Recs: 1 Q report excellent
A-Power Reports Record Financial Results for the Three and Nine Months Ended September 30, 2008
Wednesday November 19, 4:28 pm ET
SHENYANG, China, Nov. 19 /PRNewswire-FirstCall/ --
Highlights
-- Revenue for the three months ended September 30, 2008 increased to
$85.4 million, up 120% from $38.9 million for the same period of the
prior year;
-- Net income for the three months ended September 30, 2008 amounted to
$9.4 million, an increase of 124% compared to $4.2 million for the same
period of the prior year; EPS for Q3 2008 of approximately $0.28;
-- Comprehensive income for the three months ended September 30, 2008
increased to $11.3 million, up 144% from $4.6 million for the same
period of the prior year;
-- Revenue for the first nine months of 2008 of $183.4 million, up 66%
from the same period of the prior year;
-- Net income for the first nine months of 2008 increased to $18.5 million,
up 56% from the same period of the prior year;
-- Comprehensive income for the first nine months of 2008 increased to
$22.3 million, up 81% from the same period of the prior year;
-- Cash position of $59.7 million as of September 30, 2008
A-Power Energy Generation Systems (Nasdaq: APWR - News; "A-Power") today announced its unaudited financial results for the three and nine months ended September 30, 2008 (see attached financial statements).
Comments from Mr. Jinxiang Lu, Chairman & CEO
Mr. Jinxiang Lu, A-Power's Chairman and CEO commented, "As expected, our financial results continued to accelerate during the third quarter and market demand for local power generation continued to increase in China and throughout Southeast Asia. Based on these results and our expectations for the fourth quarter, we are reaffirming earnings guidance of over $35 million for 2008.
During the first nine months of 2008, power supply shortages continued throughout China and Southeast Asia causing widespread blackouts and brownouts. Given this continued energy shortage, the Chinese government and various governments throughout Southeast Asia have continued to promote the development of local power generation as an efficient and cost-effective alternative to the overburdened main power grids. With this continued strong market demand for efficient power production throughout China and Southeast Asia we do not expect that our business will be negatively impacted by the global economic slowdown.
In the third quarter of 2008, we secured a new distributed generation contract in China's Jilin province worth approximately $195 million. We also signed a binding MOU with National Power Supply Company, a subsidiary of Advance Agro Pacific, for what is expected to become our largest distributed power generation contract to-date - a $300 million contract to develop a 600 MW distributed power system in Thailand's Chachoengsao province. We remain confident this MOU will be converted into a contract shortly as we are currently in final discussions with the customer and we are working together with the customer to obtain the necessary approvals in Thailand. We feel this opportunity, combined with the $150 million Thai contract signed earlier this year, represent a strong foundation for us in the international market.
We also continue to make great progress in our wind turbine business. We recently completed construction of the largest single wind turbine production facility in China - a 310,000 square foot facility in Shenyang. In addition, the components that we have secured for the initial 10 2.7 MW wind turbines began arriving at the port in Dalian, China this week. We expect that all of the components needed to produce the first 10 2.7MW turbines will be transferred to our wind facility in Shenyang by the end of November. For this reason, we are on-track to produce the first 10 2.7MW wind turbines this quarter and all 10 units are expected to be recognized as revenue in 2008.
We have also secured components for 30 of the 750kW wind turbines from multiple domestic and international sources for delivery over the next few months. We believe we will be able to produce at least 20 of the 750kW wind turbines this year.
In the third quarter, we also announced our plan to develop a second wind turbine production facility - a 290,000 square foot facility strategically located in Bayan Nur City, in the heart of Inner Mongolia's wind belt. We commenced the initial design and construction work on this new facility in October 2008 and expect it will be completed in July 2009. When the Bayan Nur wind facility is completed, A-Power will have an annual capacity to produce over 1,800 MW of wind turbines. With this capacity, our licensed foreign technology and strong government support, we expect to become one of the leading wind turbine producers in China.
We believe A-Power is favorably positioned in the distributed generation and wind markets to ensure strong near-term operating performance and at the same time to create the conditions for sustainable long-term success with the goal of becoming the leading clean energy company in Asia. We continued to take major strides in that direction during the third quarter of 2008 and look forward to the remainder of 2008 and 2009."
Financial Results for the Three Months Ended September 30, 2008
For the three months ended September 30, 2008, A-Power's revenue was $85.4 million, an increase of 119.7% from $38.9 million for the three months ended September 30, 2007. The increase was due to continued growth in A-Power's core distributed power generation business and the relatively larger size of projects under construction compared with the prior period.
Cost of revenues for the three months ended September 30, 2008 amounted to $74.8 million, an increase of $41.5 million compared to $33.3 million in the same period of the prior year. Gross margin decreased during the three months ended September 30, 2008 to 12.3% from 14.3% in the same period of the prior year. The decrease in gross margins was primarily due to costs that were incurred in the construction phase of projects during the third quarter of 2008. Once these projects progress to equipment delivery and installation phases, gross margin should return to approximately 14%.
General and administrative expenses amounted to approximately $2.0 million for the three months ended September 30, 2008, an increase of approximately $1.0 million compared to approximately $1.0 million in the same period of the prior year. This increase was primarily due to the addition of key technical and managerial talent and direct expenses associated with being a publicly listed company in the U.S.
Net income for the three months ended September 30, 2008 amounted to $9.4 million, or approximately $0.28 per share, an increase of 124.3% compared to $4.2 million for the three months ended September 30, 2007.
Comprehensive Income, which includes RMB to US dollar currency adjustments, for the three months ended September 30, 2008 amounted to $11.3 million, up 144% from $4.6 million for the same period of the prior year
Financial Results for the Nine Months Ended September 30, 2008
For the nine months ended September 30, 2008, A-Power's revenue was $183.4 million, an increase of 66.1% from $110.5 million for the nine months ended September 30, 2007. The increase was due to continued growth in A-Power's core distributed power generation business and the relatively larger size of projects under construction compared with the prior period.
The total cost of revenues for the nine months ended September 30, 2008 amounted to $161.1 million, an increase of $66.5 million compared to $94.6 million in the same period of the prior year, while gross margins decreased for the nine months ended September 30, 2008 to 12.2% from 13.9% in the same period of the prior year. The decrease in gross margin was primarily due to costs that were incurred in the construction phase of projects during the first nine months of 2008. Once these projects progress to equipment delivery and installation phases, gross margin should return to approximately 14%.
General and administrative expenses amounted to approximately $5.0 million for the nine months ended September 30, 2008, an increase of $2.5 million compared to approximately $2.5 million in the same period of the prior year. This increase was primarily due to the addition of key technical and managerial talent and direct expenses associated with being a publicly listed company in the U.S.
Net income for the nine months ended September 30, 2008 amounted to $18.5 million, an increase of $6.7 million or 56.1% compared to $11.8 million for the nine months ended September 30, 2007. This increase was attributed primarily to the growth in revenue and operating income and an increase in the amount and size of distributed power generation contracts.
Comprehensive Income, which includes RMB to US dollar currency adjustments, for the nine months ended September 30, 2008 amounted to $22.3 million, up 81.4% from $12.3 million for the same period of the prior year.
Balance Sheet Highlights
As of September 30, 2008, A-Power's cash and cash equivalents totaled $59.7 million compared to $35.8 million as of December 31, 2007. Working capital as of September 30, 2008 was $95.8 million compared to $38.0 million as of December 31, 2007. A-Power's current ratio as of September 30, 2008 was 2.9:1.
Conference Call
Management will conduct a conference call this afternoon at 5:00 PM EST to discuss these results. A question and answer session will follow management's presentation.
Interested parties may participate in the call by dialing (866) 804-6925 (U.S.) or (857) 350-1671 (International) approximately 10 minutes before the call is scheduled to begin. The conference call passcode is 12282049.
Replays of the call will be available for 30 days and can be accessed by dialing (888) 286-8010 (U.S.) or (617) 801-6888 (International). The replay passcode is 54022746.
About A-Power
A-Power Energy Generation Systems, Ltd., through its PRC operating subsidiaries, is the largest provider of distributed power generation systems in China and entered into China's wind energy market in 2008. The Company is also focused on developing and commercializing additional renewable energy technologies and has strategic relationships with both Tsinghua University and the China Sciences Academy in Guangzhou |
