SHENZHEN, China, November 15, 2011 /PRNewswire-Asia-FirstCall/ -- Jingwei International Limited (NASDAQ: JNGW) ("Jingwei" or "the Company"), a leading provider of data-mining, interactive marketing and software services in China, today announced its financial results for the third quarter ended September 30, 2011.
Third Quarter 2011 Highlights:
"After a strong performance in operating results in 2010, we experienced some softness in our key BSS/OSS product offerings to the telecom carriers. Management changes within a major telecom carrier have also impacted the expected ramp-up of our interactive marketing services in the quarter; which in turn negatively impacted our cost structure for the services," commented Mr. George Du, Chairman and Chief Executive Officer of Jingwei. "In addition, net income was negatively affected by a one-time impairment charge of about $1.1 million to a long-term investment, as well as a sharp increase in SG&A Expense in part to support our quick business expansion in the Data mining segment."
Mr. George Du continued, "In spite of the challenges, we have invested greatly to expand our product offerings and strengthen the sales team in data mining segment. We have upgraded our major MVAS "Stock Trading Secretary" to a more comprehensive program, adding new features such as personal wealth management information, financial advisor commentaries and basic wealth management consultation over the phone. With successful deployment of the MVAS Society Channel and marketing support system for China Unicom in four provinces, the Company has built up a strong operating team for this product line. We aim to build on momentum to quickly expand the coverage to ten provinces in the next six months. In the software services segment, we have maintained our market leadership in development of IPTV billing and OSS solution, and continued to upgrade integrated call center platforms in multiple provinces for China Unicom in support of its widely popular "116114" service. Moreover we are making efforts to diversify our customer base into municipal governments and telecom carriers in Eastern European and African countries."
Key Financial Results
Key financial results for the third quarter 2011 versus the third quarter 2010 and the first nine months 2011 versus the first nine months 2010 are as follows (in US dollars thousands, except per share data):
Nine Months Ended | Three Months Ended | |||||||
2011 | 2010 | % change | 2011 | 2010 | % change | |||
(Unaudited) | (Unaudited) | |||||||
Data Mining Net Revenue | $12,027 | $12,805 | -6% | $3,569 | $5,306 | (32)% | ||
Software Services Net Revenue | 15,575 | 10,944 | 42% | 5,069 | 5,104 | 0% | ||
Net Revenue | 27,602 | 23,749 | 16% | 8,638 | 10,410 | (17)% | ||
Gross Profit | 12,380 | 12,089 | 2% | 3,919 | 4,840 | (19)% | ||
Net Income (non-GAAP)(1) | 6,404 | 9,072 | (29)% | 1,290 | 3,631 | (65)% | ||
Net Income | 2,045 | 6,242 | (67)% | (826) | 2,744 | (130)% | ||
Earnings per Basic Share | 0.10 | 0.34 | (70)% | (0.04) | 0.13 | (130)% | ||
Earning per Diluted Share | 0.10 | 0.31 | (68)% | (0.04) | 0.13 | (130)% | ||
Financial Outlook
Jingwei has revised its initial outlook for full year 2011 and now expects total revenue between $36.0 million and $40.0 million, net income of between $3.0 million and $4.6 million, and dilutive earnings per basic share of between $0.15 and $0.23 assuming 20.5 million weighted average common shares outstanding on a fully diluted basis.
Jingwei International Limited and Subsidiaries Consolidated Statements of Income and Comprehensive Income (in US dollars thousands, except share and per share data) | |||||||||
Nine Months Ended | Three Months Ended | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Sales | $ 27,602 | $ 23,749 | $ 8,638 | $ 10,410 | |||||
Cost of sales | 15,222 | 11,660 | 4,719 | 5,570 | |||||
Gross profit | 12,380 | 12,089 | 3,919 | 4,840 | |||||
Operating expenses | |||||||||
Selling, general and administrative expenses | 8,013 | 4,023 | 3,040 | 1,462 | |||||
Research and development costs | 2,355 | 1,867 | 835 | 536 | |||||
10,368 | 5,890 | 3,875 | 1,998 | ||||||
Income from operations | 2,012 | 6,199 | 44 | 2,842 | |||||
Other income (expenses) | |||||||||
Subsidy income | 1,265 | 392 | 344 | 71 | |||||
Interest income | 72 | 46 | 32 | 13 | |||||
Interest expense | - | (5) | - | (1) | |||||
Impairment loss on long-term investments | (1,059) | - | (1,059) | - | |||||
Other expense | (2) | (74) | (2) | (14) | |||||
276 | 359 | (686) | 69 | ||||||
Income (loss) before income taxes | 2,288 | 6,558 | (642) | 2,911 | |||||
Income tax expense | 243 | 316 | 184 | 167 | |||||
Net income (loss) | 2,045 | 6,242 | (826) | 2,744 | |||||
Less: Net income attributable to noncontrolling interest | - | - | - | - | |||||
Net income (loss) attributable to the Company's stockholders | 2,045 | 6,242 | (826) | 2,744 | |||||
Foreign currency translation adjustment | 2,089 | 936 | 628 | 748 | |||||
Comprehensive income | $ 4,134 | $ 7,178 | $ (198) | $ 3,492 | |||||
Comprehensive income attributable to noncontrolling interest | 270 | 156 | 92 | 124 | |||||
Comprehensive income attributable to the Company's stockholders | 3,864 | 7,022 | (290) | 3,368 | |||||
Basic earnings (loss) per share | $ 0.10 | $ 0.34 | $ (0.04) | $ 0.13 | |||||
Diluted earnings (loss) per share | $ 0.10 | $ 0.31 | $ (0.04) | $ 0.13 | |||||
Weighted average common shares outstanding | |||||||||
Basic | 20,407,859 | 18,156,763 | 20,442,322 | 20,336,167 | |||||
Diluted | 20,467,059 | 20,015,271 | 20,442,322 | 20,642,134 | |||||
Jingwei International Limited and Subsidiaries Consolidated Balance Sheets (in US dollars thousands, except share and par value) | |||||||||
September 30, 2011 | December 31, 2010 | ||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 4,045 | $ | 7,519 | |||||
Accounts receivable, less allowance of doubtful accounts of $4,163 and $2,040, respectively | 38,447 | 34,558 | |||||||
Other receivables, prepayments and deposits, less allowance for doubtful accounts of $139 and $134, respectively | 7,952 | 3,610 | |||||||
Inventories | 8,591 | 5,780 | |||||||
Deferred tax assets | 321 | 413 | |||||||
Amount due from a stockholder | 868 | - | |||||||
Total current assets | 60,224 | 51,880 | |||||||
Non-current assets | |||||||||
Property, plant and equipment, net | 1,805 | 1,854 | |||||||
Intangible assets, net | 15,006 | 17,448 | |||||||
Long-term investment | 784 | 1,797 | |||||||
Goodwill | 3,321 | 3,209 | |||||||
Total assets | $ | 81,140 | $ | 76,188 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 6,685 | $ | 4,122 | |||||
Accruals and other payable | 1,716 | 1,890 | |||||||
Income tax payable | 1,601 | 1,610 | |||||||
Deferred tax | 265 | 259 | |||||||
Loan from a stockholder | 268 | 262 | |||||||
Amount due to a related company | 819 | - | |||||||
Total current liabilities | 11,354 | 8,143 | |||||||
Non-current liabilities | |||||||||
Deferred tax liabilities | 804 | 965 | |||||||
Total liabilities | 12,158 | 9,108 | |||||||
Commitments and contingencies | - | - | |||||||
Equity | |||||||||
Common stock, ($0.001 par value; 75,000,000 shares authorized; 20,478,676 and 20,350,167 shares issued as of September 30, 2011 and December 31, 2010, respectively; 20,438,461 and 20,347,167 shares outstanding as of September 30, 2011 and December 31, 2010, respectively) | 21 | 20 | |||||||
Treasury stock, at cost (40,215 shares and 3,000 share as of September 30, 2011 and December 31, 2010, respectively) | (129) | (12) | |||||||
Additional paid-in capital | 20,386 | 22,502 | |||||||
Statutory and other reserves | 3,590 | 3,590 | |||||||
Retained earnings | 30,993 | 28,948 | |||||||
Accumulated other comprehensive income | 6,118 | 4,299 | |||||||
Total Company's stockholders' equity | 60,979 | 59,347 | |||||||
Noncontrolling interest | 8,003 | 7,733 | |||||||
Total equity | 68,982 | 67,080 | |||||||
Total liabilities and equity | $ | 81,140 | $ | 76,188 | |||||
Jingwei International Limited and Subsidiaries Consolidated Statements of Cash Flows (in US dollars thousands) | |||||||||
Nine Months Ended September 30, | |||||||||
2011 | 2010 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Cash flows from operating activities | |||||||||
Net income | $ | 2,045 | $ | 6,242 | |||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||
Depreciation and amortization | 3,770 | 2,625 | |||||||
Allowance for doubtful accounts | 2,527 | - | |||||||
Share-based compensation expense | 200 | 495 | |||||||
Loss on investment impairment | 1,059 | ||||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivables | (6,417) | (8,815) | |||||||
Other receivables, prepayments and deposits | (4,342) | 967 | |||||||
Inventories | (2,811) | (2,290) | |||||||
Deferred tax asset | (63) | (27) | |||||||
Amount due from shareholders | (868) | ||||||||
Accounts payable | 2,500 | (31) | |||||||
Accruals and other payables | (410) | 235 | |||||||
Amount due to related companies | 819 | ||||||||
Income tax payable | (9) | (31) | |||||||
Net cash used in operating activities | (2,000) | (630) | |||||||
Cash flows from investing activities | |||||||||
Acquisition of property and equipment | (562) | (223) | |||||||
Acquisition of intangible assets | (69) | (187) | |||||||
Cash paid for business acquisition | (2,004) | - | |||||||
Net cash used in investing activities | (2,635) | (410 | ) | ||||||
Cash flows from financing activities | |||||||||
Repurchase of common shares | (39) | ||||||||
Loan from a stockholder | 118 | ||||||||
Repayment of stockholder loans | (412) | - | |||||||
Net cash used in financing activities | (333) | - | |||||||
Effect of foreign currency translation on cash and cash equivalents | 1,494 | 904 | |||||||
Net decrease in cash and cash equivalents | (3,474) | (136) | |||||||
Cash and cash equivalents - beginning of period | 7,519 | 10,239 | |||||||
Cash and cash equivalents - end of period | $ | 4,045 | $ | 10,103 | |||||
Supplemental Disclosure of Cash Flow Information | |||||||||
Income tax paid | $ | 412 | $ | 404 | |||||
Interest paid | $ | - | $ | - | |||||
About Jingwei International Limited:
Jingwei International Limited ("Jingwei") has established a leading position in China in data mining, interactive marketing and software services. By leveraging its proprietary database, Jingwei helps companies to more effectively reach their target audiences. To capitalize on China's explosive mobile, Internet and e-Commerce growth, Jingwei has focused on new data mining offerings that encompass interactive marketing, bundled mobility solutions and mobile value added services. The Company's software services include business intelligence, billing, customer relationship management and decision support solutions for Chinese telecom operators and power companies.
Company Contact:
Jingwei International Limited
Yong Xu or Cao Wei
Tel: +86-755-8631-9430
Email: weicao@jingweicom.com
www.jingweicom.com
Business Risks and Forward-Looking Statements
This report includes forward-looking statements. Generally, the words "believes," "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
Note (1):
Net income (non-GAAP)
Net income (non-GAAP) excludes share-based compensation expenses and amortization of acquired intangible assets. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our operating performance. The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.
Q3-2011 Reconciliation of Net Income to Net Income (non-GAAP) | |||||
For Nine Months and Three Months Ended September 30, 2011 | |||||
9 Mos. Ended | 9 Mos. Ended | 3 Mos. Ended | 3 Mos. Ended | ||
30-Sep-11 | 30-Sep-10 | 30-Sep-11 | 30-Sep-10 | ||
Net income Attributable to the Company | 2,045 | 6,242 | -826 | 2,744 | |
Amortization of intangibles assets | 3,100 | 2,335 | 1,029 | 795 | |
Share-based compensation expenses | 200 | 495 | 28 | 92 | |
Impairment loss on long-term investment | 1,059 | 1,059 | |||
Net income (non-GAAP) | 6,404 | 9,072 | 1,290 | 3,631 | |