Quarterly Revenue Up 16%; Net Income Up 48% Compared to First Quarter 2006
Increased Revenue Guidance to Range Between $86.9 Million and $87.9 Million for the First Half of 2007, Up 16% to 17% as Compared to the Prior Year's Period
Increased EPS Guidance to Range Between $0.28 and $0.30, up 40% to 50% Compared to the Prior Year's Period
NEW YORK, May 22 /Xinhua-PRNewswire-FirstCall/ -- Global Sources Ltd. (Nasdaq: GSOL) reported financial results for the first quarter ended March 31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030303/LNM011LOGO-b )
Highlights: First Quarter 2007 Compared to First Quarter 2006
* Revenue was $34.9 million, up 16 percent from $30.0 million.
-- Online revenue was $17.3 million, up 14 percent from $15.1 million.
-- Print revenue was $11.8 million, up 7 percent from $11.0 million.
-- Exhibitions revenue was $4.8 million, up 30 percent from $3.7
million.
* Revenue from China was $18.4 million, up 30 percent from $14.2 million.
* Deferred income and customer prepayments were $76.1 million as at
March 31st, up 23 percent from $62.0 million last year at March 31st.
Net income was $6.5 million, or $0.15 per diluted share, due to greater than expected revenue and margin contribution from the 12th Annual International IC-China Conference & Exhibition (IIC-China). This is as compared to $4.4 million, or $0.10 per diluted share, in the prior year's quarter.
Chairman and CEO Merle A. Hinrichs said: "First quarter results were driven by market penetration and new product development. We achieved a record number of booths at the 12th IIC-China show and revenue from China grew by 30 percent. Also, our increased specialization of Gifts & Home Products into Home Products and Gifts & Premiums, together with our new Security Products magazine and its online marketplace, began contributing to revenue in the first quarter.
"We are moving forward with various initiatives to further expand into China's domestic B2B market where we will seek to leverage our brands, content, advertisers, sales organization, infrastructure, expertise and community. Our plans include the launch of two China Sourcing Fairs in Shanghai in December 2007; the launch of the Chinese-language Elegant Living magazine and website in September; and other initiatives still to be announced.
"Regarding our just completed April China Sourcing Fairs in Hong Kong, many exhibitors reported being impressed with the quality of buyers and, in turn, have committed to future China Sourcing Fairs. In fact, as a result of bookings at the April events, we have sold out our first Dubai show, to be held this coming June, and we have pre-sold the majority of our booth space for this October's China Sourcing Fairs in Hong Kong."
CFO Eddie Heng said: "We delivered greater than expected earnings per share of $0.15 for two reasons: First, revenue was greater than expected due to higher online services revenue; and second, we expanded IIC-China to include a new pavilion, and the overall show was more profitable."
Financial Expectations: Second Quarter Revenue Increase -- Up to
18 Percent
Second quarter 2007 revenue is expected to be in the range of $52.0 million to $53.0 million, representing growth of between 16 percent and 18 percent compared to the same quarter last year. Second quarter 2007 earnings per diluted share are expected to be between $0.13 and $0.15. This range represents growth of between 30 percent and 50 percent when compared to $0.10 per diluted share in the second quarter 2006.
Revenue guidance for the six-month period ended June 30, 2007 is raised to now be in the range of $86.9 million to $87.9 million, up from the company's previous guidance of $83.5 million to $86.5 million given on March 6, 2007. The raised guidance range represents an increase of 16 percent to 17 percent as compared to $74.9 million for the first six months of 2006. As noted previously, given that the China Sourcing Fairs were held for the first time in Hong Kong in 2006, the company continues to invest heavily to maximize their success and expects 2007 investments in new China Sourcing Fairs to be similar to their revenue contribution.
Earnings per diluted share for the six-month period ended June 30, 2007 are expected to be in the range of $0.28 to $0.30. This range is up 40 percent to 50 percent when compared to $0.20 per diluted share for the same period in 2006.
"We expect the second half of 2007 to be stronger than the first half, reflecting contribution from new products including the new trade shows in Shanghai in December," Heng said. "Also, as usual, we expect the fall China Sourcing Fairs to be larger than the spring events."
Recent Corporate Highlights: IIC-China and China Sourcing Fairs; AsiaWorld-Expo Contract Extended
-- Held four China Sourcing Fairs in Hong Kong this April: Electronics &
Components; Fashion Accessories; Gifts & Home Products; and for the
first time, Underwear & Swimwear. Over 6,200 booths were sold, up
from approximately 5,900 in April 2006.
-- Renewed and expanded contracts to host China Sourcing Fairs at Hong
Kong's AsiaWorld-Expo from 2009 through 2012 and to include a new
time period license for another show to be held each spring effective
2009.
-- Held the IIC-China in March with a record-breaking 1,058 booths
combined at events held in Shenzhen, Beijing and Shanghai, up
29 percent year-on-year.
-- Announced plans to launch Elegant Living as a Chinese-language
monthly magazine effective September 2007. Elegant Living's
editorial mission is to advance the quality of life for China's
business executives by providing critical information through well-
designed magazines, websites, events and exhibitions.
-- Sold all 500 booths at the first Dubai China Sourcing Fair. To be
held in June 2007, the show is expected to be the largest exhibition
of Greater China suppliers ever held in Dubai.
-- Increased Global Sources' independently certified community of active
buyers to more than 600,000 at the end of the first quarter, a
24 percent increase compared to the same quarter last year.
-- Grew lead generation through Global Sources Online, which is measured
as requests for information from buyers to suppliers, to over
13.7 million for the 12 months ended March 31, 2007. This is a
48 percent increase over the same period last year.
Conference Call for Global Sources First Quarter 2007 Earnings
Global Sources plans to conduct a conference call at 8:00 a.m. EDT on
May 22, 2007 (8:00 p.m. on May 22, 2007 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (888) 212-8315, and international participants may dial
(1-706) 643-0144. Investors in Hong Kong may call (852) 3011-4522. A live webcast of the conference call is scheduled to be available on Global Sources' corporate site at http://www.investor.globalsources.com .
A webcast replay of the call is scheduled to be available on the company's corporate site for at least 30 days. A telephone replay of the call is also scheduled to be available through May 24, 2007. To listen to the telephone replay, dial (800) 642-1687, or dial (1-706) 645-9291 outside the United States, and enter pass code 5163953#. For those in the Hong Kong area, the replay dial-in number is (852) 3011-4541, and enter pass code 5163953#.
About Global Sources
Global Sources is a leading business-to-business (B2B) media company and a primary facilitator of two-way trade with Greater China. The core business is facilitating trade from Greater China to the world, using a wide range of English-language media. The other key business segment facilitates trade from the world to Greater China using Chinese-language media.
The company provides sourcing information to volume buyers and integrated marketing services to suppliers. It helps a community of over 600,000 active buyers source more profitably from complex overseas supply markets. With the goal of providing the most effective ways possible to advertise, market and sell, Global Sources enables suppliers to sell to hard-to-reach buyers in over 230 countries.
The company offers the most extensive range of media and export marketing services in the industries it serves. It delivers information on 1.8 million products and more than 150,000 suppliers annually through 13 online marketplaces, 12 monthly magazines, over 100 sourcing research reports and nine specialized trade shows which run 22 times a year across seven cities.
Suppliers receive more than 13 million sales leads annually from buyers through Global Sources Online ( http://www.globalsources.com ) alone.
Global Sources has been facilitating global trade for 36 years. In mainland China it has over 1,700 team members in 44 locations, and a community of over 1 million registered online users and magazine readers for
Chinese-language media.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended and Section 21-E of the Securities Exchange Act of 1934, as amended. The company's actual results could differ materially from those set forth in the forward-looking statements as a result of the risks associated with the company's business, changes in general economic conditions, and changes in the assumptions used in making such forward-looking statements.
-- Tables to follow --
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
At At
March 31 December 31
2007 2006
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $36,454 $25,192
Available-for-sale securities 120,764 130,603
Accounts receivable, net 6,382 6,468
Receivables from sales representatives 17,333 13,238
Inventory 1,012 889
Prepaid expenses and other current assets 20,113 14,174
Total Current Assets 202,058 190,564
Property and equipment, net 27,890 28,374
Long term investments 100 100
Bonds held to maturity, at amortized cost 293 289
Other assets 2,613 1,562
Total Assets $232,954 $220,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $6,550 $6,804
Deferred income and customer prepayments 73,463 62,036
Accrued liabilities 10,167 12,427
Income taxes payable 929 751
Total Current Liabilities 91,109 82,018
Liabilities for incentive and bonus plans 102 102
Deferred income and customer prepayments
-- long term 2,684 1,802
Deferred tax liability 368 403
Total Liabilities 94,263 84,325
Minority interest 3,930 2,913
Shareholders' equity:
Common shares, US$0.01 par value;
75,000,000 shares authorized;
42,337,568 (2006: 42,271,568) shares issued
and outstanding 423 423
Additional paid in capital 126,776 125,832
Retained earnings 11,358 4,830
Accumulated other comprehensive (loss) income (3,796) 2,566
Total Shareholders' Equity 134,761 133,651
Total Liabilities and Shareholders' Equity $232,954 $220,889
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
Three months ended
March 31
2007 2006
(Unaudited) (Unaudited)
Revenue:
Online and other media services (Note 3) $29,045 $26,090
Exhibitions 4,816 3,712
Miscellaneous 1,086 229
34,947 30,031
Operating Expenses:
Sales (Note 4) 11,136 9,909
Event production 613 619
Community (Note 4) 5,273 4,674
General and administrative (Note 4) 9,953 9,379
Online services development (Note 4) 1,286 1,054
Amortization of software costs 40 302
Total Operating Expenses 28,301 25,937
Income from Operations 6,646 4,094
Interest and dividend income 1,392 1,030
Gain on sale of available-for-sale securities -- 73
Foreign exchange gains (losses), net (274) (27)
Income before Income Taxes 7,764 5,170
Income Tax Expense (219) (203)
Net Income before Minority Interest $7,545 $4,967
Minority interest (1,017) (811)
Net Income before cumulative effect of change in
accounting principle $6,528 $4,156
Cumulative effect of change in accounting
principle (Note 5) -- 251
Net Income $6,528 $4,407
Diluted net income per common share $0.15 $0.10
Common shares used in diluted net income per
common share calculations 40,979,435 40,735,777
Note: 3. Online and other media services consists of:
Three months ended
March 31
2007 2006
(Unaudited) (Unaudited)
Online services $17,270 $15,094
Print services 11,775 10,996
$29,045 $26,090
Note: 4. Non-cash compensation expenses associated with the several
employee equity compensation plans and Directors Purchase Plan
included under various categories of expenses are as follows:
Three months ended
March 31
2007 2006
(Unaudited) (Unaudited)
Sales $(133) $197
Community 85 32
General administrative 509 529
Online services development 62 59
$523 $817
Note: 5. Represents the cumulative effect of change in accounting
principle, resulting from the adoption of SFAS No.123(R) with
effect from January 1, 2006.
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
Three months ended
March 31
2007 2006
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $6,528 $4,407
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 1,072 1,071
Accretion of U.S. Treasury strips zero %
coupons (4) (7)
Unrealised dividend income on
available-for-sale securities -- (253)
Unrealised interest income on
available-for-sale securities (750) (8)
Bad debt expense 100 43
Non-cash compensation expense 523 817
Income attributable to minority shareholder 1,017 811
Equipment written off 4 --
Cumulative effect of change in accounting
principle -- (251)
8,490 6,630
Changes in assets and liabilities:
Accounts receivables (14) 579
Receivables from sales representatives (4,095) (4,550)
Inventory (123) (42)
Prepaid expenses and other current assets (5,939) (6,029)
Long term assets (1,051) (254)
Accounts payable (254) 264
Accrued liabilities and liabilities for
incentive and bonus plans (2,260) 2,366
Deferred income and customer
prepayments 12,309 9,026
Tax liability 143 83
Net cash provided by operating activities 7,206 8,073
Cash flows from investing activities:
Purchase of property and equipment (592) (660)
Purchase of available-for-sale securities (105,682) (104,674)
Proceeds from sale of available-for-sale
securities 109,908 98,728
Net cash generated from (used in)
investing activities 3,634 (6,606)
Cash flows from financing activities:
Amount received towards directors
purchase plan 422 359
Net cash generated from financing activities 422 359
Net increase in cash and cash equivalents 11,262 1,826
Cash and cash equivalents, beginning of the
period 25,192 94,321
Cash and cash equivalents, end of the period $36,454 $96,147
Supplemental cash flow disclosures:
Income tax paid $76 $120
For financial matrix, please visit: http://xprnnews.xfn.info/GSOL/20070522/HKTU001.pdf
Global Sources Press Contact in Asia
Camellia So
Tel: +852-2555-5021
Email: cso@globalsources.com
Global Sources Press Contact in U.S.
James W.W. Strachan
Tel: +1-602-978-7504
Email: strachan@globalsources.com
Global Sources Investor Contact in Asia
Eddie Heng
Tel: +65-6547-2850
Email: eheng@globalsources.com
Global Sources Investor Contacts in U.S.
Kirsten Chapman & Moriah Shilton
Lippert/Heilshorn & Associates, Inc.
Tel: +1-415-433-3777
Email: kchapman@lhai.com
