• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

KHD Humboldt Wedag International Ltd. Reports 2007 Third Quarter and Nine-Month Results

Posted on: Wednesday, 14 November 2007, 09:00 CST

HONG KONG, Nov. 14 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") today announced results for the nine months and third quarter ended September 30, 2007. All figures are in US dollars and earnings per share amounts are on a fully diluted basis.

We are reporting our financial statements exclusive of real estate interests and financial services businesses which are accounted for as discontinued operations.

For the nine months ended September 30, 2007, KHD reported revenues from continuing operations of $418.8 million and income from continuing operations of $38.6 million, or $1.27 per share.

The 2007 revenues are an increase of 75 percent over the revenues in the first nine months of 2006, and the 2007 income from continuing operations is an increase of 102 percent over the nine months of 2006 for the same operations.

For the three months ended September 30, 2007, KHD reported revenues from continuing operations of $148.8 million and income from continuing operations of $16.1 million, or $0.52 per share.

The 2007 third quarter revenues are an increase of 54 percent over the third-quarter 2006 revenues and the 2007 third-quarter income from continuing operations is an increase of 63 percent over the third-quarter 2006.

The number of shares issued and outstanding as at September 30, 2007 was 30,181,391. The weighted average number of shares on a diluted basis for the nine months ended September 30, 2007 was 30,511,709.

Order intake is defined as the total value of all orders received during the respective period, while order backlog is defined as the value of orders received but not yet fulfilled. KHD books orders on the basis of firm contracts and receipt of the down payments. For comparative purposes, all the following analyses of amounts for order intake, backlog and revenue were translated directly from Euros to US dollars at 1.4219, the exchange rate as of September 30, 2007.

Order intake for the quarter ended September 30, 2007 was $240 million, an increase of 123 percent over the third quarter of 2006; 40 percent of the third-quarter order intake came from the emerging regions of Asia, Russia and Eastern Europe; 57 percent came from the Middle East and Northern Africa region.

Order intake for the nine months ending September 30, 2007 was $569 million, approximately equal to the same period of 2006; 51 percent of the 2007 order intake came from the emerging regions of Asia, Russia and Eastern Europe.

Order backlog as of September 30, 2007 was a record $762 million and as of the date of this filing the backlog is approaching $925 million.

CEO Jim Busche commented, "Our backlog is at record levels. At the close of this year's third quarter, 86 percent of our backlog is distributed among the world's emerging economic regions with 28 percent in Asia, 27 percent in Russia and Eastern Europe and 31 percent in the Middle East and Northern Africa. These are indicators of the strong results of our strategic initiatives for capitalizing on market trends and enhancing shareholder value. Furthermore, I'd like to make note of the fact that for four of the projects in the backlog, where the customers will be placing their orders for KHD equipment upon successful conclusion of their permitting efforts, only the engineering portion of the project has been included. In these cases the engineering order is generally less than 6 percent of the total order value. Finally, within the past few days KHD has signed contracts with customers in Egypt and India with a value in excess of $175 million. These orders entail KHD proprietary pyro-processing line and a large grinding complex. Consistent with our disclosure and booking policy formal more detailed announcements will be forthcoming."

CFO Alan Hartslief commented, "The revenues and earnings from continuing operations for the nine months ended September 30, 2007 increased by 75 percent and 102 percent respectively over the same period of 2006. For the quarter ended September 30, 2007, our revenues and earnings from continuing operations increased by 54 percent and 63 percent respectively over the same period of 2006. At the end of the nine months of 2007, we had $285 million in cash and short-term securities, $559 million in current assets, and shareholders' equity of $294 million.

Over the past seven quarters KHD has been transitioning from a financial services company to an industrial plant engineering and equipment supply company. Early in the transition process KHD had revenues and earnings generated from its merchant banking businesses as well as its industrial plant equipment business. To enable our shareholders to more clearly understand our core business going forward, KHD focused on reporting earnings before taxes (EBT) from the industrial plant engineering and equipment supply business. As the transition nears completion, revenues and earnings are now generated from our continuing core business. We now focus on earnings per share (EPS) from continuing operations. We believe EPS from continuing operations is a measure of the company's overall performance; in KHD's case that would include our industrial plant engineering and equipment supply business, our iron ore royalty and the effectiveness of our fiscal responsibility with taxation. Regarding the latter, at KHD we consider taxation as an expense like any other warranting proper and effective planning in consideration of the company's fiscal responsibilities to its shareholders and host governments. EPS from continuing operations for the nine months ended September 30 increased by 102 percent and for the three months ended September 30 increased by 63 percent over the same period of the prior year.

Our performance is consistent with the guidance we issued for earnings at the outset of this year. We are now issuing guidance on EPS from continuing operations for the full year 2007, which we anticipate to be in the range of $1.70 to $1.75.

Our transition from a merchant bank to an industrial plant engineering and equipment supply company is nearly complete. In September we announced that the distribution of Austrian Depository Certificates ("ADCs") representing common shares of SWA Reit and Investments Ltd. The record date for the distribution of ADCs was set as September 25, 2007. The common shares of KHD began trading on the NYSE on a post-distribution basis on September 21, 2007. We will continue to work diligently to achieve recognition of this change from the investment community."

Jim Busche concluded, "While the third quarter results demonstrate KHD's continued growth, there are many other, less visible markers of sustained growth. In particular our activities in Russia, Eastern Europe and the Commonwealth of Independent States (CIS) are most encouraging. The level of inquiries for KHD proprietary equipment is strong, particularly due to our advancements in energy and environmentally efficient designs. It is particularly encouraging to find our emerging market customers being driven by "green" aspects of our technology and products. Our Research and Development activities have enabled KHD to become an industry leader in pyro-processes that can accommodate a broad range of alternative fuels thereby decreasing energy costs and environmental emissions. The activity level of our Russian operating companies, including our design institute, continues to expand with the placement of several significant manufacturing orders with Russian fabricators."

Today at 10:00am EST (7:00am PST), a conference call will be held to review the KHD results; this call will be broadcast live over the Internet at http://www.khdhumboldt.com/ or http://www.earnings.com/. An online archive will be available immediately following the call and continue for seven days or to listen to the audio replay by phone, dial 1 (888) 286 8010 using conference pass code # 20230750. International callers should dial 1 (617) 801 6888.

About KHD Humboldt Wedag International Ltd.

KHD Humboldt Wedag International Ltd. owns companies that operate internationally in the industrial plant engineering and equipment supply business, and specializes in the cement, coal and minerals processing industries. To obtain further information on KHD, please visit our website at http://www.khdhumboldt.com/

Disclaimer for Forward-Looking Information

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in, the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain assumptions. These assumptions, which include, management's current expectations estimates and assumptions about certain projects and the markets the Company operates in, are expressed or implied by the forward-looking statements, including, but not limited to: (1) a downturn in general economic conditions in Asia, Europe, the United States and internationally, (2) a decreased demand for the Company's products, (3) a decrease in the demand for cement, minerals and related products, (4) the number of competitors with competitively priced products and services, (5) product development or other initiatives by the Company's competitors, (6) shifts in industry capacity, (7) fluctuations in foreign exchange and interest rates, (8) fluctuations in availability and cost of raw materials or energy, (9) delays in the start of projects included in our forecasts, (10) delays in the implementation of projects included in our forecasts and disputes regarding the performance of our services, (11) the uncertainty of government regulation and politics in Asia and the Middle East and other markets, (12) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, and (13) other factors beyond the Company's control. Additional information about these and other assumptions, risks and uncertainties are set out in the "Risks and Uncertainties" section in our Form 6-K filed with the Securities and Exchange Commission and our MD&A filed with Canadian security regulators.

Contact Information: Allen & Caron Inc. Rene Randall Joseph Allen (investors) KHD Humboldt Wedag 1 (212) 691-8087 International Ltd. joe@allencaron.com 1 (604) 683-8286 or randall.r@khd.de Len Hall (media) 1 (949) 474-4300 len@allencaron.com -FINANCIAL TABLES FOLLOW- KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS September 30, 2007 and December 31, 2006 (unaudited) (amounts in U.S. dollars; in thousands) ASSETS 2007 2006 Current assets Cash and cash equivalents $270,883 $204,530 Securities 14,335 4,111 Restricted cash 20,813 16,180 Accounts receivable, trade 87,927 66,607 Other receivables 18,716 33,901 Inventories 106,261 85,799 Contract deposits, prepaid and other 39,073 24,069 Future income tax assets 754 763 Current assets of discontinued operations 0 4,301 558,762 440,261 Non-current assets Securities 8,042 67 Receivables 0 8,878 Property, plant and equipment 2,385 2,936 Resource property 32,937 29,037 Equity method investments 426 500 Future income tax assets 23,947 27,724 Investment in preferred shares of a former subsidiary 91,204 77,976 Non-current assets of discontinued operations 0 54,541 158,941 201,659 $717,703 $641,920 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS (con't) September 30, 2007 and December 31, 2006 (unaudited) (amounts in U.S. dollars; in thousands) LIABILITIES 2007 2006 Current liabilities Accounts payable and accrued expenses $320,203 $242,152 Long-term debt, current portion 0 4,596 Pension liabilities, current portion 1,793 1,664 Provision for warranty costs, current portion 26,211 21,868 Current liabilities of discontinued operations 0 964 348,207 271,244 Long-term liabilities Long-term debt, less current portion 11,557 10,725 Pension liabilities, less current portion 30,759 28,559 Provision for warranty costs, less current portion 10,068 7,247 Deferred credit, future income tax assets 14,546 15,539 Future income tax liability 1,406 9,180 Other long-term liabilities 3,319 625 Long-term liabilities of discontinued operations 0 3,047 71,655 74,922 Total liabilities 419,862 346,166 MINORITY INTERESTS 3,985 22,466 SHAREHOLDERS' EQUITY Common stock 134,102 108,595 Treasury stock (85,629) (64,383) Contributed surplus 4,072 2,131 Retained earnings 151,535 176,742 Accumulated other comprehensive income 89,776 50,203 293,856 273,288 $717,703 $641,920 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For Nine Months Ended September 30, 2007 and 2006 (unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2007 2006 Revenues $418,825 $239,581 Cost of revenues 357,968 201,587 Gross profit 60,857 37,994 Other operating income, resource property 12,987 3,244 General and administrative expense (31,258) (19,566) Stock-based compensation (3,298) (1,187) Operating income 39,288 20,485 Interest income 8,058 3,168 Interest expense (2,071) (1,602) Other income (expenses), net 1,189 3,534 Income before taxes from continuing operations 46,464 25,585 Provision for income tax: Income taxes (2,967) (1,979) Resource property revenue taxes (2,986) 0 (5,953) (1,979) Income before minority interests, continuing operation 40,511 23,606 Minority interests (1,872) (4,523) Income from continuing operations 38,639 19,083 Income from discontinued operations, net of tax (7,595) 1,187 Net income $31,044 $20,270 Basic earnings (loss) per share from continuing operations $1.29 $0.63 from discontinued operations (0.25) 0.04 $1.04 $0.67 Diluted earnings (loss) per share from continuing operations $1.27 $0.63 from discontinued operations (0.25) 0.04 $1.02 $0.67 Weighted average shares outstanding - basic 29,834,461 30,102,468 Weighted average shares outstanding - diluted 30,511,709 30,389,736 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, 2007 and 2006 (unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2007 2006 Revenues $148,833 $96,770 Cost of revenues 132,286 81,326 Gross profit 16,547 15,444 Other operating income, resource property 5,811 1,092 General and administrative expense (11,006) (5,581) Stock-based compensation (843) (788) Operating income 10,509 10,167 Interest income 2,728 1,281 Interest expense (512) (384) Other income (expenses), net (602) 993 Income before taxes from continuing operations 12,123 12,057 Recovery of (provision for) income taxes: Income taxes 5,446 (60) Resource property revenue tax (1,338) 0 4,108 (60) Income before minority interests, continuing operations 16,231 11,997 Minority interests (174) (2,125) Income from continuing operations 16,057 9,872 Income from discontinued operations, net of tax (7,945) 351 Net income $8,112 $10,223 Basic earnings (loss) per share from continuing operations $0.53 $0.32 from discontinued operations (0.26) 0.01 $0.27 $0.33 Diluted earnings (loss) per share from continuing operations $0.52 $0.32 from discontinued operations (0.26) 0.01 $0.26 $0.33 Weighted average shares outstanding - basic 30,294,782 30,527,826 Weighted average shares outstanding - diluted 31,013,973 30,840,414 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of September 30, 2007 (unaudited) (amounts in U.S. dollars; in thousands, except per share data and ratios) Cash and cash equivalents $270,883 Short-term securities 14,335 Restricted cash 20,813 Working capital 210,555 Total assets 717,703 Shareholders' equity 293,856 Book value per share 9.74 Current ratio 1.605 Long-term debt to equity ratio 0.039

KHD Humboldt Wedag International Ltd.

CONTACT: investors, Joseph Allen, +1-212-691-8087, joe@allencaron.com,or media, Len Hall, +1-949-474-4300, len@allencaron.com, both of Allen & CaronInc., for KHD Humboldt Wedag International Ltd.; or Rene Randall of KHDHumboldt Wedag International Ltd., +1-604-683-8286, randall.r@khd.de

Web site: http://www.khdhumboldt.com/

Source: PRNewswire-FirstCall

More News in this Category