- Backlog Increases 83% and Earnings Before Tax Exceed Guidance by
42% - HONG KONG, Aug. 14 /PRNewswire-FirstCall/ -- KHD Humboldt
Wedag International Ltd. ("KHD") (NASDAQ:KHDH) announces results
for the quarter and six months ended June 30, 2006. The quarter has
seen the completion of the majority of projects for the final phase
of KHD's transition to an industrial plant engineering and
equipment supply company. This transition began with the
distribution of a substantial portion of the financial services
operations, Mass Financial Corp, to our shareholders during the
first quarter of the year. The second quarter, ended June 30, 2006,
is our first full operating quarter since the distribution.
Revenues for the three months ended June 30, 2006, for the
going-forward industrial plant engineering and equipment supply
business increased to $84.6 million versus $73.0 million in the
same three-month period in 2005. For the second quarter of 2006,
earnings before taxes ("EBT") for the industrial plant engineering
and equipment supply segment was $10.2 million, an increase of 13
percent over the same period in 2005. For the first six months of
2006, industrial plant engineering and equipment supply revenues
increased by more than 18 percent, to $150.1 million from $128.3
million in the first half of 2005. EBT for the industrial plant
engineering and equipment supply services segment was $14.7
million, an increase of 28 percent over the corresponding period of
2005. KHD is raising its guidance on EBT, consistent with the June
30th numbers in that category, when EBT was $10.2 million versus
the previous forecast of $7.2 million. The company attributes this
increase to cost controls and improving margins. The new full-year
guidance for EBT is $37.9 million. KHD is maintaining its $424.6
million guidance for 2006 as to revenue, even though revenue for
the June 30th quarter was $16.2 million short of the previous
forecast of $100.8 million. In a business such as industrial plant
engineering and equipment supply that depends on sequential events,
a delay can push timing off in the short term. The company believes
that revenues that were delayed in the June 30th quarter will catch
up during the remainder of the year. The revenues and EBT are not
evenly distributed among all quarters. The following information
and other statements in this release are forward-looking and are
subject to risks and uncertainties that may cause actual results,
performance or developments to differ materially. The weighted
average number of shares for the quarter ended June 30, 2006
increased to 15.4 million on a diluted basis in the current quarter
from 13.7 million in the second quarter of 2005. For the first six
months of 2006, the weighted average number of shares increased to
15.1 million on a diluted basis from 13.7 million in the same
period of 2005. During the current quarter, the Euro depreciated by
approximately 10 percent against the Canadian dollar, compared to
the same quarter in 2005. This depreciation of the Euro against the
Canadian dollar significantly reduced our revenue and net income.
Order intake for the three months ended June 30, 2006 was $289.2
million, an increase of 151 percent over the same quarter of 2005.
Of this total, 35 percent came from the emerging Asia/Pacific
region, 35 percent from the Americas and 26 percent from Europe.
Order backlog for the second quarter of 2006 was $563.9 million, an
increase of 83 percent over the second quarter of 2005. Sales for
the second quarter of 2006 were up to $77.4 million, an increase of
18 percent over the same period in 2005. Order intake for the first
six months of 2006 was $384.6 million, an increase of 97 percent
over the corresponding period of 2005. Of this total, 33 percent of
order intake came from the emerging Asia/Pacific region, 28 percent
from the Americas, 26 percent from Europe and 10 percent from the
Middle East. Order backlog for the first six months of 2006 was
$563.9 million, an increase of 83 percent over the corresponding
period of 2005. Sales for the first six months of 2006 reached
$139.5 million, an increase of 28 percent over the corresponding
period of 2005. Order intake is defined as the total value of all
orders received during the respective period, while order backlog
is the value of orders received but not yet fulfilled. For
comparative purposes, all amounts for order intake and backlog and
sales were translated from Euro to $ at 1.1841, the exchange rate
prevailing on December 31, 2005. CEO Jim Busche commented, "The
upward trend of order intake, backlog and earnings has continued
through the second quarter. The improving leading indicators mirror
the message we hear constantly from our customers, i.e., that the
marketplace is receptive for our technically advanced, quality
products at competitive pricing. This is further a reflection of
the robust rates of growth in the economies of Asia, Russia, South
America, Europe and the USA, as infrastructure continues to expand
and modernize to accommodate requirements in travel,
communications, construction, and the delivery of services. The
demand for cement, iron, coal and other minerals shows no sign of
slacking." Jim Busche added, "The demand for infrastructure
continues to accelerate. In India alone, the demand for
infrastructure to accommodate new industry continues to drive high
demands for basic materials such as those our plants are designed
to process: cement, iron, coal and other essential minerals. The
rate of expansion in Asia, Russia and the Americas is substantial.
We believe that the combination of our reputation for excellence
and innovation, combined with our long history of performance place
us in an enviable position vis-a-vis other companies in our
industry." Following are the results for the quarter and six months
ended June 30, 2006 for KHD as a whole. It must be noted that in
considering these results they are not accurate indicators of KHD
going forward as they include numbers before our reorganization on
January 31, 2006. Total revenues for the three months ended June
30, 2006, decreased to $88.2 million compared to $225.5 million in
the second quarter of 2005. Net income for the 2006 second quarter
was $7.3 million, or $0.48 per share, compared to $13.5 million, or
$0.98 per share in the same quarter last year. For the first six
months of 2006, total revenues decreased from $397.6 million to
$189.1 million. Net income for the first six months of 2006
decreased to $10.3 million, or $0.69 per share from $18.3 million,
or $1.34 per share in the prior year. Chairman Michael Smith
commented, "The transition to an industrial plant engineering and
equipment supply company is almost complete. The projects yet to be
completed are the disposition of redundant assets that relate to
the old financial services business. A major effort is underway to
rationalize these assets. We ended the second quarter with $212
million in cash, $402 million in current assets, and a current
working capital ratio that exceeds 2:1. Our equity grew to $278
million. While we believe our financial performance through the
second quarter is encouraging, we recognize the need for continuous
improvement and remain committed to capitalizing on the strong
market conditions while implementing further cost controls and
improving margins." Mr. Smith continued, "We are working to become
more transparent and we realize we need to achieve more in this
important area as we become a larger company in our industry. We
encourage our shareholders to read the entire Form 6-K report for a
greater understanding of our industrial plant engineering and
equipment supply business, which is now available on our website."
About KHD Humboldt Wedag International Ltd. KHD Humboldt Wedag
International Ltd. (the "Company") 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/.
All figures are in US dollars and earnings per share amounts are on
a diluted basis. The consolidated balance sheet and income
statement for June 30, 2006 were translated from Canadian dollars
into U.S. dollars at U.S. dollar 1 = Canadian dollars 1.1150
(equivalent to Euro 1 = U.S. dollars 1.2777) 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, the expressed or implied by
the forward-looking statements, including, but not limited to: (1)
a downturn in general economic conditions in Asia, Europe, the
United States and internationally, (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, disputes regarding the performance of
our services, (11) the uncertainty of government regulation and
politics in 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) (212)
691-8087 or Len Hall (media) (949) 474-4300 Rene Randall KHD
Humboldt Wedag International Ltd (604) 683-8286 -FINANCIAL TABLES
FOLLOW- KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE
SHEETS As of June 30, 2006 and December 31, 2005 (Unaudited)
(amounts in U.S. dollars; in thousands) 2006 2005 ASSETS Current
assets Cash and cash equivalents $211,558 $194,313 Restricted cash
21,826 22,016 Securities 16,551 16,265 Loans 2,521 10,638
Receivables, commodities transactions 0 10,450 Receivables,
industrial plant engineering and equipment supply 31,861 34,588
Receivables 20,000 25,533 Commodity inventories 0 24,356
Inventories 33,521 38,641 Real estate held for sale 28,832 27,479
Contract deposits, prepaid and other 23,328 11,201 Future income
tax assets 11,952 7,594 401,950 423,074 Non-current assets
Securities 800 7,893 Loans 10,347 9,436 Properties, plant and
equipment 11,361 10,835 Investment in resource property 31,696
30,312 Goodwill 9,687 12,987 Equity method investments 908 16,021
Future income tax assets 8,282 12,496 Investment in preferred
shares of a former subsidiary 79,731 0 152,812 99,980 $554,762
$523,054 LIABILITIES Current liabilities Accounts payable and
accrued expenses $155,248 $159,628 Notes payable, commodities
transactions 0 9,890 Notes payable, industrial plant engineering
and equipment supply 619 2,944 Long-term debt, current portion 0
1,606 Pension liabilities 1,278 1,489 Deposits 8,702 17,327
Provision for warranty costs 28,037 20,527 Future income tax
liability 0 303 193,884 213,714 Long-term liabilities Long-term
debt, less current portion 20,265 6,253 Pension liabilities 27,957
25,584 Provision for warranty costs 6,743 4,427 Future income tax
liability 7,253 10,154 Other long-term liabilities 226 575 62,444
46,993 Total liabilities 256,328 260,707 Minority interests 20,330
18,088 SHAREHOLDERS' EQUITY Common stock 76,477 62,481 Contributed
surplus 407 0 Equity component of convertible debt 80 125 Retained
earnings 229,235 209,416 Cumulative translation adjustment (28,095)
(27,763) 278,104 244,259 $554,762 $523,054 Note: 2005 numbers
include the financial services segment which was distributed as a
stock dividend to our shareholder on January 31, 2006. As a result,
the June 30, 2005 results are not a true comparison of KHD at June
30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED
STATEMENTS OF INCOME For the Three Months Ended June 30, 2006 and
2005 (Unaudited) (amounts in U.S. dollars; in thousands, except per
share data) 2006 2005 Revenues $88,203 $225,549 Expenses Cost of
revenues 69,209 188,345 General and administrative 8,789 15,775
Stock-based compensation 407 0 Interest 396 1,772 78,801 205,892
Income before income taxes 9,402 19,657 Provision for income taxes
(124) (4,354) 9,278 15,303 Minority interests (1,945) (1,851) Net
income $7,333 $13,452 Earnings per share Basic $0.48 $0.99 Diluted
$0.48 $0.98 Weighted average shares outstanding Basic 15,217,866
13,599,118 Diluted 15,350,749 13,744,463 Note: 2005 numbers include
the financial services segment which was distributed as a stock
dividend to our shareholder on January 31, 2006. As a result, the
June 30, 2005 results are not a true comparison of KHD at June 30,
2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS
OF INCOME For the Six Months Ended June 30, 2006 and 2005
(Unaudited) (amounts in U.S. dollars; in thousands, except per
share data) 2006 2005 Revenues $189,054 $397,602 Expenses Cost of
revenues 153,513 338,288 General and administrative 18,717 31,700
Stock-based compensation 407 0 Interest 1,692 3,667 174,329 373,655
Income before income taxes 14,725 23,947 Provision for income taxes
(1,969) (2,656) 12,756 21,291 Minority interests (2,498) (2,959)
Net income $10,258 $18,332 Earnings per share Basic $0.69 $1.35
Diluted $0.69 $1.34 Weighted average shares outstanding Basic
14,493,132 13,588,193 Diluted 15,078,748 13,733,538 Note: 2005
numbers include the financial services segment which was
distributed as a stock dividend to our shareholder on January 31,
2006. As a result, the June 30, 2005 results are not a true
comparison of KHD at June 30, 2006. KHD HUMBOLDT WEDAG
INTERNATIONAL LTD. FINANCIAL SUMMARY As of June 30, 2006
(Unaudited) (amounts in U.S. dollars; in thousands, except per
share data and ratios) Cash and cash equivalents $211,558
Short-term securities 16,551 Working capital 208,066 Total assets
554,762 Shareholders' equity 278,104 Book value per share 18.22
Current ratio 2.07 Long-term debt to equity ratio 0.07 DATASOURCE:
KHD Humboldt Wedag International Ltd. CONTACT: Investors, Joseph
Allen, +1-212-691-8087, , or Media, Len Hall, +1-949-474-4300, ,
both of Allen & Caron Inc, for KHD Humboldt Wedag International
Ltd; or Rene Randall of KHD Humboldt Wedag International Ltd,
+1-604-683-8286, Web site: http://www.khdhumboldt.com/
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