WUHAN, Hubei, China, May 18 /PRNewswire-Asia-FirstCall/ -- Wuhan General Group (China), Inc. (Nasdaq: WUHN) ("Wuhan General" or the "Company"), a leading manufacturer of industrial blowers and turbines in China, today announced financial results for the first quarter ended March 31, 2009. Wuhan General operates through its subsidiaries, Wuhan Blower Co., Ltd. ("Wuhan Blower"), Wuhan Generating Equipment Co., Ltd. ("Wuhan Generating") and Wuhan Xingelin Machinery Equipment Manufacturing Co., Ltd. ("Wuhan Xingelin").
First Quarter 2009 Highlights
-- First quarter revenue was $18.1 million, down 29.4% year over year
-- Gross profit was $3.8 million, down 53.0% year over year
-- Net income was $1.1 million, or $0.03 per fully diluted share, down
from $4.8 million, or $0.10 per fully diluted share in the same quarter
last year
-- Appointed new independent director to Board of Directors
"Although our top line and bottom line performance were adversely affected due to the global economic slowdown, we are pleased that we remained profitable during the quarter. Our operating subsidiaries performed as forecasted through the first quarter allowing us to exceed our preliminary top line results, however costs at Wuhan General caused us to come in just under our preliminary net income," commented Mr. Xu Jie, CEO of Wuhan General. "Market conditions and the business environment will most likely remain challenging throughout the year. However, with Wuhan General's strong management team and operational expertise, we are hopeful and confident that we will meet our 2009 guidance."
First Quarter 2009 Results
For the first quarter ended March 31, 2009, total revenue was $18.1 million, down 29.4% from $25.6 million in the same period last year. Wuhan Blower generated $10.3 million in revenues, or 56.8% of the total revenues, compared to $12.8 million, or 49.8% of total revenues in the same period last year. Wuhan Generating contributed $7.7 million, or 42.8% of the total revenues, compared to $12.9 million, or 50.2% of total revenues in the same period last year. The remaining $0.1 million in revenues in the first quarter of 2009 was contributed by Wuhan Xingelin. The decrease in total revenue was primarily due to decreased activities by both steel companies and power plants as the result of the economic slowdown in China.
Gross profit for the quarter was $3.8 million, down 53.0% from $8.1 million in the first quarter of 2008. Gross margin was 21.0%, down from 31.5% compared to the same period in 2008. The decrease in gross margin was primarily attributable to a decrease in selling prices. Compared with the fourth quarter of 2008, gross margin was down 2.3 percentage points.
Operating expenses totaled $1.9 million, down 26.5% from $2.6 million from the same period in the prior year. Selling expenses increased 11.5% to roughly $0.4 million while sales as a percent of revenues increased from 1.4% to 2.3% year over year due to lower economies of scale as a result of the decline in sales. General and administrative expenses declined 38.6% due to tighter controls implemented by management. As a percentage of revenue, total operating expenses were 10.8% in the first quarter of 2009, compared to 10.3% for the same period last year.
Operating income was $1.8 million for the quarter or 10.2% of total revenue, down 65.9% from $5.4 million, or 21.1% of total revenue for the first quarter of 2008. This decrease as a percentage of sales was primarily due to decreased selling prices and decreased gross margin.
Net income for the first quarter of 2009 was $1.1 million, or $0.03 per diluted share, compared to $4.8 million, or $0.10 per diluted share in the same period the prior year. Net income for the first quarter of 2009 was affected by $0.3 million in taxes whereas the Company enjoyed a tax holiday in the prior year period.
Financial Condition
As of March 31, 2009, Wuhan General had $1.0 million in cash compared to $2.8 million as of December 31, 2008 and $33.9 million in working capital with a current ratio of 1.6. At quarter end, the Company's total stockholders' equity stood at $95.5 million, compared to $93.6 million as of December 31, 2008. The Company recorded cash used in operating activities of $0.7 million, compared to cash used in operating activities of $4.6 million in the same period prior year.
Wuhan General's short-term bank loans and notes were $25.1 million as of March 31, 2009. The Company has the option to refinance most of these loans and notes.
Business Outlook
"We expect our sales to improve in the second half of 2009 despite a slowdown in sales during the first quarter of this year. To maintain our market share, our management team intends to adopt a competitive pricing strategy for our products. We also intend to focus sales efforts to align with sectors which will receive benefits from the Chinese government's stimulus plan, including sewage treatment and other infrastructure related projects that utilize blowers and turbines," stated Mr. Xu. "In the meantime, we are increasing emphasis on collecting on outstanding balances from customers and have set up a collection team and more monitoring controls for this purpose. We also have begun requiring customers to increase their down payments on orders."
For the 2009 fiscal year, Wuhan General would like to reaffirm its guidance of revenues between $70 million and $80 million and net income between $7 million and $8 million.
Conference Call
The Company will host a conference call at 9:00 a.m. ET on Monday, May 18, 2009 to discuss the first quarter 2009 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-888-339-2688. International callers should dial +1-617-847-3007. When prompted by the operator, mention conference passcode 241 158 38. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, May 18, 2009 at 11:00 a.m. ET. To access the replay, please dial 1-888-286-8010 and enter passcode 11067406. International callers should dial +1-617-801-6888 and enter passcode 11067406.
About Wuhan General Group (China), Inc.
Through its subsidiaries Wuhan Blower, Wuhan Generating, and Wuhan Xingelin, Wuhan General is a leading manufacturer of industrial blowers and turbines in China and the Company is based in Wuhan, Hubei Province, China. Wuhan Blower is a China-based manufacturer of industrial blowers that are principal components of steam-driven electrical power generation plants. Wuhan Generating is a China-based manufacturer of industrial steam and water turbines used for electricity generation in coal, oil, nuclear, and hydroelectric power plants. Wuhan Xingelin manufactures silencers, connectors and other general parts for industrial blowers and electrical equipment, and it produces general machinery equipment. The Company's primary customers are from the iron and steel, power generation, petrochemical and other industries. Led by a strong management team, Wuhan General is well recognized for its technological sophistication and quality construction of blowers and turbines.
Safe Harbor Statement
Certain statements in this press release, including statements regarding future demand for our products, our ability to generate business in the current economic climate, our pricing strategy, our ability to maintain or expand our market share in our current industries and into new growth areas, the effects of the Chinese government's stimulus plan on our businesses, the effects of our management and sales strategies, our ability to refinance our debt and our future financial performance, may be forward-looking in nature or "forward-looking statements," as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to vulnerability of our business to general economic downturn, operating in the People's Republic of China (PRC) generally and the potential for changes in the laws of the PRC that affect our operations, our failure to meet or timely meet contractual performance standards and schedules and other factors that may cause actual results to be materially different from those described in such forward-looking statements. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on Wuhan General's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting Wuhan General will be those anticipated by the Company. Wuhan General undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Financial Tables Follow
Wuhan General Group (China), Inc.
Statements of Income
For the three months ended March 31, 2009 and 2008
(Stated in US Dollars)
Three Months Three Months
Ended Ended
March 31, 2009 March 31, 2008
Sales $18,076,052 $25,618,901
Cost of Sales 14,285,283 17,561,279
Gross Profit 3,790,769 8,057,622
Operating Expenses
Selling Expenses 413,162 370,639
General & Administrative Expenses 1,380,608 2,248,542
Warranty Expense 153,973 30,284
Total Operating Expense 1,947,743 2,649,465
Operating Income 1,843,026 5,408,157
Other Income (Expenses)
Other Income 18,946 --
Interest Income 184,331 313,959
Other Expenses -4,279 -764
Interest Expense -633,475 -913,442
Total Other Income (Loss)
& Expense -434,477 -600,247
Earnings before Tax 1,408,549 4,807,910
Income Tax -293,477 --
Net Income $1,115,072 $4,807,910
Preferred Dividends Declared 178,802 280,365
Income Available to Common Stockholders $936,270 $4,527,545
Earnings Per Share
Basic $0.04 $0.22
Diluted $0.03 $0.10
Weighted Average Shares Outstanding
Basic 24,759,746 20,378,815
Diluted 39,662,817 47,760,852
Comprehensive Income
Net Income $1,115,072 $4,807,910
Other Comprehensive Income
Foreign Currency Translation
Adjustment 929,786 2,533,692
Total Comprehensive Income $2,044,858 $7,341,602
Wuhan General Group (China), Inc.
Consolidated Balance Sheets
At March 31, 2009 and December 31, 2008
(Stated in US Dollars)
(Audited)
March 31, December 31,
ASSETS 2009 2008
Current Assets
Cash $955,681 $2,817,503
Restricted Cash 6,635,474 13,180,640
Notes Receivable 80,344 --
Accounts Receivable 38,926,932 41,486,856
Other Receivable 6,363,804 1,719,083
Inventory 20,908,034 8,395,467
Advances to Suppliers 13,341,580 20,274,473
Advances to Employees 225,976 189,516
Prepaid Expenses 125,318 92,279
Prepaid Taxes 406,278 604,610
Deferred Tax Asset 58,224 --
Total Current Assets 88,027,645 88,760,427
Non-Current Assets
Real Property Available for Sale 1,101,759 1,100,376
Property, Plant & Equipment, net 30,937,437 22,274,551
Land Use Rights, net 12,302,276 12,297,429
Construction in Progress 19,750,769 30,276,011
Intangible Assets, net 353,194 363,574
Total Assets $152,473,080 $155,072,368
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Bank Loans & Notes 25,107,192 35,171,690
Accounts Payable 6,957,258 8,420,678
Taxes Payable 925,112 1,109,548
Other Payable 12,860,665 7,708,323
Dividend Payable 178,802 193,804
Accrued Liabilities 2,994,930 2,805,558
Customer Deposits 5,072,042 4,614,370
Total Current Liabilities 54,096,001 60,023,971
Long Term Liabilities
Bank Loans and Notes 2,921,585 1,458,959
Total Liabilities 57,017,586 61,482,930
Stockholders' Equity
Preferred Stock - $0.0001 Par
Value, 50,000,000 Shares
Authorized; 6,241,453 Shares of
Series A Convertible Preferred
Stock Issued & Outstanding at
March 31, 2009 and December 31,
2008 624 624
Additional Paid-in Capital -
Preferred Stock 8,170,415 8,170,415
Additional Paid-in Capital -
Warrants 3,634,297 3,687,794
Additional Paid-in Capital -
Beneficial Conversion Feature 6,371,547 6,371,546
Preferred Stock - $0.0001 Par
Value 50,000,000 Shares
Authorized; 6,354,078 Shares of
Series B Convertible Preferred
Stock Issued & Outstanding at
March 31, 2009 and December 31,
2008 635 635
Additional Paid in Capital -
Preferred Stock 12,637,158 12,637,158
Additional Paid in Capital -
Warrants 2,274,181 2,274,181
Additional Paid in Capital -
Beneficial Conversion Feature 4,023,692 4,023,692
Common Stock - $0.0001 Par Value
100,000,000 Shares Authorized;
24,769,917 and 24,752,802
Shares Issued & Outstanding at
March 31, 2009 and December 31,
2008, respectively 2,477 2,475
Additional Paid-in Capital 28,490,329 28,436,835
Statutory Reserve 4,478,066 3,271,511
Retained Earnings 16,763,958 17,034,243
Accumulated Other Comprehensive
Income 8,608,115 7,678,329
Total Stockholders' Equity 95,455,494 93,589,438
Total Liabilities &
Stockholders' Equity $152,473,080 $155,072,368
Wuhan General Group (China), Inc.
Statements of Cash Flows
For the three months ended March 31, 2009 and 2008
(Stated in US Dollars)
Three Months Three Months
Ended Ended
March 31, 2009 March 31, 2008
Cash Flow from Operating Activities
Cash Received from Customers $16,368,583 $16,291,029
Cash Paid to Suppliers & Employees -16,011,377 -20,244,559
Interest Received 184,331 313,959
Interest Paid -633,475 -913,442
Income Tax Paid -- --
Miscellaneous Receipts 18,944 --
Cash Sourced/(Used) in Operating
Activities -72,994 -4,553,012
Cash Flows from Investing Activities
Cash Repayment/(Investment) in
Restricted Time Deposits 6,545,166 994,099
Repayment/(Investment) in Notes -- -830,227
Investment in Real Property -- -41,313
Payments for Purchases of Plant &
Equipment -450,252 -1,767,636
Payments for Purchases of Land Use
Rights -- -129,883
Payments for Purchases of
Intangible Assets -- -20,141
Cash Used/(Sourced) in Investing
Activities 6,094,914 -1,795,101
Cash Flows from Financing Activities
Proceeds from Bank Borrowings -- 2,849,209
Proceeds from Issuance of Notes -- 1,976,930
Repayment of Bank Loans -2,101,653 --
Repayment of Notes -6,500,220 --
Dividends Paid -193,804 -852,777
Cash Sourced/(Used) in Financing
Activities -8,795,677 3,973,362
Net Increase/(Decrease) in Cash &
Cash Equivalents for the Period -2,773,757 -2,374,750
Effect of Currency Translation 911,935 2,533,692
Cash & Cash Equivalents at Beginning
of Period 2,817,503 992,965
Cash & Cash Equivalents at End of
Period $955,681 $1,151,907
Non-Cash Financing Activity:
Constructive Preferred Dividend -- $--
Conversion of Preferred Stock to
Common Stock -- $4,021,338
Wuhan General Group (China), Inc.
Reconciliation of Net Income to Cash Flow Sourced/(Used) in Operating Activities
For the three months ended March 31, 2009 and 2008
(Stated in US Dollars)
Three Months Ended Three Months Ended
March 31, 2009 March 31, 2008
Net Income $1,115,072 $4,807,910
Adjustments to Reconcile Net Income
to Net Cash Provided by Cash
Activities:
Reclassification of assets related
to Huangli Project from
Construction in Progress to
Inventory 1,745,496 --
Amortization 22,001 31,868
Depreciation 567,112 581,858
Decrease/(Increase) in Notes Receivable -80,344 81,169
Decrease/(Increase) in Accounts
Receivable 2,559,924 -9,962,662
Decrease/(Increase) in Other Receivable -4,644,721 -2,114,025
Decrease/(Increase) in Inventory -12,512,566 -3,173,291
Decrease/(Increase) in Advances to
Suppliers 6,932,893 -5,641,690
Decrease/(Increase) in Advances to
Employees -36,460 -220,436
Decrease/(Increase) in Prepaid Expenses -33,039 --
Decrease/(Increase) in Prepaid Taxes 198,332 -23,843
Decrease/(Increase) in Deferred
Tax Assets -58,224 --
Increase/(Decrease) in Accounts
Payable -1,463,419 1,487,034
Increase/(Decrease) in Taxes Payable -184,436 -164,244
Increase/(Decrease) in Other Payable 5,152,343 6,422,048
Increase/(Decrease) in Accrued
Liabilities 189,372 667,646
Increase/(Decrease) in Customer Deposits 457,672 2,667,646
Total of all adjustments -1,188,064 -9,360,922
Net Cash Provided by Operating
Activities $ -72,994 $ -4,553,012
For more information, please contact:
Wuhan General Group (China), Inc.
Mr. Haiming Liu, CFO
Tel: +86-27-5970-0069
Email: haiming.liu@wuhangeneral.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Mr. Graham Reed, Financial Writer
Email: graham.reed@ccgir.com
Tel: +1-646-213-1907
Web: http://www.ccgirasia.com
