Highlights: First Quarter 2006 Compared to First Quarter 2005
• Revenue of $30.0 million was up 32 percent from $22.8 million. First quarter 2006 revenue included $3.7 million from the 11th Annual International IC-China Conference & Exhibition (IIC-China). In 2005, the IIC-China show was held in April, and its revenue of $3.1 million was recognized in the second quarter.
• Revenue from China totaled $14.2 million, up 37 percent from $10.4 million.
• Online revenue of $15.1 million was up 15 percent from $13.1 million, and print revenue of $11.0 million was also up 15 percent from $9.5 million.
• Deferred income and customer prepayments at the end of the period were $62.0
million, up 64 percent from $37.8 million.
Operating expenses for the first quarter of 2006 were $25.7 million, compared to $20.8 million in the prior year’s quarter. The expected increase was due mainly to sales costs resulting from higher revenue, event production and promotion costs for the IIC-China show held in this quarter, and investment in trade show infrastructure. Net income was $4.4 million, or $0.11 per diluted share, compared to $2.0 million, or $0.06 per diluted share, in the prior year’s quarter.
Chairman and chief executive officer Merle A. Hinrichs said: “All three primary lines of our business -- online, print, and exhibitions -- delivered strong year-over-year growth in the first quarter. New verticals and new sales programs drove both the online and print revenue increases, while our exhibition revenue benefited from the timing change of the IIC-China show and its 19 percent revenue growth compared to the prior year’s show.”
Chief financial officer Eddie Heng said: “We are experiencing strongly accelerating revenue growth, which is demonstrated by our deferred revenue and reflected in our guidance. In fact, we are raising our revenue guidance and now expect 33 percent revenue growth in the first half of 2006 as compared to the last year’s first half. Deferred income and customer prepayments, which include short- and long-term advance collections for online, print and trade shows, was $62.0 million as of March 31, 2006, a 64 percent increase compared to a year ago. The majority of the increase reflects growth in our trade show business.”
Hinrichs added: “The new China Sourcing Fairs held last month for the first time in Hong Kong were very successful with over 5,900 booths sold and over 68,000 buyers attending. The strong positive reaction we received included a high rate of exhibitor renewals for future shows, which lead us to believe all three shows will be even bigger in October. We are also extending the geographic footprint of the shows with a new China Sourcing Fair scheduled to be held in Dubai, United Arab Emirates in June 2007.”
“Overall, our China Sourcing Fairs are providing the face-to-face contact desired by our buyer and supplier communities and are strengthening our unique value proposition of being able to provide a total solution of online, print and trade shows that addresses all stages of the buying process -- from awareness and lead generation -- right through to purchase orders,” Hinrichs concluded.
Second quarter 2006 revenue is expected to be in the range of $42 million to $43 million. Second quarter 2006 earnings per diluted share are expected to be between $0.06 and $0.08. As a reminder, first quarter 2006 earnings benefited from the mature and profitable IICChina show.
Management is increasing the guidance for the six-month period ended June 30, 2006 and now expects revenue to be in the range of $72 million to $73 million. As noted on previous occasions, throughout 2006 Global Sources expects substantial ongoing investments in the China Sourcing Fairs in Hong Kong. Earnings per diluted share guidance for the six-month period ended June 30, 2006 is now expected to be in the range of $0.17 to $0.19.
Recent Corporate Highlights
• Launched three China Sourcing Fairs in Hong Kong in April. The events were attended by over 68,000 buyers from 166 countries and territories and 5,900 booths were sold, comprising 1,700 for Electronics & Components, 3,700 for Gifts & Home Products, and 500 for Fashion Accessories.
• Held the largest-ever International IC-China Conference & Exhibition in three cities in March. The number of exhibitors included 12 out of the world’s top 15 semiconductor manufacturers, and the show featured more than 800 booths, an increase of 100 booths compared to 2005.
• Announced plans to hold a new China Sourcing Fair: Gifts & Home Products in Dubai,United Arab Emirates, June 11-13, 2007 at the Dubai World Trade Centre.
• Announced Global Sources won the "Top 1 Investor Relations Website" for Small/Mid-Cap Companies in Asia/Pacific/Africa Region, according to The Investor Relations Global Rankings™ and Awards.
• Launched Electronic Design-China magazine and its companion website for mainland China's Electronic Engineers.
• Announced a 1-for-10 bonus share issue on outstanding common shares. Shareholders of record on March 15th received one additional common share for every ten common shares held, of face value of $0.01 each. The bonus shares were distributed on April 17th.
• Celebrated the 35th anniversary of Asian Sources, its first trade magazine, which was published in February 1971.
• Increased Global Sources’ independently certified community of active buyers to more than 484,000 at the end of the first quarter, a 13 percent increase compared to the first quarter of 2005.
• Generated over 6.6 million sales leads, or Requests-For-Information (RFIs), from buyers to suppliers through Global Sources Online for the twelve-month
period ending March 31, 2006, up by more than 59 percent compared to the same period in 2005.
Global Sources will conduct a conference call at 8:00 a.m. EDT on May 11, 2006 (8:00 p.m. on May 11, 2006 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (800) 240-2134, and international participants may dial (1-303) 262-2138. Investors in Hong Kong may call (852) 3009-3050. A live webcast of the conference call will be available on Global Sources' corporate site.
For those who cannot listen to the live broadcast, a webcast replay of the call is scheduled to be available on the company’s corporate site for at least 30 days. A telephone replay of the call is also scheduled to be available through May 15, 2006. To listen to the telephone replay, dial (800) 405-2236, or dial (1-303) 590-3000 outside the United States, and enter pass code 11057914#. In the Hong Kong area, the replay dial-in number is (852) 2287-4304, and the pass code is 253110#.
About Global Sources
Global Sources is a leading business-to-business (B2B) media company and a primaryfacilitator of two-way trade with Greater China. It provides sourcing information to volume buyers and integrated marketing services to suppliers.
The company helps its community of more than 484,000 active buyers to source more profitably from complex, overseas supply markets. With the goal of providing as many effective ways as possible to advertise, market and sell, Global Sources enables suppliers to sell to hard-to-reach buyers in 230 countries.
Global Sources delivers information on 1.6 million products and more than 130,000 suppliers annually through 10 leading online marketplaces and nine monthly magazines, more than 100 sourcing research reports, and 14 trade shows including six China Sourcing Fairs. Suppliers receive more than 6.6 million sales leads annually from buyers through Global Sources Online alone.