Wowjoint Holdings Limited Reports Third Quarter 2011 Financial Results

BEIJING, Nov. 14, 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 third quarter 2011.

Third quarter Ended September 30, 2011

• Revenues for the Company's third quarter ended September 30, 2011 were $5.4 million compared to $8.7 million in the third quarter of 2010.
• Technical service sales were $0.2 million for the quarter, compared to $1.7 million in the same quarter last year. Lease revenue was $0.3 million for the third quarter 2011, which is a recent addition to Wowjoint's revenue stream.
• Gross profit was $1.3 million compared to $1.9 million in the year ago period. Gross margins increased 280 basis points to 24.8% in the third quarter 2011 compared to 22.0% in the same period in 2010.
• Operating income was $0.4 million for the third quarter 2011 compared to $0.3 million for the third quarter 2010.
• Net income for the third quarter 2011 was $0.2 million, or $0.03 per share based on 7.9 million weighted average shares outstanding, compared to $0.3 million in same period 2010.

Cost of sales for the three months ended September 30, 2011 was approximately $4.0 million as compared to $6.8 million for the three months ended September 30, 2010. The higher cost of sales in third quarter 2010 was due to higher sales volume. Operating expenses for the three months ended September 30, 2011 were approximately $1.0 million compared to $1.5 million for the same period in 2010. The third quarter 2011 reflects a focused reduction in expenses from the Company's average operating costs. Selling expenses for the three months ended September 30, 2011 totaled $0.2 million compared to $0.4 million in the same period of 2010.

"Our gross margins remain strong and this quarter's increase was directly related to our diversification of our sales, specifically our international contracts, which provide a higher gross margin than our domestic contracts," commented Mr. Yabin Liu, Chairman and Chief Executive Officer of Wowjoint. "We continue to stay stringent on our spending, and in maintaining strong gross margins. During this quarter we were pleased to announce new leasing contracts, and the entry into the highway maintenance industry with our equipment for China's Ministry of Railway."

Balance Sheet as of September 30, 2011

• Cash and cash equivalents totaled $3.8 million at September 30, 2011, as compared to $4.3 million at June 30, 2011.
• Accounts receivable were $16.6 million at September 30, 2011 as compared to $15.8 million at June 30, 2011.  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 $9.9 million, which was an increase from $8.4 million at June 30, 2011, due to additional materials that were purchased for the production of equipment.
• Working capital was $10.1 million on September 30, 2011.
• The Company had total stockholders' equity of $22.8 million, with total assets of $57.0 million versus total liabilities of $34.2 million on September 30, 2011.  

"Wowjoint continues to expand our International outreach by adding people to our sales and marketing team and we expect to see our International sales as a larger percentage of our sales revenue," stated Mr. Liu.

Nine Months Ended September 30, 2011

• Revenues for the nine month period ended September 30, 2011 increased 57% to $20.4 million as compared to $13.0 million for the nine month period ended September 30, 2010.
• Technical service sales for the first nine months of 2011 were $1.1 million compared to $3.3million in the same period in 2010. Lease revenues for the nine months ended September 30, 2011 were $0.8 million.  
• International based revenues accounted for approximately 30% of total sales, a substantial increase from 3% of total sales in the same period 2010.  
• Gross profit increased to $5.2 million from $2.8 million in the year ago nine month period. Gross margins increased 390 basis points to 25.4% in the first nine months of 2011 compared to 21.5% in the same period in 2010.
• Operating income for the nine months ended September 30, 2011 increased to $2.2 million as compared to a loss for the same period in 2010.
• Net income for the first nine months of 2011 was $1.6 million, or $0.20 per share based on 7.9 million weighted average shares outstanding, compared to a net loss of $0.9 million in same period 2010.

Cost of sales for the nine months ended September 30, 2011 was approximately $15.2 million as compared to $10.2 million for the nine months ended September 30, 2010. Operating expenses for the nine months ended September 30, 2011 were approximately $3.0 million compared to $3.7 million for the same period in 2010. Selling expenses for the nine months ended September 30, 2011 totaled $0.8 million which is flat at $0.8 million in the same period of 2010, which shows a concentration on reducing costs.

Business Updates

Wowjoint continues to pursue international contracts and diversify its business. During the third quarter 2011 and recently, the Company announced its participation in three industry conferences in the US, where the company had a booth at two which focused on precast and segmental bridge development. At the ASBI Conference in Washington DC, Wowjoint's CEO, Yabin Liu, presented on the Company's technology and its current project in Tampa, FL.  These conferences provided for exposure to the US market and generated relationships that the company hopes to pursue. In addition, Wowjoint announced its expansion in the marine hoist market working with Shenzhen Land and Development, as well as entering the highway and bridge maintenance market. These vertical markets utilize Wowjoint's core competency of specialized engineering of large equipment.  

"A key competitive advantage remains our ability to produce custom-made equipment, which solves complex construction and logistical problems for our customers.  We believe our determination and drive to expand our business into other countries and vertical markets will result in Wowjoint's growth for years to come," stated Mr. Liu. "We've experienced a slight reduction in China's infrastructure spending recently, although projects still remain in the large government plan and the reduction is based on timing of those projects. The Company has focused on International sales and new verticals to generate revenue and provide greater stability in its revenue projections. Wowjoint has signed $24.4 million in new contracts since the beginning of 2011, with a substantial percentage of those contracts being in leasing, technical services or International sales."

Revenue Guidance and Contract Backlog

Management issued revenue guidance for the fourth quarter of 2011 of approximately $5 to $7 million. As of September 30, 2011, Wowjoint's backlog of signed contracts totaled approximately $21.3 million.

Conference Call

A conference call will take place at 4:30 p.m. EST on Monday, November 14, 2011. Interested participants should call 1-877-941-1429 when calling within the United States or 1-480-629-9857 when calling internationally (pass code 4487284).

A playback will be available through November 21, 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 4487284 for the replay.

The call will also be webcast. To join the webcast please go to: http://viavid.net/dce.aspx?sid=00008FEA

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 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.

For additional information contact:  

Wowjoint Holdings:    
Aubrye Foote, Vice President, Investor Relations
Tel:  +1-530-475-2793
Email: [email protected]
Website: www.wowjoint.com    

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SOURCE Wowjoint Holdings Limited