- Exceeds initial EBT guidance by 29% and backlog increases 71% -
HONG KONG, April 2 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag
International Ltd. ("KHD") (NASDAQ:KHDH) today announced results
for the year ended December 31, 2006. All figures are in US dollars
and earnings per share amounts are on a diluted basis. We are
reporting our financial statements on the basis of reclassifying
our prior financial service business as discontinued operations for
the years 2006, 2005 and 2004. For the full year ended December 31,
2006, KHD reported revenues from continuing operations of $393.5
million, with income (or earnings) before taxes from continuing
operations ("EBT") of $45.4 million and income from continuing
operations of $31.8 million, or $2.10 per share. By comparison,
2005's revenues were $329.4 million for the same operations, with
EBT of $30.9 million and with income from continuing operations of
$23.8 million or $1.74 per share. For 2004, revenues were $155.7
million for the same operations, with EBT of $12.6 million and
income from continuing operations of $10.6 million or $0.78 per
share. The number of shares issued and outstanding as at December
31, 2006 was 14,733,191; the weighted average number of shares for
the year ended December 31, 2006 was 15,207,726 on a diluted basis.
The difference is primarily due to restructuring and stock options
granted to our operating employees in 2006. To help our investors
better understand the fluctuations of the business of KHD, we are
providing the following forecast of the revenues and EBT for the
full year 2007. For the year 2007, we expect revenues to increase
to $623 million and EBT for the year of $61 million. Revenues and
EBT are not evenly spread among all quarters; for this reason we
are only giving guidance for the full year. The forecast (guidance)
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. See the section entitled "Disclaimer for Forward
Looking Information" at the end of this release for a description
of those risks and uncertainties. Accounting standards require our
consolidated results to be converted to Canadian dollars using a
weighted exchange rate. For this release we have converted our
Canadian dollars results to US dollars using a year-end exchange
rate. Consequently, the results are influenced by fluctuating
international exchange rates. As KHD conducts an immaterial amount
of its business in Canadian dollars, we believe it is in the best
interest of those evaluating our results to eliminate this
variable, and therefore, for comparative purposes, the following
amounts for order intake and backlog were translated directly from
Euros to US dollars at 1.3196, the exchange rate prevailing on
December 31, 2006 Order intake is defined as the total value of all
orders received during the respective period, while order backlog
is defined as the value of orders received but not yet fulfilled.
Order intake for the year ended December 31, 2006 was $676.8
million, an increase of 55 percent over 2005 and an increase of 117
percent over 2004, with 30 percent of 2006 order intake came from
the emerging Asia/Pacific region, 30 percent from Russia and
Eastern Europe, 23 percent from the Americas and 8 percent from the
Middle East. Order backlog as of December 31, 2006 was $603.2
million, up 71 percent over December 31, 2005 and an increase of
139 percent over 2004. EBT for 2006 totaled $45.4 million, an
increase of 47 percent over 2005 and 260 per cent over 2004
percent. EBT exceeded our initial EBT guidance by 29 percent. Our
corporate tax expense for reporting purposes was $7.2 million (16
percent) in 2006, $1.8 million (6 percent) in 2005. These numbers
primarily reflected the net draw-down of our deferred tax asset,
while the actual cash tax payment was $768,000 in 2006 and $1.1
million in 2005. Our minority interest expense was $6.4 million, or
$0.42 per share. We have now entered into an agreement to acquire
Sasamat Capital Corporation, the primary owner of this minority
interest. See our separate news release issued on March 29, 2007.
Commencing with our reporting of first quarter 2007 results, we
intend to change our reporting currency to US dollars. CEO Jim
Busche commented, "We are pleased that the trend of increasing
orders intake, backlog and earnings established over the past few
years has continued in 2006. Our presence and abilities in Russia,
India and the United States advanced considerably during the year.
We anticipate these trends to continue in 2007." We are also
pleased to announce that we intend to distribute to our
shareholders 90 percent of the shares of our wholly owned
subsidiary, SWA REIT Ltd. ("SWA"), which owns and operates all of
the real estate assets of KHD. Upon receipt of the necessary
approvals, KHD shareholders will receive one share of SWA common
stock for each KHD common share held. It is anticipated that there
will be no tax cost to United States shareholders as a result of
the distribution and there will be no tax effect on either KHD or
SWA. SWA intends to focus exclusively on the growth and development
of its real estate and will be seeking a stock exchange listing for
its shares. Commenting, KHD Chairman, Michael Smith, said, "We are
pleased to announce the distribution of our real estate assets to
our shareholders. With this distribution, KHD will have completed
the divestiture of legacy assets, which will allow management to
focus on the growth of our industrial plant engineering and
equipment supply business with technologies for cement production
and coal and minerals processing, while giving the benefits and
potential upside of our real estate assets to our shareholders. We
analyzed alternatives to create shareholder value with this asset
and believe that with the new real estate investment trust laws now
emerging in Germany, the United Kingdom and other European
countries, make this the most efficient means of enhancing the
potential for generating the greatest value. The intrinsic value of
the shares may grow in the market, especially with SWA's very low
debt. SWA owns approximately 777 acres of land with buildings
forming an industrial development area in the City of Arneburg,
just west of Berlin in the State of Sachsen-Anhalt, Germany, and
also owns approximately 27 acres of land with buildings in the city
of Dessau in the State of Sachsen-Anhalt. Approximately 90 percent
of the space is currently under lease to various tenants. The net
book value of SWA is approximately US$46 million, which equals
approximately US$2.81 per share for each KHD share, and has
approximately US$3 million in total debt. The comparable, real
estate companies in Europe trade at a price of 2.45 times their net
book value." In order to be entitled to receive shares of SWA in
the distribution, a shareholder must own KHD shares at the close of
business on the record date, which will be announced shortly. This
arrangement requires court approval under the Canada Business
Corporation Act and approval by our shareholders, together with
various conditions customary for transactions of this type. SWA and
KHD will apply to the Supreme Court of British Columbia to obtain
an interim order providing, among other things, for the calling and
holding of the special meeting of shareholders of KHD. This
arrangement is to be approved by two-thirds of the votes cast by
KHD shareholders. KHD expects to hold its special general meeting
on June 14, 2007. Further information concerning the arrangement
will be available in the KHD circular to be filed on SEDAR at
http://www.sedar.com/. Chairman Michael Smith commented further,
"We ended the year with $205 million in cash and cash equivalents,
$440 million in current assets, and equity at $273 million. With
the distribution of our real estate assets, KHD may now be viewed
as a true industrial plant engineering and equipment supply
company. We encourage our shareholders to read the entire Form 20F
report for a greater understanding of our company, which will
available on our website." 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
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,
business prospects and opportunities. Forward-looking statements
consist of statements that are 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 20F filed with the Securities
and Exchange Commission and our MD&A filed with Canadian
security regulators. Contact Information: Allen & Caron Inc.
Rene Randall Joseph Allen (investors) KHD Humboldt Wedag
International Ltd. 1 (212) 691-8087 1 (604) 683-8286 or Len Hall
(media) 1 (949) 474-4300 All figures are in US dollars and earnings
per share amounts are on a diluted basis. The consolidated balance
sheet and income statement for December 31, 2006 were translated
from Canadian dollars into US dollars at US dollar 1 = Canadian
dollars 1.1653 (equivalent to Euro 1 = US dollars 1.3196) KHD
HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005 (unaudited) (amounts in U.S. dollars; in
thousands) ASSETS 2006 2005 Current assets Cash and cash
equivalents $204,678 $94,667 Restricted cash 16,180 21,500
Securities 4,111 2,143 Loans 0 2,137 Accounts receivable, trade
68,432 34,588 Other receivables 33,901 18,298 Inventories 88,127
36,571 Contract deposits, prepaid and other 24,069 10,872 Future
income tax assets 763 6,962 Current assets of discontinued
operations 0 168,587 440,261 396,325 Non-current assets Securities
555 726 Loans and receivables 8,878 5,850 Real estate held for sale
47,894 26,750 Property, plant and equipment 2,993 10,190 Investment
in resource property 29,037 30,312 Equity method investments 500
993 Future income tax assets 33,826 11,944 Investment in preferred
shares of a former subsidiary 77,976 0 Non-current assets of
discontinued operations 0 39,964 201,659 126,729 $641,920 $523,054
KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS
(con't) December 31, 2006 and 2005 (unaudited) (amounts in U.S.
dollars; in thousands) LIABILITIES 2006 2005 Current liabilities
Accounts payable and accrued expenses $242,574 $128,656 Notes
payable 542 2,944 Long-term debt, current portion 4,596 1,406
Pension liabilities 1,664 1,489 Provision for warranty costs 21,868
20,527 Future income tax liability 0 245 Current liabilities of
discontinued operations 0 58,447 271,244 213,714 Long-term
liabilities Long-term debt, less current portion 13,772 5,119
Pension liabilities 28,559 25,584 Provision for warranty costs
7,247 4,427 Deferred credit, future income tax assets 15,539 0
Future income tax liability 9,180 10,154 Other long-term
liabilities 625 230 Long-term liabilities of discontinued
operations 0 1,479 74,922 46,993 Total liabilities 346,166 260,707
Minority interests 22,466 18,088 SHAREHOLDERS' EQUITY Common stock
120,670 84,470 Treasury stock (65,759) (21,989) Contributed surplus
2,039 0 Equity component of convertible debt 0 125 Retained
earnings 216,579 209,416 Cumulative translation adjustment (241)
(27,763) 273,288 244,259 $641,920 $523,054 KHD HUMBOLDT WEDAG
INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Years
Ended December 31, 2006, 2005 and 2004 (unaudited) (amounts in U.S.
dollars; in thousands, except per share data) 2006 2005 2004
Revenues $393,499 $329,402 $155,731 Cost of revenues 332,110
285,009 130,240 Gross profit 61,389 44,393 25,491 Other operating
income Resource property 5,855 4,472 4,482 Real estate property
1,907 5,521 3,809 7,762 9,993 8,291 General and administrative
expense (30,265) (27,662) (21,210) Stock-based compensation -
general and administrative (2,039) 0 0 Operating income 36,847
26,724 12,572 Interest, net 2,986 (1,159) (1,063) Other income, net
5,589 5,339 1,111 Income before income taxes from continuing
operations 45,422 30,904 12,620 Recovery of (provision for) income
taxes (7,183) (1,788) 2,875 Income before minority interests 38,239
29,116 15,495 Minority interests (6,407) (5,307) (4,882) Income
from continuing operations 31,832 23,809 10,613 Income (loss) from
discontinued operations, net of tax (1,390) 5,523 20,088 Net income
$30,442 $29,332 $30,701 Basic earnings (loss) per share from
continuing operations $2.11 $1.75 $ 0.78 from discontinued
operations (0.09) 0.41 1.48 $2.02 $2.16 $ 2.26 Diluted earnings
(loss) per share from continuing operations $2.10 $1.74 $0.78 from
discontinued operations (0.09) 0.40 1.48 $2.01 $2.14 $2.26 Weighted
average shares outstanding - basic 15,081,206 13,609,348 13,520,221
Weighted average shares outstanding - diluted 15,207,726 13,754,693
13,520,221 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY
As of December 31, 2006 (unaudited) (amounts in U.S. dollars; in
thousands, except per share data and ratios) Cash and cash
equivalents $204,678 Short-term securities 4,111 Working capital
169,017 Total assets 641,920 Shareholders' equity 273,288 Book
value per share 18.55 Current ratio 1.623 Long-term debt to equity
ratio 0.05 DATASOURCE: KHD Humboldt Wedag International Ltd.
CONTACT: Rene Randall of KHD Humboldt Wedag International Ltd.,
+1-604-683-8286, ; or 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. Web site:
http://www.khdhumboldt.com/
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