Liuyang Fireworks Reports Continued Growth in Revenue and Profitability for the Third Quarter

    




 TORONTO, May 31, 2012 /CNW/ - Liuyang Fireworks Limited  ("Liuyang" or "the Company") today announced financial  results for its third quarter and first nine months ended March 31,  2011. All amounts are in Canadian dollars unless otherwise indicated. 

 Highlights for the third quarter: 




        --  Revenue increased 71.7%, driven by higher sales volume in the
            Chinese domestic market and higher selling prices;
        --  The Company's two joint ventures in Hunan Province: a
            manufacturing joint venture in Liuyang City and a wholesale
            joint venture in Youxian City started to operate from January
            2012. Once these joint ventures are fully operational they are
            expected to improve the Company's sales by approximately $5
            million per year and allow it to manufacture over half of this
            amount thru the joint venture.
        --  Improved pricing contributed to an improvement in gross margin
            to 37.6% from 35.4% for the same period a year ago;
        --  EBITDA increased by 21.6% during the quarter to $787,000
            compared with the same quarter last year;
        --  Higher selling expense and interest cost caused net income to
            remain constant at $482,000 ($0.009 per share) compared with
            $489,000 in the same period of last year.




 "The steady execution of our business plan yielded continued growth in  revenue, gross profit and EBITDA for the quarter," said Mr. Hu,  Liuyang's president and CEO.  "We continued to penetrate the Chinese  domestic market with increased firework sales volume achieved during  the quarter. Our stronger financial results for the period are also  reflective of higher selling prices compared to the same period last  year." 

  

 SUMMARY FINANCIAL STATEMENTS  

  





                                                        

    In thousands except per share 3 months ended March 9 months ended March
    and %                                           31                   31
    data
                                   2012        2011      2012        2011

    Revenue                       $7,061        $4,113 $16,962      $12,532

    Gross profit                  $2,658        $1,457  $6,444       $4,763

    Gross margins                  37.6%         35.4%   38.0%        38.0%

    EBITDA                          $787          $648  $1,544       $1,454

    EBITDA before stock-based       $823          $695  $1,880       $1,595
    compensation

    Net income                      $482          $489    $854       $1,079

    Net income per Basic          $0.009        $0.009  $0.015       $0.023
    share

                   Diluted        $0.006        $0.006  $0.011       $0.018






  

 Balance Sheet Highlights  

  





                                    

    In thousands except ratio data 3 months ended March 31

                                     2012          2011

    Cash                            $6,055          $4,425

    Current ratio                   1.75:1          2.23:1

    Working capital                 $8,180          $7,167

    Total assets                   $21,688         $14,816

    Debt to equity ratio            1.00:1          0.65:1






  

 Review of Third Quarter Results 

  

 Revenue increased 71.7% to $7.06 million for the quarter on the back of  a strong increase in firework sales volume in the Chinese domestic  market combined with higher selling prices compared to the same quarter  a year earlier.  The higher revenue resulted in an 82.4% increase in  gross profit compared to the same period last year to $2.66 million for  the quarter.  Higher selling prices resulted in an improvement in gross  margin to 37.6% compared to 35.4% for the same quarter a year earlier. 

 EBITDA for the quarter was $0.79 million, representing an increase of  21.6% over the comparable period. EBITDA before stock-based  compensation expense was $0.82 million, representing an increase of  18.5% compared to the quarter a year earlier.  Net income for the  quarter was $0.48 million, or $0.009 per share ($0.006 diluted),  compared to $0.49 million, or $0.009 per share ($0.006 diluted) for the  same period a year earlier. 

 Compared with a year earlier, the balance sheet as at March 31, 2012 has  improved with higher levels of cash at $6.06 million and working  capital at $8.18 million. The Company has sufficient cash and working  capital to continue its growth and expansion plans for the balance of  fiscal 2012. 

 Liuyang's consolidated financial statements for the three and nine  months ended March 31, 2012 and related management's discussion and  analysis (MD&A) will be filed with securities regulatory authorities  within applicable timelines and will be available via SEDAR at www.sedar.com. 

 Outlook 

 "Our business is well positioned for the balance of the fiscal year and  as we soon head into fiscal 2013," said Mr. Hu.  "In addition to our  well-established international sales channel, we continue to strengthen  our foothold in the Chinese domestic market.  We will continue to focus  on strengthening our brand recognition in China as we further penetrate  this market.  Moreover, we will leverage the potential of our joint  ventures in Hunan Province to capitalize on the higher production  capacity and additional distribution they afford us." 

 About Liuyang Fireworks Limited 

 Liuyang Fireworks Limited is a leading China-based manufacturer of  fireworks distributed both domestically and within more than 15  countries in North America, South America and Europe.  The Company has  more than 17 years of experience in the fireworks industry and is a  supplier to the world's top five fireworks wholesalers and retailers.  Liuyang's ISO9001-certified manufacturing facilities are located in the  Liuyang area of Hunan, China, where more than half of the world's  fireworks are produced. 

 Forward-Looking Statements 

 The forward-looking information contained in this news release  represents the expectations of the Company as of the date of this news  release and, accordingly, is subject to change after such date.   Readers should not place undue importance on forward-looking  information and should not rely upon this information as of any other  date.  While the Company may elect to, it does not undertake to update  this information at any particular time except as required in  accordance with applicable securities legislation. 

 Neither TSX Venture Exchange nor its Regulation Services Provider (as  that term is defined in the policies of the TSX Venture Exchange)  accepts responsibility for the adequacy or accuracy of this release. 

   

Liuyang Fireworks Limited


CONTACT:  Jacky LongChief Financial OfficerLiuyang Fireworks LimitedTel : 647 350 [e-mail] 


    

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