-- 4Q09 Revenue Up 29.6% to RMB193.8 Million from the Prior Year Period
-- 4Q09 Net Income Up 157.5% to RMB39.8 Million from the Prior Year Period
-- 4Q09 Diluted Earnings per ADS of $0.27
-- Live Conference Call to be Held on Monday, March 8, 2010 at 8:00 AM U.S. Eastern Time
BEIJING, March 8 /PRNewswire-Asia/ -- Duoyuan Global Water Inc. (NYSE: DGW) ("Duoyuan" or the "Company"), a leading China-based domestic water treatment equipment supplier, today announced unaudited financial results for the fourth quarter and full year of 2009.
Mr. Wenhua Guo, the Company's Chairman and Chief Executive Officer, stated, "We are pleased with the Company's fourth quarter and full year financial results, which reflect increased demand across all three product lines, driven by our comprehensive and high quality product offering, our low cost manufacturing base, extensive distribution network and our focus on continually developing new products. We plan to launch 36 products throughout the remainder of this year. We are confident that our competitive strengths and formidable cash position enable us to capitalize on the compelling market opportunities at hand."
Fourth Quarter 2009 Financial Highlights
· Revenue increased 29.6% to RMB193.8 million ($28.4 million(1)) from
RMB149.5 million in the prior year period.
· Gross margin increased to 47.3% from 44.1% in the prior year period.
· Operating income increased 114.5% to RMB55.0 million ($8.1 million)
from RMB25.6 million in the prior year period.
· Net income increased 157.5% to RMB39.8 million ($5.8 million) from
RMB15.5 million in the comparable period of 2008.
· Diluted earnings per ADS(2) was $0.27. Each ADS represents two of the
Company's ordinary shares.
Fourth Quarter 2009 Financial Performance
Fourth quarter 2009 revenue increased 29.6% to RMB193.8 million ($28.4 million) from RMB149.5 million in the comparable period of 2008, reflecting growth across all three product categories.
Revenue from wastewater treatment equipment increased 50.4%, to RMB78.6 million ($11.5 million) in the fourth quarter of 2009 compared to RMB52.3 million in the fourth quarter of 2008, due to increased demand for Duoyuan's online testing equipment, ultraviolet shelving disinfection system, water decanter and sludge screw products.
Revenue from water purification equipment increased by 25.3% to RMB44.5 million ($6.5 million) in the fourth quarter of 2009 compared to RMB35.5 million in the prior year period, as the Company's central water purifiers, industry pure water equipment and ozone generators continued to be well-received by the marketplace.
Revenue from circulating water treatment increased by 10.6% to RMB67.7 million ($9.9 million) in the fourth quarter of 2009 compared to RMB61.2 million in the fourth quarter of 2008, driven by increased demand for the Company's circulating water central processors and electronic water conditioners.
Demand for the Company's products increased across all three product lines, driven by the Company's established distribution network, market recognition of the high quality, durability and effectiveness of its products as well as the success of the Company's promotion and marketing strategies.
Demand for the Company's wastewater treatment equipment continued to outpace demand for circulating water treatment equipment and water purification equipment due to intensified government efforts to monitor wastewater discharge.
For the fourth quarter of 2009, gross profit increased by 39.1% to RMB91.7 million ($13.4 million) from RMB65.9 million in the prior year period. Gross margin for the fourth quarter of 2009 was 47.3%, compared to 44.1% in the fourth quarter of 2008, and 49.5% in the third quarter of 2009. The fluctuation of gross margin reflected the fluctuation of raw material costs as well as increased depreciation expenses associated with the Company's continuous investments in manufacturing facilities, which amounted to approximately $5.0 million in 2009.
Operating income increased by 114.5% to RMB55.0 million ($8.1 million) in the fourth quarter of 2009 from RMB25.6 million in the comparable period of 2008. Operating margin was 28.4% in the fourth quarter of 2009, up from 17.1% in the prior year period. Selling expenses, up 153.6% to RMB27.4 million ($4.0 million), reflected approximately RMB15.6 million ($2.3 million) of TV advertising expenses in the fourth quarter of 2009. As the Company continues to invest in its brand, it expects to incur similar levels of TV advertising expense in the first and second quarters of 2010. Excluding a one-time cost of approximately RMB20.5 million in the fourth quarter of 2008 associated with the Company's initial public offering, general and administrative expenses increased by 10.5% to RMB4.7 million ($0.7 million) in the fourth quarter of 2009 from RMB4.2 million in the fourth quarter of 2008.
Provision for income taxes in the fourth quarter of 2009 increased to RMB15.4 million ($2.3 million), an effective tax rate of 27.9%, from RMB9.9 million in the prior year period. Compared to an effective tax rate of 39.0% in the fourth quarter of 2008, the decrease resulted from public offering related expenses of RMB20.5 million that were not tax deductible in 2008. Compared to an effective tax rate of 23.4% in the third quarter of 2009, the increase was attributable to certain expenses that were not deductible from the Company's income subject to taxes in the fourth quarter of 2009.
Net income increased 157.5% to RMB39.8 million ($5.8 million) in the fourth quarter of 2009, from RMB15.5 million in the prior year's fourth quarter. Diluted earnings per share was RMB0.91 ($0.13) in the fourth quarter of 2009, compared to RMB0.52 in the fourth quarter of 2008. Diluted earnings per ADS was RMB1.81 ($0.27) in the fourth quarter of 2009, compared to RMB1.03 per ADS in the prior period.
The Company had approximately 43.9 million weighted average number of diluted shares outstanding as of December 31, 2009, compared to 30.0 million weighted average number of diluted shares outstanding as of December 31, 2008.
As of December 31, 2009, the Company had cash and bank deposits of RMB918.7 million ($134.6 million), compared to RMB937.2 million as of September 30, 2009. Cashflow provided by operating activities for the year ended December 31, 2009 was approximately RMB154.7 million ($22.7 million), compared to approximately RMB241.7 million in the prior year period.
Full Year 2009 Financial Performance
For the year ended December 31, 2009, revenue increased 32.2% to RMB783.4 million ($114.8 million) from RMB592.7 million for the year ended December 31, 2008. During this same period, gross profit increased by 41.9% to RMB377.2 million ($55.3 million) from RMB265.9 million. Operating income increased 6.5% to RMB188.1 million ($27.6 million) from RMB176.7 million in 2008. Excluding share-based compensation of approximately RMB91.3 million ($13.4 million), or $0.36 per diluted share, non-GAAP operating income increased 58.2% to RMB279.4 million ($40.9 million) from RMB176.7 million in the prior year. Non-GAAP net income increased 55.7% to RMB208.3 million ($30.5 million), or RMB 5.62 ($0.82) per diluted share, from RMB133.8 million, or RMB4.46 per diluted share, in the prior year. Non-GAAP net income per ADS was RMB11.24 ($1.65) for the full year of 2009, up from RMB8.92 in 2008. Weighted average number of diluted shares outstanding was approximately 37.1 million in 2009, up from 30.0 million in 2008.
Please refer to the non-GAAP presentation provided below for a year over year comparison excluding non-cash share-based compensation expense.
Follow-On Offering and Expansion Plan
On February 2, 2010, Duoyuan completed a follow-on public offering of 2,760,000 ADSs representing 5,5200,000 ordinary shares at a price of $29.50 per ADS. The net proceeds to the Company from this offering, after deducting underwriting discounts, commissions and offering expenses, totaled $76.8 million.
Mr. Stephen C. Park, the Chief Financial Officer of Duoyuan, stated, "We are excited to move forward into 2010 in a highly flexible financial position. As demand continues to increase for water treatment equipment driven by stringent government regulations and the ongoing need for advanced water treatment equipment for commercial, industrial and residential uses, we believe we are well-positioned to capture the growing market opportunities."
"We intend to use the proceeds to continue to expand our manufacturing facilities, to increase in-house production of key components used in existing or new product offerings, and to launch new products. The final phase of our Langfang expansion project is expected to be completed and fully operational by the end of the second quarter of 2010. We will also break ground in March this year on a new facility in Daxing, Beijing, where our headquarters are located, to address the growing demand for our products in 2011 and beyond."
"Additionally, we remain focused on enhancing our R&D capabilities, evidenced by our plan to build a new R&D center in the third quarter of this year. We look forward to executing our near-term growth strategies with a considerably strong cash position."
Financial Outlook
Mr. Stephen C. Park concluded, "As we move forward into 2010, our competitive position remains strong and we are poised for future growth supported by our trusted brand name and vast distribution network. With this in mind, we expect to generate revenue of approximately RMB157 million in the first quarter of 2010."
This forecast reflects the Company's current and preliminary view, which is subject to change.
Conference Call
The Company will host a conference call on Monday, March 8, 2010 at 8:00 AM U.S. Eastern Time to discuss fourth quarter and full year 2009 results. Listeners may access the call by dialing:
United States: 1-877-789-3909
International: 1-706-758-5161
Hong Kong: 852-3011-4522
United Kingdom: 44-203-107-0289
Conference ID: 56632732
A telephone replay will be available beginning two hours after the
conclusion of the call and will be available through March 15th, 2010.
Listeners may access the replay by dialing:
United States: 1-706-645-9291
Conference ID: 56632732
Preregistration and a webcast of the conference call will also be available through the Company's website at www.duoyuan-hq.com.
About Duoyuan Global Water Inc.
Duoyuan Global Water Inc. is a leading China-based domestic water treatment equipment supplier. Duoyuan's product offerings address the key steps in the water treatment process, such as filtration, water softening, water-sediment separation, aeration, disinfection and reverse osmosis. Duoyuan offers a comprehensive set of complementary products across three product categories: circulating water treatment, water purification and wastewater treatment. The Company has an extensive local distribution network, which provides proximity to end-user customers and responsiveness to local market demand. Learn more at www.duoyuan-hq.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. These forward-looking statements may include, but are not limited to, statements containing words such as “may,” “could,” “would,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “expects,” “intends” and “future” or similar expressions. These forward-looking statements speak only as of the date of this press release and are subject to change at any time. These forward-looking statements are based upon management's current expectations and are subject to a number of risks, uncertainties and contingencies, many of which are beyond the Company’s control that may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading “Risk Factors” in the Company’s final prospectus filings with the Securities and Exchange Commission, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(1) This announcement contains translations of certain Renminbi amounts
into US dollars at specified rates solely for the convenience of
readers. Unless otherwise noted, all translations from Renminbi to US
dollars as of and for the quarter/year ended December 31, 2009, were
made at the noon buying rate of RMB6.8259 to USD1.00 on December 31,
2009 in the City of New York for cable transfers in Renminbi per US
dollar as certified for customs purposes by the Federal Reserve Bank
of New York. Duoyuan Global Water makes no representation that the
Renminbi or US dollar amounts referred to in this press release could
have been or could be converted into US dollars or Renminbi, at any
particular rate or at all.
(2) American Depositary Shares, which are traded on the New York Stock
Exchange, are equivalent to ordinary shares at a ratio of 1:2.
Contact Information
Integrated Corporate Relations, Inc.
In the U.S.: Ashley M. Ammon: 1-646-277-1227
In China: Wei-Jung Yang or Wen Lei Zheng: 86-10-6599-7968
DUOYUAN GLOBAL WATER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2008 2009 2009
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
RMB RMB US$
REVENUE 149,530,768 193,832,362 $28,396,602
COST OF REVENUE 83,613,885 102,115,646 14,960,027
---------- ----------- ----------
GROSS PROFIT 65,916,883 91,716,716 13,436,575
RESEARCH AND DEVELOPMENT EXPENSES 4,775,876 4,703,729 689,100
SELLING EXPENSES 10,798,612 27,382,816 4,011,605
GENERAL AND ADMINISTRATIVE
EXPENSES 24,722,835 4,675,183 684,918
---------- --------- -------
OPERATING INCOME 25,619,560 54,954,988 8,050,952
INTEREST EXPENSE (529,995) (295,295) (43,261)
OTHER INCOME 258,041 541,589 79,343
LOSS FROM SALE OF PROPERTY (11,265) - -
------- -- --
INCOME BEFORE INCOME TAXES 25,336,341 55,201,282 8,087,034
PROVISION FOR INCOME TAXES 9,879,107 15,401,879 2,256,388
--------- ---------- ---------
NET INCOME 15,457,234 39,799,403 5,830,646
========== ========== =========
Earnings per share:
Basic 0.52 0.91 $0.13
Diluted 0.52 0.91 $0.13
Earnings per ADS:
Basic 1.03 1.82 $0.27
Diluted 1.03 1.81 $0.27
Weighted average number of
shares outstanding:
Basic 30,000,000 43,702,631 43,702,631
Diluted 30,000,000 43,859,804 43,859,804
YEAR ENDED DECEMBER 31,
-----------------------
2008 2009 2009
(AUDITED) (UNAUDITED) (UNAUDITED)
--------- ----------- -----------
RMB RMB US$
REVENUE 592,699,273 783,411,447 $114,770,425
COST OF REVENUE 326,808,954 406,177,153 59,505,289
----------- ----------- ----------
GROSS PROFIT 265,890,319 377,234,294 55,265,136
RESEARCH AND DEVELOPMENT EXPENSES 16,370,230 18,386,436 2,693,628
SELLING EXPENSES 37,076,066 68,873,210 10,089,982
GENERAL AND ADMINISTRATIVE
EXPENSES 35,791,561 101,837,126 14,919,223
---------- ----------- ----------
OPERATING INCOME 176,652,462 188,137,522 27,562,303
INTEREST EXPENSE (3,117,818) (1,218,745) (178,547)
OTHER INCOME 1,278,478 1,346,863 197,316
LOSS FROM SALE OF PROPERTY (3,215,744) - -
---------- -- --
INCOME BEFORE INCOME TAXES 171,597,378 188,265,640 27,581,072
PROVISION FOR INCOME TAXES 37,830,516 71,270,638 10,441,207
---------- ---------- ----------
NET INCOME 133,766,862 116,995,002 17,139,865
=========== =========== ==========
Earnings per share:
Basic 4.46 3.16 $0.46
Diluted 4.46 3.16 $0.46
Earnings per ADS:
Basic 8.92 6.33 $0.93
Diluted 8.92 6.31 $0.92
Weighted average number of
shares outstanding:
Basic 30,000,000 36,982,711 36,982,711
Diluted 30,000,000 37,064,864 37,064,864
DUOYUAN GLOBAL WATER INC. AND SUBSIDIARIES
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2008 2009 2009
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
RMB RMB US$
REVENUE 149,530,768 193,832,362 $28,396,602
COST OF REVENUE 83,613,885 102,115,646 14,960,027
---------- ----------- ----------
GROSS PROFIT 65,916,883 91,716,716 13,436,575
RESEARCH AND DEVELOPMENT EXPENSES 4,775,876 4,703,729 689,100
SELLING EXPENSES 10,798,612 27,382,816 4,011,605
GENERAL AND ADMINISTRATIVE
EXPENSES 24,722,835 4,974,113 728,712
---------- --------- -------
OPERATING INCOME 25,619,560 54,656,058 8,007,158
INTEREST EXPENSE (529,995) (295,295) (43,261)
OTHER INCOME 258,041 541,589 79,343
LOSS FROM SALE OF PROPERTY (11,265) - -
------- -- --
INCOME BEFORE INCOME TAXES 25,336,341 54,902,352 8,043,240
PROVISION FOR INCOME TAXES 9,879,107 15,401,879 2,256,388
--------- ---------- ---------
NET INCOME 15,457,234 39,500,473 $5,786,852
========== ========== ==========
Earnings per share:
Basic 0.52 0.90 $0.13
Diluted 0.52 0.90 $0.13
Earnings per ADS:
Basic 1.03 1.81 $0.26
Diluted 1.03 1.80 $0.26
Weighted average number of
shares outstanding:
Basic 30,000,000 43,702,631 43,702,631
Diluted 30,000,000 43,859,804 43,859,804
YEAR ENDED DECEMBER 31,
-----------------------
2008 2009 2009
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
RMB RMB US$
REVENUE 592,699,273 783,411,447 $114,770,425
COST OF REVENUE 326,808,954 404,802,480 59,303,898
----------- ----------- ----------
GROSS PROFIT 265,890,319 378,608,967 55,466,527
RESEARCH AND DEVELOPMENT EXPENSES 16,370,230 18,386,436 2,693,628
SELLING EXPENSES 37,076,066 64,888,294 9,506,189
GENERAL AND ADMINISTRATIVE
EXPENSES 35,791,561 15,940,302 2,335,268
---------- ---------- ---------
OPERATING INCOME 176,652,462 279,393,935 40,931,442
INTEREST EXPENSE (3,117,818) (1,218,745) (178,547)
OTHER INCOME 1,278,478 1,346,863 197,316
LOSS FROM SALE OF PROPERTY (3,215,744) - -
---------- -- --
INCOME BEFORE INCOME TAXES 171,597,378 279,522,053 40,950,211
PROVISION FOR INCOME TAXES 37,830,516 71,270,638 10,441,207
---------- ---------- ----------
NET INCOME 133,766,862 208,251,415 $30,509,004
=========== =========== ===========
Earnings per share:
Basic 4.46 5.63 $0.82
Diluted 4.46 5.62 $0.82
Earnings per ADS:
Basic 8.92 11.26 $1.65
Diluted 8.92 11.24 $1.65
Weighted average number of
shares outstanding:
Basic 30,000,000 36,982,711 36,982,711
Diluted 30,000,000 37,064,864 37,064,864
DUOYUAN GLOBAL WATER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
-----------
December 31, December 31, December 31,
2008 2009 2009
(AUDITED) (UNAUDITED) (UNAUDITED)
--------- ----------- -----------
RMB RMB US$
CURRENT ASSETS:
Cash 198,518,061 918,667,261 $134,585,514
Accounts receivable 137,549,786 197,087,701 28,873,511
Inventories, net of
reserve for obsolescence 46,726,339 33,419,900 4,896,043
Other receivables 46,500 676,376 99,089
Other current assets 645,376 1,344,702 197,000
Deposits 9,990,000 5,605,530 821,215
--------- --------- -------
Total current assets 393,476,062 1,156,801,470 169,472,372
----------- ------------- -----------
PLANT AND EQUIPMENT, net 117,681,359 144,755,275 21,206,768
----------- ----------- ----------
OTHER ASSETS:
Prepaid leases 22,481,491 21,957,806 3,216,837
Deposits - long term - 44,378,173 6,501,439
Deferred tax assets 4,446,899 4,694,347 687,726
--------- --------- -------
Total other assets 26,928,390 71,030,326 10,406,002
---------- ---------- ----------
Total assets 538,085,811 1,372,587,071 $201,085,142
=========== ============= ============
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
-------------------------------------------------------------------
CURRENT LIABILITIES:
Notes payable 20,000,000 20,000,000 $2,930,017
Accounts payable 38,696,788 27,913,596 4,089,365
Other payables 24,927,232 19,722,465 2,889,357
Income taxes payable 10,768,521 15,423,292 2,259,525
---------- ---------- ---------
Total current liabilities 94,392,541 83,059,353 12,168,264
---------- ---------- ----------
SHAREHOLDERS' EQUITY:
Ordinary shares, US$0.000033
par value: Authorized shares -
1,500,000,000; Issued and
outstanding - 30,000,000
shares at December 31, 2008
and 43,702,631 shares
at December 31, 2009 7,295 10,384 1,521
Additional paid-in
capital 132,455,705 861,292,062 126,180,000
Statutory reserves 36,413,141 57,319,979 8,397,424
Retained earnings 274,817,129 370,905,293 54,337,933
----------- ----------- ----------
Total shareholders'
equity 443,693,270 1,289,527,718 188,916,878
----------- ------------- -----------
Total liabilities
and shareholders'
equity 538,085,811 1,372,587,071 $201,085,142
=========== ============= ============
DUOYUAN GLOBAL WATER INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS OF INCOME
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2008 2009 2009
---- ---- ----
RMB RMB US$
GAAP NET INCOME 15,457,234 39,799,403 $5,830,645
Share-based compensation - (298,930) (43,793)
-- -------- -------
NON-GAAP NET INCOME 15,457,234 39,500,473 $5,786,852
GAAP Earnings per share - diluted 0.52 0.91 $0.13
Share-based compensation - (0.01) (0.00)
-- ----- -----
NON-GAAP Earnings per share - diluted 0.52 0.90 $0.13
GAAP Earnings per ADS - diluted 1.03 1.81 $0.27
Share-based compensation - (0.01) (0.01)
-- ----- -----
NON-GAAP Earnings per ADS - diluted 1.03 1.80 $0.26
Weighted average number of shares
outstanding - diluted 30,000,000 43,859,804 43,859,804
YEAR ENDED DECEMBER 31,
-----------------------
2008 2009 2009
---- ---- ----
RMB RMB US$
GAAP NET INCOME 133,766,862 116,995,002 $17,139,865
Share-based compensation - 91,256,413 13,369,140
-- ---------- ----------
NON-GAAP NET INCOME 133,766,862 208,251,415 $30,509,005
GAAP Earnings per share - diluted 4.46 3.16 $0.46
Share-based compensation - 2.46 0.36
-- ---- ----
NON-GAAP Earnings per share - diluted 4.46 5.62 $0.82
GAAP Earnings per ADS - diluted 8.92 6.31 $0.92
Share-based compensation - 4.93 0.73
-- ---- ----
NON-GAAP Earnings per ADS - diluted 8.92 11.24 $1.65
Weighted average number of shares
outstanding - diluted 30,000,000 37,064,864 37,064,864
