JINZHOU CITY, China, Aug. 9 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. ("Wonder Auto" or "the Company"), a leading manufacturer of automotive electrical parts, suspension products and engine accessories in China, today announced its financial results for the second quarter ended June 30, 2010.
Highlights for the second quarter of 2010: -- Sales revenue increased 37.9% year-over-year to $68.5 million; -- Gross profit rose 40.4% year-over-year to $17.2 million from $12.2 million, and gross margin increased to 25.1% year over year from 24.6%; -- Non-GAAP net income attributable to Wonder Auto increased 54.0% year- over-year to $8.3 million; -- Non-GAAP EPS was $0.24, representing a 22.7% increase from approximately $0.20 compared with the second quarter 2009; -- Sales revenue from PRC increased 41.1%, or $ 17.7 million year-over- year, to $60.9 million in the second quarter 2010; -- Sales revenue from outside PRC increased $1.1 million, or 16.5% year- over-year, to $7.6 million in the second quarter 2010. *(Notes): (in thousands of U.S. dollars) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Net income attributable 6,646 5,376 12,427 10,547 to Wonder Auto Technology, Inc. common stockholders Share-based compensation 1,635 -- 3,270 -- Non-GAAP net income 8,281 5,376 15,697 10,547 attributable to Wonder Auto Technology, Inc. common stockholders GAAP EPS (U.S. dollars) 0.20 0.20 0.37 0.39 Non-GAAP EPS (U.S. dollars) 0.24 0.20 0.46 0.39 Business outlook
For the third quarter of 2010, our sales revenue is expected to achieve $69.0 million or higher. We may update our revenue guidance for third quarter 2010 after we close the M&A project with Jinheng Automotive Safety Technology Holdings Limited ("Jinheng Holdings").
"We have experienced continuous growth of our revenue for the second quarter 2010," said Wonder Auto's Chairman and Chief Executive Officer Mr. Qingjie Zhao. "The Company increased the revenue not only from the existing customers, but also from new clients and new product models. Meanwhile, the increased sales revenue from outside China was also a growth driver to our robust top-line growth. We expect the Company will maintain its growth with its increased production capacity and by generating more new contracts."
Selected Financial Results for the Second Quarter of 2010: Revenues
Our sales revenue is generated from sales of our alternator and starter products, rods and shafts, and engine valves and tappets. We experienced growth in sales revenue across all segments in the second quarter of 2010. Sales revenues in the second quarter of 2010 increased 37.9% to $68.5 million from $49.7 million in the second quarter of 2009.
Sales revenue from China increased 41.1%, or to $60.9 million in the second quarter of 2010 from $43.2 million at the same period last year. The increases were mainly attributable to the higher sales volume driven by the increased market demand for our products in expanded automobile market.
Cost of Revenues
Our cost of revenues for the second quarter of 2010 increased 37.1% to $51.3 million from $37.4 million in the same period of 2009.
As a percentage of sales revenue, the cost of sales decreased slightly by 0.5% to 74.9 % during the second quarter 2010 from 75.4 % for the quarter period of 2009. The slight decrease was mainly due to the improved gross margin of our engine valves and tappets products, because the increased percentage of sales to heavy duty engine sector. Our sales to heavy duty engine sector usually have a higher gross margin than those used for lighter trucks.
Gross Profit
Our gross profit increased 40.4%, to $17.2 million for the second quarter 2010, compared with $12.2 million for the same period in 2009 as a result of increased sales volume driven by the strong market demand for our products. Gross margin was increased to 25.1% for the second quarter 2010, as compared to 24.6% of the same period last year. Such slight increase was mainly due to the gross margin increase of our engine valves and tappets as discussed above.
Total Operating Expenses
Our total operating expenses increased by $3.8 million, to $8.5 million for the second quarter 2010, as compared to $4.7 million for the same period in 2009. A large portion of the increase in selling, general and administrative expenses for the second quarter of 2010 was attributable to the increase of non-cash share-based compensation, and the research and development expenses.
Non-cash share-based compensation
On November, 2009, we granted options to purchase a total of 1,674,400 shares of our common stock to certain officers, directors and employees with an exercise price of $11.48 per share. As a result, we incurred a non cash share-based employee compensation of approximately $1.6 million in the three months ended June 30, 2010. As of June 30, 2010, none of employees had exercised the stock option right.
Net Income
Net income attributable to our common stockholders increased by $1.3 million, or 23.6%, to $6.6 million during the three months ended June 30, 2010 from $5.4 million during the same period.
About Wonder Auto
Based in Jinzhou City, Liaoning, China, Wonder Auto Technology, Inc., 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 2009 financial results, our expected financial performance in 2010 and future strategic and operational plans, our future operating results, our expectations regarding the market for our products, our expectations regarding the continued growth of the automobile market, 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.
For more information, please contact: Patrick Sun Investor Relations Manager Tel: +86-10-8478-5339 Cell: +86-153-1161-1742 (China) Cell: +1-646-736-7588 (US) Email: ir@watg.cn Wonder Auto Technology, Inc. Condensed Consolidated Statements of Income and Comprehensive Income For the three and six months ended June 30, 2010 and 2009 (Unaudited) (Stated in US Dollars) Three months ended Six months ended June 30, June 30, 2010 2009 2010 2009 Sales revenue $68,458,594 $49,651,214 $132,079,159 $89,627,234 Cost of sales 51,307,112 37,431,981 99,301,954 67,313,643 Gross profit 17,151,482 12,219,233 32,777,205 22,313,591 Operating expenses Administrative expenses (included share-based compensation of $1,477,694 and $2,955,388 for the three and six months ended June 30, 2010 respectively, $Nil for the three and six months ended June 30, 2009) 4,939,601 2,752,054 10,018,399 5,068,046 Research and development expenses (included share- based compensation of $91,782 and $183,564 for the three and six months ended June 30, 2010 respectively, $Nil for the three and six months ended June 30, 2009) 1,538,790 464,675 2,888,319 920,907 Selling expenses (included share- based compensation of $65,419 and $130,838 for the three and six months ended June 30, 2010 respectively, $Nil for the three and six months ended June 30, 2009) 2,046,378 1,518,504 4,454,639 2,731,163 8,524,769 4,735,233 17,361,357 8,720,116 Income from operations 8,626,713 7,484,000 15,415,848 13,593,475 Other income 51,314 563,381 580,109 677,897 Government grants 219,180 177,476 420,691 352,538 Equity in net income of non- consolidated affiliates 233,169 -- 781,961 -- Net finance costs (1,080,690) (1,946,097) (1,711,518) (2,030,086) Income before income taxes and noncontrolling interests 8,049,686 6,278,760 15,487,091 12,593,824 Income taxes (1,147,099) (633,024) (2,595,189) (1,553,029) Net income before noncontrolling interests 6,902,587 5,645,736 12,891,902 11,040,795 Net income attributable to noncontrolling interests (256,835) (270,098) (465,073) (493,533) Net income attributable to Wonder Auto Technology, Inc. $6,645,752 $5,375,638 $12,426,829 $10,547,262 Net income before noncontrolling interests $6,902,587 $5,645,736 $12,891,902 $11,040,795 Other comprehensive income (loss) Foreign currency translation adjustments 648,066 9,817 648,062 (55,292) Comprehensive income 7,550,653 5,655,553 13,539,964 10,985,503 Comprehensive income attributable to noncontrolling interests (287,450) (275,411) (275,411) (483,431) Comprehensive income attributable to Wonder Auto Technology, Inc. common stockholders $7,263,203 $5,380,142 $13,044,276 $10,502,072 Earnings per share attributable to Wonder Auto Technology, Inc. common stockholders: basic and diluted $0.20 $0.20 $0.37 $0.39 Weighted average number of shares outstanding: basic and diluted 33,859,994 26,959,994 33,859,994 26,959,994 Wonder Auto Technology, Inc. Condensed Consolidated Balance Sheets As of June 30, 2010 and December 31, 2009 (Stated in US Dollars) June 30, December 31, 2010 2009 (Unaudited) (Audited) ASSETS Current assets Cash and cash equivalents $60,616,182 $82,414,287 Restricted cash 14,638,128 15,753,748 Trade receivables, net 48,444,434 49,522,583 Bills receivable 45,769,941 21,965,065 Other receivables, prepayments and deposits 9,503,920 14,826,460 Inventories 53,172,880 51,119,562 Deferred taxes 1,230,242 1,186,410 Total current assets 233,375,727 236,788,115 Restricted cash 586,800 -- Intangible assets 31,284,448 32,907,720 Property, plant and equipment, net 75,197,144 73,770,329 Land use rights 10,052,355 10,618,853 Deposit for acquisition of property, plant and equipment 10,109,428 7,435,563 Deposit for acquisition of a subsidiary 8,700,000 -- Investments in non-consolidated affiliates 16,022,362 -- Deferred taxes 1,080,366 731,575 TOTAL ASSETS $386,408,630 $362,252,155 LIABILITIES AND EQUITY LIABILITIES Current liabilities Trade payables $36,423,883 $34,126,534 Bills payable 28,149,030 29,388,653 Other payables and accrued expenses 13,762,417 14,886,909 Provision for warranty 2,783,651 2,272,322 Income tax payable 1,516,897 892,340 Secured borrowings 66,464,837 57,082,779 Early retirement benefits cost 371,734 353,584 Total current liabilities 149,472,449 139,003,121 Secured borrowings 18,161,648 20,908,721 Deferred revenue - government grants 3,113,050 3,315,762 Early retirement benefits cost 377,575 550,397 TOTAL LIABILITIES 171,124,722 163,778,001 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock: par value $0.0001 per share;-authorized 10,000,000 shares in 2010 and 2009; none issued and outstanding -- -- Common stock: par value $0.0001 per share Authorized 90,000,000 shares in 2010 and 2009; issued and outstanding 33,859,994 shares in 2010 and 2009 3,386 3,386 Additional paid-in capital 140,812,492 137,542,702 Statutory and other reserves 10,186,701 10,186,701 Accumulated other comprehensive income 10,264,498 9,647,051 Retained earnings 47,697,425 35,270,596 TOTAL WONDER AUTO TECHNOLOGY, INC. STOCKHOLDERS' EQUITY 208,964,502 192,650,436 NONCONTROLLING INTERESTS 6,319,406 5,823,718 TOTAL EQUITY 215,283,908 198,474,154 TOTAL LIABILITIES AND EQUITY $386,408,630 $362,252,155 Wonder Auto Technology, Inc. Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2010 and 2009 (Unaudited)(Stated in US Dollars) Six months ended June 30, 2010 2009 Cash flows from operating activities Net income before noncontrolling interests $12,891,902 $11,040,795 Adjustments to reconcile net income before noncontrolling interests to net cash (used in) provided by operating activities: Depreciation 3,416,688 2,781,143 Amortization of intangible assets and land use rights 772,372 198,573 Share-based compensation 3,269,790 -- Deferred taxes (384,223) 180,716 Loss on disposal of property, plant and equipment 113,590 19,549 (Recovery) provision for doubtful debts (51,895) 87,484 Provision for obsolete inventories 19,064 45,923 Exchange gain on translation of monetary assets and liabilities (522,425) (52,045) Equity in net income of non-consolidated affiliates (781,961) -- Deferred revenue amortized (215,393) (127,735) Changes in operating assets and liabilities : Trade receivables 1,327,295 (4,021,736) Bills receivable (23,634,450) (5,324,675) Other receivables, prepayments and deposits (1,884,169) 2,736,977 Inventories (2,505,312) (2,515,195) Trade payables 2,161,890 13,366,276 Other payables and accrued expenses (1,212,066) (4,123,986) Early retirement benefits costs (157,723) (214,840) Provision for warranty 499,990 58,769 Income tax payable 562,859 251,285 Net cash flows (used in) provided by operating activities $(6,314,177) $14,387,278 Cash flows from investing activities Payments to acquire intangible assets $-- $(146,600) Payments to acquire and for deposit for acquisition of property, plant and equipment and land use right (8,878,218) (3,345,040) Proceeds from sales of property, plant and equipment -- 23,877 Net cash inflow from disposal of Jinzhou Jiade 2,866,442 -- Deposit for acquisition of Vital Glee (8,700,000) -- Net cash paid to acquire Applaud (14,862,577) -- Net cash paid to acquire Wonder Auto Parts (376,285) -- Net cash received from Winning 8,013,693 -- Net cash paid to acquire Yearcity -- (3,986,057) Net cash paid to acquire Jinzhou Wanyou -- (1,705,437) Net cash flows used in investing activities (21,936,945) (9,159,257) Cash flows from financing activities Government grants received -- 769,006 (Decrease) increase in bills payable (1,338,272) 3,809,457 Decrease (increase) in restricted cash 590,836 (965,778) Proceeds from secured borrowings 46,577,250 63,247,801 Repayment of secured borrowings (39,560,651) (48,528,550) Net cash flows provided by financing activities 6,269,163 18,331,936 Effect of foreign currency translation on cash and cash equivalents 183,854 (1,309) Net (decrease) increase in cash and cash equivalents (21,798,105) 23,558,648 Cash and cash equivalents - beginning of period 82,414,287 8,159,156 Cash and cash equivalents - end of period $60,616,182 $31,717,804 Supplemental disclosures for cash flow information: Cash paid for: Interest $2,601,136 $2,500,563 Income taxes $2,318,441 $1,057,966 Non-cash investing and financing activities: Acquisition of Yearcity by offsetting with receivable from disposal of an non-consolidated affiliate $-- $5,950,000 Settlement of amount due to Hony Capital II, L.P. ("Hony Capital") by offsetting with amount due from Hony Capital $-- $7,626,804 Wonder Auto Technology, Inc. Condensed Consolidated Statements of Equity (Unaudited) (Stated in US Dollars) Wonder Auto Technology, Inc. stockholders Additional Statutory Common stock paid-in and other No. of Amount capital reserves shares Balance, December 31, 33,859,994 $3,386 $137,542,702 $10,186,701 2009 Net income -- -- -- -- Foreign currency translation adjustment -- -- -- -- Share-based compensation -- -- 3,269,790 -- Balance, June 30, 33,859,994 $3,386 $140,812,492 $10,186,701 2010 Wonder Auto Technology, Inc. stockholders Accumulated other comprehensive Retained Noncontrolling income earnings interests Total Balance, December 31, 2009 $9,647,051 $35,270,596 $5,823,718 $198,474,154 Net income -- 12,426,829 465,073 12,891,902 Foreign currency 617,447 -- 30,615 648,062 translation adjustment Share-based compensation -- -- -- 3,269,790 Balance, June 30, 2010 $10,264,498 $47,697,425 $6,319,406 $215,283,908
Wonder Auto Technology, Inc.
CONTACT: Patrick Sun, Investor Relations Manager of WATG, +86-10-8478-
5339, or cell, +86-153-1161-1742 (China) or +1-646-736-7588 (US), or
ir@watg.cn
Web Site: http://www.watg.cn/
