- Published: 09 April 2009
- Written by Editor
A-Power Energy Generation Systems Ltd. Reports $10.0 Million in Net Income for the Fourth Quarter of 2008
A-Power Energy Generation Systems, Ltd. (Nasdaq: APWR) ("A-Power" or "the Company"), a leading provider of distributed power generation ("DG") systems in China and a fast-growing manufacturer of wind turbines, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2008.
Financial Highlights 4Q08 vs. 4Q07:
-- Revenues rose 93.5% to $81.4 million, Gross margin was 17.8% vs. 11.2%, Net income rose 197.8% to $10.0 million, Diluted EPS was $0.30 vs. $0.25 (4Q08 fully diluted shares were, 33.1 million vs. 13.7 million in 4Q07)
FY08 vs. FY07
-- Revenues rose 73.6% to $264.9 million
-- Gross margin was 13.9% vs. 13.5%
-- Net income rose 87.4% to $28.5 million
-- Diluted EPS was $1.01 vs. $2.23 (FY08 fully diluted shares were
28.2 million vs. 6.8 million in FY07)
-- Cash position at December 31, 2008 was $43.5 million
"2008 marked another major milestone in A-Power's history. Despite the challenging conditions in the global market, our DG business continued to demonstrate accelerated growth as Chinese industrial plants embraced our electricity-generation systems to conserve energy and reduce pollution," Mr. Jinxiang Lu, A-Power's Chairman and CEO commented. "We are very pleased that we have nearly tripled our net income and almost doubled our revenue in the fourth quarter. We continue to prove our ability to win customers, improve profitability, and strengthen our balance sheet."
Mr. Lu continued, "In 2008, we also successfully solidified our partnerships with European wind turbine makers Fuhrlander and Norwin, and established our relationship with General Electric to prepare for our expansion in the Chinese wind turbine market. In addition, we recently completed our general assembly facility for wind turbines in Shenyang, China and now have the largest production capacity for one single location in China. After China posted robust growth rates in wind turbine installation from 6GW in 2007 to 12GW in 2008, the Chinese government recently unveiled another ambitious plan to invest $11.7 billion (RMB 80 billion) in expanding the wind energy market to 30GW and requiring utility companies to generate 15% of their power from wind by 2010. As we believe many Chinese domestic wind turbine producers are facing technological barriers and component shortages in their mega-watt class turbine production, A-Power, with its European and U.S. relationships, is well positioned to gain market share."
Fourth Quarter 2008 Results
For the three months ended December 31, 2008, A-Power's revenues rose 93.5% to $81.4 million from the fourth quarter of 2007, reflecting the strong growth of DG orders year-over-year.
Gross profit rose 207.5% to $14.5 million from the fourth quarter of 2007. Gross margin was 17.8%, compared with 11.2% in the fourth quarter of 2007.
General and administrative ("G&A") expenses were $3.7 million, compared with $1.0 million in the fourth quarter of 2007. G&A as a percentage of revenue was 4.6%, compared with 2.5% in the fourth quarter of 2007. The higher G&A expenses were mainly because of the costs of being a public company and business expansion.
Operating income increased 192.6% to $10.8 million from the fourth quarter of 2007.
Net income rose 197.8% to $10.0 million from the fourth quarter of 2007.
Diluted earnings per share were $0.30, compared with $0.25 in the fourth quarter of 2007. For the fourth quarter of 2008, the weighted average number of shares on a fully diluted basis was 33.1 million as compared to 13.7 million in the same period of 2007.
2008 Results
For the full year 2008, A-Power's revenues rose 73.6% to $264.9 million from 2007.
Gross profit increased 79.4% to $36.9 million from 2007. Gross margin was 13.9%, compared with 13.5% in 2007.
G&A expenses were $8.7 million, compared with $3.5 million in 2007. The higher G&A expenses were mainly because of the costs of being a public company and business expansion.
Operating income increased 65% to $28.2 million from 2007.
Net income soared 87.4% to $28.5 million from 2007.
Diluted earnings per share were $1.01, compared with $2.23 in 2007. For the year 2008, the weighted average number of shares on a fully diluted basis was 28.2 million, compared with 6.8 million in 2007.
Balance Sheet Highlights
As of December 31, 2008, A-Power had cash and cash equivalents of $43.5 million, compared with $59.7 million at September 30, 2008.
Working capital as of December 31, 2008 was $97.0 million, compared with $95.8 million at September 30, 2008.
Current ratio as of December 31, 2008 was 3.06 compared with 2.91 at September 30, 2008.
Total shareholders' equity rose to $155.3 million at December 31, 2008, from $143.9 million at September 30, 2008.
As of December 31, 2008, the Company recorded no short-term or long-term bank loans.
Recent Developments
On March 5, 2009, the Company announced it had signed agreements for GE Drivetrain Technologies to supply A-Power with 2.7MW wind turbine gearboxes and to establish a Joint Venture partnership for a wind turbine gearbox manufacturing plant in China.
On January 11, 2009, the Company celebrated the launch of its first wind turbine production facility with a ribbon-cutting ceremony. Strategically located in Shenyang, one of China's largest industrial hubs, the facility is the largest wind turbine production plant in China, with total annual production capacity of over 1,125MW. Among the guests at the opening ceremony were various provincial and local government officials, GE Drivetrain executives, the management from German Fuhrlander, from which the Company has an exclusive licensing agreement in China for 2.7MW wind turbines, as well as various investors in the Company.
Business Outlook
The Company expects revenues and net income for 2009 to be approximately $290 million and $29 million, respectively. These targets are based on the Company's current DG backlogs, which are subject to change when the company signs new DG contracts and/or recognizes revenues from wind turbine sales during 2009.
Mr. Lu concluded, "Entering 2009, we expect continued growth in our DG business as our strong track record attracts more industrial companies to use our systems to improve their electricity power management and utility cost control. On the wind turbine generator front, we want to fully leverage our technology partnerships with global wind technology leaders like Fuhrlander, Norwin and GE. Although our wind power business is still in its infancy, we see strong demand from the market for our 2.7MW wind turbines, as China is graduating from the Kilo-Watt class and moving towards Mega-Watt wind turbines. With our engineers and technicians completing training in Germany, our top priority is to secure components and ramp up production to satisfy the growing market demand."
Conference Call
The Company will host a conference call, to be simultaneously Webcast, on Thursday, April 9, 2009, at 8:00 a.m. Eastern Daylight Time or 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-800-510-0178 (North America) or +1-617-614-3450 (International), pass code: 58500234, approximately 10 minutes before the call start time. A live Webcast of the conference call will be available on the Company's Website at http://www.apowerenergy.com .
A replay of the call will be available starting on April 9, 2009, at 11:00 a.m. Eastern Daylight Time or 11:00 p.m. Beijing Time through May 9, 2009. An archived Webcast of the conference call will be available on the Company's Website at http://www.apowerenergy.com . Interested parties may access the replay by dialing +1-888-286-8010 (North America) or +1-617-801-6888 (International) and entering pass code 24604179.
About A-Power
A-Power Energy Generation Systems Ltd. ("A-Power"), through its China- based operating subsidiaries, is the largest provider of distributed power generation systems in China, focusing on energy-efficient and environmentally friendly projects of 25MW to 400MW. In 2008, A-Power entered the wind energy market and has built China's largest wind turbine manufacturing facility, located in Shenyang, Liaoning Province, with technologies licensed from German FUHRLANDER AG and Denmark-based Norwin, and a total annual production capacity of 1,125MW. In March 2009, A-Power entered into an agreement to establish a Joint Venture partnership with GE Drivetrain Technologies to produce wind turbine gearboxes in Shenyang. A-Power also has strategic relationships with Tsinghua University in Beijing and the China Academy of Sciences in Guangzhou to develop and commercialize other renewable energy technologies. For more information, please visit http://www.apowerenergy.com .
Safe Harbor Statement
This press release may contain forward-looking statements. Any such statement is made within the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and other similar statements. Statements that are not historical facts, including statements relating to anticipated future earnings, margins, and other operating results, future growth, construction plans and anticipated capacities, production schedules and entry into expanded markets are forward-looking statements. Such forward-looking statements, based upon the current beliefs and expectations of our management, are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements, including but not limited to, the risk that: If we fail to adapt to changing market conditions and to compete successfully with existing or new competitors, our business prospects and results of operations would be materially and adversely affected; inclement weather conditions could adversely affect our operating results in particular quarters and/or fiscal years; we may experience construction and development delays on our projects which could adversely affect our financial condition and operating results; the development of our wind turbine business will depend on the efforts of others; our limited operating history and recent entrance into new markets and the wind turbine business may make it difficult for you to evaluate our business and future prospects; the expected benefits of supply and partnership agreements may not materialize to the extent expected or at all; we expect to rely increasingly on our proprietary products and systems and on technology developed by our licensors and partners, and if we or our licensors or partners become involved in an intellectual property dispute, we may be forced to spend considerable resources resolving such dispute; a decrease in the rate of growth of China's industry and economy may lead to a decrease in our revenues because industrial companies in China are our principal source of revenues, as well as other relevant risks detailed in our filings with the Securities and Exchange Commission, including those set forth in our annual report filed on Form 20-F for the fiscal year ended December 31, 2007. The information set forth herein should be read in light of such risks. We assume no obligation to update the information contained in this press release, except as required under applicable law.
Notes to Unaudited Financial Information
This release contains unaudited financial information which is subject to adjustment. The audit of our financial statements and related notes to be included in our annual report on Form 20-F for the year ended December 31, 2008 is still in progress. Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this unaudited financial information. In addition, we are in the process of conducting further evaluations of our internal control over financial reporting for compliance with the requirements of Section 404 under the Sarbanes-Oxley Act of 2002. We make no representation in this release of management's assessment regarding internal control over financial reporting.
Financial Tables Follow
Consolidated Balance Sheets
(Unaudited, in U.S. dollars)
Dec. 31, 2008 Dec. 31, 2007
Assets
Current assets
Cash and cash equivalents $43,517,621 $35,831,895
Restricted bank balance 3,608,281 --
Accounts receivable, net of
allowance for doubtful
accounts of $Nil (2007 - $Nil) 8,036,468 20,980,185
Subscription receivable -- --
Prepayments, deposits, other receivables 79,844,563 3,118,908
Inventory 8,722,726 --
Due from related parties 104,992 31,898
Total current assets 143,834,651 59,962,886
Future income tax asset 364,236
Accounts receivable 3,646,254 1,843,830
Construction in progress 18,005,572 411,263
Property, plant and equipment, net 14,312,179 2,501,510
Intangible assets 12,563,972 --
Deposits on intangible assets 10,322,307 3,729,000
Total assets 203,049,171 68,448,489
Liabilities and Stockholder's Equity
Current liabilities
Bank loans -- 959,614
Accounts payable and accrued
liabilities 30,136,177 18,047,827
Customer deposits 16,075,856 2,479,867
Due to shareholder -- 375,531
Due to related parties 127,707 --
Income and business taxes payable 741,705 50,742
Notes payable -- 15,000,000
Total current liabilities 47,081,445 36,913,581
Minority interest 658,385 256,357
Commitments and contingencies -- --
Stockholders' equity
Common shares, 100,000,000 authorized
with par value of $0.0001 per share,
33,516,303 shares issued (2007: Common
shares, 14,350,000 authorised with par
value of $0.128 (HK$1) per share,
13,000,000 shares issued) 3,352 1,666,667
Preferred shares, 650,000
authorized, each convertible
into 1 common share, with par value
of $0.128 per share,
650,000 shares issued -- 54,333
Additional paid-in capital 94,136,757 1,671,342
Accumulated other comprehensive income 6,783,133 2,016,250
Statutory reserves 3,306,624 3,306,624
Retained earnings 51,079,475 22,563,335
Total stockholders' equity 155,309,341 31,278,551
Total liabilities and stockholder's
equity 203,049,171 68,448,489
Consolidated Statements of Income and Comprehensive Income
(Unaudited, In U.S. Dollars)
Three months ended Dec 31, Year ended Dec 31,
2008 2007 2008 2007
Revenues $81,418,342 $42,085,669 $264,865,973 $152,544,105
Cost of sales and
business taxes 66,891,191 37,361,503 227,988,781 131,987,149
Gross profit 14,527,151 4,724,166 36,877,192 20,556,956
Expenses
General and
administrative
expenses 3,731,222 1,033,708 8,700,362 3,481,979
Income from
operations 10,795,928 3,690,458 28,176,830 17,074,977
Interest costs 152,198 (968,959) -- (968,959)
Finance costs (60,790) 583,219 (112,072) (913,059)
Other income (expense) (441,337) 308,392 924,342 250,164
Income before
provision for income
taxes and minority
interest 10,445,999 3,613,110 28,989,100 15,443,123
Provision for
(Recovery of)
income taxes 115,893 190,175 70,928 190,175
Income before
minority interest 10,330,106 3,422,935 28,918,173 15,252,948
Minority interest in
subsidiary
(income) loss (313,143) (58,186) (402,028) (39,308)
Net income 10,016,963 3,364,749 28,516,144 15,213,640
Foreign currency
translation
adjustment 916,538 1,068,987 4,766,884 1,542,348
Comprehensive income 10,933,501 4,433,736 33,283,028 16,755,988
Weighted average
number of common
shares outstanding -
basic 33,516,303 13,000,000 27,995,488 6,529,670
Weighted average
number of common
shares outstanding -
diluted 33,137,770 13,650,000 28,248,818 6,834,432
EARNINGS (LOSS) PER
SHARE - BASIC 0.30 0.26 1.02 2.33
EARNINGS (LOSS) PER
SHARE - DILUTED 0.30 0.25 1.01 2.23
CONSOLIDATED STATEMENT OF CASH FLOWS
Dec. 31,
2008
(unaudited)
Cash flows from operating activities
Net income for the years 28,516,144
Items not affecting cash:
Stock-based compensation 835,851
Amortization 379,317
Amortization of discount on promissory note --
Minority interest 402,028
30,133,340
Changes in operating assets and liabilities:
Accounts receivable 12,490,074
Inventories (8,565,490)
Costs and estimated earnings in excess of billings on
uncompleted contracts --
Prepayments, deposits and other receivables (71,289,167)
Accounts payable and accrued liabilities 10,722,586
Customer deposits 13,182,400
Due to (from) related parties (73,094)
Income and business tax payable 677,740
Billings in excess of costs and estimated earnings on
uncompleted contracts --
(12,721,610)
Cash provided by (used in) financing
Proceeds from share capital, net of cost 59,329,615
Repayment of notes payable (15,000,000)
Repayment to bank loans (1,007,522)
Due to (from) related parties 127,707
Repayment of related party loans --
Cash received from Chardan South upon RTO 31,747,587
75,197,387
Cash provided by (used in) investing
Increase in restricted bank balances (3,608,281)
Purchase of plant and equipment (11,808,120)
Payment of intangible assets (6,407,237)
Construction in Progress (18,485,200)
Liabilities assumed from A-Power (1,022,960)
Purchase of land use right (12,337,494)
(53,669,293)
Effect of exchange rate changes (1,120,758)
Increase in cash and cash equivalents 7,685,726
Cash, beginning of the year 35,831,895
Cash, end of the year 43,517,621
For further information, please contact:
A-Power Energy Generation Systems
John S. Lin
Chief Strategy Officer
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Grayling
Valentine Ding / Dixon Chen
Investor Relations
Tel: +1-646-284-9412
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