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) Mar ch 31, Dec ember 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: ir@highpowertech.com
Yuanmei Ma
Investor Relations Manager
Tel: +1-909-214-2482
Email: yuanmei@highpowertech.com
ICR, Inc.
Rose Zu
Tel: +1-646-931-0303
Email: ir@highpowertech.com
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: none) Common stock (Par value: $0.0001, Authorized: 100,000,000 shares, 15,567,953 shares issued 1,557 1,556 and outstanding at March 31, 2019 and 15,559,658 at December 31, 2018, respectively) 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 Company - 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 activities: 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 cash flows ===
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
View original content:http://www.prnewswire.com/news-releases/highpower-international-reports-unaudited-first-quarter-2019-financial-results-300848666.html
SOURCE Highpower International, Inc.