NEW YORK, NY and SHENZHEN, CHINA — (Marketwire) — 08/11/11 — (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, 2011.
Grew net sales by 10% sequentially for the second quarter of 2011 to $29.7 million from $26.9 million in the first quarter 2011
Strong second quarter growth in Li-ion battery segment with an increase of 48% in net sales over the second quarter of 2010 and sequential increase of 55% over the first quarter 2011
Improved gross margins sequentially to 16% in the second quarter of 2011 from 14.8% in the first quarter 2011
Announced corporate share repurchase program of up to $5 million of shares outstanding
“We had a strong quarter in terms of overall revenue growth, which was driven by global demand for our cleaner energy lithium-ion batteries, a segment that notably reached a record level during the second quarter,” said Mr. George Pan, Chairman and Chief Executive Officer of Highpower International. “During the second quarter, we also continued to navigate an unfavorable raw materials pricing environment.”
“Despite the temporary setbacks on profitability, we have continued to position Highpower for future, sustainable growth in 2012 through strategic investments in our R&D, salesforce and capacity. In addition, we announced a share repurchase program during the quarter, which reflects our confidence and commitment to our business and our shareholders,” concluded Mr. Pan.
Mr. Henry Sun, Chief Financial Officer of Highpower International added, “While we are seeing some macro signs that point to uncertainty about consumer demand and the overall health of the global economy, we expect to benefit from lower commodity prices if recent trends continue. Moreover, we continue to actively work with our customers on our pricing programs. At this time, we believe that our profitability will improve in the second half of 2011 relative to the first half of this year.”
Net sales for the second quarter ended June 30, 2011 totaled $29.7 million, a year-over-year increase of 2.5% compared with $29.0 million for the second quarter ended June 30, 2010, and up sequentially 10% from $27.0 million in the first quarter of 2011. The increase in sales for the second quarter was primarily driven by increased demand for our Li-ion batteries.
Second quarter 2011 gross profit decreased to $4.8 million, as compared with $5.4 million for the second quarter 2010. Gross profit margin was 16.0% for the second quarter 2011, as compared with 18.6% for the second quarter 2010. Gross profit margin increased sequentially from 14.8% in the first quarter 2011. The year-over-year decrease in gross profit margin for the second quarter 2011 was primarily due to a rise in raw materials prices, primarily for nickel and rare earth materials.
Selling and distribution costs, including stock-based compensation, were $1.0 million for the second quarter 2011, as compared with $1.1 million for the comparable period in 2010.
General and administrative expenses, including stock-based compensation, were $2.1 million, or 7.1% of net sales, for the second quarter 2011, as compared to $1.8 million, or 6.1% of net sales, for the second quarter 2010. The increase was primarily due to increased spending on senior and mid-level management staffing and increased investment in our management information systems, both of which are required to support the growth of our business.
Income from operations for the second quarter of 2011 was $0.3 million, as compared with income from operations of $1.9 million for the second quarter of 2010. Also included in these results were non-cash stock-based compensation expenses of $49,000 and $7,000 for the 2011 and 2010 quarters, respectively.
Net income for the second quarter of 2011 was $0.1 million, or $0.01 per diluted share, based on 13.8 million weighted average shares outstanding. This compares with second quarter 2010 net income of $1.6 million, or $0.12 per diluted share, based on 13.7 million weighted average shares outstanding. As previously mentioned, the 2011 second quarter–s results were negatively impacted mainly by commodity prices and the timing of pricing increases to customers.
At June 30, 2011, Highpower International had cash, cash equivalents and restricted cash totaling $18.7 million, total assets of $80.9 million, working capital of $8.5 million and stockholders– equity of $28.8 million. Bank credit facilities totaled $80.0 million at June 30, 2011, of which $35.6 million was utilized and $44.4 million was available as unused credit.
Based on our current expectations for global demand for the rechargeable battery market in 2011, the outlook for our key raw material input prices and our planned increased investment in sales and marketing and research and development, we are updating our financial guidance for 2011. We expect net sales to be between $120 million and $125 million. We expect net income to be in the range of $2 million to $3 million.
The Company will host a conference call today at 7:00 a.m. Pacific time/10:00 a.m. Eastern time to discuss these results and answer questions.
Individuals interested in participating in the conference call may do so by dialing 877-941-0844 from the U.S. or 480-629-9835 from outside the U.S. and referencing the reservation code 4463189. 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 or .
Highpower International, Inc. develops, manufactures and markets powerful, efficient, and environmental rechargeable nickel-metal hydride (Ni-MH) and lithium-ion (Li-ion) batteries and related products for use in a variety of devices and equipment including wireless communications, electronics, lighting, backup power, electric tools, and transportation, etc. Highpower International–s products are distributed worldwide to markets in the Americas, Europe, China, and Southeast Asia. For more information, visit
To be added to the Company–s email distribution for future news releases, please send your request to . Company news can also be found at
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 —
Financial Profiles, Inc.
Tricia Ross
+1-916-939-7285