KHDH Khd Humboldt Wedag International Ltd. (MM)

- Earnings Before Taxes Exceed Guidance by 19% & Order Backlog Increases by 88% - HONG KONG, Nov. 14 /PRNewswire-FirstCall/ -- KHD Humboldt Wedag International Ltd. ("KHD") (NASDAQ:KHDH) announces its results for the nine months and third quarter ended September 30, 2006. The growth trends in sales, order intake and backlog continued in the third quarter and earnings exceeded guidance. KHD continued to progress towards its goal of becoming an industrial plant engineering and equipment supply company. Our transition began with the distribution of a substantial portion of the financial services operations, Mass Financial Corp., to our shareholders on January 31, 2006 and has continued over the course of this year. To provide shareholders with information most indicative of the going forward operating business, the following disclosures of revenues and earnings before taxes ("EBT") are based on our industrial plant engineering and equipment supply related operations and do not include the revenues from KHD's other operations. For comparative purposes, all amounts for order intake, backlog and sales were translated from Euro to U.S. dollar at 1.1841, the exchange rate prevailing on December 31, 2005. Revenues for the first nine months of 2006 reached $251.5 million, an increase of 7 percent over the corresponding period of 2005. EBT for the industrial plant engineering and equipment supply services segment was $27.6 million, an increase of 52 percent over the corresponding period in 2005. Revenues for the third quarter of 2006 were $100.7 million. EBT for the industrial plant engineering and equipment supply segment for the third quarter of 2006 was $12.7 million. Certain statements in this release are forward-looking and are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially. KHD is raising its full-year guidance on EBT, to $39.0 million. KHD is also adjusting its $424.6 million guidance for 2006 revenues to $416.6 million due to project delays primarily driven by our customers. In a business such as industrial plant engineering and equipment supply that depends on sequential events, a delay affecting revenue recognition timing in the short term will be recouped at a later stage in the project schedule. Based on the period average exchange rates for the nine-month period ended September 30, 2006, the Canadian dollar increased by approximately 8.1 percent, 11.0 percent and 9.7 percent against the U.S. dollar, the Swiss franc and the Euro, as compared to the same period in 2005. As the majority of our revenues are denominated in Euros and U.S. dollars, the material depreciation of such currencies has an impact on our operating results. Order intake is defined as the total value of all orders received during the respective period, while order backlog is the value of orders received but not yet fulfilled. Order intake for the first nine months of 2006 was $475.3 million, an increase of 75 percent over the corresponding period of 2005. 30 percent of order intake through the nine months ended September 30, 2006 came from the emerging Asia region, 26 percent from the Americas, 26 percent from Europe and 9 percent from the Middle East. Order intake for the three months ended September 30, 2006 was $90.7 million, compared to $79.2, an increase of 15 percent over the same quarter of 2005. 20 percent of the order intake during the third quarter came from the emerging Asia region, 20 percent from the Americas, 21 percent from Europe and 26 percent from Africa. Order backlog as at the end of the third quarter of 2006 was $563.3 million, an increase of 88 percent over the third quarter of 2005. CEO Jim Busche commented, "Our strong increase in order backlog shows that our efforts to extend our reach globally are paying off. This backlog, in addition to our globalization efforts and margin improvement program will help us to continue to have a strong performance next year." Results for KHD as a whole, i.e., including results for the industrial plant engineering and equipment supply operations as well as all the other KHD operations, follow. Total revenues for the first nine months of 2006 were $291.9 million. Net income for the first nine months of 2006 was $20.6 million, or $1.36 per share. For the quarter ended September 30, 2006, revenues were $102.9 million. Net income for the 2006 third quarter was $10.3 million, or $0.67 per share. Michael Smith, Chairman of KHD, stated, "The transition to an industrial plant engineering and equipment supply business is almost complete. The major projects yet to be completed are the disposition of redundant assets that relate to the old financial services business. A major effort is underway to rationalize these assets which clearly do not contribute to earnings in any substantial manner and are a distraction to our on-going business operations. We ended the third quarter with $231 million in cash and securities, $423 million in current assets, and a current working capital ratio that exceeds 2:1. Our equity grew to $288 million. "The business case for KHD is that we generate positive cash from all new projects and that we require no significant amount of fixed assets for the business, which allows KHD to grow with out capital constraints. "While KHD believes that our financial performance through the third quarter is encouraging, we recognize the need for continuous improvement and remain committed to capitalizing on the strong market conditions while implementing further cost controls and improving margins. Shareholders are encouraged to read our entire Form 6-K report for a greater understanding of our industrial plant engineering and equipment supply business, which is now available on our website." All figures on the following tables are in US dollars and earnings per share amounts are on a diluted basis. The consolidated balance sheet and income statement for September 30, 2006 were translated from Canadian dollars into U.S. dollars at U.S. dollar 1 = Canadian dollars 1.1153 (equivalent to Euro 1 = U.S. dollars 1.2687). About KHD Humboldt Wedag International Ltd. KHD Humboldt Wedag International Ltd. (the "Company") 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, the 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, 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) (212) 691-8087 or Len Hall (media) (949) 474-4300 Rene Randall KHD Humboldt Wedag International Ltd. (604) 683-8286 -FINANCIAL TABLES FOLLOW- KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED BALANCE SHEETS As of September 30, 2006 and December 31, 2005 (Unaudited) (amounts in U.S. dollars; in thousands) ASSETS 2006 2005 Current assets Cash and cash equivalents $216,353 $194,313 Restricted cash 21,024 22,016 Securities 14,384 16,265 Loans 2,513 10,638 Receivables, commodities transactions 0 10,450 Receivables, industrial plant engineering and equipment supply 32,144 34,588 Receivables 20,119 25,533 Commodity inventories 0 24,356 Inventories 53,362 38,641 Real estate held for sale 28,630 27,479 Contract deposits, prepaid and other 22,891 11,201 Future income tax assets 11,826 7,594 423,246 423,074 Non-current assets Securities 795 7,893 Loans 10,906 9,436 Properties, plant and equipment 11,038 10,835 Investment in resource property 31,687 30,312 Goodwill 9,640 12,987 Equity method investments 907 16,021 Future income tax assets 11,523 12,496 Investment in preferred shares of a former subsidiary 81,131 0 157,627 99,980 $580,873 $523,054 LIABILITIES Current liabilities Accounts payable and accrued expenses $168,611 $159,628 Notes payable, commodities transactions 0 9,890 Notes payable, industrial plant engineering and equipment supply 563 2,944 Long-term debt, current portion 4,419 1,606 Pension liabilities 1,269 1,489 Deposits 9,356 17,327 Provision for warranty costs 27,251 20,527 Future income tax liability 0 303 211,469 213,714 Long-term liabilities Long-term debt, less current portion 15,628 6,253 Pension liabilities 27,802 25,584 Provision for warranty costs 6,426 4,427 Future income tax liability 9,276 10,154 Other long-term liabilities 203 575 59,335 46,993 Total liabilities 270,804 260,707 Minority interests 22,298 18,088 SHAREHOLDERS' EQUITY Common stock 76,457 62,481 Contributed surplus 1,206 0 Equity component of convertible debt 80 125 Retained earnings 239,502 209,416 Cumulative translation adjustment (29,474) (27,763) 287,771 244,259 $580,873 $523,054 Note: 2005 numbers include the financial services segment which was distributed to our shareholders on January 31, 2006. As a result, the December 31, 2005 results are not a true comparison of KHD at September 30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, 2006 and 2005 (Unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2006 2005 Revenues $102,934 $199,142 Expenses Cost of revenues 83,315 180,559 General and administrative 5,656 10,728 Stock-based compensation 799 0 Interest 533 1,792 90,303 193,079 Income before income taxes 12,631 6,063 (Provision for) recovery of income taxes (174) 376 12,457 6,439 Minority interests (2,129) (1,264) Net income $10,328 $5,175 Earnings per share Basic $0.68 $0.38 Diluted $0.67 $0.38 Weighted average shares outstanding Basic 15,263,913 13,629,935 Diluted 15,420,207 13,768,343 Note: 2005 numbers include the financial services segment which was distributed to our shareholders on January 31, 2006. As a result, the September 30, 2005 results are not a true comparison of KHD at September 30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. CONSOLIDATED STATEMENTS OF INCOME For the Nine Months Ended September 30, 2006 and 2005 (Unaudited) (amounts in U.S. dollars; in thousands, except per share data) 2006 2005 Revenues $291,937 $618,830 Expenses Cost of revenues 236,786 537,639 General and administrative 24,367 44,189 Stock-based compensation 1,206 0 Interest 2,225 5,663 264,584 587,491 Income before income taxes 27,353 31,339 Provision for income taxes (2,142) (2,427) 25,211 28,912 Minority interests (4,626) (4,387) Net income $20,585 $24,525 Earnings per share Basic $1.37 $1.80 Diluted $1.36 $1.79 Weighted average shares outstanding Basic 15,051,234 13,602,260 Diluted 15,194,868 13,747,605 Note: 2005 numbers include the financial services segment which was distributed to our shareholders on January 31, 2006. As a result, the September 30, 2005 results are not a true comparison of KHD at September 30, 2006. KHD HUMBOLDT WEDAG INTERNATIONAL LTD. FINANCIAL SUMMARY As of September 30, 2006 (Unaudited) (amounts in U.S. dollars; in thousands, except per share data and ratios) Cash and securities $230,737 Working capital 211,777 Total assets 580,873 Shareholders' equity 287,771 Book value per share 18.85 Current ratio 2:1 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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