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Highpower International Inc. was founded in 2001 as a clean energy group dedicated to R&D, production and sales of rechargeable Ni-MH / Lithium batteries, power source and energy storage systems. In June 2008, Highpower listed in NASDAQ.

Highpower International Reports Financial Results For the Second Quarter And Six Months Ended June 30, 2016

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- Highlighted By Higher Net Income and EPS

- Company to Hold Conference Call on August 12, 2016 at 10:00a.m.Eastern Time /7:00a.m. Pacific Time

SAN FRANCISCO and SHENZHEN, China, Aug. 12, 2016 /PRNewswire/ -- Highpower International, Inc. (NASDAQ: HPJ), a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and  battery management systems and battery recycling provider, today announced its financial results for the second quarter and six months ended June 30, 2016.

2016 Second Quarter Financial Highlights (all results are compared to prior year period)

  • Net sales were $36.7million, compared to $38.6 million, primarily due to exchange rate difference.
  • Gross margin was 20.8%, compared to 22.2%, mainly due to lower average selling price.
  • EBITDA was $3.7million compared to $3.3 million.
  • Net income attributable to the Company was $2.1 million, or $0.14 per diluted share, compared to net income attributable to the Company of $1.9 million, or $0.12 per diluted share; non-GAAP net income attributable to the Company was $2.1 million, or $0.15 per diluted share, compared to non-GAAP net income attributable to the Company of $2.1 million, or $0.13 per diluted share.

Management Commentary

Mr. George Pan, Chairman and CEO of Highpower International, commented, "We are pleased to announce strong results for the second quarter, especially the overall net income is performing well and lithium battery business has a good momentum of progress since the second quarter. We have maintained a solid gross margin in the competitive battery market.  We also indicated that growth would accelerate in the second half of 2016 with the battery sales peak season coming. As we have focused on our corporate objectives, we have also established a lean production culture of continuous improvements, which allows us to provide our customers with the best cost performance products and allows Highpower's sustainable and healthy growth in the future. "

2016 Second Quarter Financial Review

Net Sales

Net sales for the second quarter ended June 30, 2016 were $36.7 million compared to $38.6 million for the same period in 2015. The 1.9 million decrease in net sales compared to the same period in 2015 was mainly due to a $3.8 million decrease in sales of Ni-MH Batteries, offset by increases of $1.6 million in sales of lithium batteries and $0.3 million increase in sales of new material business. Without exchange rate change, net sales in Q2 of 2016 increased 1.6% compared to the same period in 2015.

Net sales for the six months ended June 30, 2016 were $65.8 million, compared to $70.8 million for the same prior year period. This $5.0 million decrease was due to a $5.7 million decrease in sales of Ni-MH Batteries, offset by a $0.1 million increase in net sales of lithium batteries and $0.7 million increase in new material business. Without exchange rate change, net sales in first half year of 2016 decreased 0.9% compared to same period in 2015.

Gross Profit

For the second quarter ended June 30, 2016, the Company's gross profit was $7.6 million, compared to $8.6 million, for the same period in 2015. This decrease was mainly due to the decrease in the average selling price of batteries.

For the six months ended June 30, 2016, the Company's gross profit was $13.5 million, compared to $14.1 million for the same period in 2015.

Gross Margin

Gross margin was 20.8% for the second quarter ended June 30, 2016, compared to 22.2% for the same period in 2015. The decrease was due to pricing declines from the prior year period as well as product mix, offset by lower costs of sales.

Gross margin for the six months ended June 30, 2016 was 20.5%, as compared with 19.9% for the same period in 2015.

Research and Development (R&D)

R&D expenses were $2.0 million, or 5.5% of net sales, for the second quarter ended June 30, 2016, compared to $2.0 million, 5.2% of net sales for the same period in 2015.

For the six months ended June 30, 2016, R&D expenses were$3.7 million, or 5.6% of net sales, compared to $3.7 million, or 5.2% of net sales, for the same period in 2015.

Selling & Distribution

Selling and distribution expenses were $1.5 million, or 4.2% of net sales, for the second quarter ended June 30, 2016, compared to $1.6 million, or 4.1% of net sales, for the same period in 2015.

For the six months ended June 30, 2016, selling and distribution expenses were $3.1 million, or 4.7% of the net sales, compared to $3.4 million, or 4.8% of net sales, for the same period in 2015.

General & Administrative

General and administrative expenses were $3.2 million, or 8.8% of net sales, for the second quarter ended June 30, 2016, compared to $3.4 million, or 8.9% of net sales, for the same period in 2015.

For the six months ended June 30, 2016, general and administrative expenses were $6.3 million, or 9.6% of net sales, compared to $6.4 million, or 9.1% of net sales, for the same period in 2015.

Net Income

For the second quarter of 2016, net income attributable to the Company was $2.1 million, or $0.14 per diluted share based on 15.1 million weighted average diluted shares outstanding, compared to net income of $1.9 million, or $0.12 per diluted share based on 15.4 million weighted average diluted shares outstanding. Non-GAAP net income attributable to the Company was $2.1 million, or $0.15 per diluted share, compared to a non-GAAP net income of $2.1 million, or $0.13 per diluted share, in the prior year period.

For the six months ended June 30, 2016, net income attributable to the Company was $1.7 million, or $0.11 per diluted share based on 15.1 million weighted average diluted shares outstanding, compared to net income of $1.7 million, or $0.11 per diluted share based on 15.5 million weighted average diluted shares outstanding. Non-GAAP net income attributable to the Company was $1.8 million, or $0.11 per diluted share, compared to a non-GAAP net income of $1.7 million, or $0.11 per diluted share, in the prior year period.

EBITDA

EBITDA for the second quarter ended June 30, 2016 was $3.7million, compared to $3.3 million in the prior year period.

For the six months ended June 30, 2016, EBITDA was $4.8 million, compared to $4.5 million, in the prior year period.

A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) 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)


June 30,


December 31,

2016


2015



(Unaudited)





$


$

Cash and Cash Equivalents


$6.8


$5.8

Total Current Assets


$78.5


$80.7

Total Assets


$134.2


$134.2

Total Current Liabilities


$91.5


$91.2

Total Liabilities


$91.5


$91.3

Shareholders' Equity


$42.7


$42.9

Total Liabilities and Shareholders' Equity


$134.2


$134.2

Book Value Per Share


$2.83


$2.84

Conference Call Details

The Company announced that it will discuss financial results in a conference call on August 12, 2016at 10:00a.m.Eastern Time / 7:00a.m. Pacific Time to discuss these results.

The dial-in numbers are:


Live Participant Dial In (Toll Free): 

877-407-3108

Live Participant Dial In (International):

201-493-6797

 

To listen to the live webcast, please go to at www.highpowertech.com and click on the conference call link, or go to: http://highpowertech.equisolvewebcast.com/q2-2016. This webcast will be archived and accessible through the Company's website for approximately 30 days following the call. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference 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. Adjusted EBITDA and Non-GAAP (adjusted) net income or (loss) exclude stock-based compensation expense and change of fair value of warrant liability. Adjusted EBITDA, as defined above, may not be similar to Adjusted EBITDA measures used by other companies. 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 these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's operating results in the ordinary course of its operations.

These non-GAAP measures are 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.  These non-GAAP financial measures are reconciled in the accompanying tables to the most directly comparable measures 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, 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, including, without limitation, economic downturn and uncertainty in Asia and Europe adversely affecting demand for our products; 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; changes in the laws of the PRC that affect our operations; the devaluation of the U.S. Dollar relative to the Renminbi; our dependence on the growth in demand for portable electronic devices and energy storage systems and transportation 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 products, including our lithium products; our ability to successfully develop products for and penetrate the electric transportation market; our ability to continue R&D development to keep up with technological changes our exposure to product liability, safety, and defect claims; rising labor costs, volatile metal prices, and inflation; changes in foreign, political, social, business and economic conditions that affect our production capabilities or demand for our products; and various other matters, many of which are beyond our control.. 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
Interim Chief Financial Officer
+86-755-8968-6521
ir@highpowertech.com

INVESTOR RELATIONS:
The Equity Group Inc.
In China
Katherine Yao, Senior Associate
+86-10-6587-6435
kyao@equityny.com

In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
aprior@equityny.com


 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Stated in US Dollars except Number of Shares)



Three months ended

June 30,


Six months ended

June 30,


2016


2015


2016


2015


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


$


$


$


$









Net sales

36,732,310


38,635,801


65,829,365


70,773,449

Cost of sales

(29,088,639)


(30,072,041)


(52,308,655)


(56,653,975)

Gross profit

7,643,671


8,563,760


13,520,710


14,119,474









Research and development expenses

(2,035,886)


(1,997,494)


(3,658,769)


(3,671,618)

Selling and distribution expenses

(1,539,395)


(1,597,564)


(3,074,431)


(3,396,286)

General and administrative expenses

(3,248,899)


(3,423,770)


(6,318,613)


(6,448,521)

Foreign currency transaction gain

600,313


73,546


509,877


443,857

Total operating expenses

(6,223,867)


(6,945,282)


(12,541,936)


(13,072,568)









Income from operations

1,419,804


1,618,478


978,774


1,046,906









Gain on change of fair value of warrant liability

7,077


84,833


126,546


431,132

Other income

1,055,947


357,055


1,211,875


587,147

Interest expenses

(435,402)


(275,476)


(710,394)


(544,118)

Income before taxes

2,047,426


1,784,890


1,606,801


1,521,067









Income taxes (expenses) benefit

(174,313)


(18,840)


(209,817)


76,416

Net income

1,873,113


1,766,050


1,396,984


1,597,483









Less: net loss attributable to non-controlling interest

(178,669)


(101,074)


(312,190)


(146,283)

Net income attributable to the Company

2,051,782


1,867,124


1,709,174


1,743,766









Comprehensive (loss) income








Net income

1,873,113


1,766,050


1,396,984


1,597,483

Foreign currency translation (loss) income

(1,964,424)


206,027


(1,714,278)


1,266

Comprehensive (loss) income

(91,311)


1,972,077


(317,294)


1,598,749









Less: comprehensive loss attributable to non-

controlling interest

(197,060)


(95,376)


(325,882)


(144,549)

Comprehensive income attributable to the Company

105,749


2,067,453


8,588


1,743,298









Income per share of common stock attributable to the

Company








- Basic

0.14


0.12


0.11


0.12

- Diluted

0.14


0.12


0.11


0.11









Weighted average number of common stock

outstanding








- Basic

15,101,679


15,094,979


15,101,679


15,091,639

- Diluted

15,102,877


15,441,576


15,103,886


15,469,274

 

 


HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars except Number of Shares)





June 30,


December 31,




2016


2015




(Unaudited)






$


$

ASSETS







Current Assets:







Cash



6,798,975


5,849,967


Restricted cash



9,892,758


11,656,204


Accounts receivable, net



32,279,032


36,139,866


Accounts receivable, related party



2,152,054


-


Notes receivable



684,697


1,757,709


Prepayments and other receivables



6,210,666


6,060,904


Inventories, net



20,502,568


19,218,331









Total Current Assets



78,520,750


80,682,981









Property, plant and equipment, net



48,569,186


47,464,186


Land use right, net



3,830,862


3,963,003


Other assets



1,000,662


550,000


Deferred tax assets



1,574,303


1,544,314


Long-term investment



751,925


-







TOTAL ASSETS



134,247,688


134,204,484







LIABILITIES AND EQUITY












LIABILITIES







Current Liabilities:







Accounts payable



32,803,377


36,077,396


Deferred income



785,899


879,944


Short-term bank loan



14,963,306


13,839,341


Non-financial institution borrowings



4,511,550


-


Notes payable



29,003,988


30,490,166


Amount due to a related company



761,895


-


Other payables and accrued liabilities



6,503,604


6,292,492


Income taxes payable



1,252,743


1,783,013


Current portion of long-term loan



902,310


1,845,245









Total Current Liabilities



91,488,672


91,207,597









Warrant Liability



14,003


140,549









TOTAL LIABILITIES



91,502,675


91,348,146







      COMMITMENTS AND CONTINGENCIES



-


-









 

 

HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Stated in US Dollars except Number of Shares)





June 30,




December 31,




2016



2015




(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, 15,101,679
shares issued and outstanding at June 30, 2016 and December 31,
2015)



1,510


1,510


Additional paid-in capital



11,433,948


11,227,979


Statutory and other reserves



4,042,429


4,042,429


Retained earnings



25,807,349


24,098,175


Accumulated other comprehensive income



932,176


2,632,762







Total equity for the stockholders of Highpower International Inc.



42,217,412


42,002,855







Non-controlling interest



527,601


853,483







TOTAL EQUITY



42,745,013


42,856,338







TOTAL LIABILITIES AND EQUITY



134,247,688


134,204,484


 

 


HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)



Six months ended June 30


2016


2015


(Unaudited)


(Unaudited)


$


$

Cash flows from operating activities




Net income

1,396,984


1,597,483

Adjustments to reconcile net income to net cash provided by (used in) operating

activities:




Depreciation and amortization

2,486,196


2,535,695

Allowance for doubtful accounts

4,837


896

Income on disposal of property, plant and equipment

95,368


79,692

Deferred income tax

(64,671)


(230,050)

Share based compensation

205,969


412,304

Change in fair value of warrant liability

(126,546)


(431,132)

Changes in operating assets and liabilities:




Accounts receivable

3,216,097


(787,672)

Notes receivable

1,051,486


(1,645,051)

Prepayments and other receivables

(770,029)


(2,338,484)

Amount due from a related company

(2,187,784)


-

Amount due to a related company

774,545


-

Inventories

(1,735,486)


(3,386,818)

Accounts payable

(2,843,233)


(1,503,555)

Deferred revenue

(75,912)


-

Other payables and accrued liabilities

349,026


315,942

Income taxes payable

(499,161)


(573,875)

Net cash flows provided by (used in) operating activities

1,277,686


(5,954,625)





Cash flows from investing activities




Acquisitions of plant and equipment

(4,415,690)


(4,047,717)

Payment for long-term investment

(764,409)


-

Net cash flows used in investing activities

(5,180,099)


(4,047,717)





Cash flows from financing activities




Proceeds from short-term bank loans

1,452,377


-

Repayment of short-term  loans

-


(6,062,248)

Proceeds from non-financial institution borrowings

4,586,455


-

Repayment of long-term bank loans

(917,291)


(978,649)

Proceeds from notes payable

29,485,540


30,931,015

Repayment of notes payable

(30,313,965)


(27,631,861)

Proceeds from exercise of employee options

-


44,534

Change in restricted cash

1,531,837


2,588,730

Net cash flows provided by (used in) financing activities

5,824,953


(1,108,479)

Effect of foreign currency translation on cash and cash equivalents

(973,532)


238,188

Net increase (decrease) in cash and cash equivalents

949,008


(10,872,633)

Cash and cash equivalents - beginning of period

5,849,967


14,611,892

Cash and cash equivalents - end of period

6,798,975


3,739,259





Supplemental disclosures for cash flow information:




Cash paid for:




Income taxes

773,650


727,509

Interest expenses

710,394


615,363

 

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(Stated in US Dollars)


Reconciliation of Net Income to EBITDA




















Three months ended

Six months ended



June 30,

June 30,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)



$


$


$


$

Net income attributable to the
Company


2,051,782


1,867,124


1,709,174


1,743,766

Non-GAAP Net Income (1)


2,139,964


2,073,234


1,788,597


1,724,938










Interest expenses, net


283,137


110,262


425,600


342,832

Income tax (expenses) benefit


174,313


18,840


209,817


(76,416)

Depreciation and Amortization


1,229,817


1,289,652


2,486,196


2,535,695










EBITDA


3,739,049


3,285,878


4,830,787


4,545,877

Non-GAAP Adjusted EBITDA(2)


3,827,231


3,491,988


4,910,210


4,527,049


(1) See table below for reconciliation of net income attributable to the Company to Non-GAAP net income attributable to

the Company.

(2) Excludes share-based compensation expense and gain on change of fair value of warrant liabilityas set forth in the

following table.

 

 

HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(Stated in US Dollars except Number of Shares)


Reconciliation of Net Income Attributable to the Company to Non-GAAP Net Income Attributable to the Company


















Three months ended

Six months ended

June 30,

June 30,



2016


2015


2016


2015



















Net income attributable to the Company


2,051,782


1,867,124


1,709,174


1,743,766

Stock-based compensation expense


95,259


290,943


205,969


412,304

Gain on change of fair value of warrant liability


(7,077)


(84,833)


(126,546)


(431,132)

Non-GAAP net income attributable to the Company


2,139,964


2,073,234


1,788,597


1,724,938










Basic net income per share of common stock

attributable to the Company


0.14


0.12


0.11


0.12

Stock-based compensation expense


0.01


0.02


0.01


0.03

Gain on change of fair value of warrant liability


(0.00)


(0.01)


(0.01)


(0.03)

Non-GAAP income per share of common stock

attributable to the Company


0.15


0.13


0.11


0.12










Diluted net income per share of common stock

attributable to the Company


0.14


0.12


0.11


0.11

Stock-based compensation expense


0.01


0.02


0.01


0.03

Gain on change of fair value of warrant liability


(0.00)


(0.01)


(0.01)


(0.03)

Non-GAAP income per share of common stock

attributable to the Company


0.15


0.13


0.11


0.11










Weighted average number of common shares
outstanding









-Basic


15,101,679


15,094,979


15,101,679


15,091,639

-Diluted


15,102,877


15,441,576


15,103,886


15,469,274

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/highpower-international-reports-financial-results-for-the-second-quarter-and-six-months-ended-june-30-2016-300312868.html

SOURCE Highpower International, Inc.