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HUDI Huadi International

Filed: 26 Aug 21, 9:43am

Exhibit 99.1

 

Huadi International Group Co., Ltd. Announces Half-Year 2021 Financial Results

 

WENZHOU, China, August 26, 2021 (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 interim financial results for six months ended March 31, 2021.

 

Financial Highlights for the First-Half 2021

 

  For Half-Year Ended March 31 
($ millions, except per share data) 2021  2020  % Change 
Revenue $29.89  $25.56   16.94%
Gross profit $5.35  $6.30   -15.08%
Gross margin  17.90%  24.65%  -17.65%
Operating income $0.68  $3.51   -80.63%
Net income (loss) attributable to Huadi International $0.64  $2.65   -75.85%
Diluted earnings (loss) per share $0.06  $0.27   -77.78%

 

Revenue increased by 16.94% to $29.89 million for the six months ended March 31, 2021 from $25.56 million for the same period in 2020, primarily due to the growth in the number of domestic clients and sales

 

Gross profit decreased by 15.08% to $5.35 million for the six months ended March 31, 2021 from $6.30 million for the same period in 2020. The decrease of gross profit was primarily due to that we lowered the price of our products sold to attract new clients

 

Operating income was $0.68 million for the six months ended March 31, 2021, compared to $3.51 million for the six months ended March 31, 2020

 

Net income attributable to Huadi International during the six months ended March 31, 2021 was $0.64 million, compared to $2.65 million for the same period last year

 

Basic and diluted earnings per share was $0.06 for the six months ended March 31, 2021, compared to $0.27 million for the same period in 2020

 

“We accelerated our growth momentum during the six months ended March 31, 2021, growing our total revenue by 16.94% as compared with the same period of last year. We are firmly committed to carrying out our corporate mission, meticulous execution of growth strategies, methodical expansion in both overseas and domestic markets, proactive engagement of Huadi clients through innovative products, and prudent investment in sales and marketing initiatives. Going forward, we plan to refine our competitive edge, deepen our expertise in stainless steel seamless pipes and tubes products, and expand our brand influence among our clients on a global basis”, commented Mr. Di Wang, Chairman of Huadi International Group Co., Ltd.

 

Financial Results for the Six Months Ended March 31, 2021

 

Revenue

 

For the half-year ended March 31, 2021, revenue increased by $4.33 million or 16.94% to $29.89 million from $25.56 million for the same period in 2020. The increase was primarily due to the growth in the number of our domestic clients and sales.

 

 

 

 

Gross Profit

 

Gross profit decreased by $0.95 million or 15.08% to $5.35 million for the six months ended March 31, 2021 from $6.30 million for the same period in 2020. The decrease of gross profit was mainly due to that we lowered the price of our products sold to attract new customers in order to expand our market share.

 

Operating Expenses

 

Selling, general and administrative expenses increased by $1.79 million, or 91.79%, to $3.74 million for the six months ended March 31, 2021 from $1.95 million for the same period in 2020. The increase in SG&A expenses was primarily due to 1) increase of expenses related to our initial public offering completed in January 2021. 2) increase of one-off cash compensation and performance bonuses that we paid to our core employees during the reporting period.

Research and development expenses increased by $0.10 million, or 12.05%, to $0.93 million for the half year ended March 31, 2021 from $0.83 million for the same period in 2020.

 

Total operating expenses increased by $1.88 million, or 67.38%, to $4.67 million for the half-year ended March 31, 2021 from $2.79 million for the same period in 2020.

 

Total Operating Income

 

Total operating income was $0.68 million for the six months ended March 31, 2021, decreased by $2.83 million or 80.63% from $3.51 million during the same period in 2020. The decrease was primarily due to the increase in SG&A expenses.

 

Other Income (Expenses)

 

Interest expenses were $0.93 million for the half-year ended March 31, 2021, compared to $1.04 million for the same period during the prior year. Other net income was $0.96 million for the half-year ended March 31, 2021, compared to $0.55 million for the same period during the prior year. As a result, total net other expenses were $0.03 million for the half-year ended March 31, 2021, compared to total net other expenses of $0.49 million for the same period during the prior year.

 

Net Income (loss) and earnings (loss) per share

 

As a result of the factors described above, our net income was $0.64 million for the half-year ended March 31, 2021, compared to a net income of $2.68 million for the same period during the prior year.

 

After deducting for non-controlling interests, net income attributable to Huadi International was $0.64 million, or basic and diluted earnings of $0.06 per share, for the six months ended March 31, 2021. This compared to net income attributable to Huadi International of $2.65 million, or $0.27 per share, for the same period in the prior year.

 

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Financial Condition

 

As of March 31, 2021, cash and cash equivalents totaled $19.71 million, compared to $0.80 million as of September 30, 2020. Short-term bank borrowings were $32.35 million as of March 31, 2021, compared to $31.22 million as of September 30, 2020.

 

Net accounts receivable was $14.20 million as of March 31, 2021, compared to $13.62 million as of September 30, 2020. Inventories were $23.62 million as of March 31, 2021, compared to $20.84 million as of September 30, 2020. Accounts payable was $1.30 million as of March 31, 2021, compared to $1.86 million as of September 30, 2020.

 

Total current assets and current liabilities were $68.74 million and $43.74 million, respectively, leading to a current ratio of 1.57 as of March 31, 2021. Total current assets and current liabilities were $47.35 million and $43.33 million, respectively, leading to a current ratio of 1.09 as of September 30, 2020.

 

Recent Developments

 

On April 9, 2021, the Company was awarded stainless steel seamless pipe order contracts that worth RMB 20.65 million (approximately US $3.2 million) after winning the bid for a mining project in Gansu province, China.

 

On March 17, 2021, the Company announced that it was awarded stainless steel seamless pipe order contracts that worth RMB 10.2 million (approximately US $1.6 million) after winning bid for a mining project in China Gansu province.

 

On March 03, 2021, the Company announced that it has been awarded RMB 12.45 million (approximately US $1.95 million) stainless pipe order contracts after winning bids for two chemical-related projects.

 

In January 2021, the Company completed an initial public offering on the NASDAQ stock exchange market and raised $25 million by offering 3.1 million shares at $8.00 per share, the high end of the range of $7 to $8. At pricing, the Company commanded a market value of $106 million.

 

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:

 

Dong Cao, CFA

 

EverGreen Consulting Inc.

 

Email: IR@changqingconsulting.com

 

Phone: +86 13502048965

 

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HUADI INTERNATIONAL GROUP CO., LTD.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2021 AND SEPTEMBER 30, 2020

(UNAUDITED, IN U.S. DOLLARS, EXCEPT SHARE DATA)

 

  

March 31,

2021

  

September 30,

2020

 
  (Unaudited)  (Audited) 
Assets      
Current assets:      
Cash and cash equivalents $19,713,319  $796,794 
Restricted cash  947,422   908,410 
Accounts receivable, net of allowance for doubtful accounts of $3,016,194 and $2,910,554, respectively  14,200,426   13,618,697 
Accounts receivable – related parties  1,462,527   1,914,380 
Notes receivable  1,918,182   555,612 
Inventories  23,615,683   20,837,594 
Advances to suppliers  1,683,511   998,123 
Advances to suppliers – related parties  4,582,050   5,342,512 
Other receivables  619,310   2,375,031 
Total current assets  68,742,430   47,347,153 
Property, plant and equipment, net  7,216,025   6,687,642 
Intangible assets, net  2,375,128   1,202,687 
Long-term investments  13,937,452   13,449,305 
Deferred tax assets  452,429   436,583 
TOTAL ASSETS $92,723,464  $69,123,370 
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $1,299,469  $1,855,047 
Accrued expenses and other current liabilities  1,589,502   1,587,826 
Notes payable  1,785,769   1,517,026 
Advances from customers  2,253,984   1,515,452 
Due to related parties  506,394   1,407,711 
Short-term borrowings  32,354,467   31,221,280 
Tax payable  3,947,312   4,230,328 
TOTAL LIABILITIES  43,736,897   43,334,670 
         
COMMITMENTS AND CONTIGENCIES        
         
Shareholders’ equity:        
Common stock, $0.0002 par value, 250,000,000 shares authorized, 13,125,000 and 10,000,000 shares issued and outstanding, respectively  2,625   2,000 
Additional paid-in capital  44,211,336   22,531,620 
Retained earnings (Accumulated deficit)  476,719   (159,189)
Accumulated other comprehensive income  4,058,041   3,189,856 
Total equity attributable to Huadi International Group Co., Ltd.  48,748,721   25,564,287 
Equity attributable to non-controlling interests  237,846   224,413 
Total shareholders’ equity  48,986,567   25,788,700 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $92,723,464  $69,123,370 

 

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HUADI INTERNATIONAL GROUP CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED, IN U.S. DOLLARS, EXCEPT SHARE DATA)

 

  For the Six Months Ended
March 31,
 
  2021  2020 
Sales $29,887,244  $25,557,407 
Cost of sales  (24,534,360)  (19,259,740)
Gross profit  5,352,884   6,297,667 
         
Operating expenses:        
Selling, general and administrative  3,742,726   1,953,069 
Research and development  928,582   834,351 
Total operating expenses  4,671,308   2,787,420 
         
Operating income  681,576   3,510,247 
         
Other income (expenses):        
Interest expenses, net  (926,237)  (1,042,184)
Other income, net  956,618   554,456 
Total other expenses, net  30,381   (487,728)
         
Income before income taxes  711,957   3,022,519 
Income tax provision  (69,626)  (341,280)
         
Net income $642,331  $2,681,239 
         
Net income attributable to non-controlling interests  6,423   26,812 
         
Net income attributable to Huadi International Group Co., Ltd. $635,908  $2,654,427 
         
Net income $642,331  $2,681,239 
         
Other comprehensive income:        
Foreign currency translation adjustment  875,195   174,202 
         
Total comprehensive income  1,517,526   2,855,441 
Comprehensive income attributable to non-controlling interests  8,752   1,742 
         
Comprehensive income attributable to Huadi International Group Co., Ltd. $1,508,774  $2,853,699 
         
Basic and diluted earnings per share        
Basic $0.06  $0.27 
Diluted $0.06  $0.27 
Weighted average number of shares outstanding        
Basic  11,041,667   10,000,000 
Diluted  11,041,667   10,000,000 

 

 

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