- Backlog at $731.7 million - NEW YORK, Aug. 13
/PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd.
(NYSE:KHD) today announced results for the second quarter and
six-months ended June 30, 2009. All dollar figures are in U.S.
dollars. For the six months ended June 30, 2009, KHD reported
revenues of $218.0 million, with a net loss of $6.2 million or
$0.21 per share diluted. This includes a loss on terminated
contracts of $2.1 million, restructuring costs relating to the
write-down of inventories of $1.1 million, restructuring costs of
$6.8 million and a $9.5 million loss resulting from the settlement
of KHD's investment in the preferred shares of its former
subsidiaries. This compares with revenues of $281.1 million and a
net income of $27.1 million, or $0.89 per share diluted, for the
same period of 2008. KHD's operating income has also been
significantly impacted by a substantial reduction in the income
derived from its interest in a resource property that is attributed
to lower production by the operators and reduced commodity prices.
Cement revenues fell by 22 percent to $188.0 million in the first
half of 2009 and coal and minerals revenues were also down by 24
percent to $29.9 million in the same period. For the quarter ended
June 30, 2009, KHD reported revenues of $105.8 million with a net
loss of $7.5 million, or $0.25 diluted, compared with revenues of
$144.2 million and net income of $19.7 million, or $0.64 per share
diluted, for the same period in 2008. Cement revenues were $91.3
million in the quarter, a 28 percent decrease as compared to cement
revenues of $127.0 million for the second quarter of 2008. Coal and
minerals revenues were $14.6 million, a decrease of 15 percent from
coal and minerals revenues of $17.2 million for the quarter ended
June 30, 2008. Gross profit margin, excluding losses on terminated
customer contracts and restructuring costs, was 20 percent compared
to 19 percent for the same period in 2008. The slight increase in
gross profit margin in the six-month period ended June 30, 2009 can
be attributed to our continuing efficient execution and delivery of
projects in accordance with the financial, scheduling and quality
parameters set for such projects, and the reduction of sales and
marketing costs included in project cost as a result of our shift
in sales and marketing focus. Selling, general and administrative
expenses in the six-month period ended June 30, 2009 increased to
$37.5 million from $26.9 million in the six-month period ended June
30, 2008. This was due in part to the inclusion of higher sales and
marketing costs as a result of our shift in sales and marketing
focus and the under-utilization of staff due to the decrease in
market activity. KHD's balance sheet remains strong and at the end
of the second quarter of 2009, KHD had $356.8 million in cash, cash
equivalents and short term cash deposits. The reduction in the
level of cash reflects the effects of working capital movements as
our order backlog decreases. Shareholder's equity was $257.9
million as of June 30, 2009. Order intake for the six months ended
June 30, 2009 was $112.2 million, a decrease of 82 percent from the
first six months of 2008. This reflects the current low level of
demand for new cement capacity. Approximately 57 percent of the
total order intake in the first six months of 2009 came from the
Asian region, primarily India. Of the total order intake, cement
order intake was $92.6 million in the first half of 2009, a
decrease of 84 percent from order intake of $561.2 million in the
first half of 2008, and coal and minerals order intake was $19.6
million in the first half of 2009, a decrease of 59 percent from
order intake of $47.6 million for the same period in 2008. Order
intake for the quarter ended June 30, 2009 was very disappointing.
Order intake was $31.1 million, representing only 10 percent of the
level achieved in the comparable quarter in 2008. However, this was
against a very difficult comparable period. Order intake in the
second quarter of 2008 was the highest ever recorded by KHD. Cement
order intake was $22.4 million and coal and minerals order intake
was $8.7 million in the second quarter of 2009. These represent
declines of 93 percent and 57 percent, respectively, as compared
with the second quarter of 2008. Order backlog as of June 30, 2009
was $731.7 million, which represents a decrease of 44 percent from
the same period in 2008. The majority of the order backlog is in
the world's emerging economies: 44 percent in Russia and Eastern
Europe, 38 percent in Asia and 13 percent in the Middle East. Of
the total order backlog, approximately 17 percent is categorized as
at risk. Through the second quarter of 2009, there has been no
material change in the contracts at risk category of our backlog.
Mr. Salo, Chief Executive Officer, commented, "Our new operating
structure has now become effective with the creation of four
customer service centers serving the regions of Europe, the Middle
East and Africa; Russia/CIS; India; and the Americas, with KHD
Central serving as our global support and management center. We
continue to negotiate the terms of a proposed transaction regarding
the divestment of our coal and minerals business and our workshop
in Cologne, Germany but have yet to enter into a definitive
agreement." Mr. Hartslief, Chief Financial Officer, commented, "We
continue to plan for a significant reduction in the level of
activity in 2010 and beyond. We are refocusing on our core cement
operations and proceeding as planned with our restructuring
program. We are aligning capacities to changes in market demands,
allocating resources depending on geographical needs and focusing
on markets and equipment that will meet our objective of offering
cost effective solutions to our customers. Despite the current
market conditions, we continue to invest in research and
development to maintain our competitive position and aim to build
up our service offerings so that we may increase the proportion of
our revenues from less cyclical and more stable revenue streams."
Mr. Salo concluded, "Based on the current global market conditions
and uncertainty in project financing, we believe that the business
environment will remain challenging in the short term. Many
countries have established stimulus packages that should boost
demand for construction and construction materials. We continue our
efforts to explore the current business opportunities. Our focus
will be in the areas that show significant sales opportunities,
most notably in India and North Africa. In these areas we estimate
that the short term demand for our products and services will be
satisfactory, elsewhere the short term demand will remain weak.
Opportunities for larger projects such as new greenfield capacity
have become scarce, with these opportunities perhaps around a third
of the level of the previous year. The main opportunities for KHD
are in smaller projects which are typically focused on upgrades and
efficiency improvements. We are still seeing a significant number
of enquiries in this latter area. In general, however, customers
remain reluctant to make firm commitments to new projects of any
size." Shareholders are encouraged to read the entire Form 6-K,
which has been filed with the SEC, for a greater understanding of
KHD. The Form 6-K is also available on the Company's website. Today
at 10:00 a.m. EDT (7:00 a.m. 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 will continue for seven days or
to listen to the audio replay by phone, dial: 1 (888) 286 8010
using conference ID number: 97571927. 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. 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, Eastern Europe, the Middle
East, the United States and internationally including, the
continued worldwide economic downturn resulting from the effects of
the sub-prime lending and general credit market crises, volatile
energy costs, decreased consumer confidence and other factors,
(2)continuing decreased demand for our products, including the
renegotiation, delay and/or cancellation of projects by our
customers and the reduction in the number of project opportunities,
(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 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 and 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, and (14) other factors beyond our control.
Additional information about these and other assumptions, risks and
uncertainties are set out in the "Risk Factors" section in our Form
6-K filed with the Securities and Exchange Commission and the
"Risks and Uncertainties" section in our MD&A filed with
Canadian security regulators.
_____________________________________________________________________
Contact Information: Allen & Caron Inc. Joseph Allen
(investors) 1 (212) 691-8087 or Brian Kennedy (media) 1 (212)
691-8087 Rene Randall KHD Humboldt Wedag International Ltd. 1 (604)
683-8286 ex 224 - UNAUDITED INTERIM FINANCIAL TABLES FOLLOW - KHD
HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS June
30, 2009 and December 31, 2008 (U.S. Dollars in Thousands) ASSETS
2009 2008 ---- ---- Current Assets Cash and cash equivalents
$355,161 $409,087 Short-term cash deposits 1,675 - Securities 3,804
2,987 Restricted cash 27,450 32,008 Accounts receivable, trade
63,650 62,760 Other receivables 23,402 28,313 Inventories 93,425
110,161 Contract deposits, prepaid and other 55,956 58,694 Future
income tax assets 6,130 7,679 ------- ------- 630,653 711,689
Non-current Assets Notes receivables 11,265 - Property, plant and
equipment 1,904 2,489 Interest in resource property 25,316 24,861
Equity method investments 283 325 Future income tax assets 8,692
6,339 Investment in preferred shares of former subsidiaries -
19,125 Other non-current assets 836 830 ----- ----- 48,296 53,969
------ ------ $678,949 $765,658 ======== ======== KHD HUMBOLDT
WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS (cont'd) June
30, 2009 and December 31, 2008 (U.S. Dollars in Thousands)
LIABILITIES 2009 2008 ---- ---- Current Liabilities Accounts
payable and accrued expenses $117,179 $178,582 Progress billing
above costs and estimated earnings on uncompleted contracts 145,759
171,843 Advance payments received from customers 12,012 11,331
Income tax liabilities 5,400 9,112 Deferred credit, future income
tax assets 3,500 4,212 Accrued pension liabilities, current portion
2,173 2,158 Provision for warranty costs, current portion 29,689
30,856 Provision for restructuring costs 7,048 - Provision for
supplier commitments on terminated customer contracts 23,900 23,729
------ ------ 346,660 431,823 Long-term Liabilities Long-term debt,
less current portion 11,395 11,313 Accrued pension liabilities,
less current portion 29,285 29,209 Provision for warranty costs,
less current portion 9,086 7,524 Deferred credit, future income tax
assets 4,206 4,176 Future income tax liability 9,083 7,646 Other
long-term liabilities 6,797 8,344 ----- ----- 69,852 68,212 ------
------ Total liabilities 416,512 500,035 MINORITY INTERESTS 4,568
3,709 SHAREHOLDERS' EQUITY Common stock, without par value 143,826
143,826 Treasury stock (96,157) (93,793) Contributed surplus 7,208
7,623 Retained earnings 149,432 155,681 Accumulated other
comprehensive income 53,560 48,577 ------ ------ 257,869 261,914
------- ------- $678,949 $765,658 ======== ======== KHD HUMBOLDT
WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the Six Months Ended June 30, 2009 and 2008 (U.S. Dollars in
Thousands, Except per Share Data) 2009 2008 ---- ---- Revenues
$217,975 $281,076 Cost of revenues 173,727 227,537 Loss on
terminated customer contracts 2,051 - Restructuring costs,
write-down of inventories 1,121 - ------ ------ Gross profit 41,076
53,539 Income from interest in resource property 3,922 14,194
Selling, general and administrative expense (37,517) (26,915)
Stock-based compensation recovery (expenses) - selling, general and
administrative 416 (2,126) Restructuring costs (6,773) - -------
------- Operating income 1,124 38,692 Interest income 3,948 10,875
Interest expense (1,414) (961) Foreign currency transactions
(losses), net 680 (9,021) Share of loss of equity method investee
(21) (49) Loss on settlement of investment in preferred shares of
former subsidiaries (9,538) - Other income (expenses), net 1,065
(2,962) ----- ------- Income (loss) before income taxes and
minority interests (4,156) 36,574 Provision for income taxes:
Income taxes (1,264) (6,106) Resource property revenue taxes (889)
(3,091) ----- ------- (2,153) (9,197) ------- ------- Income (loss)
before minority interests (6,309) 27,377 Minority interests 60
(276) ------ ------ Net income (loss) $(6,249) $27,101 =======
======= Basic (loss) earning per share $(0.21) $0.89 ====== =====
Diluted (loss) earnings per share $(0.21) $0.89 ====== =====
Weighted average of common shares outstanding - basic 30,450,067
30,282,295 - diluted 30,450,067 30,617,689 KHD HUMBOLDT WEDAG
INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME (LOSS) For the
Three Months Ended June 30, 2009 and 2008 (U.S. Dollars in
Thousands, Except per Share Data) 2009 2008 ---- ---- Revenues
$105,847 $144,240 Cost of revenues 81,454 115,908 Loss on
terminated customer contracts 2,558 - ----- ------- Gross profit
21,835 28,332 Income from interest in resource property 1,792
10,228 Selling, general and administrative expense (22,454)
(14,070) Stock-based compensation recovery (expenses) - selling,
general and administrative 1,305 (1,063) Restructuring costs (17) -
------ ------ Operating income 2,461 23,427 Interest income 1,631
5,813 Interest expense (720) (442) Foreign currency transactions
losses, net (903) (596) Share of loss of equity method investee -
(49) Loss on settlement of investment in preferred shares of former
subsidiaries (9,538) - Other income (expenses), net 250 (1,620)
------ ------- Income (loss) before income taxes and minority
interests (6,819) 26,533 Provision for income taxes: Income taxes
(293) (4,415) Resource property revenue taxes (398) (2,215) -----
------- (691) (6,630) ----- ------- Income (loss) before minority
interests (7,510) 19,903 Minority interests 56 (233) ----- -----
Net income (loss) $(7,454) $19,670 ======= ======= Basic (loss)
earning per share $(0.25) $0.65 ------ ===== Diluted (loss)
earnings per share $(0.25) $0.64 ====== ===== Weighted average of
common shares outstanding - basic 30,378,286 30,330,462 - diluted
30,378,286 30,707,222 KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
FINANCIAL SUMMARY As of June 30, 2009 (U.S. Dollars in Thousands,
Except per Share Data and Ratios) Cash and cash equivalents
$355,161 Short-term deposits 1,675 Securities 3,804 Restricted cash
27,450 Working capital 283,993 Total assets 678,949 Shareholders'
equity 257,869 Book value per share 8.52 Current ratio 1.82
Long-term debt to equity ratio 0.04 DATASOURCE: KHD Humboldt Wedag
International Ltd. CONTACT: investors, Joseph Allen, , or media,
Brian Kennedy, , both of Allen & Caron Inc., +1-212-691-8087,
for KHD Humboldt Wedag International Ltd.; or Rene Randall of KHD
Humboldt Wedag International Ltd., +1-604-683-8286, ext. 224, Web
Site: http://www.khdhumboldt.com/
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