Huadi International Group Co., Ltd. Announces Fiscal Year 2023 Financial Results
- Revenue increased by 10.42% to $84.33 million
- Gross profit increased by 10.96% to $12.36 million
- Net income saw a 69.16% increase
- Slight decrease in gross profit margin due to increased raw material prices
- Increased selling, general and administrative expenses
Insights
The reported increase in revenue for Huadi International Group Co., Ltd. reflects a positive trend in the industrial stainless steel seamless pipes and tubes sector, particularly within the Chinese domestic market. This growth is indicative of a recovering construction market post-COVID-19, which has likely led to the completion of previously delayed orders. The strategic shift to focus more on the domestic market, accounting for 87.45% of sales, demonstrates the company's agility in adapting to market conditions and reducing dependency on international sales, which have slightly decreased.
From a market perspective, the expansion into the domestic market is a significant move, considering the scale and growth potential within China. However, the slight decrease in gross profit margin, attributed to increased raw material costs, is a concern that investors should monitor, as it could signal cost pressures that may affect future profitability if not managed effectively.
HUDI's financial results show robust year-over-year growth in net income by 69.16%, which is substantially higher than the revenue growth of 10.42%. This disparity suggests significant operational efficiency improvements or cost-saving measures that have positively impacted the bottom line. The decrease in interest expenses by 81.82% is a strong indicator of improved financial health, which may be due to strategic debt management. This reduction in interest expenses, coupled with the increase in cash and cash equivalents, provides the company with a more solid financial foundation and potentially more flexibility for future investments or to weather economic downturns.
Investors should note the increase in selling, general and administrative expenses, which could be an investment in future growth but also may warrant scrutiny to ensure that these expenses are translating into tangible results. The provision for bad debt expense is another area to watch, as it may reflect on the creditworthiness of the company's customer base and the potential risk of receivables.
The economic implications of HUDI's financial results extend beyond the company itself. The growth in the domestic market suggests an underlying resilience in the Chinese economy, particularly in sectors such as construction, which may have a multiplier effect on related industries. The company's ability to navigate the challenges posed by the global pandemic and emerge with record revenues is a testament to the effectiveness of their strategic decisions and the potential for continued economic recovery.
However, the reported decrease in gross profit margin, albeit slight, may be reflective of broader inflationary pressures on raw materials, which could have economy-wide impacts if they persist. The increase in research and development expenses is a positive sign for innovation and long-term competitiveness, but it will be important to track the return on these investments in terms of new product development and market share gains.
Financial Highlights for the Fiscal Year 2023
For the Fiscal Years Ended September 30 | ||||||||||
(in $ millions, except earnings per share; | 2023 | 2022 | % Change | |||||||
Revenue | $ | 84.33 | $ | 76.37 | 10.42 % | |||||
Gross profit | 12.36 | 11.14 | 10.96 % | |||||||
Gross profit margin | 14.65 % | 14.91 % | (0.26) percentage points | |||||||
Net income | 3.30 | 1.95 | 69.16 % | |||||||
Net earnings per share – Basic and Diluted | 0.23 | 0.15 | 53.3 % | |||||||
- Revenue increased by
10.42% to$84.33 million $76.37 million - Gross profit increased by
10.96% to$12.36 million $11.14 million - Net income for the fiscal year ended September 30, 2023, was
$3.30 million $0.23 $1.95 million $0.15 $1.35 million 69.16% . - Cash and cash equivalents as of September 30, 2023 was
$20.19 million $13.20 million
Mr. Jianping Xiang, Chief Financial Officer of the Company, commented: "As we gather to reflect on the culmination of the fiscal year 2023, we are pleased to report a commendable achievement for HUDI - a remarkable
We are delighted to share that our strategic decision to extend our business in the domestic market in
I want to express my gratitude to our entire HUDI family for their unwavering commitment during these challenging times. As we move forward, we remain steadfast in our dedication to delivering value to our shareholders, adapting to the dynamic business landscape, and pursuing avenues for sustainable growth."
Financial Results for the Fiscal year 2023
Revenue
The following table presents revenue by geographic areas for the years ended September 30, 2023 and 2022 respectively.
(differences due to rounding) | September 30, 2023 | ||||||
Sales Amount | As % of | ||||||
Top 5 Geographic Areas: | |||||||
$ | 73.74 | 87.45 % | |||||
7.15 | 8.47 % | ||||||
1.60 | 1.89 % | ||||||
United Mexican States | 0.58 | 0.68 % | |||||
0.39 | 0.46 % | ||||||
Other foreign countries | 0.88 | 1.05 % | |||||
(differences due to rounding) | September 30, 2022 | ||||||
Sales Amount | As% of | ||||||
Top 5 Geographic Areas: | |||||||
$ | 64.79 | 84.69 % | |||||
7.63 | 9.97 % | ||||||
1.30 | 1.70 % | ||||||
1.19 | 1.56 % | ||||||
0.73 | 0.95 % | ||||||
Other foreign countries | 0.87 | 1.13 % | |||||
For the year ended September 30, 2023, revenue increased by approximately
1) Due to the end of control measures on COVID-19 since 2022 December, construction market recovered and we delivered several orders delayed by mentioned control measures.
2) We were extending business in domestic market in
Gross profit
Gross profit increased by approximately
Selling, general and administrative ("SGA") expenses
Selling, general and administrative expenses increased by approximately
Research and development ("R&D") expenses
Research and development expenses increased by approximately
Interest income (expense)
Interest expense (net) decreased by approximately
Other income and expense
The Company's net other income was approximately
Net income
As a result of the factors described above, the Company's net income for the fiscal year ended September 30, 2023, was approximately
Cash and Cash Equivalents
As of September 30, 2023 and 2022, the Company had cash and cash equivalents of
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
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
For more information, please contact:
The Company:
IR Department
Email: IR@huadigroup.com
Investor Relations
WFS Investor Relations Inc.
Janice Wang, Managing Partner
Email: services@wealthfsllc.com
Phone: +86 13811768599
+1 628 283 9214
HUADI INTERNATIONAL GROUP CO., LTD. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
AS OF SEPTEMBER 30, 2023 AND 2022 | ||||||||
(IN | ||||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,192,460 | $ | 13,195,999 | ||||
Restricted cash | 769,233 | 1,347,246 | ||||||
Accounts receivable, net of allowance for doubtful accounts of | 22,630,275 | 19,658,188 | ||||||
Notes receivable | 7,661,035 | 1,410,613 | ||||||
Inventories | 26,706,629 | 24,867,708 | ||||||
Advances to suppliers, net | 2,105,902 | 3,369,468 | ||||||
Other receivables | 171,182 | 552,633 | ||||||
Total current assets | 80,236,716 | 64,401,855 | ||||||
Property, plant and equipment, net | 5,354,997 | 5,989,136 | ||||||
Land use rights, net | 4,312,349 | 1,069,891 | ||||||
Long-term investments | 12,515,817 | 12,836,916 | ||||||
Deferred tax assets | 392,713 | 338,729 | ||||||
Other noncurrent assets | 198,194 | - | ||||||
TOTAL ASSETS | $ | 103,010,786 | $ | 84,636,527 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,434,031 | $ | 919,492 | ||||
Accounts payable - related parties | 3,692,394 | 2,439,105 | ||||||
Accrued expenses and other current liabilities | 1,946,325 | 1,771,245 | ||||||
Notes payable | 1,632,401 | 548,253 | ||||||
Advances from customers | 2,393,021 | 4,005,942 | ||||||
Advances from customers - related parties | 1,015,696 | 395,498 | ||||||
Due to related parties – current portion | - | 606,986 | ||||||
Short-term borrowings | 4,442,870 | 11,888,662 | ||||||
Long-term borrowings – current portion | 43,860 | - | ||||||
Tax payable | 4,009,849 | 3,126,778 | ||||||
Total current liabilities | 22,610,447 | 25,701,961 | ||||||
Long-term borrowings | 5,398,849 | 9,300,625 | ||||||
Due to related parties - noncurrent portion | 317,680 | - | ||||||
TOTAL LIABILITIES | 28,326,976 | 35,002,586 | ||||||
COMMITMENTS AND CONTIGENCIES | ||||||||
Shareholders' equity: | ||||||||
Common stock, | 2,852 | 2,648 | ||||||
Additional paid-in capital | 67,280,709 | 44,211,313 | ||||||
Statutory surplus reserves | 874,518 | 494,223 | ||||||
Retained earnings | 6,679,692 | 3,802,265 | ||||||
Accumulated other comprehensive (loss) income | (428,779) | 873,059 | ||||||
Total equity attributable to Huadi International Group Co., Ltd. | 74,408,992 | 49,383,508 | ||||||
Equity attributable to non-controlling interests | 274,818 | 250,433 | ||||||
Total shareholders' equity | 74,683,810 | 49,633,941 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 103,010,786 | $ | 84,636,527 | ||||
HUADI INTERNATIONAL GROUP CO., LTD. | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||
FOR THE YEARS ENDED SEPTEMBER 30, 2023, 2022 AND 2021 | ||||||||||||
(IN | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Sales | $ | 83,113,259 | $ | 74,702,625 | $ | 67,006,655 | ||||||
Production service revenue | 1,219,041 | 1,663,523 | 3,239,956 | |||||||||
Cost of sales | (71,976,696) | (65,230,521) | (58,926,675) | |||||||||
Gross profit | 12,355,604 | 11,135,627 | 11,319,936 | |||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 7,338,320 | 6,452,173 | 6,684,410 | |||||||||
Research and development | 2,550,777 | 2,330,913 | 2,057,547 | |||||||||
Foreign currency transaction (gains) loss | (644,118) | - | - | |||||||||
Total operating expenses | 9,244,979 | 8,783,086 | 8,741,957 | |||||||||
Operating income | 3,110,625 | 2,352,541 | 2,577,979 | |||||||||
Other income (expenses): | ||||||||||||
Interest income (expenses), net | (296,265) | (1,629,642) | (2,058,461) | |||||||||
Other income (expenses), net | 701,751 | 1,398,173 | 1,948,527 | |||||||||
Total other income (expenses), net | 405,486 | (231,469) | (109,934) | |||||||||
Income before income taxes | 3,516,111 | 2,121,071 | 2,468,045 | |||||||||
Income tax (provision) benefit | (220,854) | (173,017) | 89,000 | |||||||||
Net income | 3,295,257 | 1,948,054 | 2,557,045 | |||||||||
Net income attributable to non-controlling interests | 37,535 | 23,852 | 25,570 | |||||||||
Net income attributable to Huadi International Group Co., Ltd. | $ | 3,257,722 | $ | 1,924,202 | $ | 2,531,475 | ||||||
Net income | $ | 3,295,257 | $ | 1,948,054 | $ | 2,557,045 | ||||||
Other comprehensive (loss) income: | ||||||||||||
Foreign currency translation adjustment | (1,314,988) | (3,792,527) | 1,452,328 | |||||||||
Total comprehensive income (loss) | 1,980,269 | (1,844,473) | 4,009,373 | |||||||||
Comprehensive income attributable to non-controlling | 24,385 | (14,073) | 40,093 | |||||||||
Comprehensive income attributable to Huadi International | $ | 1,955,884 | $ | (1,830,400) | $ | 3,969,280 | ||||||
Basic and diluted earnings per share | ||||||||||||
Basic | $ | 0.23 | $ | 0.15 | $ | 0.21 | ||||||
Diluted | $ | 0.23 | $ | 0.15 | $ | 0.21 | ||||||
Weighted average numbers of common shares outstanding | ||||||||||||
Basic | 14,138,525 | 13,228,682 | 12,116,079 | |||||||||
Diluted | 14,138,525 | 13,228,682 | 12,116,079 | |||||||||
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SOURCE Huadi International Group Co., Ltd.
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