- Earnings Before Taxes Exceed Guidance by 19% & Order Backlog
Increases by 88% - HONG KONG, Nov. 14 /PRNewswire-FirstCall/ -- KHD
Humboldt Wedag International Ltd. ("KHD") (NASDAQ:KHDH) announces
its results for the nine months and third quarter ended September
30, 2006. The growth trends in sales, order intake and backlog
continued in the third quarter and earnings exceeded guidance. KHD
continued to progress towards its goal of becoming an industrial
plant engineering and equipment supply company. Our transition
began with the distribution of a substantial portion of the
financial services operations, Mass Financial Corp., to our
shareholders on January 31, 2006 and has continued over the course
of this year. To provide shareholders with information most
indicative of the going forward operating business, the following
disclosures of revenues and earnings before taxes ("EBT") are based
on our industrial plant engineering and equipment supply related
operations and do not include the revenues from KHD's other
operations. For comparative purposes, all amounts for order intake,
backlog and sales were translated from Euro to U.S. dollar at
1.1841, the exchange rate prevailing on December 31, 2005. Revenues
for the first nine months of 2006 reached $251.5 million, an
increase of 7 percent over the corresponding period of 2005. EBT
for the industrial plant engineering and equipment supply services
segment was $27.6 million, an increase of 52 percent over the
corresponding period in 2005. Revenues for the third quarter of
2006 were $100.7 million. EBT for the industrial plant engineering
and equipment supply segment for the third quarter of 2006 was
$12.7 million. Certain 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. KHD is raising its full-year guidance on EBT, to $39.0
million. KHD is also adjusting its $424.6 million guidance for 2006
revenues to $416.6 million due to project delays primarily driven
by our customers. In a business such as industrial plant
engineering and equipment supply that depends on sequential events,
a delay affecting revenue recognition timing in the short term will
be recouped at a later stage in the project schedule. Based on the
period average exchange rates for the nine-month period ended
September 30, 2006, the Canadian dollar increased by approximately
8.1 percent, 11.0 percent and 9.7 percent against the U.S. dollar,
the Swiss franc and the Euro, as compared to the same period in
2005. As the majority of our revenues are denominated in Euros and
U.S. dollars, the material depreciation of such currencies has an
impact on our operating results. 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. Order intake for the first nine months of 2006 was
$475.3 million, an increase of 75 percent over the corresponding
period of 2005. 30 percent of order intake through the nine months
ended September 30, 2006 came from the emerging Asia region, 26
percent from the Americas, 26 percent from Europe and 9 percent
from the Middle East. Order intake for the three months ended
September 30, 2006 was $90.7 million, compared to $79.2, an
increase of 15 percent over the same quarter of 2005. 20 percent of
the order intake during the third quarter came from the emerging
Asia region, 20 percent from the Americas, 21 percent from Europe
and 26 percent from Africa. Order backlog as at the end of the
third quarter of 2006 was $563.3 million, an increase of 88 percent
over the third quarter of 2005. CEO Jim Busche commented, "Our
strong increase in order backlog shows that our efforts to extend
our reach globally are paying off. This backlog, in addition to our
globalization efforts and margin improvement program will help us
to continue to have a strong performance next year." Results for
KHD as a whole, i.e., including results for the industrial plant
engineering and equipment supply operations as well as all the
other KHD operations, follow. Total revenues for the first nine
months of 2006 were $291.9 million. Net income for the first nine
months of 2006 was $20.6 million, or $1.36 per share. For the
quarter ended September 30, 2006, revenues were $102.9 million. Net
income for the 2006 third quarter was $10.3 million, or $0.67 per
share. Michael Smith, Chairman of KHD, stated, "The transition to
an industrial plant engineering and equipment supply business is
almost complete. The major 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 which clearly do not contribute to earnings in any
substantial manner and are a distraction to our on-going business
operations. We ended the third quarter with $231 million in cash
and securities, $423 million in current assets, and a current
working capital ratio that exceeds 2:1. Our equity grew to $288
million. "The business case for KHD is that we generate positive
cash from all new projects and that we require no significant
amount of fixed assets for the business, which allows KHD to grow
with out capital constraints. "While KHD believes that our
financial performance through the third 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. Shareholders are
encouraged to read our 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." All
figures on the following tables are in US dollars and earnings per
share amounts are on a diluted basis. The consolidated balance
sheet and income statement for September 30, 2006 were translated
from Canadian dollars into U.S. dollars at U.S. dollar 1 = Canadian
dollars 1.1153 (equivalent to Euro 1 = U.S. dollars 1.2687). 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/
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 September 30, 2006 and December 31, 2005 (Unaudited)
(amounts in U.S. dollars; in thousands) ASSETS 2006 2005 Current
assets Cash and cash equivalents $216,353 $194,313 Restricted cash
21,024 22,016 Securities 14,384 16,265 Loans 2,513 10,638
Receivables, commodities transactions 0 10,450 Receivables,
industrial plant engineering and equipment supply 32,144 34,588
Receivables 20,119 25,533 Commodity inventories 0 24,356
Inventories 53,362 38,641 Real estate held for sale 28,630 27,479
Contract deposits, prepaid and other 22,891 11,201 Future income
tax assets 11,826 7,594 423,246 423,074 Non-current assets
Securities 795 7,893 Loans 10,906 9,436 Properties, plant and
equipment 11,038 10,835 Investment in resource property 31,687
30,312 Goodwill 9,640 12,987 Equity method investments 907 16,021
Future income tax assets 11,523 12,496 Investment in preferred
shares of a former subsidiary 81,131 0 157,627 99,980 $580,873
$523,054 LIABILITIES Current liabilities Accounts payable and
accrued expenses $168,611 $159,628 Notes payable, commodities
transactions 0 9,890 Notes payable, industrial plant engineering
and equipment supply 563 2,944 Long-term debt, current portion
4,419 1,606 Pension liabilities 1,269 1,489 Deposits 9,356 17,327
Provision for warranty costs 27,251 20,527 Future income tax
liability 0 303 211,469 213,714 Long-term liabilities Long-term
debt, less current portion 15,628 6,253 Pension liabilities 27,802
25,584 Provision for warranty costs 6,426 4,427 Future income tax
liability 9,276 10,154 Other long-term liabilities 203 575 59,335
46,993 Total liabilities 270,804 260,707 Minority interests 22,298
18,088 SHAREHOLDERS' EQUITY Common stock 76,457 62,481 Contributed
surplus 1,206 0 Equity component of convertible debt 80 125
Retained earnings 239,502 209,416 Cumulative translation adjustment
(29,474) (27,763) 287,771 244,259 $580,873 $523,054 Note: 2005
numbers include the financial services segment which was
distributed to our shareholders on January 31, 2006. As a result,
the December 31, 2005 results are not a true comparison of KHD at
September 30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended
September 30, 2006 and 2005 (Unaudited) (amounts in U.S. dollars;
in thousands, except per share data) 2006 2005 Revenues $102,934
$199,142 Expenses Cost of revenues 83,315 180,559 General and
administrative 5,656 10,728 Stock-based compensation 799 0 Interest
533 1,792 90,303 193,079 Income before income taxes 12,631 6,063
(Provision for) recovery of income taxes (174) 376 12,457 6,439
Minority interests (2,129) (1,264) Net income $10,328 $5,175
Earnings per share Basic $0.68 $0.38 Diluted $0.67 $0.38 Weighted
average shares outstanding Basic 15,263,913 13,629,935 Diluted
15,420,207 13,768,343 Note: 2005 numbers include the financial
services segment which was distributed to our shareholders on
January 31, 2006. As a result, the September 30, 2005 results are
not a true comparison of KHD at September 30, 2006. KHD HUMBOLDT
WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the
Nine Months Ended September 30, 2006 and 2005 (Unaudited) (amounts
in U.S. dollars; in thousands, except per share data) 2006 2005
Revenues $291,937 $618,830 Expenses Cost of revenues 236,786
537,639 General and administrative 24,367 44,189 Stock-based
compensation 1,206 0 Interest 2,225 5,663 264,584 587,491 Income
before income taxes 27,353 31,339 Provision for income taxes
(2,142) (2,427) 25,211 28,912 Minority interests (4,626) (4,387)
Net income $20,585 $24,525 Earnings per share Basic $1.37 $1.80
Diluted $1.36 $1.79 Weighted average shares outstanding Basic
15,051,234 13,602,260 Diluted 15,194,868 13,747,605 Note: 2005
numbers include the financial services segment which was
distributed to our shareholders on January 31, 2006. As a result,
the September 30, 2005 results are not a true comparison of KHD at
September 30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL
SUMMARY As of September 30, 2006 (Unaudited) (amounts in U.S.
dollars; in thousands, except per share data and ratios) Cash and
securities $230,737 Working capital 211,777 Total assets 580,873
Shareholders' equity 287,771 Book value per share 18.85 Current
ratio 2:1 Long-term debt to equity ratio 0.05 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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