SAN DIEGO and SHENZHEN, China, May
11, 2018 /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, 2018.
First Quarter 2018 Highlights (all results compared to prior
year period)
- Net sales for the first quarter of 2018 increased by 18.9% to
$49.8 million from $41.9 million. Excluding the impact of Ganzhou
Highpower Technology Co., Ltd. ("GZ Highpower"), net sales
increased 24.1% to $49.8 million from
$40.1 million.
- Lithium business net sales increased 33.1% to $36.6 million from $27.5
million.
- Gross margin decreased to 15.2% of net sales compared to 23.7%.
Excluding GZ Highpower, gross margin was 15.2% compared to
23.3%.
- Net loss attributable to the Company was $1.1 million, or loss of $0.07 per diluted share, compared to net income
attributable to the Company of $2.5
million, or earnings of $0.17
per diluted share. Excluding GZ Highpower, net loss attributable to
the Company was $1.1 million compared
to net income attributable to the Company of $2.3 million.
Recent Event
- On February 28, 2018, the Company
signed an investment agreement (the "Agreement") with an aggregate
amount of RMB4.9 million
(approximately $0.8 million) for 49%
of the equity interest of Shenzhen V-power Innovative Technology
Co., Ltd ("V-power"). Pursuant to the terms of the Agreement, the
Company shall complete the capital injection to V-power no later
than December 31, 2018. V-power
focuses on the development of electronic vehicle battery management
systems ("EV BMS"), in the future V-power will gradually extend the
business to the design and production of EV power modules, energy
storage systems ("ESS"), and related products.
Mr. George Pan, Chairman and CEO
of Highpower International, commented, "Despite the ongoing
industry challenge of high raw material prices, we are pleased to
beat our top-line guidance for the first quarter, driven by
continued strong growth in our lithium business. During the
quarter, we continued to focus on our core lithium products, such
as by attending the 2018 International Consumer Electronics Show
(CES) in Las Vegas, where we
showcased our advanced rechargeable battery products for notebooks,
smart phones, wearable devices, smart house appliances, portable
power stations, and other digital products. We also increased our
R&D efforts in order to fine-tune and develop new technologies
that improve product safety and reliability as well as to provide
solutions that fulfill the innovations of our international
customer base."
"While we continue to face industry cost headwinds, we are
committed to improving our production efficiency and maintaining an
efficient supply chain. As always, we remain focused on sustainable
growth and on providing clean, safe, and efficient power solutions
to meet society's needs," Mr. Pan concluded.
First Quarter 2018 Financial Results
Net Sales
Net sales for the first quarter of 2018 increased 18.9% to
$49.8 million from $41.9 million in the prior year period. The
increase was driven by sales of the Company's lithium business,
which grew 33.1%, or $9.1 million,
during the quarter. Excluding the impact of GZ Highpower, net sales
increased 24.1% to $49.8 million from
$40.1 million.
Gross Profit
Gross profit for the first quarter of 2018 decreased 23.8% to
$7.6 million from $9.9 million in the prior year period due to high
raw material prices. Gross margin for the first quarter of 2018 was
15.2% compared to 23.7% in the prior year period. Excluding GZ
Highpower, gross margin was 15.2% compared to 23.3%.
Operating Expenses
- Research and development (R&D) expenses for
the first quarter of 2018 were $2.6
million compared to $1.8
million in the prior year period. As a percentage of net
sales, R&D expenses increased to 5.1% from 4.3% in the prior
year period due to the Company's continued investments in
R&D.
- Selling and distribution expenses for the first
quarter of 2018 were $2.0 million
compared to $1.6 million in the prior
year period. As a percentage of net sales, selling and distribution
expenses increased to 4.0% from 3.9% in the prior year period,
remaining relatively stable.
- General and administrative expenses for the first
quarter of 2018 were $4.1 million
compared to $3.1 million in the prior
year period. As a percentage of net sales, general and
administrative expenses increased to 8.3% from 7.3% in the prior
year period. The increase was due to an increase of the provisions
for the Company's incentive plan.
Net Income
Net loss attributable to the Company for the first quarter of
2018 was $1.1 million. During the
prior year period, the Company achieved a net income attributable
to the Company of $2.5 million. Net
loss attributable to the Company per diluted share for the first
quarter of 2018 was $0.07 compared to
a net income attributable to the Company per diluted share of
$0.17 in the prior year period.
Excluding GZ Highpower, net loss attributable to the Company was
$1.1 million compared to net income
attributable to the Company of $2.3
million in the prior year period.
For the quarter ended March 31, 2018, the Company's
weighted average diluted shares outstanding used in computing
diluted share was 15,509,658.
EBITDA
EBITDA for the first quarter of 2018 decreased 88.2% to
$0.6 million from $5.0 million in the prior year period.
A table reconciling EBITDA to the appropriate GAAP measure is
included with the Company's financial information below.
Balance Sheet
Highlights
|
|
|
|
|
($ in millions,
except per share data)
|
|
March
31,
|
|
December 31,
|
2018
|
|
2017
|
|
|
(Unaudited)
|
|
|
|
|
$
|
|
$
|
Cash
|
|
$18.9
|
|
$14.5
|
Total Current
Assets
|
|
$176.3
|
|
$156.0
|
Total
Assets
|
|
$244.5
|
|
$220.3
|
|
|
|
|
|
Total Current
Liabilities
|
|
$175.4
|
|
$152.3
|
Total
Liabilities
|
|
$175.4
|
|
$153.1
|
Total
Equity
|
|
$69.2
|
|
$67.2
|
Total Liabilities and
Equity
|
|
$244.5
|
|
$220.3
|
Book Value Per
Share
|
|
$4.46
|
|
$4.33
|
Financial Outlook
For the second quarter of 2018, the Company expects net revenues
to grow over 30% year over year. Factoring in the impact of
expected, continued high raw material prices, gross margin is
expected to be similar or slightly lower than first quarter of
2018. For the full year 2018, the Company expects net revenues to
grow at least 20% compared to 2017 and gross margin levels to
exceed that of the first quarter of 2018.
Conference Call Details
The Company will hold a conference call on Friday, May 11, 2018 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/24661/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 is reconciled in the
accompanying table 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. 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, 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; 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.
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,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
|
|
$
|
|
$
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash
|
18,859,355
|
|
14,502,171
|
|
Restricted
cash
|
32,639,148
|
|
25,953,946
|
|
Accounts receivable,
net
|
56,240,961
|
|
58,252,999
|
|
Amount due from a
related party
|
921,862
|
|
1,165,838
|
|
Notes
receivable
|
67,612
|
|
2,606,517
|
|
Advances to
suppliers
|
6,511,584
|
|
6,050,531
|
|
Prepayments and other
receivables
|
5,029,550
|
|
4,268,527
|
|
Foreign exchange
derivatives
|
661,111
|
|
236,436
|
|
Inventories
|
55,347,466
|
|
42,946,644
|
|
|
|
|
|
|
Total Current
Assets
|
176,278,649
|
|
155,983,609
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
48,189,218
|
|
46,520,776
|
|
Long-term
prepayments
|
4,243,891
|
|
3,715,445
|
|
Land use rights,
net
|
2,719,885
|
|
2,639,631
|
|
Other
assets
|
746,938
|
|
748,431
|
|
Deferred tax assets,
net
|
1,135,550
|
|
750,267
|
|
Long-term
investments
|
11,209,442
|
|
9,906,379
|
|
|
|
|
TOTAL
ASSETS
|
244,523,573
|
|
220,264,538
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
61,149,301
|
|
60,368,012
|
|
Deferred government
grant
|
799,040
|
|
309,638
|
|
Short-term
loans
|
24,760,223
|
|
10,128,646
|
|
Non-financial
institution borrowings
|
11,152,890
|
|
10,756,158
|
|
Notes
payable
|
58,833,089
|
|
54,859,478
|
|
Amount due to a
related party
|
780,702
|
|
-
|
|
Other payables and
accrued liabilities
|
13,339,920
|
|
12,243,345
|
|
Income taxes
payable
|
4,537,182
|
|
3,609,391
|
|
|
|
|
|
|
Total Current
Liabilities
|
175,352,347
|
|
152,274,668
|
|
|
|
|
|
|
Income taxes payable,
noncurrent
|
-
|
|
777,685
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
175,352,347
|
|
153,052,353
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
-
|
|
-
|
|
|
|
|
|
|
HIGHPOWER
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Stated in US
Dollars)
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
(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, 15,509,658 shares issued
and outstanding at March 31, 2018 and at December 31, 2017,
respectively)
|
1,551
|
|
1,551
|
|
Additional paid-in
capital
|
12,951,177
|
|
12,709,756
|
|
Statutory and other
reserves
|
6,549,815
|
|
6,549,815
|
|
Retained
earnings
|
43,362,632
|
|
44,481,568
|
|
Accumulated other
comprehensive income
|
6,306,051
|
|
3,469,495
|
|
|
|
|
TOTAL
EQUITY
|
69,171,226
|
|
67,212,185
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
244,523,573
|
|
220,264,538
|
|
|
|
|
|
HIGHPOWER
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(Stated in US
Dollars)
|
|
|
Three months
ended March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(Unaudited)
|
|
$
|
|
$
|
Net sales
|
49,783,453
|
|
41,866,848
|
Cost of
sales
|
(42,217,126)
|
|
(31,932,014)
|
Gross
profit
|
7,566,327
|
|
9,934,834
|
|
|
|
|
Research and
development expenses
|
(2,561,837)
|
|
(1,813,930)
|
Selling and
distribution expenses
|
(1,975,096)
|
|
(1,638,313)
|
General and
administrative expenses
|
(4,114,810)
|
|
(3,058,562)
|
Foreign currency
transaction loss
|
(1,014,693)
|
|
(313,878)
|
Total operating
expenses
|
(9,666,436)
|
|
(6,824,683)
|
|
|
|
|
(Loss) income from
operations
|
(2,100,109)
|
|
3,110,151
|
|
|
|
|
Changes in fair value
of warrant liability
|
-
|
|
(31,552)
|
Changes in fair value
of foreign exchange derivatives
|
703,715
|
|
-
|
Government
grants
|
329,820
|
|
349,515
|
Other
income
|
23,561
|
|
228,578
|
Equity in earnings of
investee
|
156,250
|
|
146,932
|
Interest
expenses
|
(241,852)
|
|
(603,317)
|
(Loss) income before
taxes
|
(1,128,615)
|
|
3,200,307
|
|
|
|
|
Income taxes benefit
(expense)
|
9,679
|
|
(587,765)
|
Net (loss)
income
|
(1,118,936)
|
|
2,612,542
|
|
|
|
|
Less: net income
attributable to non-controlling interest
|
-
|
|
76,893
|
Net (loss) income
attributable to the Company
|
(1,118,936)
|
|
2,535,649
|
|
|
|
|
Comprehensive
income
|
|
|
|
Net (loss)
income
|
(1,118,936)
|
|
2,612,542
|
Foreign currency
translation gain (loss)
|
2,836,556
|
|
(24,001)
|
Comprehensive
income
|
1,717,620
|
|
2,588,541
|
|
|
|
|
Less: comprehensive
income attributable to non-controlling interest
|
-
|
|
79,551
|
Comprehensive income
attributable to the Company
|
1,717,620
|
|
2,508,990
|
|
|
|
|
(Loss) earnings per
share of common stock attributable to the Company
|
|
|
|
- Basic
|
(0.07)
|
|
0.17
|
- Diluted
|
(0.07)
|
|
0.17
|
|
|
|
|
Weighted average
number of common stock outstanding
|
|
|
|
- Basic
|
15,509,658
|
|
15,119,693
|
- Diluted
|
15,509,658
|
|
15,299,029
|
HIGHPOWER
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Stated in US
Dollars)
|
|
|
Three Months
Ended March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(Unaudited)
|
|
$
|
|
$
|
Cash flows from
operating activities
|
|
|
|
Net (loss)
income
|
(1,118,936)
|
|
2,612,542
|
Adjustments to
reconcile net income to net cash (used in) provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
1,475,228
|
|
1,274,334
|
Allowance for doubtful
accounts
|
18,524
|
|
5,015
|
Loss on disposal of
property, plant and equipment
|
21,805
|
|
3,262
|
Deferred
tax
|
(356,616)
|
|
124,548
|
Changes in fair value
of foreign exchange derivatives
|
(414,042)
|
|
-
|
Equity in earnings of
investee
|
(156,250)
|
|
(146,932)
|
Share based
compensation
|
241,421
|
|
24,401
|
Changes in fair value
of warrant liability
|
-
|
|
31,552
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
3,713,692
|
|
7,314,824
|
Notes
receivable
|
2,622,925
|
|
235,222
|
Advances to
suppliers
|
(236,789)
|
|
-
|
Prepayments and other
receivables
|
(601,315)
|
|
(485,520)
|
Amount due from
related parties
|
285,657
|
|
161,693
|
Amount due to a
related party
|
-
|
|
193,240
|
Inventories
|
(10,779,233)
|
|
(3,623,242)
|
Accounts
payable
|
(1,377,447)
|
|
(5,111,874)
|
Deferred
income
|
475,783
|
|
116,359
|
Other payables and
accrued liabilities
|
665,379
|
|
(1,977,117)
|
Income taxes
payable
|
19,371
|
|
330,735
|
Net cash flows (used
in) provided by operating activities
|
(5,500,843)
|
|
1,083,042
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Acquisitions of
property, plant and equipment
|
(1,553,979)
|
|
(2,873,489)
|
Prepayment for
long-term investment
|
(317,188)
|
|
-
|
Net cash flows used
in investing activities
|
(1,871,167)
|
|
(2,873,489)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
short-term loans
|
14,427,164
|
|
2,910,418
|
Repayments of
short-term loans
|
-
|
|
(1,381,758)
|
Proceeds from
non-financial institution borrowings
|
-
|
|
8,726,892
|
Repayments of
non-financial institution borrowings
|
-
|
|
(2,327,171)
|
Proceeds from notes
payable
|
28,429,600
|
|
20,467,907
|
Repayments of notes
payable
|
(26,488,407)
|
|
(13,081,781)
|
Proceeds from exercise
of employee options
|
-
|
|
68,519
|
Net cash flows
provided by financing activities
|
16,368,357
|
|
15,383,026
|
Effect of foreign
currency translation on cash and restricted cash
|
2,046,039
|
|
(72,952)
|
Net increase in cash
and restricted cash
|
11,042,386
|
|
13,519,627
|
Cash and restricted
cash - beginning of period
|
40,456,117
|
|
20,538,033
|
Cash and restricted
cash - end of period
|
51,498,503
|
|
34,057,660
|
|
|
|
|
Supplemental
disclosures for cash flow information:
|
|
|
|
Cash paid
for:
|
|
|
|
Income
taxes
|
327,565
|
|
132,481
|
Interest
expenses
|
114,588
|
|
583,720
|
Reconciliation of
Net Income to EBITDA
|
|
|
Three months
ended
March
31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(Unaudited)
|
|
$
|
|
$
|
Net (loss) income
attributable to the Company
|
(1,118,936)
|
|
2,535,649
|
|
|
|
|
Interest
expense
|
241,852
|
|
603,317
|
Income taxes
(benefit) expenses
|
(9,679)
|
|
587,765
|
Depreciation and
amortization
|
1,475,228
|
|
1,274,334
|
|
|
|
|
EBITDA
|
588,465
|
|
5,001,065
|
View original
content:http://www.prnewswire.com/news-releases/highpower-international-reports-unaudited-first-quarter-2018-financial-results-300646925.html
SOURCE Highpower International, Inc.