Guanwei Recycling Corp. (the "Company")
(NASDAQ: GPRC), China's leading clean tech manufacturer of recycled
low density polyethylene (LDPE), today reported record sales and
profits in 2011. Continuing strong domestic demand for the high
quality, competitively priced recycled plastic manufactured at its
zero discharge facility, also is expected to produce another year
of record growth in 2012.
Highlights
- 2011 net revenues increased 34% to a record $63,600,678 from
$47,534,645 a year earlier.
- Net income in 2011 grew 29% to a record $12,793,448, or $0.64
per diluted share, compared with $9,927,396, or $0.50 per diluted
share in 2010.
- The Company's annual combined raw material import quota was
increased to 99,000 tons in 2011 and 115,000 tons in 2012.
- Production capacity was expanded to 80,000 tons from 65,000
tons.
- Short term debt was paid off and working capital increased at
year end to $23.8 million from $13.4 million a year earlier.
- With new equipment and improved facilities, product quality was
enhanced while the Company maintained its pricing advantage over
virgin plastic.
Volume and Sales Price Increases
Year over year sales of self-manufactured recycled LDPE grew
more than 39% to $61,900,588, reflecting increases in sales volume
and pricing. Tonnage sales of manufactured recycled LDPE increased
27% from 41,478 tons a year earlier to 52,666 tons in 2011. Average
selling prices increased approximately 9.6% from $1,072 per ton a
year earlier to $1,175 per ton in 2011. While 2010 revenues
included approximately $1.99 million in low margin sales of
purchased recycled LDPE to meet customer requirements, there were
no such sales in 2011.
Increased Production Capacity
During 2011, the Company continued the construction and
expansion of its facilities as well as the replacement of machinery
and equipment. Its capital asset expenditure for these improvements
and equipment purchases was over $3.8 million. As a consequence of
these significant improvements, manufacturing capacity during 2011
was increased from 65,000 tons to 80,000 tons and will continue to
be enhanced in the current year.
Expanded Plastic Waste Import Quota
Of additional significance, the Company received government
approval in July for expansion of its quota for imported plastic
waste, the key raw material needed to manufacture recycled LDPE. In
2011, the annual quota was increased from 24,000 tons to 64,000
tons. When combined with the import quota of 35,000 tons annually
which the Company has contracted with another company (Huan Li),
its total quota in 2011 was 99,000 tons. For 2012, the Company
received approval to increase its quota to 80,000 tons, bringing
its combined total quota for the current year to 115,000 tons.
Gross Margin Down Slightly But Above
30%
While gross profit increased approximately 27% year over year in
2011 to $19.48 million, gross margins decreased to 30.64% from
32.20% a year earlier. This primarily was a consequence of an
approximately 22% increase in raw material costs. In order to
reduce these costs, the Company continues to develop relationships
with new suppliers, primarily in Europe. Guanwei's ability to
purchase raw materials directly from European suppliers --
reflecting its dedication to meeting the highest pollution and
environmental standards -- continues to provide the Company with a
significant competitive advantage. Additionally, the Company
continues to focus on managing operating costs. In 2011, higher raw
material costs were partially offset by operating expense increases
that were smaller than the growth in revenues.
No Outstanding Borrowings
Shareholders' equity as of December 31, 2011 increased to
approximately $45 million from $34.1 million a year earlier,
reflecting among other factors a reduction in short term borrowing
to zero from approximately $3.7 million a year earlier and an
increase in retained earnings to $28.62 million from $15.84 million
in the prior year. Total assets of $45.08 million at year end
included cash and cash equivalents of $12.43 million, and accounts
receivable of $4.48 million, reflecting an increased use of terms
with certain customers. Inventories increased to $16.85 million,
from $10.72 million a year earlier, and pre-payments and other
assets of $2.10 million as of year end 2011 compared with $475,195
at the end of 2010.
Strong Growth Outlook For 2012
"2011 certainly was another banner year for our Company," Mr.
Chen Min, Chairman and CEO of the Company, commented. He continued,
"not only did we see core sales advance nearly 40%, but we
continued to maintain gross margins above 30% and generated another
strong gain on our bottom line."
"Further," he added, "through careful planning and sound
execution, we were able to ratchet up our production capacity on a
largely self-financed basis, and enter the new year with strong
financials and no debt. Additionally, we obtained a substantial
increase in our government quota for imported raw material."
"With these accomplishments," he stated, "we are confident of
another year of record results in 2012. Even with an anticipated
slowing in our domestic economy, we have a customer base that is
well diversified, and the more than 40% price advantage our
recycled plastic offers compared with virgin plastic continues to
make it quite attractive."
"At the same time," Mr. Chen added, "we hope that in 2012
investor perceptions in the U.S. of Chinese companies such as ours
with outstanding track records and continuing strong growth
potential will begin to improve, and the patience of our
shareholders will begin to be rewarded."
Conference Call Invitation
The Company will discuss 2011 year end results during a live
conference call and webcast on Monday, April 2nd,
at 8:00am ET.
To participate in the call, interested participants should call
1-877-941-1427 when calling within the United States or
1-480-629-9664 when calling internationally. Please ask for the
Guanwei Recycling Corp. 2011 Year End Conference Call, Conference
ID: 4527622. There will be a playback available until 04/09/12. To
listen to the playback, please call 1-877-870-5176 when calling
within the United States or 1-858-384-5517 when calling
internationally. Use the Replay Pin Number: 4527622.
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link
http://viavid.net/dce.aspx?sid=00009567 or at ViaVid's website at
www.viavid.net.
Description of Guanwei Recycling Corp.
Guanwei Recycling Corp. is China's largest manufacturer of
recycled low density polyethylene (LDPE). Adhering to the highest
"green" standards, it has generated rapid growth producing LDPE
from plastic waste procured mostly in Europe for sales to more than
300 customers in ten different industries in China. Guanwei
Recycling Corp. is one of the few plastic recyclers in China that
has been audited by German authorities, most recently Umweltagentur
Erftstadt, for compliance with German pollution and environmental
standards. This allows the company to procure high quality plastic
waste directly from Germany and other European countries (Spain and
Holland), with no middlemen, and permits highly economic production
of the highest grades of LDPE. Additional information regarding
Guanwei Recycling Corp. is available at
www.guanweirecycling.com.
Information Regarding Forward-Looking
Statements
Except for historical information contained herein, the
statements in this press release are forward-looking statements
that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties, which
may cause our actual results in future periods to differ materially
from forecasted results. These risks and uncertainties include,
among other things, product demand, market competition, and risks
inherent in our operations. These and other risks are described in
our filings with the U.S. Securities and Exchange Commission.
GUANWEI RECYCLING CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Expressed in U.S. dollars)
Year Ended December 31,
-------------------------------
2011 2010
-------------- -------------
Net Revenue $ 63,600,678 $ 47,534,645
Cost of Revenue 44,111,700 32,179,321
-------------- -------------
Gross profit 19,488,978 15,355,324
-------------- -------------
Operating expenses:
Selling and marketing expenses 398,513 346,409
General and administrative expenses 1,903,062 1,568,653
Income from operations 17,187,403 13,440,262
Other income (expenses):
Interest income 88,249 28,704
Interest expenses (29,083) (85,474)
Income before income taxes 17,246,569 13,383,492
Income taxes 4,453,121 3,456,096
Net income $ 12,793,448 $ 9,927,396
Comprehensive Income:
Net income $ 12,793,448 $ 9,927,396
Other comprehensive income
- Foreign currency translation
adjustments 1,067,008 488,683
Comprehensive income $ 13,860,456 $ 10,416,079
Earnings per share attributable to
shareholders of Guanwei Recycling Corp.
- basic and diluted $ 0.64 $ 0.50
============== =============
Weighted average number of shares of
common stock used in computing basic
and diluted earnings per share 20,000,006 20,000,006
============== =============
GUANWEI RECYCLING CORP.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
As of December 31,
---------------------------------
2011 2010
--------------- ---------------
ASSETS:
Current assets:
Cash and cash equivalents $ 12,432,803 $ 14,940,236
Restricted cash - 2,280,398
Accounts receivable 4,475,386 9,106
Account due from director 1,290 1,290
Prepayments and other current assets 2,103,059 473,905
Inventories 16,858,801 10,721,765
Total current assets 35,871,339 28,426,700
Property, plant and equipment, net 8,151,012 4,894,141
Construction in progress 174,295 -
Land use right, net 673,762 660,941
Others 205,437 201,579
--------------- ---------------
Total Assets $ 45,075,845 $ 34,183,361
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Short term borrowings $ - $ 3,716,377
Accounts payable 8,741,822 8,812,940
Accrued expenses and other payables 714,072 721,569
Amount due to shareholder 1,468,167 905,615
Income tax payable 1,144,516 880,048
Total current liabilities 12,068,577 15,036,549
Commitments and contingencies - -
Equity:
Shareholders' equity:
Common stock, $0.001 par value,
500,000,000 shares authorized,
20,000,006 shares issued and
outstanding 20,000 20,000
Additional paid-in capital 1,290,028 1,290,028
PRC statutory reserves 805,483 805,483
Retained earnings 28,629,076 15,835,628
Accumulated other comprehensive income 2,262,681 1,195,673
Total Shareholders' equity 33,007,268 19,146,812
Total liabilities and shareholders'
equity $ 45,075,845 $ 34,183,361
=============== ===============
GUANWEI RECYCLING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
Year Ended December 31,
-----------------------------
2011 2010
------------- ------------
Cash flows from operating activities:
Net income $ 12,793,448 $ 9,927,396
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation of property, plant and
equipment 600,065 438,563
Amortization of land use right 15,070 14,389
Loss on disposal of property, plant and
equipment 72,174 2,472
Bad debt 98 -
Changes in operating assets and
liabilities:
Accounts receivable (4,395,346) 4,795
Prepayments and other current assets (1,586,462) (36,185)
Inventories (8,370,973) (3,763,939)
Other assets 4,648 -
Accounts payable 2,340,991 13,364
Accrued expenses and other payables (35,833) 252,227
Income tax payable 223,415 391,517
Net cash provided by operating activities 1,661,295 7,244,599
Cash flows from investing activities:
Decrease (increase) in restricted cash 2,339,860 (2,266,980)
Purchase of property, plant and equipment (3,847,657) (584,467)
Proceeds from disposal of property, plant
and equipment 3,563 5,948
Net cash used for investing activities (1,504,234) (2,845,499)
Cash flows from financing activities:
Advance from shareholder 562,552 620,940
New bank borrowings - 3,659,235
Repayment of bank borrowings (3,813,283) (1,420,767)
Net cash flows (used for) provided by
financing activities (3,250,731) 2,859,408
Effect of exchange rate change on cash and
cash equivalents 586,237 379,519
Net (decrease) increase in cash and cash
equivalents (2,507,433) 7,638,027
Cash and cash equivalents at the beginning
of year 14,940,236 7,302,209
Cash and cash equivalents at the end of
year $ 12,432,803 $ 14,940,236
Supplemental disclosure of cash flow
information:
Interest received $ 88,249 $ 28,659
============= ============
Interest paid $ 29,083 $ 85,215
============= ============
Income taxes paid $ 4,229,706 $ 3,064,578
============= ============
US Contact: Ken Donenfeld DGI Investor Relations
kdonenfeld@dgiir.com Tel: 212-425-5700 Fax: 646-381-9727
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