DALIAN, China. -- Fushi Copperweld, Inc. (NASDAQ: FSIN), a manufacturer of copper-clad bimetallic wire used in a variety of telecommunication, utility, transportation and other electrical applications, today announced financial results for the second quarter ended June 30, 2010.
Joe Longever, co-Chief Executive Officer of Fushi Copperweld, commented, "We are very pleased with our performance in the 2010 second quarter, which speaks to the diversified nature of our business and the benefits of the actions we have taken to enhance our strategic positioning. Revenues in the quarter were driven by strong, emerging business in markets all over the world, which offset a decline in volumes resulting from what we believe to be a temporary slowdown in China's 3G build-out."
Second Quarter highlights for the manufacturer, according to a press release, included the following:
-- GAAP Net Income increased significantly to $13.4M, or $0.35 per diluted share
-- Adjusted Net Income increased 74.5% to $12.4M, or $0.33 per diluted share
-- US operations realized Net Income of $0.6M; best quarter since second quarter 2008
-- Expanded presence in Southern China through acquisition of Shanghai Hongtai
-- Sequential volume as measured in metric tons increased 9.6% as compared to the first quarter of 2010
-- Gross profit increased 45.6% to $19.6M, or 28.4% of revenue
-- Successfully installed 8,200 metric tons of copper-clad steel (CCS) capacity in Dalian facility
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Revenues for the second quarter of 2010 increased 42.9% to $69.0 million, up from $48.3 million in the prior year quarter. Organic revenue growth excluding the impact of acquisitions during the quarter was 22.0%. The $20.7 million increase in revenues was primarily driven by continued improvement in global demand, higher average selling prices partially due to increased copper prices, and incremental contribution from recent acquisitions.
Gross profit in the second quarter of 2010 increased 45.6% year-over-year to $19.6 million from $13.5 million in the prior year quarter. Consolidated gross margin increased to 28.4% from 27.9% in the prior year period, as a result of improved pricing discipline within the wire industry, an improved product mix and benefits of operational leverage gained at the company's Fayetteville facility. Gross margin for the company's Dalian facility increased to 34.3% from 31.0% in the prior year quarter, while gross margin for the company's Fayetteville, TN facility decreased to 14.6% from 15.5% in the prior year quarter primarily due to higher raw material prices.
Longever added, "The increased worldwide demand for our products was reflected in higher volumes at our Fayetteville facility, where we saw continued improvement in profitability as a result of higher utilization levels and the steps we've taken to reduce costs and improve our operational efficiency. The additional CCS capacity we recently added at our Dalian facility also enables us to meet some of this global demand and should play an even larger role in future quarters. Lastly, the integration of our recent acquisitions have progressed as planned, and we look forward to the additional benefits these strategic purchases will bring going forward."
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Operating expenses in the second quarter increased to $5.5 million, compared to $4.3 million in the prior year quarter. This increase was due to higher G&A costs associated with increased global sales efforts and an increase in costs resulting from the company's acquisitions of Shanghai Hongtai and Dalian Jinchuan. On a percentage basis, operating expenses decreased 80 basis points to 8.0% of revenues from 8.8% in the second quarter of 2009.
On a GAAP basis, net income for the 2010 second quarter was $13.4 million, or $0.35 per diluted share. This compares with net income of $1.6 million, or $0.06 per diluted share, in the second quarter of 2009. The GAAP results for the second quarter of 2010 included a gain on acquisitions of $1.8 million, interest income of $0.2 million, and other income of $0.1 million.
Excluding all non-cash gains and expenses and one-time, non-recurring losses, adjusted net income was $12.4 million or $0.33 per diluted share in the second quarter of 2010, compared to adjusted net income of $7.1 million or $0.25 per diluted share, in the prior year quarter.
During the three months ended June 30, 2010, the company generated $2.1 million of cash flow from operations, compared to $5.5 million operating cash flow for the comparable period in 2009. In the six months ended June 30, 2010, the company generated $10.0 million of cash flow from operations, compared to $4.5 million for same period last year.
The company's cash position at the end of the second quarter was $73.8 million while the company's long-term debt position was $0.1 million, compared to debt of $32.7 million at December 31, 2009. Accounts receivables at June 30, 2010 were $64.1 million, compared to $57.0 million on March 31, 2010, an increase of 12.5% primarily due to sales growth at the company's Fayetteville facility and recent acquisitions.
Based on current business trends, the company expects adjusted fully diluted earnings per share to be between $0.33 and $0.35 for the third quarter of 2010 and to be between $1.25 and $1.29 for the 2010 full-year period, based on an estimated weighted average diluted share count of 38.3 million shares for the third quarter of 2010 and 37.4 million for full-year periods. This expectation is based on the assumption that the effective tax rate at the consolidated level will be 17.5%.
Longever concluded, "We remain confident in our ability to continue to grow our business and enhance our profitability. The demand for global infrastructure investment continues, even if the pace of the global economic recovery may have slowed since the beginning of the year. With so many attributes that differentiate our products, we are confident that we have the best solutions available to address the large market opportunity ahead of us. From an operational standpoint, we have the footprint to deliver our products anywhere in the world quickly and cost effectively, and we will continue to look for ways to better reach and serve our customers. We are very pleased with our progress and prospects."
For more information, visit www.fushicopperweld.com.
