SHENZHEN, China, May 19, 2011 /PRNewswire-Asia-FirstCall/ -- New
Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the
"Company"), a vertically integrated original design manufacturer
and distributor of lithium ion batteries and backup power systems,
today announced financial results for the first quarter ended
March 31, 2011.
First quarter 2011 Financial Highlights
- Total revenues from all four divisions increased 20% to
$27.1 million
- Anytone sold 799,600 units, a 27% increase from Q1 2010
- Gross profit increased 47% to $9.4
million
- Adjusted net income increased 37% to $6.4 million
Mr. Jack Yu, Chairman of New
Energy stated, "We made further progress in transforming New Energy
to an efficient, consumer-driven battery solutions company. Our
proactive reorganization of our wholesale batteries businesses has
already produced cost savings. Meanwhile, our new product pipeline
for Anytone is as robust as it has been since we acquired the
business. We also expect solid top and bottom line contribution
from Kim Fai as we integrate our sales and marketing and R&D
efforts. All of these developments in our business make us
extremely confident in our long term growth outlook."
For the 3
Months Ended March 31
|
|
|
Q1 2011
|
Q1
2010
|
CHANGE
|
|
Net Sales
|
$27.1
million
|
$22.5
million
|
+20%
|
|
Gross Profit
|
$9.4
million
|
$6.4
million
|
+47%
|
|
Net Income
|
$5.5
million
|
$3.8
million
|
+44%
|
|
Adjusted Net
Income*
|
$6.4
million
|
$4.6
million
|
+37%
|
|
GAAP EPS (Diluted)
|
$0.38
|
$0.30
|
+25%
|
|
Adjusted EPS
(Diluted)*
|
$0.44
|
$0.37
|
+19%
|
|
|
|
|
|
*Adjusted net income and adjusted EPS exclude $0.2 million and $0.1
million of non-cash stock-based compensation expenses and
$0.7 million and $0.7 million of amortization expenses in Q1 2011
and Q1 2010, respectively. Fully diluted shares on March 31, 2011 were 14.6 million versus 12.6
million on March 31, 2010.
Revenues increased 20% year-over-year to $27.1 million. Growth in the Anytone battery
business was offset by Management's deliberate strategy to reduce
sales of lower-margin battery shells. The acquisition of Kim Fai in
the fourth quarter of 2010 added approximately $5.5 million of sales in the three months ended
March 31, 2011, meeting Management's
forecast.
Anytone® consumer products division sold 799,600 units in the
first quarter of 2011, up 27% from the same period last year.
Anytone introduced three new products during the quarter, including
products for laptops, iPhone 4 and iPad.
Gross profit in the first quarter of 2011 was $9.4 million compared to $6.4 million, a 47% increase compared to the same
period last year. Consolidated gross margin expanded 22% to
35% due to cost savings from the E'Jenie battery cell production
consolidation and higher growth in the high-margin Anytone®
products. Gross profit margins typically range between
30%-31% for Anytone®, 14%-16% for E'Jenie and 29%-31% for Kim
Fai.
Operating expenses for the three months ended March 31, 2011 were $2.1
million representing approximately 8% of sales compared to
$1.5 million and 7% of sales in the
same period last year. The increase was primarily a result of
higher sales and marketing expenses. The Kim Fai acquisition also
added $0.1 million of general and
administrative expenses.
The Company incurred $0.2 million
of non-cash stock-based compensation during the first three months
of 2011. Excluding these expenses, operating income was
$7.5 million, representing operating
margins of 27.7%.
Net income for the quarter was $5.5
million, a 44% increase to $3.8
million for the three months in 2010. GAAP earnings
per share were $0.38 compared to
$0.30 based on 14.6 million and 12.6
million diluted shares outstanding in the first quarter of 2011 and
2010, respectively. Non-GAAP adjusted earnings and EPS were
$6.4 million and $0.44 in the first three months of 2011,
respectively.
Balance Sheet and Cash Flow Summary
As of March 31, 2011, cash and
equivalents of the Company stood at $10.1, down from $13.1
million as of December 31,
2010. Working capital was approximately $17.6 million at March 31,
2011; accounts receivable was $17.2
million, compared to $11.2
million as of December 31,
2010. The Company had $0.5
million of debt. New Energy generated $3.6 million of cash flow from operations during
the three months ended March 31, 2011
versus $6.6 million in the same
period a year ago. The Company obtained approximately $9.2 million of credit lines in April 2011.
Business Update:
New Energy continues to make additional progress improving its
operating efficiencies and expanding its product portfolio. In the
first quarter of 2011, the Company completed the integration of
their finished battery pack and battery cells businesses. The
benefits are twofold: E'Jenie has a fully integrated battery
component manufacturer capable of producing battery shells, battery
caps and battery cells, making the Company more competitive with
larger customers looking for one integrated provider of battery
solutions. Secondly, the integration has already generated
meaningful cost savings, as reflected in the margin expansion
during the first quarter of 2011.
The Anytone consumer products division is focused on expanding
its distribution and growing its brand recognition. By introducing
compelling and differentiated new products such as the iPhone 4
battery charger, more distributors are selling Anytone's line of
mobile and PC batteries to their customers.
In addition, Management is focused on building its own online
and retail distribution. The Company plans to open approximately 30
franchised stores in China during
2011 to increase its brand recognition and maintain more control
over its marketing. Anytone expects to incur minimal capital
investment since the franchisees will be responsible for the
opening and operating the stores. The Company is working with
several famous online retailers in China to roll out its owned franchised online
marketplace. This will allow Anytone to significantly expand its
direct distribution to consumers while improving its working
capital efficiencies. The online store is expected to be online at
the beginning of July 2011.
2011 Guidance
Management is reiterating its 2011 guidance as follows:
Revenue:
|
$130 to $135
million
|
|
Adjusted Net
Income:
|
$24.5 million to $25.5
million
|
|
Adjusted EPS:
|
$1.69 to $1.75
|
|
|
|
The Company recently became aware of counterfeit products using
Anytone's brand name being sold to distributors and online.
Management has contacted regulators and taken legal actions against
several perpetrators involved with manufacturing and selling
counterfeit products. While the Company believes these and other
actions will significantly curtail the amount of counterfeit
products, Anytone's consumer product sales may be impacted in the
short term.
Since closing the Kim Fai acquisition in November 2010, Management has been successful in
signing new customers and expanding its portfolio of higher-margin
solar application products. Based on the strong pipeline of orders
and requests for proposals Kim Fai has, the Company is confident in
at least meeting and potentially exceeding the prior forecast of
$24 million of revenues and
$5 mill of net income contribution
from Kim Fai in 2011.
Conference Call
To attend the call, please use the dial-in information below.
When prompted, ask for the "New Energy Call " and/or be
prepared to provide the conference ID.
|
|
Date:
|
May
20th,
2011
|
|
Time:
|
9:00 a.m. Eastern Time,
US.
|
|
Conference
Line Dial-In (U.S.):
|
1-877-941-1427
|
|
International
Dial-In:
|
1-480-629-9664
|
|
Conference
ID:
|
4440646
"New Energy
Systems Call"
|
|
Webcast
link:
|
http://viavid.net/dce.aspx?sid=00008669
|
|
|
|
|
|
Please dial in at least 10 minutes before the call to ensure
timely participation. A playback will be available through
May 27, 2011. To listen, please call
1-877-870-5176 within the United
States or 1-858-384-5517 if calling internationally. Utilize
the pass code 4440646 for the replay.
About New Energy Systems Group
New Energy Systems Group is a vertically integrated original
design manufacturer and distributor of lithium ion batteries and
backup power systems for mobile phones, laptops, digital cameras,
MP3s and a variety of other portable electronics. The company's
end-user consumer products are sold under the Anytone® brand in
China, and the company has begun
expanding its international sales efforts. The fast pace of new
mobile device introductions in China combined with a growing middle class
make it fertile ground for New Energy's end-user consumer products,
as well as its high powered, light weight lithium ion batteries. In
addition to historically strong organic growth, New Energy is
expected to benefit from economies of scale, broader distribution,
and higher production capacity and higher profit margins.
Additional information about the company is available at:
www.newenergysystemsgroup.com.
Forward Looking Statements
This release contains certain "forward-looking
statements" relating to the business of the Company
and its subsidiary and affiliated companies. These forward looking
statements are often identified by the use of forward-looking
terminology such as "believes,"
"expects" or similar expressions. Such
forward looking statements involve known and unknown risks and
uncertainties that may cause actual results to be materially
different from those described herein as anticipated, believed,
estimated or expected. Investors should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. The Company's actual results
could differ materially from those anticipated in these
forward-looking statements as a result of a variety of factors,
including those discussed in the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website (www.sec.gov). All
forward-looking statements attributable to the Company or to
persons acting on its behalf are expressly qualified in their
entirety by these factors other than as required under the
securities laws. The Company does not assume a duty to update these
forward-looking statements.
For more information, please contact:
COMPANY
New Energy Systems Group
Ken Lin, VP of Investor
Relations
Tel: +1-917-573-0302
Email: klin1330@hotmail.com
INVESTOR RELATIONS
John Mattio, SVP
HC International, Inc.
Tel: US +1-212-301-7130
Email: john.mattio@hcinternational.net
Web: http://www.hcinternational.net
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
2011
|
|
December
31,
2010
|
|
|
|
(Unaudited)
|
|
(Restated)
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
10,121,795
|
|
$
|
13,065,008
|
|
Accounts receivable
|
|
|
17,169,890
|
|
|
11,192,150
|
|
Inventory
|
|
|
4,795,771
|
|
|
2,420,009
|
|
Other receivables
|
|
|
46,934
|
|
|
47,249
|
|
Due from shareholders
|
|
|
273,257
|
|
|
270,522
|
|
Deferred compensation
|
|
|
675,000
|
|
|
675,000
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
33,082,647
|
|
|
27,669,938
|
|
|
|
|
|
|
|
|
|
Noncurrent assets
|
|
|
|
|
|
|
|
Plant, property & equipment,
net
|
|
|
1,115,997
|
|
|
1,134,029
|
|
Deferred compensation -
noncurrent
|
|
|
929,743
|
|
|
1,098,493
|
|
Goodwill
|
|
|
60,863,441
|
|
|
60,555,607
|
|
Intangible assets,
net
|
|
|
19,247,770
|
|
|
19,969,021
|
|
|
|
|
|
|
|
|
|
Total
noncurrent assets
|
|
|
82,156,951
|
|
|
82,757,150
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
115,239,598
|
|
$
|
110,427,088
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
11,066,372
|
|
$
|
6,655,592
|
|
Accrued expenses and other
payables
|
|
|
1,193,653
|
|
|
1,127,133
|
|
Payable for Kimfai
acquisition
|
|
|
-
|
|
|
6,325,985
|
|
Taxes payable
|
|
|
2,703,568
|
|
|
1,553,206
|
|
Loan payable to related
party
|
|
|
549,082
|
|
|
543,585
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
15,512,675
|
|
|
16,205,501
|
|
|
|
|
|
|
|
|
|
Deferred tax
liability
|
|
|
4,631,181
|
|
|
4,798,822
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
20,143,856
|
|
|
21,004,323
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
Preferred stock, $.001 par
value, 2,553,030 shares authorized, issued and outstanding as of
March 31, 2011 and December 31, 2010,
respectively
|
|
|
2,553
|
|
|
2,553
|
|
Common stock, $.001 par value,
140,000,000 shares authorized, 14,296,428 and 14,278,928 shares
issued and outstanding as of March 31, 2011 and December 31, 2010,
respectively
|
|
|
14,296
|
|
|
14,279
|
|
Additional paid in
capital
|
|
|
74,137,861
|
|
|
73,171,435
|
|
Statutory reserves
|
|
|
2,436,761
|
|
|
2,323,603
|
|
Other comprehensive
income
|
|
|
1,949,192
|
|
|
1,834,341
|
|
Retained earnings
|
|
|
16,555,079
|
|
|
12,076,554
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
95,095,742
|
|
|
89,422,765
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
115,239,598
|
|
$
|
110,427,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
THREE MONTHS
ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
Battery
|
|
$
|
20,052,391
|
|
$
|
19,399,150
|
|
Battery shell and
cover
|
|
|
1,518,822
|
|
|
3,053,513
|
|
Solar panel
|
|
|
5,514,918
|
|
|
-
|
|
Total revenue
|
|
|
27,086,131
|
|
|
22,452,663
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
Battery
|
|
|
12,710,728
|
|
|
14,073,985
|
|
Battery shell and
cover
|
|
|
1,053,855
|
|
|
1,953,393
|
|
Solar panel
|
|
|
3,876,878
|
|
|
-
|
|
Total cost of sales
|
|
|
17,641,461
|
|
|
16,027,378
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
9,444,670
|
|
|
6,425,285
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Selling
|
|
|
364,180
|
|
|
125,974
|
|
General and
administrative
|
|
|
1,755,619
|
|
|
1,374,155
|
|
Total operating
expenses
|
|
|
2,119,799
|
|
|
1,500,129
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
7,324,871
|
|
|
4,925,156
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
Other income
|
|
|
5,379
|
|
|
8,287
|
|
Interest income
|
|
|
8,033
|
|
|
21,289
|
|
Total other income,
net
|
|
|
13,412
|
|
|
29,576
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
7,338,283
|
|
|
4,954,732
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
(1,877,728)
|
|
|
(1,172,866)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
5,460,555
|
|
|
3,781,866
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
114,851
|
|
|
4,210
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
5,575,406
|
|
$
|
3,786,076
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.38
|
|
$
|
0.32
|
|
Diluted
|
|
$
|
0.38
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
14,286,511
|
|
|
11,863,390
|
|
Diluted
|
|
|
14,558,566
|
|
|
12,623,895
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
THREE MONTHS
ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
Net Income
|
|
$
|
5,460,555
|
|
$
|
3,781,866
|
|
Adjustments to reconcile net
income to net cash
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
768,370
|
|
|
760,851
|
|
Deferred tax
liability
|
|
|
(167,641)
|
|
|
(134,717)
|
|
Deferred
compensation expense
|
|
|
168,750
|
|
|
168,750
|
|
Loss on
disposal of fixed asset
|
|
|
-
|
|
|
121
|
|
Warrants
expense
|
|
|
10,071
|
|
|
-
|
|
(Increase) / decrease in current
assets:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(5,840,687)
|
|
|
1,646,089
|
|
Inventory
|
|
|
(2,341,718)
|
|
|
(847,367)
|
|
Prepaid
expenses, deposits and other receivables
|
|
|
790
|
|
|
433,887
|
|
Increase/(Decrease) in current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
4,325,793
|
|
|
2,169,271
|
|
Accrued
expenses and other payables
|
|
|
61,580
|
|
|
(2,265,368)
|
|
Taxes
payable
|
|
|
1,131,689
|
|
|
875,670
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
3,577,552
|
|
|
6,589,053
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
Cash acquired in
acquisition
|
|
|
-
|
|
|
24,550
|
|
Proceeds from sale of property
and equipment
|
|
|
-
|
|
|
66
|
|
Acquisition of property and
equipment
|
|
|
(12,456)
|
|
|
(3,844)
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
investing activities
|
|
|
(12,456)
|
|
|
20,772
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
Repayment of acquisition
liability for Subsidiaries
|
|
|
(6,714,060)
|
|
|
(1,000,000)
|
|
Cash proceeds from warrant
exercise
|
|
|
87,500
|
|
|
-
|
|
Repayment to related
party
|
|
|
-
|
|
|
(732,397)
|
|
|
|
|
|
|
|
|
|
Net cash used in financing
activities
|
|
|
(6,626,560)
|
|
|
(1,732,397)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and equivalents
|
|
|
118,251
|
|
|
1,449
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and equivalents
|
|
|
(2,943,213)
|
|
|
4,878,877
|
|
|
|
|
|
|
|
|
|
Cash and equivalents, beginning
of the period
|
|
|
13,065,008
|
|
|
3,651,990
|
|
|
|
|
|
|
|
|
|
Cash and equivalents, ending of
the period
|
|
$
|
10,121,795
|
|
$
|
8,530,867
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
1,396,883
|
|
$
|
556,427
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these consolidated financial
statements.
|
|
|
|
|
|
|
|
|
SOURCE New Energy Systems Group