TORONTO,
May 31, 2013 /CNW/ - Liuyang
Fireworks Limited (TSX-V: FWK) (Liuyang) today announced
financial results for its third quarter and nine months ended
March 31, 2013. All amounts are in
Canadian dollars unless otherwise indicated.
In a year marked by industry-wide issues related
to high pollution levels in Beijing and across China, Liuyang managed to maintain a
profitable operation and remain competitive in the face of
challenges in the domestic marketplace.
Highlights for the third quarter:
- The Company achieved revenue of $6.1
million during the quarter compared with $7.1 million during the same period of 2012.
- Continued growth in domestic sales was achieved which
represented 58% of total revenue during the quarter;
- Gross profit of $2.1 million was
achieved during the quarter represented 34.1% gross margin compared
with 37.6% during the third quarter of 2012;
- Net income was $282,000, or
$0.005 per share compared with
$482,000 in the corresponding period
of 2012;
- As at March 31, 2013, the company
had a cash position of $2.8 million
and total bank debt of $5.7
million;
- New product development was initiated in response to
environmental concerns and fireworks regulatory changes in
China;
- Completed construction of a new warehouse for Far Ocean Youxian
Company (a wholesale distribution company 70% owned by
Liuyang).
"Despite unusual and adverse market
circumstances related to excessive smog conditions in Beijing and other cities, we continued with
our expansion plans and maintained satisfactory profitability in
addition to having lower international sales revenue related to
timing differences, as some of our U.S. market order shipments were
pushed back to deliver in April, 2013" said Mr.Hu, Liuyang's
president and CEO. "During the quarter we completed a $714,000 warehouse project for our wholesale
distribution joint venture, Far Ocean Youxian Company. We
fully expect to maintain our expansion in the quarters and years
ahead as we work to remain a leading fireworks manufacturer in
China and around the world. Given
our solid market position, quality management team, and strength in
the domestic and international market, there is no reason why this
cannot be achieved" states Mr. Hu.
Summary Financial Statements
|
'000 C$
(except per share and % data) |
3 months ended March 31 |
9 months ended March 31 |
2013 |
2012 |
2013 |
2012 |
Revenue |
$6,139 |
$7,061 |
$15,772 |
$16,962 |
Gross profit |
$2,141 |
$2,658 |
$5,942 |
$6,444 |
Gross margins |
34.9% |
37.6% |
37.7% |
38.0% |
EBITDA |
$535 |
$787 |
$1,241 |
$1,544 |
EBITDA before stock-based
compensation |
$542 |
$823 |
$1,273 |
$1,880 |
Net income |
$282 |
$482 |
$670 |
$854 |
Net income per share |
Basic |
$0.005 |
$0.009 |
$0.012 |
$0.015 |
|
Diluted |
$0.004 |
$0.006 |
$0.010 |
$0.011 |
Balance Sheet Highlights
|
|
'000 C$
(except ratio data) |
3 months ended March 31 |
2013 |
2012 |
Cash |
$2,821 |
$6,055 |
Current ratio |
1.76:1 |
1.75:1 |
Working capital |
$8,078 |
$8,180 |
Total assets |
$22,492 |
$21,688 |
Debt to equity
ratio |
0.89:1 |
1.00:1 |
Review of Results
Liuyang's revenue for the third quarter fell
12.8% to $6.1 million as some
fireworks display shows planned for the China Spring Festival
(February 8 to February 22, 2013)
were cancelled and certain U.S. market shipments were rescheduled
for delivery in April 2013. The
fireworks display show were cancelled due to concerns over
increased smog levels in Beijing
and other cities in China
following media reports indicating that widespread use of fireworks
was a contributor to heightened levels of smog. Revenue for the
third quarter was comprised of 58% domestic revenue and 42%
international revenue.
Gross profit for the quarter was $2.1 million, down $500,000 or 19.5% from the corresponding quarter
in 2012. The decrease in gross profit was attributable to lower
product volumes for both the domestic and international markets.
Gross margin as a percentage of revenue decreased by 2.7% to 34.9%
as lower margin products were sold to international markets faced
with an economic downturn.
EBITDA for the quarter was $536,000, representing a decrease of $252,000, or 32%, compared with the third quarter
in 2012. EBITDA before stock-based compensation expense decreased
by $280,000, or 34.1%, for the
quarter.
Net income was $282,000 or $0.005
per share ($0.004 diluted), compared
to $482,000, or $0.009 per share ($0.006 diluted) for the same period in 2012.
At March 31, 2013,
Liuyang held cash of $2.8 million and
working capital of $8.1 million.
These figures compare to cash of $6.1
million and working capital of $8.2
million at March 31, 2012.
Liuyang expects its cash flow from operations to be sufficient to
continue its growth and expansion plans for the balance of fiscal
2013.
Liuyang's consolidated financial statements for
the three and nine months ended March 31,
2013, and related Management's Discussion and Analysis
(MD&A) are filed with securities regulatory authorities within
applicable timelines and 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 over 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 Province,
China, where more than half of the
world's fireworks are produced.
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.
SOURCE Liuyang Fireworks Limited