Harbin Electric Announces Earnings for the Second Quarter of Fiscal Year 2006
15 August 2006
Harbin Electric, Inc., (OTC Bulletin Board: HRBN) a U.S. company, with operations based in Harbin, China, today announced financial results for the second quarter ended June 30, 2006. Sales for the quarter were $9.71 million, an increase of 84% over the second quarter of last year. Sales of linear motor and special motor products drove the growth the period. Industrial electric linear motors and other special motors continued to comprise significantly all of our total product sales in both comparable periods.
Reported net income was $3.68 million with fully diluted earnings per share of $0.21 compared to $2.61 million and $0.17 respectively for the three months ended June 30, 2005, an increase of 41%. The increase is primarily attributed to the continued increase in sales levels. Gross margins were 49.4% for the second quarter of 2006 compared to 52.2% the second quarter of last year. Our operating margins were 37.7% during the second quarter of 2006 compared to 49.2% in the comparable period last year. The Company incurred total operating expenses of $1.14 million, or 11.7% of sales, as compared to $0.160 million, or 3.0% of sales, for the corresponding three-month period last year.
We ended the quarter with a strong balance sheet. The Company ended the quarter with $11.5 million in cash, as compared with $3.76 million for the corresponding period in 2005. The increased cash position was mainly due to higher net income. Shareholders' equity increased for the 6th consecutive quarter to a record high of $32.1 million. This rise is largely due to increased retained earnings from our net profits. The Company ended the quarter with no long-term debt. These financial results can be seen in greater detail in the Company's SEC Form 10-QSB filed with the Securities and Exchange Commission ( http://www.sec.gov ) on August 14, 2006.
"The second quarter continued our strong start to 2006,'' stated TianFu Yang, Chairman and CEO of Harbin Electric, Inc. "We are very happy with our financial performance as the company reports high levels of continued growth while maintaining our existing levels of profitability. Growth was primarily driven by sales of electric motors in domestic China and we continue to experience contributions from new international relationships. Our current sales initiatives will continue to attract profitable long term customers and partners both in China and internationally,'' Mr. Yang continued. ''The company continues to make progress on its growth initiatives. We look forward to updating you as we make further progress.''
About Harbin Electric, Inc.
Harbin Electric, Inc. designs, develops and manufactures linear motors and special electric motors. With proprietary technology and core patents, the Company builds a wide array of customized linear motors and other special motor for a variety of applications and industries. The Company currently designs and supplies its motor products and systems to numerous end users throughout the Chinese domestic market, as well as, to other industrial OEM customers overseas. Industry applications for linear motors include oilfield services, conveyor systems, factory automation, packaging equipment, as well as mass transportation systems. The Company is based in Harbin, China along with its wholly owned subsidiaries. The Company has 223 employees with approximately 200,000 square feet of state-of-the-art manufacturing space. For further information, please see our filings with the Securities and Exchange Commission ( http://www.sec.gov ).
Safe Harbor Statement
The actual results of Harbin Electric, Inc. could differ materially from those described in this press release. Detailed information regarding factors that may cause actual results to differ materially from the results expressed or implied by statements in this press release may be found in the Company's periodic filings with the U.S. Securities and Exchange Commission, including the factors described in the section entitled "Risk Factors" in its quarterly report on Form 10-QSB for the quarter ended June 30, 2006. The Company does not undertake any obligation to update forward-looking statements contained in this press release.
This press release contains forward-looking information about the Company that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and the Company's future performance, operations and products.
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTH FOR THE THREE MONTH
PERIODS ENDED PERIODS ENDED
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
Net revenue $18,590,003 $ 9,402,739 $ 9,711,345 $ 5,274,442
Cost of revenue 9,515,476 4,598,080 4,910,553 2,520,020
Gross profit 9,074,527 4,804,659 4,800,791 2,754,422
Operating expenses:
Selling expenses 424,606 124,333 216,600 17,745
General and
administrative expenses 1,833,000 394,001 924,243 142,301
Total operating expenses 2,257,607 518,334 1,140,842 160,046
Income from operations 6,816,920 4,286,325 3,659,949 2,594,376
Non-operating Income
Realized gain on sale of
Marketable securities 571,143 -- -- --
Other income (expense) 53,148 -- (914) --
Interest income 31,030 14,118 18,709 13,824
Net income 7,472,241 4,300,443 3,677,744 2,608,200
Other comprehensive
item:
Unrealized gain on
Marketable securities -- (145,645) -- --
Translation gain 322,355 -- 80,612 --
Reclassification
adjustment for gains
on sale of marketable
securities (587,171) -- -- (159,645)
Comprehensive Income $ 7,207,425 $ 4,154,798 $ 3,758,355 $ 2,448,555
Basic weighted average
Shares outstanding 16,600,451 15,000,450 16,600,451 15,000,450
Basic net earnings per
share $ 0.45 $ 0.29 $ 0.22 $ 0.17
Diluted weighted average
Shares outstanding 17,245,535 15,125,588 17,350,758 15,125,588
Diluted net earnings per
share $ 0.43 $ 0.28 $ 0.21 $ 0.17
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
As of June
ASSETS 30, 2006
CURRENT ASSETS:
Cash & cash equivalents $ 11,494,797
Accounts receivable, net of allowance for uncollectible
accounts of $30,000 8,395,448
Inventory 908,562
Advances to suppliers 4,601,117
Prepaid expenses 5,096
Total current assets 25,405,020
PROPERTY AND EQUIPMENT, net 7,876,280
INTANGIBLE ASSETS, net 306,630
TOTAL ASSETS $ 33,587,930
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 773,663
Payment in advance 673,924
TOTAL CURRENT LIABILITIES 1,447,587
STOCKHOLDERS' EQUITY
Common stock, .00001 par value; authorized shares
100,000,000; issued and outstanding 16,600,451 shares 166
Additional paid in capital 11,627,676
Statutory reserves 2,967,560
Accumulated other comprehensive income 732,650
Retained earnings 16,812,292
Total stockholders' equity 32,140,344
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,587,930
HARBIN ELECTRIC, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTH PERIODS ENDED
June 30, 2006 June 30, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,472,241 $ 4,300,443
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 146,512 211,290
Realized gain on sale of marketable
securities (571,143) --
Stock based compensation 330,000 --
(Increase) decrease in current assets:
Accounts receivable (2,490,257) (1,900,326)
Inventory 444,295 1,411
Advances to suppliers (1,826,602) (1,183,090)
Other assets (960) --
Increase in current liabilities:
Accounts payable 583,747 414,336
Payment in advance 670,950 --
Accrued expenses -- (116,650)
Net cash provided by operating activities 4,758,783 1,727,414
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable
securities 1,093,165 --
Acquisition of intangible assets -- (266,200)
Acquisition on property & equipment (175,582) (210,888)
Net cash provided by (used in) investing
activities 917,583 (477,088)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to related party -- 87,360
Advances to related party -- 206,309
Net cash provided by financing activities -- 293,669
EFFECT OF EXCHANGE RATE CHANGE ON CASH &
CASH EQUIVALENTS 79,412 --
NET INCREASE IN CASH & CASH EQUIVALENTS 5,755,778 1,543,995
CASH & CASH EQUIVALENTS, BEGINNING OF
PERIOD 5,739,019 2,210,803
CASH & CASH EQUIVALENTS, END OF PERIOD $ 11,494,797 $ 3,754,798
For more information, please contact:
Barry L. Raeburn
EVP Finance & Corporate Development
Tel: +1-215-854-8104
Email: info@HarbinElectric.com
In China:
Chungang Xia
Corporate Secretary / China PR
Email: mainlandIR@HarbinElectric.com
Source: prnewswire
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