NEW YORK, May 12 /PRNewswire-FirstCall/ -- Tongxin International Ltd. (Successor company of Asia Automotive Acquisition Corporation) , the largest independent supplier of Engineered Vehicle Body Structures ("EVBS") in China, today announced selected financial results for the First Quarter 2008. On April 23, 2008, Tongxin International ("TXI") announced that it consummated a merger with Hunan Tongxin Enterprise Co. Ltd., ("Hunan Tongxin") in which Hunan Tongxin becomes a wholly owned subsidiary of TXI. The merger of TXI and Hunan Tongxin was pursuant to an Equity Acquisition Agreement dated July 25, 2007, among Asia Automotive Acquisition Corporation ("AAAC"), the predecessor company of TXI and the stockholders of Hunan Tongxin.
Q1 2008 Highlights:
-- Total revenue of US$ 30.3 million, an increase of 49.3% compared to the
fourth quarter 2007; and an increase of 26.7% compared to the same
period of last year.
-- EBITDA of US$4.1 million, an increase of 38.2% compared to the same
period in 2007.
-- Gross margin of 24.9%, as compared to 24.4% of the same period in 2007.
-- Net income of US$ 3.8 million, an increase of 65.9% compared to the
fourth quarter 2007; and an increase of 38.4% compared to the same
period last year.
"We continued to see increasing demand for our products throughout each of our business segments during the first few months of 2008 and as the demand for commercial vehicles continues to be very strong we expect to continue to see record results for revenue and net income for the remaining quarters of 2008. This strong demand is driven by China's need to continue to improve the infrastructure in the country. It will take commercial vehicles to build the needed roads and bridges and once this need is satisfied it will be trucks and buses that use the new roads. Because of this we are forecasting that the commercial vehicle market will continue to grow at a 20 to 25% rate for the foreseeable future and we believe we are well positioned to continue to grow faster than the overall market," stated Mr. William R. Herren, Chairman and CEO of Tongxin International Ltd.
Summary of Unaudited Selected Financial Results for the First Quarter 2008
(All numbers in US$ thousands )
Q1 of Q4 of Q1 of Change Change
2008 2007 2007 (%) (QOQ) (%) (YOY)
Consolidated Revenue $30,281 $20,288 $23,906 49.3% 26.7%
Cost of Goods Sold $22,734 $14,934 $18,084 52.2% 25.7%
Gross Profit $7,547 $5,354 $5,822 41.8% 29.6%
Total Operating Expenses $1,798 $1,496 $1,413 20.2% 27.3%
Income from Operations $5,749 $3,858 $4,409 49.0% 30.4%
Net Income $3,847 $2,318 $2,779 65.9% 38.4%
* QOQ: compared current quarter over last quarter;
YOY: compared current year over same period of last year
Tongxin International Ltd. Financial Statements
Hunan Tongxin International Ltd.
Consolidated Statements of Operations
For Year Ended March 31, 2008
(US$ amounts in thousands)
3/31/2008
Total revenues 30,281
Cost of goods sold (22,734)
Gross profit 7,547
Operating expenses :
Selling expense (520)
General and admin expense (1,278)
(1,798)
Income from operations 5,749
Interest expense (618)
Income (loss) before income taxes 5,131
Income taxes (1,283)
Net income (loss) 3,847
Hunan Tongxin International Ltd.
Consolidated Balance Sheets
For the Year Ended March 31, 2008
(US$ amount in thousands)
3/31/2008
ASSETS
Current Assets:
Cash and cash equivalents 3,483
Accounts and notes receivable, net
of allowance for doubtful accounts 25,388
Inventories 15,978
Investments in marketable securities 74
Other receivables 1,742
Other receivables due from related parties, 8,284
Prepaid expenses 2,959
Deferred tax assets 1,676
Total current assets 59,584
Investments in operating businesses 908
Property, plant and equipment 30,706
Land occupancy rights 1,865
Total assets 93,063
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 15,343
Accrued expenses and other liabilities 10,617
Provision for product warranty 54
Taxes payable 9,246
Dividend payable 0
Short-term loans 24,492
Total current liabilities 59,752
Long-term liabilities:
Long-term loans 14,619
Total liabilities 74,371
Shareholders' equity:
Paid in capital 8,762
Reserve funds 2,998
Other comprehensive income 1,971
Retained earnings 4,961
Total shareholders' equity 18,692
Total liabilities and shareholders' equity 93,063
Hunan Tongxin International Ltd.
Consolidated Statements of Cash Flows
For Year Ended March31, 2008
(US$ amounts in thousands)
3/31/2008
Cash flows from operating activities:
Net income(loss) 3,847
Adjustments to reconcile net
income(loss)to net cash provided by (used in)
operating activities:
Allowance for doubtful accounts (136)
Depreciation expense 520
Amortization expense 15
Changes in 0
Decrease in tax payable 0
Increase of inventories (3,449)
Increase of accounts and notes
receivable (950)
Decrease (increase) of prepaid expenses (37)
Increase of accounts payable 6,349
Increase (decrease) of accrued expenses 750
Net cash provided by (used in) operating
activities 6,909
Cash flows from investing activities:
Purchase of property, plant and equipment (6,170)
Cash paid for investment (35)
Net cash used in investing activities (6,205)
Cash flows from financing activities:
Proceeds from capital contributions 0
Proceeds from loans 4,325
Dividends paid (263)
Cash repayments of amounts borrowed (3,275)
Net cash provided by financing activities 787
Effect of foreign exchange rate changes 330
Net increase (decrease) in cash and cash
equivalents 1,821
Cash and cash equivalents at beginning of
year 1,662
Cash and cash equivalents at end of year 3,483
Update on Listing on a National Exchange The Company is currently completing its requirements for a listing on the NASDAQ Global Market. About Tongxin International Ltd. Tongxin International Ltd. is the largest independent supplier of EVBS in China, capable of providing products for both light, medium-sized, heavy-duty, and vans. Additionally TXI designs, fabricates and tests dies used to stamp automotive body panels. EVBS consists of exterior body panels including doors, floor pans, hoods, side panels and fenders. TXI also manufactures complete cab structures for commercial vehicles. Its components must meet exacting dimensions for fit and finish before they are assembled and finally painted. These capabilities enable it to participate effectively in all sectors of the automotive market including light and commercial vehicles. Safe Harbor Statement This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, about Hunan Tongxin, Tongxin International and their combined business and revenue expectations after completion of the proposed merger. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of Tongxin International's and Hunan Tongxin's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Hunan Tongxin is engaged; cessation or changes in government incentive programs: potential trade barriers affecting international expansion; fluctuations in customer demand; management of rapid growth and transitions to new markets; intensity of competition from or introduction of new and superior products by other providers of distributed automotive engineered vehicle body structures; timing, approval and market acceptance of new product introductions; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks detailed in Tongxin International's filings with the Securities and Exchange Commission, and the Preliminary Proxy Statement/Prospectus (Reg. No. 333- 147086-01). The information set forth herein should be read in light of such risks. Neither Tongxin International nor Hunan Tongxin assumes any obligation to update the information noted within in this press release.
For further information, please contact:
Mr. William R. Herren
Chairman and CEO
Mr. Rudy Wilson
COO
Tel: 1-248-593-8330
Tongxin International Ltd.
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