Hong Kong Highpower Technology, Inc. (NASDAQ: HPJ), a developer,
manufacturer and marketer of nickel-metal hydride (Ni-MH) and
lithium-ion (Li-ion) batteries and related products, today
announced financial results for the fourth quarter and year ended
December 31, 2009.
Business Highlights
-- Generated gross margin improvement to 21% in 2009 compared to 17% for
2008;
-- Earned net income of $0.33 per diluted share for 2009, a 122% increase
over 2008;
-- Continued production ramp of Li-ion batteries to average monthly
production rate in excess of 800,000 units for fourth quarter 2009, a
100% increase in production over the same period in 2008;
-- Debt-to-capital ratio remained healthy consistent with prior quarter.
"Despite the global financial crisis, we exceeded our operating
and financial targets in 2009," said Mr. George Pan, Chairman and
Chief Executive Officer of Hong Kong Highpower Technology. "We more
than doubled our net income in 2009 and significantly increased our
gross profit and margins in the face of a still fragile economy.
Our focus on cost containment efforts and execution proved
invaluable in helping us weather the most severe economic crisis in
recent history."
"As we look forward, we believe we are well positioned within
our industry to capitalize on growth opportunities with well over
10% share of the global Ni-MH battery market and excellent and
stable customer relationships. We anticipate demand for our
products will continue to increase in 2010 over last year's levels
as the remaining effects of the recession appear to be fading
away."
Mr. Henry Ngan, Chief Financial Officer of Hong Kong Highpower
Technology added, "We are pleased with our 2009 financial results
as we achieved both record profitability and unit volumes sold. We
have also created healthy shareholder value for our investors and
look forward to continuing these trends."
Full Year 2009 Financial Results
Net sales for the year ended December 31, 2009 totaled $70.3
million, a year-over-year decrease of 6% compared with $75.0
million for the year ended December 31, 2008. The year-over-year
decrease was due to lower average selling prices and partially
offset by an increase in unit volume sold.
Gross profit for 2009 increased 18% to $15.0 million, compared
with $12.8 million for 2008. Gross margin was 21% for 2009,
compared with 17% for 2008. The year-over-year improvement in gross
margin is attributable to implemented manufacturing efficiencies
and a decrease in the average per unit cost of goods sold.
Selling and distribution costs were $2.4 million for 2009,
unchanged from 2008.
General and administrative expenses, including stock-based
compensation, were $6.4 million or 9.1% of net sales for 2009,
compared to $6.1 million or 8.1% of net sales for 2008.
The Company reported a loss on the exchange rate difference
between the U.S. Dollar ("USD") and the Renminbi ("RMB") of $60,300
for 2009 compared with $1.2 million for 2008.
The Company recorded a provision for income taxes of $1.1
million for 2009 compared with $529,000 for 2008.
Net income increased 122% to $4.4 million, or $0.33 per diluted
share, for the year ended December 31, 2009, based on 13.6 million
weighted average shares outstanding. This compares with 2008 net
income of $2.0 million, or $0.15 per diluted share, for the year
ended December 31, 2008, based on 13.2 million weighted average
shares outstanding.
Fourth Quarter 2009 Financial Results
Net sales for the fourth quarter ended December 31, 2009 totaled
$22.5 million, a year-over-year increase of 27% compared with $17.7
million for the fourth quarter ended December 31, 2008. The
increase in sales for the fourth quarter was primarily due to
increased orders from customers.
Fourth quarter 2009 gross profit increased 37% to $4.3 million,
compared with $3.2 million for the fourth quarter 2008. Gross
margin was 19% for the fourth quarter 2009, compared with 18% for
the fourth quarter 2008. The year-over-year increase in gross
profit for the fourth quarter 2009 was primarily due to a decrease
in the average per unit cost of goods sold and growth in volume of
units sold.
Selling and distribution costs were $476,000 for the fourth
quarter 2009, compared with $655,000 for the comparable period in
2008.
General and administrative expenses, including stock-based
compensation, were $2.8 million or 12% of net sales for the fourth
quarter 2009, compared to $1.8 million, or 10% of net sales for the
fourth quarter 2008.
The Company recorded a provision for income taxes of $229,000
for the fourth quarter 2009, compared with provisions for income
taxes of $262,000 for the fourth quarter 2008.
Net income for the fourth quarter of 2009 was $638,000 or $0.05
per diluted share, based on 13.6 million weighted average shares
outstanding. This compares with fourth quarter 2008 net income of
$303,000, or $0.02 per diluted share, based on 13.7 million
weighted average shares outstanding, which resulted in an increase
in diluted EPS of 150% year-over-year.
Balance Sheet
At December 31, 2009, Hong Kong Highpower Technology had cash
and cash equivalents and restricted cash totaling $8.4 million,
total assets of $51.1 million, working capital of $7.0 million and
stockholders' equity of $21.2 million. Bank credit facilities
totaled $27.0 million at December 31, 2009, of which $12.2 million
was available as unused credit.
Conference Call and Webcast
Management of Hong Kong Highpower Technology will host a
conference call today, Tuesday, March 30, 2010 at 8:00 a.m. Pacific
time/11:00 a.m. Eastern time to discuss fourth quarter and year-end
2009 financial results and answer questions.
Individuals interested in participating in the conference call
may do so by dialing 888-799-5026 from the U.S. or 973-409-9693
from outside the U.S and referencing the reservation code 64574530.
Those interested in listening to the conference call live via the
Internet may do so by visiting the Investor Relations section of
the Company's Web site at www.haopengbattery.com or
www.InvestorCalendar.com.
A telephone replay will be available for 48 hours following the
conclusion of the call by dialing 800-642-1687 from the U.S., or
706-645-9291 from outside the U.S., and entering reservation code
64574530. A webcast replay will be available for one year.
About Hong Kong Highpower Technology, Inc.
Hong Kong Highpower Technology develops, manufactures and
markets rechargeable nickel metal hydride (Ni-MH) and lithium-ion
(Li-ion) batteries and related products for use in a variety of
electronic devices. The majority of Hong Kong Highpower
Technology's products are distributed worldwide to markets in the
United States, Europe, China, Hong Kong, Southeast Asia and Taiwan.
For more information, visit www.haopengbattery.com.
To be added to the Company's email distribution for future news
releases, please send your request to HPJ@finprofiles.com. Company
news can also be found at
http://ir.haopengbattery.com/en/introduce028.html.
Forward Looking Statement
This press release contains "forward-looking statements" within
the meaning of the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995 that are not historical
facts. These statements can be identified by the use of
forward-looking terminology such as "believe," "expect," "may,"
"will," "should," "project," "plan," "seek," "intend," or
"anticipate" or the negative thereof or comparable terminology, and
include discussions of strategy, and statements about industry
trends and the Company's future performance, operations and
products. Such statements involve known and unknown risks,
uncertainties and other factors that could cause the Company's
actual results to differ materially from the results expressed or
implied by such statements. For a discussion of these and other
risks and uncertainties see "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's public filings with the SEC. Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. The
Company has no obligation to update the forward-looking information
contained in this press release.
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in US Dollars)
Years Ended December 31,
--------------------------
2009 2008
$ $
Net sales 70,331,277 75,004,242
Cost of sales (55,299,955) (62,238,982)
------------ ------------
Gross profit 15,031,322 12,765,260
Depreciation (270,078) (194,496)
Selling and distribution costs (2,354,967) (2,416,220)
General and administrative costs including
stock-based compensation (6,404,724) (6,097,580)
Loss on exchange rate difference (60,294) (1,182,076)
Fees and costs related to reorganization - -
------------ ------------
Income from operations 5,941,259 2,874,888
Change in fair value of currency forwards (117,171) 115,568
Change in fair value of warrants - (276,000)
Other income 509,294 463,142
Interest expense (527,940) (642,161)
Other expenses (214,092) -
------------ ------------
Income before taxes 5,591,350 2,535,437
Income taxes (1,147,804) (528,950)
------------ ------------
Net income 4,443,546 2,006,487
============ ============
Net Income per common share
- Basic 0.33 0.15
============ ============
- Diluted 0.33 0.15
============ ============
Weighted average common shares outstanding
- Basic 13,608,265 13,205,599
============ ============
- Diluted 13,667,697 13,233,353
============ ============
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
At December 31,
--------------------------
2009 2008
$ $
ASSETS
Current Assets:
Cash and cash equivalents 2,967,586 4,175,780
Restricted cash 5,478,418 4,845,478
Accounts receivable 14,896,503 8,765,593
Notes receivable 596,795 429,815
Prepaid expenses and other receivables 2,366,734 1,732,709
Deferred charges - Stock-based compensation - 216,667
Inventories 10,633,566 11,208,697
------------ ------------
Total Current Assets 36,939,602 31,374,739
Deferred tax assets - 104,556
Plant and equipment, net 10,284,873 7,778,477
Leasehold land 3,019,509 3,050,510
Intangible asset, net 850,000 900,000
Investment securities 52,732 -
Currency forward - 116,157
------------ ------------
TOTAL ASSETS 51,146,716 43,324,439
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities :
Non-trading foreign currency derivatives
liabilities 11,041 293,830
Accounts payable 10,738,714 8,306,123
Other payables and accrued liabilities 3,563,308 3,139,275
Income taxes payable 876,739 476,330
Bank borrowings 14,787,714 14,829,228
------------ ------------
Total Current Liabilities 29,977,516 27,044,786
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock
Par value: $0.0001
Authorized: 10,000,000 shares
Issued and outstanding: none - -
Common stock
Par value : $0.0001
Authorized: 100,000,000 shares
Issued and outstanding: 2009 - 13,582,106
shares (2008 - 13,562,596 shares) 1,358 1,356
Additional paid-in capital 5,065,426 5,048,194
Accumulated other comprehensive income 2,023,858 1,595,091
Retained earnings 14,078,558 9,635,012
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 21,169,200 16,279,653
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 51,146,716 43,324,439
============ ============
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Stated in US Dollars)
Three months ended
December 31,
2009 2008
$ $
Net Sales 22,519,839 17,677,732
Cost of Sales (18,179,460) (14,507,445)
----------- -----------
Gross Profit 4,340,379 3,170,287
Depreciation (100,769) (64,048)
Selling and Distribution Cost (475,966) (654,834)
General and administrative costs including
stock-based compensation (2,791,070) (1,841,112)
Loss on exchange rate difference 2,108 (187,091)
Fees and costs related to reorganization - -
----------- -----------
Income from operations 974,682 423,202
Change in fair value of currency forwards (65) 86,466
Change in fair value of warrants - -
Other Income 130,862 137,309
Interest Expense (248,318) (82,331)
Other expenses 9,871
----------- -----------
Income before taxes 867,032 564,646
Income Taxes (228,784) (262,089)
----------- -----------
Net Income 638,248 302,557
=========== ===========
Net Income per common share
- Basic 0.05 0.02
=========== ===========
- Diluted 0.05 0.02
=========== ===========
Weighted average common shares outstanding
- Basic 13,566,601 13,711,011
=========== ===========
- Diluted 13,632,069 13,708,139
=========== ===========
Media and Investor Inquiries: Henry H. Ngan Chief Financial
Officer +1-917-887-0614 Email Contact Financial Profiles, Inc.
Tricia Ross (310) 277-4711 Email Contact
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