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8-K - 8-K CURRENT REPORT - Fushi Copperweld, Inc.v312426_8k.htm

Exhibit 99.1

 

Fushi Copperweld Announces 2012 First Quarter Results

 

BEIJING, May 3, 2012 /PRNewswire-Asia-FirstCall/ -- Fushi Copperweld, Inc. (Nasdaq: FSIN), the leading global manufacturer and innovator of copper-clad bimetallic wire used in a variety of telecommunication, utility, transportation and other electrical applications, today announced financial results for the first quarter ended March 31, 2012.

 

First Quarter 2012 Results

  • Revenues were $62.1 million compared to $65.9 million in the year ago period;
  • Gross profit was $16.4 million, or 26.3% of revenues, compared to $17.1 million, or 26.0% of revenues, in the year ago period;
  • Income from operations was $8.1 million, or 13.0% of revenues, compared to $10.5 million, or 15.9% of revenues, in the year ago period;
  • Net income was $4.9 million, or $0.13 per diluted share, compared to net income of $6.8 million, or $0.18 per diluted share, in the year ago period;
  • Cash position of $205.4 million at March 31, 2012.

Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "The quarter came in largely as expected, and we saw a slight improvement in business conditions and greater predictability in orders relative to what we experienced in the 2011 fourth quarter. While sales at Dalian were impacted by softening telecom demand, we benefitted from solid performance in our utility product lines and lower raw material costs in what continued to be a challenging market environment. We also began to see some traction from our growth initiatives in the period, including increased order and inquiry activity from European, African and broader Asian markets, for a variety of products. The ramp up of our operations in Liege, Belgium continued, and Liege is becoming a key competitive differentiator for us, as we have secured promising new copper tubing and bi-metallic wire orders and interest, as a result of our on-the-ground presence in this market."

 

Revenues in the first quarter of 2012 were $62.1 million, a decrease of 5.7% compared to $65.9 million in the prior year quarter, primarily due to lower sales volumes.

Gross profit in the first quarter was $16.4 million compared to $17.1 million last year. Gross margin increased to 26.3% from 26.0% in the same period last year. Gross margin for the Company's Dalian cladding facility was 33.1%, compared to 32.6% in the prior year period, while gross margin for the Company's Fayetteville, TN facility was 10.3% in the first quarter of 2012, compared to 8.9% in the 2011 first quarter.

 

Operating expenses in the first quarter of 2012 increased to $8.3 million, compared to $6.7 million in the prior year's quarter, primarily as a result of the Company's continued investment in its global business development efforts, as well as incremental costs of approximately $0.9 million related to the start-up of operations at its new facility in Liege, Belgium. As a percentage of revenue, operating expenses increased to 13.3% from 10.1% in the first quarter of 2011. While not significant to date, the Liege facility did generate nominal revenues from sales of copper-clad aluminum and copper tubing products during the quarter. The Company expects that revenues from this facility will continue to increase and be slightly dilutive to earnings in 2012.

 

The Company's effective income tax rate in the first quarter of 2012 was 39.2% compared to 33.5% in the year ago period. The Company continues to expect its effective tax rate for the 2012 full year period to be 31.5%.

 
 

 

Net income in the first quarter was $4.9 million, or $0.13 per diluted share, compared to net income of $6.8 million, or $0.18 per diluted share, for the 2011 first quarter.

 

Fully diluted shares in the first quarter of 2012 were 38.3 million compared to 38.4 million a year ago.

 

During the three months ended March 31, 2012, the Company generated net cash from operating activities of $7.1 million, compared to $15.0 million in the comparable period in 2011.

 

Mr. Longever concluded, "As we exit the seasonally soft first quarter, we are encouraged by our performance and the improved conditions in our markets. Order trends have remained promising, our growth investments are beginning to generate benefits that we expect to build on throughout the year, and the feedback we have received from our customers and prospects reinforces the value proposition of our products as a technically superior and economically attractive alternative to pure copper. We remain confident in the long-term demand drivers for our products and in our ability to grow the business. In the meantime, we continue to generate healthy cash flows and add to our strong cash position, which keeps us well positioned through the economic cycle."

 

Outlook

 

Based on its first quarter performance and current business trends, Fushi Copperweld continues to expect 2012 fully diluted earnings per share between $0.76 and $0.86, based on an estimated weighted average diluted share count of 38.3 million shares and an effective tax rate of 31.5%. The Company expects profitability in subsequent quarters to improve over the first quarter due to higher revenues with the absence of the Chinese New Year and increased traction from business development and certification efforts.

 

Conference Call

 

The Company will conduct a conference call to discuss the first quarter 2012 results today, Thursday, May 3, 2012, at 8:30 am ET. To participate, the conference call may be directly accessed from the U.S. and Canada at 1-866-226-1792 and accessed internationally at 1-416-340-2216. A live webcast of the conference call will also be available at http://bit.ly/eventFSIN. A replay of the call will be available at www.fushicopperweld.com on the Investor Relations section.

 

About Fushi Copperweld

 

Fushi Copperweld Inc., principally through its wholly owned subsidiaries, Fushi International (Dalian) Bimetallic Cable Co. Ltd. and Copperweld Bimetallics LLC, is the leading manufacturer and innovator of copper-clad bimetallic engineered conductor products for electrical, telecommunications, transportation, utilities and industrial applications. With extensive design and production capabilities, and a long-standing dedication to customer service, Fushi Copperweld is the preferred choice for bimetallic products worldwide.

 

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:

 

Investors

 

Jolin Qiao, Investor Relations Officer
Fushi Copperweld Inc.
Phone +1.931.433.0482
E-mail: ir@fushicopperweld.com
Web:  www.fushicopperweld.com

 

 

FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2012 and DECEMBER 31, 2011
UNAUDITED
         
   March 31,   December 31, 
ASSETS  2012   2011 
Current assets:  USD   USD 
Cash   205,375,102    200,451,902 
Accounts receivable, net of allowance for doubtful accounts   63,844,604    63,978,861 
Inventories   15,053,070    10,695,123 
Advances to suppliers   6,970,168    6,793,904 
Prepaid expenses and other current assets   1,488,592    1,332,204 
Total current assets   292,731,536    283,251,994 
           
Property, plant and equipment, net   114,205,897    117,405,523 
Intangible assets, net   387,900    431,441 
Land use rights   13,213,366    13,321,796 
Deposits for land use rights   10,084,905    10,090,621 
Goodwill   1,811,041    1,812,068 
Other non-current assets   459,845    491,380 
Total assets   432,894,490    426,804,823 
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities:          
Current portion of long-term loan   650,000    650,000 
Accounts payable   5,595,197    3,802,155 
Amounts due to a related party   -    2,000,000 
Accrued expenses and other current liabilities   17,026,671    15,880,176 
Total current liabilities   23,271,868    22,332,331 
Long-term loans   7,542,740    7,632,100 
Deferred income tax liabilities   663,100    672,943 
Total liabilities   31,477,708    30,637,374 
           
Shareholders' equity:          
Common stock, $0.006 par value, 100,000,000 shares authorized; 38,286,054 and 38,240,438 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively   229,718    229,444 
Additional paid-in capital   169,696,936    169,335,522 
Retained earnings   177,374,216    172,507,890 
Accumulated other comprehensive income   54,115,912    54,094,593 
Total shareholders' equity   401,416,782    396,167,449 
Commitments and contingencies          
Total liabilities and shareholders' equity   432,894,490    426,804,823 

 

 
 

 

 FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2012 AND 2011
UNAUDITED
         

   Three-Month Period Ended March 31, 
   2012   2011 
   USD   USD 
         
Revenues   62,146,186    65,925,866 
Cost of revenues   45,790,996    48,777,114 
    Gross profit   16,355,190    17,148,752 
Selling expenses   1,619,393    1,149,524 
General and administrative expenses   6,656,755    5,515,123 
    Total operating expenses   8,276,148    6,664,647 
    Income from operations   8,079,042    10,484,105 
Interest income   236,709    228,854 
Interest expense   (131,185)   (98,094)
Foreign currency exchange losses, net   (175,595)   (354,892)
    Total other expense, net   (70,071)   (224,132)
    Income before income taxes   8,008,971    10,259,973 
Income tax expense   3,142,645    3,433,688 
    Net income   4,866,326    6,826,285 
Other comprehensive income:          
Foreign currency translation adjustment, net of nil income taxes   21,319    2,655,537 
    Comprehensive income   4,887,645    9,481,822 
Earnings per share:          
Basic   0.13    0.18 
Diluted   0.13    0.18 

 

FUSHI COPPERWELD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2012 AND 2011
UNAUDITED
     

   Three-Month Period Ended March 31, 
   2012   2011 
   USD   USD 
Cash flows from operating activities:        
  Net cash provided by operating activities   7,115,016    15,013,956 
Cash flows from investing activities:          
  Purchases of property, plant and equipment   (199,054)   (282,486)
  Net cash used in investing activities   (199,054)   (282,486)
Cash flows from financing activities:          
  Payment for acquisition of  Jinchuan   -    (4,819,107)
  Repayment of interest-free loans provided by Mr. Li Fu   (2,000,000)   - 
  Repayment of long-term bank loans   (162,500)   (162,500)
  Proceeds from issuance of common stock and warrants   185,873    622,275 
  Net cash used in financing activities   (1,976,627)   (4,359,332)
  Effect of foreign currency exchange rate changes on cash   (16,135)   1,065,919 
Net increase in cash   4,923,200    11,438,057 
Cash at beginning of period   200,451,902    123,000,338 
Cash at end of period   205,375,102    134,438,395 
Supplemental disclosure of cash flow information:          
Interest paid   131,185    98,595 
Income taxes paid   2,249,133    2,572,995