"Wonder Auto Reports Its Record Fourth Quarter and Full Year 2009 Financial Results
JINZHOU CITY, China, Feb. 11 /PRNewswire-Asia-FirstCall/ -- Wonder Auto Technology, Inc. (Nasdaq: WATG) ("Wonder Auto" or the "Company"), a leading supplier of automotive electric parts, suspension products and engine components in China, today announced its financial results for the fourth quarter and full year ended December 31, 2009.
Operational Highlights for Year 2009:
-- Established a foundation for capacity expansion and strategic
acquisition through recent financing of approx $70 million;
-- Sales revenue increased 49.5% year-over-year to a record $211.0 million;
-- Gross profit rose 41.0% year-over-year to $51.4 million;
-- Net income attributable to Wonder Auto increased 20.9% year-over-year
to $22.9 million;
-- Non-GAAP EPS* was $ 0.86 for the full year 2009, compared with Non-GAAP
EPS $0.73 in 2008.
*[Notes]:
For the year ended For the year ended
December 31, 2009 December 31, 2008
GAAP EPS $0.82 $0.70
Stock-based compensation $0.04 $0.03
Non-GAAP EPS $0.86 $0.73
Mr. Zhao, CEO and Chairman of Wonder Auto commented, "Although we have experienced economic downturn, China's auto popularization was still improving. In 2009, Wonder Auto has successfully captured the dramatic development of China's auto market and our sales revenue increased nearly 50% year over year. Our management team is quite optimistic to Wonder Auto's rapid growth in both market share and capitalization in the following years, especially with the recent financing from the stock market last November."
Business outlook
For the first quarter of 2010, sales revenue is expected to be approximately $58.0 million.
Growth drivers
-- China economy growth, as GDP growth rate was 8.7% in 2009
-- The purchasing desire from Chinese car buyers had been activated
-- Stimulus programs from Chinese government for Chinese auto industry,
such as purchase tax reduction, cars to the countryside program,
subsidy for trade-in cars.
Selected Financial Results for the Full Year Ended December 31, 2009
Sales revenue in 2009 rose to a record high of $211.0 million, which was a 49.5% increase from $141.2 million in 2008. Revenue from alternators and starters increased $27.8 million, and the sales of rod and shaft products contributed $21.2 million and engine valves valve tappets contributed $46.6 million to revenue. The increase was mainly attributable to the growing market demand for our cost effective and high quality products.
In 2009, gross profit increased 41.0% to a record of $51.4 million from a gross profit of $36.4 million in 2008. Gross margin was 24.3% in 2009 compared with 25.8% for the year 2008. The decreased gross margin was due to the changes of product portfolio, when the majority of our products sold for mid- to small-sized engine vehicles. And this category of products has relatively low gross margin.
Operating expenses for 2009 increased $10.4 million, to $23.6 million from $13.3 million of 2008. The increase was primarily due to the new non-cash stock-based compensation, which was $1.2 million, and from the operating expenses of Jinan Worldwide, which was $7.1 million for the year 2009 compared to $1.4 million in the last quarter of 2008.
The increased administrative expenses were primarily due to administrative expenses of the newly acquired subsidiaries, higher expenses on legal, audit, and due diligence work for acquisitions, maintenance fees as a Nasdaq-listed company. In addition, a non-cash stock-based compensation of $1.2 million was incurred from the newly launched stock option plan. The increase of research and development costs is primarily attributable to the research and development of new and existing products, especially for alternative energy vehicle parts. As a percentage of revenue, research and development expenses increased 83.7% year-over-year from $1.6 million, or 1.2% of sales revenue, in 2008, to $3.0 million, or 1.4% of sales revenue, in 2009. Selling expenses increased to $7.8 million compared with $4.1 million in 2008. The increased selling expenses were mainly caused by the newly acquired subsidiaries.
Income before income taxes and non-controlling interests increased $3.5 million, or 15.0%, to $27.1 million in 2009 from $23.5 million in 2008. Income before income taxes and non-controlling interests as a percentage of revenue was 12.8% in 2009.
Net income attributable to Wonder Auto increased $3.9 million, or 20.9%, to $22.9 million in 2009 from $18.9 million in 2008. The Non-GAAP net income increased $4.4 million, or 22.5%, to $24.0 million in 2009 from $19.6 million in 2008. Non-GAAP EPS was $0.86 in 2009, without considering the non-cash stock-based compensation of $1.2 million incurred from the stock option plan.
As of December 31, 2009, Wonder Auto had $82.4 million in cash and cash equivalents and restricted cash of $15.8 million, a current ratio of 1.7-to-1, working capital of $97.8 million, and $20.9 million long-term bank loan. Total Wonder Auto Stockholders' equity increased to $192.7 million. As of December 31, 2009, the value of property, plant and equipment rose to $73.8 million from $69.1 million as of December 31, 2008.
Events overview
On November 2009, Wonder Auto closed a follow-on offering of 6.9 million shares of common stock at a public offering price of $10.75 per share.
On October 30, 2009, Wonder Auto's subsidiaries Jinzhou Wonder Motor Co., Ltd. and Jinzhou Halla Electrical Equipment Co., Ltd. have entered into framework agreements with Jinzhou Wonder Alternative Energy Vehicle Technology Co., Ltd., for the supply of electric motors to Jinzhou AEV for use in its electric and alternative energy vehicles. The Company expects the aggregate value of the agreements to be approximately US$6.13 million.
On September 28, 2009, Wonder Auto's subsidiary Jinzhou Halla entered into a joint development agreement with Shenzhen BYD Auto Company Limited ("Shenzhen BYD") to design and develop alternator prototypes for Shenzhen BYD's F3/F3R sedan models, which have engine sizes between 1.3 liters and 1.5 liters, and were among the top ten best-selling models in China in the first nine months in 2009.
On September 22, 2009, Wonder Auto's subsidiary Jinzhou Wanyou Mechanical Parts Co., Ltd. acquired Friend Birch Limited. By the acquisition, Jinzhou Wanyou expanded its capacity to meet increasing customer demand.
On July 3, 2009, our subsidiary, Jingzhou Halla closed the acquisition of 100% ownership of Yearcity Limited. As a result of our acquisition of Jinan Worldwide, we have become one of the largest engine valves and tappets manufacturers in China.
In April 2009, Mr. Xiaoyu Zhang and Mr. Xianzhang Wang were appointed to be the Company's new independent directors. The Company values the two outstanding experts as tremendous assets for the company as they will be of immense benefit to the company attributable to their background. Mr. Xiaoyu Zhang is the president of the Society of Automotive Engineers of China and the vice president of China Machinery Industry Federation. Mr. Xianzhang Wang is the president of the Insurance Association of China and vice president of China Insurance Academy.
In February 2009, the Company won the bid to supply starters to Dongfeng Automotive Co., Ltd with prototype deliveries for road testing to be commenced in 2009. The expected revenue under this agreement will be approximately $20 million during the period of 2011 to 2015 progressively."
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