Hong Kong Highpower Technology, Inc. (NASDAQ: HPJ), a developer,
manufacturer and marketer of nickel-metal hydride (Ni-MH) and
lithium-ion (Li-ion) batteries and related products, today
announced financial results for the first quarter ended March 31,
2010.
Business Highlights
-- Achieved 79% increase in net sales to $20.2 million for first quarter
2010 from $11.3 million in first quarter 2009;
-- Generated gross margin of 21% for the first quarter 2010; up
sequentially from 19% for the fourth quarter of 2009;
-- Earned net income of $0.12 per diluted share for first quarter 2010, a
300% increase over the first quarter of 2009;
-- Improved business conditions and outlook;
-- Debt-to-capital ratio remained healthy consistent with prior quarter.
"We are seeing positive indications of stabilization in the
global economy and strengthening demand for our batteries," said
Mr. George Pan, Chairman and Chief Executive Officer of Hong Kong
Highpower Technology. "Hong Kong Highpower Technology had
significant year-over-year growth in both sales and net income
during our first quarter. As we head into the second quarter, we
believe demand for our products will continue to increase
throughout the year and that we are well positioned through our
cost effective operating structure and our high quality products,
to capitalize profitably on these trends."
Mr. Henry Ngan, Chief Financial Officer of Hong Kong Highpower
Technology, added, "We are pleased with the strength of our first
quarter 2010 results as we continue to build on last year's
momentum of strong financial results. At this point, we anticipate
ever greater levels of profitability in FY 2010 in comparison to
last year's full year results."
First Quarter 2010 Financial Results
Net sales for the first quarter ended March 31, 2010 totaled
$20.2 million, a year-over-year increase of 79% compared with $11.3
million for the first quarter ended March 31, 2009. The increase in
sales for the first quarter was primarily due to increased orders
from customers and a slight increase in the average selling
price.
First quarter 2010 gross profit increased 77% to $4.2 million,
compared with $2.4 million for the first quarter 2009. Gross margin
was 21% for the first quarter 2010, compared with 21.2% for the
first quarter 2009. The increase year-over-year in gross profit for
the first quarter 2010 was primarily due to growth in volume of
units sold.
Selling and distribution costs were $752,000 for the first
quarter 2010, compared with $531,300 for the comparable period in
2009.
General and administrative expenses, including stock-based
compensation, were $1.5 million or 7.2% of net sales for the first
quarter 2010, compared to $1.1 million, or 9.8% of net sales for
the first quarter 2009.
The Company recorded a provision for income taxes of $379,400
for the first quarter 2010, compared with provisions for income
taxes of $161,000 for the first quarter 2009.
Net income for the first quarter of 2010 was $1.6 million or
$0.12 per diluted share, based on 13.6 million weighted average
shares outstanding. This compares with first quarter 2009 net
income of $403,000, or $0.03 per diluted share, based on 13.6
million weighted average shares outstanding, which resulted in an
increase in diluted EPS of 300% year-over-year.
Balance Sheet
At March 31, 2010, Hong Kong Highpower Technology had cash and
cash equivalents and restricted cash totaling $13.2 million, total
assets of $57.3 million, working capital of $8.5 million and
stockholders' equity of $22.8 million. Bank credit facilities
totaled $27.0 million at March 31, 2010, of which $11.3 million was
available as unused credit.
Conference Call and Webcast
Management of Hong Kong Highpower Technology will host a
conference call today, Wednesday, May 12, 2010 at 8:00 a.m. Pacific
time/11:00 a.m. Eastern time to discuss first quarter 2010
financial results and answer questions.
Individuals interested in participating in the conference call
may do so by dialing 888-799-5026 from the U.S., or 973-409-9693
from outside the U.S. and referencing the reservation code
73021825. Those interested in listening to the conference call live
via the Internet may do so by visiting the Investor Relations
section of the Company's Web site at www.haopengbattery.com or
www.InvestorCalendar.com.
A telephone replay will be available for 48 hours following the
conclusion of the call by dialing 800-642-1687 from the U.S., or
706-645-9291 from outside the U.S., and entering reservation code
73021825. A webcast replay will be available for one year.
About Hong Kong Highpower Technology, Inc.
Hong Kong Highpower Technology develops, manufactures and
markets rechargeable nickel metal hydride (Ni-MH) and lithium-ion
(Li-ion) batteries and related products for use in a variety of
electronic devices. The majority of Hong Kong Highpower
Technology's products are distributed worldwide to markets in the
United States, Europe, China, Hong Kong, Southeast Asia and Taiwan.
For more information, visit www.haopengbattery.com.
To be added to the Company's email distribution for future news
releases, please send your request to HPJ@finprofiles.com. Company
news can also be found at
http://ir.haopengbattery.com/en/introduce028.html.
Media and Investor Inquiries:
Henry H. Ngan
Chief Financial Officer
+1-917-887-0614
ir@highpowerbatteries.net
Financial Profiles, Inc.
Tricia Ross
(310) 478-2700
HPJ@finprofiles.com
Forward-Looking Statement
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. 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.
- financial tables to follow -
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in US Dollars)
Three months ended March 31,
----------------------------
2010 2009
(Unaudited) (Unaudited)
$ $
Net sales 20,223,372 11,309,805
Cost of sales (15,977,042) (8,913,709)
------------- -------------
Gross profit 4,246,330 2,396,096
Depreciation (69,242) (51,114)
Selling and distribution costs (752,054) (531,349)
General and administrative costs including
stock-based compensation (1,453,607) (1,102,922)
Loss on exchange rate difference (22,354) (32,724)
------------- -------------
Income from operations 1,949,073 677,987
Change in fair value of currency forwards - (88,113)
Other income 77,374 66,815
Interest expenses (66,333) (41,120)
Other expenses - (51,536)
------------- -------------
Income before income taxes 1,960,114 564,033
Income taxes (379,414) (161,067)
------------- -------------
Net income 1,580,700 402,966
============= =============
Income per common share
- Basic 0.12 0.03
============= =============
- Diluted 0.12 0.03
============= =============
Weighted average common shares outstanding
- Basic and diluted 13,582,106 13,562,596
============= =============
- Diluted 13,632,096 13,562,596
============= =============
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
As of
-----------------------------
March 31, December 31,
2010 2009
(Unaudited) (Audited)
$ $
ASSETS
Current Assets :
Cash and cash equivalents 7,122,966 2,967,586
Restricted cash 6,054,576 5,478,418
Accounts receivable 13,188,095 14,896,503
Notes receivable 687,117 596,795
Prepaid expenses and other receivables 4,569,073 2,366,734
Inventories 11,285,201 10,633,566
-------------- --------------
Total Current Assets 42,907,028 36,939,602
Plant and equipment, net 10,450,014 10,284,873
Leasehold land, net 3,003,908 3,019,509
Intangible asset, net 837,500 850,000
Investment securities 52,734 52,732
-------------- --------------
TOTAL ASSETS 57,251,184 51,146,716
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities :
Non-trading foreign currency derivatives
liabilities 8,524 11,041
Accounts payable 13,347,757 10,738,714
Other payables and accrued liabilities 4,086,950 3,563,308
Income taxes payable 1,240,533 876,739
Bank borrowings 15,747,410 14,787,714
-------------- --------------
Total Current Liabilities 34,431,174 29,977,516
-------------- --------------
COMMITMENTS AND CONTINGENCIES
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
Issued and outstanding: 2010 - 13,582,106
shares (2009 - 13,582,106 shares) 1,358 1,358
Additional paid-in capital 5,148,616 5,065,426
Accumulated other comprehensive income 2,010,778 2,023,858
Retained earnings 15,659,258 14,078,558
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 22,820,010 21,169,200
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 57,251,184 51,146,716
=============== ===============
Media and Investor Inquiries: Henry H. Ngan Chief Financial
Officer +1-917-887-0614 Email Contact Financial Profiles, Inc.
Tricia Ross (310) 478-2700 Email Contact
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