-- Full Year Revenue Increases 394% to $82.5 Million --
-- Net income Increases 364% to $14.9 Million --
WUHAN, China, March 31 /Xinhua-PRNewswire/ -- Wuhan General (OTC Bulletin Board: WUHN), a leading manufacturer of industrial blowers and turbines, today announced consolidated financial results for the full year ended December 31, 2007.
Fiscal 2007 Results
For the full year, total sales increased 394% to $82.5 million as compared to $16.7 million in the prior year period. Sales of industrial blowers comprised 54% of total revenue, or $44.6 million, while sales of turbines amounted to $37.9 million or 46% of total revenue.
Gross profit increased to $25.1 million compared to $7.8 million in the prior year period. The industrial blower unit contributed 64% of the gross profit, or $16.1 million, while turbines accounted for 36% of gross profit, or $8.9 million. Gross margin decreased from 46.8% in 2006 to 30.4% in 2007. Gross margin for the industrial blower business was 36% and for the turbine business was 23%. The decrease in gross margins was primarily due to increases in raw material costs, particularly steel. Also impacting gross margins was the Huangli power plant project for which the Company is responsible for construction of the entire plant, with construction having somewhat lower gross margins than blower and turbine sales.
Selling, general and administrative expenses for the year increased 107% from $3.8 million in 2006 to $7.9 million in 2007. As a percentage of sales, SG&A decreased from 23% in 2006 to 10% in 2007. This decrease is mainly attributable to economies of scale related to higher sales and production volumes associated with the launching of the turbine business in 2007.
Operating profit in 2007 increased 340% to $16.4 million as compared to $3.7 million in the prior year period. The combined effect of the decreased gross margin and a decrease in SG&A percentages year over year resulted in operating margins decreasing from 22.3% to 19.9%.
It should be noted that Net Income Available to Common Shareholders for 2007 includes a one-time Paid-in-Capital vs. Retained Earnings re-allocation, resulting from the $24.0 million sale of Convertible Preferred Stock with Warrants in the 1st Quarter. This re-allocation of $10.5 million was construed as a "Constructive Preferred Dividend" for accounting purposes. This "Dividend" had no impact on the company’s real earnings, cash flow, overall equity or any other standard financial measure; nor was any such "Dividend" actually paid to the holders of the Preferred Stock. Real, cash dividends to the Preferred Shareholders in 2007 were $1.1 million.
Net income for 2007 increased 364% to $14.9 million from $3.2 million in 2006. Earnings Available to Common Shareholders, before the above accounting "Dividend", were $.70 per share versus $.16 per share in 2006, an increase of 338%. The fully diluted Earnings Available to Common Shareholders, before the above accounting "Dividend", were $.35 per share versus $.16 per share.
Mr. Xu Jie, Chief Executive Officer of Wuhan General commented, "We are quite pleased with the progress we made in 2007. We exceeded our revenue and net income forecasts for 2007 as our industrial blower business increased from $16.7 million in sales in 2006 to $44.6 million in 2007 and our turbine business, launched only this year, went from zero to $37.9 million. In a relatively short period of time we have solidified our position as a high quality supplier in the fast growing turbine business. We are now well positioned, relative to both blowers and turbines, to continue to profit from China’s need for electricity, environmental protection, and general infrastructure build out.
2008 Financial Outlook
For 2008 the Company is expecting to record revenue of $119 million and net income of $22 million, increases of 44% and 48% respectively over 2007.
"In the second half of 2008 our new dedicated turbine manufacturing facility will be completely operational which will give us plenty of room to expand the business into the future," commented Mr. Xu Jie, Chief Executive Officer of Wuhan General. "Demand for our products continues to exceed supply within China. Exports now account for 10% of our industrial blower business and based on our quality and cost competitiveness we expect to see that percentage increase. Considering these positive trends and with a backlog of $18.6 million of blowers and $25.0 million of turbines as we enter 2008, we are confident this year will be another year of solid growth for Wuhan General."
Conference Call
The Company will conduct a conference call to discuss the fiscal 2007 results Wednesday, April 2, 2008 before the market open at 8:30 am ET. A press release will be issued within the next 24 hours announcing the dial-in numbers for Wednesday’s conference call.
About Wuhan General
Wuhan General (OTC Bulletin Board: WUHN) designs, manufactures, and distributes industrial blowers and turbines. Blowers are used in a variety of applications where large amounts of air have to be moved. Examples would include electricity generation, air pollution control, and ventilation and aeration in subways and vehicular tunnels, mines, and sewage treatment facilities. Wuhan General manufactures both steam and water turbines which are used for electricity generation in coal, oil, nuclear, and hydroelectric power plants. The company is located in Wuhan, China, a major industrial city of 8 million people strategically located in the south-central part of China.
Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the company’s control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the company’s periodic filings with the Securities and Exchange Commission.
Wuhan General Group (China), Inc.
Statements of Income
For the years ended December 31, 2007 and 2006
(Stated in US Dollars)
2007 2006
Sales 82,503,510 16,702,043
Cost of Sales 57,429,085 8,886,274
Gross Profit 25,074,425 7,815,769
Operating Expenses
Selling Expenses 2,333,707 1,193,971
General & Administrative
Expenses 5,615,320 2,651,953
Warranty Expense 725,626 244,101
Total Operating
Expense 8,674,653 4,090,026
Operating Income 16,399,773 3,725,743
Other Income (Expenses)
Other Income 42,097 26,977
Interest Income 303,898 348
Other Expenses (554,484) (1,830)
Interest Expense (1,321,414) (548,970)
Total Other Income (Loss) &
Expense (1,529,903) (523,475)
Earnings before Tax 14,869,869 3,202,268
Income Tax -- --
Net Income 14,869,869 3,202,268
Preferred Dividends
Declared 1,072,904 --
Constructive Preferred
Stock Dividend 10,501,982 --
Income Available to Common
Stockholders 3,294,983 --
Earnings Per Share
Basic $ 0.17 $0.16
Diluted $ 0.10 $0.16
Weighted Average Shares
Outstanding
Basic 19,712,446 19,712,446
Diluted 33,633,831 19,712,446
Earnings Per Share excluding effect of Constructive
Preferred
Dividend
Basic $ 0.70 $0.16
Diluted $ 0.35 $0.16
Weighted Average Shares Outstanding
Basic 19,712,446 19,712,446
Diluted 42,864,053 19,712,446
Consolidated Balance Sheets
At December 31, 2007 and 2006
(Stated in US Dollars)
ASSETS 2007 2006
Cash 992,965 248,243
Restricted Cash 9,108,866 382,530
Notes Receivable 1,865,491 1,535,868
Accounts Receivable 31,875,411 12,488,083
Other Receivable 1,977,646 8,810,699
Inventory 7,895,960 4,544,662
Advances to Suppliers 12,743,130 2,746,325
Advances to Employees 138,420 255,836
Prepaid Taxes 257,554 3,889
Real Property Available
for Sale 993,861 --
Total Current Assets 67,849,304 31,016,135
Property, Plant &
Equipment, net 20,401,547 17,252,577
Land Use Rights, net 1,830,476 1,749,740
Construction in Progress 9,897,484 35,304
Intangible Assets, net 381,281 364,565
$
Total Assets $100,360,092 50,418,321
LIABILITIES & STOCKHOLDERS’
EQUITY
Liabilities
Bank Loans & Notes 28,132,664 13,545,059
Accounts Payable 4,747,298 8,531,852
Contract Payable -- 1,137,623
Taxes Payable 1,043,383 1,723,544
Other Payable 3,137,575 4,594,639
Dividend Payable 898,875 --
Accrued Liabilities 2,003,800 354,169
Customer Deposits 5,034,464 1,587,306
Total Current Liabilities 44,998,059 31,474,192
Total Liabilities 44,998,059 31,474,192
Wuhan General Group (China), Inc.
Consolidated Balance Sheets
December 31, 2007, and 2006
(Stated in US Dollars)
Stockholders’ Equity 2007 2006
Preferred Stock - $0.0001 Par
Value, 50,000,000 Shares
Authorized; 10,287,554 & 0
Shares of Series A
Convertible Preferred
Stock Issued &
Outstanding at December 31,
2007, and 2006 respectively. 1,029 --
Additional Paid-in Capital -
Preferred Stock 13,466,990 --
Additional Paid-in Capital -
Warrants 6,572,334 --
Additional Paid-in Capital -
Beneficial Conversion Feature 10,501,982 --
Common Stock - $0.0001 Par
Value 100,000,000 Shares
Authorized; 19,712,446 Shares
Issued & Outstanding at
December 31, 2007, and 2006. 1,971 1,971
Additional Paid-in Capital 12,349,602 12,349,602
Statutory Reserve 633,771 622,151
Retained Earnings 8,483,648 5,200,285
Accumulated Other
Comprehensive
Income 3,350,706 770,120
Total Stockholders’ Equity 55,362,033 18,944,129
Total Liabilities &
Stockholders’ Equity $100,360,092 $ 50,418,321
Wuhan General Group (China), Inc.
Statements of Cash Flows
For the year ended December 31, 2007 and 2006
(Stated in US Dollars)
2007 2006
Cash Flow from Operating Activities
Cash Received from Customers 73,532,077 3,395,609
Cash Paid to Suppliers &
Employees (83,510,411) (4,710,988)
Interest Received 157,072 348
Interest Paid (1,321,415) (548,970)
Income Tax Paid -- --
Miscellaneous Receipts 42,096 26,977
Cash Sourced/(Used) in Operating
Activities (11,100,581) (1,837,024)
Cash Flows from Investing
Activities
Cash Invested in Restricted Time
Deposits (8,726,336) (1,006,024)
Repayment/(Investment) in Notes (1,312,344) (148,213)
Payments for Purchases of Plant &
Equipment (5,100,642) (2,843,702)
Payments for Construction of Plant &
Equipment (9,862,180) (33,743)
Payments for Purchases of Land Use
Rights (127,793) (58,853)
Payments for Purchases of Intangible
Assets (59,920) (15,316)
Cash Used/(Sourced) in Investing
Activities (25,189,215) (2,093,803)
Cash Flows from Financing
Activities
Increases to Preferred Stock &
Additional
Paid-in Capital 20,040,353 --
Proceeds from Bank Borrowings 4,681,749 4,844,345
Repayment of Bank Loans -- --
Proceeds from Issuance of Notes 9,905,857 --
Repayment of Notes -- (1,319,147)
Dividends Paid (174,029) --
Cash Sourced/(Used) in Financing
Activities 34,453,930 3,525,198
Net Increase/(Decrease) in Cash & Cash
Equivalents for the Period (1,835,866) (405,629)
Effect of Currency Translation 2,580,588 487,384
Cash & Cash Equivalents at Beginning of
Period 248,243 166,488
Cash & Cash Equivalents at End of Period 992,965 248,243
Non-Cash Investing Activity:
Contribution of equipment to capital -- 6,315,691
Value of property surrendered by Hubei
Dilong Industrial Group Co., Ltd. 993,861 --
Constructive Preferred Stock Divided 10,501,982 --
