Wowjoint Holdings Limited Reports First Quarter 2011 Financial Results

BEIJING, May 19, 2011 /PRNewswire-Asia/ -- Wowjoint Holdings Limited ("Wowjoint," or the "Company") (Nasdaq: BWOW), China's innovative infrastructure solutions provider of customized heavy duty lifting and carrying machinery, reported today financial results for the first quarter 2011.

First quarter Ended March 31, 2011

• Revenues for the Company's first quarter ended March 31, 2011 increased 282% to $6.6 million as compared to $1.7 million in the first quarter of 2010.
• Technical service sales increased by 675% from the first quarter of 2010 to $0.6 million. These services, as well as lease revenue, continue to be a focus for Wowjoint as they provide a more stable source of cash flows and a higher margin compared to machinery sales.
• International based revenues accounted for approximately 25% of total sales, a substantial increase from 3% of total sales in the same period 2010.
• Gross profit increased to $1.4 million from $0.2 million in the year ago period. Gross margins increased 5 basis points to 21.3% in the first quarter 2011 compared to 16.3% in the same period in 2010.
• Operating income increased to $0.3 for the first quarter 2011 compared to a loss for the first quarter 2010.
• Net income for the first quarter 2011 was $0.3 million, or $0.04 per share based on 7.9 million weighted average shares outstanding, compared to net loss of $0.5 million in same period 2010.

Cost of sales for the three months ended March 31, 2011 was approximately $5.9 million as compared to $1.5 million for the three months ended March 31, 2010. The higher cost of sales in first quarter 2011 was due to higher sales volume. Operating expenses for the three months ended March 31, 2011 were approximately $1.0 million compared to $0.8 million for the same period in 2010. The first quarter 2011 reflects a focused reduction in expenses from the Company's average operating costs, showing only a slight increase from the previous year despite incurring the expenses of being a public company. Selling expenses for the three months ended March 31, 2011 totaled $0.2 million compared to $0.07 million in the same period of 2010, due to an increase in sales force and larger sales for the period.

"The first quarter revenue is a substantial increase from the first quarter 2010, due to continued infrastructure spending by the Chinese government, as well as our focus on diversifying our revenue stream through international sales, service and lease revenue. In addition, during the first quarter we expanded into two new vertical markets with sales to the luxury goods market providing hoists for Sunbird Yachts and the wind power industry with Tongliao Green," commented Mr. Yabin Liu, Chairman and Chief Executive Officer of Wowjoint. "Gross margins remain strong and will continue to improve as our technical services segment grows, which provides clearer visibility for our future revenue stream."

Balance Sheet as of March 31, 2010

• Cash and cash equivalents totaled $3.0 million at March 31, 2011, as compared to $2.2 million at December 31, 2010.
• Accounts receivable were $16.8 million at March 31, 2011 as compared to $17.9 million at December 31, 2010.  The majority of the receivables are from extremely large Blue Chip companies in China; therefore collection of the receivables is relatively secure.
• Inventories amounted to $8.6 million, which increased due to additional materials that were purchased for production of equipment and were in-line with the sales increase.
• Working capital was $16 million on March 31, 2011.
• The Company had total stockholders' equity of $20.7 million, with total assets of $46.4 million versus total liabilities of $25.6 million on March 31, 2011.

"Wowjoint continues to progress in our expansion of sales and order backlog. The additions we've made to our sales and marketing team have enabled us to secure new customers, meaningful contracts, enter new vertical markets, international expansion and deeper penetration in the high speed rail projects in China. All of these successes have occurred fairly quickly which shows Wowjoint's dedication to our business and our customers," stated Mr. Yabin Liu, Chairman and CEO of Wowjoint.

Business Updates

Wowjoint achieved significant progress diversifying its revenue streams in the first quarter 2011, with new leasing and service contracts announced and expansion into different vertical markets. During the quarter, Wowjoint announced a contract with Sunbird Yacht Company, China's largest yacht manufacturer, to provide two marine hoists. This is a new product for the Company and the exposure to a market that is growing rapidly in China. Wowjoint signed a contract with Tongliao Green, a wind power company, to provide a wind tower hoist which is also a new product for the Company. The Company is pursuing other vertical markets such as highway and bridge maintenance, subway systems and other clean tech power plants. These vertical markets will utilize Wowjoint's core competency of specialized engineering of large equipment.

"We continued to expand our sales, having signed $20 million in new contracts since the beginning of 2011. Those contracts demonstrate our continued focus on diversifying our revenue stream with 50% of the contracts being lease and service contracts," stated Mr. Liu. "Our products are well-known in the industry and we've been able to achieve deeper penetration in the infrastructure industry by procuring new customers. A key competitive advantage remains our ability to produce custom-made equipment, which solves complex construction and logistical problems for our customers.  Our ability to now supply that equipment in a leasing situation has expanded our market potential and provides a new customer base for us."

Revenue Guidance and Contract Backlog

Management issued revenue guidance for the second quarter of 2011 of approximately $8 to $10 million. As of March 31, 2011, Wowjoint's backlog of signed contracts totaled approximately $25 million. As of May 19, 2011, the backlog of signed contracts has risen to $29 million.

Conference Call

A conference call will take place at 4:30 p.m. EDT on Thursday, May 19, 2011. Interested participants should call 1-877-941-4158 when calling within the United States or 1-480-629-9760 when calling internationally (pass code 4442372).

A playback will be available through May 26, 2011. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 when calling internationally. Utilize the pass code 4442372 for the replay.

About Wowjoint Holdings Limited

Wowjoint is a leading provider of customized heavy duty lifting and carrying machinery used in large scale infrastructure projects such as railway, highway and bridge construction. Wowjoint's main product lines include launching gantries, tyre trolleys, special carriers and marine hoists. The company's innovative design capabilities have resulted in patent grants and proprietary products. Wowjoint is well positioned to benefit directly from China's rapid infrastructure development by leveraging its extensive operational experience and long-term relationships with established blue chip customers. Information on Wowjoint's products and other relevant information are available on its website at http://www.wowjoint.com.

Forward Looking Statements

This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. Forward-looking statements in this press release include matters that involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by this press release. Wowjoint undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the date of this communication. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. All forward-looking statements are qualified in their entirety by this cautionary statement. All subsequent written and oral forward-looking statements concerning Wowjoint or other matters and attributable to Wowjoint or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Wowjoint does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this news release.

SOURCE Wowjoint Holdings Limited