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 second quarter ended June
30, 2013.
Second Quarter 2013 Highlights
- Net sales increased 6.1% year-over-year to $31.2 million
- Sustained growth in lithium battery segment -- lithium battery
net sales up 32.9% in the second quarter of 2013 over the second
quarter of 2012; total lithium battery pieces sold increased 29.0%;
and a 32.2% increase in volume per ampere hour
- Gross margin of 18.4%
- Net income of $0.1 million attributable to Highpower
International, or $0.01 per diluted share
Management Commentary "Our lithium battery
business continues to deliver excellent results. This was the
strongest quarter ever for our lithium battery business," said Mr.
George Pan, Chairman and Chief Executive Officer of Highpower
International. "Though our Ni-MH battery sales declined slightly
for the quarter, we believe we are faring much better than some of
our competitors. That said, our Ni-MH battery segment remains a
sustainable business line with strong and valuable
relationships.
"We are very excited about our new automated facility in Huizhou
coming online later this year. It will help us address the
increased demand for our lithium batteries, as we are currently
operating at full capacity for this product line. With the addition
of this automated facility, we believe that we are well positioned
to attract larger customers and capitalize on the growing global
demand for rechargeable batteries."
"We continue to make up-front investments that are required to
prepare us for accelerated growth in our lithium battery business,"
said Mr. Henry Sun, Chief Financial Officer of Highpower
International. "Our investments in manufacturing, research and
development, sales, and marketing have all increased in
anticipation of growth and have impacted our current profitability.
However, we remain focused on continued profitability in the second
half of 2013."
Second Quarter 2013 Financial Results
Net sales for the second quarter ended June 30, 2013 totaled
$31.2 million, a year-over-year increase of 6.1% compared with
$29.4 million for the second quarter ended June 30, 2012. The
increase in sales for the second quarter was driven by increased
demand for our lithium batteries from new and existing customers.
Our sales total were, however, partially offset by a decrease in
sales from our Ni-MH battery segment.
Second quarter 2013 gross profit decreased to $5.7 million, as
compared with $6.0 million for the second quarter of 2012. Gross
profit margin was 18.4% for the second quarter of 2013, as compared
with 20.5% for the second quarter of 2012. The year-over-year
decrease in gross profit margin for the second quarter of 2013 was
primarily attributable to increases in labor costs, primarily for
our lithium battery segment, as we serviced the increased volume
from our existing facilities, which are operating at full
capacity.
R&D spending was $1.4 million for the second quarter of
2013, as compared with $1.2 million for the comparable period in
2012, reflecting the expansion of our workforce to expand our
research and development and management functions.
Selling and distribution expenses were $1.4 million for the
second quarter of 2013, as compared with $1.3 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
globally.
General and administrative expenses were $2.6 million for the
second quarter of 2013, as compared with $2.3 million for the
second quarter of 2012. The increase was mainly due to the
expansion of our workforce in various functions to support our
growth.
Net income attributable to the company for the second quarter of
2013 was $109,289, or $0.01 per diluted share, based on 13.6
million weighted average shares outstanding. This compares with
second quarter 2012 net income attributable to the company of
$503,714 or $0.04 per diluted share, based on 13.6 million weighted
average shares outstanding.
Balance Sheet
As of June 30, 2013, Highpower International had cash, cash
equivalents and restricted cash totaling $27.3 million, total
assets of $121.2 million, and stockholders' equity of $31.8
million. Bank credit facilities totaled $69.0 million at June 30,
2013, of which $36.2 million was utilized and $32.8 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 are reaffirming our full-year 2013
revenue guidance to be 15% to 20% higher than our 2012 revenue
levels. We also reaffirm our expectation that we will be 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 4635068.
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 Six months ended
June 30, June 30,
------------------------ ------------------------
2013 2012 2013 2012
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
$ $ $ $
Net sales 31,177,616 29,377,682 55,576,988 49,980,465
Cost of sales (25,443,157) (23,369,258) (45,079,349) (40,299,782)
----------- ----------- ----------- -----------
Gross profit 5,734,459 6,008,424 10,497,639 9,680,683
----------- ----------- ----------- -----------
Research and development
expenses (1,350,997) (1,233,585) (2,453,465) (2,117,931)
Selling and distribution
expenses (1,392,576) (1,282,499) (2,787,978) (2,481,399)
General and
administrative
expenses, including
stock-based
compensation (2,612,855) (2,263,983) (5,418,246) (4,278,468)
Income (loss) on
exchange rate
difference (180,010) 153,360 (219,957) 122,030
Gain (loss) of
derivative instruments 112,335 (304,147) 222,283 32,956
----------- ----------- ----------- -----------
Total operation expenses (5,424,103) (4,930,854) (10,657,363) (8,722,812)
----------- ----------- ----------- -----------
Income (loss) from
operations 310,356 1,077,570 (159,724) 957,871
Other income 281,236 61,185 497,385 228,218
Interest expenses (365,146) (301,123) (701,412) (313,441)
----------- ----------- ----------- -----------
Income (loss) before
taxes 226,446 837,632 (363,751) 872,648
----------- ----------- ----------- -----------
Income taxes expenses (159,110) (362,941) (207,329) (416,266)
----------- ----------- ----------- -----------
Net income (loss) 67,336 474,691 (571,080) 456,382
----------- ----------- ----------- -----------
Less: net loss
attributable to non-
controlling interest (41,953) (29,023) (71,489) (50,517)
Net income (loss)
attributable to the
Company 109,289 503,714 (499,591) 506,899
----------- ----------- ----------- -----------
Comprehensive income
(loss)
Net income (loss) 67,336 474,691 (571,080) 456,382
Foreign currency
translation gain (loss) 526,996 (300,800) 298,942 (155,895)
----------- ----------- ----------- -----------
Comprehensive income
(loss) 594,332 173,891 (272,138) 300,487
=========== =========== =========== ===========
Less: comprehensive loss
attributable to non-
controlling interest (31,257) (46,997) (65,475) (68,449)
Comprehensive income
(loss) attributable to
the Company 625,589 220,888 (206,663) 368,936
=========== =========== =========== ===========
Earnings (loss) per
share of common stock
attributable to the
Company
- Basic and diluted 0.01 0.04 (0.04) 0.04
=========== =========== =========== ===========
Weighted average number
of common stock
outstanding
- Basic and diluted 13,582,106 13,582,106 13,582,106 13,582,106
=========== =========== =========== ===========
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
June 30, December 31,
2013 2012
------------- -------------
(Unaudited)
$ $
ASSETS
Current Assets:
Cash and cash equivalents 2,666,806 6,627,334
Restricted cash 24,594,567 27,695,569
Accounts receivable, net 25,556,158 25,323,899
Notes receivable 564,427 392,242
Prepayments 4,633,723 3,223,795
Other receivables 800,984 802,907
Inventories 18,797,421 16,719,807
------------- -------------
Total Current Assets 77,614,086 80,785,553
------------- -------------
Property, plant and equipment, net 37,466,258 33,462,369
Land use right, net 4,411,408 4,423,348
Intangible asset, net 675,000 700,000
Deferred tax assets 907,594 762,954
Foreign currency derivatives assets 133,225 255,508
------------- -------------
TOTAL ASSETS 121,207,571 120,389,732
============= =============
LIABILITIES AND EQUITY
LIABILITIES
Current Liabilities:
Accounts payable 27,012,982 27,509,195
Deferred revenue 666,613 661,178
Short-term loan 27,636,005 20,478,604
Notes payable 20,079,201 26,397,200
Other payables and accrued liabilities 6,260,815 4,485,918
Income taxes payable 959,696 1,180,469
Current portion of long-term loan 1,941,590 1,925,762
------------- -------------
Total Current Liabilities 84,556,902 82,638,326
------------- -------------
Long-term loan 4,853,977 5,777,286
------------- -------------
TOTAL LIABILITIES 89,410,879 88,415,612
============= =============
COMMITMENTS AND CONTINGENCIES - -
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Stated in US Dollars except Number of Shares)
June 30, December 31,
2013 2012
------------- -------------
(Unaudited)
$ $
EQUITY
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, 13,582,106
shares issued and outstanding at June 30,2013
and December 31, 2012) 1,358 1,358
Additional paid-in capital 5,547,463 6,035,230
Statutory and other reserves 2,790,484 2,790,484
Retained earnings 16,791,993 17,291,584
Accumulated other comprehensive income 5,342,792 5,049,864
------------- -------------
Total equity for the Company's stockholders 30,474,090 31,168,520
------------- -------------
Non-controlling interest 1,322,602 805,600
------------- -------------
TOTAL EQUITY 31,796,692 31,974,120
------------- -------------
TOTAL LIABILITIES AND EQUITY 121,207,571 120,389,732
============= =============
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
Six months ended June 30,
2013 2012
------------ ------------
(Unaudited) (Unaudited)
$ $
Cash flows from operating activities
Net income (loss) (571,080) 456,382
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization 1,182,314 999,544
Allowance for doubtful accounts (3,965) 282,127
Loss on disposal of property, plant and
equipment 102,926 56,703
Income on derivative instruments 123,333 31,278
Deferred income tax (137,726) 106,644
Share based payment 94,710 93,164
Changes in operating assets and liabilities
Accounts receivable (41,371) (4,971,615)
Notes receivable (167,535) (1,227,504)
Prepayments (1,372,932) 591,874
Other receivable 8,451 240,454
Inventories (1,924,454) (2,907,198)
Accounts payable 1,414,867 5,680,116
Deferred revenue - 652,157
Other payables and accrued liabilities 1,725,062 1,481,165
Income taxes payable (228,533) 69,855
------------ ------------
Net cash flows provided by operating activities 204,067 1,635,146
------------ ------------
Cash flows from investing activities
Acquisition of plant and equipment (7,335,376) (8,484,171)
Acquisition of land use right - (1,326,010)
------------ ------------
Net cash flows used in investing activities (7,335,376) (9,810,181)
------------ ------------
Cash flows from financing activities
Proceeds from short-term bank loans 15,581,691 5,871,646
Repayment of short-term bank loans (8,515,280) (1,196,676)
Proceeds from long-term bank loans - 7,914,523
Repayment of long-term bank loans (962,603) -
Proceeds from notes payable 20,038,103 19,682,410
Repayment of notes payable (26,517,924) (16,633,527)
Repayment of letter of credit - (2,880,000)
Proceeds from non-controlling interest - 949,743
Increase (decrease) in restricted cash 3,280,806 (5,387,117)
------------ ------------
Net cash flows provided by financing activities 2,904,793 8,321,002
------------ ------------
Effect of foreign currency translation on cash
and cash equivalents 265,988 (201,599)
------------ ------------
Net decrease in cash and cash equivalents (3,960,528) (55,632)
Cash and cash equivalents - beginning of period 6,627,334 5,175,623
------------ ------------
Cash and cash equivalents - end of period 2,666,806 5,119,991
============ ============
Supplemental disclosures for cash flow
information :
Cash paid for :
Income taxes 573,588 239,767
============ ============
Interest expenses 701,412 590,399
============ ============
Non-cash transactions
Accounts payable for construction in progress 1,649,807 1,501,464
============ ============
Financial Profiles, Inc. Tricia Ross +1-916-939-7285 Email
Contact
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