WUHAN, China, August 23, 2011 /PRNewswire-Asia-FirstCall/ -- Wuhan General Group (China), Inc. (Nasdaq: WUHN) ("Wuhan General" or the "Company"), a leading manufacturer of industrial blowers and turbines in China, operating through its subsidiaries, Wuhan Blower Co., Ltd. ("Wuhan Blower"), Wuhan Generating Equipment Co., Ltd. ("Wuhan Generating") and Wuhan Sungreen Environment Protection Equipment Co., Ltd. ("Wuhan Sungreen"), today reported its financial results for the three and six months ended June 30, 2011.
Second quarter 2011 Highlights
"We continued to improve profitability of our continuing business. For the second quarter, growth was mainly driven by the strong performance of our turbine division, which benefited from a recovery in capital spending in the Chinese economy. In addition to positive sales growth, the improved gross margin of Wuhan Generating was a result of our shift to proprietary production from the use of subcontractors," said Mr. Ruilong Qi, the CEO of Wuhan General. "While we are pleased about our improved profitability, our collection cycle remains long and we rely on short term debt financing for our working capital. In order to improve our cash position, we carefully monitor the financial positions of our customers to avoid unnecessary delay of payments."
Second quarter 2011 Results
For the second quarter ended June 30, 2011, total revenues were $32.3 million, up 43.7% from $22.5 million for the same period last year. Wuhan Blower generated 49% of total revenues, compared to 57% for the same period last year. Wuhan Generating contributed 51% of total revenues, compared to 43% for the same period last year. The year-over-year increase in total revenues was mainly due to increased sales of turbines following a recovery in demand because of the improved economic climate.
Cost of sales for the second quarter increased 28.7% to $22.7 million, or 70.5% of total revenues, from $17.7 million, or 78.7% of total revenues, during the same period in 2010. The 820-basis-point decrease in cost of sales as a percentage of total revenues was primarily attributable to a shift in the production process from subcontracting to in-house manufacturing at Wuhan Generating, resulting in a decrease in cost of production.
Gross profit for the second quarter was $9.5 million, up 99.2% from $4.8 million in the same quarter of 2010. Gross margin was 29.5%, up 8.2 percentage points from 21.3% for the same period in 2010. The increase in gross margin was mainly due to the increase in gross margin year-over-year for Wuhan Generating.
Total operating expenses increased 243.4% to $3.2 million, or 9.9% of the total revenue for the second quarter of 2011, from $0.9 million, or 4.1% of the total revenue for the same period of 2010. The increase in total operating expenses was primarily attributed to a sharp increase in general and administrative expenses, partially offset by a decrease in warranty expenses. General and administrative expenses increased 488.9% from $0.5 million for the second quarter of 2010 to $2.9 million for the second quarter of 2011 primarily due to a shift in the production process from subcontracting to in-house manufacturing that resulted in increased expenses. Warranty expense was $21,674 for the second quarter compared to $195,721 for the same period of 2010. Selling expenses were $0.3 million, compared to $0.2 million for the same period of 2010. Selling expenses as a percentage of sales decreased, mainly due to an increase in sales turnover.
As a result, operating income increased 64.4% to 6.3 million for the second quarter of 2011, from $3.8 million for the same period of 2010. Operating margin was 19.6%, compared to 17.1% a year ago.
The Company had other net expenses of $2.8 million for the second quarter of 2011, down 6.1% from $3.0 million for the year-ago period, mainly due to a $0.2 million decrease in interest expenses and an increase in interest income.
Income taxes were $0.5 million for the second quarter of 2011, compared to $0.2 million for the same period of 2010. Wuhan Blower and Wuhan Generating were subject to 12.5% P.R.C. income tax for the three months ended June 30, 2011 and June 30, 2010, and Wuhan General did not incur any U.S. income tax liability for the three months ended June 30, 2011 and June 30, 2010.
Net income for the second quarter of 2011 was $3.0 million, compared with $0.7 million for the same period last year. Income from continuing operations was $3.1 million compared with $0.7 million for the same period last year. Loss from discontinued operations resulting from the discontinuation of Wuhan Sungreen was $90,893 compared with $40,818.
Net of preferred dividends declared, net income available to common stockholders was $2.8 million for the second quarter of 2011, compared with $0.5 million for the same period last year.
Earnings per diluted share were $0.06 for the second quarter of 2011 compared with $0.02 per diluted share for the same period of 2010. Earnings per diluted share from continuing operations were $0.06 compared with $0.02 for the corresponding period last year.
Six months 2011 Results
For the six months ended June 30, 2011, total revenue was $59.6 million, up 48.4% from $40.2 million in the same period of 2010. Gross profit was $16.1 million for the six months ended June 30, 2011, up 66.6% from $9.7 million in the same period of 2010. Overall gross margin was 27.0% compared with 24.0% for the six months of 2010. Operating income was $10.1 million for six months ended June 30, 2011, up 40.8% from $7.2 million for the same period in 2010. Net income was $1.6 million, compared to $2.6 million in the year-ago period. Income from continued operations was $1.8 million compared with $2.7 million for the six months ended June 30, 2010. Loss from discontinued operations was $0.2 million compared with $0.1 million for the six months ended June 30, 2010. Net income available to common stockholders was $1.2 million, compared to $2.2 million for the same period in 2010.
Earnings per diluted share were $0.04 for the six months ended June 30, 2011 compared with $0.08 per diluted share for the corresponding period in 2010. Earnings per diluted share from continuing operations were $0.05 compared with $0.09 for the corresponding period last year.
Financial Condition
As of June 30, 2011, Wuhan General had cash and cash equivalents of $79.3 million, including restricted cash of $24.1 million, compared to $57.5 million as of December 31, 2010. The Company had $57.9 million in accounts receivable compared to $49.5 million as of December 31, 2010 and its accounts receivable ratio was 162 days as of June 30, 2011, compared to 242 days as of June 30, 2010. The Company had $69.8 million in working capital with a current ratio of 1.5 to 1. Total stockholders' equity was $119.7 million as of June 30, 2011, compared to $112.3 million as of December 31, 2010. Wuhan General's short term bank loans and notes were $99.7 million as of June 30, 2011 compared with $72.0 million as of December 31, 2010. Cash used in operating activities for the six months ended June 30, 2011 was approximately $5.5 million, as compared to cash provided by operating activities of approximately $2.9 million for the same period in 2010. This change was mainly due to increased payments to suppliers and employees compared to the same period in 2010, in addition to a significant increase in taxes paid.
Business Outlook
"Our current backlog is RMB 280 million (approximately $43.3 million) for Wuhan Blower and RMB 220 million (approximately $34.0 million) for Wuhan Generating of which we expect to realize approximately $65.8 million in revenue for 2011. As our backlog remains encouraging, we believe that our improved performance will help us regain our former position in the market. The decision to divest Wuhan Sungreen has further improved our cash flow position and we hope to reach an agreement regarding the sale of the assets soon," said Mr. Qi, "While our business still faces challenges, particularly as the tightened credit environment may hamper collection of accounts receivable, we believe that our current product offerings and long term relationships with our customers will help us establish a prominent position in our industry."
About Wuhan General Group (China), Inc.
Through its subsidiaries, Wuhan Blower and Wuhan Generating, Wuhan General is a leading manufacturer of industrial blowers and turbines in China and the Company is based in Wuhan, Hubei Province, China. Wuhan Blower is a China-based manufacturer of industrial blowers that are principal components of steam-driven electrical power generation plants. Wuhan Generating is a China-based manufacturer of industrial steam and water turbines used for electricity generation in coal, oil, nuclear and hydroelectric power plants. The Company's primary customers are from the iron and steel, power generation, petrochemical and other industries. Led by a strong management team, Wuhan General is well recognized for its technological sophistication and quality construction of blowers and turbines. For more information, please visit http://www.wuhangeneral.com .
Safe Harbor Statement
Certain statements in this press release, including statements regarding our revenue, position in the market, sale of Wuhan Sungreen, collections of accounts receivable, and the fulfillment of our backlog orders may be forward-looking in nature or "forward-looking statements," as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to vulnerability of our business to general economic downturn, operating in the People's Republic of China (PRC) generally and the potential for changes in the laws of the PRC that affect our operations, our failure to meet or timely meet contractual performance standards and schedules, and other factors that may cause actual results to be materially different from those described in such forward-looking statements. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on Wuhan General's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting Wuhan General will be those anticipated by the Company. Wuhan General undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Contact: | |
Wuhan General Group (China), Inc. | |
Mr. Philip Lo, CFO | |
Phone: + 86-27-5970-0067 (China) | |
Email: philip.lo@wuhangeneral.com | |
CCG Investor Relations Inc. | |
Mr. Crocker Coulson, President | |
Phone: +1-646-213-1915 (New York) | |
Email: crocker.coulson@ccgir.com | |
-FINANCIAL TABLES FOLLOW-
Wuhan General Group (China), Inc. Consolidated Statements of Balance As of June 30, 2011 and December 31, 2010 (Stated in US Dollars) | |||||
At | At | ||||
ASSETS | June 30, | December 31, | |||
Current Assets | 2011 | 2010 | |||
Cash | $ | 55,251,887 | $ | 26,856,317 | |
Restricted Cash | 24,076,390 | 30,599,958 | |||
Short Term Investment | 154,703 | - | |||
Notes Receivable | 72,710 | 251,066 | |||
Accounts Receivable | 57,862,257 | 49,485,978 | |||
Other Receivable | 27,676,744 | 16,269,293 | |||
Inventory | 15,384,444 | 9,867,301 | |||
Advances to Suppliers | 27,375,466 | 35,433,751 | |||
Advances to Employees | 296,776 | 322,205 | |||
Prepaid Expenses | 1,834,090 | 517 | |||
Prepaid Taxes | 412,317 | 1,351 | |||
Deferred Tax Asset | 1,219,800 | 1,192,532 | |||
Current assets held for sale | 1,835,464 | 1,756,460 | |||
Total Current Assets | 213,453,048 | 172,036,729 | |||
Non-Current Assets | |||||
Real Property Available for Sale | - | 1,140,718 | |||
Property, Plant & Equipment, net | 30,367,724 | 30,617,120 | |||
Land Use Rights, net | 1,968,066 | 1,945,678 | |||
Construction in Progress | 14,978,941 | 12,371,309 | |||
Other Assets | 7,000 | - | |||
Intangible Assets, net | 163,381 | 179,837 | |||
Long-term assets held for sale | 24,528,890 | 24,215,927 | |||
Total Assets | $ | 285,467,050 | $ | 242,507,318 | |
LIABILITIES & STOCKHOLDERS' EQUITY | |||||
Liabilities | |||||
Current Liabilities | |||||
Bank Loans & Notes | 99,652,003 | $ | 72,007,623 | ||
Accounts Payable | 9,022,777 | 9,619,808 | |||
Taxes Payable | 8,355,936 | 10,459,789 | |||
Other Payable | 5,736,818 | 4,123,669 | |||
Related Party Payable | 2,287,549 | - | |||
Dividend Payable | 1,087,706 | 727,129 | |||
Accrued Liabilities | 3,093,625 | 2,885,931 | |||
Customer Deposits | 13,723,483 | 8,005,336 | |||
Current liabilities associated with assets held for sale | 718,672 | 726,232 | |||
Total Current Liabilities | 143,678,569 | 108,555,517 | |||
Long Term Liabilities | |||||
Bank Loans and Notes | 22,122,525 | 21,627,999 | |||
Total Liabilities | 165,801,094 | $ | 130,183,516 | ||
STOCKHOLDERS' EQUITY | June 30, | December 31, | |||
2011 | 2010 | ||||
Preferred Stock - $0.0001 Par Value 50,000,000 Shares | $ | 624 | $ | 624 | |
Additional Paid in Capital - Preferred Stock | 8,170,415 | 8,170,415 | |||
Additional Paid in Capital - Warrants | 63,171 | 1,554,635 | |||
Additional Paid in Capital - Beneficial Conversion Feature | 6,371,547 | 6,371,547 | |||
Preferred Stock - $0.0001 Par Value 50,000,000 Shares | 635 | 635 | |||
Additional Paid in Capital - Preferred Stock | 12,637,158 | 12,637,158 | |||
Additional Paid in Capital - Warrants | - | 1,244,366 | |||
Additional Paid in Capital - Beneficial Conversion Feature | 4,023,692 | 4,023,692 | |||
Common Stock - $0.0001 Par Value 100,000,000 Shares | 3,251 | 2,833 | |||
Additional Paid in Capital | 42,090,418 | 35,895,190 | |||
Statutory Reserve | 4,563,592 | 4,563,592 | |||
Retained Earnings | 27,175,361 | 25,956,458 | |||
Accumulated Other Comprehensive Income | 14,566,092 | 11,902,657 | |||
Total Stockholders' Equity | 119,665,956 | 112,323,802 | |||
Total Liabilities & Stockholders' Equity | $ | 285,467,050 | $ | 242,507,318 | |
Wuhan General Group (China), Inc. Consolidated Statements of Income For the three and six months ended June 30, 2011 and 2010 (Stated in US Dollars) | ||||||||||||
Three Months | Three Months | Six Months | Six Months | |||||||||
Ended | Ended | Ended | Ended | |||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||
Sales | $ | 32,255,783 | $ | 22,451,331 | $ | 59,643,903 | $ | 40,203,807 | ||||
Cost of Sales | 22,741,366 | 17,673,889 | 43,549,985 | 30,545,757 | ||||||||
Gross Profit | 9,514,417 | 4,777,442 | 16,093,918 | 9,658,050 | ||||||||
Operating Expenses | ||||||||||||
Selling | 267,446 | 240,169 | 700,143 | 636,503 | ||||||||
General & Administrative | 2,897,838 | 492,083 | 5,074,326 | 1,453,436 | ||||||||
Warranty | 21,674 | 195,721 | 195,705 | 376,550 | ||||||||
Total Operating Expenses | 3,186,958 | 927,973 | 5,970,174 | 2,466,489 | ||||||||
Operating Income | 6,327,459 | 3,849,469 | 10,123,744 | 7,191,561 | ||||||||
Other Income (Expenses) | ||||||||||||
Other Income | 87,776 | 132,311 | 138,188 | 132,393 | ||||||||
Interest Income | 80,404 | 7,363 | 89,166 | 25,867 | ||||||||
Other Expenses | (2,398) | (1,335) | (49,605) | (1,561) | ||||||||
Interest Expense | (2,954,482) | (3,106,994) | (4,224,378) | (4,134,777) | ||||||||
Expense for warrant recapitalization | - | - | (3,455,260) | - | ||||||||
Total Other Income (Loss) & Expenses | (2,788,700) | (2,968,655) | (7,501,889) | (3,978,078) | ||||||||
Earnings from Continuing Operations before Taxes | 3,538,759 | 880,814 | 2,621,855 | 3,213,483 | ||||||||
Income Taxes | 456,593 | 160,897 | 844,005 | 467,682 | ||||||||
Income from Continuing Operations | 3,082,166 | 719,917 | 1,777,850 | 2,745,801 | ||||||||
Income (Loss) from Discontinued Operations, net of taxes | (90,893) | (40,818) | (198,370) | (146,837) | ||||||||
Net Income | $ | 2,991,273 | $ | 679,099 | $ | 1,579,480 | $ | 2,598,964 | ||||
Preferred Dividends Declared | (181,284) | (177,300) | (360,577) | (354,600) | ||||||||
Income Available to Common Stockholders | $ | 2,809,989 | $ | 501,799 | $ | 1,218,903 | $ | 2,244,364 | ||||
Earnings Per Share | ||||||||||||
Basic - Net Income | $ | 0.09 | $ | 0.02 | $ | 0.04 | $ | 0.09 | ||||
- Income from Continuing Operations | 0.09 | 0.02 | 0.05 | 0.10 | ||||||||
- Loss from Discontinued Operations | (0.00) | (0.00) | (0.01) | (0.01) | ||||||||
Diluted - Net Income | 0.06 | 0.02 | 0.04 | 0.08 | ||||||||
- Income from Continuing Operations | 0.06 | 0.02 | 0.05 | 0.09 | ||||||||
- Loss from Discontinued Operations | $ | (0.00) | $ | (0.00) | $ | (0.01) | $ | (0.01) | ||||
Weighted Average Shares Outstanding | ||||||||||||
Basic | 32,505,000 | 25,351,950 | 32,040,845 | 25,351,950 | ||||||||
Diluted | 45,100,531 | 31,799,321 | 38,394,923 | 31,799,321 | ||||||||
Three Months | Three Months | Six Months | Six Months | |||||||||
Ended | Ended | Ended | Ended | |||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||
Comprehensive Income | ||||||||||||
Net Income | $ | 2,991,273 | $ | 679,099 | $ | 1,579,480 | $ | 2,598,964 | ||||
Other Comprehensive Income | ||||||||||||
Foreign Currency Translation Adjustment | 972,071 | (395,865) | 2,663,435 | (369,809) | ||||||||
Total Comprehensive Income | $ | 3,963,344 | $ | 283,234 | $ | 4,242,915 | $ | 2,229,155 | ||||
Wuhan General Group (China), Inc. Consolidated Statements of Cash Flows For the three and six months ended June 30, 2011 and 2010 (Stated in US Dollars) | |||||||||||
Three Months | Three Months | Six Months | Six Months | ||||||||
Ended | Ended | Ended | Ended | ||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||
Cash Flows from Operating Activities | |||||||||||
Cash Received from Customers | $ | 18,968,445 | $ | 11,273,068 | $ | 45,750,713 | $ | 40,397,013 | |||
Cash Paid to Suppliers & Employees | (24,136,911) | (11,146,068) | (43,327,856) | (31,417,189) | |||||||
Interest Received | 80,404 | 7,362 | 89,166 | 25,866 | |||||||
Interest Paid | (2,954,483) | (2,064,703) | (4,224,378) | (4,134,777) | |||||||
Taxes Paid | (685,878) | (1,818,418) | (3,794,166) | (2,127,194) | |||||||
Miscellaneous Receipts | 87,777 | 132,252 | 138,188 | 132,334 | |||||||
Cash Provided by operating activities - continuing operations | (8,640,646) | (3,616,507) | (5,368,333) | 2,876,053 | |||||||
Cash Provided by operating activities - discontinued operations | (105,412) | (13,881) | (95,289) | 40,479 | |||||||
Cash Sourced/(Used) in Operating Activities | (8,746,058) | (3,630,388) | (5,463,622) | 2,916,532 | |||||||
Cash Flows from Investing Activities | |||||||||||
Cash Released/(Invested in) Restricted Time Deposits | 20,814,390 | (2,855,657) | 6,523,568 | (2,655,444) | |||||||
Purchase of Short Term Investment Fund or Investment Property | 986,015 | - | 986,015 | - | |||||||
Payments for Purchases and Construction of Plant & Equipment | (3,324,976) | (354,386) | (4,227,475) | (934,004) | |||||||
Payments for Deposits | (7,712) | - | (7,943) | - | |||||||
Cash Used in investing activities - continuing operations | 18,467,717 | (3,210,043) | 3,274,165 | (3,589,448) | |||||||
Cash Used in investing activities - discontinued operations | 58,838 | (9,466) | 1,219 | (12,792) | |||||||
Cash Sourced/(Used) in Investing Activities | 18,526,555 | (3,219,509) | 3,275,384 | (3,602,240) | |||||||
Cash Flows from Financing Activities | |||||||||||
Proceeds from Bank Loans and Notes | 25,598,068 | 33,026,008 | 28,138,906 | 68,483,013 | |||||||
(Repayment of Bank Loans and Notes) | - | (4,715,310) | - | (42,472,495) | |||||||
Dividends Paid | - | (727,129) | - | (727,129) | |||||||
Cash provided by financing activities - continuing operations | 25,598,068 | 27,583,569 | 28,138,906 | 25,283,389 | |||||||
Cash provided by financing activities - discontinued operations | - | - | - | - | |||||||
Cash Sourced/(Used) in Financing Activities | 25,598,068 | 27,583,569 | 28,138,906 | 25,283,389 | |||||||
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period - continuing operations | 35,425,139 | 20,757,019 | 26,044,738 | 24,569,994 | |||||||
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period - discontinued operations | (46,574) | (23,347) | (94,070) | 27,687 | |||||||
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period | 35,378,565 | 20,733,672 | 25,950,668 | 24,597,681 | |||||||
Effect of Currency Translation - continuing operations | 616,407 | (453,555) | 2,353,949 | (429,797) | |||||||
Effect of Currency Translation - discontinued operations | 1,166 | 148 | (1,225) | 153 | |||||||
617,573 | (453,407) | 2,352,724 | (429,644) | ||||||||
Cash & Cash Equivalents at Beginning of Period - continuing operations | 19,210,341 | 4,207,625 | 26,853,200 | 370,893 | |||||||
Cash & Cash Equivalents at Beginning of Period - discontinued operations | 89,502 | 87,541 | 139,389 | 36,501 | |||||||
19,299,843 | 4,295,166 | 26,992,589 | 407,394 | ||||||||
Cash & Cash Equivalents at End of Period - continuing operations | 55,251,887 | 24,511,089 | 55,251,887 | 24,511,089 | |||||||
Cash & Cash Equivalents at End of Period - discontinued operations | 44,094 | 64,342 | 44,094 | 64,341 | |||||||
Cash & Cash Equivalents at End of Period | $ | 55,295,981 | $ | 24,575,431 | $ | 55,295,981 | $ | 24,575,431 | |||
