Highpower International Reports Financial Results for the Fiscal Fourth Quarter and Year Ended December 31, 2015

SAN FRANCISCO and SHENZHEN, China, March 24, 2016 /PRNewswire/ -- Highpower International, Inc. (NASDAQ: HPJ), a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and a battery management systems and battery recycling provider, today announced its financial results for the fiscal fourth quarter and year ended December 31, 2015.

Fiscal Year 2015 Operating and Financial Highlights (all results are compared to prior year period)

• Net sales were $146.2 million compared to $147.1 million.
• Lithium battery net sales increased 14.9% to $78.6 million from $68.4 million.
• Gross margin was 19.1%, compared to 20.5%, due to a decrease in the average selling price of both Ni-MH batteries and lithium batteries, and increased labor costs.
• EBITDA increased 20.7% to $10.3 million, compared to $8.6 million; Adjusted EBITDA was $10.1 million compared to $9.7 million.
• Net income attributable to the Company increased 40.0% to $3.9 million, or $0.25 per diluted share, compared to $2.8 million, or $0.18 per diluted share. Non-GAAP net income attributable to the Company was to $3.6 million, or $0.23 per diluted share, compared to $3.9 million, or $0.26 per diluted share.
• Received order from a global consumer electronics company to provide lithium polymer batteries for smartphone backup power products.
• Received "The Best Design Company of China's Energy Storage Industry" award.
• Secured a contract to produce a 100KWH energy storage system (ESS) for China Southern Power Grid.
• Granted US patent for its safety technology on rechargeable battery.

Fiscal 2015 Fourth Quarter Operating and Financial Highlights (all results are compared to prior year period)

• Net sales increased 7.2% to $37.9 million from $35.3 million, primarily due to increased revenue contributions from the lithium batteries as a result of the increased battery sales into the electric bus and high end consumer electronic device markets.
• Gross margin was 17.5% compared to 20.1%.
• Net income attributable to the Company was $166,973, or $0.01 per diluted share, compared to $2.0 million, or $0.13 per diluted share.

Management Commentary

Mr. George Pan, Chairman and CEO of Highpower International, commented, "We were pleased to report positive operating results for fiscal 2015 despite the reduction in average selling prices of both Ni-MH and lithium batteries during the year. We were able to achieve double-digit growth in net sales of lithium batteries as a result of growing global demand for mobile/portable products and electrical vehicles. We continue to work on advancing our lithium battery technology through R&D investment and to extend our sales and marketing efforts for our products worldwide. Highpower has been recognized by many reputable global companies as their approved vendor, but we also continue to seek a number of opportunities within China, which possesses a vast market for both consumer electronics and electrical vehicles. As we take an aggressive yet responsible approach to expanding into these areas in China, we expect to continue to strengthen Highpower's brand, extend our sales channels and ultimately increase profitability."

Fiscal 2015 Fourth Quarter and Year-end Financial Review

Net Sales

Net sales for the fourth quarter ended December 31, 2015 increased 7.2% to $37.9 million from $35.3 million for the same period in 2014. The increase in net sales was mainly due to increased revenue contributions from the lithium batteries segment as a result of the increased battery sales into the electric bus and high end consumer electronic device markets.

Net sales for FY 2015 were $146.2 million compared to $147.1 million in the prior fiscal year. The decrease was due to a $10.2 million increase in net sales of lithium batteries offset by a $10.4 million decrease in net sales of Ni-MH batteries and a $0.7 million decrease in new material business.

Gross Profit

For the fourth quarter ended December 31, 2015, the Company's gross profit was $6.6 million compared to $7.1 million for the same period in 2014.

Gross profit for FY 2015 was $27.9 million compared to $30.2 million in the prior fiscal year. The decrease was primarily due to a decrease in the average selling price of both Ni-MH batteries and lithium batteries, coupled with increased labor costs.

Gross Margin

Gross margin was 17.5% for the fourth quarter ended December 31, 2015 compared to 20.1% in the same period in 2014.

For FY 2015, gross margin was 19.1% compared to 20.5% in FY 2014.

Research and Development (R&D)

R&D spending was $2.0 million, or 5.3% of net sales, for the fourth quarter ended December 31, 2015 compared to $1.9 million, or 5.3% of net sales, for the same period in 2014.

R&D spending was $7.6 million, or 5.2% of net sales, for FY 2015 compared to $7.7 million, or 5.2% of net sales, in FY 2014.

Selling & Distribution

Selling and distribution expenses were $1.6 million, or 4.3% of net sales, for the fourth quarter ended December 31, 2015, compared to $1.7 million, or 4.9% of net sales, for the same period in 2014.

For FY 2015, selling and distribution expenses were $6.7 million, or 4.6% of net sales, compared to $6.6 million, or 4.5% of net sales, in the prior fiscal year. The increase was due to the expanded marketing effort for the Company's lithium batteries, which included participation in industry trade shows and international travels to promote and sell products abroad.

General & Administrative

For the fourth quarter ended December 31, 2015, general and administrative expenses were $3.2 million, or 8.3% of net sales, compared to $2.7 million, or 7.7% of net sales, in the prior year period.

General and administrative expenses in FY 2015 remained flat at $12.9 million, or 8.8% of net sales, which compares to $12.9 million, or 8.8% of net sales, in FY 2014.

Net Income

For the fourth quarter of 2015, net income attributable to the Company was $166,973, or $0.01 per share based on 15.2 million weighted average diluted shares outstanding, compared to $2.0 million, or $0.13 per share based on 15.5 million weighted average diluted shares outstanding, for the same period in 2014.

Net income attributable to the Company for FY 2015 increased 40.0% to $3.9 million, or $0.25 per share based on 15.3 million weighted average diluted shares outstanding, from $2.8 million, or $0.18 per share based on 15.2 million weighted average diluted shares outstanding, in FY 2014.

EBITDA

EBITDA for the fourth quarter ended December 31, 2015, was $1.8 million, compared to $3.3 million in the prior year period.

For FY 2015, EBITDA increased 20.7% to $10.3 million from $8.6 million in FY 2014.

A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company's financial information below.

Balance Sheet Highlights

Conference Call Details

The Company announced that it will discuss financial results in a conference call on March 24, 2016, at 11:00 a.m. Eastern time / 8:00 a.m. Pacific time to discuss these results.

The dial-in numbers are:

To listen to the live webcast, please go to at www.highpowertech.com and click on the conference call link, or go to: http://highpowertech.equisolvewebcast.com/q4-2015. This webcast will be archived and accessible through the Company's website for approximately 30 days following the call. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.

About Highpower International, Inc.

Highpower International was founded in 2001 and produces high-quality Nickel-Metal Hydride (Ni-MH) and lithium-based rechargeable batteries used in a wide range of applications such as electric buses, bikes, energy storage systems, power tools, medical equipment, digital and electronic devices, personal care products, and lighting, etc. Highpower's target customers are Fortune 500 companies and top 10 companies in each vertical segment. With advanced manufacturing facilities located in Shenzhen, Huizhou, and Ganzhou of China, Highpower is committed to clean technology, not only in the products it makes, but also in the processes of production. The majority of Highpower International's products are distributed to worldwide markets mainly in the United States, Europe, China and Southeast Asia.

Use of Non-GAAP Measures

The Company has supplemented its reported GAAP (generally accepted accounting principles) financial information with non-GAAP measures. EBITDA was derived by taking earnings before interest expense (net), taxes, depreciation and amortization. Adjusted EBITDA and Non-GAAP net income exclude stock-based compensation expense. Adjusted EBITDA, as defined above, may not be similar to Adjusted EBITDA measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The Company believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's operating results in the ordinary course of its operations.

These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with, and not in lieu of, the corresponding GAAP measures. These non-GAAP financial measures are reconciled in the accompanying tables to the most directly comparable measures as reported in accordance with GAAP.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and the Company's future performance, operations and products. Such statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results to differ materially from the results expressed or implied by such statements, including, without limitation, fluctuations in the cost of raw materials; our dependence on, or inability to attract additional, major customers for a significant portion of our net sales; our ability to increase manufacturing capabilities to satisfy orders from new customers; our ability to maintain increased margins; our dependence on the growth in demand for portable electronic devices and energy storage systems and transportation products and the success of manufacturers of the end applications that use our battery products; our responsiveness to competitive market conditions; our ability to successfully manufacture our products in the time frame and amounts expected; the market acceptance of our battery products, including our lithium products; our ability to successfully develop products for and penetrate the electric transportation market; our ability to continue R&D development to keep up with technological changes. For a discussion of these and other risks and uncertainties see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public filings with the SEC. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

CONTACT:
Highpower International, Inc.
Henry Sun
CFO
+86-755-8968-6521
ir@highpowertech.com

INVESTOR RELATIONS:
The Equity Group Inc.
In China
Katherine Yao, Senior Associate
+86-10-6587-6435
kyao@equityny.com

In U.S.
Adam Prior, Senior Vice President
(212) 836-9606
aprior@equityny.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/highpower-international-reports-financial-results-for-the-fiscal-fourth-quarter-and-year-ended-december-31-2015-300240963.html