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home / news releases / HUDI - Huadi International Group Co. Ltd. Announces Fiscal Year 2022 Financial Results


HUDI - Huadi International Group Co. Ltd. Announces Fiscal Year 2022 Financial Results

BEIJING, Feb. 15, 2023 (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 financial results for the fiscal year ended September 30, 2022.

Financial Highlights for the Fiscal Year 2022

For the Fiscal Years Ended September 30
(in $ millions, except earnings per share; differences due to rounding)
2022
2021
% Change
Sales
$


76.4
$
70.3


8.7


%
Gross profit
11.1
11.3
1.6
%
Gross margin

14.9

%
16.1
%
(1.2 percentage points)
Net income
1.9
2.6
(23.8
%)
Net earnings per share – Basic and Diluted
0.15
0.21
(28.6
%)
  • Revenue increased by 8.7% to $76.4 million For the year ended September 30, 2022 from $70.3 million for the year ended September 30, 2021.
  • Gross profit decreased by 1.6% to$11.1 million for the year ended September 30, 2022, from $11.3 million for the year ended September 30, 2021.
  • Net income for the fiscal year ended September 30, 2022 was $1.9 million compared to net income of $2.6 million for the fiscal year ended September 30, 2021,

Mr. Di Wang, Chairman of the Company commented: “The Company continues to focus its strategy on providing high-quality services and products to maintain and expand HUDI’s existing and prospective client base, which is shown by the Company’s nearly 9% sales growth during the fiscal year ended September 30, 2022. Despite a challenging year amid supply chain disruptions and rising material costs, the Company is pleased to deliver resilient performance during the past fiscal year and is prepared to keep implementing current strategic plan to seek sustainable growth in the coming year.”

Financial Results for the Fiscal year 2022

Sales

For the year ended September 30, 2022, revenues increased by approximately $6.1 million or 8.7%, to approximately $76.4 million from approximately $70.3 million for the year ended September 30, 2021. The increase in revenues was primarily driven by the following factors:

  • During the fiscal year 2022, the Company observed an increase of raw materials price, especially the price of nickel which is an important component of stainless steel. To minimize the impact the rise of raw material price, we increased our weighted average selling price (“ASP”) during the fiscal year 2022.

  • As a result of domestic shortage of construction materials and recovery of construction market, the Company’s domestic sales increased over 21.9% compared to the last fiscal year. The Company’s international sales revenue during fiscal year 2022 amounted to approximately $11.7 million, a decrease of 31.6% compared to last fiscal year.

Gross profit

Our gross profit decreased by approximately $0.2 million, or 1.6%, to approximately $11.1 million for the year ended September 30, 2022 from approximately $11.3 million for the year ended September 30, 2021. Gross profit margin was 14.9% for the year ended September 30, 2022, as compared to 16.1% for the year ended September 30, 2021. The slight decrease of gross profit margin was mainly due to increased raw material prices which drove up the cost of sales.

Selling, general and administrative (“SGA”) expenses

Selling, general and administrative expenses decreased by approximately $0.2 million, or 3.5% to approximately $6.5 million for the year ended September 30, 2022 as compared to approximately $6.7 million for the year ended September 30, 2021. The decrease of SGA expenses was mainly due to decreased freight expenses for the Company’s international and domestic sales, and increased travelling and agency expenses related to the increased sales activities.

Research and development (“R&D”) expenses

Research and development expenses increased by approximately $0.3 million, or 13.3% to approximately $2.3 million for the year ended September 30, 2022 as compared to approximately $2.1 million for the year ended September 30, 2021.

Net Income

As a result of the factors described above, the Company’s net income for the fiscal year ended September 30, 2022 was approximately $2.0 million compared to net profit of $2.6 million for the fiscal year ended September 30, 2021, a decrease in profit of approximately $0.6 million, or approximately 23.8%.

Recent development

On November 9, 2022, the Company closed a registered direct offering for the sale of 1,000,000 ordinary shares. The Company received gross proceeds from the sale of the shares of approximately $25 million before deducting placement agent fees and other offering expenses.

On December 8, 2022, Ms. Qin Li tendered her resignation as the Chief Financial officer the Company, effective on December 8, 2022. On the same day, at the recommendation of the Nominating Committee and the Compensation Committee, the Board of Directors approved and confirmed the appointment of Mr. Jianping Xiang as the succeeding Chief Financial Officer of the Company, effective December 8, 2022.

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:

Wealth Financial Services LLC

Email: services@wealthfsllc.com


HUADI INTERNATIONAL GROUP CO., LTD.

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2022 AND 2021

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

2022
2021
Assets
Current assets:
Cash and cash equivalents
$
13,195,999
$
15,350,197
Restricted cash
1,347,246
1,304,518
Accounts receivable, net of allowance for doubtful accounts of $2,197,396 and $3,066,937, respectively
19,658,188
21,297,261
Accounts receivable – related parties
-
3,981,697
Notes receivable
1,410,613
2,593,018
Inventories
24,867,708
22,721,265
Advances to suppliers
3,369,468
3,806,420
Advances to suppliers – related parties
-
5,550,504
Other receivables
552,633
475,793
Total current assets
64,401,855
77,080,673
Property, plant and equipment, net
5,989,136
7,208,705
Land use rights, net
1,069,891
1,234,636
Long-term investments
12,836,916
14,171,928
Deferred tax assets
338,729
549,921
TOTAL ASSETS
$
84,636,527
$
100,245,863
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
919,492
$
1,713,716
Accounts payable - related parties
2,439,105
-
Accrued expenses and other current liabilities
1,771,245
2,048,979
Notes payable
548,253
2,312,556
Advances from customers
4,401,440
4,667,084
Due to related parties
606,986
514,913
Short-term borrowings
11,888,662
33,459,043
Tax payable
3,126,778
4,051,158
Total current liabilities
25,701,961
48,767,449
Long-term borrowing
9,300,625
-
TOTAL LIABILITIES
35,002,586
48,767,449
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Common stock, $0.0002 par value, 250,000,000 shares authorized, 13,239,182 and 13,127,000 shares issued and outstanding, respectively
2,648
2,625
Additional paid-in capital
44,211,313
44,211,336
Statutory surplus reserves
494,223
255,705
Retained earnings
3,802,265
2,116,581
Accumulated other comprehensive income
873,059
4,627,661
Total equity attributable to Huadi International Group Co., Ltd.
49,383,508
51,213,908
Equity attributable to non-controlling interests
250,433
264,506
Total shareholders’ equity
49,633,941
51,478,414
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
84,636,527
$
100,245,863

HUADI INTERNATIONAL GROUP CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020
(IN U.S. DOLLARS, EXCEPT SHARE DATA)

2022
2021
2020
Sales
$
74,702,625
$
67,006,655
$
57,767,081
Production service revenue
1,663,523
3,239,956
1,370,197
Cost of sales
(65,230,521
)
(58,926,675
)
(48,473,061
)
Gross profit
11,135,627
11,319,936
10,664,217
Operating expenses:
Selling, general and administrative
6,452,173
6,684,410
3,938,511
Research and development
2,330,913
2,057,547
2,120,649
Total operating expenses
8,783,086
8,741,957
6,059,160
Operating income
2,352,541
2,577,979
4,605,057
Other income (expenses):
Interest expenses, net
(1,629,642
)
(2,058,461
)
(2,162,589
)
Other income, net
1,398,173
1,948,527
1,132,780
Total other expenses, net
(231,469
)
(109,934
)
(1,029,809
)
Income before income taxes
2,121,071
2,468,045
3,575,248
Income tax benefit/(provision)
(173,017
)
89,000
(218,949
)
Net income
1,948,054
2,557,045
3,356,299
Net income attributable to non-controlling interests
23,852
25,570
33,563
Net income attributable to Huadi International Group Co., Ltd.
$
1,924,202
$
2,531,475
$
3,322,736
Net income
$
1,948,054
$
2,557,045
$
3,356,299
Other comprehensive income (loss):
Foreign currency translation adjustment
(3,792,527
)
1,452,328
1,225,301
Total comprehensive income
(1,844,473
)
4,009,373
4,581,600
Comprehensive income attributable to non-controlling interests
(14,073
)
40,093
45,816
Comprehensive income attributable to Huadi International Group Co., Ltd.
$
(1,830,400
)
$
3,969,280
$
4,535,784
Basic and diluted earnings per share
Basic
$
0.15
$
0.21
$
0.34
Diluted
$
0.15
$
0.21
$
0.34
Weighted average numbers of common shares outstanding
Basic
13,239,182
12,116,079
10,000,000
Diluted
13,239,182
12,116,079
10,000,000

HUADI INTERNATIONAL GROUP CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020

(IN U.S. DOLLARS)

2022
2021
2020
Cash Flows from Operating Activities:
Net income
$
1,948,054
$
2,557,045
$
3,356,299
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
792,888
735,333
723,586
Amortization
32,087
32,349
30,048
Bad debt expense reverse
(564,283
)
(153,676
)
-
Deferred tax benefits (expenses)
173,017
(89,000
)
-
Loss (gain) on disposal of fixed assets
-
1,767
(654,138
)
Changes in operating assets and liabilities:
Accounts receivable
4,080,722
(8,823,928
)
(260,202
)
Notes receivable
1,018,351
(1,987,871
)
(10,332
)
Inventories
(4,653,336
)
(756,588
)
(1,987,737
)
Advances to suppliers
19,092
(2,727,661
)
366,087
Advances to suppliers – related party
5,457,504
78,283
180,333
Other receivables
(132,062
)
2,006,975
3,303,687
Accounts payable
1,960,756
(238,638
)
650,988
Accrued expenses and other current liabilities
(91,961
)
372,155
(387,358
)
Notes payable
(1,678,680
)
707,021
(2,301,375
)
Advances from customers
188,878
3,040,106
222,805
Tax payable
(589,163
)
(402,478
)
(28,401
)
Net cash provided by (used in) operating activities
8,027,856
(5,648,806
)
3,204,290
Cash Flows from Investing Activities:
Purchases of property, plant and equipment
(206,175
)
(917,539
)
(664,996
)
Proceeds from disposition of property, plant and equipment
-
20,285
724,782
Net cash (used in) provided by investing activities
(206,175
)
(897,254
)
59,786
Cash Flows from Financing Activities:
Proceeds from short-term borrowings
21,719,160
35,820,322
38,620,077
Repayments on short-term borrowings
(41,712,446
)
(35,265,552
)
(40,488,791
)
Proceeds from long-term borrowings
10,095,831
-
-
Proceeds from stock offering, net of offering costs
-
21,680,341
-
Advances from related parties
305,226
6,223,875
3,068,965
Repayments to related parties
(152,628
)
(7,182,813
)
(5,889,557
)
Net cash (used in) provided by financing activities
(9,744,857
)
21,276,173
(4,689,306
)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(188,294
)
219,398
113,762
Net (decrease) increase in cash and cash equivalents and restricted cash
(2,111,470
)
14,949,511
(1,311,468
)
Cash and cash equivalents and restricted cash at the beginning of year
16,654,715
1,705,204
3,016,672
Cash and cash equivalents and restricted cash at the end of year
$
14,543,245
$
16,654,715
$
1,705,204
Supplemental disclosures of cash flows information:
Cash paid for income taxes
$
64,016
$
480,495
$
135,262
Cash paid for interest
$
1,151,567
$
1,550,082
1,951,622

Stock Information

Company Name: Huadi International Group Co. Ltd.
Stock Symbol: HUDI
Market: NASDAQ
Website: huadigroup.com

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