Highpower International, Inc. Reports First Quarter 2014 Financial
Results
SAN FRANCISCO, CA and SHENZHEN, CHINA--(Marketwired - May 12,
2014) - Highpower International, Inc. (NASDAQ: HPJ), a developer,
manufacturer and marketer of lithium and nickel-metal hydride
(Ni-MH) rechargeable batteries, and a battery management systems
and battery recycling provider, today announced financial results
for the first quarter ended March 31, 2014.
First Quarter 2014 Highlights
- Net sales increased 19.5% year-over-year to $29.2 million
- Robust growth in lithium battery segment -- lithium battery net
sales up 44.7% in the first quarter of 2014 over the first quarter
of 2013; total lithium battery pieces sold increased 15.2%; and a
22.5% increase in volume per ampere hour, reflecting more sales of
large format lithium batteries used in areas such as electric
buses
- Gross margin of 20.3%, improved 80 basis points over the first
quarter of 2013
- Net loss of $0.9 million, or $0.07 per diluted share including
stock based expenses of $0.4 million.
Management Commentary
"The first quarter was transformational in Highpower's corporate
evolution," said Mr. George Pan, Chief Executive Officer and
Chairman of Highpower International. "We have achieved a
number of important milestones since beginning the year, including:
we received our first ever electric vehicle order for large format
lithium polymer batteries to be used in electric buses; we became
an approved supplier for two Fortune 500 companies, Philips from
Europe and SONY from Asia; we began shipping product from our new
Huizhou facility; we continued to grow into new innovative markets
such as wearable products, mobile payment, and electric lawn
mowers; we initiated the roll-out of our solar compatible energy
storage system line of products; and we successfully accessed the
capital markets to strengthen our balance sheet by over $5
million. We accomplished all of this while executing on our
sales initiatives and delivering solid financial performance in
what is typically our weakest quarter seasonally.
"We are excited that Highpower's value and potential was
acknowledged by institutional investors. This is the first time
since we went public in 2008 that we raised capital in the equity
markets. Over the past six years, we have experienced strong growth
in terms of the breadth of our product offerings, technological
advancements and global customer expansion. We have been
disciplined on the timing of issuing new equity, with the goal of
maximizing shareholder value. At present, our lithium battery
business is experiencing robust growth and we believe this new
capital will help us fund that growth and enable us to continue
executing on our strategy of strengthening our global leadership
position in the clean energy industry," concluded Mr. Pan.
"We are pleased with our revenue growth and gross margin level
during the first quarter as our business continues to expand with
the ramp up of our new Huizhou facility. Our first quarter's
results have been on track with our forecast," said Mr. Henry Sun,
Chief Financial Officer of Highpower International. "With our
recent key customer additions and other accounts we are working on
in the pipeline, we believe that we are well positioned for growth
throughout 2014."
First Quarter 2014 Financial Results
Net sales for the first quarter ended March 31, 2014 totaled
$29.2 million, a year-over-year increase of 19.5% compared with
$24.4 million for the first quarter ended March 31, 2013. The
increase in sales for the first quarter was primarily due to a $4.1
million increase in net sales of our lithium batteries and a $0.4
million increase in net sales of our Ni-MH batteries. The increase
in the volume of lithium batteries sold during the quarter was
primarily attributable to growth in global demand for mobile and
portable products, and electrical vehicles, and the increase in the
number of Ni-MH battery units sold was attributable to increased
orders from our new customers.
First quarter 2014 gross profit increased to $5.9 million, as
compared with $4.8 million for the first quarter of
2013. Gross profit margin was 20.3% of net sales for the first
quarter of 2014, as compared with 19.5% for the first quarter of
2013. The year-over-year increase in gross profit margin for
the first quarter of 2014 was primarily attributable to increases
in the average selling price of lithium batteries sold for the
comparable period.
R&D spending was $1.8 million for the first quarter of 2014,
as compared with $1.1 million for the comparable period in 2013,
reflecting the expansion of our workforce to expand our research
and development in lithium batteries, particularly in the area of
new product development for the electrical vehicles and energy
storage sectors.
Selling and distribution expenses were $1.5 million for the
first quarter of 2014, as compared with $1.4 million for the
comparable period in 2013. 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 $3.6 million for the
first quarter of 2014, as compared with $2.8 million for the first
quarter of 2013. The increase was due to the expansion of our
workforce at our Huizhou facility. Included in this amount was
non-cash share-based compensation expense of $0.4 million, up from
$49,000 in the first quarter of 2013.
Net loss attributable to the Company for the first quarter of
2014 was $0.9 million, or $0.07 per diluted share, based on 14.0
million weighted average shares outstanding. This compares with
first quarter 2013 net loss attributable to the company of $0.6
million or $0.04 per diluted share, based on 13.6 million weighted
average shares outstanding. The increase in net loss
attributable to the Company is primarily attributable to the $0.4
million increase in non-cash share-based compensation expense
between periods, and the $0.7 million increase in R&D spending
on future products.
Balance Sheet
As of March 31, 2014, Highpower International had cash, cash
equivalents and restricted cash totaling $26.6 million, total
assets of $138.2 million, and stockholders' equity of $34.0
million. Bank credit facilities totaled $54.1 million at March
31, 2014, of which $28.9 million was utilized and $25.2 million was
available as unused credit.
Subsequent to the end of the quarter, the Company completed a
registered direct offering of 1,000,000 common stock sold to
institutional investors at a price of $5.05 per share, including
warrants to purchase an additional 500,000 shares of common stock
with an exercise price of $6.33 per share. Net proceeds from the
offering of approximately $4.7 million, after deducting the
placement agent fees but prior to offering expenses, will used be
for general corporate purposes, including research and development,
sales and marketing, general and administrative, manufacturing, and
capital expenditures.
Outlook
Based on our current expectations for global demand in the
rechargeable battery market in 2014 and our continued shift toward
mobile power sources, higher-value energy storage systems and
transportation products, we are reaffirming our 2014 guidance of
revenues to range between $150 million to $170 million and net
income in the range of $2.5 million to $4.0 million.
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 877-941-0843 from the U.S. or 480-629-9819
from outside the U.S. and referencing the reservation code 4682633.
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 electric buses, bikes, energy storage
systems, power tools, medical equipment, digital and electronic
devices, personal care products, and lighting, etc. Highpower's
target customers are Fortune 500 companies, and top 10 companies in
each vertical segment. With advanced manufacturing facilities
located in Shenzhen, Huizhou, and Ganzhou 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 manage the new
facility and control both operating expenses and additional capital
expenditures on equipment; 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, |
|
| |
|
2014 |
|
|
2013 |
|
| |
|
(Unaudited) |
|
|
(Unaudited) |
|
| |
|
$ |
|
|
$ |
|
| |
|
|
|
|
|
|
| Net sales |
|
29,160,314 |
|
|
24,399,372 |
|
| Cost of sales |
|
(23,229,369 |
) |
|
(19,636,192 |
) |
| Gross profit |
|
5,930,945 |
|
|
4,763,180 |
|
| |
|
|
|
|
|
|
| Research and development expenses |
|
(1,811,952 |
) |
|
(1,102,468 |
) |
| Selling and distribution expenses |
|
(1,537,160 |
) |
|
(1,395,402 |
) |
| General and administrative expenses, including
share-based compensation |
|
(3,571,280 |
) |
|
(2,805,391 |
) |
| Gain (loss) on exchange rate difference |
|
102,593 |
|
|
(39,947 |
) |
| Gain (loss) on derivative instruments |
|
(137,281 |
) |
|
109,948 |
|
| Total operating expenses |
|
(6,955,080 |
) |
|
(5,233,260 |
) |
| |
|
|
|
|
|
|
| Loss from operations |
|
(1,024,135 |
) |
|
(470,080 |
) |
| |
|
|
|
|
|
|
| Other income |
|
541,420 |
|
|
216,149 |
|
| Interest expenses |
|
(595,381 |
) |
|
(336,266 |
) |
| |
|
|
|
|
|
|
| Loss before taxes |
|
(1,078,096 |
) |
|
(590,197 |
) |
| |
|
|
|
|
|
|
| Income taxes benefit (expenses) |
|
92,151 |
|
|
(48,219 |
) |
| Net loss |
|
(985,945 |
) |
|
(638,416 |
) |
| |
|
|
|
|
|
|
| Less: net loss attributable to non-controlling
interest |
|
(50,796 |
) |
|
(29,536 |
) |
| Net loss attributable to the Company |
|
(935,149 |
) |
|
(608,880 |
) |
| |
|
|
|
|
|
|
| Comprehensive loss |
|
|
|
|
|
|
| Net loss |
|
(985,945 |
) |
|
(638,416 |
) |
| Foreign currency translation loss |
|
(341,186 |
) |
|
(228,054 |
) |
| Comprehensive loss |
|
(1,327,131 |
) |
|
(866,470 |
) |
| |
|
|
|
|
|
|
| Less: comprehensive loss attributable to
non-controlling interest |
|
(61,433 |
) |
|
(34,218 |
) |
| Comprehensive loss attributable to the Company |
|
(1,265,698 |
) |
|
(832,252 |
) |
| |
|
|
|
|
|
|
| Loss per share of common stock attributable to the
Company |
|
|
|
|
|
|
| |
-
Basic and diluted |
|
(0.07 |
) |
|
(0.04 |
) |
| |
|
|
|
|
|
|
| Weighted average number of common shares
outstanding |
|
|
|
|
|
|
| |
-
Basic and diluted |
|
13,978,106 |
|
|
13,582,106 |
|
| |
| |
| HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (Stated in US Dollars except Number of Shares) |
| |
| |
|
March 31, |
|
December 31, |
| |
|
2014 |
|
2013 |
| |
|
(Unaudited) |
|
|
| |
|
$ |
|
$ |
| ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash
and cash equivalents |
|
5,137,477 |
|
7,973,459 |
|
|
Restricted cash |
|
21,470,419 |
|
28,586,121 |
|
|
Accounts receivable, net |
|
28,048,843 |
|
33,961,014 |
|
|
Notes
receivable |
|
1,526,360 |
|
1,014,891 |
|
|
Prepayments |
|
5,448,693 |
|
4,969,743 |
|
|
Other
receivables |
|
1,079,497 |
|
1,063,656 |
|
|
Inventories |
|
20,066,716 |
|
19,739,360 |
|
|
|
|
|
|
|
|
|
Total
Current Assets |
|
82,778,005 |
|
97,308,244 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
49,173,769 |
|
48,548,203 |
|
|
Land
use right, net |
|
4,356,203 |
|
4,421,415 |
|
|
Intangible asset, net |
|
637,500 |
|
650,000 |
|
|
Deferred tax assets |
|
1,213,139 |
|
802,225 |
|
|
Foreign currency derivatives assets |
|
- |
|
63,289 |
| |
|
|
|
|
| TOTAL ASSETS |
|
138,158,616 |
|
151,793,376 |
| |
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
| |
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Foreign currency derivatives liabilities |
|
73,980 |
|
- |
|
|
Accounts payable |
|
43,402,418 |
|
40,026,698 |
|
|
Deferred revenue |
|
1,677,967 |
|
675,521 |
|
|
Short-term loan |
|
25,453,672 |
|
36,142,105 |
|
|
Notes
payable |
|
19,113,705 |
|
25,271,256 |
|
|
Other
payables and accrued liabilities |
|
7,502,113 |
|
7,801,431 |
|
|
Income taxes payable |
|
1,587,134 |
|
1,279,658 |
|
|
Current portion of long-term loan |
|
1,951,124 |
|
1,967,536 |
|
|
|
|
|
|
|
|
|
Total
Current Liabilities |
|
100,762,113 |
|
113,164,205 |
|
|
|
|
|
|
|
|
|
Long-term loan |
|
3,414,468 |
|
3,935,071 |
| |
|
|
|
|
| TOTAL LIABILITIES |
|
104,176,581 |
|
117,099,276 |
| |
|
|
|
|
| COMMITMENTS AND CONTINGENCIES |
|
- |
|
- |
| |
| |
| HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS (CONTINUED) |
| (Stated in US Dollars except Number of Shares) |
| |
| |
|
March 31, |
|
December 31, |
| |
|
2014 |
|
2013 |
| |
|
(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, 13,978,106 shares
issued and outstanding at March 31, 2014 and December 31,
2013) |
|
1,398 |
|
1,398 |
|
|
Additional paid-in capital |
|
6,626,371 |
|
6,011,305 |
|
|
Statutory and other reserves |
|
3,142,411 |
|
3,142,411 |
|
|
Retained earnings |
|
17,455,726 |
|
18,390,875 |
|
|
Accumulated other comprehensive income |
|
5,518,310 |
|
5,848,859 |
|
|
|
|
|
|
|
|
|
Total
equity for the Company's stockholders |
|
32,744,216 |
|
33,394,848 |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
1,237,819 |
|
1,299,252 |
| |
|
|
|
|
| TOTAL EQUITY |
|
33,982,035 |
|
34,694,100 |
| |
|
|
|
|
| TOTAL LIABILITIES AND EQUITY |
|
138,158,616 |
|
151,793,376 |
| |
|
| |
|
| HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES |
|
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| (Stated in US Dollars) |
|
| |
|
| |
|
Three months ended March 31, |
|
| |
|
2014 |
|
|
2013 |
|
| |
|
(Unaudited) |
|
|
(Unaudited) |
|
| |
|
$ |
|
|
$ |
|
| Cash flows from operating activities |
|
|
|
|
|
|
| Net loss |
|
(985,945 |
) |
|
(638,416 |
) |
| Adjustments to reconcile net loss to net cash provided
by operating activities |
|
|
|
|
|
|
| |
Depreciation and amortization |
|
1,011,081 |
|
|
568,719 |
|
| |
Allowance for doubtful accounts |
|
- |
|
|
(4,252 |
) |
| |
Loss
on disposal of property, plant and equipment |
|
37,244 |
|
|
36,903 |
|
| |
Loss
on derivative instruments |
|
137,281 |
|
|
129,749 |
|
| |
Deferred income tax |
|
(418,906 |
) |
|
(111,704 |
) |
| |
Share
based payment |
|
400,946 |
|
|
49,039 |
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
| |
Accounts receivable |
|
5,681,371 |
|
|
2,583,851 |
|
| |
Notes
receivable |
|
(521,988 |
) |
|
(244,230 |
) |
| |
Prepayments |
|
(519,476 |
) |
|
(694,174 |
) |
| |
Other
receivable |
|
(24,811 |
) |
|
35,795 |
|
| |
Inventories |
|
(493,677 |
) |
|
505,048 |
|
| |
Accounts payable |
|
3,911,914 |
|
|
1,698,223 |
|
| |
Deferred revenue |
|
1,012,063 |
|
|
- |
|
| |
Other
payables and accrued liabilities |
|
(237,561 |
) |
|
876,198 |
|
| |
Income taxes payable |
|
319,409 |
|
|
(254,421 |
) |
| Net cash flows provided by operating activities |
|
9,309,665 |
|
|
4,536,328 |
|
| |
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
|
|
| |
Acquisition of plant and equipment |
|
(2,403,047 |
) |
|
(3,025,300 |
) |
| Net cash flows used in investing activities |
|
(2,403,047 |
) |
|
(3,025,300 |
) |
| |
|
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
|
|
| |
Proceeds from short-term bank loans |
|
295,426 |
|
|
9,339,810 |
|
| |
Repayment of short-term bank loans |
|
(10,824,720 |
) |
|
(5,786,540 |
) |
| |
Repayment of long-term bank loans |
|
(489,708 |
) |
|
(477,981 |
) |
| |
Proceeds from notes payable |
|
6,192,247 |
|
|
5,474,476 |
|
| |
Repayment of notes payable |
|
(12,159,236 |
) |
|
(13,083,414 |
) |
| |
Increase in restricted cash |
|
6,920,453 |
|
|
945,392 |
|
| Net cash flows used in financing activities |
|
(10,065,538 |
) |
|
(3,588,257 |
) |
| Effect of foreign currency translation on cash and cash
equivalents |
|
322,938 |
|
|
155,681 |
|
| Net decrease in cash and cash equivalents |
|
(2,835,982 |
) |
|
(1,921,548 |
) |
| Cash and cash equivalents - beginning of period |
|
7,973,459 |
|
|
6,627,334 |
|
| Cash and cash equivalents - end of period |
|
5,137,477 |
|
|
4,705,786 |
|
| |
|
|
|
|
|
|
| Supplemental disclosures for cash flow
information: |
|
|
|
|
|
|
| Cash paid for: |
|
|
|
|
|
|
| |
Income taxes |
|
7,346 |
|
|
414,343 |
|
| |
Interest expenses |
|
595,381 |
|
|
336,266 |
|
| Non-cash transactions |
|
|
|
|
|
|
| |
Accounts payable for construction in progress |
|
797,753 |
|
|
2,189,363 |
|
| |
|
|
|
|
|
|
|
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Highpower (NASDAQ:HPJ)
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From Jun 2024 to Jul 2024
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