From the Wires
Hanwei Energy Services Reports Third Quarter Fiscal 2013 Financial and Operational Results
By: Marketwired .
Feb. 6, 2013 07:19 PM
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/07/13 -- Hanwei Energy Services Corp. (TSX:HE) -
-- Revenue increases 87% to $8.6 million for the three-month period -- EBITDA increases 580% to $2.7 million for the nine-month period -- Confirmed pipe orders to be completed approximately $9.8 million
Hanwei Energy Services Corp. ("Hanwei" or the "Company") today reported its financial results for the quarter ended December 31, 2012 (the "Reporting Period"). All amounts are in Canadian Dollars unless otherwise noted.
For the three months ended December 31, 2012:
-- Revenues were $8.6 million, representing an increase of $4.0 million (or an 87% improvement) as compared to $4.6 million for the same period of the prior year. -- Gross profit was $3.0 million, representing an increase of $1.4 million (or an 88% improvement) as compared to $1.6 million for the same period of 2011. Gross margin as a percentage of sales was 35.4% as compared to 35.1% for the same period of the prior year. The Company aims to maintain a minimum gross profit margin of not less than 30% on an annualized basis. -- EBITDA from continuing operations was $0.7 million, representing an increase of $0.6 million (or a 633% improvement) as compared to $0.1 million for the same period of the prior year. -- Earnings per share was $0.00 as compared to a loss per share of $0.01 for the same period of the prior year.
For the nine months ended December 31, 2012:
-- Revenues were $21.8 million, representing an increase of $0.9 million (or a 4% improvement) as compared to $20.9 million for the same period of the prior year. -- Gross profit was $7.7 million representing an increase of $1.2 million (or an 18% improvement) as compared to $6.5 million for the same period of the prior year. Gross margin as a percentage of sales was 35.6% as compared to 31.2% for the same period of the prior year. -- EBITDA from continuing operations was $2.7 million, representing a $2.3 million increase (or a 580% improvement) as compared to EBITDA from continuing operations of $0.4 million for the same period of the prior year. -- Earnings per share was $0.01 as compared to a loss per share of $0.05 for the same period of the prior year, or an improvement of $0.06 per share.
Bank debt as of December 31, 2012 was $16.8 million versus $24.5 million as of December 31, 2011 and $21.2 million as of September 30, 2012.
The aforementioned financial highlights indicate significant improvements across the Company's key operating metrics. The Company remains focused on increasing sales, stringent management of costs, and continued commitment to manufacturing processes and quality assurance, to drive profitability. Operational highlights in this regard are as follows:
-- The Company continues to actively pursue sales across various international markets. -- Of the $21.8 million of revenues recognized for the nine months ended December 31, 2012 approximately $10.5 million was to the Company's Chinese market and $11.3 million to international markets respectively representing 48% and 52% of total sales. -- This geographic mix of revenue with increases in international orders has offset any current reductions in China sales. The Company's aforementioned $10.5 million in China sales represents a $7.4 million reduction in this market from the same period of the prior year as an outcome of a decrease in demand from major Chinese customers and increased competition from other Chinese GRE pipe and alternative product suppliers. However, the aforementioned international sales of $11.3 million have provided a comparatively greater increase of $8.3 million from international sales of $3.0 million in the same period of the prior year. -- The Company's international sales include completed orders to clients in Kazakhstan of approximately $10 million, representing an increase in this particular market of $6.5 million or 185% for the nine months ended December 31, 2012 (as compared to revenues from this market of $3.5 million for the same period of the prior year). The increase in Kazakhstan was due to successful project references on previous pipe installations providing continued confidence to both new and existing clients in this market. -- In addition to the $21.8 million of revenues noted above, the Company has confirmed pipe orders of approximately $9.8 million as of the date of this press release. -- The Company continues to stringently manage its costs and expenses. -- While revenue for the nine months ended December 31, 2012 grew to $21.8 million from $20.9 million for the same period of the prior year, the Company's cost of revenues reduced to $14.02 million from $14.4 million for the comparative period. -- General and administrative expenses for the nine months ended December 31, 2012 were $3.6 million as compared to $4.4 million for the same period of 2011. The $0.8 million reduction was primarily driven by reductions in employee costs, professional service fees and office rent. -- The Company continues to manage its debt facilities. Subsequent to the quarter end, the Company has repaid a short term loan of Renminbi ("Rmb")8 million ($1.3 million) due to mature on February 27, 2013 and obtained a new Rmb9.3 million ($1.5 million) loan that matures on May 14, 2013 and bears interest of 5.6% per annum. In addition the Company has also renewed a short-term loan of Rmb30 million ($4.8 million) due to mature on March 18, 2013 and the loan matures on January 21, 2014 and bears interest of 8.4% per annum.
Graham Kwan, Executive Vice President and Rick Huang, Chief Financial Officer of Hanwei will host a conference call to discuss its operational and financial results for the quarter ended December 31, 2012. Management invites analysts and investors to participate on the conference call:
Date: Thursday, February 7, 2013
Time: 1:00 p.m., Eastern Time
Dial in number: 1-888-364-3109 or 1-719-325-2469
A replay of the conference call will be available on the Company's website www.hanweienergy.com.
About Hanwei Energy Services Corp.
Hanwei Energy Services Corp. is a leading manufacturer of high and low pressure, fiberglass reinforced plastic pipe products and associated technologies and services for the international oil and gas, and infrastructure industries. Hanwei serves major energy customers in the Chinese and global energy markets.
The forward-looking information in this press release presents the Company's expectations as of the date of this press release and accordingly is subject to change after such date. Readers are cautioned that reference to "orders" hereto are not recognized under IFRS and should not be construed to be indicators of performance or purported to be an alternative to sales or any other financial measures under IFRS. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company does not undertake to update this information at any particular time, except as required by applicable securities legislation.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
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