BEIJING, Feb. 15, 2023 (GLOBE NEWSWIRE) -- Huadi International Group Co., Ltd. (“HUDI” or the “Company”) (NASDAQ: HUDI), a leading developer and manufacturer of industrial stainless steel seamless pipes and tubes products in China, today announced its financial results for the fiscal year ended September 30, 2022.
Financial Highlights for the Fiscal Year 2022
|
|
For the Fiscal Years Ended September 30 |
| (in $ millions, except earnings per share; differences due to rounding) |
|
2022 |
|
|
|
2021 |
|
|
|
% Change |
| Sales |
|
$ |
76.4 |
|
|
|
$ |
70.3 |
|
|
|
8.7 |
% |
| Gross profit |
|
|
11.1 |
|
|
|
|
11.3 |
|
|
|
1.6 |
% |
| Gross margin |
|
|
14.9 |
% |
|
|
|
16.1 |
% |
|
|
(1.2 percentage points) |
| Net income |
|
|
1.9 |
|
|
|
|
2.6 |
|
|
|
(23.8 |
%) |
| Net earnings per share – Basic and Diluted |
|
|
0.15 |
|
|
|
|
0.21 |
|
|
|
(28.6 |
%) |
- Revenue increased by 8.7% to $76.4 million For the year ended September 30, 2022 from $70.3 million for the year ended September 30, 2021.
- Gross profit decreased by 1.6% to$11.1 million for the year ended September 30, 2022, from $11.3 million for the year ended September 30, 2021.
- Net income for the fiscal year ended September 30, 2022 was $1.9 million compared to net income of $2.6 million for the fiscal year ended September 30, 2021,
Mr. Di Wang, Chairman of the Company commented: “The Company continues to focus its strategy on providing high-quality services and products to maintain and expand HUDI’s existing and prospective client base, which is shown by the Company’s nearly 9% sales growth during the fiscal year ended September 30, 2022. Despite a challenging year amid supply chain disruptions and rising material costs, the Company is pleased to deliver resilient performance during the past fiscal year and is prepared to keep implementing current strategic plan to seek sustainable growth in the coming year.”
Financial Results for the Fiscal year 2022
Sales
For the year ended September 30, 2022, revenues increased by approximately $6.1 million or 8.7%, to approximately $76.4 million from approximately $70.3 million for the year ended September 30, 2021. The increase in revenues was primarily driven by the following factors:
- During the fiscal year 2022, the Company observed an increase of raw materials price, especially the price of nickel which is an important component of stainless steel. To minimize the impact the rise of raw material price, we increased our weighted average selling price (“ASP”) during the fiscal year 2022.
- As a result of domestic shortage of construction materials and recovery of construction market, the Company’s domestic sales increased over 21.9% compared to the last fiscal year. The Company’s international sales revenue during fiscal year 2022 amounted to approximately $11.7 million, a decrease of 31.6% compared to last fiscal year.
Gross profit
Our gross profit decreased by approximately $0.2 million, or 1.6%, to approximately $11.1 million for the year ended September 30, 2022 from approximately $11.3 million for the year ended September 30, 2021. Gross profit margin was 14.9% for the year ended September 30, 2022, as compared to 16.1% for the year ended September 30, 2021. The slight decrease of gross profit margin was mainly due to increased raw material prices which drove up the cost of sales.
Selling, general and administrative (“SGA”) expenses
Selling, general and administrative expenses decreased by approximately $0.2 million, or 3.5% to approximately $6.5 million for the year ended September 30, 2022 as compared to approximately $6.7 million for the year ended September 30, 2021. The decrease of SGA expenses was mainly due to decreased freight expenses for the Company’s international and domestic sales, and increased travelling and agency expenses related to the increased sales activities.
Research and development (“R&D”) expenses
Research and development expenses increased by approximately $0.3 million, or 13.3% to approximately $2.3 million for the year ended September 30, 2022 as compared to approximately $2.1 million for the year ended September 30, 2021.
Net Income
As a result of the factors described above, the Company’s net income for the fiscal year ended September 30, 2022 was approximately $2.0 million compared to net profit of $2.6 million for the fiscal year ended September 30, 2021, a decrease in profit of approximately $0.6 million, or approximately 23.8%.
Recent development
On November 9, 2022, the Company closed a registered direct offering for the sale of 1,000,000 ordinary shares. The Company received gross proceeds from the sale of the shares of approximately $25 million before deducting placement agent fees and other offering expenses.
On December 8, 2022, Ms. Qin Li tendered her resignation as the Chief Financial officer the Company, effective on December 8, 2022. On the same day, at the recommendation of the Nominating Committee and the Compensation Committee, the Board of Directors approved and confirmed the appointment of Mr. Jianping Xiang as the succeeding Chief Financial Officer of the Company, effective December 8, 2022.
About Huadi International Group Co., Ltd.
Huadi International Group Co., Ltd. is a leading manufacturer of industrial stainless steel seamless pipes and tubes products with extensive distribution facilities and network for over twenty provinces in China and across international steel pipes industry. It offers a broad range of products exported to twenty countries and regions such as United States, Mexico, Thailand, Australia, Argentina, Taiwan, India, the Philippines, UAE and Canada. Its products are widely used in the oil & gas transmission, chemistry engineering, food processing, medical devices, aeronautics and astronautics, boiler, irrigation works construction, electricity, automobile, naval architecture, paper mill and mechanical industries. For more information about the Company, please visit: http://www.huadi.cc.
Forward-Looking Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as “may, “will, “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; the Company’s future business development; financial condition and results of operations; product and service demand and acceptance; reputation and brand; the impact of competition and pricing; changes in technology; government regulations; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward‐looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
The Company:
IR Department
Email: IR@huadigroup.com
Investor Relations:
Wealth Financial Services LLC
Email: services@wealthfsllc.com
HUADI INTERNATIONAL GROUP CO., LTD.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND 2021
(IN U.S. DOLLARS, EXCEPT SHARE DATA)
|
|
2022 |
|
|
2021 |
|
| Assets |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
13,195,999 |
|
|
$ |
15,350,197 |
|
| Restricted cash |
|
|
1,347,246 |
|
|
|
1,304,518 |
|
| Accounts receivable, net of allowance for doubtful accounts of $2,197,396 and $3,066,937, respectively |
|
|
19,658,188 |
|
|
|
21,297,261 |
|
| Accounts receivable – related parties |
|
|
- |
|
|
|
3,981,697 |
|
| Notes receivable |
|
|
1,410,613 |
|
|
|
2,593,018 |
|
| Inventories |
|
|
24,867,708 |
|
|
|
22,721,265 |
|
| Advances to suppliers |
|
|
3,369,468 |
|
|
|
3,806,420 |
|
| Advances to suppliers – related parties |
|
|
- |
|
|
|
5,550,504 |
|
| Other receivables |
|
|
552,633 |
|
|
|
475,793 |
|
| Total current assets |
|
|
64,401,855 |
|
|
|
77,080,673 |
|
| Property, plant and equipment, net |
|
|
5,989,136 |
|
|
|
7,208,705 |
|
| Land use rights, net |
|
|
1,069,891 |
|
|
|
1,234,636 |
|
| Long-term investments |
|
|
12,836,916 |
|
|
|
14,171,928 |
|
| Deferred tax assets |
|
|
338,729 |
|
|
|
549,921 |
|
| TOTAL ASSETS |
|
$ |
84,636,527 |
|
|
$ |
100,245,863 |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
919,492 |
|
|
$ |
1,713,716 |
|
| Accounts payable - related parties |
|
|
2,439,105 |
|
|
|
- |
|
| Accrued expenses and other current liabilities |
|
|
1,771,245 |
|
|
|
2,048,979 |
|
| Notes payable |
|
|
548,253 |
|
|
|
2,312,556 |
|
| Advances from customers |
|
|
4,401,440 |
|
|
|
4,667,084 |
|
| Due to related parties |
|
|
606,986 |
|
|
|
514,913 |
|
| Short-term borrowings |
|
|
11,888,662 |
|
|
|
33,459,043 |
|
| Tax payable |
|
|
3,126,778 |
|
|
|
4,051,158 |
|
| Total current liabilities |
|
|
25,701,961 |
|
|
|
48,767,449 |
|
| Long-term borrowing |
|
|
9,300,625 |
|
|
|
- |
|
| TOTAL LIABILITIES |
|
|
35,002,586 |
|
|
|
48,767,449 |
|
|
|
|
|
|
|
|
|
|
| COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’ equity: |
|
|
|
|
|
|
|
|
| Common stock, $0.0002 par value, 250,000,000 shares authorized, 13,239,182 and 13,127,000 shares issued and outstanding, respectively |
|
|
2,648 |
|
|
|
2,625 |
|
| Additional paid-in capital |
|
|
44,211,313 |
|
|
|
44,211,336 |
|
| Statutory surplus reserves |
|
|
494,223 |
|
|
|
255,705 |
|
| Retained earnings |
|
|
3,802,265 |
|
|
|
2,116,581 |
|
| Accumulated other comprehensive income |
|
|
873,059 |
|
|
|
4,627,661 |
|
| Total equity attributable to Huadi International Group Co., Ltd. |
|
|
49,383,508 |
|
|
|
51,213,908 |
|
| Equity attributable to non-controlling interests |
|
|
250,433 |
|
|
|
264,506 |
|
| Total shareholders’ equity |
|
|
49,633,941 |
|
|
|
51,478,414 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
84,636,527 |
|
|
$ |
100,245,863 |
|
HUADI INTERNATIONAL GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020
(IN U.S. DOLLARS, EXCEPT SHARE DATA)
|
|
|
2022
|
|
2021 |
|
2020 |
|
| Sales |
|
$ |
74,702,625 |
|
|
$ |
67,006,655 |
|
|
$ |
57,767,081 |
|
| Production service revenue |
|
|
1,663,523 |
|
|
|
3,239,956 |
|
|
|
1,370,197 |
|
| Cost of sales |
|
|
(65,230,521 |
) |
|
|
(58,926,675 |
) |
|
|
(48,473,061 |
) |
| Gross profit |
|
|
11,135,627 |
|
|
|
11,319,936 |
|
|
|
10,664,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
|
6,452,173 |
|
|
|
6,684,410 |
|
|
|
3,938,511 |
|
| Research and development |
|
|
2,330,913 |
|
|
|
2,057,547 |
|
|
|
2,120,649 |
|
| Total operating expenses |
|
|
8,783,086 |
|
|
|
8,741,957 |
|
|
|
6,059,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
2,352,541 |
|
|
|
2,577,979 |
|
|
|
4,605,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expenses, net |
|
|
(1,629,642 |
) |
|
|
(2,058,461 |
) |
|
|
(2,162,589 |
) |
| Other income, net |
|
|
1,398,173 |
|
|
|
1,948,527 |
|
|
|
1,132,780 |
|
| Total other expenses, net |
|
|
(231,469 |
) |
|
|
(109,934 |
) |
|
|
(1,029,809 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
|
2,121,071 |
|
|
|
2,468,045 |
|
|
|
3,575,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax benefit/(provision) |
|
|
(173,017 |
) |
|
|
89,000 |
|
|
|
(218,949 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
1,948,054 |
|
|
|
2,557,045 |
|
|
|
3,356,299 |
|
| Net income attributable to non-controlling interests |
|
|
23,852 |
|
|
|
25,570 |
|
|
|
33,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Huadi International Group Co., Ltd. |
|
$ |
1,924,202 |
|
|
$ |
2,531,475 |
|
|
$ |
3,322,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
1,948,054 |
|
|
$ |
2,557,045 |
|
|
$ |
3,356,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign currency translation adjustment |
|
|
(3,792,527 |
) |
|
|
1,452,328 |
|
|
|
1,225,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
(1,844,473 |
) |
|
|
4,009,373 |
|
|
|
4,581,600 |
|
| Comprehensive income attributable to non-controlling interests |
|
|
(14,073 |
) |
|
|
40,093 |
|
|
|
45,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive income attributable to Huadi International Group Co., Ltd. |
|
$ |
(1,830,400 |
) |
|
$ |
3,969,280 |
|
|
$ |
4,535,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.15 |
|
|
$ |
0.21 |
|
|
$ |
0.34 |
|
| Diluted |
|
$ |
0.15 |
|
|
$ |
0.21 |
|
|
$ |
0.34 |
|
| Weighted average numbers of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
13,239,182 |
|
|
|
12,116,079 |
|
|
|
10,000,000 |
|
| Diluted |
|
|
13,239,182 |
|
|
|
12,116,079 |
|
|
|
10,000,000 |
|
HUADI INTERNATIONAL GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020
(IN U.S. DOLLARS)
|
|
|
|
|
|
2022 |
|
|
2021 |
|
2020 |
|
| Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
1,948,054 |
|
|
$ |
2,557,045 |
|
|
$ |
3,356,299 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation |
|
|
792,888 |
|
|
|
735,333 |
|
|
|
723,586 |
|
| Amortization |
|
|
32,087 |
|
|
|
32,349 |
|
|
|
30,048 |
|
| Bad debt expense reverse |
|
|
(564,283 |
) |
|
|
(153,676 |
) |
|
|
- |
|
| Deferred tax benefits (expenses) |
|
|
173,017 |
|
|
|
(89,000 |
) |
|
|
- |
|
| Loss (gain) on disposal of fixed assets |
|
|
- |
|
|
|
1,767 |
|
|
|
(654,138 |
) |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
4,080,722 |
|
|
|
(8,823,928 |
) |
|
|
(260,202 |
) |
| Notes receivable |
|
|
1,018,351 |
|
|
|
(1,987,871 |
) |
|
|
(10,332 |
) |
| Inventories |
|
|
(4,653,336 |
) |
|
|
(756,588 |
) |
|
|
(1,987,737 |
) |
| Advances to suppliers |
|
|
19,092 |
|
|
|
(2,727,661 |
) |
|
|
366,087 |
|
| Advances to suppliers – related party |
|
|
5,457,504 |
|
|
|
78,283 |
|
|
|
180,333 |
|
| Other receivables |
|
|
(132,062 |
) |
|
|
2,006,975 |
|
|
|
3,303,687 |
|
| Accounts payable |
|
|
1,960,756 |
|
|
|
(238,638 |
) |
|
|
650,988 |
|
| Accrued expenses and other current liabilities |
|
|
(91,961 |
) |
|
|
372,155 |
|
|
|
(387,358 |
) |
| Notes payable |
|
|
(1,678,680 |
) |
|
|
707,021 |
|
|
|
(2,301,375 |
) |
| Advances from customers |
|
|
188,878 |
|
|
|
3,040,106 |
|
|
|
222,805 |
|
| Tax payable |
|
|
(589,163 |
) |
|
|
(402,478 |
) |
|
|
(28,401 |
) |
| Net cash provided by (used in) operating activities |
|
|
8,027,856 |
|
|
|
(5,648,806 |
) |
|
|
3,204,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of property, plant and equipment |
|
|
(206,175 |
) |
|
|
(917,539 |
) |
|
|
(664,996 |
) |
| Proceeds from disposition of property, plant and equipment |
|
|
- |
|
|
|
20,285 |
|
|
|
724,782 |
|
| Net cash (used in) provided by investing activities |
|
|
(206,175 |
) |
|
|
(897,254 |
) |
|
|
59,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from short-term borrowings |
|
|
21,719,160 |
|
|
|
35,820,322 |
|
|
|
38,620,077 |
|
| Repayments on short-term borrowings |
|
|
(41,712,446 |
) |
|
|
(35,265,552 |
) |
|
|
(40,488,791 |
) |
| Proceeds from long-term borrowings |
|
|
10,095,831 |
|
|
|
- |
|
|
|
- |
|
| Proceeds from stock offering, net of offering costs |
|
|
- |
|
|
|
21,680,341 |
|
|
|
- |
|
| Advances from related parties |
|
|
305,226 |
|
|
|
6,223,875 |
|
|
|
3,068,965 |
|
| Repayments to related parties |
|
|
(152,628 |
) |
|
|
(7,182,813 |
) |
|
|
(5,889,557 |
) |
| Net cash (used in) provided by financing activities |
|
|
(9,744,857 |
) |
|
|
21,276,173 |
|
|
|
(4,689,306 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
(188,294 |
) |
|
|
219,398 |
|
|
|
113,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (decrease) increase in cash and cash equivalents and restricted cash |
|
|
(2,111,470 |
) |
|
|
14,949,511 |
|
|
|
(1,311,468 |
) |
| Cash and cash equivalents and restricted cash at the beginning of year |
|
|
16,654,715 |
|
|
|
1,705,204 |
|
|
|
3,016,672 |
|
| Cash and cash equivalents and restricted cash at the end of year |
|
$ |
14,543,245 |
|
|
$ |
16,654,715 |
|
|
$ |
1,705,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosures of cash flows information: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash paid for income taxes |
|
$ |
64,016 |
|
|
$ |
480,495 |
|
|
$ |
135,262 |
|
| Cash paid for interest |
|
$ |
1,151,567 |
|
|
$ |
1,550,082 |
|
|
|
1,951,622 |
|
