SHANGDONG, China, May 7, 2012 /PRNewswire-Asia-FirstCall/ -- Gulf
Resources, Inc. (NASDAQ: GURE) ("Gulf Resources" or the "Company"),
a leading manufacturer of bromine, crude salt and specialty
chemical products in China, today
announced its financial results for the first quarter ended
March 31, 2012.
First Quarter 2012 Highlights
- Revenue was $23.8 million, a
year-over-year decrease of 47.5%
- Gross profit was $6.7 million, a
year-over-year decrease of 73.0%
- Gross margin decreased to 28.1 % compared to 54.6% in the
first quarter of 2011
- Income from operations was $4.6
million as compared to $20.3
million in the first quarter of 2011
- Operating margin was 19.3% compared to 44.7% for the first
quarter of 2011
- Net income was $3.3 million or
$0.10 per basic and diluted share,
versus $14.4 million, or $0.41 and $0.4 per
basic and diluted share a year ago, respectively.
- Cash totaled $81.9 million as of
March 31, 2012
"Due to the lower demand of bromine as influenced by continuing
macroeconomic tightening policy imposed by the Chinese government,
the average selling price of bromine decreased from $4,596 per tonne for the first quarter in 2011 to
$3,569 per tonne for the same period
this year, with stable cost of raw material and increasing cost of
labor, we reported significantly lower operating performance in
this quarter in comparison to the same period of last year as we
were unable to benefit from the upgrades and enhancement made to
our equipment and the acquisition of the factory completed in 2011
under current economic condition," said CEO Mr. Xiaobin Liu.
First Quarter 2012 Results
Gulf Resources' revenue was $23.8
million for the first quarter of 2012, a decrease of 47.5%
from $45.4 million for the first
quarter of 2011. The decrease in net revenue was primarily
attributable to the decline in selling price and sales volume in
the segments of bromine and crude salt. Revenue from the bromine
and crude salt segments was $13.5
million and $2.3 million,
respectively, representing a total of 66.0% of sales revenue for
the first quarter of 2012.
Revenue from the chemical products segment was $8.1 million, or 34.0% of total revenue, for the
first quarter of 2012, a decrease of 20.5% from $10.2 million in the corresponding period in
2011. The decrease in revenue from this product segment was mainly
due to a drop in sales volume for oil and gas exploration additives
and paper manufacturing additives due to the continuing high price
level of oil prices compared to the same quarter last year, which
offset the incremental benefit arising from a higher sales volume
for pesticides manufacturing additives and the increase in prices
of all chemical products.
Gross profit for the first quarter of 2012 was $6.7 million, a decrease of 73.0% from
$24.8 million from the first quarter
of 2011, and gross profit margin for the three months ended
March 31, 2012 was 28.1%, compared to
54.6% for the corresponding period last year. The decrease in gross
margin was mainly due to the decrease in selling prices in bromine
and crude salts segments.
Sales, marketing and other operating expenses for the first
quarter of 2012 were $17,764 compared
with $24,012 for the corresponding
quarter last year. The decrease in these costs in the first quarter
of 2012 was mainly due to the decrease in sales that caused reduced
sales-related expenses.
General and administrative expenses for the first quarter of
2012 were $2.1 million, compared to
$4.3 million for the first quarter of
2011. The significant decrease was primarily due to the decrease in
non-cash expenses related to options granted to employees and a
warrant issued to our previous investor relations firm.
Income from operations for the first quarter of 2012 was
$4.6 million, compared to
$20.3 million for the corresponding
quarter of 2011. The operating margin was 19.3% for the first
quarter of 2012, compared to 44.7% for the first quarter of
2011.
Other operating income, which represented the sales of
wastewater at market price, was $57,074 for the first quarter of 2012 as compared
to $22,785 for the same period in
2011.
For the first quarter of 2012, the Company incurred other income
of $44,478 compared to $33,828 for the corresponding quarter last
year.
Income taxes were $1.3 million for
the first quarter of 2012, a decrease of 78.0% from $5.9 million for the first quarter of 2011. The
Company's effective tax rate was 29% for both the three-month
periods ended March 31, 2012 and
2011.
Net income was $3.3 million for
the first quarter of 2012, a decrease of 77.1% from $14.4 million for the first quarter of 2011.
Basic and diluted earnings per share in first quarter of 2012 were
$0.10 per basic and diluted share
compared to $0.41 and $0.40 per basic and diluted share respectively in
the first quarter of 2011. Weighted average number of diluted
shares for the three months ended March 31,
2012 was 34,561,520 compared with 35,590,982 for the
three months ended March 31,
2011.
Financial Condition
As of March 31, 2012, Gulf
Resources had cash of $81.9 million,
current liabilities of $12.1 million,
and shareholders' equity of $246.7
million. For the three months ended March 31, 2012, the Company had working capital
of $102.5 million and a current ratio
of 9.5. As of March 31, 2012, the
Company generated $3.3 million in
cash flow from operations, which approximately equaled our net
income for the first quarter this year, and used $109,076 in investing activities for additions of
prepaid land leases.
Subsequent Events
In an effort to pursue more effective and seamless
communications with our investors and promote accelerated press
releases, the Company has now set up its own investor relations
department to handle investor relations issues. For future
investor inquiries, investors may reach our IR manager
Max Ma at email address
Max_vx@163.com or CEO assistant Helen
Xu at email address beishengrong@vip.163.com.
Business Outlook
"Although the potential benefit of our recently acquired
manufacturing capacity and upgrades on production efficiency was
not positively reflected in our operating results in this quarter,
we believe that the company in the long run will benefit from
exploration and acquisition of businesses with proven reserve and
cooperation with overseas large-scale bromine manufacturers in the
same sector with sophisticated manufacturing technology." said
Xiaobin Liu, the CEO of the company,
"therefore, we intend to retain our cash for potential attractive
opportunities of future expansion of our bromine and crude salt
businesses that can enable the company to achieve long term
sustainable growth."
Conference Call
Gulf Resources' management will host a conference call on
Tuesday, May 8, 2012 at 8:00 AM Eastern Time to discuss its financial
results for the first quarter 2012 ended March 31, 2012.
Hosting the call will be Mr. Xiaobin
Liu, CEO of Gulf Resources. The Company's management team
will be available for investor questions following the prepared
remarks.
To participate in this live conference call, please dial +1
(877) 275-8968 five to ten minutes prior to the scheduled
conference call time. International callers should call +1 (706)
643-1666. The conference participant pass code is 77195667.
A replay of the conference call will be available for 14 days
starting from 11:00 AM ET on
Tuesday, May 8, 2012. To access the
replay, call +1 (855) 859-2056. International callers should call
+1 (404) 537-3406. The pass code is 77195667.
This conference call will be broadcast live over the Internet
and can be accessed by all interested parties by clicking on
http://www.gulfresourcesinc.com/events.html. Please access the link
at least fifteen minutes prior to the start of the call to
register, download, and install any necessary audio software. For
those unable to participate during the live broadcast, a 90-day
replay will be available shortly after the call by accessing the
same link.
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through two wholly-owned
subsidiaries, Shouguang City Haoyuan Chemical Company Limited
("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited
("SYCI"). The Company believes that it is one of the largest
producers of bromine in China.
Elemental Bromine is used to manufacture a wide variety of
compounds utilized in industry and agriculture. Through SYCI, the
Company manufactures chemical products utilized in a variety of
applications, including oil & gas field explorations and as
papermaking chemical agents. For more information, visit
www.gulfresourcesinc.com.
Forward-Looking Statements
Certain statements in this news release contain
forward-looking information about Gulf Resources and its
subsidiaries business and products within the meaning of Rule 175
under the Securities Act of 1933 and Rule 3b-6 under the Securities
Exchange Act of 1934, and are subject to the safe harbor created by
those rules. The actual results may differ materially depending on
a number of risk factors including, but not limited to, the general
economic and business conditions in the PRC, future product
development and production capabilities, shipments to end
customers, market acceptance of new and existing products,
additional competition from existing and new competitors for
bromine and other oilfield and power production chemicals, changes
in technology, the ability to make future bromine asset purchases,
and various other factors beyond its control. All forward-looking
statements are expressly qualified in their entirety by this
Cautionary Statement and the risks factors detailed in the
Company's reports filed with the Securities and Exchange
Commission. Gulf Resources undertakes no duty to revise or update
any forward-looking statements to reflect events or circumstances
after the date of this release.
CONTACT:
Max Ma
Max_vx@163.com
- Financial tables to follow -
GULF RESOURCES,
INC.
|
AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(Expressed in U.S.
dollars)
|
|
|
|
March 31,
2012
|
|
|
December 31,
2011
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
81,867,417
|
|
|
$
|
78,576,060
|
Accounts
receivable
|
|
|
27,278,642
|
|
|
|
21,919,828
|
Inventories
|
|
|
4,766,966
|
|
|
|
4,437,972
|
Prepayments and
deposits
|
|
|
363,925
|
|
|
|
307,600
|
Prepaid land
leases
|
|
|
105,237
|
|
|
|
46,582
|
Deferred tax
assets
|
|
|
167,511
|
|
|
|
228,702
|
Total Current
Assets
|
|
|
114,549,698
|
|
|
|
105,516,744
|
Non-Current
Assets
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
141,740,566
|
|
|
|
147,200,740
2,336,920
|
Property, plant and
equipment under capital leases, net
|
|
|
2,252,855
|
|
|
|
Prepaid land leases, net
of current portion
|
|
|
760,293
|
|
|
|
763,814
|
Deferred tax
assets
|
|
|
2,495,065
|
|
|
|
2,509,481
|
Total non-current
assets
|
|
|
147,248,779
|
|
|
|
152,810,955
|
Total Assets
|
|
$
|
261,798,477
|
|
|
$
|
258,327,699
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
7,742,643
|
|
|
$
|
7,373,643
|
Retention
payable
|
|
|
541,521
|
|
|
|
556,450
|
Capital lease
obligation, current portion
|
|
|
244,066
|
|
|
|
189,742
|
Taxes payable
|
|
|
3,537,567
|
|
|
|
4,058,550
|
Total Current
Liabilities
|
|
|
12,065,797
|
|
|
|
12,178,385
|
Non-Current
Liabilities
|
|
|
|
|
|
|
|
Capital lease
obligation, net of current portion
|
|
|
3,039,619
|
|
|
|
3,036,558
|
Total
Liabilities
|
|
$
|
15,105,416
|
|
|
$
|
15,214,943
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
PREFERRED STOCK; $0.001
par value; 1,000,000 shares authorized; none outstanding
|
|
$
|
|
|
|
$
|
|
COMMON STOCK; $0.0005
par value; 100,000,000 shares authorized; 34,745,342 and 34,745,342
shares issued; and 34,560,743 and 34,560,743 shares outstanding as
of March 31, 2012 and December 31, 2011, respectively
|
|
|
17,373
|
|
|
|
17,373
|
Treasury stock; 184,599
shares as of March 31, 2012 and December 31, 2011 at
cost
|
|
|
(500,000)
|
|
|
|
(500,000)
|
Additional paid-in
capital
|
|
|
74,123,279
|
|
|
|
74,107,979
|
Retained earnings
unappropriated
|
|
|
135,697,275
|
|
|
|
133,314,581
|
Retained earnings
appropriated
|
|
|
15,313,970
|
|
|
|
14,409,557
|
Cumulative translation
adjustment
|
|
|
22,041,164
|
|
|
|
21,763,266
|
Total Stockholders'
Equity
|
|
|
246,693,061
|
|
|
|
243,112,756
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
261,798,477
|
|
|
$
|
258,327,699
|
GULF RESOURCES,
INC.
|
AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
(Expressed in U.S.
dollars)
|
|
|
|
Three-Month Period
Ended
March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
NET REVENUE
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$
|
23,808,674
|
|
|
$
|
45,378,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES/INCOME
|
|
|
|
|
|
|
|
|
|
|
Cost of net revenue
|
|
|
|
(17,115,882)
|
|
|
|
(20,591,384)
|
|
|
Sales, marketing and other
operating expenses
|
|
|
|
(17,764)
|
|
|
|
(24,012)
|
|
|
Research and development
cost
|
|
|
|
(42,798)
|
|
|
|
(180,337)
|
|
|
General and administrative
expenses
|
|
|
|
(2,112,205)
|
|
|
|
(4,341,291)
|
|
|
Other operating
income
|
|
|
|
57,074
|
|
|
|
22,785
|
|
|
|
|
|
(19,231,575)
|
|
|
|
(25,114,239)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
|
4,577,099
|
|
|
|
20,264,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(54,412)
|
|
|
|
(42,216)
|
|
|
Interest income
|
|
|
|
98,890
|
|
|
|
76,044
|
|
|
INCOME BEFORE
TAXES
|
|
|
|
4,621,577
|
|
|
|
20,298,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAXES
|
|
|
|
(1,334,470)
|
|
|
|
(5,933,122)
|
|
|
NET INCOME
|
|
|
$
|
3,287,107
|
|
|
$
|
14,364,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
$
|
3,287,107
|
|
|
$
|
14,364,999
|
|
|
OTHER COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
- Foreign currency translation
adjustments
|
|
|
|
277,898
|
|
|
|
2,021,635
|
|
|
COMPREHENSIVE
INCOME
|
|
|
$
|
3,565,005
|
|
|
$
|
16,386,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE:
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
|
|
$
|
0.10
|
|
|
$
|
0.41
|
|
|
DILUTED
|
|
|
$
|
0.10
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
|
|
|
34,560,743
|
|
|
|
34,735,912
|
|
|
DILUTED
|
|
|
|
34,561,520
|
|
|
|
35,590,982
|
|
|
GULF
RESOURCES, INC.
|
AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
GULF RESOURCES,
INC.
|
|
|
Three-Month Period Ended
March 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income
|
|
$
|
3,287,107
|
|
|
$
|
14,364,999
|
|
Adjustments to reconcile
net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Interest on capital lease
obligation
|
|
|
54,020
|
|
|
|
41,715
|
|
Amortization of prepaid land
leases
|
|
|
54,871
|
|
|
|
29,842
|
|
Depreciation and
amortization
|
|
|
5,683,163
|
|
|
|
3,348,519
|
|
Exchange loss on inter-company
balances
|
|
|
24,322
|
|
|
|
-
|
|
Stock-based compensation
expense
|
|
|
15,300
|
|
|
|
3,138,000
|
|
Deferred tax asset
|
|
|
78,204
|
|
|
7,888
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(5,325,631)
|
|
|
|
(5,750,002)
|
|
Inventories
|
|
|
(323,846)
|
|
|
|
898,399
|
|
Prepayments and
deposits
|
|
|
(56,325)
|
|
|
|
787,313
|
|
Accounts payable and accrued
expenses
|
|
|
362,206
|
|
|
|
2,502,453
|
|
Retention payable
|
|
|
(15,458)
|
|
|
|
-
|
|
Taxes payable
|
|
|
(523,983)
|
|
|
|
2,372,754
|
|
Net cash provided by
operating activities
|
|
|
3,313,950
|
|
|
|
21,741,880
|
|
|
|
|
|
|
|
|
|
CASH FLOWS USED IN
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Additions of prepaid
land leases
|
|
|
(109,076)
|
|
|
|
(24,760)
|
|
Purchase of property,
plant and equipment
|
|
|
-
|
|
|
|
(3,038,000)
|
|
Net cash used in
investing activities
|
|
|
(109,076)
|
|
|
|
(3,062,760)
|
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS
|
|
|
86,483
|
|
|
|
771,565
|
|
NET INCREASE IN CASH AND
CASH EQUIVALENTS
|
|
|
3,291,357
|
|
|
|
19,450,685
|
|
CASH AND CASH
EQUIVALENTS - BEGINNING OF PERIOD
|
|
|
78,576,060
|
|
|
|
68,494,480
|
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD
|
|
$
|
81,867,417
|
|
|
$
|
87,945,165
|
|
|
|
|
|
|
|
|
|
|
SOURCE Gulf Resources, Inc.