WUXI, China, May 17, 2011 /PRNewswire-Asia-FirstCall/ -- China
Wind Systems, Inc. (NASDAQ: CWS), ("China Wind Systems" or the
"Company"), a leading supplier of forged rolled rings and other
forged components to the wind power and other industries and
industrial equipment primarily to the textile industry in
China, today announced its
financial results for the three months ended March 31, 2011.
First Quarter 2011 Financial
Highlights
- Revenue increased 4.3% year-over-year to $17.6 million
- Revenue from the sale of forged products to the wind power and
other industries increased 13.2% year-over-year to $13.4 million, or 76.4% of revenue
- Revenue from the sale of forged products exclusively to the
wind power industry increased 46.5% year-over-year to $10.2 million, or 58.0% of revenue
- Operating income increased 24.1% year-over-year to $3.6 million
- Net income increased 36.9% to $2.7
million, or $0.10 per diluted
share
"During the first quarter of 2011, sales to the wind power
industry increased as we expanded our customer base and delivered
large scale orders of forging equipment used in the wind power
industry. As a result of our increased focus on the wind power
segment, sales of our forging equipment to other industries
continued to soften. In addition, the decrease in revenue from the
sale of dyeing and finishing equipment reflects the business cycle
as well as delays in purchasing new equipment designed to meet
stricter environmental standards imposed by the Chinese government
as textile manufacturers evaluate both their projected business in
uncertain economic times and new equipment designed to meet the new
standards. Longer-term, we believe the new policies will
generate a demand for our next generation dye machine models that
were introduced in November 2010,
which we believe meets the new standards," commented Mr.
Jianhua Wu, Chairman and Chief
Executive Officer of China Wind Systems. "During the quarter, we
continued our efforts to capitalize on the attractive growth
opportunities in the clean energy sector. We recently received two
follow-on purchase orders of solar chamber subassemblies worth
$1.1 million."
First Quarter 2011
Results
Revenue for the first quarter of 2011 increased 4.3% to
$17.6 million, compared to
$16.8 million in the same period of
2010. The increase was attributable to the increase in revenue from
forged rolled rings and related products segment, partially offset
by a decline in revenue from the dyeing and finishing equipment
segment. This decline was largely due to the business cycle and
customer delays in purchasing new equipment designed to meet the
PRC government's mandatory environmental protection policies, which
require companies in the textile industry to use more energy
efficient machinery with lower carbon emissions.
Revenue from the sale of forged rolled rings to the wind power
industry and other industries grew 13.2% to $13.4 million, or 76.4% of revenue, compared to
$11.8 million, or 70.4% of net
revenue, in the same period last year.
Revenue from the sale of forged rolled rings exclusively to the
wind power industry rose 46.5% to $10.2
million, representing 58.0% of revenue, compared to
$7.0 million, or 41.3% of revenues in
the comparable period last year.
Revenue from the sale of forged rolled rings to other industries
decreased 33.9% to $3.2 million, or
18.4% of revenue, compared with $4.9
million for the comparable period of the prior year.
Revenue from the Company's dyeing and finishing equipment
segment decreased 16.9% to $4.1
million, or 23.6% of net revenues, compared to $5.0 million, or 29.6% of revenue, for the first
quarter of 2010.
Gross profit for the first quarter of 2011 increased 3.1% to
$4.6 million, compared to
$4.4 million for the same period in
2010. Gross margin slightly decreased to 25.9% during the first
quarter of 2011 compared to 26.2% for the same period a year ago.
The decline in gross margin was mainly due to an increase in costs
of raw materials and labor, which could not be fully passed on to
the Company's customers in a timely manner. Gross margins for the
Company's forged rolled rings and other components and dyeing and
finishing equipment were 27.4% and 21.1%, respectively, during the
first quarter of 2011.
Operating expenses decreased 38.5% to $0.9 million, compared to $1.5 million in the comparable period last year,
as a result of lower selling, general, and administrative expenses
related to a bad debt recovery and decreased stock-based
compensation.
Operating income increased 24.1% to $3.6
million, compared to $2.9
million for the same period of 2010. Operating margin was
20.7% compared to 17.4% in the first quarter last year.
Net income increased 36.9% to $2.7
million, compared to $1.9
million in the comparable period last year. Basic earnings
per share in 2011 and 2010 were $0.14
and $0.11, respectively. Basic
earnings per share were calculated using basic weighted average
shares of 18,925,959 and 17,252,799 for the three months ended
March 31, 2011 and 2010,
respectively. Diluted earnings per share were $0.10, compared to $0.08 in the same period of 2010. Diluted
earnings per share were calculated using diluted weighted average
shares of 25,655,436 and 25,395,026 for the three months ended
March 31, 2011 and March 31, 2010, respectively.
Financial Condition
As of March 31, 2011, China Wind
Systems held cash and cash equivalents of $1.3 million, up from $0.9
million at December 31, 2010.
Accounts receivable were $6.2
million and total current assets of $15.5 million. The Company had $1.2 million in short-term loans payable, no
long-term debt and stockholders' equity stood at $66.0 million. In the three months ended
March 31, 2011, the Company generated
$3.4 million in cash flow from
operations.
The Company's planned capital expenditures for 2011 mainly
relate to purchase of manufacturing equipment for its new solar
segment and maintenance expenditures for its forged rolled rings
and dying equipment segment. The Company plans to finance
these expenditures with cash flow from operations.
Business Outlook
China Wind Systems delivered sample product units used in the
solar power industry over the past few months. Following successful
inspection and approval by its customer, the Company received a
total of two purchase orders for approximately $1.1 million from its customer to deliver solar
chamber subassemblies. The Company will supply these units of solar
chamber subassemblies by June
2011.
The Company is currently producing subassemblies for equipment
used in the wafer production of multi crystalline silicon products
and plans to roll out products used for mono crystalline silicon
products over the next few months. The Company expects the market
for the mono crystalline silicon products to present a significant
growth opportunity in the next 12-18 months time frame. In 2011,
the Company plans to purchase new manufacturing equipment to
enhance efficiency and ramp up production of its solar segment.
"We are confident that sales of our next generation air dyeing
machines, which meet the PRC government's environmental standards,
will continue to grow. In the coming quarters, we expect to see
increased sales of our new dye machine models," commented Mr. Wu.
"We will continue to focus on the wind energy sector and work with
our existing and potential customers to maintain our market
position despite the difficult pricing environment. We are also
pleased with our co-operation with our first customer in the solar
industry and are excited about the growing opportunities in the
clean energy sector both domestically and internationally."
Conference Call
China Wind Systems will conduct a conference call at
8:00 a.m. Eastern Time on
Tuesday, May 17, 2011 to discuss
results for the first quarter and fiscal year 2011.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: (866) 759-2078. International callers should
dial (706) 643-0585. When prompted, please enter conference
passcode: 65642121.
If you are unable to participate in the conference call at this
time, a replay will be available for 14 days starting on
May 17, 2011 at 11:00 a.m. ET. To access the replay, dial (800)
642-1687. International callers dial (706) 645-9291, and enter
passcode: 65642121.
About China Wind Systems, Inc.
China Wind Systems, Inc. is a profitable, rapidly growing
supplier of precision forged components primarily to the wind
industry in China - the world's
leading wind-power market. The Company also supplies forged and
other components and fabricated products to other industries. For
more information on the Company, visit
http://www.chinawindsystems.com. Information on the Company's Web
site or any other Web site does not constitute a portion of this
release.
Safe Harbor Statement
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, including factors described
in "Risk Factors" and
"Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our
Form 10-K for the year ended December 31,
2010 and in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our Form 10-Q for the quarter ended
March 31, 2011. 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.
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For more information, please
contact:
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Company
Contact:
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Investor Relations
Contact:
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Mr. Fernando
Liu
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Mr. Athan
Dounis
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Chief Financial
Officer
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CCG Investor
Relations
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China Wind
Systems, Inc.
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Tel:
+1-646-213-1916
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Tel: +
86-13761347367
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Email:
athan.dounis@ccgir.com
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Email:
fol@chinawindsystems.com
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Web:
www.ccgirasia.com
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Web:
www.chinawindsystems.com
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- Financial Tables Follow-
CHINA WIND
SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
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March 31,
2011
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December 31,
2010
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(Unaudited)
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(Audited)
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$
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1,252,597
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$
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947,177
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Notes receivable
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213,087
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50,593
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Accounts receivable, net of allowance for doubtful accounts
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6,175,107
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8,207,797
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Inventories, net of reserve for obsolete inventory
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4,577,077
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3,371,128
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Advances to suppliers
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625,902
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333,923
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Prepaid VAT on purchases
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2,521,987
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2,759,763
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Prepaid expenses and other
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140,325
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36,338
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Total Current Assets
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15,506,082
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15,706,719
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PROPERTY AND EQUIPMENT - net
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56,764,932
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54,742,993
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OTHER ASSETS:
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Land use rights, net
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3,768,575
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3,767,159
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Total Assets
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$
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76,039,589
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$
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74,216,871
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Loans payable
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$
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1,217,637
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$
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1,814,937
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Accounts payable
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6,640,657
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7,660,768
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Accrued expenses
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662,519
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526,006
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VAT and service taxes payable
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-
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81,614
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Advances from customers
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314,468
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236,004
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Income taxes payable
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1,157,599
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|
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1,331,713
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Total Current Liabilities
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9,992,880
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11,651,042
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STOCKHOLDERS' EQUITY:
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Preferred stock $0.001 par value (60,000,000 shares authorized, all of which were designated
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as series A convertible preferred, 15,622,625 and 16,205,268 shares issued and outstanding
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at March 31, 2011 and December 31, 2010, respectively)
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15,622
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16,205
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Common stock ($0.001 par value; 150,000,000 shares authorized;
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19,123,392 and 18,751,128 shares issued and outstanding
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at March 31, 2011 and December 31, 2010, respectively)
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19,123
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18,751
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Additional paid-in capital
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26,989,156
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26,579,053
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Retained earnings
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31,736,903
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29,264,152
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Statutory reserve
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1,850,606
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1,658,197
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Accumulated other comprehensive gain - foreign currency translation adjustment
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5,435,299
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5,029,471
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Total Stockholders' Equity
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66,046,709
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62,565,829
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Total Liabilities and Stockholders' Equity
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$
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76,039,589
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$
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74,216,871
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CHINA WIND
SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
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`
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For the Three Months Ended
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March 31,
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2011
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2010
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(Unaudited)
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(Unaudited)
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REVENUES
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$
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17,566,380
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$
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16,840,682
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COST OF REVENUES
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13,013,774
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12,423,987
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GROSS PROFIT
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4,552,606
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4,416,695
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OPERATING EXPENSES:
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Depreciation
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80,587
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82,955
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Selling, general and administrative
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831,801
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1,401,376
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Total Operating Expenses
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912,388
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1,484,331
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INCOME FROM OPERATIONS
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3,640,218
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2,932,364
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OTHER INCOME (EXPENSE):
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Interest income
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712
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1,244
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Interest expense
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(29,702)
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(74,919)
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Foreign currency loss
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(1,457)
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(1,859)
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Other income
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8,650
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-
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Total Other Income (Expense)
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(21,797)
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(75,534)
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INCOME BEFORE INCOME TAXES
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3,618,421
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2,856,830
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INCOME TAXES
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953,261
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910,293
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NET INCOME
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$
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2,665,160
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$
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1,946,537
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COMPREHENSIVE INCOME:
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NET INCOME
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$
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2,665,160
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$
|
1,946,537
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OTHER COMPREHENSIVE INCOME:
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Unrealized foreign currency translation gain
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405,828
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7,270
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COMPREHENSIVE INCOME
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$
|
3,070,988
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$
|
1,953,807
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NET INCOME PER COMMON SHARE:
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Basic
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$
|
0.14
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$
|
0.11
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Diluted
|
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$
|
0.10
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$
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0.08
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
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Basic
|
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18,925,959
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17,252,799
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Diluted
|
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25,655,436
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|
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25,395,026
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|
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CHINA
WIND SYSTEMS, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
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For the Three Months Ended
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March
31,
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2011
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2010
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(Unaudited)
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(Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
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|
|
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Net income
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$
|
2,665,160
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$
|
1,946,537
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Adjustments to reconcile net income from operations to net cash
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|
|
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provided by operating activities:
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|
|
|
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Depreciation
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|
1,177,002
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|
584,646
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Amortization of debt discount to interest expense
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-
|
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44,993
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Amortization of land use rights
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22,428
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|
21,618
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(Decrease) Increase in allowance for doubtful accounts
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(7,145)
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|
|
251,496
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Stock-based compensation expense
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|
84,892
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|
|
|
286,320
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|
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Changes in assets and liabilities:
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|
|
|
|
|
|
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|
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Notes receivable
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|
(161,698)
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|
|
102,808
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|
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Accounts receivable
|
|
|
2,085,825
|
|
|
|
(1,075,263)
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Inventories
|
|
|
(1,181,083)
|
|
|
|
(1,095,615)
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Prepaid value-added taxes on purchases
|
|
|
254,544
|
|
|
|
(489,189)
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Prepaid and other current assets
|
|
|
(103,842)
|
|
|
|
137,756
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|
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Advances to suppliers
|
|
|
(289,011)
|
|
|
|
(110,779)
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|
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Accounts payable
|
|
|
(1,065,108)
|
|
|
|
1,141,572
|
|
|
Accrued expenses
|
|
|
133,298
|
|
|
|
(212,230)
|
|
|
VAT and service taxes payable
|
|
|
(81,892)
|
|
|
|
78,994
|
|
|
Income taxes payable
|
|
|
(182,032)
|
|
|
|
(67,074)
|
|
|
Advances from customers
|
|
|
76,741
|
|
|
|
185,517
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
3,428,079
|
|
|
|
1,732,107
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(2,846,586)
|
|
|
|
(2,810,860)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(2,846,586)
|
|
|
|
(2,810,860)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from loans payable
|
|
|
758,794
|
|
|
|
-
|
|
|
Repayment of loans payable
|
|
|
(1,365,830)
|
|
|
|
(330,000)
|
|
|
Proceeds from sale of common stock
|
|
|
125,000
|
|
|
|
-
|
|
|
Proceeds from exercise of warrants
|
|
|
200,000
|
|
|
|
1,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
|
|
(282,036)
|
|
|
|
1,270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS
|
|
|
5,963
|
|
|
|
360
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
305,420
|
|
|
|
191,607
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of year
|
|
|
947,177
|
|
|
|
2,278,638
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of period
|
|
$
|
1,252,597
|
|
|
$
|
2,470,245
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
29,702
|
|
|
$
|
32,069
|
|
|
Income taxes
|
|
$
|
1,135,294
|
|
|
$
|
977,367
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Series A preferred converted to common shares
|
|
$
|
936
|
|
|
$
|
-
|
|
|
Common stock issued for prior and future service
|
|
$
|
-
|
|
|
$
|
7,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Wind Systems, Inc.