4Q09 Financial Highlights
— Revenues were $125.9 million for a 54.6% year-over-year increase;
— Gross margin was 21.3% vs. 17.8% in 4Q08;
— Excluding the expenses and non-cash losses related to the convertible bond and warrants, non-GAAP Net Income attributable to common shareholders for Q4 was $20.6 million, or non-GAAP diluted EPS $0.61;
— GAAP loss was $23.9 million, or $0.69 per diluted share;
— Cash, Cash equivalent and restricted cash were $179.8 million.
Fiscal Year 2009 Highlights
— Annual net revenue increased 17.5% year-over-year to $311.3 million;
— Gross margin was 16.4%;
— Operating income rose to $38.4 million from $28.2 million in 2008;
— Excluding the expenses and non-cash losses related to the convertible bond and warrants, non-GAAP Net Income attributable to common stockholders for the fiscal year 2009 was $36.1 million, or non-GAAP EPS $1.05;
— GAAP net loss was $16.7 million, or $0.49 diluted per share.
Mr. Jinxiang Lu, A-Power’s Chairman and CEO commented, "We are very pleased with our fourth quarter results and continued delivery of annual growth featuring both our award-winning distribution power generation turn-key contract services and emerging wind turbine production. As China has demonstrated its economic resilience throughout the global financial crisis and renewed its growth momentum driven by further infrastructure build-out and rapid urbanization, power generation continues to stay in the lime light. Whether our DG micro-grid to complement often stressed state grids, or our large wind turbines to provide better economies of scale, A-Power focuses on bringing the best cost-effective solutions to the marketplace. While we are aligning our strategic positions in Japan and US, our goal remains intact by leveraging best-of-breed renewable technologies to benefit the vast end users and maximize our shareholders’ long-term value."
Revenues in the 2009 fourth quarter increased to $125.9 million from $81.4 million from the fourth quarter of 2008. The increase was primarily due to increased DG revenues and revenue recognition of 10 wind turbine units sold in the fourth quarter.
Gross profit increased 84.9% to $26.9 million from $14.5 million in the same period of 2008. Gross margin was 21.3%, up from 17.8% in the same period of 2008. The improvement in gross margin was mainly attributable to sales of 2.7MW wind turbines which carry higher gross margin.
Selling, general and administrative expenses amounted to $4.0 million, an increase of $0.3 million from $3.7 million in the previous year. As a percentage of revenues, these expenses decreased from 4.9% in the fourth quarter of 2008 to 3.2% for the fourth quarter of 2009. The decline was mainly attributable to higher revenues driven by wind turbine sales.
Operating income was $22.8 million, compared with $10.8 million in the same period of 2008, reflecting a 111.4% year-over-year increase.
Excluding the expenses and non-cash losses related to the convertible bond and warrants, Non-GAAP net income was $20.6 million compared with $10.0 million in the fourth quarter of 2008. Non-GAAP diluted EPS was $0.61, compared with $0.30 in the fourth quarter of 2008.
GAAP net loss for the fourth quarter was $23.9 million, compared with a net income of $10.0 million in the same period of 2008. Diluted loss per share were $0.69, compared with diluted earning per share $0.30 in the same period of 2008.
As of December 31, 2009, the Company had cash and cash equivalents and restricted cash totaling $179.8 million, compared with $47.1 million at the end of December 2008.
Total shareholders’ equity rose to $252.6 million at December 31, 2009, from $155.3 million at December 31, 2008.
For the fiscal year 2009, net revenue increased year-over-year by 17.5% to $311.3 million.
Gross profit increased 38.5% to $51.1 million from $36.9 million in 2008. Gross margin was 16.4% compared with 13.9% in the same period of 2008. The increase in gross margin was mainly attributable to sales of 2.7MW wind turbines which carry higher gross margin.
Selling, general and administrative expenses were $12.8 million, compared with $8.7 million in 2008. The increase was mainly due to all activities related to the Evatech acquisition, the Texas wind farm project and Nevada assembly facility location selection.
Operating income in 2009 rose 35.7% to $38.2 million from $29.0 million in 2008. The increased income was generated by higher gross profit partially offset by higher operating expenses.
Excluding the expenses and non-cash losses related to the convertible bond and warrants, Non-GAAP net income was $36.1 million, or $1.05 earnings per share, compared with $28.5 million and $0.94 earnings per share in 2008.
GAAP net loss was $16.7 million, compared with net income of $28.5 million in 2008.
Key 2009 Milestones
In March 2009, A-Power entered into a supply agreement and a joint venture partnership agreement with GE Drivetrain Technologies, a unit of GE Transportation to manufacture 2.7 megawatt (MW) wind turbine gearboxes.
In June 2009, Shenyang Municipal Government approved in principal to form Shenyang Power Group with A-Power as the lead investor. In addition, the Shenyang government will provide a total of RMB 100 million of subsidies. The Shenyang Power Group intends to expand and strengthen the distributed power generation system construction business of the Company because it will upgrade and strengthen the whole capacity of the Company to undertake more business.
In September 2009, the Company signed a definitive contract to acquire 100% of EVATECH Co., Ltd. ("EVATECH") of Kyoto, Japan, a 22-year-old designer and manufacturer of industrial equipment for LCDs (liquid crystal displays), PDPs (plasma display panels) and, more recently, amorphous-silicon (a-Si) photovoltaic (PV) panels.
In December 2009, A-Power and SPG signed agreements with Pakistan Amraas International Private Limited ("Amraas") on two separate DG projects in Pakistan. The first project entails the construction and operation of two 25 megawatt (MW) biomass power plants for Amraas. The total value of the contract is estimated to be $120 million (RMB 816 million). The second project concerns a geothermal project for the Pakistan Parliament Building (753,480 square feet) between SPG and Amraas International.
In December 2009, SPG established a Delaware Limited company ("Project Company") with United States Renewable Energy Group Wind Partners I, LLC ("USREG Wind"). The Project Company will own, design, develop, construct, manage and operate a wind energy power plant to be located in Texas with a total nameplate capacity of 600MW (the "Project"). The Company has been designated to supply turbines to the Project.
Recent Developments
In January 2010, A-Power signed a technology license agreement with German wind turbine design company, W2E Technologies GmbH ("W2E Technologies") to manufacture, operate, service and sell T8x 2.0 MW wind turbines. Under the license agreement, W2E Technologies granted A-Power an exclusive right to manufacture, operate, service and sell T8x 2.0 MW wind turbines in China and the United States starting in January 2010. In addition, A-Power has obtained non-exclusive rights to market T8x products outside of China and the United States.
In March, 2010, EVATECH signed a definitive contract with a Chinese leading renewable energy company to supply one set of photovoltaic solar machines. The contract covers the design, manufacturing and installation of the photovoltaic solar machine. The total value of the contract is $1.7 million. A down payment has been received with shipment expected by May 31, 2010.
Outlook for the Fiscal Year 2010
For fiscal year 2010, the management is expecting net sales to be approximately $380 million and net income to be approximately $45 million. These targets are based on the Company’s current views on the operating and market conditions, which are subject to change.
Mr. Lu concluded, "As our DG solution continues to extend its growth track record and win customers in China and aboard, our wind business is picking up speed. While Chinese domestic customers remain interested in large wind turbines with proven records, our involvement in the Texas wind farm development paved the way for our foray into the much larger US wind energy market. We see an exciting 2010 ahead of us."
Conference Call
The Company will host a conference call, to be simultaneously webcast, on Wednesday, March 31, 2010, at 8:00 a.m. Eastern Daylight Time or 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-800-322-2803 (North America) or +1-617-614-4925 (International), passcode: 11088184, approximately 10 minutes before the call start time. A live webcast of the conference call will be available on the Company’s Website at http://www.apowerenergy.com .
A replay of the call will be available starting on approximately 11:00 a.m. EDT on March 31, or 11:00 p.m. Beijing Time through May 1, 2010. An archived webcast of the conference call will be available on the Company’s Website at http://www.apowerenergy.com . Interested parties may access the replay by dialing +1-888-286-8010 (North America) or +1-617-801-6888 (International) and entering passcode: 20413998.
A-Power Energy Generation Systems, Ltd. ("A-Power"), through its China- based operating subsidiaries, is the largest provider of distributed power generation systems in China, focusing on energy-efficient, wind energy and environmentally friendly projects of 25MW to 400MW. In 2008, A-Power entered the wind energy market and has built China’s largest wind turbine manufacturing facility, located in Shenyang, Liaoning Province, with a total annual production capacity of 1,125MW. In March 2009, A-Power entered into an agreement to establish a Joint Venture partnership with GE Drivetrain Technologies to produce wind turbine gearboxes in Shenyang. In addition to the establishment of strategic relationships with the world’s leading wind energy design and engineering companies, A-Power has formed joint research programs with Tsinghua University and the China Academy of Sciences to develop and commercialize other renewable energy technologies.
