Wowjoint Holdings Limited, China's innovative infrastructure solutions provider of customized heavy duty lifting and carrying machinery, reported recently unaudited financial results for the fourth quarter and full year of 2011.
Full Year Ended December 31, 2011
- Revenues for the full year ended December 31, 2011 were $24.4 million, a slight increase from the $24.1 million reported for 2010.
- The Company built and sold 12 machines during the year which represented $19.6 million, or 80% of total revenues.
- Technical service sales were $1.3 million, a decrease from the $5.1 million in FY 2010. Lease income for FY 2011, which began as a segment of revenue a year ago for the company, represented $3.5 million, or 14.4% of total revenues, an increase from $0.7 million in 2010.
- International based revenues accounted for approximately 26% of total sales.
- Gross profit for 2011 was $6.7 million, compared to gross profit of $6.0 million in the full year 2010, representing an 11% increase year over year. Gross margins increased to 27.3%, from 24.8% in the same period 2010. The 250 basis points gross margin increase was due to higher lease income and a higher margin product mix.
- Operating margin increased substantially to 8.6% compared to 2.6% in the prior year. During the year the Company entered into new markets and added staffing to enhance the Company's internal systems and control, yet the company was able to control costs and achieve an increase in operating profit.
- Net income was $1.2 million, or $0.15 per share based on 7.9 million weighted average shares outstanding, compared to net income of $0.4 million, or $0.06 per share based on 7.4 million weighted average shares outstanding for the full year 2010.
Operating expenses for 2011 were reduced to approximately $4.6 million, compared to $5.3 million in the same period of 2010. Selling expenses were flat year over year at $1.2 million. General and administrative expenses were $3.4 million and $4.2 million for the 2011 and 2010 periods, respectively, with the decrease due to the company's stringent focus on reducing costs.
Fourth-quarter Ended December 31, 2011
- Revenues for the Company's fourth quarter ended December 31, 2011 were $4.0 million as compared to $11.0 million in the fourth quarter of 2010.
- Technical service sales $151,000 in the fourth quarter 2011.
- Lease income increased 269% to $2.7 million for the fourth quarter 2011. This is a higher margin line of business for Wowjoint. Gross margin for this segment was 80%, much higher than that of machinery sales at 17%.
- Gross profit was $1.5 million compared to $3.2 million in the year ago period. Gross margins increased markedly to 36.9%, from the previous quarter 2011 and from a year ago 2010. This is primarily due to a higher percentage of lease revenue, which has a higher gross margin.
- Operating margins were 1.6% for the fourth quarter 2011.
- Net loss for the fourth quarter 2011 was $0.3 million, compared to net income of $1.3 million in same period 2010.
Cost of sales for the three months ended December 31, 2011 was approximately $2.5 million as compared to $7.9 million for the three months ended December 31, 2010. Operating expenses for the three months ended December 31, 2011 were approximately $1.5 million, compared to $1.6 in the same period in 2010. Selling expenses for the three months ended December 31, 2011 totaled $0.3 million compared to $0.4 million in the same period of 2010.
"During the fourth quarter, we continued to pursue International expansion by attending two conferences in the US, which introduced Wowjoint to various contractors and designers that could be customers in the future," commented Mr. Yabin Liu, Chairman and Chief Executive Officer of Wowjoint. "In general, gross margin has improved noticeably for the year due to the increase in our lease income segment, which provides clearer visibility for our future revenue stream. Providing leasing and technical services creates a more stable income flow and helps us better serve our customers."
Balance Sheet as of December 31, 2011
- Cash and cash equivalents totaled $4.6 million at December 31, 2011, as compared to $2.2 million at December 31, 2010.
- Accounts receivable were $13.3 million at December 31, 2011 as compared to $14.0 million at December 31, 2010. The receivables are held with extremely large Blue Chip companies in China; therefore we believe collection of the receivables is relatively secure.
- Inventories amounted to $5.6 million and working capital was $ 9.5 million on December 31, 2011.
- The Company had total stockholders' equity of $22.5 million, with total assets of $53 million versus total liabilities of $30.5 million on December 31, 2011. Leverage was extremely low, with bank debt/equity of only 23%.
"We are pleased with Wowjoint's progress during 2011. During the year we entered new vertical markets, new international locations and grew our sales force. We remain encouraged by the traction that we are achieving in these new markets and believe we will see the results over the next few years," stated Mr. Yabin Liu, Chairman and CEO of Wowjoint.