A-Power Energy Generation (PINK:APWR)

SHENYANG, China, April 7, 2011 /PRNewswire-Asia-FirstCall/ -- A-Power Energy Generation Systems, Ltd. today explained the delay of its intended early reporting of the year 2010 results and its related conference call.

Mr. Kin Kwong (Peter) Mak, A-Power's Chief Financial Officer, said, "The scope of the audit field work that is necessary to bring the audit of our 2010 financial statements to a conclusion was not immediately recognized when the conference call was initially scheduled to discuss our results. After learning from both our internal team and from our outside professional advisers that the work on the financial statements and conclusion of the audit could not be completed prior to the date we had previously scheduled for release, we, of necessity, postponed the conference call and the release of the financial results for 2010.

"While we very much regret the delay and confusion caused by our premature announcement of the conference call, it is most important that our financial statements for the year ended December 31, 2010 are completed with all due care and that these financial statements are accurate and reliable when they are released.

"I again confirm that the delay was not the result of any accounting irregularities or investigation of accounting errors, nor do we expect any restatement of A-Power's previously audited financial statements as a result of the ongoing audit processes for 2010."

Third quarter 2010 financial highlights

• Revenues decreased 40.7% to $57.3 million from $96.6 million in the third quarter 2009.

• Gross profit decreased 2.5% to $12.3 million in the third quarter from $12.6 million in the third quarter 2009.

• Gross profit margin was 21.5% in the third quarter compared to 13.1% in the third quarter 2009.

• Income from operations decreased 63.2% to $3.4 million in the third quarter from $9.4 million in the third quarter 2009.

• Net loss attributable to A-Power was $(1.0) million in the third quarter compared with a net loss of $(0.6) million in the third quarter 2009.

• Net loss per diluted common share was $(0.02) in both the third quarter 2010 and third quarter 2009 on 34.0% higher weighted average common shares outstanding in the third quarter 2010 than in the prior third quarter.

• Guidance for the year 2010 has been revised downward to revenues of $310 million and net income of $50 million due to lower-than-expected wind turbine sales.

Mr. Jinxiang Lu, A-Power's Chairman and CEO said, "A-Power's results in the third quarter were less than we hoped we would achieve. The shortfall was due mainly to lower revenues in our Distributed power generation segment because of the timing of work under contracts, and to less-than-planned sales in our Wind power segment. Although Wind power achieved revenues of $15.5 million in the third quarter, we had assumed we would be able to book revenues from a major customer, Spinning Star LLC. However to date, Spinning Star has been unable to secure the expected construction financing for its wind farm project in Texas.

"We believe our strategy to benefit from alternative power generation, in the forms of distributed power, wind power, and photovoltaic solar power, continues to be valid for the Company's long-term success and is in the best interests of our shareholders. Our design, engineering, suppliers, and operations are all in very good shape and remain competitive in the marketplace.

"Recently, we have won a major new contract in our Distributed power business for the engineering, procurement, and construction of four hydropower plants over a period of six years, to be located in the Jilin province of China. The project is expected to generate RMB 1.87 billion (about $279 million) over project's anticipated six year life.

"We are very aware of our responsibility to shareholders and are doing everything possible to simultaneously expand our businesses and protect our assets in the most prudent of ways.

"We hope to see greater predictability in financing for our customers in 2011 and the years ahead."

Business outlook and guidance

In light of the general softness in the wind energy business and, in particular, the lack of turbines purchases from Spinning Star and the consequent impact of these factors on the near-term demand for A-Power's wind turbines, the Company has reduced its guidance for the full year 2010. It now expects

• revenues of $310 million (reduced from $500 million)
• net income of $50 million (reduced from $60 million).

"GAAP net income attributable to A-Power in the 2010 second quarter increased 86.3% to $11.6 million, or $0.25 per diluted share, from $6.3 million, or $0.14 per diluted share in the prior year period. Non-GAAP net income, declined to $1.1 million from $4.7 million in prior year period." 

Non-GAAP EPS works to about $0.02 vs. $0.13.

In the 2010 second quarter, total shares outstanding on a diluted basis were 46.5 million shares, an increase of 32%, compared with 35.3 million in the prior year period.

Business Outlook

The Company reiterates its guidance for its full year 2010 outlook of revenues of $500 million and net income of $60 million. This guidance is based upon the on-going DG projects and revenues from the expected sale of wind turbines to be generated during the remainder of 2010.

Mr. Lu continued, "We have many compelling opportunities in our business that can drive our revenue growth significantly higher in the second half of the year. Our DG business is expected to remain the primary performance driver with sales coming from our existing 15 projects. Significant sales are also expected in our wind turbine business in the second half of the year. We expect to begin delivery of 2.0 MW or larger turbines to customers in the second half of 2010. We are building a platform that will establish A-Power as an emerging leader in both distributed power and alternative power generation systems and are working aggressively to capitalize on the long-term growth opportunities in these areas."

First Quarter Financial Highlights

     -- Revenues were $67.3 million representing a 115.8% year-over-year
        increase;
     -- Gross margin increased to 14.5% from 12.6% in the first quarter of
        2009;
     -- Net income (GAAP) attributable to A-Power was $29.3 million, or $0.64
        per diluted share;
     -- Cash, cash equivalent and restricted cash were $220.4 million;
     -- Prepayments, deposits, other receivables from customers were $102.4
        million;
     -- Annual guidance for 2010 raised to revenues of $500 million with net
        income of $60 million.

Mr. Jinxiang Lu, A-Power's Chairman and CEO commented, "We are very excited with our strong revenue growth and solid gross margin expansion in the first quarter. Although the first quarter is typically a slow season in our DG activities in most parts of China due to the winter weather condition, we set new records for both revenue and net income growth in first quarter of 2010. Our geographic diversification into southern China and international projects are contributing more DG revenues. Our wind turbine business continues to gain traction and we remain confident in the market outlook, as our larger turbines are receiving favorable consideration in China, and the outlook for future turbine exports also appears promising. With more components arriving and our production expanding, we are continuing to move forward on all facets of our wind turbine business, both domestically and internationally. On the financial side, we continued to work to strengthen our balance sheet and manage our cash flow to prepare ourselves for further expansion during 2010."

Management raised its view that revenues for 2010 will reach $500 million and net income will reach $60 million, from previously announced annual guidance of $380 million in revenues and $45 million in net income, respectively. These targets are based on the Company's current views on the operating and market conditions, which are subject to change and to future developments, including those referred to under our safe harbor statement below.

A-Power today reaffirmed its revenue and after-tax net income guidance for 2009 of $320 million and $32 million, respectively. These targets are based on the Company's current DG contracts, which are subject to change when the Company signs new DG contracts and/or recognizes revenues from wind turbine sales during 2009. A-Power expects that it will from time to time provide periodic updates when additional major DG contracts and wind turbine sales are confirmed.

Source: PR Newswire (August 27, 2009)

A-Power adjusted upward its revenue and after-tax net income guidance for 2009.

FULL YEAR 2009 Guidance

	Full Year 2009	Full Year 2008	Period Change
GAAP Revenue	$320.0 million	$264.9  million	20.8%
Net Income	$32.0 million	$28.5 million	12.2%

'Entering 2009, we expect continued growth in our DG business as our strong track record attracts more industrial companies to use our systems to improve their electricity power management and utility cost control. On the wind turbine generator front, we want to fully leverage our technology partnerships with global wind technology leaders like Fuhrlander, Norwin and GE. Although our wind power business is still in its infancy, we see strong demand from the market for our 2.7MW wind turbines, as China is graduating from the Kilo-Watt class and moving towards Mega-Watt wind turbines. With our engineers and technicians completing training in Germany, our top priority is to secure components and ramp up production to satisfy the growing market demand.'

FULL YEAR 2009 Guidance

	Full Year 2009	Full Year 2008	Period Change
GAAP Revenue	$290.00 million	$264.87  million	9.49%
Net Income	$29.00 million	$28.52 million	1.68%

Guidance Update: 

 For the 2008 fourth quarter, the Company now expects revenue to be approximately $76 million and net income to be approximately $5 million. Both revenue and net income guidance are now lower than previous guidance of $158 million and $15.5 million, respectively.

"Due to the unusual current macro economic conditions, a few of our key potential contracts, which we expected to close in the fourth quarter, were postponed."

"Entering into 2009, we remain confident with a positive outlook for China's wind energy market as both government and enterprises have a strong commitment for renewable energy development, and we maintain a leading position in the marketplace, where the barrier to enter is high. As a result, we continue to expect profitable growth in 2009."

GeoPerspective:

As for 2009 the company commented that they will remain profitable, but gave no specifics.  This may make it difficult for investors  to place a valuation on the company.

Source: PR Newswire (December 30, 2008)

2008 Earnings Guidance

Mr. Jinxiang Lu, A-Power’s Chairman and CEO commented about A-Power’s earnings outlook for 2008, “As a result of the accelerating growth of our domestic (China) distributed power generation business and the backlog associated with this business, our ongoing discussions for multiple distributed power contracts in Southeast Asia, as well as the anticipated start of our wind turbine production operation, we expect that our year-end 2008 net income will range from $35 to $45 million, or approximately $1.05 to $1.35 per share.”



(Source: Press, March 31, 2008)