Highpower International, 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 third quarter ended
September 30, 2010.
Business Highlights
- Achieved 32% increase in net sales to $27.8 million for third
quarter 2010 from $21.1 million in third quarter 2009;
- Gross profit grew 13% year-over-year to $5.9 million for third
quarter 2010 from $5.2 million in third quarter 2009;
- Generated gross margin of 21.1% for the third quarter 2010; up
sequentially from 18.6% for the second quarter of 2010;
- Li-ion battery production exceeded 1.2 million units and
continued making steady improvement in operations;
- Successfully changed company name to Highpower International,
Inc. to reflect global brand.
"The third quarter proved to be another strong quarter of
year-over-year revenue growth," said Mr. George Pan, Chairman and
Chief Executive Officer of Highpower International. "We also
accomplished an important corporate branding milestone this quarter
by changing our name to Highpower International. Our new name helps
position us for further worldwide growth in the years ahead.
Highpower International better reflects our global initiatives to
continue to expand our sales and marketing efforts worldwide and
advance our position as a leading, profitable, eco-friendly focused
solution provider of green energy."
Mr. Henry Ngan, Chief Financial Officer of Highpower
International, added, "We are pleased with the continued revenue
strength we saw in the third quarter. We remain optimistic that
these revenue trends will continue throughout the end of the year.
Despite our net income being down year-over-year in the third
quarter, will still anticipate that our overall profitability in FY
2010 will exceed the record profitability levels we saw in 2009,
which remains consistent with our commentary from earlier this
year."
Third Quarter 2010 Financial Results
Net sales for the third quarter ended September 30, 2010 totaled
$27.8 million, a year-over-year increase of 32% compared with $21.1
million for the third quarter ended September 30, 2009. The
increase in sales for the third quarter was primarily due to an
increase in the average selling price of our batteries and
contributions from the New Material business segment.
Third quarter 2010 gross profit increased 13% to $5.9 million,
compared with $5.2 million for the third quarter 2009. Gross margin
was 21.1% for the third quarter 2010, compared with 24.8% for the
third quarter 2009. The increase year-over-year in gross profit for
the third quarter 2010 was primarily due to the increase in average
selling price of our batteries and the improvement in our Li-ion
operations.
Selling and distribution costs were $1.1 million for the third
quarter 2010, compared with $767,194 for the comparable period in
2009. The increase was primarily due to the expansion of our
salesforce and marketing efforts.
General and administrative expenses, including stock-based
compensation, were $2.6 million or 9.5% of net sales for the third
quarter 2010, compared to $1.5 million, or 7.0% of net sales for
the third quarter 2009. The increase was due to both an increase in
labor costs and research & development expenses.
The Company reported a loss on the exchange rate difference
between the U.S. Dollar ("USD") and the Renminbi ("RMB") of
$329,000 for the third quarter ended September 30, 2010. This
compares with losses on the exchange rate difference of $7,000 for
the third quarter 2009. The increase in losses on exchange rate was
due to the devaluation of the U.S. Dollar relative to the RMB over
the respective periods resulting from recent policies implemented
by the Chinese government.
The Company recorded a provision for income taxes of $280,000
for the third quarter 2010, compared with provisions for income
taxes of $530,000 for the third quarter 2009.
Net income for the third quarter of 2010 was $1.4 million or
$0.11 per diluted share, based on 13.6 million weighted average
shares outstanding. This compares with a particularly strong third
quarter 2009 net income of $2.4 million, or $0.18 per diluted
share, based on 13.6 million weighted average shares
outstanding.
Balance Sheet
At September 30, 2010, Highpower International had cash and cash
equivalents and restricted cash totaling $13 million, total assets
of $71.4 million, working capital of $8.7 million and stockholders'
equity of $25.9 million. Bank credit facilities totaled $35.0
million at September 30, 2010, of which $13.3 million was available
as unused credit.
Conference Call and Webcast
Management of Highpower International, Inc. will host a
conference call tomorrow, Thursday, November 11, 2010 at 8:00 a.m.
Pacific time/11:00 a.m. Eastern time to discuss third quarter 2010
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 20769802.
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
20769802. A webcast replay will be available for one year.
About Highpower International, Inc.
Highpower International, Inc. 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 Highpower International's products are
distributed worldwide to markets in the United States, Europe,
China, Hong Kong, Southeast Asia and Taiwan. For more information,
visit http://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.
-financial tables to follow-
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Stated in US Dollars)
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
$ $ $ $
Net sales 27,774,213 21,056,149 76,975,699 47,811,438
Cost of sales (21,900,312) (15,835,110) (61,456,057) (37,120,495)
------------ ------------ ------------ ------------
Gross profit 5,873,901 5,221,039 15,519,642 10,690,943
Depreciation (57,638) (50,120) (196,599) (169,309)
Selling and
distributing costs (1,132,812) (767,194) (2,995,314) (1,879,001)
General and
administrative
costs, including
stock-based
compensation (2,625,900) (1,464,392) (6,247,610) (3,613,654)
Loss on exchange
rate difference (328,921) (6,813) (481,405) (62,402)
Loss from associate (6,780) (6,780)
------------ ------------ ------------ ------------
Income from
operations 1,721,850 2,932,520 5,591,934 4,966,577
Change in fair value
of currency
forwards - (7,483) - (117,106)
Other income 83,490 289,843 286,890 378,432
Interest expenses (89,669) (199,125) (257,113) (279,622)
Other expenses - (52,878) - (223,963)
------------ ------------ ------------ ------------
Income before taxes 1,715,671 2,962,877 5,621,711 4,724,318
Income taxes (280,062) (529,201) (1,020,055) (919,020)
------------ ------------ ------------ ------------
Net income for the
period 1,435,609 2,433,676 4,601,656 3,805,298
============ ============ ============ ============
Earnings per share
of common stock
- Basic 0.11 0.18 0.34 0.28
============ ============ ============ ============
- Diluted 0.11 0.18 0.34 0.28
============ ============ ============ ============
Weighted average
number of common
stock
- Basic 13,582,106 13,562,597 13,582,106 13,621,466
============ ============ ============ ============
- Diluted 13,732,096 13,615,096 13,732,096 13,673,966
============ ============ ============ ============
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
As of
----------------------------
September 30, December 31,
2010 2009
(Unaudited) (Audited)
$ $
ASSETS
Current Assets:
Cash and cash equivalents 5,385,507 2,967,586
Restricted cash 7,579,676 5,478,418
Accounts receivable 19,459,847 14,896,503
Notes receivable 1,979,551 596,795
Prepaid expenses and other receivables 4,958,306 2,366,734
Inventories 14,773,060 10,633,566
--------------- ------------
Total Current Assets 54,135,947 36,939,602
Plant and equipment, net 13,242,801 10,284,873
Leasehold land, net 2,978,606 3,019,509
Intangible asset, net 812,500 850,000
Investment securities 52,843 52,732
Investment in an associate 135,735 -
--------------- ------------
TOTAL ASSETS 71,358,432 51,146,716
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Non-trading foreign currency derivatives
liabilities 11,065 11,041
Accounts payable 17,798,596 10,738,714
Other payables and accrued liabilities 5,051,365 3,563,308
Income taxes payable 855,227 876,739
Bank borrowings 21,704,893 14,787,714
--------------- ------------
Total Current Liabilities 45,421,146 29,977,516
--------------- ------------
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: 2010 -
13,582,106 shares (2009 - 13,582,106
shares) 1,358 1,358
Additional paid-in capital 5,173,097 5,065,426
Accumulated other comprehensive income 2,082,617 2,023,858
Retained earnings 18,680,214 14,078,558
--------------- ------------
TOTAL STOCKHOLDERS' EQUITY 25,937,286 21,169,200
--------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 71,358,432 51,146,716
=============== ============
Media and Investor Inquiries: Henry H. Ngan Chief
Financial Officer +1-917-887-0614 Email Contact Financial Profiles,
Inc. Tricia Ross (310) 478-2700 Email Contact
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