UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
November 12, 2014 |
HIGHPOWER INTERNATIONAL, INC.
_____________________________________________________
(Exact name of registrant as specified in
its charter)
Delaware |
001-34098 |
20-4062622 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
Building A1, Luoshan Industrial Zone, Shanxia,
Pinghu, Longgang, Shenzhen, Guangdong, 518111, China
(Address,
including zip code, of principal executive offices)
Registrant’s telephone number, including area code |
(86) 755-89686238 |
(Former
name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 12, 2014, Highpower International, Inc. (the “Company”)
issued a press release announcing its financial results for the period ended September 30, 2014.
A copy of the November 12, 2014 press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein by reference.
The attached press release attached hereto and filed as exhibit
99.1 includes non-GAAP financial measures. EBITDA was derived by taking earnings before interest expense (net), taxes, depreciation
and amortization. Adjusted EBITDA and Non-GAAP net income each exclude stock-based compensation expense. Adjusted EBITDA,
as defined above, may not be similar to Adjusted EBITDA measures used by other companies. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The
Company believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's operating
results in the ordinary course of its operations.
These non-GAAP measures are not based on any comprehensive set
of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures
should only be used to evaluate the Company's results of operations in conjunction with, and not in lieu of, the corresponding
GAAP measures. These non-GAAP financial measures are reconciled in the accompanying tables to the most directly comparable measures
as reported in accordance with GAAP.
Management uses these non-GAAP financial measures in evaluating
the overall performance of the Company's business operations. Though management finds these non-GAAP financial measures useful
for evaluating aspects of the Company's business, its reliance on these measures are limited because excluded items often have
a material effect on the Company's net income and net income per common share calculated in accordance with GAAP. Therefore, management
uses the non-GAAP financial measures in conjunction with the comparable GAAP financial measures..
Item 7.01 Regulation FD Disclosure.
On November 12, 2014, the Company issued a press release announcing
its financial results for the period ended September 30, 2014.
A copy of the November 12, 2014 press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein by reference.
The information reported under Items 2.02 and 7.01 in this Current
Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless
of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. |
Description |
99.1 |
Highpower International, Inc. Press Release dated November 12, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Highpower International, Inc. |
|
|
|
|
Dated: November 12, 2014 |
/s/ |
Henry
Sun |
|
|
By: |
Henry Sun |
|
|
Its: |
Chief Financial Officer |
|
|
|
|
EXHIBIT INDEX
Exhibit No. |
Description |
99.1 |
Highpower International, Inc. Press Release dated November 12, 2014. |
Exhibit 99.1
Highpower International Reports Financial
Results
for the Third Quarter and Nine Months
Ended September 30, 2014
Company to Hold
Conference Call on November 12, 2014, at 10:00 AM ET / 7:00 AM PT
SAN FRANCISCO, USA and SHENZHEN, CHINA
– November 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 its financial results for the third quarter and nine months ended September 30, 2014.
2014 Third Quarter Operating and Financial
Highlights (all results are compared to prior year period)
| · | Net sales increased 14.5% to $44.5 million,
driven mainly by the growing lithium battery business |
| · | Lithium battery net sales increased 40.8%
with total lithium battery per ampere hour sold increased by 41.8% |
| · | Gross margin improved to 21.1% from 18.6% |
| · | EBITDA increased 30.4% to $2.9 million
from $2.2 million, adjusted EBITDA increased 89.8% to $4.3 million from $2.3 million |
| · | Net income attributable to the Company
increased 17.8% to $0.9 million, or $0.06 per share, from $0.7 million, or $0.05 per share |
| · | Non-GAAP net income attributable to the
Company increased 186.2% to $2.3 million, or $0.15 per share, from $0.8 million, or $0.06 per share |
Management Commentary
Mr. George Pan,
Chairman and CEO of the Company, commented, "We are pleased to report strong operating results during the third quarter, which
was mainly driven by the result of increased sales in our lithium battery business. We continue to see growing global demand for
lithium batteries from the mobile, portable products, electrical vehicles and energy storage sectors. Our new Huizhou facility
is on the right track to ramp up production in this quarter over the first half of the year. We believe that we will continue to
attract global customers with this state-of-the-art facility. In the meantime, we are committed to working with globally recognized
brands and companies, and investing in research and development to advance our product offerings to meet our customers continuously
evolving needs.”
2014 Third Quarter and Nine Month Financial
Review
Net Sales
Net sales for the third quarter ended September
30, 2014 increased 14.5% to $44.5 million compared with $38.9 million for the same period in 2013. The increase in net sales was
mainly due to a $6.1 million increase in net sales of lithium batteries, and a $0.3 million increase from new material business,
which was partly offset by a $0.8 million decrease in net sales of Ni-MH batteries.
For the nine months ended September 30,
2014, the Company’s net sales increased 18.4% to $111.8 million compared with $94.4 million in the first nine months of 2013.
The increase was due to a $15.4 million increase in net sales of lithium batteries, and a $0.9 million increase in net sales of
Ni-MH batteries, and a $1.0 million increase from new material business.
2/11
Gross Profit
Gross profit for the third quarter ended
September 30, 2014 increased to $9.4 million, as compared with $7.2 million for the same period in 2013. Gross profit for the nine
months ended September 30, 2014 increased to $23.1 million, as compared with $17.7 million for the same period in 2013. The increase
for both periods was due to decrease of unit cost of Ni-MH batteries and lithium batteries.
Gross Margin
Gross margin was 21.1% for the third quarter
ended September 30, 2014, as compared with 18.6% for the same period in 2013. For the nine months ended September 30, 2014, gross
margin was 20.6%, as compared with 18.8% for the same period in 2013. The increase for both periods was due to decrease of unit
cost of Ni-MH batteries and lithium batteries.
Net sales, cost of sales, and gross profit
by segments is set out as follows:
| |
Three months ended | | |
| | |
Nine months ended | | |
| |
| |
September 30, | | |
| | |
September 30, | | |
| |
| |
2014 | | |
2013 | | |
Change in % | | |
2014 | | |
2013 | | |
Change in % | |
| |
(Unaudited) | | |
(Unaudited) | | |
| | |
(Unaudited) | | |
(Unaudited) | | |
| |
| |
$ | | |
$ | | |
| | |
$ | | |
$ | | |
| |
Net sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ni-MH Batteries | |
| 22,468,264 | | |
| 23,278,902 | | |
| -3.48 | % | |
| 57,109,202 | | |
| 56,195,672 | | |
| 1.63 | % |
Lithium Batteries | |
| 21,069,435 | | |
| 14,960,966 | | |
| 40.83 | % | |
| 51,971,642 | | |
| 36,541,465 | | |
| 42.23 | % |
New Materials | |
| 936,861 | | |
| 613,110 | | |
| 52.80 | % | |
| 2,688,666 | | |
| 1,692,829 | | |
| 58.83 | % |
Total | |
| 44,474,560 | | |
| 38,852,978 | | |
| 14.47 | % | |
| 111,769,510 | | |
| 94,429,966 | | |
| 18.36 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of Sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ni-MH Batteries | |
| 17,843,761 | | |
| 19,220,485 | | |
| -7.16 | % | |
| 45,357,950 | | |
| 45,491,987 | | |
| -0.29 | % |
Lithium Batteries | |
| 16,355,265 | | |
| 11,859,111 | | |
| 37.91 | % | |
| 40,935,690 | | |
| 29,664,911 | | |
| 37.99 | % |
New Materials | |
| 870,414 | | |
| 530,395 | | |
| 64.11 | % | |
| 2,410,314 | | |
| 1,532,442 | | |
| 57.29 | % |
Total | |
| 35,069,440 | | |
| 31,609,991 | | |
| 10.94 | % | |
| 88,703,954 | | |
| 76,689,340 | | |
| 15.67 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross Profit | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ni-MH Batteries | |
| 4,624,503 | | |
| 4,058,417 | | |
| 13.95 | % | |
| 11,751,252 | | |
| 10,703,685 | | |
| 9.79 | % |
Lithium Batteries | |
| 4,714,170 | | |
| 3,101,855 | | |
| 51.98 | % | |
| 11,035,952 | | |
| 6,876,554 | | |
| 60.49 | % |
New Materials | |
| 66,447 | | |
| 82,715 | | |
| -19.67 | % | |
| 278,352 | | |
| 160,387 | | |
| 73.55 | % |
Total | |
| 9,405,120 | | |
| 7,242,987 | | |
| 29.85 | % | |
| 23,065,556 | | |
| 17,740,626 | | |
| 30.02 | % |
3/11
Research and Development (R&D)
R&D spending
was $2.1 million, or 4.6% of total revenue, for the third quarter ended September 30, 2014, compared to $1.5 million, or 3.9% of
total revenue, for the same period in 2013. R&D spending was $5.8 million for the nine months ended September 30, 2014, compared
to $4.0 million for the same period in 2013. The increase for both periods was primarily a result of the expansion of Highpower’s
workforce to expand R&D in lithium batteries, particularly in the area of new product development for the electrical vehicles
and energy storage sectors.
Selling & Distribution
Selling and distribution
expenses were $1.7 million, or 3.8 % of total revenue, for the third quarter ended September 30, 2014, as compared with $1.6 million,
or 4.1% of total revenue, for the same period in 2013. Selling and distribution expenses were $4.8 million for the nine months
ended September 30, 2014, as compared with $4.4 million for the same period in 2013. The increase for both periods was due to the
expansion of Highpower’s sales force and increased marketing activities.
General & Administrative
General and administrative
expenses were $3.3 million, or 7.4 % of total revenue, for the third quarter ended September 30, 2014, as compared with $3.0 million,
or 7.6% of total revenue, for the third quarter of 2013. The increase was due to the expansion of workforce at the Company’s
Huizhou facility. Included in this amount was non-cash share-based compensation expense of $148,725, up from $64,642 in the third
quarter of 2013.
General and administrative
expenses were $10.2 million for the nine months ended September 30, 2014, as compared with $8.4 million for the same period in
2013. The primary reason for 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 $1.1 million, up from $159,352 in the first nine months of 2013.
Net Income
Net income attributable
to the Company for the third quarter ended September 30, 2014 was $874,167, or $0.06 per diluted share based on 15.6 million weighted
average diluted shares outstanding, compared to net income of $742,228, or $0.05 per diluted share based on 13.7 million weighted
average diluted shares outstanding.
Net income attributable
to the Company for the nine months ended September 30, 2014 was $751,516, or $0.05 per diluted share based on 15.0 million weighted
average diluted shares outstanding, compared to net income of $242,637, or $0.02 per share based on 13.6 million, both basic and
diluted, in the same period of 2013.
EBITDA
EBITDA for the
third quarter ended September 30, 2014 increased 30.4% to $2.9 million from $2.2 million in the prior year period.
For the nine month
period, EBITDA increased 59.7% to $6.1 million from $3.8 million in the first nine months of 2013.
A table reconciling
EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with
the Company’s financial information below.
4/11
Balance
Sheet Highlights
($ in millions, except per share data) | |
9/30/2014 (Unaudited) | | |
12/31/2013 (Audited) | |
Cash and Cash Equivalents | |
$ | 11.8 | | |
$ | 8.0 | |
Total Current Assets | |
$ | 93.6 | | |
$ | 97.3 | |
Total Assets | |
$ | 149.5 | | |
$ | 151.8 | |
Total Current Liabilities | |
$ | 105.3 | | |
$ | 113.2 | |
Total Liabilities | |
$ | 110.2 | | |
$ | 117.1 | |
Shareholders’ Equity | |
$ | 39.3 | | |
$ | 34.7 | |
Total Liabilities and Shareholders’ Equity | |
$ | 149.5 | | |
$ | 151.8 | |
Book Value Per Share | |
$ | 2.45 | | |
$ | 2.55 | |
Outlook for
2014
Based on current
expectations for global demand in the rechargeable battery market in 2014 and the continued shift toward mobile power sources,
higher-value energy storage systems and transportation products, the Company reiterates the 2014 guidance of revenues of between
$150 million to $170 million, and non-GAAP net income of between $2.5 million and $4.0 million, and net income of between $1.5
million and $3.0 million.
Conference Call Details
The Company announced that it will
discuss financial results in a conference call on November 12, 2014 at 10:00 a.m. Eastern time / 7:00 a.m. Pacific time to discuss
these results.
The dial-in numbers are: | |
|
Live Participant
Dial In (Toll Free): | |
877-407-3108 |
Live Participant Dial
In (International): | |
201-493-6797 |
To listen to the live webcast, please
go to at www.highpowertech.com and click on the conference call link, or go to: http://highpowertech.equisolvewebcast.com/q3-2014.
This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.
The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference
call.
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.
5/11
Use of Non-GAAP Measures
The Company has supplemented its reported
GAAP (generally accepted accounting principles) financial information with non-GAAP measures. EBITDA was derived by taking earnings
before interest expense (net), taxes, depreciation and amortization. Adjusted EBITDA and Non-GAAP net income exclude stock-based
compensation expense. Adjusted EBITDA, as defined above, may not be similar to Adjusted EBITDA measures used by other companies.
The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared
in accordance with U.S. GAAP. The Company believes these non-GAAP measures are useful to investors as they provide
a basis for evaluating the Company's operating results in the ordinary course of its operations.
These non-GAAP measures are not based on
any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP
and that these measures should only be used to evaluate the Company's results of operations in conjunction with, and not in lieu
of, the corresponding GAAP measures. These non-GAAP financial measures are reconciled in the accompanying tables to the most directly
comparable measures as reported in accordance with GAAP.
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, including, without limitation, 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; our dependence on the growth in demand for portable electronic devices and energy storage systems and transportation
products 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. 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.
CONTACT:
Highpower International, Inc.
Henry Sun
CFO
+86-755-8968-6521
ir@highpowertech.com
INVESTOR RELATIONS:
The Equity Group Inc.
In China
Katherine Yao, Associate
86 10 6587 6435
kyao@equityny.com
In U.S.
Adam Prior, Senior Vice President
(212) 836-9606
aprior@equityny.com
6/11
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Stated in US Dollars except Number of Shares)
| |
Three months ended September 30, | | |
Nine months ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | |
| | |
| | |
| |
Net sales | |
| 44,474,560 | | |
| 38,852,978 | | |
| 111,769,510 | | |
| 94,429,966 | |
Cost of sales | |
| (35,069,440 | ) | |
| (31,609,991 | ) | |
| (88,703,954 | ) | |
| (76,689,340 | ) |
Gross profit | |
| 9,405,120 | | |
| 7,242,987 | | |
| 23,065,556 | | |
| 17,740,626 | |
| |
| | | |
| | | |
| | | |
| | |
Research and development expenses | |
| (2,056,045 | ) | |
| (1,531,477 | ) | |
| (5,844,962 | ) | |
| (3,984,942 | ) |
Selling and distribution expenses | |
| (1,697,674 | ) | |
| (1,598,397 | ) | |
| (4,822,560 | ) | |
| (4,386,375 | ) |
General and administrative expenses, including stock-based compensation | |
| (3,295,262 | ) | |
| (2,957,467 | ) | |
| (10,178,838 | ) | |
| (8,375,713 | ) |
Foreign currency transaction gain (loss) | |
| (15,369 | ) | |
| (154,453 | ) | |
| 334,326 | | |
| (374,410 | ) |
Gain (loss) on derivative instruments | |
| 59,785 | | |
| 45,033 | | |
| (56,349 | ) | |
| 267,316 | |
Total operating expenses | |
| (7,004,565 | ) | |
| (6,196,761 | ) | |
| (20,568,383 | ) | |
| (16,854,124 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 2,400,555 | | |
| 1,046,226 | | |
| 2,497,173 | | |
| 886,502 | |
| |
| | | |
| | | |
| | | |
| | |
Loss on change of fair value of warrant liability | |
| (1,286,335 | ) | |
| - | | |
| (1,211,787 | ) | |
| - | |
Other income | |
| 590,117 | | |
| 479,288 | | |
| 1,493,491 | | |
| 976,673 | |
Interest expenses | |
| (458,534 | ) | |
| (444,706 | ) | |
| (1,528,077 | ) | |
| (1,146,118 | ) |
Income before taxes | |
| 1,245,803 | | |
| 1,080,808 | | |
| 1,250,800 | | |
| 717,057 | |
| |
| | | |
| | | |
| | | |
| | |
Income taxes expenses | |
| (439,659 | ) | |
| (372,023 | ) | |
| (628,872 | ) | |
| (579,352 | ) |
Net income | |
| 806,144 | | |
| 708,785 | | |
| 621,928 | | |
| 137,705 | |
| |
| | | |
| | | |
| | | |
| | |
Less: net loss attributable to non-controlling interest | |
| (68,023 | ) | |
| (33,443 | ) | |
| (129,588 | ) | |
| (104,932 | ) |
Net income attributable to the Company | |
| 874,167 | | |
| 742,228 | | |
| 751,516 | | |
| 242,637 | |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive income | |
| | | |
| | | |
| | | |
| | |
Net income | |
| 806,144 | | |
| 708,785 | | |
| 621,928 | | |
| 137,705 | |
Foreign currency translation gain (loss) | |
| 19,368 | | |
| 232,201 | | |
| (341,754 | ) | |
| 531,143 | |
Comprehensive income | |
| 825,512 | | |
| 940,986 | | |
| 280,174 | | |
| 668,848 | |
| |
| | | |
| | | |
| | | |
| | |
Less: comprehensive loss attributable to non-controlling interest | |
| (67,486 | ) | |
| (25,145 | ) | |
| (140,213 | ) | |
| (90,620 | ) |
Comprehensive income attributable to the Company | |
| 892,998 | | |
| 966,131 | | |
| 420,387 | | |
| 759,468 | |
| |
| | | |
| | | |
| | | |
| | |
Earnings per share of common stock attributable to the Company | |
| | | |
| | | |
| | | |
| | |
-Basic | |
| 0.06 | | |
| 0.05 | | |
| 0.05 | | |
| 0.02 | |
-Diluted | |
| 0.06 | | |
| 0.05 | | |
| 0.05 | | |
| 0.02 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common stock outstanding | |
| | | |
| | | |
| | | |
| | |
-Basic | |
| 15,052,158 | | |
| 13,657,930 | | |
| 14,632,491 | | |
| 13,607,474 | |
-Diluted | |
| 15,590,142 | | |
| 13,657,930 | | |
| 15,045,776 | | |
| 13,607,474 | |
7/11
HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
| |
September 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
| |
| |
$ | | |
$ | |
ASSETS | |
| | | |
| | |
Current Assets: | |
| | | |
| | |
Cash and cash equivalents | |
| 11,802,804 | | |
| 7,973,459 | |
Restricted cash | |
| 15,467,638 | | |
| 28,586,121 | |
Accounts receivable, net | |
| 38,107,418 | | |
| 33,961,014 | |
Notes receivable | |
| 2,460,187 | | |
| 1,014,891 | |
Prepayments | |
| 4,482,975 | | |
| 4,969,743 | |
Other receivables | |
| 715,550 | | |
| 1,063,656 | |
Inventories | |
| 20,567,199 | | |
| 19,739,360 | |
| |
| | | |
| | |
Total Current Assets | |
| 93,603,771 | | |
| 97,308,244 | |
| |
| | | |
| | |
Property, plant and equipment, net | |
| 49,383,533 | | |
| 48,548,203 | |
Land use right, net | |
| 4,312,435 | | |
| 4,421,415 | |
Intangible asset, net | |
| 612,500 | | |
| 650,000 | |
Deferred tax assets | |
| 1,626,446 | | |
| 802,225 | |
Foreign currency derivatives assets | |
| - | | |
| 63,289 | |
| |
| | | |
| | |
TOTAL ASSETS | |
| 149,538,685 | | |
| 151,793,376 | |
| |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Foreign currency derivatives liabilities | |
| 4,976 | | |
| - | |
Accounts payable | |
| 50,067,002 | | |
| 40,026,698 | |
Deferred income | |
| 1,635,959 | | |
| 675,521 | |
Short-term loan | |
| 15,817,971 | | |
| 36,142,105 | |
Notes payable | |
| 27,002,824 | | |
| 25,271,256 | |
Other payables and accrued liabilities | |
| 6,819,899 | | |
| 7,801,431 | |
Income taxes payable | |
| 2,046,929 | | |
| 1,279,658 | |
Current portion of long-term loan | |
| 1,951,442 | | |
| 1,967,536 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 105,347,002 | | |
| 113,164,205 | |
| |
| | | |
| | |
Warrant Liability | |
| 2,385,739 | | |
| - | |
Long-term loan | |
| 2,439,302 | | |
| 3,935,071 | |
| |
| | | |
| | |
TOTAL LIABILITIES | |
| 110,172,043 | | |
| 117,099,276 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| - | | |
| - | |
8/11
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Stated in US Dollars except Number of Shares)
| |
September 30, | | |
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, 15,052,158 shares
issued and outstanding at September 30, 2014 and 13,978,106 shares
issued and outstanding at December 31, 2013) | |
| 1,505 | | |
| 1,398 | |
Additional paid-in capital | |
| 10,403,566 | | |
| 6,011,305 | |
Statutory and other reserves | |
| 3,142,411 | | |
| 3,142,411 | |
Retained earnings | |
| 19,142,391 | | |
| 18,390,875 | |
Accumulated other comprehensive income | |
| 5,517,730 | | |
| 5,848,859 | |
| |
| | | |
| | |
Total equity for the Company’s stockholders | |
| 38,207,603 | | |
| 33,394,848 | |
| |
| | | |
| | |
Non-controlling interest | |
| 1,159,039 | | |
| 1,299,252 | |
| |
| | | |
| | |
TOTAL EQUITY | |
| 39,366,642 | | |
| 34,694,100 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND EQUITY | |
| 149,538,685 | | |
| 151,793,376 | |
9/11
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
| |
Nine months ended September 30, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
$ | | |
$ | |
Cash flows from operating activities | |
| | | |
| | |
Net income | |
| 621,928 | | |
| 137,705 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 3,161,384 | | |
| 1,832,596 | |
Allowance for doubtful accounts | |
| 103 | | |
| (3,643 | ) |
Loss on disposal of property, plant and equipment | |
| 346,866 | | |
| 108,652 | |
Loss on derivative instruments | |
| 67,748 | | |
| 117,966 | |
Deferred income tax | |
| (830,413 | ) | |
| (76,813 | ) |
Share based payment | |
| 1,064,969 | | |
| 159,352 | |
Loss on change of fair value of warrant liability | |
| 1,211,787 | | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (4,404,612 | ) | |
| (7,918,758 | ) |
Notes receivable | |
| (1,453,621 | ) | |
| (1,048,133 | ) |
Prepayments | |
| 448,249 | | |
| (2,191,905 | ) |
Other receivable | |
| 339,411 | | |
| (9,515 | ) |
Inventories | |
| (989,237 | ) | |
| (188,974 | ) |
Accounts payable | |
| 10,701,057 | | |
| 7,255,970 | |
Deferred income | |
| 1,635,985 | | |
| - | |
Other payables and accrued liabilities | |
| (920,591 | ) | |
| 2,251,556 | |
Income taxes payable | |
| 777,753 | | |
| 37,821 | |
Net cash flows provided by operating activities | |
| 11,778,766 | | |
| 463,877 | |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Acquisition of plant and equipment | |
| (5,864,112 | ) | |
| (11,905,424 | ) |
Net cash flows used in investing activities | |
| (5,864,112 | ) | |
| (11,905,424 | ) |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from short-term bank loans | |
| 15,821,648 | | |
| 30,408,328 | |
Repayment of short-term bank loans | |
| (35,934,559 | ) | |
| (15,748,524 | ) |
Repayment of long-term bank loans | |
| (1,463,605 | ) | |
| (1,449,322 | ) |
Proceeds from notes payable | |
| 34,246,949 | | |
| 32,308,322 | |
Repayment of notes payable | |
| (32,308,636 | ) | |
| (32,097,470 | ) |
Proceeds from issuance of capital stock, net | |
| 4,633,164 | | |
| - | |
Change in restricted cash | |
| 12,900,973 | | |
| (2,540,084 | ) |
Net cash flows provided by (used in) financing activities | |
| (2,104,066 | ) | |
| 10,881,250 | |
Effect of foreign currency translation on cash and cash equivalents | |
| 18,757 | | |
| 367,544 | |
Net increase (decrease) in cash and cash equivalents | |
| 3,829,345 | | |
| (192,753 | ) |
Cash and cash equivalents - beginning of period | |
| 7,973,459 | | |
| 6,627,334 | |
Cash and cash equivalents - end of period | |
| 11,802,804 | | |
| 6,434,581 | |
| |
| | | |
| | |
Supplemental disclosures for cash flow information: | |
| | | |
| | |
Cash paid for: | |
| | | |
| | |
Income taxes | |
| 681,533 | | |
| 618,344 | |
Interest expenses | |
| 1,489,796 | | |
| 1,146,118 | |
Non-cash transactions | |
| | | |
| | |
Accounts payable for construction in progress | |
| 648,385 | | |
| 1,408,336 | |
Offset of deferred income and property, plant and equipment | |
| 669,995 | | |
| - | |
10/11
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Stated in US Dollars)
Reconciliation of Net Income to EBITDA
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Net Income attributable to the Company | |
| 874,167 | | |
| 742,228 | | |
| 751,516 | | |
| 242,637 | |
Non-GAAP Net Income (1) | |
| 2,309,227 | | |
| 806,870 | | |
| 3,028,272 | | |
| 401,989 | |
| |
| | | |
| | | |
| | | |
| | |
Interest expenses, net | |
| 458,534 | | |
| 444,706 | | |
| 1,528,077 | | |
| 1,146,118 | |
Income tax expenses | |
| 439,659 | | |
| 372,023 | | |
| 628,872 | | |
| 579,352 | |
Depreciation and Amortization | |
| 1,107,898 | | |
| 650,282 | | |
| 3,161,384 | | |
| 1,832,596 | |
| |
| | | |
| | | |
| | | |
| | |
EBITDA | |
| 2,880,258 | | |
| 2,209,239 | | |
| 6,069,849 | | |
| 3,800,703 | |
Non-GAAP EBITDA(2) | |
| 4,315,318 | | |
| 2,273,881 | | |
| 8,346,605 | | |
| 3,960,055 | |
(1) See table below for reconciliation of
net income attributable to the Company to Non-GAAP net income attributable to the Company.
(2) Excludes share-based compensation expense
as set forth in the following table.
11/11
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Stated in US Dollars)
Reconciliation of Net Income Attributable
to the Company to Non-GAAP Net Income Attributable to the Company
| |
Three months ended September 30, | | |
Nine months ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | |
| | |
| | |
| |
Net income attributable to the Company | |
| 874,167 | | |
| 742,228 | | |
| 751,516 | | |
| 242,637 | |
Stock-based compensation expense | |
| 148,725 | | |
| 64,642 | | |
| 1,064,969 | | |
| 159,352 | |
Loss on change of fair value of warrant liability | |
| 1,286,335 | | |
| - | | |
| 1,211,787 | | |
| - | |
Non-GAAP net income attributable to the Company | |
| 2,309,227 | | |
| 806,870 | | |
| 3,028,272 | | |
| 401,989 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income per share of common stock
attributable to the Company | |
| 0.06 | | |
| 0.05 | | |
| 0.05 | | |
| 0.02 | |
Stock-based compensation expense | |
| 0.01 | | |
| 0.01 | | |
| 0.07 | | |
| 0.01 | |
Loss on change of fair value of warrant liability | |
| 0.08 | | |
| - | | |
| 0.09 | | |
| - | |
Non-GAAP income per share of common stock
attributable to the Company | |
| 0.15 | | |
| 0.06 | | |
| 0.21 | | |
| 0.03 | |
| |
| | | |
| | | |
| | | |
| | |
Diluted net income per share of common stock
attributable to the Company | |
| 0.06 | | |
| 0.05 | | |
| 0.05 | | |
| 0.02 | |
Stock-based compensation expense | |
| 0.01 | | |
| 0.01 | | |
| 0.07 | | |
| 0.01 | |
Loss on change of fair value of warrant liability | |
| 0.08 | | |
| - | | |
| 0.08 | | |
| - | |
Non-GAAP income per share of common stock
attributable to the Company | |
| 0.15 | | |
| 0.06 | | |
| 0.20 | | |
| 0.03 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares
outstanding | |
| | | |
| | | |
| | | |
| | |
-Basic | |
| 15,052,158 | | |
| 13,657,930 | | |
| 14,632,491 | | |
| 13,607,474 | |
-Diluted | |
| 15,590,142 | | |
| 13,657,930 | | |
| 15,045,776 | | |
| 13,607,474 | |
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