omniture

Wonder Auto Technology, Inc. Reports Record Third Quarter 2006 Results

Wonder Auto Technology, Inc.,
2006-11-14 19:21 1775

JINZHOU CITY, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- Wonder Auto

Technology, Inc., (OTC Bulletin Board: WATG) (“Wonder Auto” or “the

Company”), a China-based manufacturer of automotive electrical parts, today

announced its financial results for the third quarter 2006. The Company’s

business is focused on designing, developing, manufacturing and selling

automotive electrical parts, specifically, starters and alternators.

Q3 Highlights

-- Revenues increased for the third consecutive quarter to a record

$19.5 million up from $12.1 million a year ago

-- Net income increased 55.9% year over year to $2.4 million

-- New production lines installed increasing manufacturing capacity

(this is not in the 10-Q)

Revenue increased for the third consecutive quarter to a record $19.5

million, up 60.0% from revenues in the third quarter 2005 of $12.1 million.

The increase in revenues was due to the continued increase in demand from

current customers for alternators and starters and the addition of new

customers. Gross profit for the quarter increased 39.8% to $3.8 million from

gross profit of $2.7 million in the comparable period a year earlier. Net

income increased to $2.4 million or 55.9% for the third quarter 2006 from

$1.5 million in the third quarter 2005. Fully diluted earning per share for

the quarter was $0.10. Earlier this year, the Company completed a $12.0

million capital raise in conjunction with a reverse merger transaction which

resulted in an increase of share count and the Company being a public

reporting company in the United States.

“We are very excited to announce our third consecutive quarter of record

revenues. We are also pleased that this quarter’s growth was in part driven

by shipments to new customers including Nanjing Fiat, as well as solid growth

in shipments to existing customers. In addition to increased revenues, one

of our top priorities was to improve our gross margin from lower levels

earlier this year, and we were able to do that through a combination of price

action, reduction in product costs and sales of a more favorable product

mix. This improved our gross margins to 19.7% up from 17.2% last quarter,”

commented Chairman and CEO, Qingjie Zhao. “We also completed two new

starter production lines significantly increasing our starter production

capacity. We expect this capacity to offer not only greater production

capability but also more efficient scheduling and staffing.”

Gross profit was $3.8 million, for a year-over-year increase of 39.8%

from $2.7 million in the third quarter 2005. Gross profit was impacted by an

increased sales volume and management controls of product costs. Gross margin

was 19.7% for the quarter compared to 22.2% for the same period a year

earlier.

Operating expenses were $1.16 million which was 6% of revenue.

Income from operations before tax increased to $2.7 million for the third

quarter 2006, up 53.3% from $1.8 million in the third quarter 2005.

Net income for the third quarter 2006 increased to $2.4 million, up 55.9%

from the third quarter 2005 of $1.5 million. Fully diluted Earnings Per

Share for the quarter was $0.10.

Nine Months Financial Results

Revenue for the first nine months of 2006 was $53.1 million, up 40.7%

from $37.7 million in revenue for the first nine months of 2005. Income from

operations before tax and net income was $6.7 million and $5.8 million,

respectively for the first nine months of 2006.

Financial Condition

As of September 30, 2006, Wonder Auto had $10.2 million in cash and cash

equivalents and $$.4 million in restricted cash, working capital of $16.1

million and no long-term debt. Shareholders’ equity stood at $35.3 million,

up from $18.9 million from December 31, 2005.

Business Outlook

Wonder Auto continues to pursue development contracts with a number of

OEMs. The Company has experienced a significant increase in business with

Shenyang Mitsubishi caused by the customer’s increase in engine business

with certain vehicle manufacturers. In November 2006, Wonder Auto attended

the Automotive Aftermarket Products Expo in Las Vegas (“Expo”), and has

begun developing its entry into the U.S. market. Following the Expo, two

aftermarket companies expressed strong interest in visiting Wonder Auto’s

factories, and the Company established further important industry contacts.

Longer-term, Wonder Auto is looking to expand its international presence in

the United States, Japan, Korea, and India.

“We have been working diligently on both operational efficiencies and

new business, both of which we feel have positioned us for a strong year in

2007. We continue to maintain high quality control so that we can achieve a

favorable quality to price ratio and continue to generate net profit margins

of approximately 10- 11%. These are also key elements of our strategy to move

from the number two Chinese manufacturer of alternators and starters to the

number one position,” concluded Mr. Zhao.

Conference Call

Wonder Auto will host a conference call on Tuesday, November 14th at

10:00 am ET to discuss results for the third quarter of 2006. Joining Mr.

Qingjie Zhao, Chairman, will be Ryan Yuan, CFO, and Jim Groh, Vice President

of Strategic Planning of Wonder Auto . To participate in the conference

call, please dial the following number five to ten minutes prior to the

scheduled conference call time (866) 800-8648. International callers should

dial (617) 614-2702. Callers from China should dial 10 800 130 0399. When

prompted by the operator, mention Conference Passcode 61797481.

If you are unable to participate in the call at this time, a replay will

be available on Tuesday, November 14 at 11:00 a.m. Eastern Time, through

Tuesday, November 21, 2006. To access the replay dial (888) 286-8010 and

enter the conference passcode 55248766. International callers should dial

(617) 801-6888 and enter the same passcode 55248766.

This conference call will be broadcast live over the Internet and can be

accessed by all interested parties by clicking on http://phx.corporate-

ir.net/playerlink.zhtml?c=194220&s=wm&e=1416205 . Please access the link at

least fifteen minutes prior to the start of the call to register, download,

and install any necessary audio software. For those unable to participate

during the live broadcast, a 90-day replay will be available shortly after

the call by accessing the same link.

About Wonder Auto

Wonder Auto , through its subsidiary, Jinzhou Halla Electrical Equipment

Co., Ltd., designs, develops, manufactures and sells automotive electrical

parts and is the second largest seller of automotive alternators and starters

in China. The Company’s products are suitable for various types of

automobiles and industrial vehicles. Wonder Auto’s customers include

Beijing Hyundai, Shenyang Aerospace Mitsubishi, Harbin Dong’an Mitsubishi,

and Dongfeng Yueda Kia Motor Co., Ltd. Wonder Auto is a Nevada corporation

with its manufacturing subsidiary Halla and its corporate headquarters

located in Jinzhou City, Liaoning, China.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning

of the Private Securities Litigation Reform Act of 1995. Forward-looking

statements are statements that are not historical facts. Such forward-

looking statements are based upon the current beliefs and expectations of

Wonder Auto’s management and are subject to risks and uncertainties, which

could cause actual results to differ from the forward-looking statements. The

following factors, among others, could cause actual results to differ from

those set forth in the forward-looking statements: business conditions in

China, weather and natural disasters, changing interpretations of generally

accepted accounting principles; outcomes of government reviews; inquiries and

investigations and related litigation; continued compliance with government

regulations; legislation or regulatory environments, requirements or changes

adversely affecting the businesses in which Wonder Auto is engaged;

fluctuations in customer demand; management of rapid growth; intensity of

competition from other providers of auto components; timing approval and

market acceptance of new product introduction; general economic conditions;

geopolitical events and regulatory changes, as well as other relevant risks

not included herein. The information set forth herein should be read in

light of such risks. Wonder Auto does not assume any obligation to update

the information contained in this press release.

Three months ended Nine months ended

30-Sep 30-Sep

(unaudited) (unaudited)

2006 2005 2006 2005

Revenue

Sales $19,458,451 $12,141,962 $53,064,779 $37,710,520

Cost of sales (15,618,660) (9,449,207) (43,112,678) (29,036,098)

Gross profit 3,839,791 2,692,755 9,952,101 8,674,422

Expenses

Administrative

expenses 375,080 222,161 997,898 717,374

Amortization &

Depreciation 39,980 34,958 111,519 98,078

Other

Operating

Expenses 1,079 6,558 1,833 13,082

Selling

Expense 659,759 476,465 1,895,388 1,588,459

1,075,898 740,142 3,006,638 2,416,993

Income before

the following

items and taxes 2,763,893 1,952,613 6,945,463 6,257,429

Interest income 55,012 2,630 76,360 14,541

Other income 82,972 9,801 199,656 146,179

Finance costs (253,001) (201,904) (706,995) (574,183)

Equity in net

income of

unconsolidated

affiliate 140,223 -- 140,223 --

Income before

income taxes 2,703,214 1,763,140 6,654,707 5,843,966

Income taxes -

Note 5 (335,007) (244,080) (797,194) (779,086)

Net income $2,368,207 $1,519,060 $5,857,513 $5,064,880

Earnings per

share: basic

and diluted $0.10 $0.09 $0.30 $0.29

Weighted

average

number of

shares

outstanding:

basic and

diluted 23,959,994 17,227,198 19,718,086 17,227,198

September 30, December 31,

2006 2005

(Unaudited) (Audited)

ASSETS

Current assets

Cash and cash equivalents $10,206,352 $4,368,757

Restricted cash 4,425,965 3,597,609

Marketable securities -- 37,159

Trade receivables (net of allowance

of doubtful accounts of $39,511 in

2006 and $38,745 in 2005) 25,732,026 18,472,619

Bills receivable 3,967,489 3,528,649

Other receivables, prepayments and

deposits 701,672 392,906

Inventories - Note 7 12,519,338 7,807,610

Deferred taxes 266,581 261,548

Total current assets 57,819,423 38,466,857

Know-how 1,449,675 1,421,556

Trademarks and patents 7,827 1,907

Property, plant and equipment, net -

Note 8 11,158,962 10,648,082

Land use right - Note 9 571,097 580,020

Deposit for acquisition of property,

plant and equipment 888,160 819,183

Investment in unconsolidated

affiliate 5,005,031 --

Deferred taxes 189,773 152,316

TOTAL ASSETS $77,089,948 $52,089,921

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities

Trade payables $13,797,544 $10,299,879

Bills payable 6,947,251 7,060,222

Other payables and accrued expenses 4,353,453 709,822

Provision for warranty 1,351,785 914,403

Dividend payable -- 1,699,282

Income tax payable 269,924 161,277

Amount due to a stockholder -- 5,149

Amount due to a related company 64,480 --

Secured short-term bank loans - Note

10 14,970,695 7,431,813

Total current liabilities 41,755,132 28,281,847

Secured long-term bank loans - Note 10 -- 4,954,542

TOTAL LIABILITIES 41,755,132 33,236,389

COMMITMENTS AND CONTINGENCIES - Note

11

STOCKHOLDERS’ EQUITY

Preferred stock: authorized

10,000,000 shares; $0.0001 par

value, none issued and outstanding

Common stock: authorized 90,000,000

shares $0.0001 par value; issued

and outstanding 23,959,994 shares

in 2006;

issued and outstanding 17,227,198

shares in 2005 2,396 1,723

Additional paid-in capital - Note 12 28,040,143 11,998,377

Statutory and other reserves 2,347,848 2,347,848

Accumulated other comprehensive

income 926,002 444,670

Retained earnings 4,018,427 4,060,914

TOTAL STOCKHOLDERS’ EQUITY 35,334,816 18,853,532

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY $77,089,948 $52,089,921

Nine months ended September 30

(Unaudited)

2006 2005

Cash flows from operating activities

Net income $5,857,513 $5,064,880

Adjustments to reconcile net income

to net cash (used in)provided by

operating activities:

Depreciation 1,030,576 862,842

Amortization of trademarks and

patents 431 258

Amortization of land use right 20,242 19,808

Deferred taxes (34,043) 45,050

Recovery of obsolete inventories (69,708) (52,423)

Equity in net income of

unconsolidated affiliate (140,223) --

Changes in operating assets and

liabilities:

Trade receivables (6,841,892) (11,824,833)

Bills receivable (366,251) 1,492,331

Other receivables, prepayments and

deposits (297,497) (33,144)

Inventories (4,453,132) 209,769

Trade payables 3,269,026 6,498,379

Bills payable (250,718) 5,077,282

Other payables and accrued expenses (21,153) 410,033

Provision for warranty 416,125 102,202

Income tax payable 104,660 140,806

Net cash flows (used in) provided by

operating activities (1,776,044) 8,013,240

Cash flows from investing activities

Payments to acquire trademarks and

patents (6,268) --

Payments to acquire and for deposit

for acquisition of property, plant

and equipment (1,380,935) (1,558,316)

Decrease in restricted cash (828,356) (2,574,829)

Proceeds from sales of marketable

securities 37,608 --

Cash acquired from the RTO 419 --

Investment in unconsolidated

affiliate (1,200,000) --

Net cash flows used in investing

activities $(3,377,532) $(4,133,145)

For more information, please contact:

Investor Relations Contact:

Mark Collinson, Partner

CCG Investor Relations

Tel: +1-310-477-9800 x117

Email: Mark.collinson@ccgir.com

Company Contact:

Jim Groh, Vice President, Strategic Planning

Wonder Auto Technology, Inc.

Tel: +1-843-277-0024

Email: jimgroh@wonderautotech.com

Source: Wonder Auto Technology, Inc.,
Keywords: Auto
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