- Revenues Increased 42% to $26.1 Million in 2Q07 -
DALIAN, China, Aug. 15 /Xinhua-PRNewswire/ -- Fushi International, Inc. (OTC Bulletin Board: FSIN), a low-cost, leading Chinese manufacturer of bimetallic wire used in a variety of communication, transmission and other electrical products, today announced financial results for the second quarter of 2007.
Revenues for the second quarter of 2007 increased 42.3% to $26.1 million, from $18.3 million in the prior year's quarter. Revenues increased year over year despite an unusually strong 2Q06, during which a sudden, sharp increase in copper prices led to both higher demand for Fushi's products and a sell- through of low cost inventory. In the second quarter of 2007, revenues were driven by a 4% increase in the average selling price of product sold and a 37% increase in the volume of bimetallic product sold. Coaxial cable accounted for approximately 59.1% of sales, magnet wire for about 16.2% of sales, and shielding wire for about 24.7% of sales.
Gross profit increased 18.6% year-over-year to $9.7 million. Gross margin of 37.0% represented the third consecutive quarter of gross margin improvement, up from 36.4% in the first quarter of 2007. On a year-over-year basis, gross margin was down from 44.4%, when the increased copper prices highlighted above resulted in an unusually higher level of profitability.
Operating expenses in the second quarter increased 158% to $2.2 million compared to $0.9 million in the prior year period. This increase was primarily a result of higher general and administrative expenses associated with the compliance of Sarbanes-Oxley, as well as costs associated with preparing to list the company's shares on a major exchange. Also included in the general and administrative expenses for the second quarter of 2007 was share-based compensation expense of $645,158, which was equivalent to 2.5% of net revenues.
Net income in the second quarter of 2007 was $7.0 million, down slightly from $7.2 million last year due to the unusually strong Q206, and up 40.4% sequentially from $5.0 million in the first quarter of 2007. Diluted earnings per share for the second quarter of 2007 were $0.28 compared to $0.34 in the prior year period, and $0.20 in the first quarter of 2007, as a result of higher total diluted share count of 25,192,643 at the end of the second quarter, reflecting the Company's January 2007 issuance of $20 million in convertible debt to Citadel Equity Fund Ltd.
Mr. Li Fu, Chairman and Chief Executive Officer of Fushi International commented, "We are pleased to report another quarter of continued growth in our business. We believe that we have laid the foundation to become a domestic and international market leader in the bimetallic industry. Our copper clad aluminum products have delivered consistent revenue growth for us. We are well on our way to executing our strategic plan through technological innovation, manufacturing expertise, domestic and international marketing and branding and strong management."
Mr. Fu continued, "While we have in the past been primarily focused on the regular CCA market, we are also leveraging our expertise to tap into significant opportunities in other areas of the market. We believe these new areas can provide us with not only substantial new revenue opportunities, but also with higher margins. We have begun to enter the market for flat wire and continue to market our fine wire, which we believe can offer us higher margin business in a broader market. We are aggressively ramping up our production capacity to meet demand in these areas, as well as in our core regular CCA market. We believe that we will have a competitive advantage in these markets, as our state-of-the-art manufacturing technology allows us to develop reliable quality products in the time frame and manner our customers expect."
Financial Expectations
For the full year 2007, the Company reiterates diluted earnings per share of approximately $1.03-$1.13.
Mr. Fu stated, "We are excited about the remainder of 2007 and are confident that we have put in place a foundation for continued growth and financial flexibility. Our cash balance of $75.2 million places us in a strong financial position of not only being able to increase our capacity and plan for acquisitions but also having the working capital on hand to grow our revenues and best serve our customers. The nature of our business is that it requires a strong balance sheet to support growth. We believe our strong balance sheet and our access to capital has been a significant competitive factor in our success, as customers are assured that we can meet their needs."
"We believe that we are well on our way to becoming a dominant player in the bimetallic market. We will continue to explore opportunities to increase revenues, to grow our market share, and to sustain our strong margins," concluded Mr. Fu.
The Company will conduct a conference call to discuss the second quarter 2007 results today, Tuesday, August 14, 2007 after the market close at 5:30 pm ET. Listeners may access the call by dialing 913-981-5543. A live webcast of the conference call will also be available at www.viavid.net. A replay of the call will be available from August 14, 2007 to August 21, 2007. Listeners may access the replay by dialing # 719-457-0820; passcode: 3477104.
About Fushi International
Fushi International, through its wholly owned subsidiary, Fushi International (Dalian), manufactures bimetallic composite wire products, principally copper clad aluminum wires ("CCA"). CCA, the company's core product, combines the conductivity and corrosion resistance of copper with the light weight and relatively low cost of aluminum. It is a cost-effective substitute for single 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. For more information on Fushi, visit the website: http://www.fushiinternational.com/ .
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 Anderson
Director of Investor Relations
Tel: 86-10-8447-8292
Email: Nathan.anderson@fushiinternational.com
Bill Zima & Ashley Ammon MacFarlane
Integrated Corporate Relations
Tel: 203-682-8200
(Financial Tables to Follow)
FUSHI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006
Three months ended June 30, Six months ended June 30,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES $26,085,908 $18,335,021 $47,223,825 $32,925,164
COST OF GOODS SOLD 16,433,794 10,199,652 29,886,532 19,521,213
GROSS PROFIT 9,652,114 8,135,369 17,337,293 13,403,951
OPERATING EXPENSE
Selling expenses 193,916 132,629 369,110 249,249
General and
administrative
expenses 2,028,574 730,180 3,469,576 1,486,701
Total operating
expense 2,222,490 862,809 3,838,686 1,735,950
INCOME FROM OPERATIONS 7,429,624 7,272,560 13,498,607 11,668,001
OTHER INCOME (EXPENSE)
Interest income 318,244 1,419 509,454 12,431
Interest expense (1,666,043) (263,458) (2,948,115) (513,564)
Gain on cross currency
hedge 802,523 - 802,523 -
Other income 112,506 229,175 174,616 320,722
Other expense (14,195) (113,552) (79,694) (138,850)
Total other expense (446,965) (146,416) (1,541,216) (319,261)
INCOME BEFORE INCOME
TAXES 6,982,659 7,126,144 11,957,391 11,348,740
PROVISION FOR INCOME TAXES - (60,064) - 396,616
NET INCOME 6,982,659 7,186,208 11,957,391 10,952,124
OTHER COMPREHENSIVE INCOME
Foreign currency translation
adjustment 2,113,689 722,695 3,016,550 1,118,315
Cross currency hedge
adjustment (872,519) - (871,519) -
COMPREHENSIVE INCOME $8,223,829 $7,908,903 $14,102,422 $12,070,439
NET INCOME PER
SHARE-BASIC $0.32 $0.36 $0.57 $0.55
BASIC WEIGHTED AVERAGE
NUMBER OF SHARES 21,487,056 19,894,315 21,116,447 19,894,315
NET INCOME PER
SHARE-DILUTED $0.28 $0.34 $0.49 $0.51
DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES 25,192,643 21,434,692 24,667,346 21,434,692
FUSHI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND DECEMBER 31, 2006
A S S E T S
June 30, December 31,
2007 2006
(Unaudited)
CURRENT ASSETS:
Cash $75,205,436 $20,493,551
Accounts receivable, trade 9,497,345 7,042,408
Inventories 9,704,840 7,403,116
Notes receivables 176,210 -
Other receivables and prepaid expenses 1,096,741 497,380
Advances to suppliers 5,508,117 3,390,917
Total current assets 101,188,689 38,827,372
PLANT AND EQUIPMENT, net 54,065,998 47,256,475
OTHER ASSETS:
Advances to suppliers, noncurrent 10,453,486 4,559,357
Intangible asset, net 5,543,810 5,518,931
Deferred loan expense 3,270,904 -
Cross Currency hedge receivable 802,523
Total other assets 20,070,723 10,078,288
Total assets $175,325,410 $96,162,135
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 742,254 $1,055,684
Liquidated damage payable - 1,466,250
Other payables and accrued liabilities 2,607,226 321,276
Customer deposits - 531,065
Taxes payable 181,468 982,345
Short term bank loans 11,703,500 12,504,135
Current portion of long term debt 10,520,000 -
Loan from shareholder 557,520 3,911,256
Total current liabilities 26,311,968 20,772,011
LONG TERM LIABILITIES:
Long term bank loans - 10,256,000
Notes Payable 60,000,000 -
Total long term liabilities 60,000,000 10,256,000
CROSS CURRENCY HEDGE PAYABLE 871,519 -
Total liabilities 87,183,487 31,028,011
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value,
5,000,000 shares authorized, none
outstanding as of June 30, 2007 and
December 31, 2006, respectively - -
Common stock, $0.006 par value,
100,000,000 shares authorized, 22,178,578
and 20,046,162 shares issued and
outstanding as of June 30, 2007 and
December 31, 2006, respectively 133,072 120,277
Additional paid in capital 40,065,842 29,364,955
Deferred stock option compensation (1,808,305) -
Statutory reserves 6,115,309 4,452,467
Retained earnings 38,791,251 28,496,702
Accumulated other comprehensive income 4,844,754 2,699,723
Total shareholders' equity 88,141,923 65,134,124
Total liabilities and shareholders' equity $175,325,410 $96,162,135
