Harbin Electric Slips To Loss In Q3; Adj. Earnings Increase

11/10/2009 7:54 AM ET

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Harbin Electric Turns To Q3 Loss - Quick Facts

(RTTNews) - Tuesday, Harbin Electric, Inc. (HRBN: News ), a developer and manufacturer of electric motors in China, reported a net loss for the third quarter compared to profit in the same period last year, hurt in large part by non-recurring items. However, on an adjusted basis, the company posted an increase in earnings, which topped analysts' estimates on higher revenues.

Net loss for the quarter was $1.91 million or $0.07 per share compared with net income of $7.75 million or $0.34 per share in the year-ago period.

Adjusted net income rose to $10.95 million from $7.75 million in the year-ago quarter. Earnings rose to $0.40 per share from $0.34 per share reported in the corresponding period last year. On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share for the quarter.

Adjusted net income for the quarter excludes special non-cash and non-recurring items including a gain of $4.16 million on debt repurchase, a loss of $7.28 million additional amortization of debt discount and debt issuance costs, a loss of $9 million due to the termination of the cross currency interest rate swap, and a loss of $0.74 million due to change in fair value of the warrants outstanding.

The company attributed the increase in adjusted net income to higher sales. Other factors such as higher gross margin, higher non-operating income, and relatively lower operating cost and lower interest expense also contributed, the company said.

Revenue rose 18% to $46.9 million from $39.7 million in the same period last year driven by growth in the linear motor and industrial rotary motor businesses. Three Street analysts expected the company to report earnings of $43.82 million for the quarter.

Linear motor sales were up 18% mainly due to significant higher sales of oil pumps. Higher sales in oil pumps more than offset the sales decline in other linear motors and related systems. Continued strong demand for rotary motors boosted industrial rotary motor sales by 37%.

International sales totaled $3.30 million, down 45% from $6.06 million in the third quarter of 2008 reflecting continued economic weakness in North America.

Gross profit increased to $16.76 million from $13.77 million a year earlier. Gross profit margin increased to 35.7% from 34.7% in the year-ago quarter. Operating income rose to $13 million from $10.5 million in the same period last year.

For the nine-month period, net income totaled $1.3 million or $0.06 per share compared with $19.3 million or $0.92 per share in the same period last year. Revenues rose to $116 million from $86 million in the corresponding period last year.