BEIJING, Aug. 31 /PRNewswire-Asia/ -- Wowjoint Holdings
Limited ("Wowjoint," or the "Company") (Nasdaq: BWOW, BWOWU,
BWOWW), a leading provider of customized heavy duty lifting and
carrying machinery used in large scale infrastructure projects such
as railway, highway and bridge construction reported today
unaudited financial results for the second quarter and first six
months of 2010.
Second-quarter Ended June 30,
2010
Revenues for the Company's second quarter ended June 30, 2010 were $2.6
million as compared to $1.7
million in the first quarter of 2010, and $8.4 million in the three month period ended
June 30, 2009. The year-over-year
decline in revenue is primarily attributable to a reduction in
government spending beginning in late 2009 on large infrastructure
projects, resulting in a significant reduction in new contracts
being awarded for railway, highway and bridge projects. Government
budgeting for large infrastructure projects has recently increased,
which has in turn positively impacted Wowjoint's sales pipeline and
backlog. Technical services sales as a component of revenue rose
substantially to $1.6 million, or 61%
of revenue, as compared to $0.3
million, or 3.5% of revenue in the three month period ended
June 30, 2009. These services
consisted primarily of technical aftermarket support such as
disassembling, relocating, and reassembling equipment.
"Our financial results for the second quarter of 2010, while
still disappointing, showed a slight increase over the first
quarter of 2010," stated Mr. Yabin
Liu, Chief Executive Officer of Wowjoint. "Our business
continued to be impacted directly by government decisions and
timing associated with major infrastructure purchases for new
projects. While the effects of this policy were reflected in our
second quarter 2010 financial results, China's fiscal policy is becoming more
accommodative again, which is resulting in an increase in
government budgeting for large infrastructure projects and in the
current flow of potential contract activity. As a result, our
contract backlog grew and we expect to see a significant
improvement in our financial performance in the second half of
2010. It is important to note that management believes the recent
short-term shift in government spending only resulted in a delay in
these high-value infrastructure projects, and shall not have an
effect on the long-term plans for these projects. Furthermore, we
continue to work on diversifying our revenue stream as shown by our
substantial growth in technical services sales during the second
quarter of this year."
Cost of sales for the three months ended June 30, 2010 was approximately $2.0 million as compared to $5.7 million for the three months ended
June 30, 2009, due to lower revenue
and increased technical services sales. For the second quarter of
2010, the Company reported gross profit of $0.6 million, or 23.3% of total revenues compared
to gross profit of $0.3 million, or
16.3% of total revenues for the first quarter of 2010 and
$2.8 million, or 32.6% of total
revenues, for the second quarter of 2009.
Operating expenses for the three months ended June 30, 2010 were approximately $1.4 million, compared to $0.8 million in the same period of 2009. Selling
expenses for the three months ended June 30,
2010 totaled $0.3 million
compared to $0.1 million in the same
period of 2009, as the Company expanded its marketing efforts,
which contributed to its increased contract backlog. General and
administrative expenses increased to $1.1
million from $0.7 million in
the three months ended June 30 of
2010 and 2009, respectively, with the increase primarily due to
costs related with being a public company.
For the three months ended June 30,
2010, the Company reported a net loss of $0.8 million, or $.10 per share based on 7.9 million weighted
average shares outstanding, compared to net income of $1.7 million for the three months ending
June 30, 2009.
"Contract activity is improving and our sales and marketing team
has made progress as we look for business opportunities both
domestically and abroad," added Mr. Liu. Our recently announced
sales contract with China Railway Group combined with the recently
announced equipment lease and service agreements with China Railway
Construction Company and China Railway Group bring the value of
contracts announced since July 29th
to approximately $11 million. Given
the proprietary design of our equipment, our innovative engineering
expertise and our market position, we expect to capitalize on
long-term trends which benefit our business. To complement our
growth and speed the sales cycle, we are investigating alternative
business models, such as equipment leasing, which would enable us
to capture additional share of customer expenditures on
construction equipment."
Balance Sheet
Cash and cash equivalents totaled $7.2
million at June 30, 2010, as
compared to $7.6 million at
March 31, 2010. Accounts receivable
were $10.7 million at June 30, 2010 as compared to $11.4 million at March 31,
2010, and inventories amounted to $7.3 million versus $5.3
million in the respective periods. The Company had total
stockholders' equity of $18.5
million, with total assets of $33.1
million versus total liabilities of $14.6 million on June 30,
2010.
Six Months Ended June 30, 2010
Revenues for the six month period ended June 30, 2010 were $4.3
million as compared to $24.8
million in the six month period ended June 30, 2009. The decline in revenue is
primarily attributable to a shift by China in its fiscal polices resulting in
curtailment in government spending on large infrastructure
projects.
Cost of sales for the six months ended June 30, 2010 was approximately $3.4 million as compared to $17.1 million for the six months ended
June 30, 2009. For the first six
months of 2010, the Company reported gross profit of $0.9 million, or 20.4% of total revenues compared
to gross profit of $7.7 million, or
31.1% of total revenues for the 2009 six-month period. Key reasons
for the lower gross margins include a lower profit revenue mix and
greater price sensitivity among customers during this period.
Operating expenses for the six months ended June 30, 2010 were approximately $2.2 million, compared to $1.3 million in the same period of 2009. Selling
expenses for the six month period increased to $0.3 million from $0.2
million in the same period of 2009, as the Company increased
spending on the pursuit of new business opportunities, including in
international markets such as the US and Korea. General and
administrative expenses were $1.9
million and $1.1 million for
the 2010 and 2009 periods, respectively, with the increase due to
additional staff hires related to the costs of being a public
company.
For the six months ending June 30,
2010, the Company reported a net loss of $1.2 million, or $.17 per share based on 7.2 million weighted
average shares outstanding, compared to net income of $5.8 million for the six months ended
June 30, 2009.
"Given the fact that the construction equipment business
consists of large, long lead-time contracts subject to
macro-economic factors, our business and our financial results are,
by definition, difficult to predict and are extremely 'lumpy' in
nature on a quarter to quarter basis. Recognizing that reality, we
have structured our business and operations in a manner that
maximizes our flexibility and ability to respond to changing market
conditions, reduces exposure to fixed overhead, and reduces
inventory buildups. We have achieved this in part by being a
value-added design and engineering company rather than a pure
manufacturing company. As a result, we focus our resources on
designing and developing customized heavy machinery to solve
complex lifting and bridge building problems. While we do
manufacture machinery, we have not overbuilt our manufacturing
capacity knowing that when necessary due to spikes in demand that
we can outsource this relatively low value-added function. Our
current operations are capable of producing more than $25 million in sales per quarter."
Revenue Guidance and Contract Backlog
Management issued revenue guidance for Q3 2010 of approximately
$8.0 million, as current backlog of
signed contracts totals approximately $17.0
million, up from $13.1 million
at the end of the first quarter 2010.
Conference Call
The conference call will take place at 9:00 a.m. EDT on Tuesday,
August 31, 2010. Interested participants should call
1-877-941-4774 when calling within the
United States or 1-480-629-9760 when calling internationally
(pass code 4348904).
A playback will be available through September 7, 2010. To listen, please call
1-877-870-5176 within the United
States or 1-858-384-5517 when calling internationally.
Utilize the pass code 4348904 for the replay.
About Wowjoint Holdings Limited
Wowjoint is a leading provider of customized heavy duty lifting
and carrying machinery used in such large scale infrastructure
projects as railway, highway and bridge construction. Wowjoint's
main product lines include launching gantries, tyre trolleys,
special carriers and marine hoists. The company's innovative design
capabilities have resulted in patent grants and proprietary
products. Wowjoint is well positioned to benefit directly from
China's rapid infrastructure
development by leveraging its extensive operational experience and
long-term relationships with established blue chip customers.
Information on Wowjoint's products and other relevant information
are available on its website at http://www.wowjoint.com .
Forward Looking Statements
This press release includes "forward-looking statements" within
the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Words such as
"expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements in this press release
include matters that involve known and unknown risks, uncertainties
and other factors that may cause actual results, levels of
activity, performance or achievements to differ materially from
results expressed or implied by this press release. Wowjoint
undertakes no obligation and does not intend to update these
forward-looking statements to reflect events or circumstances
occurring after the date of this communication. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this communication. All
forward-looking statements are qualified in their entirety by this
cautionary statement. All subsequent written and oral
forward-looking statements concerning Wowjoint or other matters and
attributable to Wowjoint or any person acting on their behalf are
expressly qualified in their entirety by the cautionary statements
above. Wowjoint does not undertake any obligation to update any
forward-looking statement, whether written or oral, relating to the
matters discussed in this news release.
For additional information contact:
Company:
Anthony (Tony) Hung
Chief Financial Officer
Tel: +86-10-8957-9330 x8011
Email: tony@email.wowjoint.com
Investors:
Scott Powell
HC International, Inc.
Tel: +1-917-721-9480
Email: scott.powell@hcinternational.net
Web: http://www.hcinternational.net
- Financial Tables Follow -
WOWJOINT HOLDINGS LTD
Unaudited Consolidated Statement of Income
(US dollars in thousands, except for EPS and
share data)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2010 2010 2009 2010 2009
Sales
Machinery sales 999 1,653 8,140 2,652 24,304
Technical service 1,563 79 296 1,642 476
Total sales 2,562 1,732 8,436 4,294 24,780
Cost of goods sold 1,966 1,450 5,686 3,416 17,066
Gross profit 596 282 2,750 878 7,714
Operating expenses:
Selling expenses 267 74 109 341 162
General and
administrative expenses 1,147 715 729 1,862 1,134
Total operating
expenses 1,414 789 838 2,203 1,296
Income from operations (818) (507) 1,912 (1,325) 6,418
Other expenses:
Interest expense (net) 6 10 7 16 17
Bank expense 14 1 5 15 10
Foreign currency
exchange loss(gain) 16 -- 113 16 113
Other expense (profit) (29) (8) 1 (37) 0
Total other expenses 7 3 126 10 140
Income before income
taxes (825) (510) 1,786 (1,335) 6,278
Income taxes (Benefits)
expenses (63) (85) 134 (148) 471
Net income attributed
to ordinary
shareholders (762) (425) 1,652 (1,187) 5,807
Earnings per share
Basis (0.10) (0.07) 0.29 (0.17) 1.02
Diluted (0.10) (0.07) 0.29 (0.17) 1.02
Weighted average
number of shares
used in computing
earnings per share
Basis 7,949,965 6,430,610 5,700,000 7,194,485 5,700,000
Diluted 7,949,965 6,430,610 5,700,000 7,194,485 5,700,000
WOWJOINT HOLDINGS LTD
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
June 30, March 31, December 31,
2010 2010 2009
ASSETS
Current Assets:
Cash and cash equivalents 7,242 7,554 675
Accounts receivable(net) 10,700 11,410 13,410
Other receivables 133 313 43
Advances to suppliers 1,463 1,306 790
Inventories 7,288 5,304 3,636
Costs and estimated earnings in excess of
billings 1,731 2,437 2,321
Deferred tax assets 1,254 718 495
Amount due from related parties 84 62 62
Total Current Assets 29,895 29,104 21,432
Property, plant and equipment 1,715 1,664 1,630
Intangible asset, net 1,032 1,033 1,040
Deferred tax assets 66 533 670
Restricted cash 371 264 188
Prepaid expense - Long-term 53 5 5
Total Assets 33,132 32,603 24,965
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Short-term loans 736 732 732
Accounts payable and accrued expenses 5,016 5,535 4,437
Advances from customers 1,931 928 480
Taxes payable 5,322 5,747 6,169
Other payables 431 486 258
Billings in excess of costs and estimated
earnings 1,191 -- 23
Total Current Liabilities 14,627 13,428 12,099
Stockholders' Equity:
Common stock 8 8 1
Additional paid in capital 4,718 4,718 3,575
Warrants 5,581 5,581 --
Statutory surplus reserves 2,674 2,674 2,674
Retained earnings 4,573 5,335 5,760
Accumulated other comprehensive income 951 859 856
Total Stockholders' Equity 18,505 19,175 12,866
Total Liabilities and Stockholders'
Equity 33,132 32,603 24,965
SOURCE Wowjoint Holdings Limited
Copyright . 31 PR Newswire
