CBAK Battery Reports Third Quarter Fiscal 2006 Financial Results
China BAK Battery, Inc. announced financial results for the third quarter of fiscal 2006 ("FY06") ended June 30, 2006.
Revenues for the third quarter of FY06 were $33.4 million, up 38.3% from $24.2 million in the third quarter of fiscal 2005 (FY05), but down 12.6% sequentially from the quarter ended March 31, 2006. The sequential decrease was due to a seasonal decline in sales of steel-case and aluminum-case battery cells in the quarter, which declined 35.5% and 26.3%, respectively, from the second quarter of FY06. These declines were offset by strong growth in sales in other business segments. Sales of high-power lithium-phosphate cells increased twofold from the second quarter of FY06, and comprised 22.3% of total revenues.
Gross profit for the third quarter of FY06 was $8.5 million, up 29.6% from $6.6 million in the third quarter of FY05, but down 30.6% from the second quarter of FY06. Gross margin was 25.4% in the third quarter of FY06, compared to 27.1% in the year ago period and 32.0% in the second quarter of FY06. This decline was mainly attributable to two factors: lower than expected revenues resulted in unabsorbed manufacturing expenses; an increase in fixed expenses for manufacturing capacity of new products which are in their early stages of volume ramp up.
Operating expenses totaled $3.5 million during the third quarter of FY06, up 31.3% from $2.7 million in the third quarter of FY05. Operating expenses include $0.5 million in share-based compensation expenses related to the adoption of SFAS 123® and costs associated with being a public company. Research and development expenses also increased, reflecting additional staff as well as higher depreciation expenses related to the company's investment in automating its production lines. Operating income for the third quarter of FY06 was $5.0 million, an increase of 28.5% over operating income of $3.9 million reported a year ago. Operating margin for the third quarter of FY06 was 15.0%, as compared to 16.2% in the third quarter of FY05. Net income was $4.7 million in the third quarter of FY06, up 33.6% over $3.5 million in the third quarter of FY05. Diluted earnings per share for the third quarter FY06 was $0.09, compared to $0.09 per diluted share in the prior year period.
For the first nine months of FY06 ended June 30, 2006, revenues increased 30% to $97.7 million, compared to $75.2 million for the first nine months of FY05. Operating income was $16.7 million, up 66.8% over operating income of $10.0 million reported in the first nine months of FY05. Operating margin was 17.1%, as compared to 13.3% in the first nine months of FY05. Net income was $15.4 million, an increase of 77.7% over $8.7 million in the first nine months of FY05. Diluted earnings per share were $0.31, compared to $0.23 per diluted share in the first nine months of FY05.
