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NYSE:SRL 7.71 -0.03 -0.42% Volume: 4,337 December 5, 2022

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KHD Humboldt Wedag International Ltd. Reports 2008 First Quarter Results

05/15/2008

- Revenue up 28%; Order intake up 91%; Backlog up 74% tops $1.1 billion -

- New Environmental Group -

HONG KONG, May 15 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. (NYSE: KHD) today announced results for the first quarter ended March 31, 2008. All dollar figures are in US dollars.

Revenue for the quarter was $136.8 million, a gain of 28 percent over 2007 first-quarter revenues of $106.9 million. Pro forma net income for the period was $13.1 million or $0.43 per share diluted, an increase of 54 percent over the $8.5 million, or $0.28 per share, for the first quarter of 2007. Pro forma net income excludes a non-cash charge of $5.6 million, net of income tax for an unrealized loss on currency held in US dollars in overseas banks, due to the rise in value of other currencies compared to the US dollar. Net income including this unrealized currency loss for the period was $7.4 million or $0.24 per share diluted. For a reconciliation of net income and pro forma net income, see the consolidated statements of income included below.

Order intake for the quarter ended March 31, 2008 was $288.4 million, an increase of 91 percent over first quarter 2007, with 61 percent of the first quarter 2008 order intake coming from the emerging Russia and Eastern Europe region and 29 percent from the emerging Asian region.

The Company's order backlog at March 31, 2008 was $1.1 billion, up 74 percent from the previous year's first quarter, with 36 percent from Russia and Eastern Europe, 28 percent from the Middle East and 27 percent from Asia.

At March 31, 2008, the Company had $419.4 million in cash, cash equivalents, short-term cash deposits, and short-term securities. The current ratio was 1.56, and the long-term debt-to-equity ratio was 0.05.

CEO Jim Busche commented, "The first quarter of 2008 continued our trend of increasing revenue, backlog, order intake and continued strong cash flow and higher EPS, excluding currency effects."

Margins for the first quarter were 18.4 percent, versus 18.8 percent in the first quarter of 2007. Mr. Busche said, "The completion of several project warranty periods with better than historic performance, resulted in the release of reserves held against those warranties, pushing our margins above expected levels."

Our guidance on order intake and earnings per share for the full year 2008 which we gave in our April 2, 2008 news release has not changed. For the year 2008, we expect order intake to increase to $1.1 billion and earnings per share to be in the range of $2.05 to $2.15 for the year.

CFO Alan Hartslief commented, "During the first quarter we completed an analysis of our cash requirements, and concluded that a portion of our cash is available for investment in growth. Cash needed for the business is held in the currencies most commonly used by our operating subsidiaries, and we hold $100 million in US dollars in Europe. GAAP requires us to report unrealized losses or gains on these funds, since they are held by operations that use currencies whose functional currency is Euros, not US dollars. As a result of the appreciation of Euros against the US dollar, we reported unrealized losses for the period of $5.6 million net of income tax. In our opinion these unrealized losses do not affect the underlying performance of our business. We are presenting a pro forma net income and earnings per share that excludes the unrealized loss. We believe that this presentation provides our shareholders with a more useful comparison of the on going operations performance of our business."

The US dollar declined against the Euro during the first quarter of 2008 by approximately 12.6 percent over the first quarter of 2007. The US dollar has, since the quarter end, strengthened somewhat against the Euro. This unrealized exchange loss reduces by approximately half to $2.8 million, net of income tax, at an exchange rate of Euro to US dollar at $1.53.

New Environmental Group

The Company also announced that it has established a new KHD Environmental Group, which will be headed by Dr. Robert Mathai. The Environmental Group will focus on:

-- Recovery of energy and waste heat,
-- Emissions reduction (for cement plants),
-- Energy savings, and
-- Waste treatment (for coal and minerals plants).

Mr. Busche commented, "For over 150 years KHD has had a proud tradition of technology leadership and product improvement at the forefront of our industry. We intend to continue that tradition, and are pleased to be in the environmental vanguard in these times of increased concern over environmental issues worldwide."

Today at 10:00 am EDT (7:00 am 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 # 48621129. 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 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 and 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)
1 (212) 691-8087
joe@allencaron.com
or
Brian Kennedy (media)
1 (212) 691-8087
brian@allencaron.com

Rene Randall
KHD Humboldt Wedag International Ltd.
1 (604) 683-8286 ex 224
randall.r@khd.de

                          -FINANCIAL TABLES FOLLOW-
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED BALANCE SHEETS
            March 31, 2008 and December 31, 2007
            (unaudited)
            (U.S. Dollars in Thousands)
            2008             2007
            ASSETS
            Current assets
            Cash and cash equivalents                      $398,133         $354,397
            Short term cash deposits                          9,226                0
            Securities                                       12,087           15,510
            Restricted cash                                  27,788           24,116
            Accounts receivable, trade                       71,857           62,074
            Other receivables                                18,843           18,585
            Inventories                                     132,372          124,980
            Contract deposits, prepaid and other             38,744           33,775
            Future income tax assets                            893              825
            709,943          634,262
            Non-current assets
            Property, plant and equipment                     3,546            2,957
            Interest in resource property                    31,262           32,865
            Equity method investments                           638              654
            Future income tax assets                         24,935           24,658
            Investment in preferred shares of former
            subsidiaries                                    88,399           91,960
            Other non-current assets                          2,505            1,955
            151,285          155,049
            $861,228         $789,311
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED BALANCE SHEETS  (con't)
            March 31, 2008 and December 31, 2007
            (unaudited)
            (U.S. Dollars in Thousands)
            2008            2007
            LIABILITIES
            Current liabilities
            Accounts payable and accrued expenses         $152,567        $147,869
            Progress billing above costs and estimated
            earnings on uncompleted contracts             245,853         184,830
            Advance payments received from customers        16,971           9,190
            Income tax liabilities                           9,953          20,658
            Accrued pension liabilities, current portion     2,386           2,205
            Provision for warranty costs, current portion   27,446          31,503
            455,176         396,255
            Long-term liabilities
            Long-term debt, less current portion            14,943          13,920
            Accrued pension liabilities, less
            current portion                                33,527          30,981
            Provision for warranty costs, less
            current portion                                11,345          11,799
            Deferred credit, future income tax assets       15,194          15,712
            Future income tax liability                      4,160           2,593
            Other long-term liabilities                      4,878           4,931
            84,047          79,936
            Total liabilities                      539,223         476,191
            MINORITY INTERESTS                                 5,698           5,926
            SHAREHOLDERS' EQUITY
            Common stock                                   138,521         138,359
            Treasury stock                                 (93,793)        (93,793)
            Contributed surplus                              5,350           4,319
            Retained earnings                              170,064         162,633
            Accumulated other comprehensive income          96,165          95,676
            316,307         307,194
            $861,228        $789,311
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED STATEMENTS OF INCOME
            For the Three Months Ended March 31, 2008 and 2007
            (unaudited)
            (U.S. Dollars in Thousands, Except per Share Data)
            2008             2007
            Revenues                                       $136,836         $106,908
            Cost of revenues                                111,629           86,780
            Gross profit                                     25,207           20,128
            Income from interest in resource property         3,966            1,554
            General and administrative expense              (12,845)          (9,473)
            Stock-based compensation                         (1,063)            (398)
            Operating income                                 15,265           11,811
            Interest income                                   5,062            2,956
            Interest expense                                   (519)            (844)
            Foreign currency transactions gain (losses), net (8,425)             534
            Other income expenses, net                       (1,342)             976
            Income before taxes from continuing operations   10,041           15,433
            Provision for income tax:
            Income taxes                                   (1,691)          (5,397)
            Resource property revenue taxes                  (876)            (363)
            (2,567)          (5,760)
            Income before minority interests,
            continuing operations                            7,474            9,673
            Minority interests                                  (43)          (1,558)
            Income from continuing operations                 7,431            8,115
            Income (loss) from discontinued operations,
            net of tax                                           0              365
            Net income                                       $7,431           $8,480
            Net income under GAAP                             7,431            8,480
            Unrealized foreign currency translation
            loss on cash held for investment, net
            of income tax                                    5,633                0
            Pro forma net income                            $13,064           $8,480
            Diluted earnings per share
            continuing operations                           $0.24            $0.27
            discontinued operations                             0             0.01
            $0.24            $0.28
            Pro forma diluted earnings per share
            continuing operations                           $0.43            $0.27
            discontinued operations                             0             0.01
            $0.43            $0.28
            Weighted average shares
            outstanding - diluted                       30,528,155       29,855,262
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            FINANCIAL SUMMARY
            As of March 31, 2008
            (unaudited)
            (U.S. Dollars in Thousands, Except per Share Data and Ratios)
            Cash, cash equivalents and short- term cash deposits            $407,359
            Short-term securities                                             12,087
            Restricted cash                                                   27,788
            Working capital                                                  254,767
            Total assets                                                     861,228
            Shareholders' equity                                             316,307
            Book value per share                                               10.46
            Current ratio                                                       1.56
            Long-term debt to equity ratio                                      0.05
            

SOURCE KHD Humboldt Wedag International Ltd.

/CONTACT: investors, Joseph Allen, +1-212-691-8087, joe@allencaron.com, or
media, Brian Kennedy, +1-212-691-8087, brian@allencaron.com, both of Allen &
Caron Inc., for KHD Humboldt Wedag International Ltd.; or Rene Randall of KHD
Humboldt Wedag International Ltd., +1-604-683-8286, ext. 224,
randall.r@khd.de/
/Web site: http://www.khdhumboldt.com /
(KHD)

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