SGOCO Group, Ltd. Announces Solid Growth in Revenues and Earnings for First Quarter 2013 PR Newswire BEIJING, June 10, 2013 BEIJING, June 10, 2013 /PRNewswire/ -- SGOCO Group, Ltd. (Nasdaq: SGOC) ("SGOCO" or the "Company"), a company focused on product design, distribution and brand development in flat-panel display products, today announced its unaudited operating results for the three months ended March 31, 2013. 2013 First Quarter Overview SGOCO started the year 2013 with a solid year-over-year growth of both its revenues and profits. Compared with the first quarter of 2012, SGOCO achieved top line increase of 58.0% and bottom line increase of 87.5% for the first quarter of 2013. The solid operational results demonstrated that the light-asset business model provided SGOCO with greater scalability in growing its sales. Financial Highlights First Quarter 2013 vs. First Quarter 2012 oQuarterly revenues increased 58.0% to $54.5 million, as compared to $34.5 million year-over-year oGross profit increased by 39.6% to $3.7 million, as compared to $2.7 million year-over-year oNet income increased 87.5% to $1.7 million, as compared to $0.9 million year-over-year oBasic and diluted earnings per share were $0.10, as compared to $0.05. Revenue In the first quarter of 2013, SGOCO's total revenues were $54.5 million, which increased by 58.0% from $34.5 million from the first quarter of 2012. The year-over-year revenue increase was mainly due to the sign-ups with a few large local distributor clients and increased sales of other application products as well as larger-sized monitors with higher prices, offset by a decrease in sales of smaller-sized monitors in the quarter. Of the total revenues in the quarter, $36.6 million or 67.1% of total revenues were from SGOCO's own brands; $6.5 million or 12.0% of total revenues were from OEM customers; and $11.4 million or 20.9% of total revenues were from sales of other application products. Starting in the fourth quarter of 2012, the Company started to source orders for higher margin application products in order to diversify its revenue streams. Gross Margin Gross profit for the first quarter of 2013 increased 39.6% to $3.7 million from $2.7 million for the first quarter of 2012. The overall gross margin for the first quarter of 2013 was 6.9%, as compared with 7.8% for the first quarter of 2012. Gross margin continued to be negatively impacted by the increased fees charged by Chinese authorities for recycling imported monitors and price decreases in monitors. During the first quarter of 2013, SGOCO brand sales had a gross margin of 6.6%, which decreased from 9.8% in the first quarter of 2012. During the first quarters of 2013 and 2012, OEM businesses had a gross margin of 6.9% and 5.5%, respectively. Sales of other application products in the first quarter of 2013 recorded a gross margin of 7.8%. Operating Income and Expenses Operating income totaled $2.7 million for the first quarter of 2013, or 4.9% of total revenues, as compared to $1.7 million, or 4.8% of total revenues for the first quarter of 2012. SG&A expenses for the first quarter of 2013 were $1.1 million, roughly the same level as the first quarter of 2012 of $1.0 million. The year-over-year increase of $0.1 million was attributed to increase in both transportation cost and staff salaries and welfare, offset by a decrease in share-based compensation expenses. Net Income and EPS Net income for the first quarter of 2013 was $1.7 million, which grew 87.5% from $0.9 million for the first quarter of 2012. The net income margins were 3.2% and 2.7% for the three months ended March 31, 2013 and 2012, respectively. Basic and diluted earnings per share were reported at $0.10 for the first quarter of 2013, compared to $0.05 in the first quarter of 2012. Basic and diluted EPS for the first quarter of 2013 was calculated based on 17,086,826 weighted average number of common shares as compared to 17,053,036 weighted average number of common shares for the first quarter of 2012. Cash and Working Capital As of March 31, 2013, the Company held $5.7 million in cash and cash equivalents compared to $11.5 million as of December 31, 2012. Working capital increased to $79.9 million from $78.1 million at the end of 2012. The current ratio was 3.01 on March 31, 2013, compared to 3.86 on December 31, 2012. The decrease in the cash position was largely due to the Company's significant inventory build-up and advances made to suppliers as of March 31, 2013 in order to meet customers' delivery schedules in the following quarter. Annual General Meeting The Company is scheduled to hold its Annual General Meeting on June 24, 2013 with Proxy Statement filed with the SEC. Conference Call SGOCO's management will host a conference call at 9 a.m. Eastern Time/9 p.m. Beijing Time on Monday, June 17, 2013. Interested parties may access the call by dialing 1-877-941-1427 (US Toll-free) or 1-480-629-9664 (International) or 400-120-0612 (China Toll-free). The Conference call identification number is 4620997#. A webcast will also be available via http://public.viavid.com/index.php?id=104868 A recording of the conference call will be accessible within 48 hours via SGOCO's website at: http://www.sgocogroup.com/us/SGOC/irwebsite/index.php?mod=recent&id=14 About SGOCO Group, Ltd. SGOCO Group, Ltd. is focused on product design, brand development and distribution of flat panel display products, including computer monitors, TVs, computers and application specific products. SGOCO sells its products and services in the Chinese market and abroad. For more information about SGOCO, please visit our investor relations website http://www.sgocogroup.com. For investor and media inquiries, please contact: SGOCO Group, Ltd. Serena Wu Investor Relations Manager Tel: +86 (10) - 85870173 (China) US: +1(646) - 5831616 (Voice mail) Email:firstname.lastname@example.org Safe Harbor and Informational Statement This announcement contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of the Company set forth herein and those preceded by or that include the words "believe," "expect," "anticipate," "future," "will," "intend," "plan," "estimate" or similar expressions, are "forward-looking statements". Forward-looking statements in this release include, without limitation, the effectiveness of the Company's multiple-brand, multiple channel strategy and the transitioning of its product development and sales focus and to a "light-asset" model. Although the Company's management believes that such forward-looking statements are reasonable, it cannot guarantee that such expectations are, or will be, correct. These forward-looking statements involve a number of risks and uncertainties, which could cause the Company's future results to differ materially from those anticipated. These forward-looking statements can change as a result of many possible events or factors not all of which are known to the Company, which may include, without limitation, requirements or changes adversely affecting the LCD and LED market in China; fluctuations in customer demand for LCD and LED products generally; our success in promoting our brand of LCD and LED products in China and elsewhere; our ability to have effective internal control over financial reporting; our success in designing and distributing products under brands licensed from others; management of sales trend and client mix; possibility of securing loans and other financing without efficient fixed assets as collaterals; changes in government policy in China; the fluctuations and competition in sales and sale prices of LCD and LED products in China; China's overall economic conditions and local market economic conditions; our ability to expand through strategic acquisitions and establishment of new locations; changing principles of generally accepted accounting principles; compliance with government regulations; legislation or regulatory environments; geopolitical events, and other events and/or risks outlined in SGOCO's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of the date of the issuance, and SGOCO does not undertake any obligation to update any forward-looking statement, except as required under applicable law. SGOCO GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012 (Unaudited) (In thousands of U.S.dollars except share and per share data) 2013 2012 REVENUES: Revenues 54,544 34,522 COST OF GOODS SOLD: Cost of goods sold 50,801 31,840 GROSS PROFIT 3,743 2,682 OPERATING EXPENSES: Selling expenses 244 118 General and administrative expenses 832 912 Total operating expenses 1,076 1,030 INCOME FROM OPERATIONS 2,667 1,652 OTHER INCOME (EXPENSES): Interest income 1 - Interest expense (35) (15) Other income (expense), net (74) (14) Change in fair value of warrant derivative 5 1 liability Total other expenses, net (103) (28) INCOME BEFORE PROVISION FOR INCOME TAXES 2,564 1,624 PROVISION FOR INCOME TAXES 843 706 NET INCOME 1,721 918 OTHER COMPREHENSIVE INCOME (LOSS): Foreign currency translation adjustment 14 (72) COMPREHENSIVE INCOME 1,735 846 EARNINGS PER SHARE: Basic 0.10 0.05 Diluted 0.10 0.05 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 17,086,826 17,053,036 Diluted 17,086,826 17,053,036 SGOCO GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2013 AND DECEMBER 31, 2012 (In thousands of U.S.dollars except share and per share data) March 31, 2013 December 31, 2012 ASSETS (Unaudited) CURRENT ASSETS Cash 5,663 11,548 Accounts receivable, net 64,966 59,355 Other receivables and prepayments 1,440 169 Inventories 12,288 5,725 Advances to suppliers 35,313 28,511 Other current assets 27 78 Total current assets 119,697 105,386 PLANT AND EQUIPMENT, NET 257 261 Total assets 119,954 105,647 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term loan 11,800 6,230 Accounts payable, trade 17,197 12,038 Accrued liabilities 104 156 Short-term loan – shareholder 209 209 Other payables 325 379 Customer deposits 2,563 1,155 Taxes payable 7,594 7,147 Total current liabilities 39,792 27,314 OTHER LIABILITIES Warrant derivative liability 13 18 Total liabilities 39,805 27,332 Commitment and contingencies SHAREHOLDERS' EQUITY Preferred stock, $0.001 par value, 1,000,000 shares authorized, nil issued and - - outstanding as of March 31, 2013 and December 31, 2012 Common stock, $0.001 par value, 50,000,000 shares authorized, 17,545,356 and 17,465,356 shares 18 17 issued and outstanding as of March 31, 2013 and December 31, 2012, respectively Paid-in-capital 24,926 24,828 Statutory reserves 401 401 Retained earnings 54,765 53,044 Accumulated other comprehensive income 39 25 Total shareholders' equity 80,149 78,315 Total liabilities and shareholder's equity 119,954 105,647 SGOCO GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012 (Unaudited) (In thousands of U.S.dollars) 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,721 918 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 18 15 Change in fair value of warrant (5) (1) derivative liability Share-based compensation expenses 98 273 Change in operating assets and liabilities Accounts receivable, trade (5,657) (9,511) Other receivables and prepayments (1,268) 392 Inventories (6,538) 11,373 Advances to suppliers (6,716) (8,313) Other current assets 54 42 Accounts payables, trade 5,119 270 Accrued liabilities (52) (18) Other payables (81) 788 Customer deposits 1,403 (40) Taxes payable 427 517 Net cash used in operating (11,477) (3,295) activities CASH FLOWS FROM INVESTING ACTIVITIES: Settlement of consideration received from disposal of - 9,703 subsidiaries Purchase of equipment (14) (67) Net cash (used in) provided by (14) 9,636 investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Increase in restricted cash - (65) Notes payable - 65 Proceeds from short-term loan 5,570 - Net cash provided by financing 5,570 - activities EFFECT OF EXCHANGE RATE ON CASH 36 (93) (DECREASE) INCREASE IN CASH (5,885) 6,248 CASH, beginning of period 11,548 535 CASH, end of period 5,663 6,783 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest expenses paid (net of amount capitalized) 35 15 Income taxes paid 399 189 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Settlement of consideration receivable – - 13,901 received in finished goods SOURCE SGOCO Group, Ltd. Website: http://www.sgocogroup.com
SGOCO Group, Ltd. Announces Solid Growth in Revenues and Earnings for First Quarter 2013
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