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Hong Kong Highpower International, Inc. (HPJ)
Q1 2013 Earnings Conference Call
May 13, 2013 10:00 a.m. ET
Henry Sun - Chief Financial Officer & Corporate Secretary
Tricia Ross - Investor Relations, Financial Profiles
Samantha Taylor - SJT Investments
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I would now like to turn the conference over to Tricia Ross of Financial Profiles. Please go ahead.
Thank you and good morning. This is Tricia Ross, Investor Relations for Highpower International. By now you should have all received a copy of the press release we put out earlier this morning. If you need one please contact our offices at 310-478-2700. Before we begin I would like to remind you that comments on today’s call contain forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are identified through use of words such as expect, project, target, continue, believe and other words of similar meaning. Such statements involve known and unknown risks uncertainties and other facts that could cause the actual results of Highpower International to defer materially from the results expressed or implied by such statements. For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see risk factors and management’s discussion and analysis of financial condition and results of operations in the company’s annual report on Form 10K and other reports of the company filed under the Securities And Exchange Act of 1934. Although the company believes that the expectations reflected in such forward-looking statements are reasonable there can be no assurance that such expectations will prove to be correct. The company has no obligation to update the forward-looking information discussed during today’s call. With us on the call today from management is Henry Sun, Chief Financial Officer of Highpower.
With that I would now like to turn the call over to Henry.
Thank you, Tricia, and thank you all for joining us today. Welcome to Highpower International’s first quarter 2013 earnings conference call. This morning I will begin with an overview of our first quarter financial results which we reported in our press release before the market opened. Next I will provide some brief commentary on our battery business and initiatives. Finally, I will discuss our outlook for fiscal year 2013 before opening up the call to your questions.
Overall, the first quarter was very solid and it puts us in a good position to deliver on our targets in 2013. Following our typical patterns of seasonality, the first quarter is traditionally Highpower’s weakest quarter of the fiscal year due to the Chinese New Year. Despite that, we were pleased to have delivered strong year over year revenue growth of 18.4% during the first quarter, driven once again by our healthy lithium battery business.
Lithium battery net sales were up 72% in the first quarter over the same period in 2012. Total pieces were up 54% year over year and our total lithium battery volume per amp hour increased by 94% year-over-year.
Our Nickel-Metal Hydride business remained steady and on course as our Nickel-Metal Hydride net sales were up slightly in the first quarter of 2013 over the first quarter of 2012 by approximately 1%.
Net sales for the first quarter ended March 31 2013 totaled $24.4 million, a year-over-year increase of 18.4% compared with $20.6 million for the first quarter ended March 31, 2012. The increase in sales for the first quarter was primarily due to an increase net sales of our lithium batteries from new and existing customers as well as a slight increase in sales of our Nickel-Metal Hydride business.
First quarter 2013 gross profit increased to $4.8 million compared with $3.7 million for the first quarter of 2012. Gross profit margin was 19.5% for the first quarter of 2013 compared with 17.8% for the first quarter of 2012 or a 170 basis points increase. The year over year increase in gross profit margin for the first quarter of 2013 was primarily due to the drecrease in raw material prices from the comparable period in 2012. In addition, the higher volume of lithium batteries sold impacted gross margin positively due to the better absopriton of fixed costs.
R&D spending was $1.1 million for the first quarter of 2013, compared with $0.9 million for the compareable period in 2012, reflecting the expansion of our research and development workforce and management functions.
Selling and distribution expenses were $1.4 million for the first quarter of 2013 compared with $1.2 million for the comparable period in 2012. The year over year increase in selling and distribution expenses was due to the expansion of our sales force and marketing activities, participation in industry trade shows and international travel to promote and sell our products abroad.
General and administrative expenses were $2.8 million for the first quarter of 2013 compared with $2.0 million for the first quarter of 2012. The increase was mainly due to the expansion of our workforce in various fucntions to support our growth.