WSP Holdings Announces Fourth Quarter and Full Year 2012 Results.
: WH)(“WSP Holdings” or the “Company”), a
subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock.
(American Petroleum Institute) and
non-API seamless casing, tubing and drill pipes used in oil and natural
gas exploration, drilling and extraction (“Oil Country
1. shaped like a tube.
2. of or pertaining to a tubule.
1. pertaining to renal tubules.
2. pertaining to fallopian tube.
Goods” or ”
“), and other pipes and connectors, today
announced its unaudited financial results for the fourth quarter and
full year ended
Fourth Quarter 2012 Highlights (Comparison with the third quarter of
2012 and the fourth quarter of 2011)
“The fourth quarter of 2012 showed a decrease in total revenues
from the third quarter of 2012, mainly due to a decrease in sales volume
as well as
average selling price
of non-API products,” commented
Mr. Longhua Piao, the Chairman and Chief Executive Officer of WSP
Holdings. “We will continue our marketing efforts to tap into new
Variant of amid.
[Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.]
the current global economic
Financial Results Fourth Quarter 2012 Financial Results (Comparison
with the third quarter of 2012 and the fourth quarter of 2011)
WSP Holdings reported revenues of $131.4 million in the fourth
quarter of 2012, compared to $141.3 million in the third quarter of
2012, primarily due to a decrease in revenues generated from export
sales. Domestic sales and export sales accounted for 55.0% and 45.0%,
respectively, of total revenues for the fourth quarter of 2012.
On a quarter-over-quarter basis, domestic sales decreased primarily
due to a 4.7% decrease in sales volume, partially offset by a 1.7%
increase in average selling prices. Export sales decreased
quarter-over-quarter primarily due to a 9.6% decrease in average selling
prices and a 2.0% decreased in sales volume.
On a year-over-year basis, domestic sales decreased primarily due to
a 32.2% decrease in domestic sales volume and a 2.4% decrease in average
selling prices. Export sales decreased year-over-year primarily due to a
24.2% decrease in average selling prices, partially offset by a 9.3%
increase in sales volume.
API and non-API product sales accounted for 77.5% and 13.3%,
respectively, of total revenues in the fourth quarter of 2012. Higher
quarter-over-quarter sales revenues from API product sales were
primarily due to a 6.7% increase in sales volume. Non-API sales revenues
decreased quarter-over-quarter due to a 20.7% decrease in sales volume
and a 14.8% decrease in average selling prices.
API sales revenues decreased year-over-year primarily due to a 13.6%
decrease in sales volume and an 8.4% decrease in average selling prices.
Non-API sales decreased year-over-year primarily due to a 20.8% decrease
in sales volume and a 19.3% decrease in average selling prices.
Gross margin in the fourth quarter of 2012 was 4.9%, compared to
5.5% in the third quarter of 2012 and 7.2% in the fourth quarter of
2011. Lower quarter-over-quarter and year-over-year gross margins were
primarily due to decreases in average selling prices.
in the fourth quarter of 2012 were $31.6 million,
compared to $25.6 million in the third quarter of 2012 and $29.7 million
in the fourth quarter of 2011. Selling and marketing expenses were $6.2
million, compared to $3.7 million in the third quarter of 2012 and $14.6
million in the fourth quarter of 2011. The year-over-year decrease in
selling and marketing expenses was primarily due to a decrease in sales
commission and sales activity levels associated with decreased sales
volume. General and administrative expenses were $26.3 million, compared
to $23.3 million in the third quarter of 2012 and $16.1 million in the
fourth quarter of 2011. The quarter-over-quarter and year-over-year
increase in general and administrative expenses were primarily due to
increased bad debt provision in the fourth quarter of 2012.
Loss from operations was $25.2 million in the fourth quarter of
2012, compared to loss from operations of $16.7 million in the fourth
quarter of 2011 and $17.8 million in the third quarter of 2012.
Net interest expense was $6.5 million in the fourth quarter of 2012,
compared to $2.6 million in the fourth quarter of 2011 and $9.5 million
in the third quarter of 2012. The year-over-year increase in net
interest expense was attributable to lower interest expense in the
fourth quarter of 2011 due to an increase in the
n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets.
The Company recorded an income tax benefit of $0.6 million in the
fourth quarter of 2012, compared to $0.7 million in the fourth quarter
of 2011 and $1.5 million in the third quarter of 2012.
Net loss attributable to WSP Holdings was $29.1 million in the
fourth quarter of 2012, compared to net loss attributable to WSP
Holdings of $18.9 million in the fourth quarter of 2011 and $22.7
million in the third quarter of 2012.
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
loss per ADS were both $1.43 in the fourth quarter
of 2012, compared to basic and diluted loss per ADS for both of $0.93 in
the fourth quarter of 2011 and $1.11 in the third quarter of 2012.
Full year 2012 Results
Revenues for the full year 2012 were $561.3 million, a decrease of
18.2% from revenues of $686.1 million in the full year 2011. Gross
profit was $24.5 million for the full year 2012, compared to gross
profit of $48.5 million for the full year 2011. Gross margin was 4.4%
for the full year 2012, compared to 7.1% for the full year 2011.
The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income.
was $62.2 million for the full year 2012, compared to
operating loss of $41.7 million for the full year 2011. Net loss
attributable to WSP Holdings was $84.2 million for the full year 2012,
compared to net loss attributable to WSP Holdings of $68.5 million for
the full year 2011. Basic and diluted loss per ADS for both was $4.12
for the full year 2012, compared to basic and diluted loss per ADS for
both of $3.35 in the full year 2011.
As of December 31, 2012, the Company had cash and cash equivalents
of $26.1 million, compared to $27.7 million as of December 31, 2011.
Restricted cash totaled $206.8 million as of December 31, 2012, compared
to $249.8 million as of December 31, 2011. As of December 31, 2012, the
Company had short-term borrowings of $787.0 million and long-term
borrowings of $15.9 million, compared to $773.5 million and $79.4
million, respectively, as of December 31, 2011.
As of December 31, 2012, one of the Company’s major operating
subsidiaries had drawn down approximately
RMB Rolf Maier Bode
RMB Ren Min Bi
2.7 billion ($424.4
million) out of a total approved
facility of RMB2.86
billion (approximately $455.0 million as of December 31, 2012) entered
into with eight commercial banks in late August 2011. The subsidiary is
subject to continued compliance with certain bank loan covenants,
including maintaining certain financial ratios and thresholds at the end
of a one-year special observation period and at the end of 2012. As of
December 31, 2012, the subsidiary did not meet certain financial
covenants at the end of 2012. Additionally, two other subsidiaries of
the Company were also in breach of their financial covenants under
certain project loans. If and when the Company goes private, the
covenant that one of its subsidiaries has with the bank would be
breached, unless a
from the bank is obtained. The Company is now
in discussion with the bank regarding the waiver. As of December 31,
2012, the Company’s short-term borrowings include loans not due
within one year of $210.9 million that were reclassified as short-term
borrowings due to technical breaches of covenants of these loans. The
Company’s lenders have not accelerated the repayment of their loans
. In the event that the Company is unable
to reach an agreement with these lenders, the lenders may accelerate the
repayment of the loans and the Company’s ability to draw down under
these credit facilities may be adversely affected.
n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business’ problems in paying
and inventory totaled $217.0 million and $205.2
million, respectively, as of December 31, 2012, compared to $260.1
million and $242.2 million, respectively, as of December 31, 2011. As of
December 31, 2012, total assets were $1,390.3 million, total liabilities
were $1,237.9 million and total equity was $152.4 million.
Capital expenditures incurred for the full year ended December 31,
2012 were $39.0 million and were funded mainly through the
operating cash flow
and bank loans. The Company has
almost completed its major capital expenditure projects and will
and revise its capital expenditure plan based on
the prevailing economic conditions and future expectations, as well as
the availability of funding.
On February 21, 2013, the Company announced that it entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with WSP
OCTG GROUP Ltd. (“Parent”), a company owned by H.D.S.
, and JM OCTG GROUP Ltd. (“Merger Sub”), a
company with limited liability and a direct wholly-owned subsidiary of
Parent. Subject to satisfaction or waiver of the closing conditions in
the Merger Agreement, Merger Sub will merge with and into the Company,
with the Company continuing as the surviving corporation (the
“Merger”). Pursuant to the Merger Agreement, each of the
Company’s ordinary shares issued and outstanding immediately prior
to the effective time of the Merger (the “Shares”) will be
cancelled and cease to exist in exchange for the right to receive $0.32
without interest, and each ADS, which represents ten ordinary shares,
will represent the right to surrender the ADS in exchange for $3.20 in
cash without interest, except for (a) Shares held of record by Expert
Master Holdings Limited (”
EMH Emerging Market Handset
EMH Elyria Memorial Hospital
EMH Educably Mentally Handicapped
“), a company wholly-owned by Mr.
Longhua Piao, the Company’s Chairman and Chief Executive Officer,
United Mine Workers
n abbr (= United Mineworkers of America) → sindicato de mineros
n abbr (= United Mineworkers of America) →
China Ventures (L) Ltd. (“UMW”), which will be
contributed to Parent immediately prior to the Merger in exchange for
equity interests of Parent, and (b) Shares owned by shareholders who
have validly exercised and have not effectively withdrawn or lost their
from the Merger under the
, British dependency (2005 est. pop. 44,300), 100 sq mi (259 sq km), comprising three islands in the West Indies.
intr.v. dis·sent·ed, dis·sent·ing, dis·sents
1. To differ in opinion or feeling; disagree.
2. To withhold assent or approval.
Shares”), which will be cancelled for the
right to payment of fair value of the Dissenting Shares in
with the Cayman Islands Companies Law.
The Merger, which is currently expected to close during the second
quarter of 2013, is subject to the authorization and approval of the
Merger Agreement by an
vote of shareholders representing at
least two-thirds of the Shares present and voting in person or by proxy
as a single class at a meeting of the Company’s shareholders, as
well as certain other customary closing conditions. EMH and UMW
collectively beneficially own sufficient Shares to approve the Merger
Agreement and the Merger and have agreed to vote
in favor of
approval. If completed, the Merger will result in the Company becoming a
privately-held company and its ADSs will no longer be listed on the
Additional information about the proposed merger is available in the
report on Form 6-K and Schedule 13E-3 transaction statement on file with
the Securities and Exchange Commission (the “SEC”) available
at the SEC’s website (http://www.sec.
Operational Environment and Business Outlook
After falling from the $100 per barrel mark in mid-February 2013
amid concerns over
cuts in the
officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world’s third largest country in population and the fourth largest country in area.
, by late
March crude oil prices approached previous highs but subsequently fell
below $90 per barrel in mid April. Crude oil prices are expected to
v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates
1. To vary irregularly. See Synonyms at swing.
2. To rise and fall in or as if in waves; undulate.
due to the ongoing European debt crisis and
heightened global economic uncertainty.
On the international front, WSP Holdings continues to pursue new
opportunities and broaden its customer base in
fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere.
the Middle East, Central Asia and Africa and focus on sales of non-API
premium connections, which provide opportunities for sales growth. On
the domestic front, WSP Holdings continues to develop and launch new
series of non-API products for commercial use and focus mainly on
customers in areas such as Xinjiang Autonomous Region, Sichuan Province
and Shaanxi Province, which provide opportunities for sales of
higher-margin, non-API products.
WSP Holdings’ management will host a conference call at 9:00
am. Eastern Time on April 25, 2013 to discuss its unaudited financial
results for the fourth quarter and full year of 2012. To participate in
this live conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: 866-519-4004.
International callers should call +1-718-354-1231. The conference pass
code is 445 362 68. A replay of the conference call will be available
from 00:00 ET on April 26, 2013 to 23:59 ET on May 3, 2013. To access
the replay, call 646-254-3697. International callers should call +1
855-452-5696. The conference pass code is 445 362 68. This conference
call will also be broadcast live over the
and can be accessed
by all interested parties on WSP Holdings’ website:
http://ir.wsphl.com/. To listen to the live webcast, please go to WSP
Holdings’ website at least fifteen minutes prior to the start of
the call to register,
and install any necessary audio software.
For those unable to participate during the live broadcast, a replay will
be available shortly after the call on WSP Holdings’ website for 90
About WSP Holdings Limited
WSP Holdings develops and manufactures seamless Oil Country Tubular
Goods (OCTG), including seamless casing, tubing and drill pipes used for
on-shore and off-shore oil and gas exploration, drilling and extraction,
and other pipes and connectors. Founded as WSP China in 1999, the
Company offers a wide range of API and non-API seamless OCTG products,
including products that are used in extreme drilling and extraction
conditions. The Company’s products are used in China’s major
oilfields and are exported to oil producing regions throughout the
world. For further information, please visit WSP Holdings’ website
Safe Harbor Statement Under the
Private Securities Litigation Reform
of 1995: Any statements set forth above that are not historical
facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. These forward-looking
statements can be identified by terminology such as “will,”
“expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,”
“estimates” and similar statements. Among other things, the
Company’s outlook and quotations from management in this
announcement contain forward-looking statements. A number of factors
could cause actual results to differ materially from those contained in
the forward-looking statement. Such factors include, but are not limited
to, changes in anticipated level of sales, changes in national or
regional economic and competitive conditions, changes in the
Company’s relationships with customers, the Company’s ability
to develop and market new products, the Company’s ability to access
capital for expansion, changes in principal product revenues and other
factors detailed from time to time in the Company’s filings with
the United States Securities and Exchange Commission and other
regulatory authorities. The Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. This press release was
developed by the Company, and is intended solely for informational
purposes and is not to be construed as an offer or
offer to buy or sell the Company’s stock. This press release also
contains statements or projections that are based upon information
available to the public, as well as other information from sources which
management believes to be reliable, but it is not guaranteed by the
Company to be accurate, nor does WSP Holdings
it to be complete.
Opinions expressed herein are those of management as of the date of
publication and are subject to change without notice.
— Financial Tables Follow —
SOURCE WSP Holdings Limited