China BAK Reports Second Quarter Fiscal Year 2009 Financial Results
2009-04-28 00:00

China BAK Reports Second Quarter Fiscal Year 2009 Financial Results

SHENZHEN, China, April 28, 2009 /PRNewswire-Asia-FirstCall via COMTEX News Network/ --
China BAK Battery, Inc. ("China BAK," the "Company," or "we") (Nasdaq: CBAK), one of the largest lithium-ion battery cell manufacturers in the world, as measured by production output, today announced its financial results for the second quarter of fiscal year 2009 ("FY09").

Recent Achievements and Highlights -- China BAK was accepted into the approved vendor list of an international first-tier OEM notebook computer manufacturer. -- China BAK continued to optimize its business operations and to implement measures to reduce its costs and operational expenses. -- We maintained positive operating cash flow during the second quarter, which has historically been a seasonally slow quarter. -- Our Tianjin facility received positive market feedback to samples of its lithium-phosphate cells, used in electric bicycles, power tools, uninterruptible power supplies, and other applications.
Second Quarter FY09 Financial Results

Our net revenues for the second quarter of FY09 were $40.8 million, down 40.1% from $68.1 million last quarter, and down 20.5% from $51.3 million in the same quarter of last year. The substantial decrease in net revenues over the net revenues generated in the same period of last year was generally due to the global financial crisis and recession, which weakened demand for many of the products that our customers sell.

Revenues from sales of our cylindrical cells, which are used in notebook computers and other applications, were $9.2 million in the second quarter of FY09, down 49.8% from $18.4 million last quarter and up 37.5% from $6.7 million in the same quarter of last year.

Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $2.0 million in the second quarter of FY09, down 49.8% from $3.9 million last quarter, and up 3.8% from $1.9 million in the same quarter of last year.

Revenues from prismatic cells, including aluminum-case cells, steel-case cells and battery packs, which are also used in certain personal electronic devices, were $29.6 million, down 35.4% from $45.8 million last quarter and down 30.7% from $42.7 million in the same quarter of last year. Revenues from aluminum-case cells were $23.3 million, down 37.5% from $37.3 million last quarter and down 23.0% from $30.3 million in the same quarter of last year. Revenues from battery packs were $4.8 million, down 11.1% from $5.4 million last quarter and down 26.8% from $6.6 million in the same quarter of last year. Revenues from steel-case cells were $1.5 million, down 52.6% from $3.1 million last quarter, and down 75.0% from $5.9 million in the same quarter of last year.

Gross profit for the second quarter of FY09 was $3.0 million, down 71.5% from $10.6 million last quarter and down 22.8% from $3.9 million in the same quarter of last year. Gross margin was 7.4%, compared to 15.6% last quarter and 7.6% in the same quarter of last year. The decrease in gross margin from the last quarter and the same period of last year was the result of lower average selling prices and higher average manufacturing costs, offset by lower average material costs.

Operating expenses totaled $6.4 million or 15.7% of revenues in the second quarter of FY09, as compared to $9.8 million or 14.4% of revenues last quarter and $7.6 million or 14.8% of revenues in the same quarter of last year. Research and development expenses were $1.1 million or 2.8% of revenues, as compared to $1.4 million or 2.1% of revenues last quarter and $1.4 million or 2.7% of revenues in the same quarter of last year. Sales and marketing expenses were $1.2 million or 2.8% of revenues, as compared to $1.6 million, or 2.3% of revenues last quarter and $1.4 million or 2.7% of revenues in the same quarter of last year. General and administrative expenses were $4.1 million or 10.1% of revenues, as compared to $6.8 million or 9.9% of revenues last quarter and $4.8 million or 9.4% of revenues in the same quarter of last year.

Operating loss for the second quarter of FY09 was $3.4 million, as compared to operating income of $0.8 million last quarter and operating loss of $3.7 million in the same quarter of last year.

Net loss was $5.7 million in the second quarter of FY09, as compared to net loss of $1.7 million last quarter and net loss of $6.2 million in the same quarter of last year. Diluted earnings per share were negative $0.10 compared with negative $0.03 per diluted share last quarter and negative $0.12 per diluted share in the same quarter of last year.

For the second quarter of FY09, Days Sales Outstanding increased to 171 as compared to 103 last quarter, and Days Sales of Inventory increased to 148 days from 99 days last quarter.

Financial Condition

On March 31, 2009, China BAK had $25.4 million in cash and cash equivalents and negative $38.0 million in working capital, reflecting a current ratio of 0.83:1. Short-term bank loans and long-term bank loans totaled $172.7 million as compared to $172.2 million on December 31, 2008. Shareholders' equity totaled $161.1 million. China BAK had $75.0 million available for borrowing under its credit facilities.

Cost and Expense Reduction on Track

In the second quarter of FY09, China BAK continued to implement its aggressive cost management program announced earlier this year. As a result, operating expenses decreased by $3.4 million from the first quarter of FY09, exceeding our $1.5 million costs reduction target. Moreover, our operating expenses were at their lowest level since fiscal year 2007.

Business Outlook

"Throughout FY09, prioritization of our products portfolio and aggressive cost and expense reduction will be our focus. We are delighted that a first-tier OEM notebook manufacturer determined that China BAK's cylindrical cells meet their stringent performance and reliability requirements. Also, we believe we will continue to gain market share in all products," commented Mr. Xiangqian Li, Chairman and CEO of China BAK.

"We will continue to take appropriate action to address the downturn in the global economy as well as the challenges related to weak customer demand. We have implemented aggressive measures to reduce costs and expenses which will definitely strengthen the Company's ability to ride out the recession," commented Mr. Tony Shen, CFO of China BAK.

Conference Call

China BAK will host a conference call at 8:00 p.m. ET on Tuesday, April 28, 2009 to discuss results for the second quarter of FY09 ended March 31, 2009. Xiangqian Li, China BAK's Chairman and Chief Executive Officer, and Tony Shen, Chief Financial Officer will host the call and answer questions. To participate in the conference call, please dial the following number approximately fifteen minutes prior to the scheduled conference call time: 888-419-5570. International callers should dial 617-896-9871. The pass code for the call is 883 906 90. If you are unable to participate in the call at this time, a replay will be available from 10:00 p.m. ET on Tuesday, April 28, 2009 through 10:00 p.m. ET, Wednesday, May 13, 2009. To access the replay, please dial 888-286-8010. International callers should dial 617-801-6888. The pass code for the replay is 624 59 645. The conference call will be broadcast live over the Internet and can be accessed by all interested parties on the China BAK website at http://www.bak.com.cn/ . To listen to the live webcast, please go to the China BAK's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, shortly after the call a replay will be made available on China BAK's website for one year.

About China BAK Battery, Inc.