Corporate Events

Corporate Events

Highpower International Reports Unaudited First Quarter 2017 Financial Results

Highpower International Reports Unaudited First Quarter 2017 Financial Results

SAN DIEGO, Calif. and SHENZHEN, China, May 10, 2017 /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, 2017.

First Quarter 2017 Highlights

  • Net sales for the first quarter of 2017 increased by 43.9% to $41.9 million from $29.1 million in the prior year period.
  • Gross margin for the first quarter of 2017 increased to 23.7% from 20.2% in the prior year period.
  • Net income attributable to the Company for the first quarter of 2017 was $2.5 million, or $0.17 per diluted share, as compared to a net loss attributable to the Company of $0.3 million, or a net loss of $0.02 per diluted share in the prior year period.

Mr. George Pan, Chairman and CEO of Highpower International, commented, "We are extremely pleased to have delivered another quarter of strong top- and bottom-line results in the first quarter of 2017. Importantly, growth in our lithium ion batteries business, including battery solutions, continued to accelerate driven by demand for energy storage systems, smart wearable devices, and other digital products. Looking forward, we will continue to invest in areas that are critical to our business and capture the market opportunities ahead of us. With our solid product reputation and business foundations in the industry, we are confident that we will be able to maintain our strong growth momentum and continue to develop our business for years to come."

First Quarter 2017 Financial Results

Net Sales

Net sales for the first quarter of 2017 increased by 43.9% to $41.9 million from $29.1 million in the prior year period, primarily attributable to increased revenue contribution from lithium batteries as a result of the increased battery sales into markets for smart wearable devices, digital products, and handheld devices such as smart phones, tablets, and notebooks.

Gross Profit

Gross profit for the first quarter of 2017 increased by 69.0% to $9.9 million from $5.9 million in the prior year period, primarily attributable to enhanced product mix and improved labor efficiency. Gross margin for the first quarter of 2017 increased to 23.7% from 20.2% in the prior year period.

Operating Expenses

 

 

  • Research and development (R&D) expenses for the first quarter of 2017 were $1.8 million as compared to $1.6 million in the prior year period. As a percentage of net sales, R&D expenses decreased to 4.3% from 5.6% in the prior year period.
  • Selling and distribution expenses for the first quarter of 2017 were $1.6 million as compared to $1.5 million in the prior year period. As a percentage of net sales, selling and distribution expenses decreased to 3.9% from 5.3% in the prior year period, primarily attributable to the Company's customer base optimization efforts.
  • General and administrative expenses for the first quarter of 2017 remained stable at $3.1 million year over year. As a percentage of net sales, general and administrative expenses decreased to 7.3% from 10.5% in the prior year period.

Net Income

Net income attributable to the Company for the first quarter of 2017 increased to $2.5 million from net loss attributable to the Company of $0.3 million in the prior year period. Net income attributable to the Company per diluted share for the first quarter of 2017 increased to $0.17 from net loss attributable to the Company per diluted share of $0.02 in the prior year period.

For the quarter ended March 31, 2017, the Company's weighted average diluted shares outstanding used in computing diluted share was 15,299,029.

EBITDA

EBITDA for the first quarter of 2017 increased by 308.5% to $5.0 million from $1.2 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,

2017

 

December 31,

2016

  

(Unaudited)

  
  

$

 

$

Cash

 

$20.0

 

$9.3

Total Current Assets

 

$115.2

 

$104.5

Total Assets

 

$175.4

 

$163.3

     

Total Current Liabilities

 

$127.3

 

$118.0

Total Liabilities

 

$127.3

 

$118.0

Total Equity

 

$48.1

 

$45.3

Total Liabilities and Equity

 

$175.4

 

$163.3

Book Value Per Share

 

$3.17

 

$3.00

Conference Call Details

The Company will hold a conference call on Wednesday, May 10, 2017 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 tohttp://highpowertech.equisolvewebcast.com/q1-2017. 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: ir@highpowertech.com

ICR, Inc. 
Jessie Fan
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,

  

2017

 

2016

   

(Unaudited)

  
  

$

 

$

ASSETS                                                                                                  

    
 

Current Assets:

    
 

Cash

 

20,036,278

 

9,324,393

 

Restricted cash

 

14,021,382

 

11,213,640

 

Accounts receivable, net

 

39,324,098

 

46,280,769

 

Amount due from Yipeng

 

7,420,500

 

7,517,250

 

Notes receivable

 

868,427

 

1,093,730

 

Prepayments and other receivables

 

7,536,315

 

6,899,872

 

Inventories

 

26,013,323

 

22,207,333

      
 

Total Current Assets

 

115,220,323

 

104,536,987

      
 

Property, plant and equipment, net

 

44,751,137

 

43,504,991

 

Land use right, net

 

3,631,897

 

3,622,435

 

Other assets

 

487,500

 

500,000

 

Deferred tax assets

 

1,366,041

 

1,477,761

 

Long-term investment

 

9,919,428

 

9,689,576

     

TOTAL ASSETS

 

175,376,326

 

163,331,750

     

LIABILITIES AND EQUITY

    
     

LIABILITIES

    
 

Current Liabilities:

    
 

Accounts payable

 

44,170,801

 

49,463,901

 

Deferred income

 

884,134

 

761,491

 

Short-term loans

 

20,462,659

 

18,776,080

 

Non-financial institution borrowings

 

10,158,767

 

3,741,115

 

Notes payable

 

38,291,121

 

30,658,000

 

Amount due to Yipeng

 

1,728,203

 

1,522,313

 

Other payables and accrued liabilities

 

9,267,866

 

11,148,556

 

Income taxes payable

 

2,310,168

 

1,963,298

      
 

Total Current Liabilities

 

127,273,719

 

118,034,754

      
 

Warrant Liability

 

31,811

 

259

      

TOTAL LIABILITIES

 

127,305,530

 

118,035,013

     

COMMITMENTS AND CONTINGENCIES

 

-

 

-

      

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, 15,176,252 
shares issued and outstanding at March 31, 2017 and 15,114,991 
shares issued and outstanding at December 31, 2016)

 

1,517

 

1,511

 

Additional paid-in capital

 

11,766,446

 

11,580,934

 

Statutory and other reserves

 

4,992,463

 

4,992,463

 

Retained earnings

 

31,801,717

 

29,266,068

 

Accumulated other comprehensive income

 

(900,241)

 

(873,582)

      
 

Total equity attributable to the stockholders of 
Highpower International Inc.

 

47,661,902

 

44,967,394

      
 

Non-controlling interest

 

408,894

 

329,343

      

TOTAL EQUITY

 

48,070,796

 

45,296,737

      

TOTAL LIABILITIES AND EQUITY

 

175,376,326

 

163,331,750

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Stated in US Dollars)

     
  

Three months ended March 31,

  

2017

 

2016

  

(Unaudited)

 

(Unaudited)

  

$

 

$

     

Net sales

 

41,866,848

 

29,097,055

Cost of sales

 

(31,932,014)

 

(23,220,016)

Gross profit

 

9,934,834

 

5,877,039

     

Research and development expenses

 

(1,813,930)

 

(1,622,883)

Selling and distribution expenses

 

(1,638,313)