News

China BAK Reports First Quarter Fiscal Year 2011 Financial Results

January 30, 2011 by Jeff Shepard

China BAK Battery, Inc. announced its financial results for the first quarter of fiscal year 2011 ended December 31, 2010 ("Q1 2011"). During the quarter ended December 31, 2010, the company recorded $3.6 million in non-cash expense items following a strategic review of its operations.

Net revenues for the first quarter were $63.5 million, up 14.3% from $55.6 million last quarter and up 26.5% from $50.2 million for the same period in fiscal 2010. Revenues from prismatic products, including aluminum-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $47.5 million, up 10.2% from $43.1 million last quarter and up 22.5% from $38.8 million for the same period in fiscal 2010.

Revenues from cylindrical cells used in notebook computers were $10.5 million, up 17.6% from $8.9 million last quarter and up 29.1% from $8.1 million for the same period in fiscal 2010. Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $3.5 million, up 17.2% from last quarter and up 9.4% from the same period in fiscal 2010.

Revenues from high-power lithium battery cells, used in electric bicycles, power tools, uninterruptible power supplies, and other applications manufactured at the company’s Tianjin facility, were $2.1 million, up around two times the revenue from last quarter and up nearly 12 times the revenue from the same period in fiscal 2010.

Gross profit for the first quarter of fiscal year 2011 was $10.0 million, up 88.3% from $5.3 million last quarter and up 4.6% from $9.6 million in the same quarter of last year. Gross margin was 15.7% significantly up from 9.5% last quarter and slightly lower than 19.0% in the year ago period. The increase in gross profit was a result of increased direct sales of battery packs to OEM cell phone manufacturers driven by strong customer demand. The year-over-year decline in gross margin was a result of the company’s adoption of a competitive pricing strategy for its cylindrical cells to increase its market share in the OEM market.

Operating expenses totaled $11.8 million, or 18.6% of revenue, in the first quarter down 6.7% from $12.6 million, or 22.6% of revenue, in the last quarter and down 5.1% from $12.4 million, or 24.8% of revenue, in the first quarter of fiscal 2010. Research and development expenses were $1.6 million, or 2.6% of revenue, down 12.3% from $1.9 million, or 3.4% of revenue in the last quarter and down 7.0% from $1.8 million, or 3.5% of revenue in the same quarter of fiscal 2010. Sales and marketing expenses were $2.3 million, or 3.6% of revenue down 10.4% from $2.5 million, or 4.6% of revenue in the last quarter and up 12.1% from $2.0 million, or 4.0% of revenue in the same quarter of fiscal 2010. General and administrative expenses were $7.9 million, or 12.4% of revenue up 26.0% from $6.2 million, or 11.2% of revenue in the last quarter and down 8.8% from $8.6 million or 17.2% of revenue in the same quarter of fiscal 2010.

Operating loss for the first quarter was $1.8 million compared to operating loss of $7.3 million in the last quarter and operating loss of $2.9 million in the same quarter of fiscal 2010. Excluding the impact of non-cash items, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP operating income was $1.8 million in the first quarter of fiscal 2011 compared to non-GAAP operating loss of $3.3 million in the last quarter and non-GAAP operating income of $2.7 million in the same period a year ago.

Net loss was $3.7 million, or diluted loss per share of $0.06, in the first quarter of fiscal 2011 compared to net loss of $8.6 million, or diluted loss per share of $0.14, in the last quarter and net loss of $3.4 million, or diluted loss per share of $0.06, in the same quarter of fiscal 2010. Excluding the impact of non-cash items, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP net loss for the first quarter of fiscal 2011 was $0.1 million, or a loss of $0.00 per diluted share, compared to non-GAAP net loss of $4.6 million in the previous quarter, or a loss of $0.08 per diluted share, and non-GAAP net income of $2.2 million, or earnings of $0.04 per diluted share in the same period a year ago.