-- 1Q08 Revenues Increased 155.5% to $54 Million --
-- 1Q08 Net Income Increased 52% to $7.6 Million --
DALIAN, China, May 14 /Xinhua-PRNewswire-FirstCall/ -- Fushi Copperweld, Inc. (Nasdaq: FSIN), the leading global manufacturer of bimetallic wire used in a variety of telecommunication, utility, automotive, power transmission and other electrical products, today announced financial results for the first quarter of 2008.
Revenues for the first quarter of 2008 increased 155% to $54 million, from $21.1 million in the prior year's quarter. Organic revenues in the quarter from the Dalian facility totaled approximately $36 million, an increase of 70% over the prior year's first quarter. Revenues in the quarter were driven not only by the Copperweld contribution, but also by a higher sales volume, and sales from copper-clad steel, which is incremental to revenue. Overall, telecommunication applications accounted for approximately 63% of sales and utility applications for about 24% of sales.
Gross profit in the first quarter increased by 92% year over year to $14.7 million. Of the $14.7 million, $12.5 million reflected organic growth from the Dalian facility. Gross margin of 27.3% was down from last year's 36.4% and down sequentially from 28.6% in the fourth quarter, as the Company incurred higher inventory expenses stemming from increased raw materials costs associated with the Copperweld integration.
Operating expenses in the first quarter increased 262% to $5.8 million compared to $1.6 million in the prior year's quarter. This increase was primarily a result of higher general and administrative expenses associated with professional fees, as well as expenses associated with the integration of the Copperweld acquisition. On a percentage basis, operating expenses increased to 10.8% from 7.6%. Also included in the general and administrative expenses for the first quarter of 2008 was share-based compensation expense of $413,095, which was equivalent to 0.76% of net revenues.
Net income in the first quarter increased 52% to $7.6 million, or 14.0% of revenue, up from $5.0 million, or 23.5% of revenue in the prior year's quarter. The higher net income was due primarily to higher sales volume. The margin decline was primarily due to higher general and administrative expenses. Diluted earnings per share in the first quarter of 2008 was $0.26, versus $0.21 in the prior year's quarter. The weighted average share count used to calculate diluted EPS was 28.2 million.
Mr. Li Fu, Chairman and Chief Executive Officer of Fushi Copperweld commented, "We are excited about the developments at Fushi Copperweld, and are pleased with the completion of Phase I of our equipment relocation, which has allowed us to significantly increase our copper-clad aluminum capacity, and which we believe is the most advanced copper-clad aluminum line in the world at this time. We are encouraged by the demand we're seeing among our customers for high-value alternatives such as copper-clad aluminum. With the integration of Copperweld, we are now positioned as a dominant player in the bimetallic industry through technological innovation, manufacturing expertise, domestic and international marketing, and branding."
Mr. Fu continued, "Going forward, we are not only leveraging the strengths of the combined business, we are also expanding our potential market by selling into new markets beyond traditional telecommunication applications. We believe that Fushi Copperweld is now well positioned to increase worldwide market share in existing and new applications."
Financial Expectations
For the full year 2008, the company expects fully diluted earnings per share between $1.50 and $1.60 based on an estimated weighted average diluted share count of 28.8 million shares. Management anticipates that 2008 will be a year of executing the integration of Fushi Copperweld, and looks to 2009 as the year in which the company can begin to realize the full range of benefits of the combined company, as a result of equipment relocation and additional product lines ramping up.
Mr. Fu concluded, "We are excited about the momentum we're seeing at the combined Fushi Copperweld and look forward to realizing additional synergies not only on the cost side, but more importantly, in terms of new opportunities, new markets, and new sources of revenue. Our plan for the coming quarters is to deliver an increase in global production and to continue generate strong financial results to our shareholders."
Conference Call
The Company will conduct a conference call to discuss the first quarter 2008 results today, Wednesday, May 14, 2008, at 8:30 am ET. Listeners may access the call by dialing 913-312-1485. A live webcast of the conference call will also be available at http://www.fushicopperweld.com , under the Calendar of Events link located on the Investor Relations section. A replay of the call will be available from May 14, 2008 to June 14, 2008. Listeners may access the replay by dialing # 719-457-0820; passcode: 8453975.
About Fushi Copperweld
Fushi Copperweld, through its wholly owned subsidiaries, Fushi International (Dalian) Bimetallic Cable Co., Ltd., and Copperweld Bimetallics, LLC, designs, develops, manufactures and sells bimetallic composite wire products, principally copper-clad aluminum wires ("CCA") and copper-clad steel ("CCS"). CCA and CCS wire offers greater value than solid copper wire in a wide variety of applications such as coaxial cable for cable television (CATV), signal transmission lines for telecommunication networks, distribution lines for electricity, electrical transformers, wire components for electronic instruments and devices, utilities, appliances, automotive, building wire, and other industrial wire. For more information on Fushi Copperweld, visit the website: http://www.fushicopperweld.com/ .
Safe Harbor Statement
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. 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.
(Financial Tables to Follow)
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
(Formerly Fushi International, Inc.)
CONSOLIDATED STATEMENTS OF INCOME AND
OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
2008 2007
REVENUES $ 54,009,027 $ 21,137,917
COST OF GOODS SOLD 39,275,340 13,452,737
GROSS PROFIT 14,733,687 7,685,180
OPERATING EXPENSE
Selling expenses 792,911 175,194
General and administrative expenses 5,054,183 1,441,002
Total operating expense 5,847,094 1,616,196
INCOME FROM OPERATIONS 8,886,593 6,068,984
OTHER INCOME (EXPENSE)
Interest income 160,363 191,210
Interest expense (1,122,065) (1,282,072)
Other income 189,954 62,110
Other expense (75,914) (65,499)
Total other expense, net (847,662) (1,094,251)
INCOME BEFORE INCOME TAXES 8,038,931 4,974,733
PROVISION FOR INCOME TAXES 468,435 --
NET INCOME 7,570,496 4,974,733
OTHER COMPREHENSIVE INCOME
Realized loss on marketable
securities 22,301 --
Foreign currency translation
adjustment 7,855,000 902,861
Change in fair value of derivative
instrument (5,109,480) --
COMPREHENSIVE INCOME $ 10,338,317 $ 5,877,594
BASIC EARNINGS PER SHARE
Earnings Per Share $ 0.28 $ 0.24
Weighted average shares outstanding 27,048,039 20,507,096
DILUTED EARNINGS PER SHARE
Earnings Per Share $ 0.26 $ 0.21
Weighted average shares outstanding 28,228,604 23,824,495
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
(Formerly Fushi International, Inc.)
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
A S S E T S
March 31, December 31,
2008 2007
(Unaudited)
CURRENT ASSETS:
Cash $ 78,580,616 $ 79,914,758
Marketable securities -- 2,977,699
Restricted cash 3,856,000 1,000,000
Accounts receivable, trade, net of
allowance of bad debt $211,629
and $135,418 as of March 31, 2008,
and December 31, 2007 34,369,645 23,611,186
Inventories, net 26,391,479 12,308,295
Notes receivables 485,813 816,905
Other receivables and prepaid
expenses 1,991,838 997,979
Advances to suppliers 9,683,792 2,341,839
Cross currency hedge receivable 136,961 706,170
Deferred tax assets 3,651,003 2,852,000
Total current assets 159,147,147 127,526,831
PLANT AND EQUIPMENT, net 94,963,080 87,228,600
OTHER ASSETS:
Advances to suppliers, noncurrent 15,497,814 18,204,775
Prepaid land use rights 4,749,334 4,559,760
Intangible asset, net of accumulated
amortization 6,004,316 5,832,721
Deferred loan expense, net 2,447,574 3,115,930
Total other assets 28,699,038 31,713,186
Total assets $ 282,809,265 $ 246,468,617
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable, trade $ 9,686,316 $ 3,028,823
Short term bank loans 27,053,926 12,871,884
Current portion of long term debts 11,424,000 10,968,000
Other payables and accrued
liabilities 4,466,821 5,791,597
Customer deposits 182,443 --
Taxes payable 1,331,813 1,005,259
Total current liabilities 54,145,319 33,665,563
LONG TERM LIABILITIES:
Notes payable 45,000,000 60,000,000
Fair value of derivative instrument 13,624,876 8,515,396
Total liabilities 112,770,195 102,180,959
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value,
5,000,000 shares authorized,
none issued or outstanding -- --
Common stock, $0.006 par value,
100,000,000 shares authorized,
March 31, 2008: 27,454,162
issued and 27,354,162 outstanding;
December 31, 2007: 25,311,304
shares issued and 25,211,304
outstanding 164,125 151,268
Common stock held in escrow, 100,000
shares 600 600
Additional paid in capital 93,065,302 77,665,064
Statutory reserves 8,321,726 8,321,726
Retained earnings 61,703,566 54,133,070
Accumulated other comprehensive
income 6,783,751 4,015,930
Total shareholders' equity 170,039,070 144,287,658
Total liabilities and
shareholders' equity $ 282,809,265 $ 246,468,617
FUSHI COPPERWELD, INC. AND SUBSIDIARIES
(Formerly Fushi International, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 and 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
$
Net income 7,570,496 $ 4,974,733
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Depreciation 1,404,042 301,596
Amortization of intangibles 62,277 57,483
Amortization of financing expense 668,356 149,589
Amortization of stock option
compensation 413,095 --
Gain on derivative instrument (169,167) --
Loss on marketable securites 16,158 --
Change in operating assets and
liabilities:
Accounts receivable (9,917,566) (2,599,888)
Inventories (13,669,483) (321,590)
Other receivables and prepayments (908,504) (1,495,482)
Notes receivables 357,309 --
Advance to suppliers (7,031,475) --
Deferred tax assets (799,003)
Accounts payable 6,602,565 275,573
Other payables and accrued
liabilities (1,364,005) 904,538
Customer deposits 178,572 73,405
Taxes payable 285,445 (128,103)
Net cash (used in) provided by
operating activities (16,300,888) 2,191,854
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from derivative instrument 738,376 --
Proceeds from sale of marketable
securities 2,983,842 --
Purchase of property and equipment (3,253,101) (3,118,108)
Advances for purchase of equipment -- (4,682,463)
Net cash provided by (used in)
investing activities 469,117 (7,800,571)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank loans 16,908,000 14,263,112
Payments on bank loans (5,814,432) (8,655,841)
Change in restricted cash (2,795,400) (5,728,044)
Net proceeds from stock issuance in
private placement -- 1,826
Net borrowing on credit line 2,749,402 --
Net proceeds from convertible notes -- 56,400,000
Proceeds from exercise of stock
warrants -- 1,115,313
Net cash provided by financing
activities 11,047,570 57,396,366
EFFECT OF EXCHANGE RATE ON CASH 3,450,059 505,130
(DECREASE) INCREASE IN CASH (1,334,142) 52,292,779
CASH, beginning of year 79,914,758 20,493,551
CASH, end of period $ 78,580,616 $ 72,786,330
For more information, please contact:
Nathan Anderson
Director of I.R. & Corporate Development
Fushi Copperweld, Inc.
Tel: +1-931-652-2433
Bill Zima & Ashley Ammon MacFarlane
Integrated Corporate Relations
Tel: +1-203-682-8200
