FWK

TORONTO, Nov. 29 /CNW/ -- TORONTO, Nov. 29 /CNW/ - Liuyang Fireworks Limited (TSX-V: FWK) ("Liuyang" or "the Company") today reported its financial results for the three- and nine-month periods ended September 30, 2010. All amounts are in Canadian dollars unless otherwise stated. Selected Financial Highlights _____________________________________________________________________ | | | | | |For three months ending Sep|For nine months ending Sep| | | 30| 30| |______________|___________________________|__________________________| | | | | | | | | |In thousands | | | | | | | |except share, | | | | | | | |EPS and % data|FY2010|FY2009| Change |FY2010|FY2009| Change | |______________|______|______|_____________|______|______|____________| | | | | | | | | |Revenue | 3,433| 3,967| -13%| 9,094| 8,698| 5%| |______________|______|______|_____________|______|______|____________| | | | | | | | | |Gross margin | 43%| 49%| -12%| 38%| 45%| -16%| |______________|______|______|_____________|______|______|____________| | | | | | | | | |EBITDA | 590| 704| -16%| 1,067| 1,662| -36%| |______________|______|______|_____________|______|______|____________| | | | | | | | | |Adjusted net | | | | | | | |income | 546| 402| 36%| 1,144| 974| 18%| |______________|______|______|_____________|______|______|____________| | | | | | | | | |Net income | 485| 402| 21%| 811| 974| -17%| |______________|______|______|_____________|______|______|____________| | | | | | | | | |EPS | 0.011| 0.010| 10%| 0.019| 0.020| -5%| |______________|______|______|_____________|______|______|____________| "We are very pleased to see that our strategy of becoming the most vertically integrated fireworks company in China has shown good results. During the third quarter, our two recently acquired fireworks wholesalers received $1 million sales orders for 2011 spring festival sales season." said Miao Hu, President and Chief Executive Officer, Liuyang Fireworks Limited. "Consistent with our domestic sales expansion strategy, revenue from domestic market represents 30% of the company's total revenue for the first nine months of 2010, compared with 10% at the same time last year. More importantly, we continue to grow our business with profits. Our adjusted net income increases 36% for 3 months and 18% for 9 months respectively comparing to same periods last year." Third Quarter 2010 Highlights: -- Two fireworks wholesale companies acquired in August 2010 have been fully integrated with our operations. These two companies have received $1 million sales orders for 2011 spring festival sales season. The higher sales revenue is expected in first quarter of 2011. -- International division received a confirmed order from one US wholesaler for US$1.4 million to deliver in 2011. -- The company received Canadian Explosives Regulatory Division (CERD) approval for additional 3 products (15 in total as of September 2010) to distribute in Canada. Review of Third Quarter 2010 Financial Results Revenue for Q3, 2010 was $3.43 million, down 13% from $3.97 million for the same period last year. The decrease is due to some of the company's European sales orders being delivered in October as per client's request, instead of in September of last year. On a nine-month basis, revenue was $9.09 million, up 5% from the same periods in 2009. Gross profit for Q3, 2010 was $1.47 million compared with $1.93 million for the same period last year. The decrease is due to increased raw materials costs and more outsourced sales orders to subcontractors. The management has worked on initiatives to establish an alliance with all its subcontractors to reduce raw materials purchasing costs. As a percentage of revenue, gross profit margin for Q3, 2010 was 43% compared to 49% for Q3, 2009. EBITDA for Q3, 2010 was down 21% from same quarter last year to $0.59 million. Such decline was mainly attributed to non-cash stock-based compensation costs. There is no stock-based compensation cost recorded in the same period last year. On a nine-month basis, EBITDA was $1.1 million for 2010 and $1.7 million for 2009. Net income for Q3, 2010 increased 21% to $0.49 million from $0.4 million for the same period last year. The increase of net income is due to reduced selling expenses and lower G& A expenses, along with a one-time government award. On a nine-month basis, net income was $0.8 million for 2010 and $0.97 million for 2009. At September 30, 2010, Liuyang had working capital of $3.95 million, including cash and cash equivalents of $2.17 million. These compare to $4.5 million and $2 million, respectively, at December 31, 2009. Outlook "We are on track to pursue our two-pronged strategy designed to accelerate our long-term growth. Internationally, we continue to see strong demand for our safe, high quality consumer fireworks." said Mr.Hu. "Domestically, we have successfully integrated our two recently acquired wholesale companies into our operation during the quarter. We expect a higher domestic sales growth for Q4, 2010 and Q1, 2011 as a result of higher demand from Chinese market. We are also in the process of evaluating the third acquisition candidate to complete in the first half of 2011." Liuyang's consolidated financial statements for the quarter ended September 30, 2010 and related management's discussion and analysis (MD&A) will be filed with securities regulatory authorities within applicable timelines and will be available via SEDAR at www.sedar.com. About Liuyang Fireworks Limited Liuyang Fireworks Limited is a leading China-based manufacturer of fireworks that are distributed domestically and in more than 15 countries in North America, South America and Europe. The Company has more than 16 years of experience in the fireworks industry and is a supplier to the world's top five fireworks wholesalers and retailers. Liuyang's ISO9001-certified manufacturing facilities are located in the Liuyang area of Hunan, China where more than half of the world's fireworks are produced. For more information about our company, please visit www.liuyangfwk.com The forward-looking information contained in this news release represents the expectations of the Company as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable securities legislation. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. pJacky Longbr/ Chief Financial Officerbr/ Liuyang Fireworks Limitedbr/ Tel : 416-613-0208 ext 206br/ a href="mailto:jackylong@farocean.com" cr="true"jackylong@farocean.com/a/p

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