Liuyang Fireworks Reports First Quarter Results
Toronto, Ontario, December 2, 2013 – Liuyang Fireworks Limited (TSX-V: FWK) (“Liuyang” or “the Company”) today announced financial results for its first quarter ended September 30, 2013. All amounts are in Canadian dollars unless otherwise indicated.
Highlights for the first quarter:
- 45-day plant shutdown delayed production and shipping schedules, negatively impacting financial results for the quarter;
- Revenue decreased 23.3% to $3.1 million;
- EBITDA was $(211) thousand compared to $250 thousand a year earlier;
- Net loss was $377 thousand compared to net income of $92 thousand a year earlier.
“Our disappointing financial results for the first quarter were severely impacted by a government-imposed plant shutdown due to extreme temperatures in the months of July and August,” said Mr. Hu, Liuyang’s president and CEO. “We are aggressively working to catch up on our production and shipping schedules that were pushed back as a result of the 45-day shutdown. Highlighting our need to make up for the lost production time, the second quarter marks the beginning of our peak sales season for the domestic market leading up to the Chinese New Year. We remain focused on successfully servicing our domestic and international client needs as we continue to execute our business plan and growth strategy.”
SUMMARY FINANCIAL STATEMENTS
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In thousands except per share and % data |
3 months ended Sept. 30 |
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2013 |
2012 |
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Revenue |
$3,121 |
$4,068 |
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Gross profit |
$1,010 |
$1,388 |
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Gross margins |
32.4% |
34.1% |
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EBITDA |
$(211) |
$250 |
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EBITDA before stock-based compensation |
$(211) |
$268 |
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Net income |
$(377) |
$92 |
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Net income per share |
Basic |
$(0.007) |
$0.002 |
|
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Diluted |
$(0.007) |
$0.002 |
Balance Sheet Highlights
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In thousands except ratio data |
3 months ended Sept. 30 |
|
|
2013 |
2012 |
|
|
Cash |
$2,440 |
$1,505 |
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Current ratio |
1.91:1 |
1.85:1 |
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Working capital |
$7,470 |
$7,691 |
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Total assets |
$19,514 |
$20,786 |
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Debt to equity ratio |
0.72:1 |
0.78:1 |
Review of First Quarter Results
Revenue for the quarter was $3.12 million compared with $4.07 million for same quarter a year ago. The decrease of $0.95 million, or 23.3%, was mostly attributable to the local government imposing a 45-day plant shutdown as a result of rules relating to higher temperature days during the quarter. As a result of the shutdown, the Company delayed its European order production schedule and thus delayed shipping into late August and September of 2013. Due to the delayed international sales, the Company was required to push domestic production and sales into the second quarter of fiscal 2014.
Gross profit for the quarter was $1.01 million compared with $1.39 million for the first quarter of last year, representing a decrease of $0.38 million or 27.2%. Gross margin as a percentage of sales decreased to 32.4% from 34.1% in the prior year. The decrease in gross margin was attributable to lower margin products sold into the international market.
EBITDA for the quarter was negative $0.21 million compared with EBITDA of $0.25 million for the same period last year, representing a decrease of $0.46 million or 184.4%. The decrease in EBITDA is primarily due to the lower revenue and gross profit recognized in the first quarter of 2014. EBITDA before stock-based compensation expense (“Adjusted EBITDA”) decreased by $0.48 million or 178.7% compared to first quarter of the prior year.
The Company incurred a net loss for the quarter of $0.38 million compared with net income of $0.09 million a year earlier, representing a decrease of $0.47 million or 509.8%.
While the Company’s balance sheet remains relatively strong, during the first quarter the Company funded a higher level of supplier advances primarily using bank loans. The Company has sufficient working capital to continue its growth and expansion plans for the remainder of fiscal 2014.
Liuyang’s consolidated financial statements for the three months ended September 30, 2013 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.
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.
For further information, contact:
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Jacky Long Chief Financial Officer Liuyang Fireworks Limited Tel : 647 350 8818
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Forward-Looking Statements
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.
