Revenue of $63.7 million, up 21% compared to second quarter 2007
Online revenue growth continues to accelerate, increasing 30% compared
to second quarter 2007
Second quarter GAAP EPS of $0.18 and non-GAAP EPS of $0.21
Online revenue expected to exceed 50% of total revenue in second half 2008 and to grow more than 40% compared to second half 2007
NEW YORK, Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- Global Sources Ltd. (Nasdaq: GSOL) ( http://www.globalsources.com ) reported financial results for the second quarter and six months ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030303/LNM011LOGO-b )
Global Sources’ chairman and CEO, Merle A. Hinrichs, said: "We had a very successful second quarter. Our 21% revenue growth was driven by accelerating online revenue growth of 30% overall, and 40% from mainland China.
"The great majority of this growth is due to the success of Global Sources Online 2.0 and its industry leading supplier verification services. The success of the site has been supported by the repackaging and re-pricing of our services along with investments in IT, content development, marketing and increased sales representation. With the expectation of a continuing acceleration of online revenue growth for the second half, we are experiencing a promising return on these investments and plan to continue investing."
Financial Highlights: Second Quarter 2008 Compared to Second Quarter 2007
-- Revenue was $63.7 million, up 21% from $52.5 million.
* Online revenue was $24.1 million, up 30% from $18.5 million.
* Exhibitions revenue was $25.3 million, up 21% from $20.9 million.
* Print revenue was $12.8 million, up 6% from $12.0 million.
* Revenue from mainland China was $42.0 million, up 29% from $32.6
million.
-- Second quarter 2008 net income was $8.4 million, or $0.18 per
diluted share, which included $1.5 million, or $0.03 per share of
non-cash, stock-based compensation expense (SBC) based on a stock
price of $15.18 on June 30, 2008. For the second quarter of 2007,
GAAP net income was $4.2 million, or $0.09 per diluted share, which
included $2.8 million of non-cash SBC, and $1.8 million of net
impairment charge related to the company’s HC International
investment or $0.10 per share.
-- Non-GAAP net income for the second quarter of 2008 was $9.9 million,
compared to $8.8 million for the second quarter of 2007.
-- Non-GAAP EPS for the second quarter of 2008 was $0.21, compared to
$0.19 for the second quarter of 2007.
-- Total deferred income and customer prepayments were $86.8 million as
at June 30, 2008, up 19% from $72.9 million as at June 30, 2007.
-- Cash, cash equivalents and available-for-sale securities were $220.6
million as at June 30, 2008, up 27% from $173.5 million as at June
30, 2007.
Global Sources’ Non-GAAP Metrics
Management believes non-GAAP metrics are useful measures of operations and provides GAAP to non-GAAP reconciliation tables at the end of this press release. Global Sources defines non-GAAP net income as net income excluding non-cash, stock-based compensation (SBC) expense or credit, gains or losses on acquisitions and investments, and/or impairment charges, for all historical and future references to non-GAAP metrics. Non-GAAP EPS is defined as non-GAAP net income divided by the weighted average of diluted common shares outstanding.
Six-month Period Ended June 30th Financial Highlights: 2008 Compared with 2007
For the six-month period ended June 30, 2008, revenue was $104.3 million, compared to $87.5 million in the six-month period ended June 30, 2007. GAAP net income for the six months ended June 30, 2008 was $16.6 million, or $0.35 per diluted share, compared to $10.7 million, or $0.23 per diluted share for the six-month period ended June 30, 2007. Non-GAAP net income was $16.5 million, or $0.35 per diluted share, compared to $15.9 million, or $0.34 per diluted share for the six-month period ended June 30, 2007.
Global Sources’ CFO, Eddie Heng, said: "Our guidance reflects our decision to continue to invest, particularly to support our online initiatives and several new trade shows. Sales representation increased by more than 500 team members in the first half, and we expect continued expansion in the second half. We envision significant changes in the growth trajectories for our lines of business with online revenue expected to continue accelerating, exhibitions to moderate and print to decline. As such, for the second half of 2008 we expect the revenue mix to be approximately 53% online, 25% exhibitions, 20% print, and 2% miscellaneous. ”
Financial Expectations for Third Quarter and Second Half 2008
-- Third Quarter 2008 Ending Sept. 30, 2008:
* Guidance for revenue is expected to be between $38.5 million and
$39 million, representing growth of 14% to 15% over the third
quarter of 2007. Based on the stock price of $14.05 on Aug. 5,
2008, SBC is estimated to be $0.02 per diluted share.
* GAAP EPS is expected to be between $0.02 and $0.03, as compared to
$0.11 per diluted share in third quarter of 2007.
* Non-GAAP EPS is expected to be between $0.04 and $0.05, compared
to $0.13 per diluted share in the third quarter of 2007.
-- Second Half 2008 Ending Dec. 31, 2008:
* Revenue is expected to be in the range of $108 million to $109.5
million. Compared to $94.6 million for the second half of 2007,
this represents an increase of 14% to 16%. Using the stock price
of $14.05 on Aug. 5, 2008, SBC is estimated to be $0.04 per
diluted share.
* GAAP EPS is expected to be in the range of $0.23 to $0.25, as
compared to $0.28 per diluted share in the second half of 2007.
* Non-GAAP EPS is expected to be in the range of $0.27 to $0.29,
compared to $0.39 per diluted share for the same period in 2007.
Recent Corporate Highlights
-- Held the China Sourcing Fairs in Hong Kong, in April, featuring over
6,700 booths.
-- Conducted the Second Annual China Sourcing Fairs in Dubai, in June,
with 800 booths sold, up by over 60% compared to the 2007 show.
-- Hosted complimentary Private Sourcing Events for numerous very large
buyers including Best Buy, Circuit City, Markant, Office Depot,
RadioShack, Samsung Electronics, Staples, Target, and Woolworths
(Australia).
-- Achieved record lead generation, which is measured as requests for
information (RFIs) from buyers to suppliers through Global Sources
Online. There were more than 36 million RFIs during the 12 months
ended June 30, 2008, up more than 94% compared to the same period
last year.
-- Increased Global Sources’ independently certified community of
active buyers to more than 725,000 at the end of the second quarter,
14% higher than the same time last year.
-- Honored by Supply & Demand Chain Executive for "2008 Supply & Demand
Chain Executive 100", an award that recognizes companies providing
the next wave of innovative supply chain solutions.
Conference Call for Global Sources Second Quarter 2008 Earnings
Chairman and CEO, Merle A. Hinrichs, and Eddie Heng, CFO, are scheduled to conduct a conference call at 8:00 a.m. ET on Aug. 14, 2008 (8:00 p.m. on Aug. 14, 2008 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 .
For those who cannot listen to the live broadcast, 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 Aug. 18, 2008. To listen to the telephone replay, dial (800) 642-1687, or dial (1-706) 645-9291 outside the United States, and enter pass code 55221142#. For those in the Hong Kong area, the replay dial-in number is (852) 3011-4541, and the pass code is 55221142#.
About Global Sources
Global Sources is a leading business-to-business media company and a primary facilitator of 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 business segments facilitate trade from the world to Greater China, and trade within 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 725,000 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 4.3 million products and more than 196,000 suppliers annually through 14 online marketplaces, 13 monthly magazines, over 100 sourcing research reports and 9 specialized trade shows which run 27 times a year across eight cities.
Suppliers receive more than 36 million sales leads annually from buyers through Global Sources Online ( http://www.globalsources.com ) alone.
Global Sources has been facilitating global trade for 37 years. Global Sources’ network covers more than 69 cities worldwide. In mainland China, Global Sources has over 2,800 team members in more than 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
June 30, December 31,
2008 2007
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $214,348 $197,825
Available-for-sale securities 6,292 --
Accounts receivable, net 6,621 6,665
Receivables from sales representatives 11,237 12,303
Inventory 1,145 1,108
Prepaid expenses and other current assets 15,392 15,333
Deferred tax assets 46 46
Total Current Assets 255,081 233,280
Property and equipment, net 37,029 35,352
Long term investments 100 100
Bonds held to maturity, at amortized cost 101 99
Deferred tax assets -- long term 202 196
Other assets 2,141 2,781
Total Assets $294,654 $271,808
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable $6,592 $5,577
Deferred income and customers’ prepayments 81,363 78,141
Accrued liabilities 11,847 12,546
Income taxes payable 826 694
Total Current Liabilities 100,628 96,958
Deferred income and customers’ prepayments --
long term 5,458 4,934
Deferred tax liability 296 283
Total Liabilities 106,382 102,175
Non-controlling interest 5,795 4,940
Shareholders’ equity:
Common shares, US$0.01 par value; 75,000,000
shares authorized;
46,702,092 (2007: 46,572,092) shares issued
and outstanding 467 466
Additional paid in capital 134,768 133,987
Retained earnings 45,454 28,829
Accumulated other comprehensive income 1,788 1,411
Total Shareholders’ Equity 182,477 164,693
Total Liabilities and Shareholders’ Equity $294,654 $271,808
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 Six months ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenue:
Online and other media
services (Note 1) $36,884 $30,534 $70,416 $59,579
Exhibitions 25,259 20,883 31,220 25,699
Miscellaneous 1,517 1,128 2,638 2,214
63,660 52,545 104,274 87,492
Operating Expenses:
Sales (Note 2) 20,557 17,666 32,873 28,802
Event production 10,074 9,464 11,079 10,077
Community (Note 2) 9,406 7,435 15,449 12,708
General and administrative
(Note 2) 12,839 11,492 24,067 21,445
Online services development
(Note 2) 1,502 1,300 2,981 2,586
Amortization of software
costs 57 40 97 80
Total Operating Expenses 54,435 47,397 86,546 75,698
Income from Operations 9,225 5,148 17,728 11,794
Interest and dividend income 649 1,724 1,946 3,116
Loss on investment, net -- (1,846) -- (1,846)
Foreign exchange gains
(losses), net (1,039) (190) (1,295) (464)
Income before Income Taxes 8,835 4,836 18,379 12,600
Income Tax Expense (188) (338) (421) (557)
Net Income before
Non-controlling Interest $8,647 $4,498 $17,958 $12,043
Non-controlling interest (227) (308) (1,333) (1,325)
Net Income $8,420 $4,190 $16,625 $10,718
Diluted net income per share $0.18 $0.09 $0.35 $0.23
Total shares used in diluted
net income per share
calculations 47,543,536 47,039,911 47,434,955 46,843,657
Note: 1. Online and other media services consists of:
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Online services $24,104 $18,492 $46,034 $35,762
Print services 12,780 12,042 24,382 23,817
$36,884 $30,534 $70,416 $59,579
Note: 2. 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 Six months ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Sales $585 $1,519 $(808) $1,386
Community 165 17 180 102
General administrative 647 1,135 400 1,645
Online services development 77 98 125 160
$1,474 $2,769 $(103) $3,293
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
Six months ended June 30,
2008 2007
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $16,625 $10,718
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,611 2,154
Accretion of U.S. Treasury strips zero % coupons (2) (8)
Provision for doubtful debts 66 100
Non-cash compensation expense (credit) (103) 3,293
Income attributable to non-controlling
shareholder 1,333 1,325
Equipment written off 4 4
Impairment of investment -- 2,301
Exchange rate realignment 35 --
20,569 19,887
Changes in assets and liabilities:
Accounts receivables (22) 821
Receivables from sales representatives 1,071 3,332
Inventory (37) (276)
Prepaid expenses and other current assets (23) 445
Long term assets 647 (1,688)
Accounts payable 958 (638)
Accrued liabilities and liabilities for
incentive and bonus plans (751) (848)
Deferred income and customer prepayments 3,724 9,051
Tax liability 108 276
Net cash provided by operating activities 26,244 30,362
Cash flows from investing activities:
Purchase of property and equipment (3,616) (8,636)
Purchase of available-for-sale securities (6,467) --
Proceeds from sale of available-for-sale
securities -- 8
Net cash used in investing activities (10,083) (8,628)
Cash flows from financing activities:
Amount received towards directors purchase plan 886 422
Payment of dividend to non-controlling
shareholder by a subsidiary (479) --
Net cash generated from financing activities 407 422
Effect of exchange rate changes on cash
equivalents (45) --
Net increase in cash and cash equivalents 16,568 22,156
Cash and cash equivalents, beginning of the
period 197,825 135,093
Cash and cash equivalents, end of the period $214,348 $157,249
Supplemental cash flow disclosures:
Income tax paid $282 $281
GLOBAL SOURCES LTD. AND SUBSIDIARIES
ACTUAL GAAP to NON-GAAP RECONCILIATION
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
GAAP EPS $0.18 $0.09 $0.35 $0.23
GAAP Net Income $8,420 $4,190 $16,625 $10,718
Non-cash, stock-based
compensation expense /
(credit) (Note 1) 1,474 2,769 (103) 3,293
Loss on investment, net
(Note 2) -- 1,846 -- 1,846
Non-GAAP Net Income $9,894 $8,805 $16,522 $15,857
Non-GAAP diluted net
income per share $0.21 $0.19 $0.35 $0.34
Total shares used in
non-GAAP diluted net
income per share
calculations 47,543,536 47,039,911 47,434,955 46,843,657
Notes:
(1) Non-cash, stock-based compensation expense / (credit).
(2) An impairment charge of approximately $2.3 million on the
company’s HC International investment, net of $0.5 million
received pursuant to indemnification obligations of the vendor
under the purchase agreement for HC International investment.
GLOBAL SOURCES LTD. AND SUBSIDIARIES
GUIDANCE GAAP to NON-GAAP RECONCILIATION
(In U.S. Dollars Million, Except Number of Shares and Per Share Data)
GUIDANCE ACTUAL
Three month Three month
ended Sept. 30 ended Sept. 30
2008 2007
Revenue $38.50 to $39.00 $33.8
GAAP EPS $0.02 to $0.03 $0.11
Non-cash, stock-based compensation
expenses (Note 1) $0.02 $0.02 $0.02
Gain on sale of HC shares (Note 2) -- -- --
Impairment charge for Blue Bamboo
(Note 3) -- -- --
Non-GAAP diluted net income per
share $0.04 to $0.05 $0.13
Total shares used in non-GAAP
diluted net income
per share calculations 47,553,353 47,553,353 47,090,456
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONTINUED GUIDANCE GAAP to NON-GAAP RECONCILIATION
(In U.S. Dollars Million, Except Number of Shares and Per Share Data)
GUIDANCE ACTUAL
Six month Six month
ended Dec. 31 ended Dec. 31
2008 2007
Revenue $108.00 to $109.50 $94.6
GAAP EPS $0.23 to $0.25 $0.28
Non-cash, stock-based compensation
expenses (Note 1) $0.04 $0.04 $0.09
Gain on sale of HC shares (Note 2) -- -- ($0.05)
Impairment charge for Blue Bamboo
(Note 3) -- -- $0.07
Non-GAAP diluted net income per
share $0.27 to $0.29 $0.39
Total shares used in non-GAAP
diluted net income
per share calculations 47,494,995 47,494,995 46,986,861
Notes:
(1) Non-cash, stock-based compensation expenses.
(2) A gain of approximately $2.4 million arising from the sale of the
shares of HC International.
(3) Impairment charge of approximately $3.1 million recorded by the
company on intangible assets and goodwill pertaining to the
business acquisition of Blue Bamboo China Ventures.
For financial matrix, please visit:
http://xprnnews.xfn.info/GSOL/20080814/HKTH001.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: +1-480-664-8309
Email: strachan@globalsources.com
Global Sources Investor Contact in Asia:
Investor Relations Department
Tel: +852-2555-4777
Email: investor@globalsources.com
Global Sources Investor Contact in U.S.:
Kirsten Chapman
Lippert/Heilshorn & Associates, Inc.
Tel: +1-415-433-3777
Email: investor@globalsources.com
