BEIJING, March 8, 2012 /PRNewswire-Asia-FirstCall/ --
Fushi Copperweld, Inc. (Nasdaq: FSIN), the leading global
manufacturer and innovator of copper-clad bimetallic wire used in a
variety of telecommunication, utility, transportation and other
electrical applications, today announced financial results for the
fourth quarter and full year periods ended December 31, 2011.
Fourth Quarter 2011 Results
- Revenues were $68.2 million
compared to $69.9 million in the year
ago period;
- Gross profit was $16.8 million,
or 24.7% of revenues compared to $22.2
million, or 31.8% of revenues, in the year ago period;
- Income from operating activities was $9.4 million, or 13.8% of revenues compared to
$16.0 million, or 22.8% of revenues,
in the year ago period;
- Net cash generated by operating activities of $31.4 million, compared to $28.2 million net cash generated by operating
activities in the fourth quarter of 2010; and
- Cash position at quarter end remains strong at $200.5 million.
Joe Longever, co-Chief Executive
Officer of Fushi Copperweld, commented, "The fourth quarter saw a
continuation of the challenging market conditions that affected our
business in the third quarter. Reacting to macroeconomic
factors, some of our customers continued to reduce or delay their
orders, which decreased sales volumes, particularly in the U.S.,
and, combined with the effects of changes in raw material prices,
reduced our margins. Despite the difficult environment, we
continued to make solid progress in the execution of our global
strategy. The ramp-up of our new facility in Belgium is proceeding as planned. We
expect to be in a position to generate sales of tubing, CCA and CCS
products from this facility in early-2012 as anticipated, and we
have received strong feedback from current and potential customers
in the market about our enhanced regional presence."
Revenues in the fourth quarter of 2011 were $68.2 million, a slight decrease from
$69.9 million in the prior year
quarter, as softer sales volumes more than offset higher average
selling prices.
Gross profit in the fourth quarter was $16.8 million compared to $22.2 million last year. Gross margin decreased
to 24.7% from 31.8% in the same period last year. Gross margin for
the Company's Dalian cladding
facility was 30.9% compared to 38.3% in the prior year period,
while gross margin for the Company's Fayetteville, TN facility was -0.1% in the
fourth quarter of 2011, compared to 11.5% in the fourth quarter of
2010.
Operating expenses in the fourth quarter of 2011 increased to
$7.4 million compared to $6.2 million in the prior year's quarter,
primarily as a result of the Company's continued investment in its
future growth strategy and increased expenses including higher
audit and professional service fees, and advisor fees related
to the going private transaction. Operating expenses for the
quarter also included incremental costs of approximately
$0.9 million from the start up of the
Company's Belgium facility. The
Company has restarted the copper tubing production and begun the
process of stocking CCA and CCS product inventory at this facility.
Although the Company expects its Belgium operations to exit 2012 at a
profitable run-rate, its contributions will be slightly dilutive to
earnings in 2012. As a percentage of revenue, operating
expenses increased to 10.9% from 8.9% in the fourth quarter of
2010.
The Company's effective income tax rate in the fourth quarter of
2011 was 39.4% compared to 115.7% a year ago. As previously
announced, the Company's results for the 2010 fourth quarter
included a non-cash adjustment of $15.4
million, or $0.40 per diluted
share, relating to the adjustment of the beginning-of-the-period
balance of a valuation allowance of U.S. Entities (Parent and
Copperweld Bimetallics, LLC).
Net income in the fourth quarter was $5.6
million, or $0.15 per diluted
share, compared to a net loss of $2.4
million, or $0.06 per diluted
share, for the 2010 fourth quarter.
The number of fully diluted shares increased slightly in the
fourth quarter of 2011 to 38.3 million from 38.1 million a year
ago.
During the three months ended December
31, 2011, the Company generated net cash from operations of
$31.4 million, compared $28.2 million in the comparable period in
2010.
Full Year 2011 Results
For the 2011 full-year period, revenues increased 8.5% to
$287.4 million from $265.0 million in the year ago
period. Metric tons shipped in fiscal year 2011 decreased 2.9%
to 37,492 metric tons compared to 38,607 metric tons in 2010.
Gross profit in 2011 was $75.0
million, or 26.1% of revenue, compared to $79.3 million, or 29.9% of revenue, in fiscal
year 2010.
Operating expenses in 2011 were $26.0
million, compared to $21.2
million in fiscal year 2010. On a percentage basis,
operating expenses increased to 9.0% of revenues from 8.0% for
fiscal year 2010. The increase is primarily due to the higher
audit and professional service fees, advisor fees related to the
going private transaction and approximately $0.9 million in expenses during the start-up
period of the Company's Belgium
facility. Operating income for 2011 was $49.0 million, or 17.0% of revenues, compared to
$58.0 million, or 21.9% of revenues,
in 2010.
The Company's effective income tax rate for 2011 was 32.5%
compared to 42.1% in 2010 and somewhat higher than its previous
expectation of 31.0%. The decrease in effective income tax rate in
2011 compared to 2010 was primarily due to the effect of the
adjustment of valuation allowance in 2010 as mentioned above.
Net income for the 2011 full-year period was $32.0 million, or $0.84 per diluted share. This compares to net
income of $31.9 million, or
$0.86 per diluted share, in 2010.
In the year ended December 31,
2011, net cash generated from operations was $72.0 million, compared to $51.4 million in the year ago period.
As of December 31, 2011, the
Company's cash position was $200.5
million, an increase of 63.0% from $123.0 million as of December 31, 2010. Accounts receivable at
December 31, 2011 were $64.0 million, compared to $65.8 million at December
31, 2010. Long-term debt totaled $7.6
million as of December 31,
2011, compared to $5.7 million
at December 31, 2010.
Mr. Longever concluded, "Looking ahead to 2012, macroeconomic
conditions remain uncertain and we expect this will continue to
weigh on our customers' purchasing decisions, creating headwinds
for our business across the markets we serve. Nevertheless, we
remain confident in the long-term demand drivers for our products,
and expect to see incremental sales in Europe as we ramp up our new capacity and
broaden our sales network there. We continue to operate from a
solid financial position, and remain committed to utilizing our
strong cash flows and balance sheet to take advantage of
opportunities in the current marketplace and position ourselves for
success when the cycle turns upward."
Outlook
Based on fourth quarter performance and current business
conditions, Fushi Copperweld currently expects 2012 fully diluted
earnings per share of between $0.76 and
$0.86 based on an estimated weighted average diluted share
count of 38.3 million shares, and an effective tax rate of 31.5%.
The first fiscal quarter is typically the Company's weakest quarter
due to the timing of the Chinese New
Year, during which the Company's operating facilities in
China are closed for two weeks.
The Company expects profitability in subsequent quarters to improve
over the first quarter due to higher revenues with the absence of
the Chinese New Year and increased
traction from business development and certification efforts.
Conference Call
The Company will conduct a conference call to discuss the fourth
quarter and full year 2011 results today, Thursday, March 8, 2012, at 4:30 pm ET. To participate, the conference call
may be directly accessed from the U.S. and Canada at 1-866-226-1793 and accessed
internationally at 1-416-340-2218. A live webcast of the conference
call will also be available at http://bit.ly/eventFSIN. A replay of
the call will be available at www.fushicopperweld.com on the
Investor Relations section.
About Fushi Copperweld
Fushi Copperweld Inc., principally through its wholly owned
subsidiaries, Fushi International (Dalian) Bimetallic Cable Co. Ltd., and
Copperweld Bimetallics LLC, is the leading manufacturer and
innovator of copper-clad bimetallic engineered conductor products
for electrical, telecommunications, transportation, utilities and
industrial applications. With extensive design and production
capabilities, and a long-standing dedication to customer service,
Fushi Copperweld is the preferred choice for bimetallic products
worldwide.
Safe Harbor Statement
This press release may include certain statements that are not
descriptions of historical facts, but are forward-looking
statements. Forward-looking statements can be identified by the use
of forward-looking terminology such as "will" "believes", "expects"
or similar expressions. These forward-looking statements may also
include statements about our proposed discussions related to our
business or growth strategy, which is subject to change. Such
information is based upon expectations of our management that were
reasonable when made but may prove to be incorrect. All of such
assumptions are inherently subject to uncertainties and
contingencies beyond our control and upon assumptions with respect
to future business decisions, which are subject to change. We do
not undertake to update the forward-looking statements contained in
this press release. For a description of the risks and
uncertainties that may cause actual results to differ from the
forward-looking statements contained in this press release, see our
most recent Annual Report filed with the Securities and Exchange
Commission (SEC) on Form 10-K, and our subsequent SEC filings.
Copies of filings made with the SEC are available through the SEC's
electronic data gathering analysis retrieval system (EDGAR) at
www.sec.gov.
For more information, please contact:
Investors
Jolin Qiao, Investor Relations
Officer
Fushi Copperweld Inc.
Phone +1.931.433.0482
E-mail: ir@fushicopperweld.com
Web: www.fushicopperweld.com
FUSHI COPPERWELD,
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF
|
COMPREHENSIVE
INCOME
|
FOR THE THREE AND
TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period
Ended
December 31,
|
|
Twelve-Month Period
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
USD
|
|
USD
|
|
USD
|
|
USD
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
68,230,485
|
|
69,909,759
|
|
287,389,251
|
|
264,972,400
|
Cost of
revenues
|
|
51,385,191
|
|
47,698,109
|
|
212,433,141
|
|
185,684,859
|
Gross profit
|
|
16,845,294
|
|
22,211,650
|
|
74,956,110
|
|
79,287,541
|
Operating
expense:
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
1,540,078
|
|
1,719,285
|
|
5,059,143
|
|
5,793,565
|
General and administrative
expenses
|
|
5,863,288
|
|
4,527,254
|
|
20,898,944
|
|
15,451,132
|
Total operating
expense
|
|
7,403,366
|
|
6,246,539
|
|
25,958,087
|
|
21,244,697
|
Income from
operations
|
|
9,441,928
|
|
15,965,111
|
|
48,998,023
|
|
58,042,844
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
231,570
|
|
221,172
|
|
895,346
|
|
811,408
|
Interest expense
|
|
(108,812)
|
|
(206,226)
|
|
(449,094)
|
|
(903,593)
|
Gain on cross-currency
interest swap derivative
|
|
-
|
|
-
|
|
-
|
|
128,861
|
Loss on extinguishment of HY
Notes
|
|
-
|
|
-
|
|
-
|
|
(2,395,778)
|
Foreign currency exchange
losses, net
|
|
(258,436)
|
|
(428,620)
|
|
(1,935,558)
|
|
(623,065)
|
Total other
expense
|
|
(135,678)
|
|
(413,674)
|
|
(1,489,306)
|
|
(2,982,167)
|
Income before income
taxes
|
|
9,306,250
|
|
15,551,437
|
|
47,508,717
|
|
55,060,677
|
Income tax
expense
|
|
(3,670,195)
|
|
(17,995,723)
|
|
(15,463,667)
|
|
(23,192,910)
|
Net income
|
|
5,636,055
|
|
(2,444,286)
|
|
32,045,050
|
|
31,867,767
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment, net of nil income taxes
|
|
5,126,828
|
|
4,692,365
|
|
17,981,094
|
|
10,891,105
|
Comprehensive
income
|
|
10,762,883
|
|
2,248,079
|
|
50,026,144
|
|
42,758,872
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
0.15
|
|
(0.06)
|
|
0.84
|
|
0.86
|
Diluted
|
|
0.15
|
|
(0.06)
|
|
0.84
|
|
0.85
|
FUSHI COPPERWELD,
INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
As of December 31,
2011 and 2010
|
|
|
|
Dec-31
|
|
2011
|
|
2010
|
|
USD
|
|
USD
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
200,451,902
|
|
123,000,338
|
Accounts receivable, net of
allowance for doubtful accounts
|
63,978,861
|
|
65,765,722
|
Inventories
|
10,695,123
|
|
16,143,922
|
Advances to
suppliers
|
6,793,904
|
|
15,022,976
|
Prepaid expenses and other
current assets
|
1,332,204
|
|
743,206
|
Total current
assets
|
283,251,994
|
|
220,676,164
|
Property, plant and equipment,
net
|
117,405,523
|
|
124,177,512
|
Intangible assets,
net
|
431,441
|
|
577,587
|
Land use rights
|
13,321,796
|
|
13,089,733
|
Deposits for land use
right
|
10,090,621
|
|
9,623,181
|
Goodwill
|
1,812,068
|
|
1,669,789
|
Other non-current
assets
|
491,380
|
|
443,397
|
Total assets
|
426,804,823
|
|
370,257,363
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of long-term
loan
|
650,000
|
|
650,000
|
Accounts payable
|
3,802,155
|
|
3,241,428
|
Amounts due to a related
party
|
2,000,000
|
|
-
|
Accrued expenses and other
current liabilities
|
15,880,176
|
|
15,542,111
|
Total current
liabilities
|
22,332,331
|
|
19,433,539
|
Long-term loans
|
7,632,100
|
|
5,687,500
|
Deferred income tax
liabilities
|
672,943
|
|
669,540
|
Other non-current
liabilities
|
-
|
|
65,057
|
Total
liabilities
|
30,637,374
|
|
25,855,636
|
Shareholders'
equity:
|
|
|
|
Common stock, $0.006 par
value, 100,000,000 shares authorized; 38,240,438 and 38,099,138
shares issued
and outstanding as of December 31, 2011 and 2010,
respectively
|
229,444
|
|
228,596
|
Additional paid-in
capital
|
169,335,522
|
|
167,596,792
|
Retained earnings
|
172,507,890
|
|
140,462,840
|
Accumulated other
comprehensive income
|
54,094,593
|
|
36,113,499
|
Total shareholders'
equity
|
396,167,449
|
|
344,401,727
|
Commitments and
contingencies
|
|
|
|
Total liabilities and
shareholders' equity
|
426,804,823
|
|
370,257,363
|
FUSHI COPPERWELD,
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
For the Years Ended
December 31, 2011 and 2010
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2011
|
|
2010
|
|
|
USD
|
|
USD
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
32,045,050
|
|
31,867,767
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Provision for (reversal
of) bad debt allowance
|
|
26,176
|
|
(485,781)
|
Write-down
of inventories
|
|
41,489
|
|
276,898
|
Depreciation and
amortization
|
|
13,783,833
|
|
12,446,645
|
Loss (gain) on disposal
of long-lived assets
|
|
(13,910)
|
|
294,595
|
Amortization of debt
issuance cost
|
|
-
|
|
255,673
|
Deferred income tax
expenses (benefit)
|
|
(51,937)
|
|
14,283,528
|
Share-based compensation
expense
|
|
838,031
|
|
933,865
|
Unrealized foreign currency
exchange loss (gain), net
|
|
1,882,544
|
|
692,704
|
Shareholder's
contribution
|
|
278,505
|
|
-
|
Unrealized loss (gain)
on cross-currency interest swap derivative
|
|
-
|
|
(882,527)
|
Loss on extinguishment
of HY Notes
|
|
-
|
|
2,395,778
|
Change in operating
assets and liabilities, net of effect of acquisitions of Jinchuan
and Hongtai:
|
|
|
|
|
Accounts
receivable
|
|
4,583,079
|
|
7,839,294
|
Inventories
|
|
5,687,935
|
|
(3,862,514)
|
Advances to
suppliers
|
|
8,724,797
|
|
(5,378,045)
|
Prepaid expenses and
other current assets
|
|
(609,296)
|
|
422,085
|
Accounts
payable
|
|
514,363
|
|
(4,022,618)
|
Accrued expenses and
other current liabilities
|
|
4,317,133
|
|
(5,695,936)
|
Net cash provided by
operating activities
|
|
72,047,792
|
|
51,381,411
|
Cash flows from
investing activities:
|
|
|
|
|
Payments for
acquisitions of Jinchuan and Hongtai
|
|
-
|
|
(6,375,000)
|
Cash acquired from
acquisition of Jinchuan and Hongtai
|
|
-
|
|
901,442
|
Proceeds from disposal
of equipment
|
|
15,999
|
|
255,260
|
Purchase of land use
rights
|
|
-
|
|
(9,480,129)
|
Purchase of property,
plant and equipment
|
|
(1,418,716)
|
|
(2,679,246)
|
Net cash used in
investing activities
|
|
(1,402,717)
|
|
(17,377,673)
|
Cash flows from
financing activities:
|
|
|
|
|
Contingent consideration
paid for acquisition of Jinchuan
|
|
(4,819,107)
|
|
-
|
Proceeds from
interest-free loans provided by Mr. Li Fu
|
|
2,000,000
|
|
23,000,000
|
Repayment of
interest-free loans provided by Mr. Li Fu
|
|
-
|
(23,000,000)
|
Repayment of borrowings
from revolving line of credit
|
|
-
|
|
(4,033,783)
|
Proceeds from long-term
loans
|
|
2,691,800
|
|
6,500,000
|
Repayment of long-term
bank loans
|
|
(650,000)
|
|
(162,500)
|
Repayment of notes
payable
|
|
-
|
|
(35,600,000)
|
Proceeds from issuance
of common stock and warrants
|
|
623,042
|
|
62,010,759
|
Transaction costs paid
in connection with issuance of common stock
|
|
-
|
|
(3,438,550)
|
Net cash provided by
(used in) financing activities
|
|
(154,265)
|
|
25,275,926
|
|
|
|
|
|
Effect of foreign currency
exchange rate changes on cash
|
|
6,960,754
|
|
3,122,825
|
Net increase (decrease)
in cash
|
|
77,451,564
|
|
62,402,489
|
Cash at beginning of
year
|
|
123,000,338
|
|
60,597,849
|
Cash at end of
year
|
|
200,451,902
|
|
123,000,338
|
|
|
|
|
|
SOURCE Fushi Copperweld, Inc.