Wonder Auto Reports Results for the Second Quarter of 2010
JINZHOU CITY, China, Aug. 9, 2010 /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, 2010.
Highlights for the second quarter of 2010:
-- Sales revenue increased 37.9% year-over-year to $68.5 million;
-- Gross profit rose 40.4% year-over-year to $17.2 million from $12.2
million, and gross margin increased to 25.1% year over year from 24.6%;
-- Non-GAAP net income attributable to Wonder Auto increased 54.0% year-
over-year to $8.3 million;
-- Non-GAAP EPS was $0.24, representing a 22.7% increase from
approximately $0.20 compared with the second quarter 2009;
-- Sales revenue from PRC increased 41.1%, or $ 17.7 million year-over-
year, to $60.9 million in the second quarter 2010;
-- Sales revenue from outside PRC increased $1.1 million, or 16.5% year-
over-year, to $7.6 million in the second quarter 2010.
*(Notes): (in thousands of U.S. dollars)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Net income attributable 6,646 5,376 12,427 10,547
to
Wonder Auto Technology,
Inc. common stockholders
Share-based compensation 1,635 -- 3,270 --
Non-GAAP net income 8,281 5,376 15,697 10,547
attributable to Wonder
Auto Technology, Inc.
common stockholders
GAAP EPS (U.S. dollars) 0.20 0.20 0.37 0.39
Non-GAAP EPS (U.S.
dollars) 0.24 0.20 0.46 0.39
Business outlook
For the third quarter of 2010, our sales revenue is expected to achieve $69.0 million or higher. We may update our revenue guidance for third quarter 2010 after we close the M&A project with Jinheng Automotive Safety Technology Holdings Limited ("Jinheng Holdings").
"We have experienced continuous growth of our revenue for the second quarter 2010," said Wonder Auto's Chairman and Chief Executive Officer Mr. Qingjie Zhao. "The Company increased the revenue not only from the existing customers, but also from new clients and new product models. Meanwhile, the increased sales revenue from outside China was also a growth driver to our robust top-line growth. We expect the Company will maintain its growth with its increased production capacity and by generating more new contracts."
Selected Financial Results for the Second Quarter of 2010: Revenues
Our sales revenue is generated from sales of our alternator and starter products, rods and shafts, and engine valves and tappets. We experienced growth in sales revenue across all segments in the second quarter of 2010. Sales revenues in the second quarter of 2010 increased 37.9% to $68.5 million from $49.7 million in the second quarter of 2009.
Sales revenue from China increased 41.1%, or to $60.9 million in the second quarter of 2010 from $43.2 million at the same period last year. The increases were mainly attributable to the higher sales volume driven by the increased market demand for our products in expanded automobile market.
Cost of Revenues
Our cost of revenues for the second quarter of 2010 increased 37.1% to $51.3 million from $37.4 million in the same period of 2009.
As a percentage of sales revenue, the cost of sales decreased slightly by 0.5% to 74.9 % during the second quarter 2010 from 75.4 % for the quarter period of 2009. The slight decrease was mainly due to the improved gross margin of our engine valves and tappets products, because the increased percentage of sales to heavy duty engine sector. Our sales to heavy duty engine sector usually have a higher gross margin than those used for lighter trucks.
Gross Profit
Our gross profit increased 40.4%, to $17.2 million for the second quarter 2010, compared with $12.2 million for the same period in 2009 as a result of increased sales volume driven by the strong market demand for our products. Gross margin was increased to 25.1% for the second quarter 2010, as compared to 24.6% of the same period last year. Such slight increase was mainly due to the gross margin increase of our engine valves and tappets as discussed above.
Total Operating Expenses
Our total operating expenses increased by $3.8 million, to $8.5 million for the second quarter 2010, as compared to $4.7 million for the same period in 2009. A large portion of the increase in selling, general and administrative expenses for the second quarter of 2010 was attributable to the increase of non-cash share-based compensation, and the research and development expenses.
Non-cash share-based compensation
On November, 2009, we granted options to purchase a total of 1,674,400 shares of our common stock to certain officers, directors and employees with an exercise price of $11.48 per share. As a result, we incurred a non cash share-based employee compensation of approximately $1.6 million in the three months ended June 30, 2010. As of June 30, 2010, none of employees had exercised the stock option right.
Net Income
Net income attributable to our common stockholders increased by $1.3 million, or 23.6%, to $6.6 million during the three months ended June 30, 2010 from $5.4 million during the same period.
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 (China)
Cell: +1-646-736-7588 (US)
Email: ir@watg.cn
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
For the three and six months ended June 30, 2010 and 2009
(Unaudited)
(Stated in US Dollars)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Sales revenue $68,458,594 $49,651,214 $132,079,159 $89,627,234
Cost of sales 51,307,112 37,431,981 99,301,954 67,313,643
Gross profit 17,151,482 12,219,233 32,777,205 22,313,591
Operating expenses
Administrative
expenses (included
share-based
compensation of
$1,477,694 and
$2,955,388 for the
three and six months
ended June 30, 2010
respectively, $Nil
for the three and
six months ended
June 30, 2009) 4,939,601 2,752,054 10,018,399 5,068,046
Research and
development expenses
(included share-
based compensation
of $91,782 and
$183,564 for the
three and six months
ended June 30, 2010
respectively, $Nil
for the three and
six months ended
June 30, 2009) 1,538,790 464,675 2,888,319 920,907
Selling expenses
(included share-
based compensation
of $65,419 and
$130,838 for the
three and six months
ended June 30, 2010
respectively, $Nil
for the three and
six months ended
June 30, 2009) 2,046,378 1,518,504 4,454,639 2,731,163
8,524,769 4,735,233 17,361,357 8,720,116
Income from operations 8,626,713 7,484,000 15,415,848 13,593,475
Other income 51,314 563,381 580,109 677,897
Government grants 219,180 177,476 420,691 352,538
Equity in net
income of non-
consolidated
affiliates 233,169 -- 781,961 --
Net finance costs (1,080,690) (1,946,097) (1,711,518) (2,030,086)
Income before income
taxes and
noncontrolling
interests 8,049,686 6,278,760 15,487,091 12,593,824
Income taxes (1,147,099) (633,024) (2,595,189) (1,553,029)
Net income before
noncontrolling
interests 6,902,587 5,645,736 12,891,902 11,040,795
Net income
attributable to
noncontrolling
interests (256,835) (270,098) (465,073) (493,533)
Net income attributable
to Wonder Auto
Technology, Inc. $6,645,752 $5,375,638 $12,426,829 $10,547,262
Net income before
noncontrolling
interests $6,902,587 $5,645,736 $12,891,902 $11,040,795
Other comprehensive
income (loss)
Foreign currency
translation
adjustments 648,066 9,817 648,062 (55,292)
Comprehensive income
7,550,653 5,655,553 13,539,964 10,985,503
Comprehensive income
attributable to
noncontrolling
interests (287,450) (275,411) (275,411) (483,431)
Comprehensive income
attributable to
Wonder Auto
Technology, Inc.
common stockholders $7,263,203 $5,380,142 $13,044,276 $10,502,072
Earnings per share
attributable to Wonder
Auto Technology, Inc.
common stockholders:
basic and diluted $0.20 $0.20 $0.37 $0.39
Weighted average number
of shares outstanding:
basic and diluted 33,859,994 26,959,994 33,859,994 26,959,994
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2010 and December 31, 2009
(Stated in US Dollars)
June 30, December 31,
2010 2009
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $60,616,182 $82,414,287
Restricted cash 14,638,128 15,753,748
Trade receivables, net 48,444,434 49,522,583
Bills receivable 45,769,941 21,965,065
Other receivables, prepayments and
deposits 9,503,920 14,826,460
Inventories 53,172,880 51,119,562
Deferred taxes 1,230,242 1,186,410
Total current assets 233,375,727 236,788,115
Restricted cash 586,800 --
Intangible assets 31,284,448 32,907,720
Property, plant and equipment, net 75,197,144 73,770,329
Land use rights 10,052,355 10,618,853
Deposit for acquisition of property,
plant and equipment 10,109,428 7,435,563
Deposit for acquisition of a subsidiary 8,700,000 --
Investments in non-consolidated
affiliates 16,022,362 --
Deferred taxes 1,080,366 731,575
TOTAL ASSETS $386,408,630 $362,252,155
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Trade payables $36,423,883 $34,126,534
Bills payable 28,149,030 29,388,653
Other payables and accrued expenses 13,762,417 14,886,909
Provision for warranty 2,783,651 2,272,322
Income tax payable 1,516,897 892,340
Secured borrowings 66,464,837 57,082,779
Early retirement benefits cost 371,734 353,584
Total current liabilities 149,472,449 139,003,121
Secured borrowings 18,161,648 20,908,721
Deferred revenue - government grants 3,113,050 3,315,762
Early retirement benefits cost 377,575 550,397
TOTAL LIABILITIES 171,124,722 163,778,001
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: par value $0.0001 per
share;-authorized 10,000,000 shares in
2010 and 2009; none issued and
outstanding -- --
Common stock: par value $0.0001 per
share Authorized 90,000,000 shares in
2010 and 2009; issued and outstanding
33,859,994 shares in 2010 and 2009 3,386 3,386
Additional paid-in capital 140,812,492 137,542,702
Statutory and other reserves 10,186,701 10,186,701
Accumulated other comprehensive income 10,264,498 9,647,051
Retained earnings 47,697,425 35,270,596
TOTAL WONDER AUTO TECHNOLOGY, INC.
STOCKHOLDERS' EQUITY 208,964,502 192,650,436
NONCONTROLLING INTERESTS 6,319,406 5,823,718
TOTAL EQUITY 215,283,908 198,474,154
TOTAL LIABILITIES AND EQUITY $386,408,630 $362,252,155
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2010 and 2009
(Unaudited)(Stated in US Dollars)
Six months ended June 30,
2010 2009
Cash flows from operating activities
Net income before noncontrolling
interests $12,891,902 $11,040,795
Adjustments to reconcile net income
before noncontrolling interests
to net cash (used in) provided by
operating activities:
Depreciation 3,416,688 2,781,143
Amortization of intangible
assets and land use rights 772,372 198,573
Share-based compensation 3,269,790 --
Deferred taxes (384,223) 180,716
Loss on disposal of property,
plant and equipment 113,590 19,549
(Recovery) provision for
doubtful debts (51,895) 87,484
Provision for obsolete
inventories 19,064 45,923
Exchange gain on translation
of monetary assets and
liabilities (522,425) (52,045)
Equity in net income of
non-consolidated affiliates (781,961) --
Deferred revenue amortized (215,393) (127,735)
Changes in operating assets and
liabilities :
Trade receivables 1,327,295 (4,021,736)
Bills receivable (23,634,450) (5,324,675)
Other receivables, prepayments and
deposits (1,884,169) 2,736,977
Inventories (2,505,312) (2,515,195)
Trade payables 2,161,890 13,366,276
Other payables and accrued
expenses (1,212,066) (4,123,986)
Early retirement benefits costs (157,723) (214,840)
Provision for warranty 499,990 58,769
Income tax payable 562,859 251,285
Net cash flows (used in) provided by
operating activities $(6,314,177) $14,387,278
Cash flows from investing activities
Payments to acquire intangible assets $-- $(146,600)
Payments to acquire and for deposit
for acquisition of property, plant and
equipment and land use right (8,878,218) (3,345,040)
Proceeds from sales of property,
plant and equipment -- 23,877
Net cash inflow from disposal of
Jinzhou Jiade 2,866,442 --
Deposit for acquisition of Vital Glee (8,700,000) --
Net cash paid to acquire Applaud (14,862,577) --
Net cash paid to acquire Wonder Auto
Parts (376,285) --
Net cash received from Winning 8,013,693 --
Net cash paid to acquire Yearcity -- (3,986,057)
Net cash paid to acquire Jinzhou
Wanyou -- (1,705,437)
Net cash flows used in investing
activities (21,936,945) (9,159,257)
Cash flows from financing activities
Government grants received -- 769,006
(Decrease) increase in bills payable (1,338,272) 3,809,457
Decrease (increase) in restricted
cash 590,836 (965,778)
Proceeds from secured borrowings 46,577,250 63,247,801
Repayment of secured borrowings (39,560,651) (48,528,550)
Net cash flows provided by financing
activities 6,269,163 18,331,936
Effect of foreign currency translation on
cash and cash equivalents 183,854 (1,309)
Net (decrease) increase in cash and cash
equivalents (21,798,105) 23,558,648
Cash and cash equivalents - beginning of
period 82,414,287 8,159,156
Cash and cash equivalents - end of period $60,616,182 $31,717,804
Supplemental disclosures for cash flow
information:
Cash paid for:
Interest $2,601,136 $2,500,563
Income taxes $2,318,441 $1,057,966
Non-cash investing and financing
activities:
Acquisition of Yearcity by
offsetting with receivable from
disposal of an non-consolidated
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
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Equity
(Unaudited)
(Stated in US Dollars)
Wonder Auto Technology, Inc. stockholders
Additional Statutory
Common stock paid-in and other
No. of Amount capital reserves
shares
Balance, December 31, 33,859,994 $3,386 $137,542,702 $10,186,701
2009
Net income -- -- -- --
Foreign currency
translation
adjustment -- -- -- --
Share-based
compensation -- -- 3,269,790 --
Balance, June 30, 33,859,994 $3,386 $140,812,492 $10,186,701
2010
Wonder Auto Technology, Inc.
stockholders
Accumulated
other
comprehensive Retained Noncontrolling
income earnings interests Total
Balance, December 31,
2009 $9,647,051 $35,270,596 $5,823,718 $198,474,154
Net income -- 12,426,829 465,073 12,891,902
Foreign currency 617,447 -- 30,615 648,062
translation
adjustment
Share-based
compensation -- -- -- 3,269,790
Balance, June 30,
2010 $10,264,498 $47,697,425 $6,319,406 $215,283,908