KHDH Khd Humboldt Wedag International Ltd. (MM)

- Backlog Increased by 66% and EPS Increased by $0.56 a Share - HONG KONG, May 15 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") (NASDAQ:KHDH) today announced results for the first quarter ended March 31, 2007. All figures are in US dollars and earnings per share amounts are on a diluted basis. We are reporting our financial statements on the basis of reclassifying our prior financial service business as discontinued operations for the first quarters of 2006 and 2005. For the first three months ended March 31, 2007, KHD reported revenues from continuing operations of $109.6 million, and income from continuing operations of $11.2 million, or $0.75 per share. By comparison, 2006's revenues were $61.9 million for the same operations, with income from continuing operations of $2.0 million, or $0.13 per share. For 2005, revenues were $50.6 million for the same operations, with income from continuing operations of $3.7 million, or $0.36 per share. The number of shares issued and outstanding as at March 31, 2007 was 14,733,191 and the weighted average number of shares for the three months ended March 31, 2007 was 14,927,631 on a diluted basis. The difference is primarily due to stock options granted to our operating employees in 2006. Order intake is defined as the total value of all orders received during the respective period, while order backlog is defined as the value of orders received but not yet fulfilled. For comparative purposes, the following amounts for order intake and backlog were translated directly from Euros to US dollars at 1.3196. Order intake for the quarter ended March 31, 2007 was $151.1 million, an increase of 42 percent over the first quarter of 2006 and an increase of 70 percent over the first quarter of 2005; 48 percent of the first quarter order intake came from the emerging regions of Asia, Russia and Eastern Europe. Order backlog as of March 31, 2007 was $650.2 million, up 66 percent over the first quarter of 2006 and an increase of 126 percent over the corresponding period of 2005. Our corporate tax expense for reporting purposes was $5.3 million. This number primarily reflected the net draw-down of our deferred tax assets. The US Dollar declined against the Euro during the first quarter of 2007 by approximately 8 percent over the first quarter of 2006. Margins increased substantially; the increase in profit margin is associated with the higher profits from certain completed projects, a decrease in the purchased equipment component of the revenues and an increase, on a percentage basis, in the higher margins proprietary technology component of our revenues. These margins should not be viewed as sustainable for the future. Other valuable indicators of sustainability are the nature and size of our projects. We minimize our risk profile and focus on higher margins when we limit our scope of supply to proprietary products. Our backlog of $650.2 million is spread over 100 active projects with a typical order size of approximately $13 million. This demonstrates that KHD's scope of supply to customers is generally limited to our proprietary equipment, with minimal pass-throughs that carry much smaller margins. Our guidance on revenues and earnings before taxes for the full year 2007 which we gave in our April 2, 2007 news release has not changed. For the year 2007, we expect revenues to increase to $623 million and earnings before taxes for the year of $61 million. CEO Jim Busche commented, "Our order intake and order backlog at the end of the first quarter of 2007 were up 42 percent and 66 percent respectively over the same period for 2006. These are strong indicators of the growth in demand along with the locations and size of the projects themselves." Chairman Michael Smith commented, "At the end of the first quarter of 2007, we had $242.5 million in cash and short-term securities, $449.3 million in current assets, and shareholders' equity of $277.7 million. We encourage our shareholders to read the entire Form 6K report for a greater understanding of our company, which is available on our website." Mr. Smith commented further, "In March 2007, we announced that we had entered into an Agreement with Sasamat Capital Corporation providing for our acquisition of all their outstanding common shares. Since this announcement, we have applied to the Supreme Court of British Columbia, Canada to obtain an interim order providing for the calling and holding of a special meeting of the shareholders of Sasamat. Our application was approved by the Court on April 20, 2007 and the special meeting will be held on May 22, 2007. Additionally the distribution of our real estate assets to our shareholders is proceeding on schedule. " Today at 10:00am EDT (7:00am PDT), a conference call will be held to review the Company's results; this call will be broadcast live over the Internet at http://www.khdhumboldt.com/ or http://www.earnings.com/. An online archive will be available immediately following the call and continue for seven days or to listen to the audio replay by phone, dial 1 (888) 286 8010 using conference ID # 16408503. International callers should dial 1 (617) 801 6888. About KHD Humboldt Wedag International Ltd. KHD Humboldt Wedag International Ltd. owns companies that operate internationally in the industrial plant engineering and equipment supply industry, and specializes in the cement, coal and minerals processing industries. To obtain further information on the Company, please visit our website at http://www.khdhumboldt.com/ Disclaimer for Forward-Looking Information Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in, the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management's current views and are based on certain assumptions. These assumptions, which include, management's current expectations estimates and assumptions about certain projects and the markets the Company operates in, are expressed or implied by the forward-looking statements, including, but not limited to: (1) a downturn in general economic conditions in Asia, Europe, the United States and internationally, (2) a decreased demand for the Company's products, (3) a decrease in the demand for cement, minerals and related products, (4) the number of competitors with competitively priced products and services, (5) product development or other initiatives by the Company's competitors, (6) shifts in industry capacity, (7) fluctuations in foreign exchange and interest rates, (8) fluctuations in availability and cost of raw materials or energy, (9) delays in the start of projects included in our forecasts, (10) delays in the implementation of projects included in our forecasts and disputes regarding the performance of our services, (11) the uncertainty of government regulation and politics in Asia and the Middle East and other markets, (12) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, and (13) other factors beyond the Company's control. Additional information about these and other assumptions, risks and uncertainties are set out in the "Risks and Uncertainties" section in our Form 6-K filed with the Securities and Exchange Commission and our MD&A filed with Canadian security regulators. Contact Information: Allen & Caron Inc. Joseph Allen (investors) 1 (212) 691-8087 or Len Hall (media) 1 (949) 474-4300 Rene Randall KHD Humboldt Wedag International Ltd. 1 (604) 683-8286 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS March 31, 2007 and December 31, 2006 (unaudited) (amounts in U.S. dollars; in thousands) ASSETS 2007 2006 Current assets Cash and cash equivalents $195,218 $204,678 Securities 47,313 4,111 Restricted cash 9,628 16,180 Accounts receivable, trade 46,434 68,432 Other receivables 18,803 33,901 Inventories 97,271 88,127 Contract deposits, prepaid and other 33,827 24,069 Future income tax assets 768 763 449,262 440,261 Non-current assets Restricted cash 7,550 0 Securities 497 555 Receivables 0 8,878 Real estate held for sale 48,513 47,894 Property, plant and equipment 3,371 2,993 Resource property 28,746 29,037 Equity method investments 484 500 Future income tax assets 33,719 33,826 Investment in preferred shares of a former subsidiary 78,815 77,976 201,695 201,659 $650,957 $641,920 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS (con't) March 31, 2007 and December 31, 2006 (unaudited) (amounts in U.S. dollars; in thousands) 2007 2006 LIABILITIES Current liabilities Accounts payable and accrued expenses $236,844 $242,574 Notes payable 416 542 Long-term debt, current portion 4,658 4,596 Pension liabilities, current portion 1,686 1,664 Provision for warranty costs, current portion 23,404 21,868 267,008 271,244 Long-term liabilities Long-term debt, less current portion 13,931 13,772 Pension liabilities, less current portion 28,940 28,559 Provision for warranty costs, less current portion 7,181 7,247 Deferred credit, future income tax assets 15,384 15,539 Future income tax liability 12,959 9,180 Other long-term liabilities 2,700 625 81,095 74,922 Total liabilities 348,103 346,166 Minority interests 25,189 22,466 SHAREHOLDERS' EQUITY Common stock 108,595 108,595 Treasury stock (74,456) (64,383) Contributed surplus 2,529 2,131 Retained earnings 187,910 176,742 Accumulated other comprehensive income 53,087 50,203 277,665 273,288 $650,957 $641,920 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended March 31, 2007, 2006 and 2005 (unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2007 2006 2005 Revenues $109,585 $61,943 $50,572 Cost of revenues 87,353 52,967 42,808 Gross profit 22,232 8,976 7,764 Other operating income Resource property 1,554 1,061 998 Real estate property 1,145 1,021 3,066 2,699 2,082 4,064 General and administrative expense (9,556) (7,311) (8,234) Stock-based compensation - general and administrative (398) 0 0 Operating income 14,977 3,747 3,594 Interest income 2,960 710 460 Interest expense (890) (905) (1,014) Other income (expenses), net 1,453 625 (205) Income before income taxes from continuing operations 18,500 4,177 2,835 Recovery of (provision for) income taxes (5,252) (1,660) 1,856 Income before minority interests 13,248 2,517 4,691 Minority interests (2,080) (550) (966) Income from continuing operations 11,168 1,967 3,725 Income from discontinued operations, net of tax 0 858 1,151 Net income $11,168 $2,825 $4,876 Basic earnings per share from continuing operations 0.76 $0.13 $0.27 from discontinued operations 0 0.06 0.08 $0.76 $0.19 $0.35 Diluted earnings per share from continuing operations $0.75 $0.13 $0.27 from discontinued operations 0 0.06 0.08 $0.75 $0.19 $0.35 Weighted average shares outstanding - basic 14,733,191 14,665,346 13,577,146 Weighted average shares outstanding - diluted 14,927,631 14,665,346 13,722,491 KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of March 31, 2007 (unaudited) (amounts in U.S. dollars; in thousands, except per share data and ratios) Cash and cash equivalents $195,218 Short-term securities 47,313 Working capital 182,254 Total assets 650,957 Shareholders' equity 277,665 Book value per share 18.85 Current ratio 1.683 Long-term debt to equity ratio 0.05 DATASOURCE: KHD Humboldt Wedag International Ltd. CONTACT: Investors, Joseph Allen, +1-212-691-8087, , or Media, Len Hall, +1-949-474-4300, , both of Allen & Caron Inc., for KHD Humboldt Wedag International Ltd.; or Rene Randall of KHD Humboldt Wedag International Ltd., +1-604-683-8286, Web site: http://www.khdhumboldt.com/

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