Full Year Revenue Increased 63% to a Record $119.6 Million
SHENZHEN, China, April 1 /PRNewswire-Asia/ -- China Ritar Power Corp. (OTC Bulletin Board: CRTP) ("China Ritar" or the "Company"), a leading Chinese manufacturer of lead acid batteries, today reported financial results for the fourth quarter and year ended December 31, 2008.
Fourth Quarter 2008 Highlights
-- Revenue increased 36.9% year-over-year to $33.2 million
-- Gross profit grew 5.9% year-over-year to $5.0 million
-- Net income was $0.48 million for fully diluted earnings per share of
$0.02
-- Non-GAAP net income was $1.4 million for fully diluted earnings per
share of $0.07, excluding $0.96 million in non-cash, stock-based
compensation expense
Full Year Highlights
-- Revenue grew 63.0% year-over-year to a record $119.6 million
-- Net income grew 95.4% year-over-year to $5.2 million; excluding $3.85
million in non-cash, stock-based compensation expense in 2007 and 2008,
non-GAAP net income increased 38.9% to $9.0 million
-- Increased market penetration to 81 countries with over 800 customers
-- Batteries for renewable energy storage increased to 15% of total sales,
compared to 5% in fiscal year 2007
"We are pleased to report that we exceeded our revenue guidance for the full year 2008 as demand for our lead acid batteries remains healthy. We continue to maintain our strong market position through our innovative R&D that enables us to offer our international quality batteries at a competitive price while targeting rapidly growing niche markets," Mr. Jiada Hu, China Ritar's Chairman and Chief Executive Director commented. "In 2008, we made tremendous progress expanding our market penetration as we now sell our products in 81 countries and have over 800 customers. Moreover, sales for our renewable energy storage batteries remained strong with a 375% increase in sales for the year; representing 20% of total sales in the fourth quarter of 2008."
Revenue was $33.2 million in the fourth quarter of 2008, up 36.9% from revenue of $24.2 million in the fourth quarter of 2007. Batteries used for telecom, uninterruptible power supply (UPS), renewable energy storage and light electronic vehicles (LEV) accounted for 38.0%, 32.2%, 20.3% and 9.5% of total sales of the fourth quarter of 2008, respectively. On a seasonal basis, the second and third quarters are the strongest as orders tend to slow down in the fourth quarter and first quarters due to the holiday seasons.
Gross profit for the quarter increased 5.9% to $5.0 million from $4.8 million in the same period of 2007. Gross margin for fourth quarter of 2008 was 15.2% compared to 19.6% in the fourth quarter of 2007. The decline in gross margin was mainly due to the rapid decline in lead prices during the fourth quarter, which was directly passed on to the Company's customers. China Ritar's long-term gross margin target is 20.5%.
Operating expenses were $4.2 million compared to $6.1 million in the fourth quarter of 2007. Adjusting for $0.96 million and $3.85 million in non-cash, stock-based compensation recognized under salaries in the fourth quarter of 2008 and 2007, respectively, non-GAAP operating expenses were $3.2 million or 9.7% of sales and $2.2 million or 9.2% of sales, respectively. The non-cash, stock-based compensation relates to the release of shares of the Company's common stock to the Company's CEO from escrow pursuant to a make good agreement to meet the net income target for 2007 of $5.7 million and 2008 of $8.2 million entered into by the Company in connection with its private placement financing in February 2007.
Operating income for the fourth quarter was $0.85 million compared to ($1.3) million in the fourth quarter of 2007. Adjusting for the previously mentioned non-cash, stock-based compensation, non-GAAP operating income was $1.8 million in the fourth quarter of 2008 compared to $2.5 million in the same period a year ago.
Net income was $0.48 million in the fourth quarter of 2008 for fully diluted earnings per share of $0.02 compared to ($1.9) million in net income and fully diluted earnings per share of ($0.10) in the fourth quarter of 2007. Excluding the non-cash, stock-based compensation, non-GAAP net income for the fourth quarter of 2008 was $1.4 million, down 26.1% from non-GAAP net income of $2.0 million in the fourth quarter of 2007. Non-GAAP fully diluted earnings per share for the fourth quarter of 2008 were $0.07 compared to non-GAAP fully diluted earnings per share of $0.10 in the same period last year.
Full Year 2008 Financial Results
Revenue for the full year 2008 increased 63.0% to a record $119.6 million, compared to $73.3 million in 2007. Batteries used for UPS, telecom, renewable energy storage, and light electronic vehicles (LEV) markets accounted for 32%, 42%, 15% and 10% of total sales of the fiscal year 2008, respectively. Gross profit was $22.5 million, up 46.6% from $15.4 million for the full year 2007. Gross margin was 18.9% in 2008 compared to 21.0% in 2007. Operating income for the year was $8.4 million, up 98.2% from operating income of $4.3 million in the full year 2007. Adjusting for the full year non-cash, stock-based compensation of $3.85 million in 2007 and 2008, non-GAAP operating income for the year was $12.3 million, up 51.6% from non-GAAP operating income of $8.1 million in the prior year. Net income increased 95.4% to $5.2 million from $2.6 million in 2007. Non-GAAP net income for the year was $9.0 million, up 38.9% from non-GAAP net income of $6.5 million in 2007. Fully diluted earnings per share for 2008 were $0.27 compared to $0.14 for the full year 2007. Non-GAAP fully diluted earnings per share for the year were $0.47 compared to $0.34 a year ago.
Financial Condition
As of December 31, 2008, China Ritar had $12.7 million in cash and equivalents and restricted cash, $23.5 million in working capital and $3.7 million in long-term debt. Net cash provided by operating activities for the year was $4.7 million. Shareholders' equity stood at $34.4 million, up from $23.7 million at year-end 2007.
Business Outlook
In 2008, China Ritar added a new factory in Hengyang with five battery production lines and a lead plate manufacturing facility. The battery production lines are currently operating at approximately a 60% utilization rate and are expected to reach 80% to 85% by the second or third quarter of 2009. With 19 production lines in operation, the Company believes that it has sufficient capacity to support its growth plans for 2009. China Ritar expects revenues from its renewable energy storage batteries to increase to 25% in 2009 from 15% in 2008. The Company does not have any capital expenditure plans at this time.
"Stationary lead acid batteries continue to be the preferred energy storage device for standby power applications such as UPS, telecom and renewable energy. Furthermore, with the initial market success of our proprietary nano gel batteries for wind and solar power storage, we expect sales from this segment to increase to 25% of total revenue in 2009," Mr. Hu commented. "Yet, as the timing of the global economic recovery remains uncertain, we are maintaining a cautiously optimistic outlook for 2009."
Conference Call
China Ritar will host a conference call at 9:00 am EDT on Wednesday, April 1, 2009 to discuss the 2008 fourth quarter and year-end financial results. To participate in the conference call, please dial the following number fifteen minutes prior to the scheduled conference call time: 1-888-419-5570. International callers should dial +1-617-896-9871. The pass code for the call is 414 389 59. If you are unable to participate in the call at this time, a replay will be available on Wednesday, April 1, 2009 at 11:00 AM EDT through Monday April 15, 2009. To access the replay, dial 1-888-286-8010, international callers should dial +1-617-801-6888. The conference pass code is 65975630. This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://ir.ritarpower.com/en/ . 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.
Use of Non-GAAP Financial Measures
To supplement China Ritar Power's condensed consolidated financial statements presented on a GAAP basis, China Ritar is providing certain income statement information that is not calculated according to GAAP. China Ritar believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the three and 12 month periods ended December 31, 2008 and December 31, 2007 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
Non-GAAP financial results for the three and 12 month periods ended December 31, 2007 and December 31, 2008 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under salaries in relation to the release of shares of the Company's common stock to the Company's CEO from escrow pursuant to a make good agreement to meet the net income target for 2007 of $5.7 million and 2008 of $8.2 million entered into by the Company in connection with its private placement financing in February 2007.
About China Ritar Corp.
China Ritar designs, develops, manufactures and markets environmentally friendly, lead acid batteries with a wide range of capacities and applications, including telecommunications, Uninterruptible power supply (UPS) devices, light electrical vehicles (LEV), and renewable energy systems (solar and wind power). China Ritar sells, markets and services six series and 197 models of Ritar-branded, cadmium-free valve-regulated lead-acid (VRLA) batteries. Products are sold worldwide with sales in 81 countries including China, India, and numerous markets in Europe and the Americas. Additional information can be found at the Company's website http://www.ritarpower.com .
Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Ritar on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included herein are forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these
forward-looking statements.
- FINANCIAL TABLES TO FOLLOW -
Year Ended December 31,
($'000) 2008 % 2007 %
Revenue by Product
UPS 38,482 32% 23,147 32%
Telecom 50,412 42% 27,138 37%
LEV 12,382 10% 19,206 26%
Renewable Energy Storage 18,308 15% 3,856 5%
Total Revenue 119,584 100% 73,347 100%
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
December 31,
2008 2007
Unaudited
Revenue $33,189,812 $24,245,102
Cost of sales 28,145,812 19,483,882
Gross profit 5,044,000 4,761,220
Operating expenses
Salaries 1,620,045 4,153,844
Sales commission 690,323 275,314
Shipping and handling cost 514,029 463,808
Other selling, general and
administrative expenses 1,368,732 1,183,987
Total Expenses 4,193,129 6,076,953
Operating profit 850,871 (1,315,733)
Other income and (expenses)
Interest income 71,948 30,113
Government grants -- 39,385
Other income 1,259 1,451
Interest Expense 237,855 (89,300)
Foreign currency exchange loss (137,110) (369,275)
Other expenses (1,717) 23,295
Other (expenses) 172,235 (364,331)
Income before income taxes and
minority interests 1,023,106 (1,680,064)
Income taxes (549,953) (243,914)
Income before minority interests 473,153 (1,923,978)
Minority interests share profit (loss) 9,616 30,490
Net income 482,769 (1,893,488)
Earnings per share:
- Basic $0.03 ($0.10)
- Diluted $0.02 ($0.10)
Weighted average number of shares
outstanding:
- Basic 19,134,992 19,000,996
- Diluted 19,519,730 19,722,493
Year Ended
December 31,
2008 2007
Audited
Revenue $119,584,496 $73,347,126
Cost of sales 97,038,927 57,966,383
Gross profit 22,545,569 15,380,743
Operating expenses
Salaries 5,566,788 5,023,918
Sales commission 1,566,177 1,235,936
Shipping and handling cost 1,680,355 1,392,002
Other selling, general and
administrative expenses 5,283,065 3,466,151
Total Expenses 14,096,385 11,118,007
Operating profit 8,449,184 4,262,736
Other income and (expenses)
Interest income 200,346 51,143
Government grants -- 39,385
Other income 2,222 2,816
Interest Expense (511,755) (278,239)
Foreign currency exchange loss (594,800) (666,687)
Other expenses (10,456) (9,790)
Other (expenses) (914,443) (861,372)
Income before income taxes and
minority interests 7,534,741 3,401,364
Income taxes (2,400,314) (784,724)
Income before minority interests 5,134,427 2,616,640
Minority interests share profit (loss) 29,633 25,567
Net income 5,164,060 2,642,207
Earnings per share:
- Basic 0.27 0.15
- Diluted 0.27 0.14
Weighted average number of shares
outstanding:
- Basic 19,127,598 18,066,371
- Diluted 19,127,598 18,865,804
CHINA RITAR POWER CORP. AND SUBSIDIARIES
NON-GAAP CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Year Ended
December 31 December 31
2008 2007 2008 2007
Unaudited Unaudited
Revenue $33,189,812 $24,245,102 $119,584,496 $73,347,126
Cost of sales 28,145,812 19,483,882 97,038,927 57,966,383
Gross profit 5,044,000 4,761,220 22,545,569 15,380,743
Operating expenses
Salaries 656,694 303,844 1,713,387 1,173,918
Sales commission 690,323 275,314 1,566,177 1,235,936
Shipping and handling
cost 514,029 463,808 1,680,355 1,392,002
Other selling,
general and
administrative
expenses 1,368,732 1,183,987 5,283,065 3,466,151
Total Expenses 3,229,778 2,226,953 10,242,984 7,268,007
Operating profit 1,814,222 2,534,267 12,302,585 8,112,736
Other income and
(expenses)
Interest income 71,948 30,113 200,346 51,143
Government grants 39,385 39,385
Other income 1,259 1,451 2,222 2,816
Interest expense 237,855 (89,300) (511,755) (278,239)
Foreign currency
exchange loss (137,110) (369,275) (594,800) (666,687)
Other expenses (1,717) 23,295 (10,456) (9,790)
Other (expenses) 172,235 (364,331) (914,443) (861,372)
Income before income
taxes and minority
interests 1,989,457 2,169,936 11,388,142 7,251,364
Income taxes (549,953) (243,914) (2,400,314) (784,724)
Income before
minority interests 1,436,504 1,926,022 8,987,828 6,466,640
Minority interests
share profit (loss ) 9,616 30,490 29,633 25,567
Net income $1,446,120 $1,956,512 $9,017,461 $6,492,207
Earnings per share:
- Basic $0.08 $0.10 $0.47 $0.36
- Diluted $0.07 $0.10 $0.47 $0.34
Weighted average
number of shares
outstanding:
- Basic 19,134,992 19,000,996 19,127,598 18,066,371
- Diluted 19,519,730 19,722,493 19,127,598 18,865,804
CHINA RITAR POWER CORP. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2008
For the three For the three
months ended months ended
Adjusted Net income December 31, 2007 December 31, 2008
Net Diluted Net Diluted
Net Income (Loss) and Diluted EPS Income EPS Income EPS
Adjusted Amount Non-GAAP 1,956,512 0.10 1,446,120 0.07
Adjustments
Non-cash compensation adjustment (1) 3,850,000 0.20 963,350 0.05
Amount per consolidated statement of
operations (1,893,488) (0.10) 482,769 0.02
(1) Non cash compensation expense in connection with the release from
escrow to certain employees of shares of common stock that had
been deposited into escrow to certain China Ritar employees in
connection with the Company's private placement in February 2007
CHINA RITAR POWER CORP. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE YEAR ENDED DECEMBER 31, 2007 AND 2008
For the year For the year
ended ended
Adjusted Net income December 31, 2007 December 31, 2008
Net Diluted Net Diluted
Net Income (Loss) and Diluted EPS Income EPS Income EPS
Adjusted Amount Non-GAAP 6,492,207 0.34 9,017,461 0.47
Adjustments
Non-cash compensation adjustment
(1) 3,850,000 0.20 3,850,000 0.20
Amount per consolidated statement of
operations 2,642,207 0.14 5,164,060 0.27
(1) Non cash compensation expense in connection with the release from
escrow to certain employees of shares of common stock that had
been deposited into escrow to certain China Ritar employees in
connection with the Company's private placement in February 2007
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Audited
As of December 31,
ASSETS 2008 2007
Current assets:
Cash and cash equivalents $8,300,472 $4,775,562
Accounts receivable, net of
allowances of $1,311,759 and
$670,327 20,015,989 12,042,973
Inventory 14,578,230 11,850,682
Advance to suppliers 1,340,107 3,328,039
Other current assets 3,564,793 577,493
Restricted cash 4,387,679 5,857,637
Total current assets 52,187,270 38,432,386
Non-current assets:
Property, plant and equipment,
net 10,905,369 2,848,630
Construction in progress 3,089,854 3,425,473
Intangible assets, net 17,088 18,083
Land use right 476,687 451,456
Rental and utility deposits 82,801 --
Due from related parties -- 206,175
Total assets $66,759,069 $45,382,203
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $13,483,218 $10,878,649
Income and other taxes payable 2,941,267 1,168,938
Accrued salaries 447,022 300,552
Bills payable 4,321,915 4,012,797
Derivative instruments 236,898 --
Other current liabilities 2,808,483 1,939,708
Current portion of long term
loans 877,886 170,903
Short-term loans 3,596,955 3,089,922
Total current liabilities 28,713,644 21,561,469
Long-term liabilities:
Long-term loans 3,657,859 136,722
Total liabilities 32,371,503 21,698,191
Minority interest -- 28,058
Stockholders' equity:
Preferred stock, $.001 par
value, 10,000,000 shares
authorized, no shares issued
and outstanding -- --
Common stock at $.001 par
value; authorized 100,000,000
shares authorized, 19,134,992
and 19,000,996 shares issued
and outstanding 19,135 19,001
Additional paid-in capital 19,222,727 15,343,481
Retained earnings 12,053,205 6,889,145
Accumulated other
comprehensive income 3,092,499 1,404,327
Total stockholders' equity 34,387,566 23,655,954
Total liabilities and
stockholders' equity $66,759,069 $45,382,203
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Audited
Year Ended December 31,
2008 2007
Operating activities
Net income 5,164,060 2,642,207
Adjustments to reconcile net income
from operations to net cash used in
operating activities:
Depreciation of property, plant and
equipment 972,214 545,259
Amortization of intangible assets and
land use right 12,352 --
Allowance of bad debts 586,618 277,868
Gain on disposal of a subsidiary -- 26,977
Gain on disposal of property, plant
and equipment 3,088 --
Stock-based compensation - make good
provision 3,853,401 3,853,401
Allowance for inventory valuation and
slow moving items 488,685 263,365
Unrealized loss on derivative
instruments 233,795 --
Minority interests (29,633) (25,567)
Changes in operating working capital
items:
Accounts receivable (7,621,370) (4,322,035)
Inventory (2,359,983) (5,517,416)
Advance to suppliers 2,192,326 (3,122,870)
Other current assets (2,816,955) (224,964)
Rental and utility deposits (81,717) --
Accounts payable 1,818,618 2,102,486
Income and other tax recoverable /
payable 1,668,182 (543,353)
Accrued salaries 123,742 72,656
Bills payable 27,228 3,853,122
Other current liabilities 509,088 1,334,564
Net cash provided by operating
activities 4,743,739 1,215,700
Investing activities
Loan to related parties 217,750 496,618
Repayment of loan to related parties -- --
Purchase of property, plant and
equipment (8,216,819) (5,026,809)
Purchase of intangible assets (3,760) --
Acquisition of land use right -- (433,117)
Acquisition of further 20% in
Shanghai Ritar -- --
Sales proceeds of disposal of
property, plant and equipment 55,951 --
Sales proceeds of disposal of
subsidiary of Ritar net of cash -- --
Net cash used in investing activities (7,946,878) (4,963,308)
Financing activities
Proceeds from issuance of stock -- 10,737,791
Proceeds from stock issued for
warrant exercised 134 128,607
Proceeds from other loan borrowings -- 137,940
Proceeds from bank borrowings 33,213,856 6,977,630
Repayment of other loan borrowings -- (568,431)
Repayment of bank borrowings (28,775,962) (5,792,623)
Deferred offering costs -- --
Restricted cash 1,851,001 (4,470,300)
Net cash provided by financing
activities 6,289,029 7,150,614
Effect of exchange rate changes in
cash 439,020 417,713
Net increase in cash and cash
equivalents 3,524,910 3,820,719
Cash and cash equivalents, beginning
of year 4,775,562 954,843
Cash and cash equivalents, end of
year 8,300,472 4,775,562
