SAN FRANCISCO and SHENZHEN, China, May 8, 2015 /PRNewswire/ -- 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 2015 first quarter ended March 31, 2015.
2015 First Quarter Operating and Financial Highlights (all results are compared to prior year period)
Management Commentary
Mr. George Pan, Chairman and CEO of Highpower International, commented, "We are pleased to see strong year-over-year improvement in performance of sales in lithium batteries and our new material business. This was a result of growing global demand for mobile and portable products and electrical vehicles and increasing awareness of our value-added service from our customers. As we are reaching capacity of our lithium battery production, we expect to further expand our lithium battery facilities on our Huizhou campus. We anticipate continued growth throughout the remainder of 2015."
2015 First Quarter Financial Review
Net Sales
Net sales for the first quarter ended March 31, 2015 were $32.1 million compared to $29.2 million for the same period in 2014. The 10.2% increase in net sales compared to the same period in 2014 was mainly due to a $3.4 million improvement in net sales of Lithium batteries and $274,983 increase in net sales from new materials business, offset by a decline of $0.7 million in sales of Ni-MH batteries.
Gross Profit
For the first quarter ended March 31, 2015, the Company's gross profit was $5.6 million, as compared with $5.9 million for the same period in 2014.
Gross Margin
Gross margin was 17.3% for the first quarter ended March 31, 2015, compared to 20.3% in prior year period. This decrease was attributable to decrease in the average selling price of its batteries. The Company is taking measures to control its production costs by reorganizing its production structure to focus more attention on equipment automation and greater efficiency.
Net sales by segments and by geography is set out as follows:
Three months ended |
|||||
March 31, |
|||||
2015 |
2014 |
Change in % |
|||
(Unaudited) |
|||||
$ |
$ |
||||
Net sales |
|||||
Ni-MH Batteries |
14,759,470 |
15,487,503 |
-4.70% |
||
Lithium Batteries |
16,820,628 |
13,390,244 |
25.62% |
||
New Materials |
557,550 |
282,567 |
97.32% |
||
Total |
32,137,648 |
29,160,314 |
10.21% |
||
By Geography |
|||||
China |
43.6% |
49.8% |
|||
Rest of Asia, incl. H.K. |
32.5% |
19.1% |
|||
Europe |
18.1% |
21.9% |
|||
North America |
4.8% |
8.0% |
|||
Rest of the World |
1.0% |
1.2% |
|||
Total |
100% |
100% |
|||
Research and Development (R&D)
R&D spending was $1.7 million, or 5.2% of net sales, for the first quarter ended March 31, 2015, compared to $1.8 million, or 6.2% of net sales, for the same period in 2014.
Selling & Distribution
Selling and distribution expenses were $1.8 million, or 5.6% of net sales, for the first quarter ended March 31, 2015, as compared with $1.5 million, or 5.3% of net sales for the same period in 2014. The increase was due to the expansion of the sales force and marketing activities, including participation in industry trade shows and international travels to promote and sell products globally.
General & Administrative
For the first quarter ended March 31, 2015, general and administrative expenses were $3.0 million, or 9.4% of net sales, in comparison to $3.6 million, or 12.2% of net sales, for the first quarter of 2014. The decrease was due to non-cash share-based compensation expense of $121,361, down from $400,946 in the prior year period.
Net Loss
For the first quarter of 2015, net loss attributable to the Company was $0.1 million, or $0.01 per basic and diluted share based on 15.1 million weighted average diluted shares outstanding, compared to net loss of $0.9 million, or $0.07 per basic and diluted share based on 14.0 million weighted average diluted shares outstanding. Non-GAAP net loss attributable to the Company was $0.3 million, or $0.02 per diluted share, compared to a non-GAAP net loss of $0.5 million, or $0.06 per diluted share in the prior year period.
EBITDA
EBITDA for the first quarter ended March 31, 2015 improved to $1.3 million from $0.3 million in the prior year period.
A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company's financial information below.
Balance Sheet Highlights
($ in millions, except per share data) |
March 31, |
December 31, |
||
2015 |
2014 |
|||
(Unaudited) |
||||
$ |
$ |
|||
Cash and Cash Equivalents |
$9.9 |
$14.6 |
||
Total Current Assets |
$86.6 |
$89.2 |
||
Total Assets |
$143.9 |
$146.2 |
||
Total Current Liabilities |
$100.2 |
$101.4 |
||
Total Liabilities |
$102.4 |
$104.4 |
||
Shareholders' Equity |
$41.5 |
$41.8 |
||
Total Liabilities and Shareholders' Equity |
$143.9 |
$146.2 |
||
Book Value Per Share |
$2.75 |
$2.77 |
Outlook for 2015
Based on current expectations for global demand in the rechargeable battery market in 2015 and the continued shift toward mobile power sources, higher-value energy storage systems and transportation products, the Company is reaffirming its 2015 guidance of revenues to be between $160 million to $170 million, and non-GAAP net income of between $5.0 million and $6.0 million, and net income of between $4.0 million and $5.0 million.
Conference Call Details
The Company announced that it will discuss financial results in a conference call on May 8, 2015 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/q1-2015. 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.
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 (adjusted) net income or (loss) 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; and 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
+1 (212) 836-9606
aprior@equityny.com
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
||||
(Stated in US Dollars except Number of Shares) |
||||
Three months ended March 31, |
||||
2015 |
2014 |
|||
(Unaudited) |
(Unaudited) |
|||
$ |
$ |
|||
Net sales |
32,137,648 |
29,160,314 |
||
Cost of sales |
(26,581,934) |
(23,229,369) |
||
Gross profit |
5,555,714 |
5,930,945 |
||
Research and development expenses |
(1,674,124) |
(1,811,952) |
||
Selling and distribution expenses |
(1,798,722) |
(1,537,160) |
||
General and administrative expenses |
(3,024,751) |
(3,571,280) |
||
Foreign currency transaction gain |
370,311 |
102,593 |
||
Loss on derivative instruments |
- |
(137,281) |
||
Total operating expenses |
(6,127,286) |
(6,955,080) |
||
Loss from operations |
(571,572) |
(1,024,135) |
||
Gain on change of fair value of warrant liability |
346,299 |
- |
||
Other income |
230,092 |
541,420 |
||
Interest expenses |
(268,642) |
(595,381) |
||
Income before taxes |
(263,823) |
(1,078,096) |
||
Income taxes benefit |
95,256 |
92,151 |
||
Net loss |
(168,567) |
(985,945) |
||
Less: net loss attributable to non-controlling interest |
(45,209) |
(50,796) |
||
Net loss attributable to the Company |
(123,358) |
(935,149) |
||
Comprehensive loss |
||||
Net loss |
(168,567) |
(985,945) |
||
Foreign currency translation loss |
(204,761) |
(341,186) |
||
Comprehensive loss |
(373,328) |
(1,327,131) |
||
Less: comprehensive loss attributable to non-controlling interest |
(49,173) |
(61,433) |
||
Comprehensive loss attributable to the Company |
(324,155) |
(1,265,698) |
||
Earnings per share of common stock attributable to the Company |
||||
-Basic and Diluted |
(0.01) |
(0.07) |
||
Weighted average number of common stock outstanding |
||||
-Basic and Diluted |
15,086,169 |
13,978,106 |
||
HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES |
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
(Stated in US Dollars except Number of Shares) |
||||||
March 31, |
December 31, |
|||||
2015 |
2014 |
|||||
(Unaudited) |
||||||
$ |
$ |
|||||
ASSETS |
||||||
Current Assets: |
||||||
Cash and cash equivalents |
9,922,960 |
14,611,892 |
||||
Restricted cash |
15,959,357 |
15,396,827 |
||||
Accounts receivable, net |
30,678,992 |
32,316,607 |
||||
Notes receivable |
2,929,338 |
621,110 |
||||
Prepayments |
4,709,013 |
3,283,520 |
||||
Other receivables |
630,440 |
665,828 |
||||
Inventories |
21,766,434 |
22,268,069 |
||||
Total Current Assets |
86,596,534 |
89,163,853 |
||||
Property, plant and equipment, net |
50,663,432 |
50,437,718 |
||||
Land use right, net |
4,267,987 |
4,305,317 |
||||
Intangible asset, net |
587,500 |
600,000 |
||||
Deferred tax assets |
1,829,661 |
1,647,184 |
||||
TOTAL ASSETS |
143,945,114 |
146,154,072 |
||||
LIABILITIES AND EQUITY |
||||||
LIABILITIES |
||||||
Current Liabilities: |
||||||
Accounts payable |
39,024,814 |
44,562,647 |
||||
Deferred income |
1,881,694 |
1,887,409 |
||||
Short-term loan |
15,173,864 |
15,195,040 |
||||
Notes payable |
34,459,062 |
29,903,248 |
||||
Other payables and accrued liabilities |
5,751,960 |
5,896,547 |
||||
Income taxes payable |
2,002,313 |
1,968,656 |
||||
Current portion of long-term loan |
1,953,316 |
1,959,248 |
||||
Total Current Liabilities |
100,247,023 |
101,372,795 |
||||
Warrant Liability |
721,375 |
1,067,674 |
||||
Long-term loan |
1,464,987 |
1,959,247 |
||||
TOTAL LIABILITIES |
102,433,385 |
104,399,716 |
||||
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, 15,088,297 shares issued and outstanding at March 31, 2015 and 15,084,746 shares issued and outstanding at December 31, 2014) |
1,509 |
1,508 |
||||
Additional paid-in capital |
10,661,130 |
10,530,430 |
||||
Statutory and other reserves |
3,611,501 |
3,611,501 |
||||
Retained earnings |
20,551,663 |
20,675,021 |
||||
Accumulated other comprehensive income |
5,427,860 |
5,628,657 |
||||
Total equity for the Company's stockholders |
40,253,663 |
40,447,117 |
||||
Non-controlling interest |
1,258,066 |
1,307,239 |
||||
TOTAL EQUITY |
41,511,729 |
41,754,356 |
||||
TOTAL LIABILITIES AND EQUITY |
143,945,114 |
146,154,072 |
||||
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(Stated in US Dollars) |
||||
Three months ended March 31, |
||||
2015 |
2014 |
|||
(Unaudited) |
(Unaudited) |
|||
$ |
$ |
|||
Cash flows from operating activities |
||||
Net loss |
(168,567) |
(985,945) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
Depreciation and amortization |
1,246,043 |
1,011,801 |
||
Allowance for doubtful accounts |
21 |
- |
||
Loss on disposal of property, plant and equipment |
11,709 |
37,244 |
||
Loss on derivative instruments |
- |
137,281 |
||
Deferred income tax |
(187,373) |
(418,906) |
||
Share based payment |
121,361 |
400,946 |
||
Gain on change of fair value of warrant liability |
(346,299) |
- |
||
Changes in operating assets and liabilities: |
||||
Accounts receivable |
1,576,803 |
5,681,371 |
||
Notes receivable |
(2,309,732) |
(521,988) |
||
Prepayments |
(1,434,905) |
(519,476) |
||
Other receivable |
33,367 |
(24,811) |
||
Inventories |
434,169 |
(493,677) |
||
Accounts payable |
(5,404,188) |
3,911,914 |
||
Deferred income |
- |
1,012,063 |
||
Other payables and accrued liabilities |
(127,282) |
(237,561) |
||
Income taxes payable |
39,612 |
319,409 |
||
Net cash flows used in (provided by) operating activities |
(6,515,261) |
9,309,665 |
||
Cash flows from investing activities |
||||
Acquisition of plant and equipment |
(1,664,663) |
(2,403,047) |
||
Net cash flows used in investing activities |
(1,664,663) |
(2,403,047) |
||
Cash flows from financing activities |
||||
Proceeds from short-term bank loans |
- |
295,426 |
||
Repayment of short-term bank loans |
- |
(10,824,720) |
||
Repayment of long-term bank loans |
(488,250) |
(489,708) |
||
Proceeds from notes payable |
16,882,947 |
6,192,247 |
||
Repayment of notes payable |
(12,237,353) |
(12,159,236) |
||
Proceeds from exercise of employee options |
9,339 |
- |
||
Change in restricted cash |
(609,041) |
6,920,453 |
||
Net cash flows provided by (used in) financing activities |
3,557,642 |
(10,065,538) |
||
Effect of foreign currency translation on cash and cash equivalents |
(66,650) |
322,938 |
||
Net decrease in cash and cash equivalents |
(4,688,932) |
(2,835,982) |
||
Cash and cash equivalents - beginning of period |
14,611,892 |
7,973,459 |
||
Cash and cash equivalents - end of period |
9,922,960 |
5,137,477 |
||
Supplemental disclosures for cash flow information: |
||||
Cash paid for: |
||||
Income taxes |
52,505 |
7,346 |
||
Interest expenses |
268,642 |
595,381 |
||
Non-cash transactions |
||||
Accounts payable for construction in progress |
- |
797,753 |
||
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) |
||||
(Stated in US Dollars) |
||||
Reconciliation of Net loss to EBITDA |
||||
Three months ended |
||||
March 31, |
||||
2015 |
2014 |
|||
(Unaudited) |
||||
$ |
$ |
|||
Net loss attributable to the Company |
(123,358) |
(935,149) |
||
Non-GAAP Net Loss (1) |
(348,296) |
(534,203) |
||
Interest expenses, net |
232,570 |
322,149 |
||
Income tax expenses |
(95,256) |
(92,151) |
||
Depreciation and Amortization |
1,246,043 |
1,011,801 |
||
EBITDA |
1,259,999 |
306,650 |
||
Non-GAAP EBITDA(2) |
1,035,061 |
707,596 |
||
(1) See table below for reconciliation of net loss attributable to the Company to Non-GAAP net loss attributable to the Company. |
||||
(2) Excludes share-based compensation expense and gain on change of fair value of warrant liability as set forth in the following table. |
||||
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES |
||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) |
||||
(Stated in US Dollars) |
||||
Reconciliation of Net Loss Attributable to the Company to Non-GAAP Net Loss Attributable to the Company |
||||
Three months ended |
||||
March 31, |
||||
2015 |
2014 |
|||
(Unaudited) |
||||
$ |
$ |
|||
Net loss attributable to the Company |
(123,358) |
(935,149) |
||
Stock-based compensation expense |
121,361 |
400,946 |
||
Gain on change of fair value of warrant liability |
(346,299) |
- |
||
Non-GAAP net loss attributable to the Company |
(348,296) |
(534,203) |
||
Basic net loss per share of common stock attributable to the Company |
(0.01) |
(0.07) |
||
Stock-based compensation expense |
0.01 |
0.03 |
||
Gain on change of fair value of warrant liability |
(0.02) |
- |
||
Non-GAAP loss per share of common stock attributable to the Company |
(0.02) |
(0.04) |
||
Diluted net loss per share of common stock attributable to the Company |
(0.01) |
(0.07) |
||
Stock-based compensation expense |
0.01 |
0.01 |
||
Gain on change of fair value of warrant liability |
(0.02) |
- |
||
Non-GAAP loss per share of common stock attributable to the Company |
(0.02) |
(0.06) |
||
Weighted average number of common shares outstanding |
||||
-Basic and Diluted |
15,086,169 |
13,978,106 |
||
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