SHENZHEN, China, Nov. 15, 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, backup power consumer
products and solar panels, today announced financial results for
the third quarter ended September 30,
2011.
For the 3 Months Ended September
30
|
|
|
Q3
2011
|
Q3
2010
|
CHANGE
|
|
Net Sales
|
$15.3 million
|
$26.4 million
|
-42%
|
|
Gross Margin
|
($0.5) million
|
$7.2 million
|
-107%
|
|
Net Income (Loss)
|
($16.9) million
|
$4.3 million
|
-463%
|
|
Adjusted Net Income*
|
($2.4) million
|
$5.1 million
|
-147%
|
|
GAAP EPS (Diluted)
|
($1.16)
|
$0.34
|
-441%
|
|
Adjusted EPS
(Diluted)*
|
($0.17)
|
$0.41
|
-141%
|
|
*Adjusted net income and
adjusted EPS exclude $0.2 million of
non-cash stock-based compensation expenses during Q3 2011, $0.7
million of amortization expenses and a $13.6 million impairment of
goodwill.
|
|
|
|
|
|
Revenues declined 42% year-over-year to $15.3 million for the quarter, due primarily to
lower sales in the Company's battery sales divisions, which include
Anytone® mobile power consumer products, NewPower battery packs and
E'Jenie battery components. In addition to an overall slowdown in
the battery market, the Company's deliberate focus on the higher
margin businesses resulted in lower sales of battery shells and
covers. During the third quarter of 2011, the Company lowered
prices for certain products in order to remain competitive with
pirated products in the market, which management is rigorously
combating.
Battery sales decreased by $14.3
million, from $24.1 million in
the third quarter of 2010 to $9.8
million in the three months ended September 30, 2011. Since the beginning of 2010,
the Company started to integrate the supply chain and optimize the
internal and external resources to improve productivity, which
included integrating the battery production of E'Jenie with the
battery cell production of NewPower. The acquisition of Kim
Fai in November 2010 brought
$5.0 million in solar panel sales
during the third quarter of 2011. Sales of Anytone's branded
products for the three months ended September 30, 2011 was $6.7 million compared to $11 million for the 2010 period, a decrease of
$4.3 million, or 39%.
Mr. Jack Yu, Chairman of New
Energy stated, "We had a challenging quarter in several
subsidiaries, including E'Jenie and Anytone. The weak overall
battery pack market forced other companies to seek more profitable
products such as mobile power products. This resulted in a
significant increase in the number of competitors for Anytone's
products, including a few large competitors with greater scale than
Anytone. We have lost some orders to these competitors, resulting
in reduced sales starting near the end of second quarter. We also
made a strategic decision to selectively reduce prices of several
Anytone products in order to be combat pirated products."
Gross margin was a $0.5 million
loss during the third quarter compared to the gross profit of
$7.2 million in the same period last
year due to an increase in the cost of revenue for the battery
segment due to the decrease of sales, production volume and
switching of battery production of E'Jenie with the battery cell
production of NewPower to improve production efficiency.
Operating expenses for the three months ended September 30, 2011 were $16.8 million compared to $1.6 million. The increase was primarily due to
the impairment of goodwill of $13.6
million and a $0.3 million
increase in operating expenses from our newly acquired
subsidiary.
NewPower was served a notice of lawsuit in November 2011, for breaching a Sales Agreement,
dated May 9, 2011 between NewPower
and Shenzhen Zhongte Industry and Trade Co., Ltd. ("SZIT"), by not
accepting returns of purported faulty products from SZIT. SZIT
seeks monetary damages including SZIT's costs and expenses incurred
in connection with the action. Accordingly, the Company accrued
$1.5 million during the third quarter
of 2011 for this lawsuit, of which, $1.2
million was for return of the products and $0.3 million was for the loss incurred from
faulty products. Management believes these claims are without merit
and intends to fight them rigorously.
The Company incurred $0.2 million
of non-cash stock-based compensation during the third quarter of
2011. GAAP net loss for the quarter was $16.9 million, down from net income of
$4.3 million for the three months
ended September 30, 2010. Non-GAAP
adjusted earnings exclude impairment of goodwill, non-cash stock
based compensation and amortization. Adjusted net loss was
$2.4 million and $0.17 in earnings per share based on 14.6 million
shares outstanding on September 30,
2011.
Mr. Yu continued, "We expect to stabilize margins by introducing
new, innovative products that carry higher margins. In addition, we
have started to identify areas within our selling, general and
administrative expenses where we can become more efficient.
Finally, we have engaged branding strategy and financial
consultants to help evaluate and execute marketing, product
development and strategic alternatives. However, we expect sales
and margins to remain below our historical averages until our
competitive position improves."
For the 9 Months Ended September
30
|
|
|
YTD
2011
|
YTD
2010
|
CHANGE
|
|
Net Sales
|
$65.4 million
|
$72.2 million
|
-9%
|
|
Gross Profit
|
$15.4 million
|
$19.8 million
|
-22%
|
|
Net Income (Loss)
|
($8.2) million
|
$11.6 million
|
-171%
|
|
Adjusted Net Income*
|
$8.1 million
|
$14.2 million
|
-43%
|
|
GAAP EPS (Diluted)
|
($0.57)
|
$0.92
|
-162%
|
|
Adjusted EPS
(Diluted)*
|
$0.55
|
$1.13
|
-51%
|
|
*Adjusted net
income and adjusted EPS exclude $0.5
million of non-cash stock-based compensation expenses during nine
months end of September 30, 2011, $2.2 million of amortization
expenses and a $13.6 million impairment of goodwill.
|
|
|
|
|
|
Total net revenue decreased 29% in the first nine months of 2011
to $65.4 million. Battery sales
decreased 29% year-over-year to $45.5
million. The Kim Fai acquisition added approximately
$16.6 million of net revenue for the
first nine months of 2011.
Gross profit decreased 22% to $15.4
million, with gross margin of 23.5% compared to 27.4% in the
comparable period.
Selling, general and administrative expenses were $7.6 million compared to $4.7 million a year ago. Operating loss for the
nine months ending September 30,2011
was $5.8 million compared to
operating income of $15.1 million for
the previous period 0f 2010.
GAAP net loss and earnings per diluted share were $8.2 million and $0.57, respectively. Adjusted net income,
excluding non-cash expenses and impairment of goodwill, was
$8.1 million and adjusted EPS were
$0.55 in the first nine months of
2011.
Balance Sheet and Cash Flow Summary
As of September 30, 2011, cash and
equivalents of the Company stood at $9.6
million, compared to $13.1
million as of December 31,
2010. Working capital was approximately $19.4 million at September
30, 2011. Accounts receivable was $10.9 million, compared to $11.2 million as of December 31, 2010. The Company had $0.6 million of debt. New Energy generated
$2.9 million of cash flow from
operations during the nine months ended September 30, 2011 versus $11.5 million in the same period a year ago. The
Company has approximately $9.2
million of unused credit lines.
Conference Call
Management will host a conference call on Tuesday, November 15th, 2011 at 8:00 am ET to discuss the results for the three
and nine months ended September 30,
2011. To attend the call, please use the information below
for either dial-in access or webcast access. When prompted on
dial-in, ask for "New Energy Systems Group Third Quarter 2011
Conference Call".
|
|
|
|
Date:
|
Thursday, November 17,
2011
|
|
|
Time:
|
8:00 am Eastern Time,
US
|
|
|
Conference Line Dial-In
(U.S.):
|
+1-877-317-6776
|
|
|
International
Dial-In:
|
+1-412-317-6776
|
|
|
Conference ID:
|
New Energy
|
|
|
Webcast link:
|
http://webcast.mz-ir.com/publico.aspx?codplataforma=3363
|
|
|
|
|
|
|
|
|
|
Please dial in at least 10 minutes before the call to ensure
timely participation. A playback will be available through
November 22, 2011. To listen, please
call +1-877-344-7529 within the United
States or +1-412-317-0088 if calling internationally.
Utilize the pass code 10006920 for the replay.
This call is being webcast by MZ Technologies and can be
accessed by clicking on the following link:
http://webcast.mz-ir.com/publico.aspx?codplataforma=3363
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
|
|
|
MZ Group
|
|
|
Tel: US
+1-212-301-7130
|
|
|
Email: john.mattio@hcinternational.net
|
|
|
Web: http://www.mzgroup.com.
|
|
|
|
|
|
|
|
|
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
September
30,
2011 (Unaudited)
|
|
December
31,
2010 (Restated)
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and equivalents
|
$
|
9,596,616
|
|
$
|
13,065,008
|
|
Accounts receivable
|
|
10,891,541
|
|
|
11,192,150
|
|
Inventory
|
|
3,726,328
|
|
|
2,420,009
|
|
Prepayment
|
|
322,498
|
|
|
-
|
|
Other receivables
|
|
614,914
|
|
|
47,249
|
|
Tax receivables
|
|
397,237
|
|
|
-
|
|
Due from shareholders
|
|
281,922
|
|
|
270,522
|
|
Deferred compensation
|
|
675,000
|
|
|
675,000
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
26,506,056
|
|
|
27,669,938
|
|
|
|
|
|
|
|
|
Noncurrent assets
|
|
|
|
|
|
|
Plant, property & equipment,
net
|
|
1,144,341
|
|
|
1,134,029
|
|
Deferred compensation -
noncurrent
|
|
592,243
|
|
|
1,098,493
|
|
Goodwill
|
|
47,294,151
|
|
|
60,555,607
|
|
Intangible assets,
net
|
|
17,783,357
|
|
|
19,969,021
|
|
|
|
|
|
|
|
|
Total
noncurrent assets
|
|
66,814,092
|
|
|
82,757,150
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
93,320,148
|
|
$
|
110,427,088
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable
|
$
|
5,160,247
|
|
$
|
6,655,592
|
|
Accrued expenses and other
payables
|
|
1,346,278
|
|
|
1,127,133
|
|
Payable for Kimfai
acquisition
|
|
-
|
|
|
6,325,985
|
|
Taxes payable
|
|
-
|
|
|
1,553,206
|
|
Loan payable to related
party
|
|
566,492
|
|
|
543,585
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
7,073,017
|
|
|
16,205,501
|
|
|
|
|
|
|
|
|
Deferred tax
liability
|
|
4,289,266
|
|
|
4,798,822
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
11,362,283
|
|
|
21,004,323
|
|
|
|
|
|
|
|
|
Commitments and
Contingency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Preferred stock, $.001 par
value, 2,553,030 shares authorized, 0
and 2,553,030 shares issued and outstanding as of
September 30, 2011 and December 31, 2010, respectively
|
|
-
|
|
|
2,553
|
|
Common stock, $.001 par value,
140,000,000 shares authorized, 14,551,731 and 14,278,928 shares
issued and outstanding as of September 30, 2011 and December 31,
2010, respectively
|
|
14,552
|
|
|
14,279
|
|
Additional paid in
capital
|
|
74,163,916
|
|
|
74,040,307
|
|
Statutory reserves
|
|
2,410,573
|
|
|
2,323,603
|
|
Other comprehensive
income
|
|
2,493,892
|
|
|
1,834,341
|
|
Retained earnings
|
|
2,874,932
|
|
|
11,207,682
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
81,957,865
|
|
|
89,422,765
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
93,320,148
|
|
$
|
110,427,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
|
(UNAUDITED)
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
Three Months
Ended
September 30,
|
|
|
|
2011
|
|
|
2010
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
|
|
Battery
|
|
$
|
45,498,684
|
|
|
$
|
64,414,149
|
|
$
|
9,777,572
|
|
|
$
|
24,083,496
|
|
Battery shell and
cover
|
|
|
3,279,948
|
|
|
|
7,804,386
|
|
|
502,685
|
|
|
|
2,277,037
|
|
Solar
panel
|
|
|
16,649,096
|
|
|
|
-
|
|
|
4,973,124
|
|
|
|
-
|
|
Total
revenue
|
|
|
65,427,728
|
|
|
|
72,218,535
|
|
|
15,253,381
|
|
|
|
26,360,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Battery
|
|
|
34,371,287
|
|
|
|
47,079,061
|
|
|
10,705,241
|
|
|
|
17,496,266
|
|
Battery shell and
cover
|
|
|
2,574,434
|
|
|
|
5,353,483
|
|
|
528,396
|
|
|
|
1,652,966
|
|
Solar
panel
|
|
|
13,089,801
|
|
|
|
-
|
|
|
4,536,292
|
|
|
|
-
|
|
Total cost of
sales
|
|
|
50,035,522
|
|
|
|
52,432,544
|
|
|
15,769,929
|
|
|
|
19,149,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss)
|
|
|
15,392,206
|
|
|
|
19,785,991
|
|
|
(516,548)
|
|
|
|
7,211,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
1,196,044
|
|
|
|
369,251
|
|
|
444,818
|
|
|
|
123,435
|
|
General and
administrative
|
|
|
6,424,474
|
|
|
|
4,319,026
|
|
|
2,816,714
|
|
|
|
1,484,039
|
|
Impairment of
goodwill
|
|
|
13,564,691
|
|
|
|
-
|
|
|
13,564,691
|
|
|
|
-
|
|
Total operating
expenses
|
|
|
21,185,209
|
|
|
|
4,688,277
|
|
|
16,826,223
|
|
|
|
1,607,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
(5,793,003)
|
|
|
|
15,097,714
|
|
|
(17,342,771)
|
|
|
|
5,603,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
10,361
|
|
|
|
7,031
|
|
|
2,487
|
|
|
|
(510)
|
|
Interest
income
|
|
|
36,981
|
|
|
|
63,824
|
|
|
16,528
|
|
|
|
18,660
|
|
Total other income,
net
|
|
|
47,342
|
|
|
|
70,855
|
|
|
19,015
|
|
|
|
18,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
|
|
(5,745,661)
|
|
|
|
15,168,569
|
|
|
(17,323,756)
|
|
|
|
5,621,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes
|
|
|
2,500,119
|
|
|
|
3,545,827
|
|
|
(470,549)
|
|
|
|
1,350,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(8,245,780)
|
|
|
|
11,622,742
|
|
|
(16,853,207)
|
|
|
|
4,271,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
|
|
|
659,551
|
|
|
|
391,661
|
|
|
298,160
|
|
|
|
294,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$
|
(7,586,229)
|
|
|
$
|
12,014,403
|
|
$
|
(16,555,047)
|
|
|
$
|
4,566,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.57)
|
|
|
$
|
0.98
|
|
$
|
(1.16)
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
(0.57)
|
|
|
$
|
0.92
|
|
$
|
(1.16)
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
14,381,065
|
|
|
|
11,863,390
|
|
|
14,551,731
|
|
|
|
11,863,390
|
|
Diluted
|
|
|
14,548,462
|
|
|
|
12,623,411
|
|
|
14,551,731
|
|
|
|
12,622,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(8,245,780)
|
|
$
|
11,622,742
|
|
Adjustments to reconcile
net income to net cash
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,328,860
|
|
|
2,278,815
|
|
Deferred
taxes
|
|
|
(509,557)
|
|
|
(405,336)
|
|
Deferred stock
compensation
|
|
|
506,250
|
|
|
506,250
|
|
Loss on
disposal of fixed asset
|
|
|
-
|
|
|
674
|
|
Stock and
warrants expense
|
|
|
33,828
|
|
|
67,333
|
|
Impairment of
goodwill
|
|
|
13,564,691
|
|
|
-
|
|
(Increase) / decrease in current
assets:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
755,306
|
|
|
(5,834,898)
|
|
Inventory
|
|
|
(1,177,906)
|
|
|
(1,275,317)
|
|
Prepaid
expenses, deposits and other receivables
|
|
|
(868,679)
|
|
|
548,502
|
|
Increase/(Decrease) in current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(1,736,844)
|
|
|
2,643,732
|
|
Accrued
expenses and other payables
|
|
|
193,518
|
|
|
45,288
|
|
Taxes
payable
|
|
|
(1,969,979)
|
|
|
1,291,215
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
2,873,708
|
|
|
11,489,000
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
Cash acquired
in acquisition
|
|
|
-
|
|
|
24,550
|
|
Proceeds from
sale of property and equipment
|
|
|
-
|
|
|
624
|
|
Acquisition of
property and equipment
|
|
|
(84,771)
|
|
|
(34,702)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(84,771)
|
|
|
(9,528)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
Repayment of
acquisition liability for Subsidiaries
|
|
|
(6,802,616)
|
|
|
(5,000,000)
|
|
Cash proceeds
from warrant exercise
|
|
|
87,500
|
|
|
-
|
|
Repayment to
related party
|
|
|
-
|
|
|
(1,366,281)
|
|
|
|
|
|
|
|
|
|
Net cash used in financing
activities
|
|
|
(6,715,116
|
|
|
(6,366,281)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and equivalents
|
|
|
457,787
|
|
|
132,865
|
|
|
|
|
|
|
|
|
|
Net increase in cash and
equivalents
|
|
|
(3,468,392)
|
|
|
5,246,056
|
|
|
|
|
|
|
|
|
|
Cash and equivalents, beginning
of the period
|
|
|
13,065,008
|
|
|
3,651,990
|
|
|
|
|
|
|
|
|
|
Cash and equivalents, ending of
the period
|
|
$
|
9,596,616
|
|
$
|
8,898,046
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
4,745,614
|
|
$
|
3,298,884
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
SOURCE New Energy Systems Group