Liuyang Fireworks Achieves 72.8% Increase in Net Income on Revenue
Growth of 3.6% for First Quarter
TORONTO,
Nov. 30, 2012 /CNW/ - Liuyang
Fireworks Limited (TSX-V: FWK) ("Liuyang" or "the Company")
today announced financial results for its first quarter ended
September 30, 2012. The Liuyang
financial results showed a marked improvement over the pervious
year, and the maintenance of a steady growth trend.
Highlights for the Q1
- During the first quarter higher international sales resulted in
an increase in revenue to $4.1
million representing a 3.6% improvement over the
corresponding period of last year.
- With the higher concentration of traditional products sold to
the international markets, gross margin declined to 34.1% compared
with 38.2% during the corresponding period of last year.
- EBITDA increased during the first quarter to $300,000 representing a 22% improvement over the
same period last year.
- Net income increased by 72.8% compared with the corresponding
period of last year to $159,000 or
$.003 per share.
- The Company maintains a strong balance sheet with $1.7 million in cash and total debt of
$4.1 million
"The Company produced a solid first quarter
marked by net income growth of 72.8% on revenue growth of 3.6% and
an 18.6% reduction in general and administrative expenses," said
Mr. Miao Hu, Liuyang President and CEO. "Revenue growth would
likely have been even stronger accept for wetter than usual weather
that temporarily slowed manufacturing operations from March to
June. We continue to work hard to catch up on our production and
shipping schedules to meet the buoyant market demand in Q2."
Mr. Hu noted that the Liuyang balance sheet
remains strong and the Company has sufficient cash and working
capital to continue its growth and expansion plans for the balance
of fiscal 2013. The Company continues to expect improvement in
domestic sales both in term of volume and price in the 2013 spring
festival sales season. The primary reason for this is the success
of the plan to expand the domestic sales network.
SUMMARY FINANCIAL
STATEMENTS |
|
|
3 months ended Sept. 30 |
2012 |
2011 |
Revenue |
$4,068,000 |
$3,927,000 |
Gross profit |
$1,388,000 |
$1,501,000 |
Gross margins |
34.1% |
38.2% |
EBITDA |
$300,000 |
$246,000 |
EBITDA before stock-based
compensation |
$318,000 |
$456,000 |
Net income |
$159,000 |
$92,000 |
Net income per share |
Basic |
$0.003 |
$0.002 |
|
Diluted |
$0.002 |
$0.001 |
Balance Sheet
Highlights |
|
|
as at |
9/30/12 |
6/30/12 |
Cash |
$1,668,000 |
$1,910,000 |
Current ratio |
1.91:1 |
2.08:1 |
Working capital |
$7,426,000 |
$7,727,000 |
Total assets |
$18,976,000 |
$17,852,000 |
Debt to equity
ratio |
0.75:1 |
0.67:1 |
First Quarter Results Review
Revenue for the first quarter reached
$4.07 million, an increase of
$140,000 or 3.6% compared to the
first quarter of last year. 83% of the first quarter revenue was
attributable to sales in the international European markets, with
the remaining 17% attributable to domestic China sales. The unusually high concentration
of international sales was the result of a decision to delay
European order production schedules to the first quarter due to
wetter than usual weather conditions during the spring months. Wet
weather conditions can negatively impact the quality of fireworks
being produced. As a result of European production schedule delays,
the production and shipment for domestic sales has been pushed back
to the second quarter.
Gross profit for the quarter was $1.39 million compared with $1.50 million for the first quarter a year ago,
representing a decrease of $110,000
or 7.5%. Gross margin as a percentage of sales decreased to 34.1%
from 38.2% a year earlier. The decrease in gross profit was
attributable to more traditional products with lower margins being
sold to the European market compared to first quarter of last
year.
EBITDA was $300,000 compared with $250,000 million for the first quarter of last
year, representing an increase of $50,000 or 22%. The increase was primarily
attributable to a $163,000 reduction
in general and administrative expenses, which more than offset the
lower gross profit for the quarter. EBITDA before stock-based
compensation expense decreased by $140,000 or 30.2% compared to a year earlier, as
stock-based compensation decreased by $192,000 from a year earlier.
Net income for the quarter was $160,000, or $0.003
per share ($0.002 diluted), compared
with $90,000, or $0.002 per share ($0.001 diluted) for the first quarter a year
ago.
Liuyang's consolidated financial statements for
the three months ended September 30,
2012 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.
All amounts are in Canadian dollars unless
otherwise indicated.
About Liuyang Fireworks Limited
Liuyang Fireworks Limited is a leading
China-based manufacturer of
fireworks distributed both domestically and within more than 15
countries in North America,
South America and Europe. The Company has more than 17
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.
Forward-Looking Statements
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.
SOURCE Liuyang Fireworks Limited