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: 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
and outstanding at March 31, 2019 and 15,559,658 at December 31,
2018,
respectively)
|
|
|
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
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
cash flows
|
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
|
View original
content:http://www.prnewswire.com/news-releases/highpower-international-reports-unaudited-first-quarter-2019-financial-results-300848666.html
SOURCE Highpower International, Inc.