Advanced Battery Technologies Announces Second Quarter 2010 Financial Results

Advanced Battery Technologies, Inc. announced financial results for the second quarter ended June 30, 2010.

Zhiguo Fu, CEO of ABAT, stated, "We are pleased with our results during the second quarter. During the quarter, we experienced strong demand in both domestic and international markets for electric and hybrid electric vehicles as individuals and industries switch to alternate forms of transportation. We are still upgrading the capacity of two battery production lines and are aiming to complete the upgrade in the third quarter in order to meet the strong battery demand from customers."

The company had total revenues of $22.8 million for the three months ended June 30, 2010, an increase of $9.1 million or 65.8%, compared to $13.8 million for the three months ended June 30, 2009. The increase in revenues was primarily due to the contribution of sales from the electric vehicle business, which the company acquired on May 4, 2009. Sales of electric vehicles for the three months ended June 30, 2010 totaled $12.6 million, compared to $3.6 million in the three months ended June 30, 2009. Large capacity battery cells generated $4.1 million in sales, or 18.0% of total revenue in the second quarter of 2010. Medium capacity battery cells generated $2.7 million in sales, or 11.8% of total revenue in the second quarter of 2010. Small capacity battery cells generated $0.9 million in sales, or 3.8% of total revenue in the second quarter of 2010. Miner’s lamp battery cells generated $2.5 million in sales, or 11.1% of total revenue in the second quarter of 2010.

During the three months ended June 30, 2010, gross profit was $11.0 million, an increase of 74.9% year-over year. Gross margin in the second quarter of 2010 was 48.3%, compared to 45.8% a year ago, mainly due to more electric vehicle sales in overseas markets with a higher price premium.

Operating income in the second quarter of 2010 was $9.0 million, an increase of 279.4% year-over-year, from $2.4 million in the prior year’s period. Operating expenses decreased to $2.0 million in the second quarter of 2010 from $3.9 million in the second quarter of 2009. The decrease is primarily due to Wuxi ZQ’s lower selling and administration expenses of approximately $1.4 million in the three months ended June 30, 2010 compared to approximately $2.4 million, including one-time bad debt allowance associated with the acquisition, in the same period of 2009, In addition, ABAT’s U.S. office incurred lower administrative expenses in the second quarter of 2010.

Pre-tax income of $13.3 million in the second quarter of 2010, including a gain of $4.2 million from change in fair value of warrants, represents an increase of $6.2 million from $7.2 million in the same period of 2009. Pre-tax income in the second quarter of 2009, however, included a one-time gain on acquisition purchase of $9.9 million and a loss of $5.0 million from change in fair value of warrants. After taxes of $0.8 million accrued in the three months ended June 30, 2010, the Company’s net income increased 315.0% to $12.5 million, or $0.18 per diluted share, from $3.0 million, or $0.05 per diluted share, in the same period of 2009.

At July 31, 2010 the company had a backlog of around $63.3 million for delivery throughout the next 12 months, including a battery backlog of approximately $50.5 million.