Highpower International, Inc. Reports Third Quarter 2013 Financial
Results
Strongest Revenue Quarter in Company History; Reaffirms Full
Year Guidance
SAN FRANCISCO, CA and SHENZHEN, CHINA--(Marketwired - Nov 13,
2013) - 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 third quarter ended September
30, 2013.
Third Quarter 2013 Highlights
- Net sales increased 21.9% year-over-year to $38.9 million
- Sustained growth in lithium battery segment -- lithium battery
net sales up 31.8% in the third quarter of 2013 over the third
quarter of 2012; total lithium battery pieces sold increased 22.5%;
and a 39.0% increase in volume per ampere hour
- Gross margin of 18.6%
- Net income of $0.7 million, or $0.05 per diluted share
Management Commentary
"We are extremely pleased with the record revenue levels we saw
during the quarter for both our major battery business lines," said
Mr. George Pan, Chairman and Chief Executive Officer of Highpower
International. "Furthermore, we were able to gain market share in
Europe for Ni-MH batteries during the quarter. While our Ni-MH
battery business is in a maturing industry, we believe we are very
well positioned to continue to be in an advantageous position to
capitalize on trends of consolidation in this space.
"Highpower's lithium battery business continues to deliver
dramatic growth and we are very excited about the new automated
facility in Huizhou. This new factory will be focused on producing
lithium batteries for smart phones, tablets, energy storage and
electrical vehicles, which we believe are areas with high growth
potential in the coming years. The new facility will allow us to
triple our existing lithium production capacity in the years to
come and service some of the lithium business we are currently
unable to address out of our existing lithium battery facilities.
We have started small batch production and expect to see material
volumes out of the new facility in the first quarter of 2014,"
concluded Mr. Pan.
"We are delighted with our current business trajectory. Despite
our continued investments to grow our lithium capacity, we are on
track to deliver solid revenue growth and remain profitable in
2013," said Mr. Henry Sun, Chief Financial Officer of Highpower
International. "While we are unlikely to see much additional growth
in the Ni-MH battery sector, we do think we can be a strong
consolidation leader and deliver sound margins because of our
industry reputation, product quality, and global customer base.
Moreover, we believe our lithium battery business will continue to
be our primary growth driver and allow for gross margin expansion
over the next few years. At the same time, we remain focused on
cost control measures and the prudent use of capital."
Third Quarter 2013 Financial Results
Net sales for the third quarter ended September 30, 2013 totaled
$38.9 million, a year-over-year increase of 21.9% compared with
$31.9 million for the third quarter ended September 30, 2012. The
increase in sales for the third quarter was due to a $3.6 million
increase in net sales of our lithium batteries and a $3.4 million
increase in net sales of our Ni-MH batteries. The increase in the
number of Ni-MH battery units sold in the three months ended
September 30, 2013 was primarily attributable to increased orders
from our new customers and the increase in the volume of lithium
batteries sold in the three months ended September 30, 2013 was
primarily attributable to growth in global demand.
Third quarter 2013 gross profit decreased to $7.2 million, as
compared with $7.6 million for the third quarter of 2012. Gross
profit margin was 18.6% for the third quarter of 2013, as compared
with 23.9% for the third quarter of 2012. The year-over-year
decrease in gross profit margin for the third quarter of 2013 was
primarily attributable to decreases in the average selling price of
batteries sold for the comparable period and an increase in labor
costs.
R&D spending was $1.5 million for the third quarter of 2013,
as compared with $1.1 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 $1.6 million for the
third quarter of 2013, as compared with $1.4 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 $3.0 million for the
third quarter of 2013, as compared with $4.0 million for the third
quarter of 2012. The decrease was due to decreased bad debt
expenses for the three months ended September 30, 2013.
Net income attributable to the company for the third quarter of
2013 was $742,228, or $0.05 per diluted share, based on 13.7
million weighted average shares outstanding. This compares with
third quarter 2012 net income attributable to the company of
$644,362 or $0.05 per diluted share, based on 13.6 million weighted
average shares outstanding.
Balance Sheet
As of September 30, 2013, Highpower International had cash, cash
equivalents and restricted cash totaling $37.1 million, total
assets of $143.2 million, and stockholders' equity of $33.0
million. Bank credit facilities totaled $83.7 million at September
30, 2013, of which $47.1 million was utilized and $36.6 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 4650086.
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 September 30, |
|
|
Nine months ended September 30, |
|
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
38,852,978 |
|
|
31,868,046 |
|
|
94,429,966 |
|
|
81,848,511 |
|
|
Cost of sales |
|
(31,609,991 |
) |
|
(24,258,038 |
) |
|
(76,689,340 |
) |
|
(64,557,820 |
) |
|
Gross profit |
|
7,242,987 |
|
|
7,610,008 |
|
|
17,740,626 |
|
|
17,290,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
(1,531,477 |
) |
|
(1,147,359 |
) |
|
(3,984,942 |
) |
|
(3,265,290 |
) |
|
Selling and distribution expenses |
|
(1,598,397 |
) |
|
(1,423,372 |
) |
|
(4,386,375 |
) |
|
(3,904,771 |
) |
|
General and administrative expenses, including share-based
compensation |
|
(2,957,467 |
) |
|
(4,035,269 |
) |
|
(8,375,713 |
) |
|
(8,313,737 |
) |
|
Loss on exchange rate difference |
|
(154,453 |
) |
|
(200,488 |
) |
|
(374,410 |
) |
|
(78,458 |
) |
|
Gain on derivative instruments |
|
45,033 |
|
|
207,576 |
|
|
267,316 |
|
|
240,532 |
|
|
Total operating expenses |
|
(6,196,761 |
) |
|
(6,598,912 |
) |
|
(16,854,124 |
) |
|
(15,321,724 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
1,046,226 |
|
|
1,011,096 |
|
|
886,502 |
|
|
1,968,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
479,288 |
|
|
176,265 |
|
|
976,673 |
|
|
404,483 |
|
|
Interest expenses |
|
(444,706 |
) |
|
(63,935 |
) |
|
(1,146,118 |
) |
|
(377,376 |
) |
|
Income before taxes |
|
1,080,808 |
|
|
1,123,426 |
|
|
717,057 |
|
|
1,996,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes expenses |
|
(372,023 |
) |
|
(526,947 |
) |
|
(579,352 |
) |
|
(943,213 |
) |
|
Net income |
|
708,785 |
|
|
596,479 |
|
|
137,705 |
|
|
1,052,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net loss attributable to non-controlling interest |
|
(33,443 |
) |
|
(47,883 |
) |
|
(104,932 |
) |
|
(98,400 |
) |
|
Net income attributable to the Company |
|
742,228 |
|
|
644,362 |
|
|
242,637 |
|
|
1,151,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
708,785 |
|
|
596,479 |
|
|
137,705 |
|
|
1,052,861 |
|
|
Foreign currency translation gain |
|
232,201 |
|
|
381,765 |
|
|
531,143 |
|
|
225,870 |
|
|
Comprehensive income |
|
940,986 |
|
|
978,244 |
|
|
668,848 |
|
|
1,278,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: comprehensive loss attributable to non-controlling
interest |
|
(25,145 |
) |
|
(38,561 |
) |
|
(90,620 |
) |
|
(107,010 |
) |
|
Comprehensive income attributable to the Company |
|
966,131 |
|
|
1,016,805 |
|
|
759,468 |
|
|
1,385,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to the
Company - Basic and diluted |
|
0.05 |
|
|
0.05 |
|
|
0.02 |
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - Basic
and diluted |
|
13,657,930 |
|
|
13,582,106 |
|
|
13,607,474 |
|
|
13,582,106 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
| HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (Stated in US Dollars except Number of Shares) |
| |
| |
| |
|
September 30, |
|
December 31, |
| |
|
2013 |
|
2012 |
| |
|
(Unaudited) |
|
|
| |
|
$ |
|
$ |
| ASSETS |
|
|
|
|
| |
Current Assets: |
|
|
|
|
| |
Cash and cash equivalents |
|
6,434,581 |
|
6,627,334 |
| |
Restricted cash |
|
30,626,456 |
|
27,695,569 |
| |
Accounts receivable, net |
|
33,661,422 |
|
25,323,899 |
| |
Notes receivable |
|
1,457,766 |
|
392,242 |
| |
Prepayments |
|
5,638,324 |
|
3,223,795 |
| |
Other receivables |
|
824,268 |
|
802,907 |
| |
Inventories |
|
17,155,004 |
|
16,719,807 |
| |
Total Current Assets |
|
95,797,821 |
|
80,785,553 |
| |
|
|
|
|
| |
Property, plant and equipment, net |
|
41,368,522 |
|
33,462,369 |
| |
Land use right, net |
|
4,415,120 |
|
4,423,348 |
| |
Intangible asset, net |
|
662,500 |
|
700,000 |
| |
Deferred tax assets |
|
851,011 |
|
762,954 |
| |
Foreign currency derivatives assets |
|
139,966 |
|
255,508 |
| |
|
|
|
|
| TOTAL ASSETS |
|
143,234,940 |
|
120,389,732 |
| |
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
| |
|
|
|
|
| LIABILITIES |
|
|
|
|
| |
Current Liabilities: |
|
|
|
|
| |
Accounts payable |
|
32,832,593 |
|
27,509,195 |
| |
Deferred revenue |
|
670,846 |
|
661,178 |
| |
Short-term loan |
|
35,369,536 |
|
20,478,604 |
| |
Notes payable |
|
26,996,368 |
|
26,397,200 |
| |
Other payables and accrued liabilities |
|
6,823,875 |
|
4,485,918 |
| |
Income taxes payable |
|
1,235,975 |
|
1,180,469 |
| |
Current portion of long-term loan |
|
1,953,920 |
|
1,925,762 |
| |
|
|
|
|
| |
Total Current Liabilities |
|
105,883,113 |
|
82,638,326 |
| |
|
|
|
|
| |
Long-term loan |
|
4,396,320 |
|
5,777,286 |
| |
|
|
|
|
| TOTAL LIABILITIES |
|
110,279,433 |
|
88,415,612 |
| |
|
|
|
|
| COMMITMENTS AND CONTINGENCIES |
|
- |
|
- |
| |
|
|
|
|
| |
|
|
|
|
| |
| |
| HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS (CONTINUED) |
| (Stated in US Dollars except Number of Shares) |
| |
| |
| |
|
September 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, 13,732,106
shares issued and outstanding at September 30, 2013 and 13,582,106
shares issued and outstanding at December 31, 2012) |
|
1,373 |
|
1,358 |
| |
Additional paid-in capital |
|
5,765,277 |
|
6,035,230 |
| |
Statutory and other reserves |
|
2,790,484 |
|
2,790,484 |
| |
Retained earnings |
|
17,534,221 |
|
17,291,584 |
| |
Accumulated other comprehensive income |
|
5,566,695 |
|
5,049,864 |
| |
|
|
|
|
| |
Total equity for the Company's stockholders |
|
31,658,050 |
|
31,168,520 |
| |
|
|
|
|
| |
Non-controlling interest |
|
1,297,457 |
|
805,600 |
| |
|
|
|
|
| TOTAL EQUITY |
|
32,955,507 |
|
31,974,120 |
| |
|
|
|
|
| TOTAL LIABILITIES AND EQUITY |
|
143,234,940 |
|
120,389,732 |
| |
|
|
|
|
| |
|
| |
|
| HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES |
|
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| (Stated in US Dollars) |
|
| |
|
| |
|
Nine months ended September 30, |
|
| |
|
2013 |
|
|
2012 |
|
| |
|
(Unaudited) |
|
|
(Unaudited) |
|
| |
|
$ |
|
|
$ |
|
| Cash flows from operating activities |
|
|
|
|
|
|
| Net income |
|
137,705 |
|
|
1,052,861 |
|
| Adjustments to reconcile net income to net cash
provided by operating activities |
|
|
|
|
|
|
| |
Depreciation and amortization |
|
1,832,596 |
|
|
1,668,979 |
|
| |
Allowance for doubtful accounts |
|
(3,643 |
) |
|
1,156,434 |
|
| |
Loss on disposal of property, plant and equipment |
|
108,652 |
|
|
55,000 |
|
| |
Loss (income) on derivative instruments |
|
117,966 |
|
|
(97,029 |
) |
| |
Deferred income tax |
|
(76,813 |
) |
|
225,862 |
|
| |
Share based payment |
|
159,352 |
|
|
145,459 |
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
| |
Accounts receivable |
|
(7,918,758 |
) |
|
(3,904,228 |
) |
| |
Notes receivable |
|
(1,048,133 |
) |
|
(722,104 |
) |
| |
Prepayments |
|
(2,191,905 |
) |
|
629,689 |
|
| |
Other receivable |
|
(9,515 |
) |
|
231,388 |
|
| |
Inventories |
|
(188,974 |
) |
|
(3,385,965 |
) |
| |
Accounts payable |
|
7,255,970 |
|
|
5,412,400 |
|
| |
Deferred revenue |
|
- |
|
|
650,951 |
|
| |
Other payables and accrued liabilities |
|
2,251,556 |
|
|
(1,602,391 |
) |
| |
Income taxes payable |
|
37,821 |
|
|
459,052 |
|
| Net cash flows provided by operating activities |
|
463,877 |
|
|
1,976,358 |
|
| |
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
|
|
| |
Acquisition of plant and equipment |
|
(11,905,424 |
) |
|
(9,626,668 |
) |
| |
Acquisition of land use right |
|
- |
|
|
(1,323,559 |
) |
| Net cash flows used in investing activities |
|
(11,905,424 |
) |
|
(10,950,227 |
) |
| |
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
|
|
| |
Proceeds from short-term bank loans |
|
30,408,328 |
|
|
9,866,422 |
|
| |
Repayment of short-term bank loans |
|
(15,748,524 |
) |
|
(3,772,049 |
) |
| |
Proceeds from long-term bank loans |
|
- |
|
|
7,899,893 |
|
| |
Repayment of long-term bank loans |
|
(1,449,322 |
) |
|
- |
|
| |
Proceeds from notes payable |
|
32,308,322 |
|
|
33,555,477 |
|
| |
Repayment of notes payable |
|
(32,097,470 |
) |
|
(27,278,534 |
) |
| |
Repayment of letter of credit |
|
- |
|
|
(2,880,000 |
) |
| |
Capital contribution from non-controlling interest |
|
- |
|
|
947,987 |
|
| |
Increase in restricted cash |
|
(2,540,084 |
) |
|
(9,495,213 |
) |
| Net cash flows provided by financing activities |
|
10,881,250 |
|
|
8,843,983 |
|
| Effect of foreign currency translation on cash and cash
equivalents |
|
367,544 |
|
|
455,068 |
|
| Net increase (decrease) in cash and cash
equivalents |
|
(192,753 |
) |
|
325,182 |
|
| Cash and cash equivalents - beginning of period |
|
6,627,334 |
|
|
5,175,623 |
|
| Cash and cash equivalents - end of period |
|
6,434,581 |
|
|
5,500,805 |
|
| |
|
|
|
|
|
|
| Supplemental disclosures for cash flow information
: |
|
|
|
|
|
|
| Cash paid for : |
|
|
|
|
|
|
| |
Income taxes |
|
618,344 |
|
|
258,300 |
|
| |
Interest expenses |
|
1,146,118 |
|
|
917,662 |
|
| Non-cash transactions |
|
|
|
|
|
|
| |
Accounts payable for construction in progress |
|
1,408,336 |
|
|
2,285,517 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Financial Profiles, Inc. Tricia Ross +1-916-939-7285 Email
Contact
Highpower (NASDAQ:HPJ)
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From Jul 2023 to Jul 2024
