling expenses 7,767,770 4,093,413 3,290,689
Unusual charge - make
good provision -- -- 18,265,500
23,640,283 13,274,796 26,257,518
Income/(loss) from
operations 27,724,052 23,164,613 (633,740)
Other income 1,177,215 1,359,883 287,322
Government grants 2,754,978 192,882 1,496,547
Net finance costs (4,577,660) (2,246,099) (2,409,021)
Equity in net income of
non-consolidated
affiliates -- 1,072,788 34,147
Income/(loss) before income
taxes and Noncontrolling
interests 27,078,585 23,544,067 (1,224,745)
Income taxes (3,223,881) (2,174,948) (1,389,008)
Net income before
noncontrolling interests 23,854,704 21,369,119 (2,613,753)
Net income attributable to
noncontrolling interests (996,114) (2,460,352) (1,136,694)
Net income/(loss)
attributable to Wonder
Auto Technology, Inc.
common stockholders $22,858,590 $18,908,767 $(3,750,447)
Net income/(loss) before
noncontrolling interests 23,854,704 21,369,119 (2,613,753)
Other comprehensive income
Foreign currency
translation adjustments 149,199 4,613,096 3,132,459
Comprehensive income 24,003,903 25,982,215 518,706
Comprehensive income/(loss)
attributable to
noncontrolling interests (996,881) (3,071,210) (1,299,259)
Comprehensive income/(loss)
attributable to Wonder Auto
Technology, Inc. common
stockholders $23,007,022 $22,911,005 $(780,553)
Earnings/(loss) per share
attributable to Wonder
Auto Technology, Inc.
common stockholders:
basic $0.82 $0.70 $(0.16)
diluted $0.82 N/A N/A
Weighted average number of
shares
outstanding: basic 27,829,583 26,959,994 24,140,816
diluted 27,843,009 N/A N/A
Wonder Auto Technology, Inc.
Consolidated Balance Sheets
(Stated in US Dollars)
As of December 31,
2009 2008
ASSETS
Current assets
Cash and cash equivalents $82,414,287 $8,159,156
Restricted cash 15,753,748 24,181,645
Trade receivables, net 49,522,583 46,571,619
Bills receivable 21,965,065 8,388,926
Other receivables,
prepayments and deposits 14,826,460 16,408,304
Inventories 51,119,562 44,016,192
Amount due from Hony Capital -- 7,637,216
Income tax recoverable -- 289,000
Deferred taxes 1,186,410 1,075,766
Total current assets 236,788,115 156,727,824
Intangible assets 32,907,720 22,062,560
Property, plant and equipment,
net 73,770,329 69,131,579
Land use rights 10,618,853 10,391,527
Deposit for acquisition of
property, plant and equipment 7,435,563 3,845,774
Deferred taxes 731,575 870,500
TOTAL ASSETS $362,252,155 $263,029,764
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Trade payables $34,126,534 $21,616,932
Bills payable 29,388,653 31,247,100
Other payables and
accrued expenses 14,886,909 20,465,014
Provision for warranty 2,272,322 2,377,620
Income tax payable 892,340 --
Payable to Hony Capital -- 10,187,216
Secured borrowings 57,082,779 44,055,803
Early retirement
benefits cost 353,584 419,301
Total current liabilities 139,003,121 130,368,986
Secured borrowings 20,908,721 16,054,478
Deferred revenue -
government grants 3,315,762 2,806,777
Early retirement
benefits cost 550,397 798,115
TOTAL LIABILITIES 163,778,001 150,028,356
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 33,859,994 in
2009 and 26,959,994 shares in
2008 3,386 2,696
Additional paid-in
capital 137,542,702 71,349,599
Statutory and other
reserves 10,186,701 7,628,541
Accumulated other
comprehensive
income 9,647,051 8,424,270
Retained earnings 35,270,596 14,654,587
TOTAL WONDER AUTO TECHNOLOGY, INC.
STOCKHOLDERS' EQUITY 192,650,436 102,059,693
NONCONTROLLING INTERESTS 5,823,718 10,941,715
TOTAL EQUITY 198,474,154 113,001,408
TOTAL LIABILITIES AND EQUITY $362,252,155 $263,029,764
Wonder Auto Technology, Inc.
Consolidated Statements of Cash Flows
(Stated in US Dollars)
Year ended December 31,
2009 2008 2007
Cash flows from operating
activities
Net income/(loss) $23,854,704 $21,369,119 $(2,613,753)
Adjustments to reconcile
net income/(loss) to net
cash provided by
operating activities:
Depreciation 5,858,870 3,734,534 2,014,045
Amortization of
intangible assets and
land use right 687,148 169,641 90,712
Deferred taxes 26,640 (112,140) (263,993)
Loss/(gain) on disposal
of property, plant and
equipment 299,018 (129,374) 20,255
Gain on disposal of Man
Do Auto Technology Co.,
Ltd. -- -- (500)
Loss on disposal of non-
consolidated affiliate -- 122,788 --
Provision for
doubtful debts 180,718 8,577 2,159
Provision of obsolete
inventories 1,018,826 46,917 39,115
Exchange loss/(gain) on
translation of monetary
assets and liabilities 195,307 (1,242,479) 532,738
Equity in net income of
non-consolidated
affiliate -- (1,072,788) (34,147)
Share-based compensation 1,171,935 706,295 --
Deferred revenue
amortized (260,372) (59,848) --
Unusual charge -
make good provision -- -- 18,265,500
Changes in operating
assets and liabilities:
Trade receivables (2,959,820) 2,993,828 (10,651,989)
Bills receivable (13,570,634) 6,251,024 (6,504,351)
Other receivables,
prepayments and
deposits 4,380,259 (3,948,637) 2,902
Inventories (7,043,479) (14,773,890) 2,265,298
Trade payables 12,040,815 (53,217) 2,554,508
Bills payable (1,846,976) (956,502) 5,110,761
Amount due from a
related company -- 78,516 --
Other payables and
accrued expenses (6,608,069) (2,644,372) 1,099,131
Provision for warranty (105,569) 262,316 6,124
Income tax payable 1,151,157 (1,526,913) 235,971
Early retirement
benefits cost (313,139) (117,834) --
Net cash flows provided by
operating activities $18,157,339 $9,105,561 $12,170,486
Wonder Auto Technology, Inc.
Consolidated Statements of Cash Flows (Cont'd)
(Stated in US Dollars)
Year ended December 31,
2009 2008 2007
Cash flows from investing
activities
Payments to acquire
intangible assets $(155,622) $(1,472,868) $(1,982)
Payments to acquire land
use right -- (1,856,268) --
Payments to acquire and
for deposit for
acquisition of
property, plant and
equipment (12,959,259) (17,308,878) (8,023,761)
Proceeds from sales of
property, plant and
equipment 30,592 242,044 25,803
Proceeds from sales of
Money Victory Limited 5,950,000 -- --
Advanced to Winning (8,013,693) -- --
Net cash paid to acquire
Jinzhou Wanyou (1,705,437) (293,400) (14,146,485)
Net cash paid to acquire
Friend Birch (11,728,042) -- --
Net cash paid to acquire
Jinzhou Dongwoo -- -- (2,420,000)
Cash inflow from disposal
of Man Do -- -- 500
Net cash paid to acquire
Jinzhou Hanhua -- (4,040,472) --
Net cash paid to acquire
Jinzhou Karham -- (703,712) --
Net cash paid to acquire
Money Victory -- (5,000,000) --
Net cash paid to acquire
Fuxin Huirui -- (140,990) --
Net cash paid to acquire
Yearcity (9,936,057) (6,691,434) --
Net cash flows used in
investing activities (38,517,518) (37,265,978) (24,565,925)
Cash flows from financing
activities
Government grants
received 769,006 -- --
Decrease/(Increase) in
restricted cash 8,418,349 2,293,532 (3,736,383)
Dividend paid to Winning -- (644,030) (343,934)
Dividend paid to minority
stockholders (1,320,385) (1,653,271) (743,240)
Proceeds from secured
borrowings 79,457,451 18,426,341 29,486,379
Repayment of secured
borrowings (61,781,846) (9,196,570) (18,161,716)
Net proceeds from issue
of shares 68,994,141 -- 22,730,461
Net cash flows provided by
financing activities 94,536,716 9,226,002 29,231,567
Effect of foreign currency
translation on cash
and cash equivalents 78,594 990,578 1,063,166
Net increase / (decrease) in
cash and cash equivalents 74,255,131 (17,943,837) 17,899,294
Cash and cash equivalents -
beginning of year 8,159,156 26,102,993 8,203,699
Cash and cash equivalents -
end of year $82,414,287 $8,159,156 $26,102,993
Supplemental disclosures for cash
flow information:
Cash paid for:
Interest $4,418,494 $2,849,664 $1,445,534
Income taxes $2,023,001 $2,464,548 $1,316,837
Cash investing activities:
Acquisitions
Fair value of assets
acquired $9,823,946 $101,208,984 $3,149,361
Fair value of liabilities
assumed $3,107,514 $86,049,295 $309,044