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SinoHub Reports Fourth Quarter and 2008 Year-End Financial Results, Posting Triple-Digit 2008 Gains in Revenue, Gross Profit, Net Income

Posted on: Monday, 16 March 2009, 22:06 CDT

SANTA CLARA, Calif. and SHENZHEN, China, March 16 /PRNewswire-Asia/ -- SinoHub, Inc. (OTC Bulletin Board: SIHI), which conducts substantially all of its operations through its wholly-owned subsidiary SinoHub Electronics Shenzhen Limited in the People's Republic of China, today reported strong financial results for the fourth quarter and full year ended December 31, 2008, with fourth quarter revenues, gross profit and net income up 154%, 201% and 242%, respectively, over the prior-year period.

Net income for the 2008 fourth quarter more than tripled to $2.9 million, or $0.12 per fully diluted share, from $858,000, or $0.05 per fully diluted share, for the 2007 fourth quarter. Total revenues for the 2008 fourth quarter increased more than two and a half times to $26.5 million from $10.4 million in the prior-year quarter.

The company's electronic component procurement and sales business generated growth of nearly 150%, with revenues of $23.9 million for the fourth quarter of 2008, versus $9.6 million in the same period last year. Revenues from the company's supply chain management services business increased more than three-fold to $2.6 million for the 2008 fourth quarter from $781,000 in the fourth quarter of 2007.

Total operating expenses for the 2008 fourth quarter amounted to $2.6 million, or approximately 10% of total revenues, compared with $1.1 million, or approximately 11% of total revenues, a year earlier. The increase in total operating expenses reflects higher selling, general and administrative costs in support of the company's substantial revenue growth.

At December 31, 2008, SinoHub had $5.9 million in non-restricted cash and cash equivalents, up from $4.3 million at December 31, 2007. Working capital was $22.8 million at year-end 2008 compared with $6.6 million at the close of 2007, and total stockholders' equity was to $23.5 million at year-end 2008, up from $7.5 million at December 31, 2007.

"The strength of SinoHub's 2008 performance reflects the successful execution of our strategic initiatives," said Harry Cochran, chief executive officer. "Our strong revenue growth and results demonstrate the power of our supply chain management platform, which we believe is the critical framework supporting our rapid growth. Increased access to financial resources during the year helped to fuel heightened levels of business activity in our procurement-fulfillment and component sales businesses. In addition, we are benefiting from a significantly deepened bench of corporate advisors, including four new board members in 2009. We believe we are poised to continue our growth in 2009."

"As quickly as the company has been growing, we believe the opportunity ahead of us is even larger, particularly with the rollout of 3G technology- enabled mobile devices, since roughly 70% of our business is in the mobile phone arena," said Lei Xia, president of SinoHub. "We are leveraging our comprehensive platform as we pursue new business opportunities, and we believe we are fortifying SinoHub's ability to sustain profitable, long-term growth. With 90 percent of our manufacturer customers selling their products into China we believe our prospects remain robust in 2009."

Full Year Financial Results

Net income grew substantially for 2008 to $8.5 million, or $0.40 per fully diluted share, from $3.5 million, or $0.22 per fully diluted share, for 2007. Total revenues grew to $79.5 million for 2008 from $28.8 million for 2007. The company's electronic component procurement-fulfilment and component sales businesses generated revenues of $74.5 million for 2008, an almost three-fold increase from $26.7 million last year. Revenues from the company's supply chain management services business increased 137% to $5.0 million for 2008 from $2.1 million for 2007. Total operating expenses for 2008 were $5.4 million, or 7% of total revenues, compared with $2.7 million, or 9% of total revenues, in 2007.

Conference Call

SinoHub has scheduled a conference call for 7:30 am. (PDT) March 17, 2009 to discuss the company's fourth quarter and year-end financial performance. Interested parties may participate in the call by dialing 1-866-356-4441 from the U.S. or Canada, or +1-617-597-5396 from international locations, and entering passcode 5632083. This call also is being webcast and can be accessed from SinoHub's web site at http://www.sinohub.com where it will be archived for a period of one year. An audio replay of the conference call will be available through midnight (PDT) March 24, 2009 by dialing 1-888-286-8010 from the U.S. or Canada, or +1-617-801-688 from international locations, and entering passcode 34815044.

About SinoHub

SinoHub's business was founded in 2000 by veteran entrepreneur Harry Cochran and electronic component industry veteran Lei Xia to participate in the rapid growth of the electronics business in China. The company is engaged in electronic component sales and provides world-class supply chain management services with transparent information access for participants in the electronic components supply chain in China. For more information, visit the company's web site at http//www.sinohub.com .

Cautionary Statement Regarding Forward-looking Information

Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. You can identify forward-looking statements by the use of the words "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," or "continue" or the negative of those terms. These statements involve risks known to us, significant uncertainties, and other factors, many of which we cannot predict with accuracy and some of which we might not even anticipate, which may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by those forward- looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

Among the factors about which we have made assumptions are: -- our views on the potential growth of the mobile telephone and network equipment markets in China; -- our ability to overcome competition from other suppliers; -- any increase in the cost of component parts that we supply or increases in operating costs which cannot be passed on to our customers; -- the availability of financing on attractive terms or at all, which may adversely impact our growth plans or increase our future interest expense; -- changes in interest rate levels and volatility in securities markets; -- the retention of import/export licenses and SinoHub SCM SZ's Client Coordinator Enterprise Coordinator status with the Huanggang Customs authority; -- economic, political, regulatory, legal and foreign exchange risks associated with our operations; -- changes in governmental regulation, tax rates and similar matters; -- retention of key members of our senior management; and -- the abatement of the current global economic crisis over time.

Except as required by law, we assume no obligation to update any forward- looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. For further information on factors which could impact us and the statements contained herein, see the "Risk Factors" included in Item 1A of our Annual Report on Form 10-K. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

SINOHUB, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three months ended Years ended December 31, December 31, 2008 2007 2008 2007 NET SALES Supply chain management services $ 2,612,000 $ 781,000 $ 4,973,000 $ 2,096,000 Electronic components 23,861,000 9,623,000 74,511,000 26,698,000 Total net sales 26,473,000 10,404,000 79,484,000 28,794,000 COST OF SALES Supply chain management services 491,000 385,000 1,444,000 995,000 Electronic components 19,688,000 7,931,000 61,830,000 21,130,000 Total cost of sales 20,179,000 8,316,000 63,274,000 22,125,000 GROSS PROFIT 6,294,000 2,088,000 16,210,000 6,669,000 OPERATING EXPENSES Selling, general and administrative 1,244,000 1,020,000 3,787,000 2,297,000 Depreciation 101,000 113,000 389,000 383,000 Allowance for doubtful debts 1,237,000 -- 1,237,000 -- Loss on disposal of property and equipment -- -- 5,000 -- Total operating expenses 2,582,000 1,133,000 5,418,000 2,680,000 INCOME FROM OPERATIONS 3,712,000 955,000 10,792,000 3,989,000 OTHER INCOME (EXPENSE) Interest expense (69,000) (37,000) (251,000) (146,000) Interest income 26,000 38,000 66,000 124,000 Other, net 7,000 43,000 27,000 43,000 Total other income (expense) (36,000) 44,000 (158,000) 21,000 INCOME BEFORE INCOME TAXES 3,676,000 999,000 10,634,000 4,010,000 Income tax expense 741,000 141,000 2,151,000 509,000 NET INCOME 2,935,000 858,000 8,483,000 3,501,000 OTHER COMPREHENSIVE INCOME Foreign currency translation gain (138,000) 164,000 541,000 285,000 COMPREHENSIVE INCOME $ 2,797,000 $ 1,022,000 $ 9,024,000 $ 3,786,000 SHARE AND PER SHARE DATA Net income per share- basic $ 0.12 $ 0.05 $ 0.41 $ 0.22 Weighted average number of shares-basic 24,486,000 16,829,000 20,925,000 15,797,000 Net income per share- diluted $ 0.12 $ 0.05 $ 0.40 $ 0.22 Weighted average number of shares-diluted 25,132,000 16,962,000 21,460,000 15,929,000 SINOHUB, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, ASSETS 2008 2007 CURRENT ASSETS Cash and cash equivalents $ 5,860,000 $ 4,282,000 Restricted cash 374,000 5,509,000 Accounts receivable, net of allowance 22,282,000 9,748,000 Inventories, net 435,000 853,000 Prepaid expenses and other 370,000 426,000 Due from related company -- 1,493,000 Total current assets 29,321,000 22,311,000 PROPERTY AND EQUIPMENT, NET 703,000 846,000 TOTAL ASSETS $30,024,000 $23,157,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 764,000 $ 6,777,000 Accrued expenses and other 234,000 307,000 Bank borrowings 2,123,000 6,904,000 Notes payable to third parties -- 251,000 Income and other taxes payable 3,391,000 1,457,000 Total current liabilities 6,512,000 15,696,000 STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value 5,000,000 shares authorized; no shares issued -- -- Common stock, $0.001 par value, 100,000,000 shares authorized; 24,501,989 shares and 18,290,000 shares issued and outstanding as of December 31, 2008 and December 31, 2007, respectively 25,000 18,000 Additional paid-in capital 11,529,000 4,509,000 Retained earnings Unappropriated 10,424,000 2,309,000 Appropriated 724,000 356,000 Accumulated other comprehensive income 810,000 269,000 Total stockholders' equity 23,512,000 7,461,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,024,000 $23,157,000 For further information, please contact: SinoHub, Inc. Falicia Cheng Tel: +86-755-2661-1080 Email: falicia@sinohub.com In the U.S.: PondelWilkinson Inc. Laurie Berman/Angie Yang Tel: +1-310-279-5980 Email: investor@pondel.com

SOURCE SinoHub, Inc.

Source: PR Newswire

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