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|
|EBITDA before stock-based compensation||$318,000||$456,000|
|Net income per share||Basic||$0.003||$0.002|
|Balance Sheet Highlights|
|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.
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 LimitedFor further information:
Chief Financial Officer
Liuyang Fireworks Limited
Tel : 647 350 8818