A-Power Reports Second Quarter 2010 Financial Results
Thursday, August 26, 2021 7:01 AM

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SHENYANG, China -- A-Power Energy Generation Systems, Ltd. (Nasdaq: APWR) ("A-Power" or "the Company"), a leading provider of distributed power generation systems in China and a fast-growing manufacturer of wind turbines, today announced unaudited consolidated financial results for the second quarter ended June 30, 2010.

    Second Quarter 2010 Financial Highlights
    -- Revenue increased 30.1% to $74.8 million from $57.5 million in the
       prior year period.
    -- Gross profit increased 51.1% to $11.6 million from $7.7 million in the
       prior year period.
    -- Gross margin was 15.5% compared to 13.4% in the prior year period.

Mr. Jinxiang Lu, A-Power's Chairman and CEO commented, "Our results in the second quarter were primarily driven by growth in our DG business, both domestically and internationally. This segment experienced larger project orders and also benefited from higher international sales in the second quarter which fueled our gross margin increase. We are pleased that our revenue contribution from international projects has exceeded 30% of total revenues for the first time this quarter. With significant wins in Vietnam, Pakistan and Thailand, we hope to continue building upon this international success. While our DG business generated EPC work for wind projects, we did not recognize revenue from wind turbine sales in the second quarter due to delays obtaining final permits for our 2.7 MW turbines scheduled for delivery to our Inner Mongolia and Shandong wind projects. We believe wind turbine sales will pick up in the second half of the year."

Second Quarter 2010 Financial Results

Revenues in the 2010 second quarter increased 30.1% to $74.8 million from $57.5 million in the second quarter of 2009. The increase was primarily due to higher revenues recognized in the Company's core DG business, with 2.3% of the total revenue attributable to the sale of PV solar equipment. Within the DG business segment, domestic sales represented approximately 67.4% of total revenue while International DG sales represented 32.6% of total DG revenue.

Gross profit in the second quarter increased 51.1% to $11.6 million from $7.7 million in the prior year period. Gross margin was 15.5%, up from 13.4% in the same quarter of 2009. The improvement in gross margin was attributable to an increase in large-scale DG orders as well as higher international sales which typically carry slightly higher margins.

Selling, general and administrative expenses in the second quarter were $8.7 million compared with $3.0 million in the prior year period. The increase in selling, general and administrative expenses was mainly due to the growth of the businesses and $2.7 million of SG&A expenses from Evatech Co. Ltd. ("Evatech") which the Company acquired in January 2010. The Company continues to shift PV solar production for Evatech to its home base in Shenyang. As a percentage of revenues, selling, general and administrative expenses increased to 11.7% for the second quarter of 2010 from 5.2% in the second quarter of 2009.

Operating income was $2.9 million, or 3.9% of revenue in the second quarter of 2010 compared with $4.7 million, or 8.2% of revenue in the prior year period.

GAAP net income attributable to A-Power in the 2010 second quarter increased 86.3% to $11.6 million, or $0.25 per diluted share, from $6.3 million, or $0.14 per diluted share in the prior year period. Non-GAAP net income, declined to $1.1 million from $4.7 million in prior year period. In the 2010 second quarter, total shares outstanding on a diluted basis were 46.5 million shares, an increase of 32%, compared with 35.3 million in the prior year period.

Please refer to the tables below for a complete financial overview of our second quarter and first half results for 2010 and a reconciliation of non-GAAP financial measures included in this announcement to the most comparable GAAP financial measures.

Balance Sheet

As of June 30, 2010, the Company had cash and cash equivalents and restricted cash totaling $182.7 compared to $179.8 million at December 31, 2009. Prepayments, deposits, other receivables from customers were $86.7 million compared with $52.5 million at the end of 2009. Short-term loans outstanding, as of June 30, 2010, were $63.1 million, compared with $19.9 million at December 31, 2009. Working capital increased by approximately $22.6 million in the 2010 second quarter to $178.1 million. Total stockholders' equity rose to $357.3 million at June 30, 2021 from $252.6 million at December 31, 2009.

Recent Developments

Earlier in August, 2010, the Company signed cooperative agreements with The United Steelworkers (USW) and Shenyang Power Group ("SPG"). A-Power and SPG anticipate purchasing over time approximately 50,000 tons of steel from suppliers with employees represented by the USW. The USW will also guide and work collaboratively on all aspects of A-Power's U.S. market strategies including manufacturing, assembly, component sourcing, distribution and wind energy project development. The Company expects that the cooperation with USW will benefit the development of its projects including the planning of a wind turbine assembly plant in Nevada and the ongoing development of the supply chain for the expected delivery of wind turbines to the 615MW wind farm under development in Texas.

In July 2010, the Company renewed its license agreement with German wind technology company Fuhrlander AG ("Fuhrlander"), and obtained the right to manufacture, operate, service and sell 2.7 MW wind turbines using Furhlander's F2500 technology throughout China. With the license agreement with Fuhrlander, the Company expects to bolster its position in the market of high capacity 2.7MW turbines, as the wind industry is increasingly transitioning to higher capacity turbines.

Also in the month of July, the Company's subsidiary, Shenyang (Ruixiang) Lucky Wind Power Equipments Co., Ltd. ("Ruixiang") has entered into a strategic partnership with Baoding Huide Wind Power Engineering Co. Ltd ("Baoding Huide"), a renewable energy company primarily focused on the development, manufacturing, and sales of 2.0 MW wind turbines and various design parts of wind power equipments in China. The partnership is intended to complement A-Power's wind business with Baoding Huide's assembly facility of wind turbine equipment to meet the growing demand for wind power in China, the United States and elsewhere.

Effective June 30, 2010, the Company appointed Mr. Kam F. Cheung to the position of Vice President of the International Division and Mr. Morris Li, Ph.D., to the position of Vice President of Solar Research and Development. Mr. Cheung has more than 20 years of business development, corporate finance, portfolio management, and securities underwriting experience including within the energy financing industry. Doctor Li contributes to the Company's proprietary PV cell production business and has more than 13 years of semiconductor industry experience.

Business Outlook

The Company reiterates its guidance for its full year 2010 outlook of revenues of $500 million and net income of $60 million. This guidance is based upon the on-going DG projects and revenues from the expected sale of wind turbines to be generated during the remainder of 2010.

Mr. Lu continued, "We have many compelling opportunities in our business that can drive our revenue growth significantly higher in the second half of the year. Our DG business is expected to remain the primary performance driver with sales coming from our existing 15 projects. Significant sales are also expected in our wind turbine business in the second half of the year. We expect to begin delivery of 2.0 MW or larger turbines to customers in the second half of 2010. We are building a platform that will establish A-Power as an emerging leader in both distributed power and alternative power generation systems and are working aggressively to capitalize on the long-term growth opportunities in these areas."

Conference Call

A-Power's management will host an earnings conference call August 26, 2021 at 8:00 am. U.S. Eastern Time. Listeners may access the call by dialing 1-866-713-8566, or 1-617-597-5325 for international callers, access code: 63631409. A webcast of the conference call will be available through the Company's website at http://www.apowerenergy.com . A replay of the call will be accessible through September 2, 2021 by dialing 1-888-286-801 or 1-617-801-6888 for international callers, access code: 54527452.

About A-Power

A-Power Energy Generation Systems, Ltd. ("A-Power"), through its China-based operating subsidiaries, is a leading provider of distributed power generation systems in China and is expanding into the production of alternative power generation systems. Focusing on energy-efficient and environmentally friendly DG projects of 25MW to 400MW, A-Power also operates one of the largest wind turbine manufacturing facilities in China and in March 2009, entered into an agreement to establish a joint venture partnership with GE Drivetrain Technologies to produce wind turbine gearboxes in Shenyang, Liaoning Province. It also acquired Evatech, a designer and manufacturer of industrial equipment for amorphous-silicon (a-Si) photovoltaic (PV) panels, in 2010.

In addition to the establishment of strategic relationships with the world's leading wind energy design and engineering companies, A-Power has formed joint research programs with Tsinghua University and the China Academy of Sciences to develop and commercialize other renewable energy technologies. For more information, please visit http://www.apowerenergy.com .

Safe Harbor Statement

This press release may contain forward-looking statements. Any such statement is made within the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may", "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and other similar statements. Statements that are not historical facts, including statements relating to anticipated future earnings, margins, and other operating results, future growth, construction plans and anticipated capacities, production schedules and entry into expanded markets are forward-looking statements. Such forward-looking statements, based upon the current beliefs and expectations of our management, are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements, including but not limited to, the risk that: inclement weather conditions could adversely affect our operating results in particular quarters and/or fiscal years; we may experience construction, manufacturing and development delays on our projects which could adversely affect our financial condition and operating results; our limited operating history and recent entrance into new lines of business and jurisdictional markets may make it difficult for you to evaluate our business and future prospects; we may not be able to successfully develop our business in new jurisdictional markets, which would have a negative impact on the results of our operations derived from such new jurisdictional markets; our customers may not be able to obtain the financing required for these projects, and thus, we may not be able to derive revenues from such agreements, as well as other relevant risks detailed in our filings with the Securities and Exchange Commission, including those set forth in our annual report filed on Form 20-F for the fiscal year ended December 31, 2009. The information set forth herein should be read in light of such risks. We assume no obligation to update the information contained in this press release, except as required under applicable law.

    For more information, please contact:
    A-Power Energy Generation Systems
     John S. Lin
     Chief Operating Officer
     Email: john@apowerenergy.com
    ICR, LLC.
     Mr. Bill Zima
     Tel:   +1-203-682-8200
     Email: Bill.zima@icrinc.com
                         (Financial Tables to Follow)
    GAAP-non-GAAP Reconciliation Table
                                                Three Months Ended June 30,
    USD 000                                        2010              2009
    Net Income attributable to A-Power - GAAP $    11,645      $      6,252
    Reconciliation Item:
          Stock-based compensation                    498               344
          Change in fair value of warrants        (12,641)           (1,894)
          Loss on acquisition                       1,608                --
    Adjusted Net Income attributable to
     A-Power - non-GAAP                       $     1,110      $      4,702
          A-Power Energy Generation Systems Limited and Subsidiaries
     Unaudited Consolidated Statements of Income and Comprehensive Income
                   (in Thousands of United States dollars)
                             Three        Three          Six         Six
                             months       months        months      months
                             ended        ended         ended       ended
                            June 30,     June 30,      June 30,    June 30,
                              2010         2009          2010        2009
                          (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)
    Revenues             $     74,808 $     57,518  $    142,145  $    88,717
    Cost of sales and
     business taxes            63,201       49,838       120,767       77,104
    Gross profit               11,607        7,680        21,378      $11,613
    Selling, general and
     expenses                   8,722        2,990        17,638        5,554
    Income from
     operations                 2,885        4,690         3,740       $6,059
    Other income (expenses)
    Interest income
     (expenses)                    42           68            42           68
    Finance costs                (422)         (20)       (1,168)         (20)
    Gain (loss) on
     acquisition of
     Evatech                   (1,608)          --        11,981           --
    Other income
     (expense)                    (46)          78         1,464          217
    Accretion expense on
     convertible debt              --         (133)           --         (133)
    Change in fair value
     of warrants               12,642          624        26,842          624
    Change in fair value
     of embedded
     derivative -
     convertible notes             --        1,270            --        1,270
    Total other expenses
     (income)                  10,608        1,887        39,161        2,026
    Income before
     provision for
     income taxes              13,493        6,577        42,901       $8,085
    Provision for
     income taxes               2,231          138         2,457          148
    Net Income           $     11,262 $      6,439  $     40,444  $    $7,937
    Net loss (income)
     in subsidiaries
     attributable to
     interest                     383         (187)          502         (120)
    Net income
     attributable to
     A-Power Energy
     Generation Systems
     Ltd.                $     11,645 $      6,252  $     40,946  $    $7,817
    Weighted average
     number of common
     shares outstanding
     - basic               45,363,638   33,706,938    44,725,192   33,706,938
    Weighted average
     number of common
     shares outstanding
     - diluted             46,530,136   35,310,173    46,123,263   35,010,222
     SHARE - BASIC               0.26         0.19          0.92         0.23
     SHARE - DILUTED             0.25         0.14          0.89         0.19
          A-Power Energy Generation Systems Limited and Subsidiaries
                    Unaudited Consolidated Balance Sheets
                   (in Thousands of United States dollars)
                                                   June 30,     December 31,
                                                     2010           2009
                                                 (Unaudited)     (Audited)
    Current assets
    Cash and cash equivalents                  $      125,408 $      166,476
    Restricted cash                                    57,301         13,399
    Short term investment                                  74             --
    Accounts receivable, net of allowance for
     doubtful accounts of $Nil (2009 - $Nil)           39,445         12,463
    Prepayments, deposits, other receivables           86,680         52,452
    Costs and estimated earnings in excess of
     billings on uncompleted projects                   3,625          2,967
    Inventories                                        27,937         10,327
    Due from related parties                              107            105
    Total current assets                              340,577        258,189
    Accounts receivable, net of allowance for
     doubtful accounts of $Nil (2009 - $Nil)            8,611          5,738
    Long term prepayments, deposits, other
     receivables                                        8,651             --
    Property, plant and equipment, net
     accumulated depreciation of $4,370 (2009 -
     $1,912)                                           74,556         58,617
    Goodwill and other Intangible assets, net
     accumulated depreciation of $1,226 (2009
     - $169)                                           47,468         22,412
    Deposits on intangible assets                       1,819          5,657
    Deferred income tax assets                          3,583          2,321
    Long term investments                              40,857          2,423
    Total assets                               $      526,122 $      355,357
    Liabilities and Stockholder's Equity
    Current liabilities
    Short-term bank loans                      $       63,114 $       19,852
    Accounts payable                                   34,136         15,415
    Other payables and accrued liabilities             31,400         24,619
    Customer deposits                                   5,134          9,994
    Billings in excess of costs and estimated
     earnings on uncompleted projects                   3,005          4,887
    Unearned revenue                                        2          1,419
    Due to related parties                              1,407          4,158
    Income and business taxes payable                   7,332          4,078
    Fair value of forward contracts                     1,585            516
    Warrants liability                                 15,409         17,750
    Total current liabilities                  $      162,524 $      102,688
    Deferred income tax liabilities                     3,985             31
    Long-term bank loans                                1,341             --
    Retirement benefit obligations                      1,003             --
    Total liabilities                          $      168,853 $      102,719
    Stockholders' equity
    Common shares, 150,000,000 authorized with
     par value of $0.0001 per share,
     45,363,638 shares issued (2009 -
     150,000,000 authorized, 39,585,706
     issued)                                                5              4
    Additional paid-in capital                        258,441        203,491
    Accumulated other comprehensive income              9,148          6,459
    Statutory reserves                                  4,197          4,155
    Retained earnings                                  39,253         (1,651)
    Total A-Power Energy Generation Systems
     Ltd. stockholders' equity                 $      311,044 $      212,458
    Noncontrolling interest                            46,225         40,180
    Total stockholders' equity                        357,269        252,638
    Total liabilities and stockholders'
     equity                                    $      526,122 $      355,357
          A-Power Energy Generation Systems Limited and Subsidiaries
               Unaudited Consolidated Statements of Cash Flows
                   (in Thousands of United States dollars)
                                                 Six months       Six months
                                                   ended            ended
                                               June 30, 2021    June 30, 2021
                                                (Unaudited)      (Unaudited)
    Cash flows from operating activities
    Net income                                   $   40,444       $    7,937
    Items not affecting cash:                            --               --
      Stock-based compensation                          996              549
      Amortization                                    3,790              453
      Future income tax recovery                        197               --
      Amortization of deferred financing costs          229               14
      Change in fair value of warrants              (26,841)            (624)
      Change in fair value of embedded
       derivatives                                       --           (1,270)
      Accretion expenses on convertible debt             --              133
      Loss recognized from GE Joint
      Venture                                            91               --
      Change in fair value of derivatives             1,058               --
      Gains on purchase of Evatech                  (11,981)              --
      Foreign exchange gain/loss                       (967)              --
                                                      7,016            7,192
    Changes in operating assets and liabilities:
    Accounts receivable                             (28,985)          (4,295)
    Inventories                                      (3,705)          (2,333)
    Costs and estimated earnings in excess of
     billings on uncompleted contracts                 (635)             (98)
    Prepayments, deposits and other receivables     (37,822)             962
    Accounts payable and accrued liabilities         (3,801)           5,860
    Customer deposits                                (5,119)          31,742
    Due to (from) related parties                        57               --
    Billings in excess of costs and estimated
     earnings on uncompleted contracts               (1,902)           5,299
    Income and business tax payable                   2,303            1,029
    Retirement benefit obligation                        56               --
    Unearned revenue                                 (1,417)              --
                                                    (73,954)          45,358
    Cash provided by (used in) investing
    Decrease in restricted bank balances            (43,519)           1,000
    Short term investment                               (73)              --
    Purchase of property, plant and equipment        (1,341)            (427)
    Payment of intangible assets                     (3,018)              --
    Construction in Progress                             --           (2,759)
    Loans repayment (payment) from (to) third
     party                                           (5,412)              --
    Purchase of land use right                           --               --
    Acquisition of subsidiary                        (2,201)              --
    Long term investments                           (36,625)              --
                                                    (92,189)          (2,186)
    Cash provided by (used in) financing
    Proceeds from share capital, net of
     cost                                             5,566               --
    Net proceeds from private placement              78,456               --
    Net proceeds from issuance of convertible
     debt                                                --           37,096
    Repayment of notes payable                           --               --
    Cash received from bank loans                    49,900               --
    Repayment of bank loans                          (6,800)              --
    Due to (from) related parties                    (2,875)           3,996
    Cash received from Hallys upon acquisition           90               --
    Cash received from Evatech upon acquisition         169               --
                                                    124,506           41,092
    Effect of exchange rate changes                     569              (36)
    Net increase in cash and cash equivalents       (41,068)          84,228
    Cash and cash equivalents, beginning of
     period                                         166,476           44,518
    Cash and cash equivalents, end of period     $  125,408       $  128,746
    Supplemental disclosures of cash flow
    Interest paid                                       123                6
    Income tax paid                                   1,152               --

SOURCE A-Power Energy Generation Systems Limited

John S. Lin, Chief Operating Officer of A-Power Energy Generation Systems, john@apowerenergy.com; or at ICR, LLC., Mr. Bill Zima, +1-203-682-8200, or Bill.zima@icrinc.com, for APWR

(Source: PR Newswire )


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