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Asian Financial Announces First Quarter Fiscal 2008 Results
Nov 15, 2007 (08:11 AM EST)
BEIJING, Nov. 15 /Xinhua-PRNewswire/ -- Asian Financial, Inc. ("Asian Financial", "Company"), a leading provider of offset printing equipment and solutions in China through its wholly-owned operating subsidiary, Duoyuan Digital Printing Technology Industry (China) Co., Ltd. ("Duoyuan"), today reported financial results for first quarter of fiscal 2008 ended September 30, 2007.
First Quarter Fiscal 2008 Highlights -- Total revenues were $22.6 million, a 29.1% increase over the same quarter in fiscal 2007 -- Gross profit was $11.4 million, up 47.2% over the same period last year -- Gross margin was 50.5%, up 620 basis points over the same quarter in fiscal 2007 -- Operating income was $8.3 million, a 69.9% increase over the same period last year -- Net income was $6.8 million, or $0.27 per basic and diluted share, up 60.7% over the same period last year -- Non-GAAP net income was $7.5 million, or $0.30 per basic and diluted share -- Sales of new 104 cm width large format presses reached $2.1 million -- Established corporate governance structure and appointed a CFO -- Effected a 1-for-2.68189924 reverse stock split effective July 17, 2007
Commenting on the results, Mr. Wenhua Guo, Chairman and CEO of Asian Financial, said, "We are off to an exciting start in the first quarter of fiscal 2008. We increased the contribution of our technologically advanced large-format multicolor presses, which was the main driver behind in our top line growth and record gross margin."
First Quarter 2008 Results
Revenues for the first quarter of fiscal 2008 were $22.6 million, up 29.1% from $17.5 million in the first quarter of fiscal 2007. The increase in revenue was driven by continued growth in sales of large-format multicolor offset presses due to strong ongoing demand from China's printing industry.
Gross profit for the first quarter of fiscal 2008 was $11.4 million, up 47.2% from $7.8 million in the same period a year ago. Gross margin was 50.5% in the first quarter of fiscal 2008, compared to 44.3% in the same quarter last year. The improvement in gross margin reflects the increased contribution of large-format multicolor presses to revenues, as well as increases in worker productivity and improvements to production lines and equipment.
Operating expenses were $3.1 million, up 8.8% from $2.9 million in the first quarter of 2007. Operating expenses accounted for 13.9% of revenues in the first quarter of fiscal 2008, compared to 16.4% in the same quarter last year, reflecting efficiencies in the production of large-format multicolor presses, and lower shipping and handling costs and research and development expenses.
Operating income was $8.3 million in the first quarter of fiscal 2008, up 69.9% from $4.9 million in the same period a year ago. Net income was $6.8 million, up 60.7% from $4.2 million in the first quarter of fiscal 2007. Net income in the current quarter includes $0.7 million in pre-tax liquidated damage expenses associated with the failure to settle the outstanding balance of related party transactions. Earnings per basic and diluted share were $0.27, compared to $0.23 in the same quarter last year. Excluding the impact of the liquidated damage expenses, non-GAAP net income was $7.5 million, or $0.30 per basic and diluted share, up 77.5% from the same period last year.
As of September 30, 2007, cash and cash equivalents were $17.3 million, up from $7.8 million at the end of fiscal 2007. At the end of first quarter, the Company had working capital of $38.6 million, $13.1 million outstanding on its lines of credit and shareholders' equity of $66.8 million. In the first quarter of 2008, there was no capital expenditure incurred.
"In the rest of fiscal 2008, we will continue to make capital investments to further enhance our product lines and upgrade our production capabilities to meet the strong market demand in China," Mr. Guo said. "Our long-term goals are to strengthen market share in each of our existing business segments and expand into related areas while maintaining our cost advantages over international competitors. We have realized the benefits of focusing on large-format multicolor presses and believe this strategy will ensure a continued growth in our top and bottom lines."
Guidance for Fiscal Year 2008
The Company expects to achieve approximately $23.9 million in net income and earnings per basic and diluted share of about $0.89 in the fiscal year ending June 30, 2008.
The Company will conduct a conference call at 10:00 a.m. Eastern Time on Friday, November 16, 2007 to discuss fiscal year 2007 results. Joining Mr. Wenhua Guo, Asian Financial's Chairman and Chief Executive Officer, will be Mr. Gene Michael Bennett, Chief Financial Officer. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial 617-614-4070. When prompted by the operator, mention Conference Passcode 850 761 42. If you are unable to participate in the call at this time, a replay will be available for seven days starting on Friday, November 16, 2007 at 12:00 p.m. Eastern Time. To access the replay, dial 888-286-8010 and enter the passcode 39683362. International callers should dial 617-801- 6888 and enter the same passcode. The conference will be broadcast live over the Internet and can be accessed by all interested parties at http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=215582&eventID=1692699 . To listen to the call please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
Use of Non-GAAP Financial Measures
To supplement Asian Financial's condensed consolidated financial statements presented on a GAAP basis, the Company is providing certain income statement information that is not calculated according to GAAP. Non-GAAP net income discussed in this release reflect operating results excluding liquidated damage expenses associated with the delay in filing the registration statement for the shares issued in its November 2, 2006 private placement and penalties associated with the failure to settle the outstanding balance of related party transactions. The Company 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 September 30, 2007 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.
About Asian Financial, Inc.
Asian Financial, Inc., through its wholly-owned subsidiaries, is engaged in the business of manufacturing and marketing commercial offset printing presses and related solutions in the People's Republic of China ("PRC"). The Company combines technical innovation with PRC cost advantages to offer a broad range of offset printing equipment at price discount as compared to western models. Asian Financial, Inc. has manufacturing and R&D facilities in Langfang in Hebei Province and Shaoyang in Hunan Province and has a distribution and service network in approximately 100 cities in China. Headquartered in Beijing, the Company is one of the largest non-government owned major offset printing equipment and solutions provider in China.
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Generally, the words "believes", "anticipates," "may," "will," "should," "expect," "intend," "estimate," "continue," and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the Company's expectations regarding its working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such statements are subject to certain risks and uncertainties, including the matters set forth in its Annual Report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements. In addition, the forward-looking statements in this press release involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to differ materially from those expressed in or implied by the forward-looking statements contained herein. Please see the discussion on risk factors which appears in the Company's Form 10-Q.
--FINANCIAL TABLES FOLLOW--
ASIAN FINANCIAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED) 2007 2006 REVENUES $ 22,645,571 $ 17,536,182 COST OF SALES 11,210,255 9,768,690 GROSS PROFIT 11,435,316 7,767,492 RESEARCH AND DEVELOPMENT 163,457 183,421 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,973,267 2,700,760 INCOME FROM OPERATIONS 8,298,592 4,883,311 LIQUIDATED DAMAGE EXPENSES 706,476 -- OTHER INCOME (EXPENSE), net (128,397) (187,935) INCOME BEFORE MINORITY INTEREST AND PROVISION FOR INCOME TAXES 7,463,719 4,695,376 MINORITY INTEREST 93,542 71,868 INCOME BEFORE PROVISION FOR INCOME TAXES 7,370,177 4,623,508 PROVISION FOR INCOME TAXES 615,649 420,017 NET INCOME 6,754,528 4,203,491 OTHER COMPREHENSIVE INCOME Foreign currency translation gain 907,750 278,273 COMPREHENSIVE INCOME $ 7,662,278 $ 4,481,764 BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES 25,000,050 17,997,404 BASIC AND DILUTED EARNING PER SHARE $ 0.27 $ 0.23 ASIAN FINANCIAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2007 AND JUNE 30, 2007 A S S E T S September 30, June 30, 2007 2007 (UNAUDITED) CURRENT ASSETS: Cash $ 17,279,298 $ 7,816,361 Restricted cash 87,086 2,097,490 Accounts receivable, net of allowance of $534,026 and $498,648 as of September 30, 2007 and June 30, 2007, respectively 21,824,752 21,170,423 Inventories 21,536,466 20,074,605 Other receivables 38,845 68,160 Other assets 136,788 40,331 Total current assets 60,903,235 51,267,370 PLANT AND EQUIPMENT, net 25,431,765 25,332,554 OTHER ASSETS: Intangible assets, net 3,712,814 3,679,941 Total assets $ 90,047,814 $ 80,279,865 L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y CURRENT LIABILITIES: Lines of credit $ 13,073,200 $ 12,887,000 Accounts payable 3,873,173 2,572,061 Accrued liabilities 1,155,665 1,107,591 Other payables 229,014 198,000 Other payables - related parties 77,824 369,564 Taxes payable 1,097,263 1,078,503 Liquidated damages payable 2,825,904 2,119,428 Total liabilities 22,332,043 20,332,147 MINORITY INTEREST 906,541 800,766 COMMITMENTS AND CONTINGENT LIABILITIES -- -- SHAREHOLDERS' EQUITY: Preferred stock; $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding as of September 30, 2007 and June 30, 2007 -- -- Common stock; $0.001 par value; 100,000,000 shares authorized; 25,000,050 shares issued and outstanding at September 30, 2007 and June 30, 2007 25,000 25,000 Additional paid-in capital 27,263,040 27,263,040 Statutory reserves 3,948,216 3,282,601 Retained earnings 32,405,054 26,316,141 Accumulated other comprehensive income 3,167,920 2,260,170 Total shareholders' equity 66,809,230 59,146,952 Total liabilities and shareholders' equity $ 90,047,814 $ 80,279,865 ASIAN FINANCIAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED) 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,754,528 $ 4,203,491 Adjustments to reconcile net income to cash provided by (used in) operating activities: Minority interest 93,542 71,868 Depreciation 514,100 220,844 Amortization 20,153 16,841 Bad debt expense 27,975 -- Liquidated damage penalties 706,476 -- Change in operating assets and liabilities Accounts receivable (373,963) (1,035,604) Inventories (1,163,553) 1,316,492 Other receivables 30,086 (40,503) Other receivables - related parties -- 625,528 Advances on inventory purchases (5,139) (36,761) Other assets (90,058) 11,282 Accounts payable 1,255,043 1,148,009 Customer deposits -- -- Other payables 27,956 51,664 Other payables - related parties (294,986) (252,552) Accrued liabilities 32,952 (57,140) Taxes payable 3,157 979,946 Liquidated damages payable -- -- Net cash provided by operating activities 7,538,269 7,223,405 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (250,941) -- Purchase of land use right -- -- Payments for construction in progress -- -- Payments on business acquisition -- -- Net cash used in investing activities (250,941) -- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit 8,999,200 8,561,200 Payments for line of credit (8,999,200) (8,561,200) Proceeds from private placement -- -- Restricted cash 2,010,404 -- Payment of other payable - related parties -- -- Net cash provided by financing activities 2,010,404 -- EFFECT OF EXCHANGE RATE CHANGES ON CASH 165,205 91,710 INCREASE IN CASH 9,462,937 7,315,115 CASH, beginning of period 7,816,361 3,742,698 CASH, end of period $ 17,279,298 $ 11,057,813 ASIAN FINANCIAL INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL DATA FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 Non-GAAP Net income Q1 2008 Q1 2007 Basic and Basic and Diluted Diluted Net Income Net Income EPS Net Income EPS Adjusted Amount $7,461,004 $0.30 $4,203,491 $0.23 Adjustments Liquidated Damage Expenses (1) $706,476 $0.03 -- -- Amount per consolidated statement of operations $6,754,528 $0.27 $4,203,491 $0.23 (1) Liquidated damage expenses associated with: (a) the delay in filing the registration statement for the shares issued in its November 2, 2006 private placemen; (b) the failure to settle the outstanding balance of related party transactions For more information, please contact: Asian Financial, Inc. Gene Michael Bennett, CFO Tel: +86-10-6021 2222 Email: GMBennett@Duoyuan.com CCG Elite Crocker Coulson, President, or Elaine Ketchmere, VP Financial Writing Tel: +1-310-231-8600 Email:
CONTACT: Asian Financial, Inc. - Gene Michael Bennett, CFO, +86-10-6021 GMBennett@Duoyuan.com2222, or ; or CCG Elite - Crocker Coulson, President,or Elaine Ketchmere, VP Financial Writing, +1-310-231-8600, or. Or , both for AsianFinancial, Inc.
Web site: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-/