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Liuyang Fireworks Reports First Quarter Results
December 02, 2014 7:00 AM EST | Source: Liuyang Fireworks Limited
Toronto, Ontario--(Newsfile Corp. - December 2, 2014) - Liuyang Fireworks Limited (TSXV: FWK) ("Liuyang" or "the Company") today announced financial results for its first quarter ended September 30, 2014. All amounts are in Canadian dollars unless otherwise indicated.
Highlights for the first quarter:
- During the quarter ended September 30, 2014 the Company experienced a, government imposed plant closure for 40 days due to extremely hot weather conditions. As a result the Company was forced to delay production and shipping during the quarter, contributing to a reduction in revenue by 21.3% to $2.46 million;
- As a result of changes in the product mix, gross margin improved during the first quarter to 42.9% compared with 32.4% during the same period of last year;
- Reductions in sales expenditures and general and administrative expenses led to a 49.8% improvement in EBITDA during the first quarter to negative $0.11 million;
- Net loss for the quarter improved 44.6% to $0.21 million.
"Our production and shipping schedules for the quarter were disrupted by the unexpected plant closure," said Mr. Hu, Liuyang's president and CEO. "On the positive side, our gross margin percentage improved as a result of a sales mix with more higher-margin goods sold into the international market. As well, we saw improvements in our EBITDA and bottom line as we were able to achieve reductions in our general and administrative expenses during the quarter."
SUMMARY FINANCIAL STATEMENTS
| In thousands except per share | 3 months ended Sept. 30 | |||||
| and % data | 2014 | 2013 | ||||
| Revenue | $ | 2,457 | $ | 3,121 | ||
| Gross profit | $ | 857 | $ | 1,010 | ||
| Gross margins | 34.9% | 32.4% | ||||
| EBITDA | $ | (109 | ) | $ | (211 | ) |
| Net income | $ | (209 | ) | $ | (377 | ) |
| Net income per share Basic | $ | (0.002 | ) | $ | (0.007 | ) |
| Diluted | $ | (0.002 | ) | $ | (0.007 | ) |
Balance Sheet Highlights
| In thousands except ratio data | 3 months ended Sept. 30 | |||||
| 2014 | 2013 | |||||
| Cash | $ | 2,374 | $ | 2,440 | ||
| Current ratio | 1.94:1 | 1.91:1 | ||||
| Working capital | $ | 7,839 | $ | 7,470 | ||
| Total assets | $ | 16,212 | $ | 19,514 | ||
| Debt to equity ratio | 0.82:1 | 0.72:1 | ||||
Review of First Quarter Results
Revenue during the first quarter ended September 30, 2014 fell 21.3% to $2.46 million compared with $3.12 million for the same period a year earlier. The decrease was mainly attributable to the plant shutdown which delayed the Company's European order production schedule into September of 2014. Domestic sales revenue were down $0.2 million, or 47.1%, as a result of continued softness in domestic demand.
Gross profit for the quarter was down 15.1% to $0.86 million compared with $1.01 million for the same period last year. Gross margin as a percentage of sales increased to 34.9% from 32.4% as more higher-margin products were sold into the international market.
EBITDA for the quarter improved 49.8% to negative $0.11 million compared with negative $0.21 million for the same period last year. The improvement was attributable to a 17.5% reduction in sales expenditures and a 14.9% reduction in general and administrative expenses offsetting the lower revenues and gross profit earned during the quarter.
Net loss for the quarter improved 44.6% to $0.21 million compared with a net loss of $0.38 million for the same period a year earlier.
Liuyang's consolidated financial statements for the three months ended September 30, 2014 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.