Sales of Self-Manufactured Recycled LDPE Rose
on Slightly Higher Volume and Increased Selling Prices While Labor
and Raw Material Costs Continued To Stabilize
Company Sees Product Demand and Selling Prices
Continuing to Rise Moderately Through Year End
2013 Second Quarter Investor Conference Call to
Be Held Friday, August 16th at 8:00am ET
Guanwei Recycling Corp. (NASDAQ:
GPRC), China's leading clean tech
manufacturer of recycled low density polyethylene (LDPE), today
reported that in its second quarter ended June 30, 2013, it
experienced a continuation of the positive trends in sales and
costs that began to develop in the second half of 2012. Sales in
the quarter of self manufactured recycled LDPE rose 5.21% compared
with the prior year quarter, based on moderate gains in selling
prices as well as sales volume, while raw material and labor costs
in the quarter continued to stabilize. Consequently, there was
further improvement in the gross profit margin leading to a 2.37%
increase in net income compared with the second quarter of last
year.
Financial Highlights
- Net revenues in the second quarter of 2013 were $17,732,347,
including $17,266,070 in sales of manufactured recycled LDPE and
$466,277 in sales of sorted non-LDPE materials. 2013 second quarter
sales of manufactured recycled LDPE were up 5.21% compared with the
$16,410,448 in sales of manufactured recycled LDPE in the same
period last year. Revenues in last year's second quarter of
$18,694,938 also included sales of sorted non-LDPE materials of
$511,361 as well as $1,773,129 in excess inventory that was sold
with a negligible markup to recoup costs. The increased sales of
manufactured recycled LDPE in the 2013 second quarter reflected a
2.23% increase in average selling prices to approximately $1,239
per ton, as well as a 2.96% increase in volume to 13,939 tons
sold.
- For the six months ended June 30, 2013, revenue from the sale
of manufactured recycled LDPE was $31,778,819, a 4.35% increase
over the prior year period, reflecting an increase in the average
selling price of approximately 1.57% and an increase in tons sold
of 2.66% compared with the prior year's first six months. Total
revenues in the first six months of 2013 were $32,572,153 compared
with $34,866,428 in the prior year period which included $3,462,210
in low margin sales of raw materials. Sales of sorted non-LDPE
materials totaled $793,334 and $949,128 for the six months ended
June 30, 2013 and 2012, respectively.
- During the second quarter of 2013, the cost of imported plastic
waste -- which is the Company's primary raw material -- increased
8.41% to $748 per ton compared with $690 per ton in the second
quarter of 2012. However, the $748 per ton cost in the 2013 second
quarter was 2.35% lower than the $766 per ton cost in the first
quarter this year. Additionally, following a significant increase
in labor costs in 2012, labor cost per ton in the 2013 second
quarter declined 3.57% compared with the same quarter last year. As
a result of better control of labor and overhead costs, gross
margin in the 2013 second quarter was 28.96% compared with 28.34%
in the same period in 2012, excluding the sale of raw
materials.
- In the first six months of 2013, the Company's average
manufacturing costs declined slightly compared with the same period
a year earlier. While per ton raw material costs increased 4.71% to
$756 per ton in the first half of 2013, labor costs per ton
declined 8.93% compared to the same period a year earlier.
- Net income in the second quarter of 2013 increased 2.37% to
$3,237,997 from $3,163,030 in the year earlier quarter. EPS was
$0.31 in both periods based on approximately 10.41 million diluted
weighted average number of common shares outstanding in the 2013
quarter compared with approximately 10.35 million shares in the
2012 second quarter. For the first six months of 2013, net income
rose 7.17% to $5,603,390, compared with $5,228,286 in the first
half of 2012. EPS in the first six months of 2013 was $0.54 on
approximately 10.41 million diluted weighted average number of
common shares outstanding, compared with $0.51 on approximately
10.18 million shares in the year earlier period.
Financial Strength
As of June 30, 2013, the Company reported that it had no bank
debt and cash and cash equivalents of $15,399,617, up from
$12,083,358 as of December 31, 2012. Working capital as of June 30,
2013 and December 31, 2012 was $42,057,689 and $35,505,028,
respectively. The increase in working capital in part reflects the
increase in cash and cash equivalents, an increase in advances to
suppliers which led to a reduction in accounts payable, and a
partially offsetting decrease in accounts receivable resulting from
ongoing efforts to speed collection from customers.
Outlook
"We anticipate the steady progress we have made over the past
couple of quarters will continue through the remainder of the year,
as current indications are that raw material costs will continue to
stabilize and demand for recycled LDPE will continue to grow,"
stated Mr. Chen Min, Chairman and CEO.
"Further," he added, "we are well positioned to capitalize on
stronger demand for our products as China's economy strengthens
further and we retain our competitive advantage by staying focused
on being the environmental leader in the industry."
Conference Call Invitation
The Company will discuss 2013 second quarter results during a
live conference call and webcast on Friday, August
16th, 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. 2013 Second Quarter Conference Call,
Conference ID: 4635647. There will be a playback available until
August 23, 2013. 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: 4635647.
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link
http://public.viavid.com/index.php?id=105748 or at ViaVid's website
at http://viavid.com.
SEE ATTACHED TABLES
Description of Guanwei Recycling Corp.
Adhering to the highest "green" standards, Guanwei Recycling
Corp. (the "Company") has generated rapid growth producing recycled
low density polyethylene (LDPE) from plastic waste procured mostly
in Europe. The Company sells the recycled LDPE to more than 300
customers (including over 150 active recurring customers) in more
than ten different industries in China. The Company is licensed by
Chinese authorities and also has been issued a Compliance
Certificate by Umweltagentur Erftstadt, which issues certificates
of approval for certain plastics manufacturers that meet Germany's
strict environmental standards. This enables 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.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2013 2012
ASSETS
Current assets
Cash and cash equivalents $ 15,399,617 $ 12,083,358
Accounts receivable 7,611,692 9,305,104
Inventories 18,888,447 18,696,648
Advances to suppliers 3,173,698 1,827,480
Value added tax refundable 11,813 -
Prepaid expenses and other current assets 144,290 131,564
Total current assets 45,229,557 42,044,154
Property, plant and equipment, net 10,304,955 10,223,874
Land use right, net 669,674 663,800
Other assets 204,108 202,346
Total Assets $ 56,408,294 $ 53,134,174
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 571,029 $ 4,082,982
Accrued expenses and other payables 646,600 796,705
Value added taxes payable - 110,484
Amount due to shareholder 772,524 517,863
Income tax payable 1,181,715 1,031,092
Total current liabilities 3,171,868 6,539,126
Commitments and contingencies
Shareholders' Equity
Common stock, $0.001 par value, 500,000,000
shares authorized, 10,407,839 shares issued and
outstanding, as of June 30, 2013 and December
31, 20112 10,408 10,408
Additional paid-in capital 2,767,787 2,767,787
PRC statutory reserves 805,483 805,483
Accumulated other comprehensive income 3,584,987 2,546,999
Retained earnings 46,067,761 40,464,371
Total shareholders' equity 53,236,426 46,595,048
Total liabilities and shareholders' equity $ 56,408,294 $ 53,134,174
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Net revenue $17,732,347 $18,694,938 $32,572,153 $34,866,428
Cost of revenue 12,596,865 13,803,142 23,557,730 26,419,246
Gross profit 5,135,482 4,891,796 9,014,423 8,447,182
Operating expenses:
Selling and marketing 116,565 78,228 272,471 167,750
General and
administrative 571,243 464,158 1,170,530 1,123,028
Total operating expenses 687,808 542,386 1,443,001 1,290,778
Income from operations 4,447,674 4,349,410 7,571,422 7,156,404
Other income (expenses)
Interest income 14,540 14,336 27,942 28,508
Net foreign exchange
gain (loss) (12,878) (61,606) 47,065 (29,680)
Miscellaneous (9,121) - (9,802) -
Total other income
(expense) (7,459) (47,270) 65,205 (1,172)
Income before income
taxes 4,440,215 4,302,140 7,636,627 7,155,232
Income taxes 1,202,218 1,139,110 2,033,237 1,926,949
Net income 3,237,997 3,163,030 5,603,390 5,228,286
Other comprehensive
income - foreign
currency translation
adjustments 774,693 18,029 1,037,988 231,447
Comprehensive income $ 4,012,690 $ 3,181,059 $ 6,641,378 $ 5,459,733
Earnings per share -
basic and diluted $ 0.31 $ 0.31 $ 0.54 $ 0.51
Weighted average number
of common shares
outstanding - basic and
diluted 10,407,839 10,354,048 10,407,839 10,177,026
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2013 2012
Cash flows from operating activities
Net income $ 5,603,390 $ 5,228,286
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation of property, plant and equipment 511,086 401,947
Amortization of land use rights 7,795 7,717
Changes in operating assets and liabilities:
Accounts receivable 1,866,159 (928,136)
Inventories 193,491 (1,676,025)
Advances to suppliers (1,294,453) -
Value added taxes refundable (11,687) (665,921)
Prepaid expenses and other current assets (11,355) 742,871
Other assets 2,404 2,380
Accounts payable (3,558,330) (1,864,905)
Accrued expenses and other payables (172,425) (92,906)
Value added taxes payable (111,574) -
Income tax payable 127,888 (33,839)
Net cash provided by operating activities 3,152,389 1,121,469
Cash flows from investing activities
Deposit for property, plant and equipment - (645,755)
Purchase of property, plant and equipment (373,718) (100,572)
Net cash used in investing activities (373,718) (746,327)
Cash flows from financing activities
Advance from shareholder 254,661 323,582
Net cash provided by financing activities 254,661 323,582
Effect of exchange rate change on cash 282,927 84,839
Net increase in cash and cash equivalents 3,316,259 783,563
Cash and cash equivalents at the beginning of
period 12,083,358 12,432,803
Cash and cash equivalents at the end of period $ 15,399,617 $ 13,216,366
Supplemental disclosure of cash flow
information
Income taxes paid $ 1,905,349 $ 1,960,785
============ ============
Non-cash investing and financing activities
Accrued expense related to purchases of
property, plant and equipment $ 8,013 $ -
============ ============
Issuance of common stock to repay debt to
shareholder $ - 1,468,167
============ ============
Contacts: Richard Sun guanweirecycling@gmail.com Ken
Donenfeld DGI Investor Relations kdonenfeld@dgiir.com Tel:
212-425-5700 Fax: 646-381-9727
Guanwei Recycling (CE) (USOTC:GPRC)
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