Yet (midday), the shares are down 9%. Quite odd, that…
We would say these results are a blast and picking some up at the sell-off seems like a good idea, but read for yourself (bold letters are ours):
FUQI International, Inc. Reports Third Quarter 2009 Financial Results
— 3Q09 Revenues Increase 35.8% to $127.2 Million —
— 3Q09 Gross Margin Increases 11.8% to 23.5% —
— 3Q09 Net Income Increases 187.9% to $18.8 Million, or $0.73 per Diluted Share —
— Raises Full Year Revenue and Net Income Guidance —
SHENZHEN, China, Nov. 9 /PRNewswire-Asia/ — FUQI International, Inc. (Nasdaq: FUQI – News) today announced financial results for the third quarter ended September 30, 2009.
“I am pleased to report that, our team has once again delivered strong third quarter results, especially as the third quarter has historically been a seasonally slower quarter for FUQI. During the third quarter, we were able to report stronger than expected wholesale results primarily due to increased sales volume and through our original design manufacturing (ODM) work. As our brand grows throughout China, we plan to continue to capitalize on such opportunities to enhance our wholesale and retail businesses. Furthermore, we will continue with our collaborative relationship with several well-known universities specialized in gemological training in China to further enhance our product and designs as well as to develop innovative technological products. We remain confident with our fully-integrated wholesale and retail platforms, and we believe that we are well on our way to becoming one of the dominant jewelry enterprises in China,” commented Mr. Yu Kwai Chong, CEO and Chairman of Fuqi International.
In the third quarter of 2009, the company opened a total of eleven new retail counters. Three FUQI counters were opened in Beijing, Shanghai and Shenyang and eight Temix brand counters were opened in Beijing and Shanghai. Three counters closed in the same period. As of September 30, 2009, the Company had a total of 72 retail counters, including 58 under the Temix brand and 14 under the FUQI brand, and a total of 7 retail stores, which are all under the Temix brand. The Company continues to grow its counter space and plans to have a total of 95-100 retail locations by the end of 2009 and additional 80-100 retail locations in 2010.
Revenues for the third quarter of 2009 increased 35.8% to $127.2 million from $93.7 million in the third quarter of 2008. The increase was attributable to an increase of sales volume in the wholesale business, including original design manufacturing (ODM) work, as well as from increased revenues derived from the Company’s retail business. Wholesale revenue contributed approximately $117.5 million to overall revenues for the quarter, representing year-over-year growth of approximately 29.7%, and retail revenue contributed approximately $9.7 million to overall revenue for the quarter, which is a 208.7% increase compared to $3.2 million the same period of the prior year.
Gross profit in the third quarter of 2009 increased 172.0% to $29.9 million from $11.0 million for the same period in the prior year. Gross profit margin for the third quarter of 2009 increased to 23.5% compared to 11.7% in the same period in the prior year. The improvement in gross margin was primarily due to higher wholesale margins resulting from several sizeable ODM orders fulfilled during the third quarter. Third quarter wholesale gross margin increased 12.8% to 23.6% compared to 10.8% in the prior year period while retail gross margin was 22.6% in the third quarter of 2009 compared to 38.0% in the third quarter of the prior year.
Operating expenses in the third quarter increased 110.8% to $5.7 million compared to $2.7 million in the prior year period. The increase was primarily a result of higher professional fees as a result of the expansion of the retail business and increased payroll cost for the additional employees hired in the accounting and finance department, salary expenses incurred in relation to the expansion of the wholesale and retail business and an increase in variable rents and fees to department stores and malls for retail business. Income from operations for the third quarter increased 192.3% to $24.2 million from $8.3 million in the third quarter of 2008.
Net income for the third quarter of 2009 increased 187.9% to $18.8 million, or $0.73 per diluted share, compared to $6.5 million, or $0.31 per diluted share in the same period of the prior year.
On September 30, 2009, the Company had cash and cash equivalents of $173.2 million, compared with $49.3 million at the end of the second quarter. Inventory at the end of the third quarter was $85.8 million, down slightly from $86.8 million in the second quarter, but reflecting anticipated demand for jewelry products in the upcoming Christmas holiday season.
2009 Financial Outlook
Mr. Chong continued, “The third quarter came in stronger than we expected, considering the long National Holiday week and the dearth of gift-giving holidays during the quarter. Nevertheless, our ability to generate strong revenue and earnings growth during a seasonally slow period is extremely encouraging for our management team, as we look towards our goals for the future. As a result of the stronger-than-expected third quarter performance, we will be raising our revenue and net income guidance for the fourth quarter and full year. We believe that FUQI has laid the plans for strong continued growth in the wholesale and retail markets, and our branding, marketing and distribution plans will enable us to leverage the foundation we have built for more market penetration. We are excited about the coming quarters and the plans we have in place, and look forward to providing our shareholders with optimal value.”
For the fourth quarter of 2009, the Company anticipates total revenue between approximately $182.0-$191.0 million, which includes wholesale and retail revenues. Net income in the fourth quarter is expected to be in the range of $15.2-$16.6 million, or $0.55-$0.60 per diluted share, based on a weighted average share count of approximately 27.6 million shares.
For the full year 2009, the Company now expects full-year revenue of approximately $519.4-$528.4 million. These estimates include both wholesale and retail revenues and exclude the impact from any potential acquisitions. The Company also anticipates net income of approximately $53.5-$54.9 million, or diluted EPS of $2.21-$2.27, based on a weighted average share count of approximately 24.2 million shares, reflecting the partial-year impact of the shares issued in our recent offering.
Conference Call
The Company will conduct a conference call to discuss its third quarter 2009 results today, Monday, November 9th at 8:30 am ET. Listeners may access the call by dialing #1-480-629-9858. To listen to the live webcast of the event, please go to http://www.viavid.net . Listeners may access the call replay, which will be available through November 23rd, by dialing #1-303-590- 3030; pin number: 4182147.
About FUQI International
Based in Shenzhen, China, FUQI International, Inc. is a leading designer of high quality precious metal jewelry in China, developing, promoting, and selling a broad range of products in the large and rapidly expanding Chinese luxury goods market.
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 the Company’s proposed discussions related to its business or growth strategy, which is subject to change. Such information is based upon expectations of the Company’s 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. Such risks and uncertainties include, but are not limited to, risks related to our acquisition of Temix in August 2008, adverse capital and credit market conditions, the vulnerability of the Company’s business to a general economic downturn in China; fluctuation and unpredictability of costs related the gold, platinum and precious metals and other commodities used to make the Company’s products; the Company’s ability to obtain all necessary government certifications and/or licenses to conduct its business; the Company’s recent entry into the retail jewelry market; the Company’s reliance on one source for gold; and other factors detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company does 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 the Company’s most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and its subsequent SEC filings. Copies of filings made with the SEC are available through the SEC’s electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov .
For more information, please contact:
Mr. Frederick Wong
Chief Financial Officer
Tel: +852-6199-0741 (Hong-Kong)
Ms. Charlene Hua
EVP of Finance, Capital Market & Corporate Development
Tel: +852-9468-2497 (Hong Kong)
Email: <a href="mailto:IR@Fuqiintl.com;_ylt=Ai1I4hMC3lxDL6Rp5SS5xeOxcq9_;_ylu=X3oDMTE2NmkxbWl2BHBvcwMzBHNlYwNuZXdzQXJ0Qm9keQRzbGsDaXJmdXFpaW50bGNv" class="yltasis">IR@Fuqiintl.com</a>
Bill Zima
ICR Inc. (US)
Tel: +1-203-682-8200
FUQI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net sales:
Wholesale and
distribution $117,450,677 $90,523,143 $306,780,848 $233,011,441
Retail 9,737,783 3,154,558 30,609,867 5,108,874
127,188,460 93,677,701 337,390,715 238,120,315
Cost of sales:
Wholesale and
distribution 89,712,957 80,723,212 250,306,439 207,616,922
Retail 7,538,332 1,956,227 21,740,102 3,596,854
97,251,289 82,679,439 272,046,541 211,213,776
Gross Profit 29,937,171 10,998,262 65,344,174 26,906,539
Operating
expenses:
Selling and
marketing 3,893,122 1,559,892 9,731,593 2,486,020
General and
administrative 1,828,675 1,153,666 5,690,294 3,222,725
Total operating
expenses 5,721,797 2,713,558 15,421,887 5,708,745
Income from
operations 24,215,374 8,284,704 49,922,287 21,197,794
Other income
(expenses):
Interest expense (667,537) (400,799) (1,463,510) (1,086,954)
Interest income 54,303 6,715 114,928 20,050
(Loss)/gain from
derivative
instrument (18,652) 22,954 77,019 1,584,220
Miscellaneous 150,648 16,111 190,905 272,271
Total other
income (expenses) (481,238) (355,019) (1,080,658) 789,587
Income before
provision for
income taxes 23,734,136 7,929,685 48,841,629 21,987,381
Provision for
income taxes 4,962,627 1,409,127 10,542,380 3,820,983
Net income 18,771,509 6,520,558 38,299,249 18,166,398
Other compre-
hensive income
(loss) - foreign
currency
translation
adjustments 47,969 707,332 39,190 7,213,788
Comprehensive
income $18,819,478 $7,227,890 $38,338,439 $25,380,186
Earnings per
share - basic $0.75 $0.31 $1.69 $0.86
Earnings per
share - diluted $0.73 $0.31 $1.66 $0.86
Weighted average
number of
common shares -
basic 24,964,966 21,247,868 22,654,228 21,033,701
Weighted average
number of common
shares- diluted 25,722,344 21,247,868 23,045,424 21,033,701
FUQI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
(Unaudited)
ASSETS
Current assets:
Cash $173,169,185 $56,569,733
Accounts receivable, including amount due
from related party of $9,376,955 for 2009
and $2,837,907 for 2008, net of allowance
for doubtful accounts of $1,171,000 for
2009 and $1,620,000 for 2008 73,825,242 73,949,200
Value added taxes receivable 5,824,290 2,170,669
Inventories 85,774,101 44,409,645
Prepaid expenses and other current assets 561,747 286,405
Advances to suppliers 26,120,827 8,468,971
Gold future contracts -- 1,426,236
Deferred taxes 26,820 142,608
Total current assets 365,302,212 187,423,467
Property, equipment, and improvements, net 4,046,172 3,400,642
Deposits 114,909 104,414
Goodwill 585,693 583,269
Acquired intangibles, net 3,103,914 3,197,344
Other assets 93,658 140,278
$373,246,558 $194,849,414
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $48,323,327 $21,944,904
Accounts payable and accrued liabilities 8,261,630 12,511,519
Other payable, related parties 3,076,720 6,287,102
Customer deposits 18,271,322 14,474,178
Income tax payable 6,682,964 2,802,110
Total current liabilities 84,615,963 58,019,813
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value,
5,000,000 shares authorized, none issued
and outstanding -- --
Common stock, $0.001 par value,
100,000,000 shares authorized, shares
issued and outstanding - 27,628,656 for
2009 and 22,005,509 for 2008 27,629 22,006
Additional paid in capital 195,960,570 82,503,638
Accumulated foreign currency translation
adjustments 9,659,714 9,620,524
Retained earnings 82,982,682 44,683,433
Total stockholders' equity 288,630,595 136,829,601
$373,246,558 $194,849,414
FUQI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
INCREASE (DECREASE) IN CASH
Nine Months Ended
September 30,
2009 2008
Cash flows provided by operating
activities:
Net income $38,299,249 $18,166,398
Adjustments to reconcile net income to
net cash provided by (used for) operating
activities:
Depreciation and amortization 905,330 363,644
Provision for inventory reserve -- 1,958,552
Bad debt provision (449,290) 100,633
Stock-based compensation 467,729 445,653
Loss on disposal on property, equipment
and improvements 55,355 18,189
Changes in operating assets and
liabilities:
Accounts receivable (3,749,103) (24,737,675)
Value added taxes receivable (3,649,481) (2,951,671)
Inventories (41,299,295) (10,614,653)
Prepaid expenses and other current
assets (215,109) (148,260)
Gold future contracts 1,426,716 609,615
Advances to suppliers (17,633,714) (576,491)
Deferred taxes 115,851 (2,239,121)
Other assets 46,722 (111,561)
Accounts payable, accrued expenses,
accrued business tax, and other payable (4,218,947) 4,957,894
Customer deposits 3,781,576 2,311,975
Income tax payable 3,876,000 1,658,344
Net cash (used for) provided by
operating activities (22,240,411) (10,788,535)
Cash flows (used for) investing
activities:
Purchase of property, equipment and
improvements (1,624,738) (959,435)
Proceeds from disposal of property,
equipment and improvements 79,028 --
Business acquisition -- (3,911,646)
Decrease in restricted cash -- 431,282
Net cash used for investing activities (1,545,710) (4,439,799)
Cash flows provided by (used for)
financing activities:
Proceeds from short-term borrowing 26,342,748 3,594,019
Repayments to a related party (965,901) --
Advances from a related party 2,071,706 --
Issuance of common stock related to
public offering, net of financing cost 112,994,826 --
Net cash provided by (used for)
financing activities 140,443,379 3,594,019
Effect of exchange rate changes on cash (57,806) 4,522,759
Net increase (decrease) in cash 116,599,452 (7,111,556)
Cash, beginning of the period 56,569,733 63,293,653
Cash, end of the period $173,169,185 $56,182,097
Supplemental disclosure of cash flow
information:
Interest paid $1,533,925 $604,505
Income taxes paid $6,550,534 $4,449,155
Non-cash disclosure:
Issuance of common stock for the Temix
acquisition $-- $4,021,160
Offset of accounts receivables from
related party and other payable to
a related party $4,392,387 $--
Non monetary exchanges related to
certain retail sales $1,553,949 $607,186
Transfer of acquisition deposit as a
payment of the purchase price for
business acquisition $-- $718,804
What’s going on… allready 14,70% down at
$ 19,90. Is it time to get in..
These shares are HIGHLY volatile, traders have it firmly by the bit as we explained earlier:
http://shareholdersunite.com/2009/10/29/we-did-say-the-sell-off-in-fuqi-was-overdone/
Fundamentals are too good to be ignored though