TORONTO, May 31, 2012 /CNW/ - Liuyang Fireworks Limited (TSX-V: FWK) ("Liuyang" or "the Company") today announced financial results for its third quarter and first nine months ended March 31, 2011. All amounts are in Canadian dollars unless otherwise indicated.
Highlights for the third quarter:
- Revenue increased 71.7%, driven by higher sales volume in the Chinese domestic market and higher selling prices;
- The Company's two joint ventures in Hunan Province: a manufacturing joint venture in Liuyang City and a wholesale joint venture in Youxian City started to operate from January 2012. Once these joint ventures are fully operational they are expected to improve the Company's sales by approximately $5 million per year and allow it to manufacture over half of this amount thru the joint venture.
- Improved pricing contributed to an improvement in gross margin to 37.6% from 35.4% for the same period a year ago;
- EBITDA increased by 21.6% during the quarter to $787,000 compared with the same quarter last year;
- Higher selling expense and interest cost caused net income to remain constant at $482,000 ($0.009 per share) compared with $489,000 in the same period of last year.
"The steady execution of our business plan yielded continued growth in revenue, gross profit and EBITDA for the quarter," said Mr. Hu, Liuyang's president and CEO. "We continued to penetrate the Chinese domestic market with increased firework sales volume achieved during the quarter. Our stronger financial results for the period are also reflective of higher selling prices compared to the same period last year."
SUMMARY FINANCIAL STATEMENTS
| In thousands except per share and %
|3 months ended March 31||9 months ended March 31|
|EBITDA before stock-based compensation||$823||$695||$1,880||$1,595|
|Net income per share||Basic||$0.009||$0.009||$0.015||$0.023|
Balance Sheet Highlights
|In thousands except ratio data||3 months ended March 31|
|Debt to equity ratio||1.00:1||0.65:1|
Review of Third Quarter Results
Revenue increased 71.7% to $7.06 million for the quarter on the back of a strong increase in firework sales volume in the Chinese domestic market combined with higher selling prices compared to the same quarter a year earlier. The higher revenue resulted in an 82.4% increase in gross profit compared to the same period last year to $2.66 million for the quarter. Higher selling prices resulted in an improvement in gross margin to 37.6% compared to 35.4% for the same quarter a year earlier.
EBITDA for the quarter was $0.79 million, representing an increase of 21.6% over the comparable period. EBITDA before stock-based compensation expense was $0.82 million, representing an increase of 18.5% compared to the quarter a year earlier. Net income for the quarter was $0.48 million, or $0.009 per share ($0.006 diluted), compared to $0.49 million, or $0.009 per share ($0.006 diluted) for the same period a year earlier.
Compared with a year earlier, the balance sheet as at March 31, 2012 has improved with higher levels of cash at $6.06 million and working capital at $8.18 million. The Company has sufficient cash and working capital to continue its growth and expansion plans for the balance of fiscal 2012.
Liuyang's consolidated financial statements for the three and nine months ended March 31, 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.
"Our business is well positioned for the balance of the fiscal year and as we soon head into fiscal 2013," said Mr. Hu. "In addition to our well-established international sales channel, we continue to strengthen our foothold in the Chinese domestic market. We will continue to focus on strengthening our brand recognition in China as we further penetrate this market. Moreover, we will leverage the potential of our joint ventures in Hunan Province to capitalize on the higher production capacity and additional distribution they afford us."
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.
For further information:
Chief Financial Officer
Liuyang Fireworks Limited
Tel : 647 350 8818