Fushi Copperweld Announces 2012 Second Quarter Results

BEIJING, Aug. 9, 2012 /PRNewswire-Asia/ -- Fushi Copperweld, Inc. (Nasdaq: FSIN), the leading global manufacturer and innovator of copper-clad bimetallic wire used in a variety of telecommunication, utility, transportation and other electrical applications, today announced financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Results

• Revenues were $77.3 million compared to $79.0 million in the year ago period;
• Gross profit was $19.8 million, or 25.7% of revenues, compared to $21.0 million, or 26.6% of revenues, in the year ago period;
• Income from operations was $11.1 million, or 14.3% of revenues, compared to $15.3 million, or 19.4% of revenues, in the year ago period;
• Net income was $7.4 million, or $0.19 per diluted share, compared to net income of $10.6 million, or $0.28 per diluted share, in the year ago period;
• Cash position of $203.3 million at June 30, 2012.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "Our performance for the 2012 second quarter was in-line with our expectations, as we continued to execute on our strategic objectives. While the telecom markets in China and the U.S. remained challenging, we saw improved sales in our utility and transportation product lines in North America driven by higher domestic and international demand, which drove strong volume and profitability growth at our Fayetteville facility. In Europe, the ramp-up of operations at our new facility in Liege continues, and the benefits of being closer to our customers and decreased delivery times are becoming more tangible, as customer orders for bimetallic wire in Western Europe, the Middle East, Africa and emerging Asian markets accelerate. At the same time, we continue to secure re-certifications for our copper tubing product in major markets across the continent, enhancing our ability to generate sales for this product. We are building on this momentum with the recently announced establishment of our EMEA-focused sales and innovation office in Milan, Italy. In total, we believe the investments we are making across our businesses are gaining traction and will help drive our long-term growth, particularly as the demand environment improves and the market adoption for bimetallics increases."

Revenues in the second quarter of 2012 were $77.3 million, a decrease of 2.2% compared to $79.0 million in the prior year quarter, primarily due to lower sales volumes at the Company's Dalian facility partially offset by higher sales volumes at the company's Fayetteville and Liege facilities.

Gross profit in the second quarter was $19.8 million compared to $21.0 million in the year ago period. Gross margin decreased to 25.7% from 26.6% in the same period last year. Gross margin for the Company's Dalian cladding facility was essentially flat at 32.5%, compared to 32.4% in the prior year period, while gross margin for the Company's Fayetteville, TN facility improved to 16.2% in the second quarter of 2012, compared to 10.2% in the 2011 second quarter.

Operating expenses in the second quarter of 2012 increased to $8.8 million, compared to $5.7 million in the prior year's quarter, primarily as a result of approximately $1.9 million in advisory fees related to the going private offer and definitive merger agreement compared to $0.1 million in the prior year period. As previously announced on June 28, 2012, the Company has entered into an Agreement and Plan of Merger with entities affiliated with its Chairman and Co-Chief Executive Officer, Mr. Li Fu, and Abax Global Capital (Hong Kong) Limited at a price of $9.50 per share in cash. The Company continues to expect the transaction to close in the fourth quarter of 2012.

Operating expenses in the second quarter of 2012 also included the Company's continued investment in its global business development efforts of $0.4 million and incremental costs of approximately $0.4 million related to the start-up of operations at its new facility in Liege, Belgium. As a percentage of revenue, operating expenses increased to 11.3% from 7.2% in the second quarter of 2011.

The Company's effective income tax rate in the second quarter of 2012 was 35.3% compared to 28.4% in the year ago period. The Company continues to expect its effective tax rate for the 2012 full year period to be 31.5%.

Net income in the second quarter was $7.4 million, or $0.19 per diluted share, compared to net income of $10.6 million, or $0.28 per diluted share, for the 2011 second quarter.

Fully diluted shares in the second quarter of 2012 were 38.3 million, even with the year ago period.

As of June 30, 2012, the Company's cash position was $203.3 million, an increase of 1.4% from $200.5 million as of December 31, 2011. Accounts receivable at June 30, 2012 was $73.0 million, compared to $64.0 million at December 31, 2011. Long-term debt totaled $7.9 million as of June 30, 2012, compared to $8.3 million at December 31, 2011.

Outlook

Based on its second quarter performance and current business trends, Fushi Copperweld continues to expect 2012 fully diluted earnings per share between $0.76 and $0.86, based on an estimated weighted average diluted share count of 38.3 million shares and an effective tax rate of 31.5%.

About Fushi Copperweld

Fushi Copperweld Inc., principally through its wholly owned subsidiaries, Fushi International (Dalian) Bimetallic Cable Co. Ltd. and Copperweld Bimetallics LLC, is the leading manufacturer and innovator of copper-clad bimetallic engineered conductor products for electrical, telecommunications, transportation, utilities and industrial applications. With extensive design and production capabilities, and a long-standing dedication to customer service, Fushi Copperweld is the preferred choice for bimetallic products worldwide.

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "will", "believes", "expects" or similar expressions. These forward-looking statements may also include statements about our proposed discussions related to our business or growth strategy, which is subject to change. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

For more information, please contact:

Investors
Jolin Qiao, Investor Relations Officer
Fushi Copperweld Inc.
Phone +1.615.377.4183
E-mail: [email protected]
Web:  www.fushicopperweld.com

SOURCE Fushi Copperweld, Inc.