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KHD Humboldt Wedag International Ltd. Reports Results for 2009

03/26/2010
Order backlog at end of the year was $437.0 million -
NEW YORK, March 26, 2010 /PRNewswire via COMTEX/ -- KHD Humboldt Wedag International Ltd. (NYSE: KHD) today announced results for the fourth quarter and year ended December 31, 2009. All dollar figures are in U.S. dollars.

Revenues in the fourth quarter of 2009 were $210.2 million, an increase of 41.8 percent compared with the third quarter of 2009. Gross profit, excluding the impact of terminated contracts, was $48.1 million, this was due to improved project execution and the completion of several projects in the fourth quarter. New order intake of $96.7 million in the fourth quarter showed improvement over the third quarter of 2009 and was the highest quarterly new order intake achieved in 2009 for the continuing cement operations.

For the year ended December 31, 2009, KHD reported revenues of $576.4 million with a net income of $40.7 million, or $1.34 per share on a diluted basis, which included restructuring charges. This compares to revenues in 2008 of $638.4 million and net loss for that period of $7.0 million, or a loss of $0.23 per share on a diluted basis. When taking into account only revenues and cost of revenues, without considering the effects of cancelled contracts, the gross profit margin for the year ended December 31, 2009 was 20.6 percent as compared to 19.1 percent for the same period in 2008. Considering the effect from cancelled contracts, gross profit margin increased from 14.1 percent in 2008 to 23.7 percent in 2009. This improvement was due to improved project execution and continuing success with finding alternative, more cost effective, equipment procurement opportunities.

KHD's balance sheet remains strong. As of December 31, 2009, our cash and cash equivalents increased to $420.6 million (as compared to $409.1 million at the end of 2008); working capital was $370.8 million (as compared to $279.9 million in 2008); and shareholders' equity was $319.8 million (as compared to $261.9 million at the end of 2008). KHD's current ratio was 2.01 and its long-term debt-to-equity ratio was 0.04 as of December 31, 2009.

New order intake is defined as the total value of all orders received during the respective period, excluding cancelled contracts, while order backlog is defined as the value of orders received but not yet fulfilled.

New order intake in 2009 was $321.9 million. This was a decline of 55.5 percent from the prior year. Of this total, 53 percent came from Asia, 22 percent came from Russia and Eastern Europe, 10 percent came from Europe, 9 percent came from the Middle East, 5 percent from Africa and 1 percent from other regions. Of the total new order intake for 2009, $273.6 million was from our cement customer group and $48.3 million was from our coal and minerals business, which was sold in October, 2009.

Order backlog at the end of the year ended December 31, 2009 was $437.0 million, a decrease of 48.1 percent year on year. This was primarily a result of the slowdown in new order intake resulting from the general economic slowdown in 2009, the removal from the order backlog of cancelled contracts amounting to $110.2 million that were previously classified as at risk as of December 31, 2008, as well as the removal of $68.0 million of contracts from our order backlog due to the sale of the coal and minerals business.

CEO Jouni Salo commented, "Overall market conditions were difficult during the year, although there were strong pockets of activity in regions such as India. In India, KHD had a very successful year in terms of new order intake, approximately half of our total new order intake for the year originated from India. We were pleased to see new order intake improve in the second half of the year. During the year, we sold our coal and minerals operations and our workshop in Cologne, and we completed the first phase of our restructuring plan.

"We intend to continue to invest in improving our technology as well as our offering of environmentally friendly products. This is likely to be achieved through a combination of internal research and development as well as through strategic partnerships. We are currently involved in a number of discussions with potential partners to strengthen our market position."

Mr. Salo concluded, "In January, we announced our intention to split the company into two parts: a mineral royalty company and an industrial plant technology, equipment and service company. The first tranche of this transaction is expected to be completed by the end of the first quarter of 2010. We believe this will result in the two independent entities being well positioned to create further value for our shareholders.

"We ended the year with renewed confidence and believe that we have taken a number of significant steps towards helping our customers produce cement and process minerals in a much more energy efficient and environmentally friendly manner. This has been a difficult year for our employees, with many changes over the course of the year, and I would like to thank everyone for their support during this period."

Shareholders are encouraged to read the entire Form 20-F, which has been filed with the SEC, for a greater understanding of KHD. The Form 20-F is also available on the Company's website.

About KHD Humboldt Wedag International Ltd.

KHD Humboldt Wedag International Ltd. ("KHD") (NYSE: KHD) announced in the first quarter of 2010 that it intends to restructure KHD into two distinct legal entities through the distribution to KHD's shareholders, on a pro rata basis, of approximately 26 percent of the shares of its subsidiary, KHD Humboldt Wedag International (Deutschland) AG (the "Arrangement"). Assuming completion of the Arrangement, it is expected that KHD will be split into a mineral royalty company and an industrial plant technology, equipment and service company. 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. The worldwide macroeconomic downturn has resulted in the prolonging or cancellation of some of our customers' projects and may negatively affect our customers' ability to make timely payment to us. Further, it may result in a further decrease in the demand for our products or services. Any of these may have a material adverse effect on our operating results and financial condition. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. 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 global economic environment, interest rates, exchange rates and our ability to attract and retain customers and to manage our assets and operating costs, may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a continued downturn in general economic conditions in Asia, Europe, Russia, the Middle East, the United States and otherwise internationally, including as a result of the worldwide economic downturn resulting from the general credit market crises, volatile energy costs, decreased consumer confidence and other factors, (2) continuing decreased demand for our industrial plant technology, equipment and services, including the renegotiation, delay and/or cancellation of projects by our customers and the reduction in the number of project opportunities, (3) a continuing 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 our 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, the Middle East and other markets, (12) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, (13) the timing and extent of our restructuring program and the restructuring charges to be incurred in connection therewith, (14) whether the proposed Arrangement is approved by our shareholders, (15) difficulties seeking out and obtaining interests in mineral royalties, and (16) other factors beyond our control. Additional information about these and otherassumptions, risks and uncertainties are set out in the "Risk Factors" section in our Form 20-F filed with the Securities and Exchange Commission and the "Risks and Uncertainties" section in our MD&A filed with Canadian securities regulators.

    Contact
            Information:    Allen & Caron Inc.    Rene Randall
            Joseph Allen          KHD Humboldt Wedag
            (investors)           International Ltd.
            1 (212) 691-8087          1 (604) 683-8286 ex 224
            joe@allencaron.com    rene.randall@khd.com
            or
            Len Hall (media)
            1 (949) 474-4300
            len@allencaron.com
            - UNAUDITED INTERIM FINANCIAL TABLES FOLLOW -
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED BALANCE SHEETS
            December 31, 2009 and 2008
            (Audited)
            (U.S. Dollars in Thousands)
            2009         2008
            ----         ----
            ASSETS
            Current Assets
            Cash and cash equivalents                        $420,551     $409,087
            Short-term cash deposits                            6,916            -
            Securities                                         16,432        2,987
            Restricted cash                                    24,979       32,008
            Accounts receivable, trade                         96,982       62,760
            Other receivables                                  36,179       28,313
            Inventories                                        80,815      110,161
            Contract deposits, prepaid and other               53,893       58,694
            Future income tax assets                            1,748        7,679
            -----        -----
            Total current assets                           738,495      711,689
            Non-current Assets
            Note receivables                                    1,672            -
            Account receivable, trade                           4,660            -
            Property, plant and equipment                       2,257        2,489
            Interest in resource property                      27,150       24,861
            Equity method investments                              73          325
            Future income tax assets                           13,405        6,339
            Investment in preferred shares of former
            subsidiaries                                           -       19,125
            Other non-current assets                            1,191          830
            -----          ---
            Total non-current assets                        50,408       53,969
            ------       ------
            Total assets                              $788,903     $765,658
            ========     ========
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED BALANCE SHEETS (cont'd)
            December 31, 2009 and 2008
            (Audited)
            (U.S. Dollars in Thousands)
            2009      2008
            ----      ----
            LIABILITIES
            Current Liabilities
            Accounts payable and accrued expenses         $191,746  $178,582
            Progress billing above costs and estimated      77,841   171,843
            earnings on uncompleted contracts
            Advance payments received from customers        26,927    11,331
            Income tax liabilities                          18,092     9,112
            Deferred credit, future income tax assets        1,748     4,212
            Accrued pension liabilities, current portion     2,070     2,158
            Provision for warranty costs, current portion   28,282    30,856
            Provision for restructuring costs                8,025         -
            Provision for supplier commitments on
            terminated                                     12,943    23,729
            customer contracts                        ------    ------
            Total current liabilities                   367,674   431,823
            Long-term Liabilities
            Long-term debt, less current portion            11,649    11,313
            Accrued pension liabilities, less current
            portion                                        28,861    29,209
            Provision for warranty costs, less current
            portion                                        25,711     7,524
            Deferred credit, future income tax assets            -     4,176
            Future income tax liability                     14,210     7,646
            Other long-term liabilities                     15,607     8,344
            ------     -----
            Total long-term liabilities                  96,038    68,212
            ------    ------
            Total liabilities                        463,712   500,035
            MINORITY INTERESTS                                  5,403     3,709
            SHAREHOLDERS' EQUITY
            Common stock, without par value                141,604   143,826
            Treasury stock                                 (83,334)  (93,793)
            Contributed surplus                              7,232     7,623
            Retained earnings                              185,790   155,681
            Accumulated other comprehensive income          68,496    48,577
            ------    ------
            Total shareholders' equity                  319,788   261,914
            -------   -------
            $788,903  $765,658
            ========  ========
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            CONSOLIDATED STATEMENTS OF INCOME
            For the Years Ended December 31, 2009 and 2008
            (Audited)
            (U.S. Dollars in Thousands, Except per Share Data)
            2009        2008
            ----        ----
            Revenues                                           $576,408    $638,354
            Cost of revenues                                   (457,847)   (516,631)
            Recovery of (loss on) terminated customer
            contracts                                           17,829     (31,966)
            ------     -------
            Gross profit                                        136,390      89,757
            Income from interest in resource property            13,530      27,185
            Selling, general and administrative expense         (74,796)    (56,156)
            Stock-based compensation recovery (expense) -
            selling general and                                    391
            administrative                                              (4,401)
            Restructuring costs                                  (9,220)          -
            Gain on sale of workshop and related assets           5,254           -
            -----         ---
            Operating income                                     71,549      56,385
            Interest income                                       7,043      21,449
            Interest expense                                     (2,793)     (2,291)
            Foreign currency transaction gains (losses), net     (2,006)      2,149
            Share of loss of equity method investee                (254)       (272)
            Loss on settlement of investment in preferred
            shares of former                                               (55,076)
            subsidiaries                                    (9,538)
            Other income (expense), net                           3,825      (9,912)
            -----      ------
            Income before income taxes and minority
            interests                                           67,826      12,432
            Provision for income taxes:
            Income taxes                                     (23,026)    (12,800)
            Resource property revenue taxes                   (3,039)     (5,864)
            ------      ------
            (26,065)    (18,664)
            -------     -------
            Income (loss) before minority interests              41,761      (6,232)
            Minority interests                                   (1,050)       (720)
            ------        ----
            Net income (loss)                                   $40,711     $(6,952)
            =======     =======
            Basic earnings (loss) per share                       $1.34      $(0.23)
            =====      ======
            Diluted earnings (loss) per share                     $1.34      $(0.23)
            =====      ======
            Weighted average number of common shares
            outstanding                                     30,354,207  30,401,018
            - basic
            - diluted                                     30,354,207  30,401,018
            KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
            FINANCIAL SUMMARY
            As of December 31, 2009
            (Audited)
            (U.S. Dollars in Thousands, Except per Share Data and Ratios)
            Cash and cash equivalents                           $420,551
            Securities                                            16,432
            Restricted cash                                       24,979
            Working capital                                      370,821
            Total assets                                         788,903
            Shareholders' equity                                 319,788
            Book value per share                                   10.57
            Current ratio                                           2.01
            Long-term debt to equity ratio                          0.04
            

SOURCE KHD Humboldt Wedag International Ltd.

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