Highpower International, Inc. (NASDAQ: HPJ),
a developer, manufacturer and marketer of nickel-metal hydride
(Ni-MH) and lithium rechargeable batteries and battery solutions,
today announced financial results for the first quarter ended March
31, 2013.
First Quarter 2013 Highlights
- Net sales increased 18.4% year-over-year to $24.4 million in
seasonally weakest quarter
- Sustained growth in lithium battery segment -- lithium battery
net sales up 71.7% in the first quarter of 2013 over the first
quarter of 2012; total lithium battery pieces sold increased 54.2%;
and a 93.7% increase in volume per ampere hour
- Gross margin improvement year-over-year of 170 basis points,
from 17.8% to 19.5%
- Stable balance sheet sufficient to fund growth
Management Commentary
"We were pleased to deliver solid year-over-year revenue growth
in what is typically our slowest quarter due to the Chinese New
Year," said Mr. George Pan, Chairman and Chief Executive Officer of
Highpower International. "Our lithium battery business continues to
produce solid numbers and we believe we are making clear inroads on
showcasing our higher capacity, cleaner energy batteries to many
international customers. Overall, we feel confident in our outlook
for the year as we continue to position Highpower as the premier
global rechargeable battery leader."
"Although volume levels and pricing pressure reflected typical
seasonal weakness during the first quarter, our gross margin
improved as we benefitted from lower commodity prices and increased
sales of higher capacity batteries in our lithium segment," said
Mr. Henry Sun, Chief Financial Officer of Highpower International.
"Additionally, some of our competitors are facing difficulty
delivering quality products while trying to maintain competitive
pricing, and we plan to seize the potential new customer
opportunities in 2013. As we anticipated, the second half of the
year should be pivotal as well as strong for Highpower and we
remain upbeat in our outlook."
First Quarter 2013 Financial Results
Net sales for the first quarter ended March 31, 2013 totaled
$24.4 million, a year-over-year increase of 18.4% compared with
$20.6 million for the first quarter ended March 31, 2012. The
increase in sales for the first quarter was primarily due to an
increase in sales of lithium batteries from new and existing
customers as well as a slight increase in sales of Ni-MH
batteries.
First quarter 2013 gross profit increased to $4.8 million, as
compared with $3.7 million for the first quarter of 2012. Gross
profit margin was 19.5% for the first quarter of 2013, as compared
with 17.8% for the first quarter of 2012, or a 170 basis point
increase. The year-over-year increase in gross profit margin for
the first quarter of 2013 was primarily due to the decrease in raw
material prices from the comparable period in 2012.
R&D spending was $1.1 million for the first quarter of 2013,
as compared with $0.9 million for the comparable period in 2012,
reflecting the expansion of our research and development workforce
and management functions.
Selling and distribution expenses were $1.4 million for the
first quarter of 2013, as compared with $1.2 million for the
comparable period in 2012. The year-over-year increase in selling
and distribution expenses was due to the expansion of our sales
force and marketing activities, participation in industry trade
shows, and international travel to promote and sell our products
abroad.
General and administrative expenses were $2.8 million for the
first quarter of 2013, as compared with $2.0 million for the first
quarter of 2012. The increase was mainly due to the expansion of
our workforce in various functions to support our growth.
Net loss for the first quarter of 2013 was $(608,880), or
$(0.04) per diluted share, based on 13.6 million weighted average
shares outstanding. This compares with first quarter 2012 net
income of $3,185 or breakeven per diluted share, based on 13.6
million weighted average shares outstanding.
Balance Sheet
At March 31, 2013, Highpower International had cash, cash
equivalents and restricted cash totaling $31.3 million, total
assets of $115.4 million, and stockholders' equity of $30.4
million. Bank credit facilities totaled $79.9 million at March 31,
2013, of which $29.1 million was utilized and $50.8 million was
available as unused credit.
Outlook
Based on our current expectations for global demand for the
rechargeable battery market in 2013 and our continued shift toward
mobile power sources, higher-value energy storage systems and
transportation products, we expect revenues to grow between 15% to
20% over 2012 revenue levels. We expect to remain profitable for
the full year in 2013.
Conference Call and Webcast
The Company will host a conference call today at 7:00 a.m.
Pacific time/10:00 a.m. Eastern time to discuss these results and
answer questions.
Individuals interested in participating in the conference call
may do so by dialing 877-941-9205 from the U.S. or 480-629-9771
from outside the U.S. and referencing the reservation code 4619428.
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.highpowertech.com or
www.InvestorCalendar.com.
About Highpower International, Inc.
Highpower International was founded in 2001 and produces
high-quality Nickel-Metal Hydride (Ni-MH) and lithium-based
rechargeable batteries used in a wide range of applications such as
mobile devices, computer tablets, electric bikes, energy storage
systems, power tools, medical equipment, digital and electronic
devices, personal care products, and lighting, etc. With over 3,000
employees and advanced manufacturing facilities located in Shenzhen
and Huizhou of China, Highpower is committed to clean technology,
not only in the products it makes, but also in the processes of
production. The majority of Highpower International's products are
distributed to worldwide markets mainly in the United States,
Europe, China and Southeast Asia
Forward Looking Statements
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 and involve risks and uncertainties,
including, without limitation, the current economic downturn and
uncertainty in the European economy adversely affecting demand for
our products; fluctuations in the cost of raw materials; our
dependence on, or inability to attract additional, major customers
for a significant portion of our net sales; our ability to increase
manufacturing capabilities to satisfy orders from new customers;
our ability to maintain increased margins; changes in the laws of
the PRC that affect our operations; our ability to complete
construction of and to begin manufacturing operations at our new
manufacturing facilities on time; our ability to control operating
expenses and costs related to the construction of our new
manufacturing facilities; the devaluation of the U.S. Dollar
relative to the Renminbi; our dependence on the growth in demand
for portable electronic devices and the success of manufacturers of
the end applications that use our battery products; our
responsiveness to competitive market conditions; our ability to
successfully manufacture our products in the time frame and amounts
expected; the market acceptance of our battery products, including
our lithium products; our ability to successfully develop products
for and penetrate the electric transportation market; our ability
to continue R&D development to keep up with technological
changes; our exposure to product liability, safety, and defect
claims; rising labor costs, volatile metal prices, and inflation;
changes in foreign, political, social, business and economic
conditions that affect our production capabilities or demand for
our products; and various other matters, many of which are beyond
our control. 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
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Stated in US Dollars except Number of Shares)
Three months ended March 31,
2013 2012
------------- -------------
(Unaudited) (Unaudited)
------------- -------------
$ $
Net sales 24,399,372 20,602,783
Cost of sales (19,636,192) (16,930,524)
------------- -------------
Gross profit 4,763,180 3,672,259
Research and development expenses (1,102,468) (884,346)
Selling and distribution expenses (1,395,402) (1,198,900)
General and administrative expenses, including
stock-based compensation (2,805,391) (2,014,485)
Loss on exchange rate difference (39,947) (31,330)
Gain of derivative instruments 109,948 337,103
------------- -------------
Total operation expenses (5,233,260) (3,791,958)
------------- -------------
Income (loss) from operations (470,080) (119,699)
Other income 216,149 167,033
Interest expenses (336,266) (12,318)
------------- -------------
Income (loss) before taxes (590,197) 35,016
Income taxes expenses (48,219) (53,325)
------------- -------------
Net loss (638,416) (18,309)
------------- -------------
Less: net loss attributable to non-controlling
interest (29,536) (21,494)
Net income (loss) attributable to the Company (608,880) 3,185
------------- -------------
Comprehensive income (loss)
Net loss (638,416) (18,309)
Foreign currency translation gain (loss) (228,054) 144,905
------------- -------------
Comprehensive income (loss) (866,470) 126,596
============= =============
Less: comprehensive income attributable to
non-controlling interest (34,218) (21,452)
Comprehensive income (loss) attributable to
the Company (832,252) 148,048
============= =============
Earnings (loss) per share of common stock
attributable to the Company
============= =============
- Basic and diluted (0.04) -
============= =============
Weighted average number of common stock
outstanding
- Basic and diluted 13,582,106 13,582,106
============= =============
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
March 31, December 31,
2013 2012
-------------- --------------
(Unaudited)
$ $
ASSETS
Current Assets:
Cash and cash equivalents 4,705,786 6,627,334
Restricted cash 26,615,916 27,695,569
Accounts receivable, net 22,607,922 25,323,899
Notes receivable 634,563 392,242
Prepayments 3,901,279 3,223,795
Other receivables 762,436 802,907
Inventories 16,117,760 16,719,807
-------------- --------------
Total Current Assets 75,345,662 80,785,553
-------------- --------------
Property, plant and equipment, net 33,963,640 33,462,369
Land use rights, net 4,374,056 4,423,348
Intangible asset, net 687,500 700,000
Deferred tax assets 870,709 762,954
Foreign currency derivatives assets 124,101 255,508
-------------- --------------
TOTAL ASSETS 115,365,668 120,389,732
============== ==============
LIABILITIES AND EQUITY
LIABILITIES
Current Liabilities:
Accounts payable 27,495,330 27,509,195
Deferred revenue 657,370 661,178
Short-term loan 23,992,952 20,478,604
Notes payable 18,625,288 26,397,200
Other payables and accrued liabilities 5,339,146 4,485,918
Income taxes payable 918,882 1,180,469
Current portion of long-term loan 1,914,670 1,925,762
-------------- --------------
Total Current Liabilities 78,943,638 82,638,326
-------------- --------------
Long-term loan 5,265,341 5,777,286
TOTAL LIABILITIES 84,208,979 88,415,612
============== ==============
COMMITMENTS AND CONTINGENCIES - -
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Stated in US Dollars except Number of Shares)
March 31, December 31,
2013 2012
-------------- --------------
(Unaudited)
$ $
EQUITY
Stockholder's 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, 13,582,106 shares
issued and outstanding at March 31,2013
and December 31, 2012) 1,358 1,358
Additional paid-in capital 6,084,269 6,035,230
Statutory and other reserves 2,790,484 2,790,484
Retained earnings 16,682,704 17,291,584
Accumulated other comprehensive income 4, 826,492 5,049,864
-------------- --------------
Total equity for the Company's stockholders 30,385,307 31,168,520
-------------- --------------
Non-controlling interest 771,382 805,600
TOTAL EQUITY 31,156,689 31,974,120
============== ==============
TOTAL LIABILITIES AND EQUITY 115,365,668 120,389,732
============== ==============
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
Three months ended
March 31,
----------------------------
2013 2012
------------- -------------
(Unaudited) (Unaudited)
$ $
Cash flows from operating activities
Net loss (638,416) (18,309)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities :
Depreciation and amortization 568,719 493,486
Allowance for doubtful accounts (4,252) 20,203
Loss on disposal of property, plant and
equipment 36,903 131
Income on derivative instruments 129,749 (337,103)
Deferred income tax (111,704) (42,523)
Share based payment 49,039 41,073
Changes in operating assets and liabilities :
Accounts receivable 2,583,851 2,175,529
Notes receivable (244,230) 152,459
Prepayments (694,174) 780,082
Other receivable 35,795 241,553
Inventories 505,048 727,314
Accounts payable 1,698,223 (2,882,177)
Other payables and accrued liabilities 876,198 657,272
Income taxes payable (254,421) 79,995
------------- -------------
Net cash flows provided by operating
activities 4,536,328 2,088,985
------------- -------------
Cash flows from investing activities
Acquisition of plant and equipment (3,025,300) (3,542,211)
Acquisition of land use right - (1,327,923)
------------- -------------
Net cash flows used in investing activities (3,025,300) (4,870,134)
------------- -------------
Cash flows from financing activities
Proceeds from short-term bank loans 9,339,810 3,176, 620
Repayment of short-term bank loans (5,786,540) -
Proceeds from long-term bank loans - 7,925,940
Repayment of long-term bank loans (477,981) -
Proceeds from notes payable 5,474,476 8,367,572
Repayment of notes payable (13,083,414) (5,698,187)
Proceeds from non-controlling interest - 951,113
Increase (decrease) in restricted cash 945,392 (1,525,001)
------------- -------------
Net cash flows provided by (used in) financing
activities (3,588,257) 13,198,057
------------- -------------
Effect of foreign currency translation on cash
and cash equivalents 155,681 (120,553)
------------- -------------
Net increase (decrease) in cash and cash
equivalents (1,921,548) 10,296,355
Cash and cash equivalents - beginning of
period 6,627,334 5,175,623
------------- -------------
Cash and cash equivalents - end of period 4,705,786 15,471,978
============= =============
Supplemental disclosures for cash flow
information :
Cash paid for :
Income taxes 414,343 15,854
============= =============
Interest expenses 336,266 219,867
============= =============
Non-cash transactions
Accounts payable for construction in
progress 2,189,363 1,857,764
============= =============
Financial Profiles, Inc. Tricia Ross +1-916-939-7285 Email
Contact
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