SHENZHEN, CHINA — (Marketwire) — 11/16/12 — New Energy Systems Group (NYSE MKT: NEWN) (“New Energy” or the “Company”), a vertically integrated original design manufacturer and distributor of Anytone® and MeePower®-branded consumer backup power systems for mobile devices and solar panels and related solar application products to service municipal power applications, today announced financial results for the third quarter ended September 30, 2012.
Mr. Jack Yu, Chairman of New Energy, stated, “Over the past year, other than operations, we have generated $5.7 million of cash from selling non-core assets that were losing substantial amount of money. With over $10 million of cash, no debt and valuable intellectual property related to our Anytone consumer electronic and solar businesses, we are looking for those strategies to stable and regrow our shareholder value.”
Revenues declined 46% year-over-year to $3.6 million due to lower demand for batteries in China and increased competition. Solar panel and related solar product sales were down 62% to $1.9 million due to the downturn pressure of the entire solar market and intense market competition.
Cost of sales decreased 38% to $3.4 million from $5.5 million in the third quarter of 2011 due to lower sales and production volumes. Gross profit in the third quarter of 2012 was $0.2 million compared to $1.2 million, a 80% decline compared to the same period last year.
Consolidated gross margin fell to 7% from 18% in the third quarter of 2011 as a result of higher raw materials and labor costs and a significant decrease in production and sales volumes.
Selling, general and administrative expenses (“SG&A”) for the three months ended September 30, 2012 were $1.8 million, essentially unchanged from the same period last year.
The Company incurred $0.2 million of non-cash stock-based compensation expenses and $0.5 million amortization expenses during the third quarter of 2012 and 2011. New Energy recorded a non-cash goodwill and intangible assets impairment charge of $7.7 million in the third quarter of 2012 related to its Anytone and Kim Fai solar businesses. Excluding these expenses, operating income was $0.8 million for the third quarter of 2012.
Net income from continuing operations was a net loss of $7.6 million compared to a net loss of $0.5 million in the third quarter of 2011. GAAP net loss per share was was $0.52 in the third quarter of 2012 compared to a net loss per share of $0.04 in 2011. Non-GAAP adjusted net income and earnings per share were $0.8 million and $0.06, respectively, in the third quarter of 2012.
Consolidated net sales for the nine months ended September 30, 2012 were $12.2 million, a decrease of 60% compared to $30.3 million in the corresponding period in 2011. Sales of Anytone batteries and Kim Fai solar products were $6.7 million and $5.5 million, respectively, in the first nine months of 2012.
Cost of sales was $11.4 million, down 42% from $19.8 million in the first nine months of 2011. Gross profit and gross margin were $0.8 million and 6%, respectively, in the nine months ended September 30, 2012.
Selling, general and administrative expenses increased 13% to $5.7 million. Loss from continuing operations was a net loss $21.1 million compared to a net income of $5.5 million in the same period a year ago.
Non-GAAP adjusted net loss and EPS were $0.9 million loss and $0.06 loss per share in the first nine months of 2012, respectively. The weighted average diluted shares outstanding were 14.6 million.
As of September 30, 2012, New Energy Systems Group had cash and equivalents of approximately $10.3 million, up from $4.5 million as of December 31, 2011. The Company received $5.7 million for sale of disposed subsidiaries and generated $0.3 million of cash from operations.
Working capital was approximately $19.1 million at September 30, 2012; accounts receivable was $4.3 million compared to $6.6 million as of December 31, 2011.
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During the last quarter, through reduced sales prices of certain products, continuing marketing efforts and exploration of other potential market, the Company managed to control the loss brought by piracy and counterfeit to our mobile power products. In addition to searching for potential partners in the global market, the Company also starts to sell its products directly on the large E-Commence websites such as Amazon and eBay. Also, the Company plans to sell its products directly from its official website to foreign customers in the near future. Moreover, the Company will aggressively participate in domestic and international trade shows for any potential business opportunity, including the recent solar energy show in South Africa and CES 2013 in Las Vegas. Finally, the Company has also developed compatible mobile power products for the popular consumer electronic products such as iPhone 5 and Galaxy S3.
New Energy Systems Group is a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems for mobile phones, laptops, digital cameras, MP3s and a variety of other portable electronics. The company-s end-user consumer products are sold under the Anytone® brand in China, and the company has begun expanding its international sales efforts. The fast pace of new mobile device introductions in China combined with a growing middle class make it fertile ground for New Energy-s end-user consumer products, as well as its high powered, light weight lithium ion batteries. In addition to historically strong organic growth, New Energy is expected to benefit from economies of scale, broader distribution, and higher production capacity and higher profit margins. Additional information about the company is available at: .
This release contains certain “forward-looking statements” relating to the business of the Company and its subsidiary and affiliated companies. These forward looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company-s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company-s periodic reports that are filed with the Securities and Exchange Commission and available on its website (). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
New Energy Systems Group
Ken Lin
VP of Investor Relations
Tel: +1-917-573-0302
Email:
John Mattio
SVP
MZ Group
Tel: US +1-212-301-7130
Email:
Web:
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