China Ritar Power Announces First Quarter Fiscal 2009 Results
May 18, 2009 7:00:00 AM
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View Additional ProfilesSHENZHEN, China, May 18 /PRNewswire-Asia-FirstCall/ -- China Ritar Power Corp. (OTC Bulletin Board: CRTP) ('China Ritar' or the 'Company'), a leading Chinese manufacturer of lead acid batteries, today reported its fiscal 2009 first quarter results for the period ended 31 March, 2009.
First Quarter 2009 Highlights
-- Revenue was $17.5 million, down 9% year-over-year
-- Sales volume increased 21% year-over-year
-- Gross profit was $3.3 million with 18.8% gross margin
-- Net income increased 3% year-over-year to $0.53 million
-- Fully diluted earnings per share were $0.03
"During the first quarter, our sales volume increased 21% over the first quarter in fiscal 2008 as a result of continued growth in the renewable energy sector," Mr. Jiada Hu, China Ritar's Chairman and Chief Executive Officer commented. "Moreover, we continued to ramp up production at our new facilities in Hengyang Industrial Park for our battery and lead plate production. Lead plates represented approximately 70.2% of the cost of our batteries for the quarter. As we increase the volume of lead plates manufactured internally, we expect to realize an improvement in our gross margins by 3%-5% over the next few years."
Revenue in the first quarter of 2009 was $17.5 million, down 9% from revenue of $19.3 million in the first quarter of 2008. The decrease in revenue was mainly attributable to a decline in the average selling price (ASP) as a result of approximately 40% drop in the price of lead. The decline in ASP was offset by a 21% increase in sales volume. Moreover, the first quarter is typically the Company's slowest quarter as a result of a slowdown in customers' orders due to the Chinese New Year holiday. Batteries used for telecom, uninterruptible power supply (UPS), renewable energy storage and light electronic vehicles (LEV) accounted for 33%, 31%, 25% and 11% of total sales of the first quarter of 2009, respectively. International sales represented 73% of total sales with domestic sales representing the balance of 27%.
Gross profit for the quarter decreased 18.3% to $3.3 million from $4.0 million in the same period of 2008. Gross margin for first quarter of 2009 was 18.8% compared to 21.0% in the first quarter of 2008. The decline in gross margin was mainly the result of a sales promotion offered to current customers during the quarter and the increased overhead cost at the Hengyang factory. China Ritar's long-term gross margin target is 20.5%.
Operating expenses were $2.5 million or 14.3% of sales, compared to $2.7 million or 14.1% of sales in the first quarter of 2008. Adjusting for $0.96 million in non-cash, stock-based compensation recognized under salaries in the first quarter of 2008, non-GAAP operating expenses were $1.7 million or 9.0% of sales. The non-cash, stock-based compensation relates to the release of shares of the Company's common stock to the Company's CEO from escrow pursuant to a make good agreement to meet the net income target for 2008 of $8.2 million entered into by the Company in connection with its private placement financing in February 2007. The increase in operating expenses is primarily due to an increase in sales commission which represented 4.3% of total sales compared to 0.9% of total sales in the first quarter of 2008. The increase in sales commission is due to increased marketing efforts.
Operating income for the first quarter was $0.79 million compared to $1.3 million in the first quarter of 2008. Adjusting for the previously mentioned non-cash, stock-based compensation, non-GAAP operating income was $2.3 million in the first quarter of 2008.
Net income was $0.54 million in the first quarter of 2009 for fully diluted earnings per share of $0.03 compared to $0.53 million in net income and fully diluted earnings per share of $0.03 in the first quarter of 2008. Excluding the non-cash, stock-based compensation, non-GAAP net income for the first quarter of 2008 was $1.5 million. Non-GAAP fully diluted earnings per share for the first quarter of 2008 were $0.08.
Financial Condition
As of March 31, 2009, China Ritar had $11.8 million in cash and equivalents and restricted cash, $24.0 million in working capital and $30 million in total liabilities. Net cash provided by operating activities for the period was $1.7 million. Shareholders' equity stood at $35.0 million, up from $34.4 million at year end 2008.
Business Outlook
In 2008, China Ritar completed its new manufacturing complex in Hengyang City, Hunan Province. The complex has five lead acid battery production lines with designed production capacity of approximately 1.25 million kilowatt-hours and a lead plate production line with designed annual production capacity of 15,000 tons, per eight hour shift. The battery production lines are currently operating at approximately 60% utilization rate and are expected to reach 80% to 85% by the second or third quarter of 2009. With 19 production lines in operation, the Company believes that it has sufficient capacity to support its growth plans for 2009 and does not have plans for any capital expenditures at this time.
China Ritar has qualified to be a battery supplier for China's build out of the country's 3G mobile telecommunications networks and is in the final stage of the contract biding process. The Company expects the biding process will be completed by mid-June.
"We are very excited about the growth prospects for 2009, specifically in the domestic market as the Chinese government has committed significant resources to the advancement of its telecommunication and renewable energy industries," Mr. Hu commented. "While demand for our lead acid batteries used for telecommunication and renewable energy applications remains healthy in both international and domestic markets, we are concentrating the majority of our marketing efforts on the domestic market which is expected to increase to about 40% of total sales by the end of the year."
Conference Call
China Ritar will host a conference call at 9:00 am EDT on Monday, May 18, 2009 to discuss the first quarter fiscal 2009 results. To participate in the conference call, please dial the following number fifteen minutes prior to the scheduled conference call time: 888-419-5570. International callers should dial 617-896-9871. The pass code for the call is 647 125 73. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, May 18, 2009 at 11:00 AM EDT. To access the replay, dial 888-286-8010, international callers should dial 617-801-6888. The conference pass code is 659 756 30. This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://ir.ritarpower.com/en/ . Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a 90-day replay will be available shortly after the call by accessing the same link.
Use of Non-GAAP Financial Measures
To supplement China Ritar's condensed consolidated financial statements presented on a GAAP basis, China Ritar is providing certain income statement information that is not calculated according to GAAP. China Ritar believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the three month periods ended March 31, 2008 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
Non-GAAP financial results for the three month periods ended March 31, 2008 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under salaries in relation to the release of shares of the Company's common stock to the Company's CEO from escrow pursuant to a make good agreement to meet the net income target for 2008 of $8.2 million entered into by the Company in connection with its private placement financing in February 2007.
About China Ritar Corp.
China Ritar designs, develops, manufactures and markets environmentally friendly, lead acid batteries with a wide range of capacities and applications, including telecommunications, Uninterruptible power supply (UPS) devices, light electrical vehicles (LEV), and renewable energy systems (solar and wind power). China Ritar sells, markets and services six series and 197 models of Ritar-branded, cadmium-free valve-regulated lead-acid (VRLA) batteries. Products are sold worldwide with sales in 81 countries including China, India, and numerous markets in Europe and the Americas. Additional information can be found at the Company's website http://www.ritarpower.com .
Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Ritar on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included herein are forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
-- FINANCIAL TABLES TO FOLLOW --
Three Months Ended March 31,
(Unaudited)
2009(000) % 2008(000) %
Revenue by Product
UPS 5,434 31% 6,739 35%
Telecom 5,785 33% 8,086 42%
LEV 1,928 11% 2,503 13%
Renewable Energy Storage 4,382 25% 1,925 10%
Total Revenue 17,531 100% 19,255 100%
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended March 31,
2009 2008 2008
GAAP NON-GAAP GAAP
Revenue $17,530,804 $19,254,556 $19,254,556
Cost of sales
14,236,015 15,220,717 15,220,717
Gross profit 3,294,789 4,033,839 4,033,839
Operating expenses
Salaries 463,634 247,503 1,210,853
Sales commission 749,224 179,150 179,150
Shipping and handling cost 297,096 289,055 289,055
Other selling, general and
administrative expenses 995,326 1,026,587 1,026,587
Total Expenses 2,505,280 1,742,295 2,705,645
Operating profit 789,509 2,291,544 1,328,194
Other income and (expenses)
Interest income 58,154 45,782 45,782
Other income 2,540 -- --
Interest Expense (147,424) (142,234) (142,234)
Foreign currency exchange loss (49,810) (306,261) (306,261)
Other expenses (1,663) (726) (726)
Other (expenses) (138,203) (403,439) (403,439)
Income before income taxes and
non-controlling interests 651,306 1,888,105 924,755
Income taxes (117,047) (404,900) (404,900)
Net income 534,259 1,483,205 519,855
Net loss attributable to non-controlling
interest 7,694 14,236 14,236
Net income attributable to China Ritar
Power Corp. shareholders 541,953 1,497,441 534,091
Earnings per share:
- Basic $0.03 $0.08 $0.03
- Diluted $0.03 $0.08 $0.03
Weighted average number of shares
outstanding:
- Basic 19,133,154 19,114,390 19,114,390
- Diluted 19,133,154 19,525,797 19,525,797
CHINA RITAR POWER CORP. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2008
Three months ended
Adjusted Net income March 31, 2008
Net Income (Loss) and Diluted EPS Net Income Diluted EPS
Adjusted Amount Non-GAAP 1,497,441 0.08
Adjustments
Non-cash compensation adjustment (1) 963,350 0.05
Amount per consolidated statement of operations 534,091 0.03
(1) Non cash compensation expense in connection with the release from
escrow to certain employees of shares of common stock that had been
deposited into escrow to certain China Ritar employees in connection
with the Company's private placement in February 2007
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, As of December 31,
ASSETS 2009 2008
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 8,696,963 $ 8,300,472
Accounts receivable, net of
allowances of $1,311,511 and
$1,311,759 16,532,716 20,015,989
Inventory 16,366,159 14,578,230
Advance to suppliers 1,420,309 1,340,107
Other current assets 4,131,664 3,564,793
Restricted cash 3,058,963 4,387,679
Total current assets 50,206,774 52,187,270
Non-current assets:
Property, plant and equipment, net 10,735,355 10,905,369
Construction in progress 3,425,036 3,089,854
Intangible assets, net 12,920 17,088
Land use right 474,181 476,687
Rental and utility deposits 82,785 82,801
Total assets $ 64,937,051 $ 66,759,069
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,445,038 $ 13,483,218
Income and other taxes payable 2,808,951 2,941,267
Accrued salaries 364,639 447,022
Bills payable 5,201,738 4,321,915
Derivative instruments 213,856 236,898
Other current liabilities 2,854,944 2,808,483
Current portion of long term loans 877,719 877,886
Short-term loans 1,483,758 3,596,955
Total current liabilities 26,250,643 28,713,644
Long-term liabilities:
Long-term loans 3,657,163 3,657,859
Total liabilities 29,907,806 32,371,503
Stockholders' equity:
Preferred stock, $.001 par value,
10,000,000 shares authorized, no
shares issued and outstanding -- --
Common stock at $.001 par value;
authorized 100,000,000 shares
authorized, 19,134,992 shares
issued and outstanding 19,135 19,135
Additional paid-in capital 19,222,727 19,222,727
Retained earnings 12,595,158 12,053,205
Accumulated other comprehensive
income 3,199,920 3,092,499
Total China Ritar shareholders'
equity 35,036,940 34,387,566
Non-controlling interest (7,695) --
Total equity $ 35,029,245 $ 34,387,566
Total liabilities and stockholders'
equity $ 64,937,051 $ 66,759,069
CHINA RITAR POWER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
March 31,
2009 2008
Operating activities
Net income $541,953 $534,091
Adjustments to reconcile net income from
operations to net cash used in operating
activities:
Depreciation of property, plant and
equipment 324,251 189,596
Amortization of intangible assets and land
use right 3,592 --
Allowance of bad debts -- 11,985
Gain on disposal (365) --
Stock-based compensation - make good
provision -- 963,350
Allowance for inventory valuation and slow
moving items -- 18,993
Unrealized loss on derivative instruments (22,992) --
Non-controlling interests (7,694) (14,236)
Changes in operating working capital
items:
Accounts receivable 3,478,753 (1,702,569)
Inventory (1,790,335) (1,906,722)
Advance to suppliers -- 2,233,541
Other current assets (567,432) (145,011)
Accounts payable (1,035,407) (640,889)
Income and other tax payable (131,730) (162,787)
Accrued salaries (82,281) (136,874)
Bills payable 880,465 (1,804,702)
Other current liabilities 123,431 397,779
Net cash provided by (used in) operating
activities 1,714,209 (2,164,455)
Investing activities
Loan to related parties -- (4,566)
Purchase of property, plant and equipment (496,069) (1,243,342)
Sales proceeds of disposal of fixed assets 4,388 --
Net cash used in investing activities (491,681) (1,247,908)
Financing activities
Proceeds from other loan borrowings -- 130,649
Proceeds from bank borrowings 1,626,177 1,290,457
Repayment of bank borrowings (3,738,257) --
Restricted cash 1,327,610 1,624,452
Net cash provided by financing activities (784,470) 3,045,558
Effect of exchange rate changes in cash (41,567) 190,483
Net increase (decrease) in cash and cash
equivalents 396,491 (176,322)
Cash and cash equivalents, beginning of
period 8,300,472 4,775,562
Cash and cash equivalents, end of period $8,696,963 $4,599,240
For more information, please contact:
Elite IR
John Marco, Partner
Tel: +1-310-819-2948
Email: John.marco@elite-ir.com
Elite IR
Leslie J. Richardson, Partner
Tel: +852-3183-0283
Email: Leslie.richardson@elite-ir.com
SOURCE China Ritar Power Corp.
----------------------------------------------
At Elite IR
John Marco
Partner
+1-310-819-2948
or John.marco@elite-ir.com
or Leslie J. Richardson
Partner
+852-3183-0283
or Leslie.richardson@elite-ir.com
both for China Ritar
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