-Grew revenue by 29% to $39.4 million, as compared to the same period a year ago, driven by exhibition revenue growth-
-Posted GAAP EPS of $0.06 and Non-GAAP EPS of $0.08-
-Increased revenue growth expectations for second half of 2010 to be between 16% and 17%-
NEW YORK, Nov. 11, 2010 /PRNewswire-Asia/ -- Global Sources Ltd. (Nasdaq: GSOL) (http://www.globalsources.com ) reported financial results for the third quarter ended September 30, 2010.
Global Sources' chairman and CEO, Merle A. Hinrichs, said: "We delivered a solid third quarter, increasing revenue by 29% from the same period last year. Our performance was driven by two shows that were new to the quarter and by a healthy rebound in our online business.
"Online revenue grew by 19%, reflecting our initiatives to further integrate our multi-channel offering and add digital value to our magazines and trade shows. For example, our online and magazine advertisers now have a trade show presence through our digital product displays, we now provide digital magazines for each of our export verticals and our trade show exhibitors can have an online presence. As we continue to extend the integration and functionality of each of our media, our key objectives are to boost market adoption and cross-selling."
Financial highlights -- Third quarter: 2010 compared to 2009
-- Revenue was $39.4 million, as compared to $30.6 million.
-- Online revenue was $24.8 million, as compared to $20.9 million.
-- Exhibitions revenue was $7.7 million, as compared to $901,000.
-- Print revenue was $5.7 million, as compared to $7.9 million.
-- Revenue from mainland China was $30.6 million, as compared to $21.8
million.
-- GAAP net income, including a non-cash stock based compensation (SBC)
expense of $722,000, and amortization of intangibles as it relates to
certain equity compensation plans of $154,000, was $2.3 million, or
$0.06 per diluted share, as compared to third quarter 2009 GAAP net
income of $1.2 million, or $0.03 per diluted share, which included a
non-cash SBC expense of $940,000.
-- Non-GAAP net income was $3.2 million, or $0.08 per diluted share, as
compared to $2.1 million, or $0.05 per diluted share, for the third
quarter of 2009.
-- Adjusted EBITDA was $6.0 million, as compared to $3.4 million for the
third quarter of 2009.
-- Total deferred income and customer prepayments were $100.5 million as
at September 30, 2010, as compared to $89.3 million as at September 30,
2009.
Financial highlights -- Nine Months Ended September 30th: 2010 compared to 2009
-- Revenue was $131.8 million, as compared to $119.6 million.
-- GAAP net income was $12.1 million, or $0.28 per diluted share, which
included a non-cash SBC expense of $2.5 million, and amortization of
intangibles as it relates to certain equity compensation plans of
$371,000, as compared to $7.5 million, or $0.16 per diluted share,
which included a non-cash SBC expense of $3.2 million.
-- Non-GAAP net income was $15.0 million, or $0.34 per diluted share, as
compared to $10.7 million, or $0.23 per diluted share, for the nine
months ended September 30, 2009.
-- Adjusted EBITDA was $21.2 million, as compared to $15.6 million for the
nine months ended September 30, 2009.
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, SBC expense or credit, amortization of intangibles as it relates to certain equity compensation plans, 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. Adjusted EBITDA is defined at earnings before interest, taxes, depreciation, amortization, stock-based compensation and impairment of goodwill and intangible assets.
Global Sources' CFO, Connie Lai, said: "A meaningful portion of the 29% revenue growth was from two shows that did not occur in last year's third quarter. This was the first time we recognized revenue for the China International Optoelectronic Expo (CIOE) in which we acquired an interest in December 2009, and we also recognized revenue for the China Sourcing Fairs in Mumbai which were held in the fourth quarter of last year.
"We are increasing our second half 2010 revenue and earnings guidance. In the fourth quarter, we expect online revenue to grow the fastest, exhibitions to achieve healthy growth and print to decline. For the second half of 2010, the company expects the revenue mix to range between 48% and 50% for online, 36% and 38% for exhibitions, 11% and 13% for print, and approximately 2% for miscellaneous. This compares to the mix for the second half of 2009, which was approximately 48% for online, 31% for exhibitions, 18% for print, and 3% for miscellaneous."
Financial expectations for the second half of 2010
-- For the second half of 2010 ending Dec. 31, 2010:
-- Revenue is now expected to be in the range of $99.0 million to
$100.0 million, representing an increase of 16% to 17%, as compared
to $85.5 million for the second half of 2009.
-- GAAP EPS is expected to be in the range of $0.28 to $0.30, as
compared to $0.21 per diluted share in the second half of 2009.
Using the stock price of $7.63 on Oct. 28, 2010, SBC and the
amortization of intangibles as it relates to certain equity
compensation plans are estimated to be an expense of $0.03 per
diluted share for the three months ended Dec. 31 2010.
-- Non-GAAP EPS is expected to be in the range of $0.33 to $0.35, as
compared to $0.23 per diluted share for the same period in 2009.
-- Adjusted EBITDA is expected to be $16.2 million, as compared to
$13.1 million in the second half of 2009.
Recent Corporate Highlights
-- Launched new verticals for Solar & Energy Saving Products, Medical
Products & Supplies and In-Car Electronics & GPS. Each vertical is
supported by an online marketplace, e-magazine, and print magazine for
the trade shows, and China Sourcing Fairs are scheduled for the solar
and medical categories next spring in Hong Kong.
-- Held three trade shows in September.
-- The 12th China International Optoelectronic Expo was held in
Shenzhen. Co-located with the 15th IIC-China Conference & Exhibition
Fall edition, it featured more than 2,300 exhibitors.
-- In Mumbai, China Sourcing Fairs were held for six categories and
featured almost 700 booths.
-- In October in Hong Kong, eight China Sourcing Fairs, two India
Sourcing Fairs and one Korea Sourcing Fair were held, featuring over
6,900 booths.
-- Announced the planned launch of five China Sourcing Fairs in Miami in
July 2011, which will enable Asian exporters to meet face-to-face with
American, Canadian, and Latin American buyers.
-- Private Sourcing Events were held from July 1st through the end of
October, 2010 for more than 118 sourcing teams from very large buying
organizations including Carrefour, Hermes-Otto International, Kmart
Australia, Metro, Office Depot, QVC, Sears, Staples, and Woolworths
Australia. These events created more than 490 high quality, one-on-one
selling opportunities for Global Sources suppliers.
Conference call for Global Sources third quarter 2010 earnings
Chairman and CEO Merle A. Hinrichs and CFO Connie Lai are scheduled to conduct a conference call at 8:00 a.m. ET on November 11, 2010 (9:00 p.m. on November 11, 2010 in Hong Kong) to review these results in more detail. To participate, please call at least 10 minutes in advance to ensure all callers are placed into the call at the start time. Investors in the United States may participate by dialing (877) 941-2069, and international participants may dial (1-480) 629-9713. Investors in Hong Kong are required to provide the conference ID 4377068; are encouraged to dial into the call 10 to 15 minutes prior to the call to prevent delay in joining; and may participate by dialing (852) 3009-5027. 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 November 18, 2010. To listen to the telephone replay, please dial (800) 406-7325, or (1-303) 590-3030 outside the United States, and enter pass code 4377068. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4377068.
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 uses English-language media to facilitate trade from Greater China to the world. The other business segment utilizes Chinese-language media to enable companies to sell to, and within Greater China.
The company provides sourcing information to volume buyers and integrated marketing services to suppliers. It helps a community of over 967,000 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 240 countries.
The company offers the most extensive range of media and export marketing services in the industries it serves. It delivers information on over 4.7 million products and more than 262,000 suppliers annually through 14 online marketplaces, 13 monthly print and 18 digital magazines, over 80 sourcing research reports and 20 specialized trade shows which run 57 times a year across 9 cities.
Suppliers receive more than 192 million sales leads annually from buyers through Global Sources Online (http://www.globalsources.com ) alone.
Global Sources has been facilitating global trade for 40 years. Global Sources’ network covers more than 60 cities worldwide. In mainland China, Global Sources has about 2,700 team members in more than 40 locations, and a community of over 2 million registered online users and magazine readers for its 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 Follow -
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)
At At
September 30 December 31
2010 2009
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 85,292 $ 91,553
Term deposits with banks 1,467 60,357
Available-for-sale securities 6,763 6,423
Accounts receivable, net 4,646 3,438
Receivables from sales representatives 6,511 5,607
Inventory 425 600
Prepaid expenses and other current assets 19,805 13,603
Deferred tax assets 96 13
Total Current Assets 125,005 181,594
Property and equipment, net 76,305 77,815
Goodwill 2,497 --
Intangible assets, net 7,572 8,770
Long term investments 100 100
Deferred tax assets 445 446
Other noncurrent assets 2,967 1,667
Total Assets $ 214,891 $ 270,392
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,528 $ 10,901
Deferred income and customer prepayments 95,721 73,841
Accrued liabilities 14,892 11,585
Income taxes payable 880 435
Total Current Liabilities 120,021 96,762
Deferred income and customer prepayments 4,819 2,516
Deferred tax liability 1,432 141
Total Liabilities 126,272 99,419
Shareholders' equity:
Common shares, US$0.01 par value;
75,000,000 shares authorized;
51,565,725 (2009: 51,427,642) shares
issued and 33,569,725 (2009: 44,552,642)
outstanding 516 514
Additional paid in capital 142,038 138,468
Treasury shares, at cost
-- 17,996,000 (2009: 6,875,000) shares (150,089) (50,000)
Retained earnings 83,490 71,369
Accumulated other comprehensive income 4,363 2,859
Total Company Shareholders’ Equity 80,318 163,210
Non-controlling interests 8,301 7,763
Total Equity $ 88,619 $ 170,973
Total Liabilities and Equity $ 214,891 $ 270,392
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 Nine months ended
September 30, September 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue:
Online and other media
services (Note 1) $ 30,541 $ 28,780 $ 88,641 $ 87,431
Exhibitions 7,674 901 39,554 29,372
Miscellaneous 1,202 931 3,597 2,817
39,417 30,612 131,792 119,620
Operating Expenses:
Sales (Note 2) 15,492 12,087 48,840 45,820
Event production 2,635 319 13,576 10,032
Community (Note 2) 4,069 4,796 15,533 17,885
General and
administrative (Note 2) 11,810 11,057 35,201 33,975
Online services
development (Note 2) 1,440 1,408 4,078 4,172
Amortization of
intangibles and
software costs 492 26 1,079 106
Total Operating Expenses 35,938 29,693 118,307 111,990
Income from Operations 3,479 919 13,485 7,630
Interest and dividend
income 66 312 425 725
Foreign exchange gains
(losses), net (14) 85 (26) 58
Income before Income Taxes $ 3,531 $ 1,316 $ 13,884 $ 8,413
Income Tax Expense (407) (96) (636) (270)
Net Income $ 3,124 $ 1,220 $ 13,248 $ 8,143
Net income attributable
to non-controlling
interests (842) (35) (1,127) (669)
Net Income Attributable to
the Company $ 2,282 $ 1,185 $ 12,121 $ 7,474
Diluted net income per
share attributable to the
Company’s shareholders $ 0.06 $ 0.03 $ 0.28 $ 0.16
Shares used in diluted net
income per share
calculations 39,873,952 45,877,214 44,010,618 45,759,320
Note: 1. Online and other media services consists of:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Online services $ 24,811 $ 20,904 $ 68,985 $ 64,928
Print services 5,730 7,876 19,656 22,503
$ 30,541 $ 28,780 $ 88,641 $ 87,431
Note: 2. Non-cash compensation expenses associated with the employee
and team member equity compensation plans and Global Sources
Directors Share Grant Award Plan included under various
categories of expenses are as follows:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Sales $ 163 $ 213 $ 675 $ 1,053
Community 60 155 221 304
General and
administrative 431 493 1,354 1,569
Online services
development 68 79 222 255
$ 722 $ 940 $ 2,472 $ 3,181
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 Nine months ended
September 30, September 30,
2010 2009 2010 2009
GAAP EPS $ 0.06 $ 0.03 $ 0.28 $ 0.16
GAAP Net Income $ 2,282 $ 1,185 $ 12,121 $ 7,474
Non-cash stock based
compensation expense
(Note 1) 722 940 2,472 3,181
Amortization of
intangibles (Note 2) 154 -- 371 --
Non-GAAP Net Income $ 3,158 $ 2,125 $ 14,964 $ 10,655
Non-GAAP diluted net
income per share $ 0.08 $ 0.05 $ 0.34 $ 0.23
Total shares used in
non-GAAP diluted net
income per share
calculations 39,873,952 45,877,214 44,010,618 45,759,320
Notes:
(1) Actual SBC is calculated based on actual share price on date of the
awards for employees and revaluation based on the share price
of the last day of the quarter for consultants.
(2) Amortization of intangible assets relating to certain non-compete
agreements.
GLOBAL SOURCES LTD. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
(In U.S. Dollars Thousands)
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
US GAAP Income from
operations $ 3,479 $ 919 $ 13,485 $ 7,630
Depreciation and
amortization 1,840 1,557 5,197 4,764
EBITDA 5,319 2,476 18,682 12,394
Non-cash stock based
compensation expense 722 940 2,472 3,181
Adjusted EBITDA $ 6,041 $ 3,416 $ 21,154 $15,575
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
Six months Six months
ended December 31, ended December 31,
2010 2009
Revenue $99.0 to $100.0 $85.5
GAAP EPS $0.28 to $0.30 $0.21
Non-cash stock based
compensation expense (Note 1) $0.04 $0.04 ($0.01)
Amortization of intangibles
(Note 2) $0.01 $0.01 $0.03
Non-GAAP diluted net income per
share $0.33 to $0.35 $0.23
Total shares used in non-GAAP
diluted net income
per share calculations 37,460,493 37,460,493 45,893,215
Notes:
(1) Actual SBC is calculated based on actual share price on date of the
awards for employees and revaluation based on the share price of the
last day of the quarter for consultants.
(2) Amortization of intangible assets relating to certain non-compete
agreements.
For financial matrix, please visit:
http://www.prnasia.com/sa/attachment/2010/11/20101111149555.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:
Suzanne Wang
Tel: +852-2555-4747
Email: investor@globalsources.com
Global Sources Investor Contact in U.S.:
Kirsten Chapman & Timothy Dien
Lippert/Heilshorn & Associates, Inc.
Tel: +1-415-433-3777
Email: tdien@lhai.com
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