Financial Performance - For the fiscal year 2023, Huadi International generated total revenues of approximately $84.33 million, a 10.4% increase from $76.37 million in 2022[185]. - Gross profit for the year ended September 30, 2023, increased by approximately $1.22 million or 10.96%, totaling approximately $12.36 million, with a gross profit margin of 14.65%[313]. - Net income attributable to Huadi International Group Co., Ltd. for the year ended September 30, 2023, was approximately $3.26 million, compared to $1.92 million in 2022[305]. - Total comprehensive income for the year ended September 30, 2023, was approximately $1.98 million, a recovery from a loss of $1.84 million in 2022[305]. - Net income for the fiscal year ended September 30, 2023, was approximately $3.30 million, an increase of approximately 69.16% compared to $1.95 million in 2022[324]. - Cash and cash equivalents as of September 30, 2023, were $20,192,460, up from $13,195,999 in 2022, indicating strong liquidity[326]. - Net cash used in operating activities for the year ended September 30, 2023, was approximately $2.45 million, primarily due to adjustments in working capital[330]. - Accounts receivable as of September 30, 2023, were $22.63 million, an increase from $19.66 million in 2022, reflecting increased credit sales[337]. - Net cash provided by financing activities for the year ended September 30, 2023, was approximately $11.58 million, primarily from a stock offering that generated $23.01 million[334]. - Total operating expenses for the year ended September 30, 2023, were approximately $9.24 million, an increase from $8.78 million in 2022[306]. Revenue Sources - Steel piping products accounted for 98.6% of total revenues in 2023, with sales amounting to $83.11 million, up from $74.70 million in 2022[185]. - The top geographic market was China, contributing $73.74 million or 87.45% of total sales in 2023, followed by the USA at $7.15 million (8.47%) and India at $1.60 million (1.89%)[186]. - Approximately 12.55% of the company's revenues in 2023 were generated from international sales, highlighting reliance on favorable exchange rates for competitiveness[302]. - Domestic sales in China increased over 13.83% compared to the last fiscal year, while international sales revenue decreased by 9.62% to approximately $10.59 million[306]. Product and Market Development - Huadi International's new subsidiary, Huadi Songyang, was established in June 2023 to expand the product line of industrial steel pipe and tube products[182]. - The company has a diverse product range, producing over 3,000 distinct pipe and tube products, primarily for the automotive, oil and gas, and electric energy sectors[189]. - The company is focused on expanding market share through acquisitions and organic initiatives, including new product offerings and increased geographic coverage[222]. - The company is actively expanding its product offerings, as evidenced by the diverse range of registered trademarks related to steel and metal products[240]. Research and Development - The company invested $2,550,777 in research and development for new product development and process improvements in 2023, compared to $2,330,913 in 2022, representing an increase of approximately 9.4%[247]. - The research and development team consists of 75 employees from technical and production departments, focusing on in-house patent research[247]. - The company anticipates focusing its R&D efforts on improving existing products and developing new technology in the coming years[346]. - The company has a strong focus on quality control in its R&D processes, which is crucial for maintaining brand value[346]. Intellectual Property - The company has obtained 43 patents, enhancing its intellectual property portfolio and innovation capabilities[287]. - Huadi Steel holds a total of 8 invention patents and 35 utility patents, which protect new technical solutions and improvements[244]. - The patents include advanced technologies such as anti-corrosion treatments and high-strength materials, showcasing the company's commitment to quality and durability[244]. - Huadi Steel's utility patents are protected under PRC laws for a term of 10 years, providing a competitive edge in the market[244]. Corporate Governance - The company has established an audit committee, a compensation committee, and a nominating and corporate governance committee[373]. - The audit committee is responsible for ensuring proper procedures for the receipt and treatment of complaints regarding accounting and auditing matters[374]. - The company has adopted a whistleblower procedure to allow confidential and anonymous submission of concerns about questionable accounting or auditing matters[374]. - The board has implemented a written disclosure policy to ensure timely and accurate communication to the investing public[374]. Legal and Regulatory Compliance - The company is compliant with PRC laws and regulations, having obtained all necessary permissions and approvals for its operations[260]. - The PRC government has initiated regulatory actions affecting business operations, which may impact the company's future compliance requirements[254]. - The company is not subject to cybersecurity review under the CAC Revised Measures, as it does not hold personal information of over one million users[256]. Financial Management - The company has implemented cost and production efficiency initiatives, resulting in lower inventory levels and reduced customer lead times[211]. - The company has a rigorous pricing strategy to manage commodity price exposure and share transportation costs with customers[226]. - The company has long-term bank loans totaling $5,442,709, with $43,860 due within the next year[351]. - The interest rate on the long-term loans from Agricultural Bank is consistently 4.35%[344].
Huadi International Group(HUDI) - 2023 Q4 - Annual Report