Liuyang Fireworks Reports Third Quarter Financial Results

June 01, 2015 9:10 PM EDT | Source: Liuyang Fireworks Limited

Toronto, Ontario--(Newsfile Corp. - June 1, 2015) - Liuyang Fireworks Limited (TSXV: FWK) ("Liuyang" or "the Company") today announced financial results for its third quarter and first nine months ended March 31, 2015. All amounts are in Canadian dollars unless otherwise indicated.

Highlights for the Third quarter:

  • International sales of the Company's firework products were lower but offset by increases in domestic sales into China. As a result, total sales is on par with the same quarter of fiscal 2014;
  • International sales during the third quarter represented 56% of sales compared with 62% during the third quarter of 2014;
  • Gross margin during the third quarter was 37.3% compared with 39.1% the same period in 2014;
  • Net loss was $549,451 compared to net income of $74,027 a year earlier;
  • As a result of the above, EBITDA was negative $327,100 compared to $222,277 the previous year.

Summary Financial Statements

In thousands except per share and % 3 months ended Mar. 31 9 months ended Mar. 31
data   2015 2014 2015 2014
Revenue   $3,912 $3,930 $11,684 $11,616
Gross profit   $1,458 $1,535 $4,278 $4,168
Gross margins   37.3% 39.1% 36.6% 35.9%
EBITDA   ($327) $222 $(420) $(238)
Net income   $(558) $(74) $(804) $(713)
Net income per share Basic $(0.010) $(0.001) $(0.015) $(0.013)
  Diluted $(0.010) $(0.001) $(0.015) $(0.013)
 

In thousands except ratio data 3 months ended Mar. 31
  2015 2014
Cash $2,665 $3,134
Current ratio 1.90:1 2.49:1
Working capital $8,601 $7,600
Total assets $20,508 $19,287
Debt to equity ratio 0.53:1 0.67:1

 

Review of Third Quarter Results

Revenue for the quarter was $3.91 million, representing a decline of $17,770 or 0.5% compared to the same period a year ago. The decrease was mainly attributable to a $241 thousand sales decrease in the international market but offset by $223 thousands from China domestic market fireworks sales revenue. During the quarter the Company earned 76% of its revenues from international markets.

Gross profit for the quarter was $1.46 million, representing a decrease of $0.77 million (or 5%) compared to a year earlier. Gross margin as a percentage of sales decreased to 37.3% from 39.1% during the same period last year.

EBITDA for the quarter was negative $327 thousand, representing a decrease of $549 thousand (or 247%) compared with the third quarter of fiscal 2014. The deterioration was attributable to lower net income recognized in the third quarter of fiscal 2015.

The Company had a net loss of $558 thousand, or $0.010 per share, compared to a net income of $74 thousand, or $0.001 per share, for the third quarter of last year.

At March 31, 2015, the Company had cash of $2.66 million and working capital of $8.6 million. These figures compare to cash of $3.13 million and working capital of $7.6 million at March 31, 2014.

Liuyang's consolidated financial statements for the three and nine months ended March 31, 2015 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:

Jacky Long
Chief Financial Officer
Liuyang Fireworks Limited
Tel : 647 350 8818
jackylong@farocean.com

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.

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