SHENZHEN, China, Jan. 28, 2011 /PRNewswire-Asia/ -- China BAK
Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK),
a leading global manufacturer of lithium-based battery cells, today
announced its financial results for the first quarter of fiscal
year 2011 ended December 31, 2010
("Q1 2011").
Recent Achievements and Highlights
- Revenue increased 26.5% year-over-year and 14.3% quarter on
quarter (Q1 2011 compared to Q4 2010)
- Revenues from high-power batteries more than tripled
sequentially in Q1 2011 due to robust demand for batteries used in
Energy Storage Solutions
- Gross margin improved to 15.7% in the first quarter of fiscal
2011 from 9.5% in the previous quarter
- Reported another quarter of positive cash flow of $18.4 million from operating activities,
reflecting continued progress in the Company's turnaround plan
- Days Sales Outstanding declined to 126 days from 134 days last
quarter and Days Sales of Inventory declined to 110 days from 115
days in the previous quarter
- In November 2010, Chery
Automobile Co., Ltd. officially launched its first Lithium-ion
solution EV, Ruilin M1, powered by China BAK's lithium-ion
phosphate batteries at the 25th World Electric Vehicle Symposium
and Exposition
- BAK International (Tianjin)
Limited ("BAK Tianjin"), the Company's wholly-owned subsidiary,
received a subsidy of approximately $7.5
million for its automated high power lithium battery project
in December 2010
During the quarter ended December 31,
2010, the Company recorded $3.6
million in non-cash expense items following a strategic
review of its operations. The Company has presented non-GAAP gross
profit, operating income (loss), net income (loss) and diluted loss
per share excluding the impact of non-cash items on its financial
results for the three months ended December
31, 2010, September 30, 2010,
and December 31, 2009. A
reconciliation of these non-GAAP measures to the corresponding GAAP
measure is provided in Table 4 below. The Company uses the non-GAAP
information in its internal performance measures to analyze
performance between periods, develop internal projections and
measure management performance. The Company believes the non-GAAP
results provide investors with a measurement of operating results
which are comparable with subsequent periods.
First Quarter Fiscal Year 2011 Financial
Results
Net revenues for the first quarter were $63.5 million, up 14.3% from $55.6 million last quarter and up 26.5% from
$50.2 million for the same period in
fiscal 2010.
Revenues from prismatic products, including aluminum-case cells
and battery packs, which are used in mobile phones and certain
personal electronic devices, were $47.5
million, up 10.2% from $43.1
million last quarter and up 22.5% from $38.8 million for the same period in fiscal
2010.
Revenues from cylindrical cells used in notebook computers were
$10.5 million, up 17.6% from
$8.9 million last quarter and up
29.1% from $8.1 million for the same
period in fiscal 2010.
Revenues from lithium polymer cells, used in personal electronic
devices such as PDAs, MP3 players and Bluetooth devices, were
$3.5 million, up 17.2% from last
quarter and up 9.4% from the same period in fiscal 2010.
Revenues from high-power lithium battery cells, used in electric
bicycles, power tools, uninterruptible power supplies, and other
applications manufactured at the Company's Tianjin facility, were $2.1 million, up around two times the revenue
from last quarter and up nearly 12 times the revenue from the same
period in fiscal 2010.
Gross profit for the first quarter of fiscal year 2011 was
$10.0 million, up 88.3% from
$5.3 million last quarter and up 4.6%
from $9.6 million in the same quarter
of last year. Gross margin was 15.7% significantly up from 9.5%
last quarter and slightly lower than 19.0% in the year ago period.
The increase in gross profit was a result of increased direct sales
of battery packs to OEM cell phone manufacturers driven by strong
customer demand. The year-over-year decline in gross margin was a
result of the Company's adoption of a competitive pricing strategy
for its cylindrical cells to increase its market share in the OEM
market.
Operating expenses totaled $11.8
million, or 18.6% of revenue, in the first quarter down 6.7%
from $12.6 million, or 22.6% of
revenue, in the last quarter and down 5.1% from $12.4 million, or 24.8% of revenue, in the first
quarter of fiscal 2010. Research and development expenses were
$1.6 million, or 2.6% of revenue,
down 12.3% from $1.9 million, or 3.4%
of revenue in the last quarter and down 7.0% from $1.8 million, or 3.5% of revenue in the same
quarter of fiscal 2010. Sales and marketing expenses were
$2.3 million, or 3.6% of revenue down
10.4% from $2.5 million, or 4.6% of
revenue in the last quarter and up 12.1% from $2.0 million, or 4.0% of revenue in the same
quarter of fiscal 2010. General and administrative expenses were
$7.9 million, or 12.4% of revenue up
26.0% from $6.2 million, or 11.2% of
revenue in the last quarter and down 8.8% from $8.6 million or 17.2% of revenue in the same
quarter of fiscal 2010.
Operating loss for the first quarter was $1.8 million compared to operating loss of
$7.3 million in the last quarter and
operating loss of $2.9 million in the
same quarter of fiscal 2010. Excluding the impact of non-cash
items, including provisions for doubtful debts, obsolete
inventories and impairment charges related to strategic review of
business operations, non-GAAP operating income was $1.8 million in the first quarter of fiscal 2011
compared to non-GAAP operating loss of $3.3
million in the last quarter and non-GAAP operating income of
$2.7 million in the same period a
year ago.
Net loss was $3.7 million, or
diluted loss per share of $0.06, in
the first quarter of fiscal 2011 compared to net loss of
$8.6 million, or diluted loss per
share of $0.14, in the last quarter
and net loss of $3.4 million, or
diluted loss per share of $0.06, in
the same quarter of fiscal 2010. Excluding the impact of non-cash
items, including provisions for doubtful debts, obsolete
inventories and impairment charges related to strategic review of
business operations, non-GAAP net loss for the first quarter of
fiscal 2011 was $0.1 million, or a
loss of $0.00 per diluted share,
compared to non-GAAP net loss of $4.6
million in the previous quarter, or a loss of $0.08 per diluted share, and non-GAAP net income
of $2.2 million, or earnings of
$0.04 per diluted share in the same
period a year ago.
Financial Condition
On December 31, 2010 China BAK had
$24.5 million in cash and cash
equivalents. For the first quarter of fiscal year 2011, Days Sales
Outstanding (DSO) decreased to 126 days from 134 days last quarter
and Days Sales of Inventory decreased to 110 days from 115 days
last quarter. Short-term bank loans and long-term bank loans
totaled $177.6 million as compared to
$179.3 million on September 30, 2010. Shareholders' equity totaled
$149.4 million. China BAK had
$66.9 million available for borrowing
under its credit facilities. The Company generated $18.4 million from cash flow from operating
activities in the first quarter of fiscal 2011.
Business Outlook
In fiscal 2011, China BAK expects to further penetrate into the
rapidly growing EV market, strengthening its existing market
position. The Company also intends to be certified by additional
OEM customers in the prismatic battery packs segment.
"As a result of our cost-control measures and profitability
focus, we continue to experience recovery in gross margin level and
increased cash flow generation, reflecting continued progress of
our turnaround strategy," commented Ke
Marcus Cui, Interim CFO of China BAK.
"Our aggressive sales and marketing efforts in promoting our
high-power lithium batteries used in EVs, E-bikes and UPS - energy
storage solution, we continue to experience significant revenue
growth from this segment. We believe, in the year ahead, due to the
outstanding growth opportunities in the EV industry, BAK Tianjin
will become a significant revenue contributor to the Company,"
commented Mr. Xiangqian Li, CEO of
China BAK.
Conference Call
China BAK will host a conference call at 8:00 a.m. ET on Friday,
January 28, 2011 to discuss results for the first quarter of
fiscal year 2011 ended December 31,
2010. Joining Xiangqian Li,
China BAK's President and Chief Executive Officer on the call will
be Ke Marcus Cui, Interim Chief
Financial Officer. To participate in the conference call, please
dial the following number approximately fifteen minutes prior to
the scheduled conference call time: 877-847-0047 or 212-444-0113.
International callers should dial 852-3006-8101. The pass code for
the call is 641-962. If you are unable to participate in the call
at this time, a replay will be available from 11:00 a.m. ET on Friday,
January 28, 2011 through 11:00 a.m.
ET, Friday, February 11, 2011.
To access the replay, please dial 866-572-7808. International
callers should dial (852) 3012-8000. The pass code for the replay
is 641-962. The conference call will be broadcast live over the
Internet and can be accessed by all interested parties on the China
BAK website at http://www.bak.com.cn/. To listen to the live
webcast, please go to China BAK's website 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, after the call a replay will be
available on China BAK's website for a period of one year.
About China BAK Battery Inc.
China BAK Battery, Inc. (NASDAQ: CBAK) is a leading global
manufacturer of lithium-based battery cells. The Company produces
battery cells that are the principal component of rechargeable
batteries commonly used in cellular phones, notebook computers and
portable consumer electronics such as digital media devices,
portable media players, portable audio players, portable gaming
devices, and PDAs. China BAK Battery, Inc.'s production facilities,
located in Shenzhen and
Tianjin, PRC, cover over three
million square feet and have been recently expanded to support the
production of larger batteries for various types of vehicles. For
more information regarding China BAK Battery, Inc., please visit
http://www.bak.com.cn.
Safe Harbor Statement
This press release contains forward-looking statements, which
are subject to change. The forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. All "forward-looking statements"
relating to the business of China BAK Battery, Inc. and its
subsidiary companies, which can be identified by the use of
forward-looking terminology such as "believes," "expects" or
similar expressions, involve known and unknown risks and
uncertainties which could cause actual results to differ. These
factors include but are not limited to: risks related to China
BAK's business and risks related to operating in China. Please refer to China BAK's Annual
Report on Form 10-K for the fiscal year ended September 30, 2010, for specific details on risk
factors. Given these risks and uncertainties, you are cautioned not
to place undue reliance on forward-looking statements. China BAK's
actual results could differ materially from those contained in the
forward-looking statements. China BAK undertakes no obligation to
revise or update its forward-looking statements in order to reflect
events or circumstances that may arise after the date of this
release.
Table 1
China BAK
Battery, Inc. and Subsidiaries
Condensed
Interim Consolidated Statements of
Operations and Comprehensive
Loss
For the
Three Months Ended December
31,
2010,
September
30,
2010 and
December
31,
2009
(Amounts in
thousands, except per
share data)
|
|
|
Three Months
Ended
|
|
|
December
31,
2010
|
|
September
30, 2010
|
|
December
31, 2009
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net Revenues
|
$
63,530
|
|
$
55,594
|
|
$
50,228
|
|
Cost of revenues
|
(53,534)
|
|
(50,286)
|
|
(40,668)
|
|
Gross profit
|
9,996
|
|
5,308
|
|
9,560
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Research and
development expenses
|
(1,645)
|
|
(1,875)
|
|
(1,768)
|
|
Sales and marketing
expenses
|
(2,273)
|
|
(2,536)
|
|
(2,028)
|
|
General and
administrative expenses
|
(7,878)
|
|
(6,253)
|
|
(8,637)
|
|
Impairment
charge
|
-
|
|
(1,981)
|
|
-
|
|
Total
operating expenses
|
(11,796)
|
|
(12,645)
|
|
(12,433)
|
|
|
|
|
|
|
|
|
Operating loss
|
(1,800)
|
|
(7,337)
|
|
(2,873)
|
|
|
|
|
|
|
|
|
Finance costs, net
|
(2,840)
|
|
(2,640)
|
|
(2,153)
|
|
Government grant
income
|
607
|
|
221
|
|
355
|
|
Other income /
(expense)
|
241
|
|
(46)
|
|
7
|
|
Loss before income
taxes
|
(3,792)
|
|
(9,802)
|
|
(4,664)
|
|
|
|
|
|
|
|
|
Income tax benefit
|
134
|
|
1,224
|
|
1,272
|
|
Net loss
|
$
(3,658)
|
|
$
(8,578)
|
|
$
(3,392)
|
|
|
|
|
|
|
|
|
Other comprehensive income /
(loss)
|
2,050
|
|
2,193
|
|
(108)
|
|
- Foreign currency translation
adjustment
|
|
Comprehensive loss
|
$
(1,608)
|
|
$
(6,385)
|
|
$
(3,500)
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
Basic
|
$
(0.06)
|
|
$
(0.14)
|
|
$
(0.06)
|
|
Diluted
|
$
(0.06)
|
|
$
(0.14)
|
|
$
(0.06)
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
Basic
|
62,895
|
|
62,890
|
|
61,108
|
|
Diluted
|
62,895
|
|
62,890
|
|
61,108
|
|
|
|
|
|
|
|
|
|
Table
2
China BAK
Battery, Inc. and Subsidiaries
Condensed
Interim Consolidated Balance Sheets
As
of December
31, 2010 and
September 30, 2010
(Amounts in
thousands)
|
|
|
December
31,
|
|
September
30,
|
|
|
2010
|
|
2010
|
|
|
(Unaudited)
|
|
(Audited)
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash
equivalents
|
$
24,527
|
|
$
22,589
|
|
Pledged
deposits
|
16,365
|
|
9,426
|
|
Trade accounts receivable,
net
|
92,219
|
|
86,198
|
|
Inventories
|
67,167
|
|
64,048
|
|
Prepayments and other
receivables
|
5,055
|
|
5,513
|
|
Deferred tax
assets
|
7,209
|
|
6,888
|
|
Total
current assets
|
212,542
|
|
194,662
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
229,074
|
|
228,885
|
|
Lease prepayments,
net
|
32,178
|
|
31,924
|
|
Intangible assets,
net
|
235
|
|
184
|
|
Deferred tax
assets
|
1,706
|
|
1,681
|
|
Total assets
|
$
475,735
|
|
$
457,336
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term bank
loans
|
$
139,774
|
|
$
137,418
|
|
Current maturities of
long-term bank loans
|
15,146
|
|
11,956
|
|
Accounts and bills
payable
|
110,591
|
|
93,725
|
|
Accrued expenses and other
payables
|
19,681
|
|
22,411
|
|
Total current liabilities
|
285,192
|
|
265,510
|
|
|
|
|
|
|
Long-term bank loans, less
current maturities
|
22,719
|
|
29,890
|
|
Deferred
revenue
|
7,392
|
|
7,353
|
|
Other long-term
payables
|
10,359
|
|
3,431
|
|
Deferred tax
liabilities
|
723
|
|
719
|
|
Total liabilities
|
326,385
|
|
306,903
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Ordinary shares US$ 0.001
par value; 100,000,000 authorized; 63,612,526 and 63,616,276 issued
and outstanding as of September 30, 2010 and December 31, 2010
respectively
|
64
|
|
64
|
|
Donation Shares
|
14,102
|
|
14,102
|
|
Additional
paid-in-capital
|
125,077
|
|
124,551
|
|
Statutory
reserves
|
7,645
|
|
7,315
|
|
Accumulated
deficit
|
(23,531)
|
|
(19,542)
|
|
Accumulated other
comprehensive income
|
30,060
|
|
28,010
|
|
Less: Treasury
shares
|
(4,067)
|
|
(4,067)
|
|
Total shareholders' equity
|
149,350
|
|
150,433
|
|
Total liabilities and
shareholders' equity
|
$
475,735
|
|
$
457,336
|
|
|
|
|
|
|
|
Table 3
China BAK
Battery, Inc. and Subsidiaries
Condensed
Interim Consolidated Statements of Cash Flows
For
the Three Months
Ended December
31,
2010,
September
30,
2010 and
December
31,
2009
(Amounts in
thousands)
|
|
|
Three Months
Ended
|
|
|
December
31,
2010
|
|
September
30, 2010
|
|
December
31, 2009
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Cash flow from operating
activities
|
|
|
|
|
|
|
Net loss
|
$
(3,658)
|
|
$
(8,578)
|
|
$
(3,392)
|
|
Adjustments to reconcile
net loss to net cash provided by / (used in)operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
4,319
|
|
5,143
|
|
4,193
|
|
Provision for doubtful
debts
|
3,061
|
|
1,336
|
|
4,736
|
|
Provision for obsolete
inventories
|
-
|
|
(717)
|
|
(280)
|
|
Impairment
charge
|
-
|
|
1,981
|
|
-
|
|
Share-based
compensation
|
525
|
|
1,420
|
|
1,145
|
|
Deferred income
taxes
|
(236)
|
|
(742)
|
|
(1,495)
|
|
Deferred
revenue
|
(60)
|
|
(59)
|
|
(59)
|
|
Exchange
(gain) / loss
|
(66)
|
|
614
|
|
(263)
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
Trade accounts
receivable
|
(7,872)
|
|
(6,688)
|
|
4,475
|
|
Inventories
|
(2,228)
|
|
2,321
|
|
(13,573)
|
|
Prepayments and
other receivables
|
522
|
|
98
|
|
(8,197)
|
|
Accounts and bills
payable
|
15,962
|
|
10,173
|
|
(4,795)
|
|
Accrued expenses
and other payables
|
8,117
|
|
(1,825)
|
|
131
|
|
Net cash provided
by / (used
in) operating activities
|
$
18,386
|
|
$
4,477
|
|
$
(17,373)
|
|
|
|
|
|
|
|
|
Cash flow from investing
activities
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
(5,968)
|
|
(3,000)
|
|
(3,905)
|
|
Purchases of intangible
assets
|
-
|
|
-
|
|
(1)
|
|
Net cash used in investing
activities
|
$
(5,968)
|
|
$
(3,000)
|
|
$
(3,906)
|
|
|
|
|
|
|
|
|
Cash flow from financing
activities
|
|
|
|
|
|
|
Proceeds from
borrowings
|
27,754
|
|
3,300
|
|
40,938
|
|
Repayment of
borrowings
|
(31,760)
|
|
(6,660)
|
|
(63,714)
|
|
(Increase)
/ decrease in
pledged deposits
|
(6,758)
|
|
(6)
|
|
12,071
|
|
Proceeds from issuance of
capital stock, net
|
|
|
-
|
|
19,616
|
|
Net cash (used in) / provided by
financing activities
|
$
(10,763)
|
|
$
(3,366)
|
|
$
8,911
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
283
|
|
(397)
|
|
(7)
|
|
Net increase /
(decrease) in cash and cash
equivalents
|
1,938
|
|
(2,286)
|
|
(12,375)
|
|
Cash and cash equivalents at the
beginning of the period
|
22,589
|
|
24,875
|
|
30,678
|
|
Cash and cash equivalents at the
end of the period
|
$
24,527
|
|
$
22,589
|
|
$
18,303
|
|
|
|
|
|
|
|
|
|
Table
4
|
|
China BAK
Battery, Inc. and subsidiaries
|
|
Reconciliation of non-GAAP to
GAAP measures
|
|
|
For the
quarter ended
December 31, 2010
|
For the
quarter ended
September 30,
2010
|
For the
quarter ended
|
|
December 31,
2009
|
|
|
|
|
|
|
Gross Profit as reported under
GAAP
|
9,996,364
|
5,307,908
|
9,559,880
|
|
Add: Provision / (recovery) for
obsolete inventories
|
|
-716,973
|
-280,255
|
|
Non-GAAP Gross
Profit
|
9,996,364
|
4,590,935
|
9,279,625
|
|
|
|
|
|
|
Operating Income (Loss) as
reported under GAAP
|
-1,800,414
|
-7,336,480
|
-2,873,537
|
|
Add: Provision for doubtful
debts
|
3,060,868
|
1,336,468
|
4,736,336
|
|
Add: Provision / (recovery) for
obsolete inventories
|
-
|
-716,973
|
-280,255
|
|
Add: Share-based compensation
costs
|
525,019
|
1,420,061
|
1,145,210
|
|
Add: Impairment
charge
|
-
|
1,980,741
|
-
|
|
Non-GAAP Operating Income
(Loss)
|
1,785,473
|
-3,316,183
|
2,727,754
|
|
|
|
|
|
|
Net Income (Loss) as reported
under GAAP
|
-3,657,792
|
-8,577,780
|
-3,392,327
|
|
Add: Provision for doubtful
debts
|
3,060,868
|
1,336,468
|
4,736,336
|
|
Add: Provision for obsolete
inventories
|
-
|
-716,973
|
-280,255
|
|
Add: Share-based compensation
costs
|
525,019
|
1,420,061
|
1,145,210
|
|
Add: Impairment
charge
|
-
|
1,980,741
|
-
|
|
Non-GAAP Net Income
(Loss)
|
-71,905
|
-4,557,483
|
2,208,964
|
|
|
|
|
|
|
Diluted Earnings (Loss) Per
Share reported under GAAP
|
-$0.06
|
-$0.14
|
-$0.06
|
|
Add: Provision for doubtful
debts
|
$0.05
|
$0.02
|
$0.08
|
|
Add: Provision for obsolete
inventories
|
$0.00
|
-$0.01
|
$0.00
|
|
Add: Share-based compensation
costs
|
$0.01
|
$0.02
|
$0.02
|
|
Add: Impairment
charge
|
$0.00
|
$0.03
|
$0.00
|
|
Non-GAAP Diluted (Loss) Earnings
Per Share
|
$0.00
|
-$0.08
|
$0.04
|
|
|
|
|
|
|
Diluted weighted average number
of common stock outstanding
|
62,895,001
|
62,890,069
|
61,107,713
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China BAK Battery, Inc.