BEIJING, Aug. 4, 2011 /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 second quarter ended June 30, 2011.
Second Quarter Highlights
- Metric tons shipped increased 3.2% to 10,292, compared to the second quarter of 2010;
- Revenues of $79.0 million, up 14.4% from $69.0 million in the second quarter of 2010;
- Net cash generated from operations of $5.7 million, compared to $3.6 million net cash used in the second quarter of 2010;
- Cash position at quarter end remains strong at $141.9 million.
Revenues for the second quarter of 2011 increased 14.4% to $79.0 million, up from $69.0 million in the prior year quarter, primarily driven by higher average selling prices, and to a lesser extent, an increase in sales volumes. All growth during the quarter represented organic growth.
Gross profit in the second quarter was $21.0 million compared to $19.6 million a year ago. Gross margin decreased to 26.6% from 28.4% in the prior year period, due to higher raw material prices and pricing pressure as a result of decreased investment in the 3G network build out in China. Gross margin of the Company's Dalian cladding facility was 32.4% compared to 34.3% in the prior year period, while gross margin of the Company's Fayetteville, TN facility was 10.2% in the second quarter of 2011, compared to 14.6% in the second quarter of 2010, due to lower sales volumes.
Operating expenses in the second quarter increased slightly to $5.7 million, compared to $5.4 million in the prior year's quarter. On a percentage basis, operating expenses in the second quarter of 2011 decreased to 7.2% of revenues from 7.9% in the second quarter of 2010, as efficiencies in the Company's operations resulted in improved margins.
The Company's effective income tax rate for the second quarter of 2011 was 28.4% compared with an effective income tax rate of 14.4% in the year ago period. The increased tax rate is primarily due to the change of income tax rate from 12.5% in 2010 to 25% in 2011 for the Company's subsidiary, Fushi International (Dalian) Bimetallic Cable Co. Ltd., as a result of the expiration of the tax holiday. The Company continues to expect the effective income tax rate for the 2011 full-year to be approximately 28%.
Net income for the second quarter was $10.6 million, or $0.28 per diluted share, compared to net income of $12.3 million, or $0.32 per diluted share, in the second quarter of 2010.
Fully diluted share count increased 1.0% in the second quarter of 2011 to 38.3 million from 37.9 million a year ago.
During the three months ended June 30, 2011, the Company generated net cash from operations of $5.7 million, compared to $3.6 million net cash used in the comparable period in 2010. In the six months ended June 30, 2011, net cash generated from operations was $20.7 million, compared to $3.1 million for same period in last year.
As of June 30, 2011, the Company's cash position was $141.9 million, an increase of 15.3% from $123.0 million as of December 31, 2010. Accounts receivable at June 30, 2011 was $75.2 million, compared to $65.8 million at December 31, 2010. Long-term debt totaled $5.4 million as of June 30, 2011, compared to $5.7 million at December 31, 2010.
Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "Our second quarter results reflected gradual improvement in our performance against a challenging economic backdrop. We grew our revenues by more than 14% in the quarter, aided by improved volumes, as the diversity of our products and the markets we serve allowed us to offset a decline in demand from the telecommunications industry in China with increased orders from customers in the utility space. Somewhat offsetting this was a global economic environment that remains uncertain, which has slowed the pace of the recovery in the marketplace. During the quarter we also continued to invest in our global sales, marketing, and new business development initiatives, and saw solid progress in new markets such as India, Latin America, Southeast Asia and the Middle East that will further expand our market presence and the penetration of bimetallic wire in the future."
Mr. Longever continued, "Looking ahead to the seasonally stronger second half, typical demand trends, combined with initial traction from our recent sales and marketing investments and global market expansion efforts, should allow us to continue to grow in the current environment. We remain focused on the global opportunity we see for our products, and will continue to invest in initiatives that support our ongoing efforts to educate the marketplace about the benefits of bimetallic wire and leverage the opportunities this creates."
Based on current business trends, the Company reiterates its previously announced annual guidance of fully diluted earnings per share between $1.15 and $1.25 based on an estimated weighted average diluted share count of 38.4 million shares, and an effective income tax rate of 28.0%. The Company expects profitability in subsequent quarters to improve over the first half due to higher revenues with the absence of the Chinese New Year, continued higher raw material prices, increased global demand and the increased capability to meet that demand.
The Company will conduct a conference call to discuss the second quarter 2011 results today, Thursday, August 4, 2011, at 8:30 am ET. To participate, the conference call may be directly accessed from the U.S. and Canada at 1-877-240-9772 and accessed internationally at 1-416-340-8530. A live webcast of the conference call will also be available at www.fushicopperweld.com on the Investor Relations section. A replay of the call will be available at www.fushicopperweld.com.
About Fushi Copperweld
Fushi Copperweld Inc., 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:
Nathan J. Anderson, VP/Corporate Development -- Fushi Copperweld Inc.
Phone +1.931.433.0482 -- E-mail: IR@fushicopperweld.com
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED June 30, 2011 AND 2010
Three months ended June 30,
Six months ended June 30,
COST OF GOODS SOLD
General and administrative expenses
Total operating expenses
INCOME FROM OPERATIONS
OTHER INCOME (EXPENSE):
Gain on cross-currency interest swap derivative
Loss on extinguishment of HY notes
Other income (expense), net
Total other income (expense), net
INCOME BEFORE INCOME TAXES
Current income tax expense
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment, net of nil income taxes
EARNINGS PER SHARE:
WEIGHTED AVERAGE SHARES:
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF June 30, 2011 AND DECEMBER 31, 2010
Accounts receivable, net of allowance for doubtful accounts
Advances to suppliers
Prepaid expenses and other current assets
Total current assets
PLANT AND EQUIPMENT, net
Land use rights
Deposits for land use rights
Other non-current assets
Total other assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term bank loan
Accrued expenses and other current liabilities
Total current liabilities
Long-term bank loan
Deferred income tax liabilities
Other non-current liabilities
Total long-term liabilities
Common stock, $0.006 par value, 100,000,000 shares authorized, 38,203,638
Additional paid-in capital
Accumulated other comprehensive income
Total shareholders' equity
Total liabilities and shareholders' equity
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED June 30, 2011 AND 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions of Jinchuan and Hongtai
Cash acquired from acquisition of Jinchuan and Hongtai
Proceeds from disposal of property and equipment
Purchases of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for acquisition of Jinchuan
Borrowing(Repayment) on revolver line of credit
Repayment on bank loans
Repayment of notes payable
Proceeds from issuance of common stock and warrants
Transaction costs paid in connection with issuance of common stock
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE ON CASH
CHANGE IN CASH
CASH, beginning of period
CASH, end of period
Supplemental cash flow disclosures:
Income taxes paid
Accrual for the acquisition of Jinchuan
Issuance of common stock in connection with the acquisition of Hongtai
SOURCE Fushi Copperweld, Inc.