Fushi Copperweld Announces 2012 First Quarter Results

BEIJING, May 3, 2012 /PRNewswire-Asia-FirstCall/ -- Fushi Copperweld, Inc. (Nasdaq: FSIN), the leading global manufacturer and innovator of copper-clad bimetallic wire used in a variety of telecommunication, utility, transportation and other electrical applications, today announced financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Results

  • Revenues were $62.1 million compared to $65.9 million in the year ago period;
  • Gross profit was $16.4 million, or 26.3% of revenues, compared to $17.1 million, or 26.0% of revenues, in the year ago period;
  • Income from operations was $8.1 million, or 13.0% of revenues, compared to $10.5 million, or 15.9% of revenues, in the year ago period;
  • Net income was $4.9 million, or $0.13 per diluted share, compared to net income of $6.8 million, or $0.18 per diluted share, in the year ago period;
  • Cash position of $205.4 million at March 31, 2012.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "The quarter came in largely as expected, and we saw a slight improvement in business conditions and greater predictability in orders relative to what we experienced in the 2011 fourth quarter. While sales at Dalian were impacted by softening telecom demand, we benefitted from solid performance in our utility product lines and lower raw material costs in what continued to be a challenging market environment. We also began to see some traction from our growth initiatives in the period, including increased order and inquiry activity from European, African and broader Asian markets, for a variety of products. The ramp up of our operations in Liege, Belgium continued, and Liege is becoming a key competitive differentiator for us, as we have secured promising new copper tubing and bi-metallic wire orders and interest, as a result of our on-the-ground presence in this market."

Revenues in the first quarter of 2012 were $62.1 million, a decrease of 5.7% compared to $65.9 million in the prior year quarter, primarily due to lower sales volumes.

Gross profit in the first quarter was $16.4 million compared to $17.1 million last year. Gross margin increased to 26.3% from 26.0% in the same period last year. Gross margin for the Company's Dalian cladding facility was 33.1%, compared to 32.6% in the prior year period, while gross margin for the Company's Fayetteville, TN facility was 10.3% in the first quarter of 2012, compared to 8.9% in the 2011 first quarter.

Operating expenses in the first quarter of 2012 increased to $8.3 million, compared to $6.7 million in the prior year's quarter, primarily as a result of the Company's continued investment in its global business development efforts, as well as incremental costs of approximately $0.9 million related to the start-up of operations at its new facility in Liege, Belgium. As a percentage of revenue, operating expenses increased to 13.3% from 10.1% in the first quarter of 2011. While not significant to date, the Liege facility did generate nominal revenues from sales of copper-clad aluminum and copper tubing products during the quarter. The Company expects that revenues from this facility will continue to increase and be slightly dilutive to earnings in 2012.

The Company's effective income tax rate in the first quarter of 2012 was 39.2% compared to 33.5% in the year ago period. The Company continues to expect its effective tax rate for the 2012 full year period to be 31.5%.

Net income in the first quarter was $4.9 million, or $0.13 per diluted share, compared to net income of $6.8 million, or $0.18 per diluted share, for the 2011 first quarter.

Fully diluted shares in the first quarter of 2012 were 38.3 million compared to 38.4 million a year ago.

During the three months ended March 31, 2012, the Company generated net cash from operating activities of $7.1 million, compared to $15.0 million in the comparable period in 2011.

Mr. Longever concluded, "As we exit the seasonally soft first quarter, we are encouraged by our performance and the improved conditions in our markets. Order trends have remained promising, our growth investments are beginning to generate benefits that we expect to build on throughout the year, and the feedback we have received from our customers and prospects reinforces the value proposition of our products as a technically superior and economically attractive alternative to pure copper. We remain confident in the long-term demand drivers for our products and in our ability to grow the business. In the meantime, we continue to generate healthy cash flows and add to our strong cash position, which keeps us well positioned through the economic cycle."

Outlook

Based on its first quarter performance and current business trends, Fushi Copperweld continues to expect 2012 fully diluted earnings per share between $0.76 and $0.86, based on an estimated weighted average diluted share count of 38.3 million shares and an effective tax rate of 31.5%. The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year and increased traction from business development and certification efforts.

Conference Call

The Company will conduct a conference call to discuss the first quarter 2012 results today, Thursday, May 3, 2012, at 8:30 am ET. To participate, the conference call may be directly accessed from the U.S. and Canada at 1-866-226-1792 and accessed internationally at 1-416-340-2216. A live webcast of the conference call will also be available at http://bit.ly/eventFSIN. A replay of the call will be available at www.fushicopperweld.com on the Investor Relations section.

About Fushi Copperweld

Fushi Copperweld Inc., principally through its wholly owned subsidiaries, Fushi International (Dalian) Bimetallic Cable Co. Ltd. and Copperweld Bimetallics LLC, is the leading manufacturer and innovator of copper-clad bimetallic engineered conductor products for electrical, telecommunications, transportation, utilities and industrial applications. With extensive design and production capabilities, and a long-standing dedication to customer service, Fushi Copperweld is the preferred choice for bimetallic products worldwide.

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "will", "believes", "expects" or similar expressions. These forward-looking statements may also include statements about our proposed discussions related to our business or growth strategy, which is subject to change. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

For more information, please contact:

Investors

Jolin Qiao, Investor Relations Officer
Fushi Copperweld Inc.
Phone +1.931.433.0482
E-mail: ir@fushicopperweld.com
Web:  www.fushicopperweld.com

 

FUSHI COPPERWELD, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2012 and DECEMBER 31, 2011

UNAUDITED








March 31,


December 31,

ASSETS


2012


2011

Current assets:


USD


USD

Cash


205,375,102


200,451,902

Accounts receivable, net of allowance for doubtful accounts


63,844,604


63,978,861

Inventories


15,053,070


10,695,123

Advances to suppliers


6,970,168


6,793,904

Prepaid expenses and other current assets


1,488,592


1,332,204

Total current assets


292,731,536


283,251,994






Property, plant and equipment, net


114,205,897


117,405,523

Intangible assets, net


387,900


431,441

Land use rights


13,213,366


13,321,796

Deposits for land use rights


10,084,905


10,090,621

Goodwill


1,811,041


1,812,068

Other non-current assets


459,845


491,380

Total assets


432,894,490


426,804,823

LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Current portion of long-term loan


650,000


650,000

Accounts payable


5,595,197


3,802,155

Amounts due to a related party


-


2,000,000

Accrued expenses and other current liabilities


17,026,671


15,880,176

Total current liabilities


23,271,868


22,332,331

Long-term loans


7,542,740


7,632,100

Deferred income tax liabilities


663,100


672,943

Total liabilities


31,477,708


30,637,374






Shareholders' equity:





Common stock, $0.006 par value, 100,000,000 shares authorized; 38,286,054 and 38,240,438 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively


229,718


229,444

Additional paid-in capital


169,696,936


169,335,522

Retained earnings


177,374,216


172,507,890

Accumulated other comprehensive income


54,115,912


54,094,593

Total shareholders' equity


401,416,782


396,167,449

Commitments and contingencies





Total liabilities and shareholders' equity


432,894,490


426,804,823

 

 FUSHI COPPERWELD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2012 AND 2011

UNAUDITED







Three-Month Period Ended March 31,


2012



2011


USD



USD






Revenues

62,146,186



65,925,866

Cost of revenues

45,790,996



48,777,114

    Gross profit

16,355,190



17,148,752






Selling expenses

1,619,393



1,149,524

General and administrative expenses

6,656,755



5,515,123

    Total operating expenses

8,276,148



6,664,647






    Income from operations

8,079,042



10,484,105






Interest income

236,709



228,854

Interest expense

(131,185)



(98,094)

Foreign currency exchange losses, net

(175,595)



(354,892)

    Total other expense, net

(70,071)



(224,132)






    Income before income taxes

8,008,971



10,259,973






Income tax expense

3,142,645



3,433,688






    Net income

4,866,326



6,826,285






Other comprehensive income:





Foreign currency translation adjustment, net of nil income taxes

21,319



2,655,537






     Comprehensive income

4,887,645



9,481,822






Earnings per share:





Basic

0.13



0.18

Diluted

0.13



0.18

 

FUSHI COPPERWELD, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2012 AND 2011

UNAUDITED






Three-Month Period Ended March 31,



2012


2011



USD


USD

Cash flows from operating activities:





Net cash provided by operating activities


7,115,016


15,013,956






Cash flows from investing activities:





Purchases of property, plant and equipment


(199,054)


(282,486)

Net cash used in investing activities


(199,054)


(282,486)






Cash flows from financing activities:





Payment for acquisition of  Jinchuan


-


(4,819,107)

Repayment of interest-free loans provided by Mr. Li Fu


(2,000,000)


-

Repayment of long-term bank loans


(162,500)


(162,500)

Proceeds from issuance of common stock and warrants


185,873


622,275

Net cash used in financing activities


(1,976,627)


(4,359,332)






Effect of foreign currency exchange rate changes on cash


(16,135)


1,065,919

Net increase in cash


4,923,200


11,438,057






Cash at beginning of period


200,451,902


123,000,338






Cash at end of period


205,375,102


134,438,395






Supplemental disclosure of cash flow information:





Interest paid


131,185


98,595

Income taxes paid


2,249,133


2,572,995

SOURCE Fushi Copperweld, Inc.



RELATED LINKS
http://www.fushicopperweld.com
http://bit.ly/eventFSIN

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