- EPS increase by 51% to $1.89, Backlog at $1.1 billion - HONG
KONG, Nov. 12 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag
International Ltd. (NYSE:KHD) today announced results for the third
quarter and nine months ended September 30, 2008. Unless otherwise
noted, all figures are in U.S. dollars. For the nine months ended
September 30, 2008, KHD reported revenues from continuing
operations of $474.7 million and income from continuing operations
for the period was $57.9 million or $1.89 per share diluted, an EPS
increase of 51 percent over the $38.1 million or $1.25 per share
for the first nine months of 2007. Although the results for the
quarter and year-to-date were strong, it is clear that the
international financial conditions that have surfaced in recent
weeks will require us to look at options to best adapt to these
market changes. Revenues for the quarter ended September 30, 2008,
were $193.6 million, an increase of 29% over 2007 third-quarter
revenues of $150.4 million. Income from continuing operations for
the period was $30.8 million or $1.01 per share diluted, an EPS
increase of 58 percent over the $19.7 million or $0.64 per share
for the third quarter of 2007. Net income for the quarter ended
September 30, 2008 included an after tax foreign exchange gain of
$6.6 million on the $100 million of cash currency held in certain
of our European subsidiaries in U.S. dollars that was converted to
Euros in the third quarter. At September 30, 2008, the Company had
$408.4 million in cash, cash equivalents, short term cash deposits
and short term securities; a current working capital ratio of 1.72.
Shareholders' equity rose to $351.6 million and a long term debt to
equity ratio of 0.04. Order intake for the nine months ended
September 30, 2008 was $689.9 million, an increase of 28 percent
over the first nine months of 2007. Of this amount, 53 percent came
from the emerging Russia/Eastern Europe region, 27 percent from the
emerging Asian region and 13 percent from the Middle East region.
Order intake for the quarter ended September 30, 2008 was $81
million, a decrease of 65 percent from the third quarter of 2007.
Of this amount, 55 percent came from the Middle East region and 23
percent from the emerging Russia/Eastern Europe region. The
decrease in order intake for the third quarter was primarily a
result of delays in project awards by customers revisiting their
financing alternatives in light of credit market dynamics. Order
backlog as of September 30, 2008 was $1.1 billion, up 39 percent
over the same period of 2007. The majority of the order backlog is
in the world's emerging economies: 39 percent in Russia/Eastern
Europe, 27 percent in Asia and 26 percent in the Middle East. CEO
Jim Busche commented, "KHD has focused its expansion activities in
growth markets that have the greatest infrastructure demands. These
markets are Asia, Russia/Eastern Europe and the Middle East. KHD
has achieved a significant position in each with over 90 percent of
our backlog at September 30, 2008, $1.1 billion dollars,
originating from these three regions. "The changing economic
climate requires a change in KHD's focus from growth to sustaining
equity during this period of uncertainty and positioning KHD to
effectively capitalize on opportunities that become available as
conditions improve. "KHD's primary business is selling capital
equipment to cement producers. There is little doubt that the
shortage of credit will impact the international construction
market. We expect the recent trends of demand growth, consolidation
and capital expenditures in the cement industry to moderate. Many
of our customers are facing liquidity problems. Some have
approached us to discuss renegotiating contracts. We are closely
monitoring market communications concerning our customers. Some are
revisiting their capital expenditure plans by assessing the impacts
of the tight credit markets, assuming demand for product will be
penalized, and weighing the decrease in freight rates vis-a-vis
import options. While the extent of their reductions in capital
expenditures is not yet known, it is clear that we should expect
some projects to be delayed, others cancelled and a decrease in the
number of project opportunities." CEO Jim Busche continued, "KHD is
currently evaluating alternatives to adapt to these changing market
conditions and will develop a plan to minimize costs and maximize
profitability, preserve shareholder value and take an optimum
position to capitalize on opportunities that become available as
conditions recover. It is our intention to finalize a plan, obtain
Board approval and have it implemented by the beginning of 2009.
"As a result of the rapid and dramatic changes in world credit
markets and the associated impact on our customer base, despite our
strong financial performance through three quarters, we are not in
a position at this time to confirm our guidance on earnings and
order intake for 2008 which we gave in our April 2, 2008 news
release." CFO Alan Hartslief commented, "We will continue to target
opportunities where we judge the returns to be reasonable and the
risks to be controllable. This balanced approach to business
opportunities has resulted in improving gross profit margins and
has allowed us to maintain a balance sheet with low debt and high
levels of liquidity. For the nine-month period ended September 30,
2008, the gross profit margin was 19 percent compared to 14 percent
for the same period in 2007 and was 19 percent compared to 14
percent for the three-month periods ended September 30, 2008 and
2007, respectively. Our royalty stream from the Wabush iron ore
mine continues to provide strong positive cash flow." We encourage
our shareholders to read the entire Form 6-K, which has been filed
with SEC, for a greater understanding of our company. The Form 6-K
is also available on the Company website. The Company's annual
report for the fiscal year ended December 31, 2007 on Form 20-F was
filed with the Securities and Exchange Commission (SEC) on March
31, 2008. The Company will provide a hard copy of the Company's
complete audited financial statements included in the annual
report, free of charge upon request. Requests can be sent by mail
to: KHD Humboldt Wedag International Ltd., Suite 702, 7th Floor,
Ruttonjee House, Ruttonjee Centre, 11 Duddell Street, Central, Hong
Kong SAR, China. Today at 10:00am EDT (7:00am PDT), a conference
call will be held to review the Company's results; this call will
be broadcast live over the Internet at http://www.khdhumboldt.com/
or http://www.earnings.com/. An online archive will be available
immediately following the call and continue for seven days or to
listen to the audio replay by phone, dial: 1 (888) 286 8010 using
conference ID # 53894928. International callers should dial: 1
(617) 801 6888. About KHD Humboldt Wedag International Ltd. KHD
Humboldt Wedag International Ltd. owns companies that operate
internationally in the industrial plant engineering and equipment
supply industry, and specializes in the cement, coal and minerals
processing industries. To obtain further information on the
Company, please visit our website at http://www.khdhumboldt.com/
Disclaimer for Forward-Looking Information Certain statements in
this release are forward-looking statements, which reflect the
expectations of management regarding the Company's future growth,
results of operations, performance and business prospects and
opportunities. Forward-looking statements consist of statements
that are not purely historical, including any statements regarding
beliefs, plans, expectations or intentions regarding the future.
Such statements are subject to risks and uncertainties that may
cause actual results, performance or developments to differ
materially from those contained in the statements. No assurance can
be given that any of the events anticipated by the forward-looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them. These forward-looking statements
reflect management's current views and are based on certain
assumptions. These assumptions, which include management's current
expectations, estimates and assumptions about certain projects and
the markets the Company operates in, are expressed or implied by
the forward-looking statements, including, but not limited to: (1)
a downturn in general economic conditions in Russia, Asia, Europe,
the United States and internationally, including the worldwide
economic downturn resulting from the effects of the sub-prime
lending and general market causes, volatile energy costs,
decreasing consumer confidence and other factors, (2) a decreased
demand for the Company's products, (3) a decrease in the demand for
cement, minerals and related products, (4) the number of
competitors with competitively priced products and services, (5)
product development or other initiatives by the Company's
competitors, (6) shifts in industry capacity, (7) fluctuations in
foreign exchange and interest rates, (8) fluctuations in
availability and cost of raw materials or energy, (9) delays in the
start of projects included in our forecasts, (10) delays in the
implementation of projects included in our forecasts and disputes
regarding the performance of our services, (11) the uncertainty of
government regulation and politics in Russia, Asia and the Middle
East and other markets, (12) potential negative financial impact
from regulatory investigations, claims, lawsuits and other legal
proceedings and challenges, and (13) other factors beyond the
Company's control. Additional information about these and other
assumptions, risks and uncertainties are set out in the "Risks and
Uncertainties" section in our Form 6-K filed with the Securities
and Exchange Commission and our MD&A filed with Canadian
security regulators. Contact Information: Allen & Caron Inc.
Joseph Allen (investors) 1 (212) 691-8087 or Brian Kennedy (media)
1 (212) 691-8087 Rene Randall KHD Humboldt Wedag International Ltd.
1 (604) 683-8286 ex 224 - FINANCIAL TABLES FOLLOW - KHD HUMBOLDT
WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS September 30,
2008 and December 31, 2007 (unaudited) (U.S. Dollars in Thousands)
ASSETS 2008 2007 Current assets Cash and cash equivalents $372,984
$354,397 Short-term cash deposits 26,528 -- Securities 8,860 15,510
Restricted cash 31,338 24,116 Accounts receivable, trade 72,536
62,074 Other receivables 25,642 18,585 Inventories 106,834 124,980
Contract deposits, prepaid and other 63,174 33,775 Future income
tax assets 783 825 708,679 634,262 Non-current assets Property,
plant and equipment 2,391 2,957 Interest in resource property
29,675 32,865 Equity method investments 534 654 Future income tax
assets 18,257 24,658 Investment in preferred shares of former
subsidiaries 85,731 91,960 Other non-current assets 2,663 1,955
139,251 155,049 $847,930 $789,311 KHD HUMBOLDT WEDAG INTERNATIONAL
LTD. CONSOLIDATED BALANCE SHEETS (cont'd) September 30, 2008 and
December 31, 2007 (unaudited) (U.S. Dollars in Thousands) 2008 2007
LIABILITIES Current liabilities Accounts payable and accrued
expenses $158,622 $147,869 Long-term debt, current portion 287 --
Progress billing above costs and estimated earnings on uncompleted
202,216 184,830 contracts Advance payments received from customers
11,299 9,190 Income tax liabilities 7,286 20,658 Accrued pension
liabilities, current portion 2,126 2,205 Provision for warranty
costs, current portion 29,710 31,503 411,546 396,255 Long-term
liabilities Long-term debt, less current portion 12,885 13,920
Accrued pension liabilities, less current portion 29,572 30,981
Provision for warranty costs, less current portion 9,865 11,799
Deferred credit, future income tax assets 9,838 15,712 Future
income tax liability 12,318 2,593 Other long-term liabilities 5,793
4,931 80,271 79,936 Total liabilities 491,817 476,191 MINORITY
INTERESTS 4,497 5,926 SHAREHOLDERS' EQUITY Common stock, without
par value; authorized unlimited number 143,826 138,359 Treasury
stock (93,793) (93,793) Contributed surplus 6,630 4,319 Retained
earnings 220,538 162,633 Accumulated other comprehensive income
74,415 95,676 351,616 307,194 $847,930 $789,311 KHD HUMBOLDT WEDAG
INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For Nine
Months Ended September 30, 2008 and 2007 (unaudited) (U.S. Dollars
in Thousands, Except per Share Data) 2008 2007 Revenues $474,672
$416,893 Cost of revenues 384,559 356,809 Gross profit 90,113
60,084 Income from interest in resource property 23,654 12,987
General and administrative expense (39,393) (31,258) Stock-based
compensation (3,407) (3,298) Operating income 70,967 38,515
Interest income 16,595 8,058 Interest expense (1,780) (2,071)
Foreign currency transactions losses, net (1,369) (1,019) Other
income (expenses), net (5,563) 2,208 Income before taxes from
continuing operations 78,850 45,691 Provision for income taxes:
Income taxes (15,150) (2,707) Resource property revenue taxes
(5,104) (2,986) (20,254) (5,693) Income before minority interests,
continuing operations 58,596 39,998 Minority interests (691)
(1,872) Income from continuing operations 57,905 38,126 Loss from
discontinued operations, net of tax -- (7,595) Net income $57,905
$30,531 Basic earnings per share from continuing operations $1.91
$1.27 from discontinued operations 0.00 (0.25) $1.91 $1.02 Diluted
earnings per share from continuing operations $1.89 $1.25 from
discontinued operations 0.00 (0.25) $1.89 $1.00 Weighted average of
common shares outstanding - basic 30,360,179 29,834,461 Weighted
average of common shares outstanding - diluted 30,628,990
30,511,709 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED
STATEMENTS OF INCOME For Three Months Ended September 30, 2008 and
2007 (unaudited) (U.S. Dollars in Thousands, Except per Share Data)
2008 2007 Revenues $193,596 $150,441 Cost of revenues 157,022
129,890 Gross profit 36,574 20,551 Income from interest in resource
property 9,460 5,811 General and administrative expense (12,830)
(11,006) Stock-based compensation (1,281) (843) Operating income
31,923 14,513 Interest income 5,720 2,728 Interest expense (819)
(512) Foreign currency transactions losses, net 7,652 608 Other
expenses, net (2,200) (1,210) Income before taxes from continuing
operations 42,276 16,127 Provision for income taxes: Income taxes
(9,044) 5,808 Resource property revenue taxes (2,013) (1,338)
(11,057) 4,470 Income before minority interests, continuing
operations 31,219 20,597 Minority interests (415) (870) Income from
continuing operations 30,804 19,727 Loss from discontinuing
operations, net of tax -- (7,945) Net income $30,804 $11,782 Basic
earnings per share from continuing operations $1.01 $0.65 from
discontinued operations 0.00 (0.26) $1.01 $0.39 Diluted earnings
per share from continuing operations $1.01 $0.64 from discontinued
operations 0.00 (0.26) $1.01 $0.38 Weighted average of common
shares outstanding - basic 30,514,255 30,294,782 Weighted average
of common shares outstanding - diluted 30,649,899 31,013,973 KHD
HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of September
30, 2008 (unaudited) (U.S. Dollars in Thousands, Except per Share
Data and Ratios) Cash, cash equivalents and short-term cash
deposits $399,512 Short-term securities 8,860 Restricted cash
31,338 Working capital 297,133 Total assets 847,930 Shareholders'
equity 351,616 Book value per share 11.52 Current ratio 1.72
Long-term debt to equity ratio 0.04 DATASOURCE: KHD Humboldt Wedag
International Ltd. CONTACT: investors, Joseph Allen, , or media,
Brian Kennedy, , both of Allen & Caron Inc., +1-212-691-8087,
for KHD Humboldt Wedag International Ltd.; or Rene Randall of KHD
Humboldt Wedag International Ltd., +1-604-683-8286, ext. 224, Web
site: http://www.khdhumboldt.com/
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