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 second quarter
ended June 30, 2010.
Financial and Business Highlights
- Recorded $28.9 million in net sales for second quarter 2010, a
88% increase year-over-year, and 43% increase sequentially;
- Achieved gross profit of $5.4 million for second quarter 2010,
compared to $3.1 million in second quarter 2009;
- Earned net income of $0.12 per diluted share for second quarter
2010, a 71% increase over the second quarter of 2009;
- Debt-to-capital ratio remained healthy consistent with prior
quarter;
- Formed Springpower International, a research & development
unit for advanced high performance battery materials and clean
energy materials.
"Our business trends in the second quarter clearly indicate that
the overall level of demand for our battery products remains
healthy," said Mr. George Pan, Chairman and Chief Executive Officer
of Hong Kong Highpower Technology. "Our ability to deliver strong
second quarter results in the face of a slow and gradual macro
economic recovery signifies that we are taking the right steps and
executing well on our strategy to be a leading, profitable,
eco-friendly focused, world battery player."
Mr. Henry Ngan, Chief Financial Officer of Hong Kong Highpower
Technology, added, "We produced another solid quarter of results.
We are now six months through FY 2010, and our sales and
profitability are tracking well ahead of 2009 levels. Therefore, we
remain optimistic that we can achieve greater levels of sales and
profitability in FY 2010 in comparison to last year's full year
results."
Second Quarter 2010 Financial Results
Net sales for the second quarter ended June 30, 2010 totaled
$28.9 million, a year-over-year increase of 88% compared with $15.4
million for the second quarter ended June 30, 2009. The increase in
sales for the second quarter was primarily due to increased orders
from customers and contribution from the New Material business
started in the first quarter 2010.
Second quarter 2010 gross profit increased 76% to $5.4 million,
compared with $3.1 million for the second quarter 2009. Gross
margin was 18.6% for the second quarter 2010, compared with 19.9%
for the second quarter 2009. The increase year-over-year in gross
profit for the second quarter 2010 was primarily due to growth in
volume of units sold.
Selling and distribution costs were $1.1 million for the second
quarter 2010, compared with $0.6 million for the comparable period
in 2009. The increase in selling and distribution costs is mainly
related to the expansion of our salesforce.
General and administrative expenses, including stock-based
compensation, were $2.2 million or 7.5% of net sales for the second
quarter 2010, compared to $1.0 million, or 6.8% of net sales for
the second quarter 2009.
The Company reported a loss on the exchange rate difference
between the U.S. Dollar ("USD") and the Renminbi ("RMB") of
$130,000 for the second quarter ended June 30, 2010. This compares
with losses on the exchange rate difference of $23,000 for the
second quarter 2009.
The Company recorded a provision for income taxes of $360,600
for the second quarter 2010, compared with provisions for income
taxes of $228,800 for the second quarter 2009.
Net income for the second quarter of 2010 was $1.6 million or
$0.12 per diluted share, based on 13.7 million weighted average
shares outstanding. This compares with second quarter 2009 net
income of $969,000, or $0.07 per diluted share, based on 13.8
million weighted average shares outstanding, which resulted in an
increase in diluted EPS of 71% year-over-year.
Balance Sheet
At June 30, 2010, Hong Kong Highpower Technology had cash and
cash equivalents and restricted cash totaling $10.2 million, total
assets of $65.5 million, working capital of $8.2 million and
stockholders' equity of $24.3 million. Bank credit facilities
totaled $35.0 million at June 30, 2010, of which $18.8 million was
available as unused credit.
Conference Call and Webcast
Management of Hong Kong Highpower Technology will host a
conference call today, Thursday, August 12, 2010 at 8:00 a.m.
Pacific time/11:00 a.m. Eastern time to discuss second 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
92195662. 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.
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
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in US Dollars)
Three months ended June 30,
----------------------------
2010 2009
(Unaudited) (Unaudited)
$ $
Net sales 28,978,114 15,445,484
Cost of sales (23,578,703) (12,371,676)
------------- -------------
Gross profit 5,399,411 3,073,808
Depreciation (69,719) (68,075)
Selling and distributing costs (1,110,448) (580,458)
General and administrative costs, including
stock-based compensation (2,168,103) (1,046,340)
Loss on exchange rate difference (130,130) (22,865)
------------- -------------
Income from operations 1,921,011 1,356,070
Change in fair value of currency forwards - (21,510)
Other income 126,026 21,774
Interest expenses (101,111) (39,377)
Other expenses - (119,549)
------------- -------------
Income before taxes 1,945,926 1,197,408
Income taxes (360,579) (228,752)
------------- -------------
Net income for the period 1,585,347 968,656
Earnings per share of common stock
- Basic 0.12 0.07
============= =============
- Diluted 0.12 0.07
============= =============
Weighted average number of common stock
- Basic 13,582,106 13,762,217
============= =============
- Diluted 13,732,096 13,812,547
============= =============
HONG KONG HIGHPOWER TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
As of
--------------------------
June 30, December 31,
2010 2009
(Unaudited) (Audited)
$ $
ASSETS
Current Assets:
Cash and cash equivalents 3,548,525 2,967,586
Restricted cash 6,683,776 5,478,418
Accounts receivable 18,888,393 14,896,503
Notes receivable 860,786 596,795
Prepaid expenses and other receivables 4,345,588 2,366,734
Inventories 15,017,272 10,633,566
------------ ------------
Total Current Assets 49,344,340 36,939,602
Plant and equipment, net 12,118,022 10,284,873
Leasehold land, net 2,987,656 3,019,509
Intangible asset, net 825,000 850,000
Investment securities 52,725 52,732
Investment in an associate 142,515 -
------------ ------------
TOTAL ASSETS 65,470,258 51,146,716
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Non-trading foreign currency derivatives
liabilities 11,039 11,041
Accounts payable 19,969,317 10,738,714
Other payables and accrued liabilities 4,456,429 3,563,308
Income taxes payable 589,804 876,739
Bank borrowings 16,151,634 14,787,714
------------ ------------
Total Current Liabilities 41,178,223 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 5,155,864 5,065,426
Accumulated other comprehensive income 1,890,208 2,023,858
Retained earnings 17,244,605 14,078,558
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 24,292,035 21,169,200
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 65,470,258 51,146,716
============ ============
Media and Investor Inquiries: Henry H. Ngan Chief
Financial Officer +1-917-887-0614 Email Contact Financial Profiles,
Inc. Tricia Ross (916) 939-7285 Email Contact
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