omniture

New Energy Systems Group Reports First Quarter 2011 Financial Results

2011-05-20 05:58 745

Anytone® unit sales and Kim Fai Solar panels drive revenue growth of 20%

Generated $3.6 million in cash from operations

Reaffirmed 2011 guidance: $130 million to $135 million in revenues, adjusted net income of $24.5 million to $25.5 million and adjusted EPS of $1.69 to $1.75


SHENZHEN, China, May 20, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems, today announced financial results for the first quarter ended March 31, 2011.

First quarter 2011 Financial Highlights

  • Total revenues from all four divisions increased 20% to $27.1 million
  • Anytone sold 799,600 units, a 27% increase from Q1 2010
  • Gross profit increased 47% to $9.4 million
  • Adjusted net income increased 37% to $6.4 million

Mr. Jack Yu, Chairman of New Energy stated, "We made further progress in transforming New Energy to an efficient, consumer-driven battery solutions company. Our proactive reorganization of our wholesale batteries businesses has already produced cost savings. Meanwhile, our new product pipeline for Anytone is as robust as it has been since we acquired the business. We also expect solid top and bottom line contribution from Kim Fai as we integrate our sales and marketing and R&D efforts. All of these developments in our business make us extremely confident in our long term growth outlook."

For the 3 Months Ended March 31

 
 

 

Q1 2011

 

Q1 2010

 

CHANGE

 
 

Net Sales

 

$27.1 million

 

$22.5 million

 

+20%

 
 

Gross Profit

 

$9.4 million

 

$6.4 million

 

+47%

 
 

Net Income

 

$5.5 million

 

$3.8 million

 

+44%

 
 

Adjusted Net Income*

 

$6.4 million

 

$4.6 million

 

+37%

 
 

GAAP EPS (Diluted)

 

$0.38

 

$0.30

 

+25%

 
 

Adjusted EPS (Diluted)*

 

$0.44

 

$0.37

 

+19%

 
 
       


*Adjusted net income and adjusted EPS exclude $0.2 million and $0.1 million of non-cash stock-based compensation expenses and $0.7 million and $0.7 million of amortization expenses in Q1 2011 and Q1 2010, respectively. Fully diluted shares on March 31, 2011 were 14.6 million versus 12.6 million on March 31, 2010.

Revenues increased 20% year-over-year to $27.1 million. Growth in the Anytone battery business was offset by Management's deliberate strategy to reduce sales of lower-margin battery shells. The acquisition of Kim Fai in the fourth quarter of 2010 added approximately $5.5 million of sales in the three months ended March 31, 2011, meeting Management's forecast.

Anytone® consumer products division sold 799,600 units in the first quarter of 2011, up 27% from the same period last year. Anytone introduced three new products during the quarter, including products for laptops, iPhone 4 and iPad.

Gross profit in the first quarter of 2011 was $9.4 million compared to $6.4 million, a 47% increase compared to the same period last year.  Consolidated gross margin expanded 22% to 35% due to cost savings from the E'Jenie battery cell production consolidation and higher growth in the high-margin Anytone® products.  Gross profit margins typically range between 30%-31% for Anytone®, 14%-16% for E'Jenie and 29%-31% for Kim Fai.

Operating expenses for the three months ended March 31, 2011 were $2.1 million representing approximately 8% of sales compared to $1.5 million and 7% of sales in the same period last year. The increase was primarily a result of higher sales and marketing expenses. The Kim Fai acquisition also added $0.1 million of general and administrative expenses.

The Company incurred $0.2 million of non-cash stock-based compensation during the first three months of 2011. Excluding these expenses, operating income was $7.5 million, representing operating margins of 27.7%.

Net income for the quarter was $5.5 million, a 44% increase to $3.8 million for the three months in 2010.  GAAP earnings per share were $0.38 compared to $0.30 based on 14.6 million and 12.6 million diluted shares outstanding in the first quarter of 2011 and 2010, respectively. Non-GAAP adjusted earnings and EPS were $6.4 million and $0.44 in the first three months of 2011, respectively.

Balance Sheet and Cash Flow Summary


As of March 31, 2011, cash and equivalents of the Company stood at $10.1, down from $13.1 million as of December 31, 2010. Working capital was approximately $17.6 million at March 31, 2011; accounts receivable was $17.2 million, compared to $11.2 million as of December 31, 2010.  The Company had $0.5 million of debt.  New Energy generated $3.6 million of cash flow from operations during the three months ended March 31, 2011 versus $6.6 million in the same period a year ago. The Company obtained approximately $9.2 million of credit lines in April 2011.

Business Update:

New Energy continues to make additional progress improving its operating efficiencies and expanding its product portfolio. In the first quarter of 2011, the Company completed the integration of their finished battery pack and battery cells businesses. The benefits are twofold: E'Jenie has a fully integrated battery component manufacturer capable of producing battery shells, battery caps and battery cells, making the Company more competitive with larger customers looking for one integrated provider of battery solutions. Secondly, the integration has already generated meaningful cost savings, as reflected in the margin expansion during the first quarter of 2011.

The Anytone consumer products division is focused on expanding its distribution and growing its brand recognition. By introducing compelling and differentiated new products such as the iPhone 4 battery charger, more distributors are selling Anytone's line of mobile and PC batteries to their customers.  

In addition, Management is focused on building its own online and retail distribution. The Company plans to open approximately 30 franchised stores in China during 2011 to increase its brand recognition and maintain more control over its marketing. Anytone expects to incur minimal capital investment since the franchisees will be responsible for the opening and operating the stores. The Company is working with several famous online retailers in China to roll out its owned franchised online marketplace. This will allow Anytone to significantly expand its direct distribution to consumers while improving its working capital efficiencies. The online store is expected to be online at the beginning of July 2011.  

2011 Guidance

Management is reiterating its 2011 guidance as follows:

Revenue:

 

$130 to $135 million

 
 

Adjusted Net Income:

 

$24.5 million to $25.5 million

 
 

Adjusted EPS:

 

$1.69 to $1.75

 
 
   


The Company recently became aware of counterfeit products using Anytone's brand name being sold to distributors and online. Management has contacted regulators and taken legal actions against several perpetrators involved with manufacturing and selling counterfeit products. While the Company believes these and other actions will significantly curtail the amount of counterfeit products, Anytone's consumer product sales may be impacted in the short term.

Since closing the Kim Fai acquisition in November 2010, Management has been successful in signing new customers and expanding its portfolio of higher-margin solar application products. Based on the strong pipeline of orders and requests for proposals Kim Fai has, the Company is confident in at least meeting and potentially exceeding the prior forecast of $24 million of revenues and $5 mill of net income contribution from Kim Fai in 2011.  

Conference Call

To attend the call, please use the dial-in information below.  When prompted, ask for the "New Energy Call " and/or be prepared to provide the conference ID.


 
 

Date:

 

May 20th, 2011

 
 

Time:

 

9:00 a.m. Eastern Time, US.

 
 

Conference Line Dial-In (U.S.):

 

1-877-941-1427

 
 

International Dial-In:

 

1-480-629-9664

 
 

Conference ID:

 

4440646  "New Energy Systems Call"

 
 

Webcast link:

 

http://viavid.net/dce.aspx?sid=00008669

 
 

 
 
   


Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 27, 2011. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 if calling internationally. Utilize the pass code 4440646 for the replay.

About New Energy Systems Group

New Energy Systems Group is a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems for mobile phones, laptops, digital cameras, MP3s and a variety of other portable electronics. The company's end-user consumer products are sold under the Anytone® brand in China, and the company has begun expanding its international sales efforts. The fast pace of new mobile device introductions in China combined with a growing middle class make it fertile ground for New Energy's end-user consumer products, as well as its high powered, light weight lithium ion batteries. In addition to historically strong organic growth, New Energy is expected to benefit from economies of scale, broader distribution, and higher production capacity and higher profit margins. Additional information about the company is available at: www.newenergysystemsgroup.com.

Forward Looking Statements

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary and affiliated companies. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

For more information, please contact:

COMPANY

New Energy Systems Group
Ken Lin, VP of Investor Relations
Tel:   +1-917-573-0302
Email: klin1330@hotmail.com

INVESTOR RELATIONS

John Mattio, SVP
HC International, Inc.
Tel: US +1-212-301-7130
Email: john.mattio@hcinternational.net
Web: http://www.hcinternational.net


 
 

NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

 
 

CONSOLIDATED BALANCE SHEETS

 
 

 

 

 

 

 

 

 
 

 

 

March 31,

2011

 

 

December 31,

2010

 
 

 

 

(Unaudited)

 

 

(Restated)

 
 

 

 

 

 

 
 

Current assets

 

 

 

 

 
 

Cash and equivalents

 

 

$

 

10,121,795

 

 

$

 

13,065,008

 
 

Accounts receivable

 

 

 

17,169,890

 

 

 

11,192,150

 
 

Inventory

 

 

 

4,795,771

 

 

 

2,420,009

 
 

Other receivables

 

 

 

46,934

 

 

 

47,249

 
 

Due from shareholders

 

 

 

273,257

 

 

 

270,522

 
 

Deferred compensation

 

 

 

675,000

 

 

 

675,000

 
 

 

 

 

 

 

 

 
 

        Total current assets

 

 

 

33,082,647

 

 

 

27,669,938

 
 

 

 

 

 

 

 

 
 

Noncurrent assets

 

 

 

 

 

 

 
 

Plant, property & equipment, net

 

 

 

1,115,997

 

 

 

1,134,029

 
 

Deferred compensation - noncurrent

 

 

 

929,743

 

 

 

1,098,493

 
 

Goodwill

 

 

 

60,863,441

 

 

 

60,555,607

 
 

Intangible assets, net

 

 

 

19,247,770

 

 

 

19,969,021

 
 

 

 

 

 

 

 

 
 

        Total noncurrent assets

 

 

 

82,156,951

 

 

 

82,757,150

 
 

 

 

 

 

 

 

 
 

Total assets

 

 

$

 

115,239,598

 

 

$

 

110,427,088

 
 

 

 

 

 

 

 

 
 

Current liabilities

 

 

 

 

 

 

 
 

Accounts payable

 

 

$

 

11,066,372

 

 

$

 

6,655,592

 
 

Accrued expenses and other payables

 

 

 

1,193,653

 

 

 

1,127,133

 
 

Payable for Kimfai acquisition

 

 

 

-

 

 

 

6,325,985

 
 

Taxes payable

 

 

 

2,703,568

 

 

 

1,553,206

 
 

Loan payable to related party

 

 

 

549,082

 

 

 

543,585

 
 

 

 

 

 

 

 

 
 

       Total current liabilities

 

 

 

15,512,675

 

 

 

16,205,501

 
 

 

 

 

 

 

 

 
 

Deferred tax liability

 

 

 

4,631,181

 

 

 

4,798,822

 
 

 

 

 

 

 

 

 
 

Total Liabilities

 

 

 

20,143,856

 

 

 

21,004,323

 
 

 

 

 

 

 

 

 
 

Stockholders' equity

 

 

 

 

 

 

 
 

Preferred stock, $.001 par value, 2,553,030 shares authorized, issued and outstanding as of March   31, 2011 and December 31, 2010, respectively

 

 

 

2,553

 

 

 

2,553

 
 

Common stock, $.001 par value, 140,000,000 shares authorized, 14,296,428 and 14,278,928 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively

 

 

 

14,296

 

 

 

14,279

 
 

Additional paid in capital

 

 

 

74,137,861

 

 

 

73,171,435

 
 

Statutory reserves

 

 

 

2,436,761

 

 

 

2,323,603

 
 

Other comprehensive income

 

 

 

1,949,192

 

 

 

1,834,341

 
 

Retained earnings

 

 

 

16,555,079

 

 

 

12,076,554

 
 

 

 

 

 

 

 

 
 

Total stockholders' equity

 

 

 

95,095,742

 

 

 

89,422,765

 
 

 

 

 

 

 

 

 
 

Total liabilities and stockholders' equity

 

 

$

 

115,239,598

 

 

$

 

110,427,088

 
 

 

 

 

 

 

 

 
 

 

 

 

 

 

 

 
 

The accompanying notes are an integral part of these consolidated financial statements.

 
 

 
 
             




 
 

NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

 
 

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 
 

THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

 
 

 

 

 

 

 

 

 
 

 

 

 

 

 
 

 

 

2011

 

 

2010

 
 

 

 

 

 

(Restated)

 
 

 

 

 

 

 
 

Revenue, net

 

 

 

 

 
 

Battery

 

 

$

 

20,052,391

 

 

$

 

19,399,150

 
 

Battery shell and cover

 

 

 

1,518,822

 

 

 

3,053,513

 
 

Solar panel

 

 

 

5,514,918

 

 

 

-

 
 

Total revenue

 

 

 

27,086,131

 

 

 

22,452,663

 
 

 

 

 

 

 

 

 
 

Cost of sales

 

 

 

 

 

 

 
 

Battery

 

 

 

12,710,728

 

 

 

14,073,985

 
 

Battery shell and cover

 

 

 

1,053,855

 

 

 

1,953,393

 
 

Solar panel

 

 

 

3,876,878

 

 

 

-

 
 

Total cost of sales

 

 

 

17,641,461

 

 

 

16,027,378

 
 

 

 

 

 

 

 

 
 

Gross profit

 

 

 

9,444,670

 

 

 

6,425,285

 
 

 

 

 

 

 

 

 
 

Operating expenses

 

 

 

 

 

 

 
 

Selling

 

 

 

364,180

 

 

 

125,974

 
 

General and administrative

 

 

 

1,755,619

 

 

 

1,374,155

 
 

Total operating expenses

 

 

 

2,119,799

 

 

 

1,500,129

 
 

 

 

 

 

 

 

 
 

Income from operations

 

 

 

7,324,871

 

 

 

4,925,156

 
 

 

 

 

 

 

 

 
 

Other income

 

 

 

 

 

 

 
 

Other income

 

 

 

5,379

 

 

 

8,287

 
 

Interest income

 

 

 

8,033

 

 

 

21,289

 
 

Total other income, net

 

 

 

13,412

 

 

 

29,576

 
 

 

 

 

 

 

 

 
 

Income before income taxes

 

 

 

7,338,283

 

 

 

4,954,732

 
 

 

 

 

 

 

 

 
 

Provision for income taxes

 

 

 

(1,877,728)

 

 

 

(1,172,866)

 
 

 

 

 

 

 

 

 
 

Net income

 

 

 

5,460,555

 

 

 

3,781,866

 
 

 

 

 

 

 

 

 
 

Other comprehensive income

 

 

 

 

 

 

 
 

           Foreign currency translation

 

 

 

114,851

 

 

 

4,210

 
 

 

 

 

 

 

 

 
 

Comprehensive income

 

 

$

 

5,575,406

 

 

$

 

3,786,076

 
 

 

 

 

 

 

 

 
 

Net income per share

 

 

 

 

 

 

 
 

Basic

 

 

$

 

0.38

 

 

$

 

0.32

 
 

Diluted

 

 

$

 

0.38

 

 

$

 

0.30

 
 

 

 

 

 

 

 

 
 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 
 

          Basic

 

 

 

14,286,511

 

 

 

11,863,390

 
 

          Diluted

 

 

 

14,558,566

 

 

 

12,623,895

 
 

 

 

 

 

 

 

 
 

The accompanying notes are an integral part of these consolidated financial statements.

 
 

 
 
             



NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
 

THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

 
 

 

 

2011

 

 

2010

 
 

 

 

 

 

(Restated)

 
 

 

 

 

 

 
 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 
 

Net Income

 

 

$

 

5,460,555

 

 

$

 

3,781,866

 
 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 
 

provided by operating activities:

 

 

 

 

 

 

 
 

   Depreciation and amortization

 

 

 

768,370

 

 

 

760,851

 
 

   Deferred tax liability

 

 

 

(167,641)

 

 

 

(134,717)

 
 

   Deferred compensation expense

 

 

 

168,750

 

 

 

168,750

 
 

   Loss on disposal of fixed asset

 

 

 

-

 

 

 

121

 
 

   Warrants expense

 

 

 

10,071

 

 

 

-

 
 

(Increase) / decrease in current assets:

 

 

 

 

 

 

 
 

   Accounts receivable

 

 

 

(5,840,687)

 

 

 

1,646,089

 
 

   Inventory

 

 

 

(2,341,718)

 

 

 

(847,367)

 
 

   Prepaid expenses, deposits and other receivables

 

 

 

790

 

 

 

433,887

 
 

Increase/(Decrease) in current liabilities:

 

 

 

 

 

 

 
 

   Accounts payable

 

 

 

4,325,793

 

 

 

2,169,271

 
 

   Accrued expenses and other payables

 

 

 

61,580

 

 

 

(2,265,368)

 
 

   Taxes payable

 

 

 

1,131,689

 

 

 

875,670

 
 

 

 

 

 

 

 

 
 

Net cash provided by operating activities

 

 

 

3,577,552

 

 

 

6,589,053

 
 

 

 

 

 

 

 

 
 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 
 

Cash acquired in acquisition

 

 

 

-

 

 

 

24,550

 
 

Proceeds from sale of property and equipment

 

 

 

-

 

 

 

66

 
 

Acquisition of property and equipment

 

 

 

(12,456)

 

 

 

(3,844)

 
 

 

 

 

 

 

 

 
 

Net cash provided by (used in) investing activities

 

 

 

(12,456)

 

 

 

20,772

 
 

 

 

 

 

 

 

 
 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 
 

Repayment of acquisition liability for Subsidiaries

 

 

 

(6,714,060)

 

 

 

(1,000,000)

 
 

Cash proceeds from warrant exercise

 

 

 

87,500

 

 

 

-

 
 

Repayment to related party

 

 

 

-

 

 

 

(732,397)

 
 

 

 

 

 

 

 

 
 

Net cash used in financing activities

 

 

 

(6,626,560)

 

 

 

(1,732,397)

 
 

 

 

 

 

 

 

 
 

Effect of exchange rate changes on cash and equivalents

 

 

 

118,251

 

 

 

1,449

 
 

 

 

 

 

 

 

 
 

Net increase (decrease) in cash and equivalents

 

 

 

(2,943,213)

 

 

 

4,878,877

 
 

 

 

 

 

 

 

 
 

Cash and equivalents, beginning of the period

 

 

 

13,065,008

 

 

 

3,651,990

 
 

 

 

 

 

 

 

 
 

Cash and equivalents, ending of the period

 

 

$

 

10,121,795

 

 

$

 

8,530,867

 
 

 

 

 

 

 

 

 
 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 
 

 

 

 

 

 

 

 
 

Cash paid during the year for:

 

 

 

 

 

 

 
 

 

 

 

 

 

 

 
 

     Income taxes

 

 

$

 

1,396,883

 

 

$

 

556,427

 
 

 

 

 

 

 

 

 
 

     Interest

 

 

$

 

-

 

 

$

 

-

 
 

 

 

 

 

 

 

 
 

The accompanying notes are an integral part of these consolidated financial statements.

 
 
             

Source: New Energy Systems Group
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