Wonder Auto Reports Its Third Quarter 2009 Financial Results
JINZHOU CITY,
Technology, Inc. (Nasdaq: WATG) (“Wonder Auto” or “the Company”), a leading
manufacturer of automotive electric parts, suspension products and engine
components in
quarter ended
Highlights:
-- $59.0 million sales revenue for the third quarter of 2009, an increase
of 50.2% from the same quarter of last year; $41.0 million organic
sales revenue in China, an increase of 24.1% on year-over-year basis
excluding acquisition contribution.
-- $6.5 million net income, or $0.24 per share on a basic and diluted
basis, for the third quarter of 2009, an increase of 2.4% from the same
period of last year;
-- On a non-GAAP basis, net income for the third quarter of fiscal 2009
increased 25.8% to $6.9 million, or $0.26 per share, on a basic and
diluted basis, as compared with a non-GAAP net income of $5.5 million,
or $0.20 per share, for the third quarter of fiscal 2008. Non-GAAP net
income excludes non-cash exchange gain/loss in connection with a loan
denominated in euro.
Business outlook
We project approximately
income attributable to our common stockholders for the whole year ended
Financial performance
Sales Revenue. Sales revenue increased by approximately
50.2%, to approximately
2009
was mainly attributable to the
in the third quarter of 2009 by recently acquired subsidiary, Jinan Worldwide
and increased sales volume of starter and alternator products in the third
quarter of 2009 due to the high market demand.
Gross Profit. Gross profit increased by approximately
37.8%, to approximately
2009
a result of increased demand for and sales of alternator and starter products
and the consolidation of the operating results of Jinan Worldwide which
contributed
three-month period ended
period in 2008. Such decrease was mainly due to a larger portion of sales
revenue was generated from alternators and starters for small-to-mid
displacement engine vehicles which generally have a lower margin than
alternators and starters for large displacement engine vehicle.
Total Operating Expenses. Total operating expenses increased by
approximately
three months ended
million
expenses increased to 8.8% for the three months ended
compared from 8.5% for the same period in 2008.
Net finance cost. Net finance cost was
ended on
for the same period last year. The Company has an outstanding loan of
million
(the “DEG Loan”). Since the DEG Loan is denominated in euro, with the
depreciation of RMB against euro, the Company incurred a
exchange loss during the three months ended
the Company had a non-cash exchange gain of approximately
same period of 2008.
Income Taxes. Income taxes increased
three months ended
2008. The income taxes increase is mainly due to the increase in income and
the change in tax rate for the Company’s subsidiary Jinzhou Wanyou. Jinzhou
Wanyou was exempted from the PRC enterprise income tax in 2008 and its EIT
rate increased to 12.5% in 2009.
Net Income. Net income increased by
approximately
Events overview
On
a joint development agreement with Shenzhen BYD Auto Company Limited
(“Shenzhen BYD”) to design and develop alternator prototypes for Shenzhen
BYD’s F3/F3R sedan models, which have engine sizes between 1.3 liters and 1.5
liters, and were among the top ten best-selling models in
nine months in 2009. Sample deliveries are expected to start in
for testing.
On
Parts Co., Ltd. acquired Friend Birch Limited and its
subsidiaries, Jinzhou Jiade Machinery Co., Ltd. and Jinzhou Lida Auto Parts
Co., Ltd. Jinzhou Jiade Machinery and Jinzhou Lida Auto Parts manufacture and
sell gas spring shafts and other thin mechanical shafts products, automotive
springs and gas springs, and prior to the acquisition were among Wonder Auto’s
key suppliers of those products. As part of the transaction, Jinzhou Wanyou
also acquired all proprietary technologies of Friend Birch Limited’s rods and
shafts technology center in
Wonder Auto recently entered into an investment option agreement with the
shareholders of Jinzhou Wonder Alternative Energy Vehicle Technology Co., Ltd.
(“Jinzhou AEV”), which allows Wonder Auto to acquire a 10% ownership interest
in Jinzhou AEV by the end of 2009 and grants the Company a right of first
refusal to acquire a greater ownership interest in Jinzhou AEV. In addition,
Wonder Auto will be the preferred supplier of motors to Jinzhou AEV. Jinzhou
AEV is a manufacturer of electric and alternative energy vehicles, including
electric sedans, taxis, minivans, pick-ups, freight cars, tourist coaches,
golf carts and motorized bikes. Wonder Auto’s CEO and chairman, Mr.
Zhao
Mr.
commented, “In the process of fighting against the global economic recession,
significant changes have taken place in the auto industry. As the 10 million
sales target was achieved in the Chinese auto market during October, people
begin to turn their focuses to
preliminary goals for adjustments to response to the financial crisis, and
thus reinforced our competitiveness in the markets.”
Conference call
The company will host a conference call on
U.S. Eastern Daylight time. A question and answer session will follow
management’s presentation. Mr.
To participate, please call the following numbers ten minutes before the
call start time:
Phone number: +1 866 242 1388 (United States)
Phone number: +852 800 968 831 (Hong Kong)
Phone number: +86 10 800 264 0084 (China, China Telecom)
Phone number: +86 10 800 640 0084 (China, NetCom Users)
Phone number: +44 08082347860 (United Kingdom)
Conference ID: 38225903
A live webcast of the conference call will be available on the investor
relations page of Wonder Auto’s web site at http://www.watg.cn .
Non-GAAP Financial Measures and Related Reconciliation
To supplement the Company’s financial results presented in accordance with
GAAP, the Company provides non-GAAP net income and non-GAAP net income per
share data on a basic and diluted basis. The presentation of these non-GAAP
financial measures should be considered in addition to the Company’s GAAP
results and are not intended to be considered in isolation or as a substitute
for the financial information prepared and presented in accordance with GAAP.
The Company’s non-GAAP measures may be different from non-GAAP measures used
by other companies. The Company’s management believes that these non-GAAP
financial measures provide meaningful supplemental information regarding its
performance by excluding certain exchange gains and losses that may not be
indicative of the Company’s business operating results. The Company believes
that both management and investors benefit from referring to these non-GAAP
financial measures in assessing the Company’s performance. These non-GAAP
financial measures also facilitate comparisons to the Company’s historical
performance and its competitors’ operating results. The Company includes
these non-GAAP financial measures because management believes they are useful
to investors in allowing for greater transparency with respect to supplemental
information used by management in its financial and operational decision
making. Non-GAAP measures are reconciled to comparable GAAP measures in the
table below:
Three Months Ended
September 30,
2009 2008
Calculation of non-GAAP net income:
GAAP net income $6.5 mil $6.4 mil
Foreign exchange (loss) gain: ($0.4 mil) $1.0 mil
Non-GAAP net income $6.9 mil $5.5 mil
Basic and diluted non-GAAP net income
per share $0.26 $0.20
Shares used in the calculation of non-GAAP
net income per share - basic and diluted 26,959,994 26,959,994
About Wonder Auto
Based in Jinzhou City,
through its Chinese subsidiaries, designs, develops, manufactures and sells
automotive electrical parts, suspension products and engine components.
Wonder Auto ranked second and third in sales revenue in the Chinese market for
automobile alternators and starters in 2008, respectively. Wonder Auto’s
products are used in a wide range of passenger and commercial automobiles with
special focus on the fast-growing small- to medium-engine passenger vehicle
market. For more information, please log on http://www.watg.cn .
Safe Harbor Statement
This press release may include certain statements that are not
descriptions of historical facts, but are forward-looking statements. Such
statements include, among others, those concerning our expected financial
performance and strategic and operational plans, our future operating results,
our expectations regarding the market for our products, as well as all
assumptions, expectations, predictions, intentions or beliefs about our
relative strength and about future events. Forward-looking statements can be
identified by the use of forward-looking terminology such as “will,”
“believe,” “expect,” “may,” “should,” “potential,” “continue,” “anticipate,”
“future,” “intend,” “plan,” “believe,” “is/are likely to,” “estimate” or
similar expressions. Such information is based upon assumptions and
expectations of our management that were reasonable when made but may prove to
be incorrect. All of such assumptions and expectations are inherently subject
to uncertainties and contingencies beyond our control and based upon premises
with respect to future business decisions, which are subject to change. We do
not undertake to update the forward- looking statements contained in this
press release, except as required under applicable law. For a description of
the risks and uncertainties that may cause actual results to differ from the
forward-looking statements contained in this press release, see our most
recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission (“SEC”), and our subsequent SEC filings. Copies of filings made
with the SEC are available through the SEC’s electronic data gathering
analysis retrieval system at http://www.sec.gov . All information provided in
this press release and in the attachments is as of the date of this press
release.
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
For the three and nine months ended September 30, 2009 and 2008
Three months ended Nine months ended
September 30, September 30,
(Unaudited) (Unaudited)
2009 2008 2009 2008
Sales revenue $58,961,604 $39,265,821 $148,588,838 $107,041,424
Cost of sales 45,007,159 29,139,968 112,320,802 79,238,857
Gross profit 13,954,445 10,125,853 36,268,036 27,802,567
Operating expenses
Administrative
expenses 2,594,285 1,676,857 7,662,331 4,444,210
Research and
development
expenses 487,572 459,804 1,408,479 1,128,026
Selling expenses 2,080,438 1,209,170 4,811,601 2,912,020
5,162,295 3,345,831 13,882,411 8,484,256
Income from operations 8,792,150 6,780,022 22,385,625 19,318,311
Other income 149,146 107,023 827,043 520,349
Government grants 397,277 -- 749,815 --
Net finance (costs)/
income (1,481,640) 139,381 (3,511,726) (1,380,951)
Equity in net
income of an
unconsolidated
affiliate -- 567,802 -- 792,924
Income before income
taxes and
noncontrolling
interests 7,856,933 7,594,228 20,450,757 19,250,633
Income taxes (939,622) (632,570) (2,492,651) (1,859,813)
Net income before
noncontrolling
interests 6,917,311 6,961,658 17,958,106 17,390,820
Net income
attributable to
noncontrolling
interests (410,290) (608,120) (903,823) (1,785,599)
Net income
attributable to
Wonder Auto
Technology, Inc.
common
stockholders $6,507,021 $6,353,538 $17,054,283 $15,605,221
Net income before
noncontrolling
interests $6,917,311 $6,961,658 $17,958,106 $17,390,820
Other comprehensive
income
Foreign currency
translation
adjustments 167,348 185,858 112,056 4,448,672
Comprehensive income 7,084,659 7,147,516 18,070,162 21,839,492
Comprehensive income
attributable to
noncontrolling
interests (421,159) (623,982) (904,590) (2,372,767)
Comprehensive income
attributable to
Wonder Auto
Technology, Inc.
common
stockholders $6,663,500 $6,523,534 $17,165,572 $19,466,725
Earnings per share
attributable to
Wonder Auto
Technology, Inc.
common stockholders:
basic and diluted $0.24 $0.24 $0.63 $0.58
Weighted average
number of shares
outstanding:
basic and diluted 26,959,994 26,959,994 26,959,994 26,959,994
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets
As of September 30, 2009 and December 31, 2008
September 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $21,419,751 $8,159,156
Restricted cash 21,283,623 24,181,645
Trade receivables, net 50,640,997 46,571,619
Bills receivable 21,351,329 8,388,926
Other receivables, prepayments
and deposits 9,225,466 16,408,304
Inventories 46,916,547 44,016,192
Amount due from Hony Capital -- 7,637,216
Income tax recoverable -- 289,000
Deferred taxes 1,204,625 1,075,766
Total current assets 172,042,338 156,727,824
Intangible assets 22,097,408 22,062,560
Property, plant and equipment,
net 71,883,262 69,131,579
Land use rights 10,206,638 10,391,527
Deposit for acquisition of
property, plant and equipment 2,554,387 3,845,774
Deferred taxes 628,382 870,500
TOTAL ASSETS $279,412,415 $263,029,764
Wonder Auto Technology, Inc.
Condensed Consolidated Balance Sheets (Cont'd)
As of September 30, 2009 and December 31, 2008
September 30, December 31,
2009 2008
(Unaudited) (Audited)
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Trade payables $30,633,985 $21,616,932
Bills payable 31,161,376 31,247,100
Other payables and accrued
expenses 13,540,880 20,465,014
Provision for warranty 2,581,872 2,377,620
Payable to Hony Capital -- 10,187,216
Income tax payable 602,290 --
Secured borrowings 54,010,768 44,055,803
Early retirement benefits cost 371,247 419,301
Total current liabilities 132,902,418 130,368,986
Secured borrowings 18,577,971 16,054,478
Deferred revenue - government grants 3,382,726 2,806,777
Early retirement benefits cost 519,895 798,115
TOTAL LIABILITIES 155,383,010 150,028,356
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: par value $0.0001
per share; authorized 10,000,000
shares in 2009 and 2008;
none issued and outstanding -- --
Common stock: par value $0.0001 per
share Authorized 90,000,000 shares in
2009 and 2008; issued and outstanding
26,959,994 shares in 2009 and 2008 2,696 2,696
Additional paid-in capital 67,711,999 71,349,599
Statutory and other reserves 7,944,120 7,628,541
Accumulated other comprehensive
income 9,609,908 8,424,270
Retained earnings 31,708,870 14,654,587
TOTAL WONDER AUTO TECHNOLOGY, INC.
STOCKHOLDERS' EQUITY 116,977,593 102,059,693
NONCONTROLLING INTERESTS 7,051,812 10,941,715
TOTAL EQUITY 124,029,405 113,001,408
TOTAL LIABILITIES AND EQUITY 279,412,415 $263,029,764
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2009 and 2008
Nine months ended
September 30,
(Unaudited)
2009 2008
Cash flows from operating activities
Net income attributable to Wonder Auto
Technology, Inc. common stockholders $17,054,283 $15,605,221
Adjustments to reconcile net income
attributable to Wonder Auto
Technology, Inc. common stockholders
to net cash provided by
operating activities:
Depreciation 4,239,790 2,248,751
Amortization of intangible assets
and land use rights 297,888 85,162
Deferred taxes 111,617 (208,858)
Loss (gain) on disposal of
property, plant and equipment 59,490 (1,205)
Provision for doubtful debts 303,738 (4,020)
Provision of obsolete inventories 26,149 43,671
Exchange loss (gain) on translation
of monetary assets and liabilities 387,701 (828,205)
Equity net income of a
non-consolidated affiliate -- (792,924)
Share-based payment compensation -- 109,772
Noncontrolling interests 903,823 1,785,599
Deferred revenue amortized (193,408) --
Changes in operating assets and
liabilities :
Trade receivables (4,366,425) (15,303,061)
Bills receivable (11,649,801) 6,302,977
Other receivables, prepayments and
deposits 1,694,880 (1,860,072)
Inventories (2,926,673) (6,365,418)
Trade payables 9,010,565 3,254,639
Other payables and accrued expenses (4,604,814) (1,584,738)
Amount due from a related company -- 78,516
Early retirement benefit costs (325,977) --
Provision for warranty 203,981 542,873
Income tax payable 886,176 (9,835)
Net cash flows provided by operating
activities $11,112,983 $3,098,845
Wonder Auto Technology, Inc.
Condensed Consolidated Statements of Cash Flows (Cont'd)
For the nine months ended September 30, 2009 and 2008
Nine months ended
September 30,
(Unaudited)
2009 2008
Cash flows from investing activities
Payments to acquire intangible assets $(146,600) $(7,080)
Payments to acquire and for deposit for
acquisition of property, plant and
equipment and land use right (6,463,215) (11,776,593)
Proceeds from sales of property,
plant and equipment 29,125 100,988
Proceeds from sales of Money Victory Limited 5,950,000 --
Net cash paid to acquire Jinzhou Hanhua
Electrical Systems Co., Ltd. -- (3,042,676)
Net cash paid to acquire Money Victory Limited -- (5,000,000)
Net cash paid to acquire Jinzhou Karham Co.,
Ltd. -- (703,712)
Net cash paid to acquire Fuxin Huirui
Mechanical Co., Ltd. -- (140,990)
Net cash paid to acquire Yearcity (9,936,057) --
Net cash paid to acquire Jinzhou Wanyou
Mechanical Parts Co., Ltd. (1,705,437) --
Net cash flows used in investing activities (12,272,184) (20,570,063)
Cash flows from financing activities
Dividend paid to Winning -- (384,500)
Government grants received 769,006 --
Decrease in bills payable (1,381,350) (4,819,593)
Decrease in restricted cash 2,888,474 4,011,467
Proceeds from secured borrowings 64,274,001 15,631,122
Repayment of secured borrowings (52,193,550) (9,196,570)
Net cash flows provided by financing activities 14,356,581 5,241,926
Effect of foreign currency translation
on cash and cash equivalents 63,215 980,483
Net increase (decrease) in cash and cash
equivalents 13,260,595 (11,248,809)
Cash and cash equivalents - beginning of period 8,159,156 26,102,993
Cash and cash equivalents - end of period $21,419,751 $14,854,184
Supplemental disclosures for cash flow
information:
Cash paid for:
Interest $3,382,425 $1,346,694
Income taxes $1,489,450 $1,656,577
Non-cash investing and financing activities:
Settlement of amount due to Hony Capital
II, L.P. ("Hony Capital") by offsetting
with amount due from Hony Capital $7,626,804 $--
For more information, please contact:
Patrick Sun
Investor Relations Manager
Tel: +86-10-8478-5339
Cell: +86-153-1161-1742
Email: ir@watg.cn
SOURCE Wonder Auto Technology, Inc.