WENZHOU, China, Feb. 02, 2022 (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 audited financial results for the fiscal year ended September 30, 2021.
Financial Highlights for the Fiscal Year 2021
| For the fiscal year ended September 30, | |||||||
| ($ millions, except per share data) | 2021 | 2020 | % Change | ||||
| Revenue | $70.25 | $59.14 | 18.79% | ||||
| Gross profit | $11.32 | $10.66 | 6.15% | ||||
| Gross margin | 16.11% | 18.03% | (1.92) percentage points | ||||
| Operating income | $2.58 | $4.61 | (44.02)% | ||||
| Operating income margin | 3.67% | 7.79% | (4.12) percentage points | ||||
| Net income attributable to Huadi International | $2.53 | $3.32 | (23.8)% | ||||
| Diluted earnings per share | $0.21 | $0.34 | (38.24)% | ||||
“We are pleased with our business performance for the fiscal year 2021, generated $70.25 million revenue and $11.32 million gross profit for the fiscal year 2021, increased 18.79% and 6.15%, respectively, compared to the last fiscal year, our domestic and international sales increased by 12.40% and 44.2%, respectively. The significant growth shows our great efforts to sustainably develop our business operation, and the market recognizing the quality of our products and the brand awareness of Huadi. Looking ahead to the fiscal year 2022, we will continue to execute our growth strategies and improve our brand influence, while the demand for the construction materials continues to grow, our strong business operation performance positions us well to increase market share in this industry that will continue to consolidate, and create more benefits to all of our shareholders in the future,” commented Mr. Di Wang, Chairman of Huadi International Group Co., Ltd.
Financial Results for the Fiscal year 2021
Revenue
The following table presents revenue by geographic areas for the years ended September 30, 2021 and 2020 respectively.
| September 30, 2021 | September 30, 2020 | ||||||||||||||||
| Top 5 International Markets: | Sales Amount ($ millions) | As %of Sales | Sales Amount ($ millions) | As %of Sales | |||||||||||||
| China | $ | 53.13 | 81.22 | % | $ | 47.27 | 79.93 | % | |||||||||
| US | 5,.74 | 8.78 | % | 3.0 | 5.07 | % | |||||||||||
| India | 4.19 | 6.41 | % | 5.08 | 8.59 | % | |||||||||||
| Australia | 0.55 | 0.84 | % | 1.33 | 2.24 | % | |||||||||||
| Switzerland | 0.51 | 0.79 | % | - | - | % | |||||||||||
| Other foreign countries | 6.12 | 1.96 | % | 2.46 | 4.17 | % | |||||||||||
For the year ended September 30, 2021, revenues increased by approximately $11.11 million or 18.79%, to approximately $70.25 million from approximately $59.14 million for the year ended September 30, 2020. The increase in revenues was primarily driven by the following factors:
| 1) | Due to increased market demand of construction materials and shortage of supply on the current market, particularly the piping systems in the real estate sector, we observed an increase of weighted average selling price (“ASP”) during the fiscal year 2021. |
| 2) | As a result of global shortage of construction materials, our domestic sales increased over 12.40% compared to the last fiscal year. Our international sales revenue during fiscal year 2021 amounted to $17.12 million, an increase of $5.25 million, or 44.2%, compared to last fiscal year |
Gross Profit
Our gross profit increased by approximately $0.66 million, or 6.15%, to approximately $11.32 million for the year ended September 30, 2021 from approximately $10.66 million for the year ended September 30, 2020. The increase of gross profit was consistent with the increase of revenues for fiscal 2021 as compared to fiscal 2020. Gross profit margin was 16.11% for the year ended September 30, 2021, as compared to 18.03% for the year ended September 30, 2020. The decrease of gross profit margin was mainly due to increased raw material cost caused by the supply shortage of steel materials and increased international fright expenses.
Operating Expenses
Selling, general and administrative expenses increased by approximately $2.75 million, or 69.72% to approximately $6.68 million for the year ended September 30, 2021 as compared to approximately $3.94 million for the year ended September 30, 2020. The increase of SGA expenses was mainly due to increased consulting and compliance expenses in relation to our initial public offering and increased freight expenses incurred during fiscal year 2021.
Research and development expenses decreased by approximately $0.06 million, or 2.98% to approximately $2.06 million for the year ended September 30, 2021 as compared to approximately $2.12 million for the year ended September 30, 2020. Management is committed to expanding our research and development activities.
Total operating expenses increased by $2.68 million, or 44.28%, to $8.74 million for the fiscal year 2021 from $6.06 million for the prior fiscal year. As a percentage of sales, total operating expenses was 12.4% for the fiscal year 2020, compared to 10.2% for the prior fiscal year.
Total Operating Income
Operating income was $2.58 million for the fiscal year ended September 30, 2021, compared to income from operations of $4.61 million for the prior fiscal year. Operating margin was 3.67%, compared to operating profit margin of 7.79% for the prior fiscal year.
Interest expenses
Our interest expense (net) decreased by approximately $0.10 million, or 4.81% to approximately $2.06 million for the year ended September 30, 2021, from approximately $2.16 million for the year ended September 30, 2020. The decrease of interest expense was mainly due to decreased bank loan the Company borrowed from the banks.
Other Income
We had net other income of approximately $1.95 million, which mainly attributable to dividend income received from invested company and government grant received during fiscal year 2021, comparing to net other income of approximately $1.13 million, which mainly attributable to dividend income received from invested company and government grant received during fiscal year 2020.
Net Income and earnings per share
As a result of the factors described above, net income was $2.56 million for the fiscal year 2021, compared to net income of $3.36 million for the prior fiscal year. Net income margin was 3.6% for the fiscal year 2021, compared to net profit margin of 5.8% for the prior fiscal year.
After deducting for non-controlling interests, net income attributable to Huadi International was $2.53 million, or net earnings of $0.21 per share, for the fiscal year 2021. This compared to net income attributable to Huadi International of $3.32 million, or $0.34 per share, for the prior fiscal year.
Financial Condition
As of September 30, 2021, cash and cash equivalents totaled $15.35 million, compared to $0.80 million as of September 30, 2020. Short-term bank borrowings were $33.46 million as of September 30, 2021, compared to $31.22 million as of September 30, 2020.
Accounts receivable net of allowance was $25.28 million as of September 30, 2021, compared to $15.53 million as of September 30, 2020. Inventories were $22.72 million as of September 30, 2021, compared to $20.84 million as of September 30, 2020. Accounts payable was $1.71 million as of September 30, 2021, compared to $1.86 million as of September 30, 2020.
Total current assets and current liabilities were $77.08 million and $48.77 million, respectively, leading to a current ratio of 1.58 as of September 30, 2021. This compared to total current assets and current liabilities were $47.35 million and $43.33 million, respectively, and current ratio of 1.09 as of September 30, 2020.
Net cash used in operating activities was $5.65 million for the fiscal year 2021, compared to net cash provided by operating activities was $3.20 million for the prior fiscal year. Net cash used in investing activities was $0.90 million for the fiscal year 2021, compared to net cash provided by investing activities of $0.06 million for the prior fiscal year. Net cash provided by financing activities was $21.28 million for the fiscal year 2021, compared to net cash used in financing activities of $4.69 million for the prior fiscal year.
Recent Developments
On November 10, 2021, the Company entered into a strategic cooperation framework agreement on October 28, 2021 with Zhejiang Lanneng Gas Equipment Limited to jointly develop and produce high-pressure hydrogen storage tank stainless steel pipe.
On November 1, 2021, the Company was awarded stainless steel seamless pipe order contracts worth $3.26 million in total.
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.