Exhibit 99.1

 

 Highpower International Reports Unaudited First Quarter 2019 Financial Results

 

SAN DIEGO, CALIFORNIA and SHENZHEN, China, May 13, 2019 /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, 2019.

 

First Quarter 2019 Highlights (all results compared to prior year period)

 

·Net sales for the first quarter of 2019 increased 16.7% to $58.1 million from $49.8 million.
·Lithium business net sales increased 16.8% to $42.7 million from $36.6 million.
·Gross margin increased to 21.8% of net sales compared to 15.2%.
·Net income attributable to the Company was $0.3 million, or earnings of $0.02 per diluted share, compared to net loss attributable to the Company of $1.1 million, or loss of $0.07 per diluted share.

 

Mr. George Pan, Chairman and CEO of Highpower International, commented, “Our first quarter results show a good start to 2019. Top line performance beat our guidance in RMB terms, driven by continued growth in our battery solutions businesses. We also continued to optimize our product mix and improve labor efficiency, which successfully increased our margins, which also exceeded our expectations.”

 

“We believe that raw material prices will stabilize in 2019. However, potential trade conflicts may place downward pressure on the broader global economic environment, creating uncertainties to our business. To offset these effects, we intend to adapt to market forces and remain focused on executing our strategy while ensuring that we have the talent, technology, and capacity necessary to continue our growth. We remain dedicated to sustainable long-term growth and to providing clean, safe, and efficient power solutions to meet society’s needs,” Mr. Pan concluded.

 

First Quarter 2019 Financial Results

 

Net Sales

 

Net sales for the first quarter of 2019 increased 16.7% to $58.1 million from $49.8 million in the prior year period. The Company’s lithium segment grew 16.8% year over year, and the NiMH batteries and accessories segment grew 16.7% year over year.

 

Gross Profit

 

Gross profit for the first quarter of 2019 increased 67.3% to $12.7 million from $7.6 million in the prior year period. Gross margin was 21.8% compared to 15.2% in the prior year period.

 

 

 

 

Operating Expenses

 

·Research and development (R&D) expenses were $3.0 million compared to $2.6 million in the prior year period. As a percentage of net sales, R&D expenses remained steady at 5.1% from the prior year period.

 

·Selling and distribution expenses were $2.8 million compared to $2.0 million in the prior year period. As a percentage of net sales, selling and distribution expenses increased to 4.8% from 4.0% in the prior year period. The increase was mainly driven by expanded business scale, including marketing expenses for more brand customers.

 

·General and administrative expenses were $4.8 million compared to $4.1 million in the prior year period. As a percentage of net sales, general and administrative expenses remained at 8.3% from the prior year period.

 

Net Income

 

Net income attributable to the Company for the first quarter of 2019 was $0.3 million compared to a net loss of $1.1 million in the prior year period. Net income attributable to the Company per diluted share for the first quarter of 2019 was $0.02 compared to a net loss attributable to the Company per diluted share of $0.07 in the prior year period.

 

For the quarter ended March 31, 2019, the Company's weighted average diluted shares outstanding used in computing diluted share was 15,604,907.

 

EBITDA

 

EBITDA for the first quarter of 2019 increased 374.6% to $2.8 million from $0.6 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        
   March 31,   December 31, 
($ in millions, except per share data)  2019   2018 
   (Unaudited)     
   $   $ 
Cash   24.2    24.9 
Total Current Assets   194.9    215.0 
Total Assets   284.1    288.1 
           
Total Current Liabilities   201.1    210.8 
Total Liabilities   204.6    210.8 
Total Equity   79.5    77.3 
Total Liabilities and Equity   284.1    288.1 
Book Value Per Share   5.10    4.97 

 

 

 

 

Financial Outlook

 

For the second quarter of 2019, the Company expects net revenues to grow over 20% year over year. Gross margin is expected to be similar or slightly lower than that of the first quarter of 2019.

 

Conference Call Details

The Company will hold a conference call on Monday, May 13, 2019, 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/30366/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 are reconciled in the tables below 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. Such forward-looking statements include outlook on net revenues and gross margins, business and financial expectations and anticipated growth during 2019. 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; inability to successfully expand our production capacity and improve production efficiency; 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; impact of trade relations between China and the U.S. and other countries where we sell our products; unexpected fluctuations in exchange rates and our ability to successfully manage hedging; our ability to continue R&D development to keep up with technological changes, and adverse changes in legal, regulatory and economic factors generally. 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 Annual Report for the year ended December 31, 2018 on Form 10-K and other 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, 
   2019   2018 
   (Unaudited)     
   $   $ 
ASSETS          
Current Assets:          
Cash   24,167,300    24,916,484 
Restricted cash   39,562,823    44,495,633 
Accounts receivable, net   59,037,769    77,279,817 
Amount due from a related party   61,131    477,663 
Notes receivable   4,375,399    256,712 
Advances to suppliers   926,624    2,292,843 
Prepayments and other receivables   8,282,896    10,457,789 
Inventories   58,456,282    54,790,461 
           
Total Current Assets   194,870,224    214,967,402 
           
Property, plant and equipment, net   68,148,472    56,523,177 
Long-term prepayments   1,949,214    2,617,419 
Land use right, net   2,476,691    2,445,751 
Other assets   635,015    643,128 
Deferred tax assets, net   983,879    865,370 
Long-term investments   9,768,087    9,993,852 
Right-of-use assets   5,272,558    - 
           
TOTAL ASSETS   284,104,140    288,056,099 
           
LIABILITIES AND EQUITY          
           
LIABILITIES          
Current Liabilities:          
Accounts payable   68,943,619    66,486,690 
Deferred government grants   473,111    464,206 
Short-term loans   17,749,981    24,856,744 
Non-financial institution borrowing   -    8,761,426 
Notes payable   75,053,041    73,607,284 
Foreign exchange derivative liabilities   2,240    521,509 
Amount due to related parties   9,011,760    6,116,851 
Other payables and accrued liabilities   23,733,687    25,860,703 
Income taxes payable   4,246,421    4,124,719 
Lease liabilities, current   1,866,177    - 
           
Total Current Liabilities   201,080,037    210,800,132 
           
Lease liabilities, non current   3,550,051    - 
           
TOTAL LIABILITIES   204,630,088    210,800,132 

 

 

 

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

 

    March 31,     December 31,  
    2019     2018  
    (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, 15,567,953 shares issued and outstanding at March 31, 2019 and 15,559,658 at December 31, 2018, respectively)     1,557       1,556  
Additional paid-in capital     14,067,883       13,863,282  
Statutory and other reserves     8,012,052       8,012,052  
Retained earnings     56,481,633       56,173,912  
Accumulated other comprehensive income (loss)     910,927       (794,835 )
                 
TOTAL EQUITY     79,474,052       77,255,967  
                 
TOTAL LIABILITIES AND EQUITY     284,104,140       288,056,099  

 

 

 

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Stated in US Dollars)

 

  

Three months ended

March 31,

 
   2019   2018 
   (Unaudited)   (Unaudited) 
   $   $ 
         
Net sales   58,113,480    49,783,453 
Cost of sales   (45,452,951)   (42,217,126)
Gross profit   12,660,529    7,566,327 
           
Research and development expenses   (2,986,709)   (2,561,837)
Selling and distribution expenses   (2,792,862)   (1,975,096)
General and administrative expenses   (4,823,489)   (4,114,810)
Foreign currency transaction loss   (1,250,895)   (1,014,693)
Total operating expenses   (11,853,955)   (9,666,436)
           
Income (loss) from operations   806,574    (2,100,109)
           
Changes in fair value of foreign exchange derivatives   387,100    703,715 
Government grants   221,435    329,820 
Other income   66,698    23,561 
Equity in (loss) earnings of investee   (418,204)   156,250 
Interest expenses   (470,423)   (241,852)
Income (loss) before income taxes   593,180    (1,128,615)
           
Income taxes (expense) benefit   (285,459)   9,679 
Net income (loss)   307,721    (1,118,936)
           
Comprehensive income          
Net income (loss)   307,721    (1,118,936)
Foreign currency translation gain   1,705,762    2,836,556 
Comprehensive income   2,013,483    1,717,620 
           
Earnings (loss) per share of common stock attributable to the Company          
- Basic   0.02    (0.07)
- Diluted   0.02    (0.07)
           
Weighted average number of common stock outstanding          
- Basic   15,566,478    15,509,658 
- Diluted   15,604,907    15,509,658 

 

 

 

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

   Three Months Ended March 31, 
   2019   2018 
   (Unaudited)   (Unaudited) 
   $   $ 
Cash flows from operating activities          
Net income (loss)   307,721    (1,118,936)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   1,729,440    1,475,228 
Bad debt expense   89,427    18,524 
Loss on disposal of property, plant and equipment   -    21,805 
Deferred taxes   (102,366)   (356,616)
Changes in fair value of foreign exchange derivatives   (387,100)   (414,042)
Equity in loss (earnings) of investee   418,204    (156,250)
Share based compensation   204,602    241,421 
Changes in operating assets and liabilities:          
Accounts receivable   18,954,393    3,713,692 
Notes receivable   (4,120,877)   2,622,925 
Advances to suppliers   1,412,642    (236,789)
Prepayments and other receivables   2,379,960    (601,315)
Amount due from a related party   426,432    285,657 
Amount due to related parties   113,794    - 
Inventories   (2,626,489)   (10,779,233)
Accounts payable   (6,016,313)   (1,377,447)
Deferred government grants   -    475,783 
Other payables and accrued liabilities   (2,287,547)   665,379 
Income taxes payable   57,542    19,371 
Net cash flows provided by (used in) operating activities   10,553,465    (5,500,843)
           
Cash flows from investing activities          
Acquisitions of plant and equipment   (4,336,823)   (1,553,979)
Payment for long-term investment   (313,073)   (317,188)
Net cash flows used in investing activities   (4,649,896)   (1,871,167)
           
Cash flows from financing activities          
Proceeds from short-term bank loans   5,963,296    14,427,164 
Repayments of short-term bank loans   (13,560,014)   - 
Proceeds from a related party   2,981,648    - 
Repayments of non-financial institution borrowing   (8,944,944)   - 
Proceeds from notes payable   30,205,286    28,429,600 
Repayments of notes payable   (30,171,519)   (26,488,407)
Payment of derivative instruments   (143,089)   - 
Net cash flows (used in) provided by financing activities   (13,669,336)   16,368,357 
Effect of foreign currency translation on cash   2,083,773    2,046,039 
Net (decrease) increase in cash and restricted cash   (5,681,994)   11,042,386 
Cash and restricted cash- beginning of year   69,412,117    40,456,117 
Cash and restricted cash- end of year   63,730,123    51,498,503 
           
Supplemental disclosures for cash flow information:          
Cash paid for:          
Income taxes   330,283    327,565 
Interest expenses   863,923    114,588 
Non-cash investing and financing activities:          
Purchase of property and equipment financed by accounts payables   7,203,680    - 
Reconciliation of cash and restricted cash:          
Cash   24,167,300    18,859,355 
Restricted cash   39,562,823    32,639,148 
Total cash and restricted cash shown in the condensed consolidated statements of cash flows   63,730,123    51,498,503 

 

 

 

 

Reconciliation of Net Income to EBITDA

 

   Three months ended March 31, 
   2019   2018 
   (Unaudited)   (Unaudited) 
   $   $ 
Net income (loss) attributable to the Company   307,721    (1,118,936)
           
Interest expenses   470,423    241,852 
Income taxes expenses (benefit)   285,459    (9,679)
Depreciation and amortization   1,729,440    1,475,228 
           
EBITDA   2,793,043    588,465