Highpower International Reports Unaudited First Quarter 2019 Financial Results
SAN DIEGO and SHENZHEN, China, May 13, 2019 /PRNewswire/ -- Highpower International, Inc. (NASDAQ: HPJ) ("Highpower" or the "Company"), a developer, manufacturer, and marketer of lithium ion and nickel-metal hydride (Ni-MH) rechargeable batteries, battery management systems, and a provider of battery recycling, today announced its financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights (all results compared to prior year period)
- Net sales for the first quarter of 2019 increased 16.7% to $58.1 million from $49.8 million.
- Lithium business net sales increased 16.8% to $42.7 million from $36.6 million.
- Gross margin increased to 21.8% of net sales compared to 15.2%.
- Net income attributable to the Company was $0.3 million, or earnings of $0.02 per diluted share, compared to net loss attributable to the Company of $1.1 million, or loss of $0.07 per diluted share.
Mr. George Pan, Chairman and CEO of Highpower International, commented, "Our first quarter results show a good start to 2019. Top line performance beat our guidance in RMB terms, driven by continued growth in our battery solutions businesses. We also continued to optimize our product mix and improve labor efficiency, which successfully increased our margins, which also exceeded our expectations."
"We believe that raw material prices will stabilize in 2019. However, potential trade conflicts may place downward pressure on the broader global economic environment, creating uncertainties to our business. To offset these effects, we intend to adapt to market forces and remain focused on executing our strategy while ensuring that we have the talent, technology, and capacity necessary to continue our growth. We remain dedicated to sustainable long-term growth and to providing clean, safe, and efficient power solutions to meet society's needs," Mr. Pan concluded.
First Quarter 2019 Financial Results
Net Sales
Net sales for the first quarter of 2019 increased 16.7% to $58.1 million from $49.8 million in the prior year period. The Company's lithium segment grew 16.8% year over year, and the NiMH batteries and accessories segment grew 16.7% year over year.
Gross Profit
Gross profit for the first quarter of 2019 increased 67.3% to $12.7 million from $7.6 million in the prior year period. Gross margin was 21.8% compared to 15.2% in the prior year period.
Operating Expenses
- Research and development (R&D) expenses were $3.0 million compared to $2.6 million in the prior year period. As a percentage of net sales, R&D expenses remained steady at 5.1% from the prior year period.
- Selling and distribution expenses were $2.8 million compared to $2.0 million in the prior year period. As a percentage of net sales, selling and distribution expenses increased to 4.8% from 4.0% in the prior year period. The increase was mainly driven by expanded business scale, including marketing expenses for more brand customers.
- General and administrative expenses were $4.8 million compared to $4.1 million in the prior year period. As a percentage of net sales, general and administrative expenses remained at 8.3% from the prior year period.
Net Income
Net income attributable to the Company for the first quarter of 2019 was $0.3 million compared to a net loss of $1.1 million in the prior year period. Net income attributable to the Company per diluted share for the first quarter of 2019 was $0.02 compared to a net loss attributable to the Company per diluted share of $0.07 in the prior year period.
For the quarter ended March 31, 2019, the Company's weighted average diluted shares outstanding used in computing diluted share was 15,604,907.
EBITDA
EBITDA for the first quarter of 2019 increased 374.6% to $2.8 million from $0.6 million in the prior year period.
A table reconciling EBITDA, a non-GAAP financial measure, to the appropriate GAAP measure is included with the Company's financial information below.
Balance Sheet Highlights |
||||
($ in millions, except per share data) |
March 31, |
December 31, |
||
2019 |
2018 |
|||
(Unaudited) |
||||
$ |
$ |
|||
Cash |
24.2 |
24.9 |
||
Total Current Assets |
194.9 |
215.0 |
||
Total Assets |
284.1 |
288.1 |
||
Total Current Liabilities |
201.1 |
210.8 |
||
Total Liabilities |
204.6 |
210.8 |
||
Total Equity |
79.5 |
77.3 |
||
Total Liabilities and Equity |
284.1 |
288.1 |
||
Book Value Per Share |
5.10 |
4.97 |
Financial Outlook
For the second quarter of 2019, the Company expects net revenues to grow over 20% year over year. Gross margin is expected to be similar or slightly lower than that of the first quarter of 2019.
Conference Call Details
The Company will hold a conference call on Monday, May 13, 2019, at 10:00 am Eastern Time, or 10:00 pm Beijing Time, to discuss the financial results. Participants may access the call by dialing the following numbers:
United States: |
877-407-3108 |
International: |
201-493-6797 |
To listen to the live webcast, please go to www.highpowertech.com and click on the conference call link, or go to https://78449.themediaframe.com/dataconf/productusers/hpj/mediaframe/30366/indexl.html. This webcast will be archived and accessible through the Company's website for approximately 30 days following the 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 20 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.
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. 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 this non-GAAP measure is useful to investors as it provides a basis for evaluating the Company's operating results in the ordinary course of its operations. This non-GAAP measure is 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. EBITDA are reconciled in the tables below to the most directly comparable measure 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. Such forward-looking statements include outlook on net revenues and gross margins, business and financial expectations and anticipated growth during 2019. 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. 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; inability to successfully expand our production capacity and improve production efficiency; 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 smart wearable devices and energy storage systems, and other digital 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 solutions, including our lithium ion batteries; impact of trade relations between China and the U.S. and other countries where we sell our products; unexpected fluctuations in exchange rates and our ability to successfully manage hedging; our ability to continue R&D development to keep up with technological changes, and adverse changes in legal, regulatory and economic factors generally. 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 Annual Report for the year ended December 31, 2018 on Form 10-K and other 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.
Sunny Pan
Chief Financial Officer
Tel: +86-755-8968-6521
Email: [email protected]
Yuanmei Ma
Investor Relations Manager
Tel: +1-909-214-2482
Email: [email protected]
ICR, Inc.
Rose Zu
Tel: +1-646-931-0303
Email: [email protected]
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(Stated in US Dollars) |
||||||
March 31, |
December 31, |
|||||
2019 |
2018 |
|||||
(Unaudited) |
||||||
$ |
$ |
|||||
ASSETS |
||||||
Current Assets: |
||||||
Cash |
24,167,300 |
24,916,484 |
||||
Restricted cash |
39,562,823 |
44,495,633 |
||||
Accounts receivable, net |
59,037,769 |
77,279,817 |
||||
Amount due from a related party |
61,131 |
477,663 |
||||
Notes receivable |
4,375,399 |
256,712 |
||||
Advances to suppliers |
926,624 |
2,292,843 |
||||
Prepayments and other receivables |
8,282,896 |
10,457,789 |
||||
Inventories |
58,456,282 |
54,790,461 |
||||
Total Current Assets |
194,870,224 |
214,967,402 |
||||
Property, plant and equipment, net |
68,148,472 |
56,523,177 |
||||
Long-term prepayments |
1,949,214 |
2,617,419 |
||||
Land use right, net |
2,476,691 |
2,445,751 |
||||
Other assets |
635,015 |
643,128 |
||||
Deferred tax assets, net |
983,879 |
865,370 |
||||
Long-term investments |
9,768,087 |
9,993,852 |
||||
Right-of-use assets |
5,272,558 |
- |
||||
TOTAL ASSETS |
284,104,140 |
288,056,099 |
||||
LIABILITIES AND EQUITY |
||||||
LIABILITIES |
||||||
Current Liabilities: |
||||||
Accounts payable |
68,943,619 |
66,486,690 |
||||
Deferred government grants |
473,111 |
464,206 |
||||
Short-term loans |
17,749,981 |
24,856,744 |
||||
Non-financial institution borrowing |
- |
8,761,426 |
||||
Notes payable |
75,053,041 |
73,607,284 |
||||
Foreign exchange derivative liabilities |
2,240 |
521,509 |
||||
Amount due to related parties |
9,011,760 |
6,116,851 |
||||
Other payables and accrued liabilities |
23,733,687 |
25,860,703 |
||||
Income taxes payable |
4,246,421 |
4,124,719 |
||||
Lease liabilities, current |
1,866,177 |
- |
||||
Total Current Liabilities |
201,080,037 |
210,800,132 |
||||
Lease liabilities, non current |
3,550,051 |
- |
||||
TOTAL LIABILITIES |
204,630,088 |
210,800,132 |
||||
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Stated in US Dollars) |
|||||||
March 31, |
December 31, |
||||||
2019 |
2018 |
||||||
(Unaudited) |
|||||||
$ |
$ |
||||||
EQUITY |
|||||||
Stockholders' equity |
|||||||
Preferred stock |
|||||||
(Par value: $0.0001, Authorized: 10,000,000 shares, Issued and outstanding: |
- |
- |
|||||
Common stock |
|||||||
(Par value: $0.0001, Authorized: 100,000,000 shares, 15,567,953 shares issued |
1,557 |
1,556 |
|||||
Additional paid-in capital |
14,067,883 |
13,863,282 |
|||||
Statutory and other reserves |
8,012,052 |
8,012,052 |
|||||
Retained earnings |
56,481,633 |
56,173,912 |
|||||
Accumulated other comprehensive income (loss) |
910,927 |
(794,835) |
|||||
TOTAL EQUITY |
79,474,052 |
77,255,967 |
|||||
TOTAL LIABILITIES AND EQUITY |
284,104,140 |
288,056,099 |
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
||||
(Stated in US Dollars) |
||||
Three months ended March 31, |
||||
2019 |
2018 |
|||
(Unaudited) |
(Unaudited) |
|||
$ |
$ |
|||
Net sales |
58,113,480 |
49,783,453 |
||
Cost of sales |
(45,452,951) |
(42,217,126) |
||
Gross profit |
12,660,529 |
7,566,327 |
||
Research and development expenses |
(2,986,709) |
(2,561,837) |
||
Selling and distribution expenses |
(2,792,862) |
(1,975,096) |
||
General and administrative expenses |
(4,823,489) |
(4,114,810) |
||
Foreign currency transaction loss |
(1,250,895) |
(1,014,693) |
||
Total operating expenses |
(11,853,955) |
(9,666,436) |
||
Income (loss) from operations |
806,574 |
(2,100,109) |
||
Changes in fair value of foreign exchange derivatives |
387,100 |
703,715 |
||
Government grants |
221,435 |
329,820 |
||
Other income |
66,698 |
23,561 |
||
Equity in (loss) earnings of investee |
(418,204) |
156,250 |
||
Interest expenses |
(470,423) |
(241,852) |
||
Income (loss) before income taxes |
593,180 |
(1,128,615) |
||
Income taxes (expense) benefit |
(285,459) |
9,679 |
||
Net income (loss) |
307,721 |
(1,118,936) |
||
Comprehensive income |
||||
Net income (loss) |
307,721 |
(1,118,936) |
||
Foreign currency translation gain |
1,705,762 |
2,836,556 |
||
Comprehensive income |
2,013,483 |
1,717,620 |
||
Earnings (loss) per share of common stock attributable to the |
||||
- Basic |
0.02 |
(0.07) |
||
- Diluted |
0.02 |
(0.07) |
||
Weighted average number of common stock outstanding |
||||
- Basic |
15,566,478 |
15,509,658 |
||
- Diluted |
15,604,907 |
15,509,658 |
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
|||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
(Stated in US Dollars) |
|||
Three Months Ended March 31, |
|||
2019 |
2018 |
||
(Unaudited) |
(Unaudited) |
||
$ |
$ |
||
Cash flows from operating activities |
|||
Net income (loss) |
307,721 |
(1,118,936) |
|
Adjustments to reconcile net income to net cash provided by (used in) operating |
|||
Depreciation and amortization |
1,729,440 |
1,475,228 |
|
Bad debt expense |
89,427 |
18,524 |
|
Loss on disposal of property, plant and equipment |
- |
21,805 |
|
Deferred taxes |
(102,366) |
(356,616) |
|
Changes in fair value of foreign exchange derivatives |
(387,100) |
(414,042) |
|
Equity in loss (earnings) of investee |
418,204 |
(156,250) |
|
Share based compensation |
204,602 |
241,421 |
|
Changes in operating assets and liabilities: |
|||
Accounts receivable |
18,954,393 |
3,713,692 |
|
Notes receivable |
(4,120,877) |
2,622,925 |
|
Advances to suppliers |
1,412,642 |
(236,789) |
|
Prepayments and other receivables |
2,379,960 |
(601,315) |
|
Amount due from a related party |
426,432 |
285,657 |
|
Amount due to related parties |
113,794 |
- |
|
Inventories |
(2,626,489) |
(10,779,233) |
|
Accounts payable |
(6,016,313) |
(1,377,447) |
|
Deferred government grants |
- |
475,783 |
|
Other payables and accrued liabilities |
(2,287,547) |
665,379 |
|
Income taxes payable |
57,542 |
19,371 |
|
Net cash flows provided by (used in) operating activities |
10,553,465 |
(5,500,843) |
|
Cash flows from investing activities |
|||
Acquisitions of plant and equipment |
(4,336,823) |
(1,553,979) |
|
Payment for long-term investment |
(313,073) |
(317,188) |
|
Net cash flows used in investing activities |
(4,649,896) |
(1,871,167) |
|
Cash flows from financing activities |
|||
Proceeds from short-term bank loans |
5,963,296 |
14,427,164 |
|
Repayments of short-term bank loans |
(13,560,014) |
- |
|
Proceeds from a related party |
2,981,648 |
- |
|
Repayments of non-financial institution borrowing |
(8,944,944) |
- |
|
Proceeds from notes payable |
30,205,286 |
28,429,600 |
|
Repayments of notes payable |
(30,171,519) |
(26,488,407) |
|
Payment of derivative instruments |
(143,089) |
- |
|
Net cash flows (used in) provided by financing activities |
(13,669,336) |
16,368,357 |
|
Effect of foreign currency translation on cash |
2,083,773 |
2,046,039 |
|
Net (decrease) increase in cash and restricted cash |
(5,681,994) |
11,042,386 |
|
Cash and restricted cash- beginning of year |
69,412,117 |
40,456,117 |
|
Cash and restricted cash- end of year |
63,730,123 |
51,498,503 |
|
Supplemental disclosures for cash flow information: |
|||
Cash paid for: |
|||
Income taxes |
330,283 |
327,565 |
|
Interest expenses |
863,923 |
114,588 |
|
Non-cash investing and financing activities: |
|||
Purchase of property and equipment financed by accounts payables |
7,203,680 |
- |
|
Reconciliation of cash and restricted cash: |
|||
Cash |
24,167,300 |
18,859,355 |
|
Restricted cash |
39,562,823 |
32,639,148 |
|
Total cash and restricted cash shown in the condensed consolidated statements of |
63,730,123 |
51,498,503 |
Reconciliation of Net Income to EBITDA |
|||
Three months ended March 31, |
|||
2019 |
2018 |
||
(Unaudited) |
(Unaudited) |
||
$ |
$ |
||
Net income (loss) attributable to the Company |
307,721 |
(1,118,936) |
|
Interest expenses |
470,423 |
241,852 |
|
Income taxes expenses (benefit) |
285,459 |
(9,679) |
|
Depreciation and amortization |
1,729,440 |
1,475,228 |
|
EBITDA |
2,793,043 |
588,465 |
SOURCE Highpower International, Inc.
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