NEW YORK and CHANGSHA, China, Nov. 10 /Xinhua-PRNewswire-FirstCall/ --Tongxin International Ltd. ("Tongxin") ("Company") (Nasdaq: TXIC) a manufacturer of engineered commercial vehicle body structures ("EVBS"), SUV passenger vehicle bodies and stamped body parts for the Chinese commercial vehicle market, today announced the Company's third quarter financial results ended September 30th, 2008.
-- Third quarter revenues increased 4.7 % to $22.8 million vs. Q3 2007
-- Third quarter net income decreased 16.2 % to $2.1 million vs. Q3 2007
-- Nine-month revenues increased 21.3 % to $76.3 million vs. the same
period in 2007
-- Nine-month net income increased 8.0 % to $8.1 million vs. the same
period in 2007
2008 Third Quarter Financial Results
Total operating expenses for the third quarter of 2008 were $1.5 million versus $1.4 million for the same period in 2007. Operating expenses as a percentage of revenues were 6.5% compared with 6.2% for the same period, 2007. Operating income and operating margin for the quarter were $2.9 million and 12.6%, versus $4.1 million and 18.9% in 2007.
Net income was $2.1 million, representing a decrease of 16.2% from $2.5 million reported in the same period prior year. The net income reflects the $175,000 one-time transaction costs recorded by Tongxin International, Ltd (previously Automotive Acquisition Corporation) for the Company's business combination with Hunan Tongxin. The Company incurred $521,000 in taxes for the quarter and pays an effective tax rate of 23.5% for the year. Corresponding net profit margins were 9.1% for the quarter which represented a 230-basis point decrease versus the same quarter, 2007. This decrease was related to increases in raw material costs. Earnings per share for the quarter was $0.19 based on 11.2 million shares.
"We believe our management team properly estimated the effects of the factory restrictions and associated demands of the Euro III emission standards on our sales and shipments in the third quarter," opened Rudy Wilson, CEO of Tongxin International. "Despite our predictions, we were encouraged to see a slight increase in revenues quarter over quarter especially since the same set of circumstances were not present for our 2007 third quarter. Considering the highly-restrictive environment in which we were operating around the dates of the Olympics, an increase in revenues during third quarter demonstrates the resilience of the commercial market and our position as the leading EVBS supplier," Wilson concluded.
2008 Nine-Month Financial Results
"We are very confident about our business operation and that our team will reach our guidance of the year. After polling our top customers and scheduling our builds and deliveries of the fourth quarter, the market has responded with added demand pent up from manufacturers and their customers in October. A combination of lowered steel prices, strong order bookings from our customers and the relaxing of the Euro III compliance time table should result in a return to our standard margins and pace of business we experienced during the first quarter of this year," Wilson added.
Balance Sheet and Cash Flow Discussion
As of September 30, 2008, Tongxin International had approximately $19.0 million in cash and cash equivalents. The company maintained a current ratio of 1.1 to 1 and $12.0 million in accounts receivable on September 30, 2008. Corresponding days sales outstanding (DSO) were 47 days. Stockholders' equity was $34.2 million on September 30, 2008, representing an increase of 52.8% versus same period 2007.
The Company has approximately five million warrants with strike price of $5.00 and callable at $10.00. If exercised, warrants would yield $25.2 million in proceeds to the company.
Business Outlook
Based on its order bookings and accrued demand for the same time period, the Company anticipates a strong fourth quarter as its customer base completely resumes production and the extension of timetables to meet Euro III regulations. Additionally, the Company is completing USGAAP audit of Meihua Bus for which a framework agreement was signed on July 28th, 2008. Preliminary results for Meihua Bus indicate higher than expected revenues and net income for the 2008 year. Tongxin anticipates closing the Meihua acquisition before year end.
Company News and Events
-- Tongxin International announced the appointment of Ms. Jackie Chang as
CFO and CAO of Tongxin International. Ms. Chang's appointment was
effective November 1, 2008.
-- Tongxin is participating at the Rodman and Renshaw Growth Conference
during November 10-12th and conducting a non-deal road show to meet
with prospective and current investors in the New York area the week of
the 10th of November
-- Tongxin will also participate in the Roth China Conference held in Las
Vegas the 19-21st of November.
Conference Call
The Company will host a conference call on November 10th, 2008, at 5:00 p.m. EST. To attend the call, please use the dial information below. When prompted, ask for the "Tongxin International" and or be prepared to provide the conference ID.
Date: November, 10th 2008
Time: 5:00 pm ET
Conference Line Dial-In (U.S.): 1-800-762-8932
International Dial-In: +1-480-629-9031
Conference ID: 3941507
Webcast link: http://viavid.net/dce.aspx?sid=0000594C
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through November 17th, 2008. To listen, please call 800-406-7325 within the United States or +1 303-590-3030 when calling internationally. Utilize the pass code 3941507 for the replay.
About TXI
Tongxin International Ltd., is the largest independent supplier of EVBS in China, is capable of providing EVBS for both the commercial truck and light vehicle market segments, in addition to designing, fabricating and testing dies used in the manufacturing process. EVBS consists of exterior body panels including doors, floor pans, hoods, side panels and fenders.
Forward Looking Statements
For more information, please contact:
Investor Relations Contact:
John Mattio
SVP, HC International, Inc.
Tel: +1-914-669-5340
Email: john.mattio@hcinternational.net
Tongxin International Ltd.
Consolidated Statements of Operations
(US$ amounts expressed in thousands)
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
Total Revenues 22,849 21,822 76,328 $62,922
Total Cost of Goods Sold 18,468 16,347 59,713 46,481
Gross Profit 4,381 5,475 16,615 16,441
Operating Expenses:
Selling and General and Admin. 1,493 1,360 4,698 3,855
Other Income, net 151 65 373 80
Profit before Interest and
Income taxes 3,039 4,180 12,290 12,666
Interest Expense 437 518 1,667 1,520
Income before Income taxes 2,602 3,662 10,623 11,146
Income Tax Expense 521 1,179 2,498 3,625
Net Income 2,081 2,483 8,125 7,521
Net Income per share-basic 0.186 0.222 0.725 0.671
Net Income per share-diluted 0.186 0.222 0.725 0.671
Common shares used in
calculating basic
net income per share 11,205,270 11,205,270 11,205,270 11,205,270
Common shares used in
calculating diluted 11,205,270 11,205,270 11,205,270 11,205,270
net income per share
(Treasury method)
Tongxin International Ltd.
Consolidated Balance Sheet
(US$ amounts expressed in thousands)
September December
30, 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $19,013 $7,646
Accounts receivable, net 12,018 11,382
Other receivable, net 7,641 4,309
Related party 6,951 10,056
Notes receivable 4,322 5,520
Inventories 17,446 15,403
Investment in marketable securities 73 --
Prepaid expenses 8,518 3,395
Deferred tax assets 1,689 1,710
Total current assets 77,671 59,421
Investments in non-consolidated
subsidiaries and affiliates 912 820
Plant and equipment, net of depreciation
of $9,748 and $13,394, respectively 36,108 28,407
Land occupancy rights 2,019 1,876
Total assets 116,710 90,524
Liabilities and shareholders' equity
Current liabilities:
Accounts payable 17,917 16,215
Notes payable 2,933 --
Accrued expenses and other liabilities 10,229 7,707
Income taxes payable 18,578 11,068
- current 2,321 --
- prior period/year 16,257 11,068
Dividend payable -- 5,279
Short-term loans 20,533 17,933
Short-term loans from shareholders 3,152 4,912
Deferred tax liability 4 -
Total current liabilities 73,346 63,114
Long-term loans -- 4,394
Long-term loans from shareholders 8,634 --
Other 522 630
Total liabilities 82,502 68,138
Shareholders' equity:
Common stock (authorized, 39,000,000
common shares US$0.001 par value, issued
and outstanding 11,205270 shares) 8,762 8,762
Reserve funds 13,070 1,994
Accumulated other comprehensive income 2,474 2,421
Retained earnings 9,902 9,209
Total shareholders' equity 34,208 22,386
Total liabilities and shareholders'
equity 116,710 90,524
