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 third quarter ended September 30, 2013.
Third Quarter 2013 Highlights
- Net revenue was $32.9 million, a year-over-year increase of
34%
- Gross profit was $10.9 million, a year-over-year increase of
47%
- Gross margin increased to 33%, as compared to 30% in the third
quarter of 2012
- Income from operations was $10.9 million, as compared to $5.6
million in the third quarter of 2012, a year-over-year increase of
94%
- Operating margin was 33%, as compared to 23% for the third
quarter of 2012
- Net income was $8.1 million or $0.21 per basic and diluted
share, versus $4.1 million, or $0.12 per basic and diluted share a
year ago.
- Cash totaled $97.2 million as of September 30, 2013
"We are pleased to report that Company's net revenue for the
third quarter of 2013 has increased 34%, income from operations
increased 94%, and net income increased 97% as compared with the
same quarter of 2012, which is mainly due to the increased sales
revenue from all segments of the Company and gain on relocation of
bromine factory No.3. As compared with the same period of 2012, the
sales revenue of chemical products segment largely increased 45%,
crude salt segment increased 65% and bromine segment slightly
increased 22%." said Mr. Xiaobin Liu, CEO of the Company.
Third Quarter 2013 Financial Results
Gulf Resources' net revenue was $32,935,277 for the three-month
period ended September 30, 2013, an increase of approximately 8.4
million (or 34%) as compared to the same period in 2012. This
increase was primarily attributable to the increase of revenues
from all of our segments, specifically, including (i) the increase
of revenue from the bromine segment from $13,960,118 for the
three-month period ended September 30, 2012 to $17,093,087 for the
same period in 2013, an increase of approximately 22%; (ii) the
increase of revenue from the crude salt segment from $2,360,905 for
the three-month period ended September 30, 2012 to $3,902,979 for
the same period in 2013, an increase of approximately 65%; and
(iii) the increase of revenue from the chemical products segment
from $8,209,309 for the three-month period ended September 30, 2012
to 11,939,211 for the same period in 2013, an increase of
approximately 45%.
Gross profit was $10,929,021, or 33%, of net revenue for the
three-month period ended September 30, 2013 compared to $7,430,442,
or 30%, of net revenue for the same period in 2012. The increase in
gross profit percentage was primarily attributable to an increase
in the margin percentage in all of our three segments.
The total research and development costs incurred for the
three-month periods ended September 30, 2013 and 2012 were $33,198
and $28,478, respectively, an increase of 17%. Research and
development costs for the three-month periods ended September 30,
2013 and 2012 represented raw materials used by SYCI for testing
the manufacturing routine.
Write-off on property, plant and equipment for the three-month
periods ended September 30, 2013 and 2012 were $214 and $130,143,
respectively, a decrease of 99.8%. Write-off on property, plant and
equipment of $130,143 for the three-month period ended September
30, 2012 represented the write-off of certain machinery and
equipment replaced during the enhancement work to our bromine
production facilities in Factory No. 2 completed in September
2012.
General and administrative expenses were $1,962,496 for the
three-month period ended September 30, 2013, an increase of
$254,633 (or 15%) as compared to $1,707,863 for the same period in
2012. This increase in general and administrative expenses was
primarily due to a sum of $628,718 for insurance compensation
received for a legal case in 2012, which offset legal fee included
in general and administrative expense, partially offset by a
non-cash expense related to stock options granted to employees
which decreased to $4,100 for the three-month period ended
September 30, 2013 from $477,000 in the same period of 2012.
Gain on relocation of factory was $1,877,779 for the three-month
period ended September 30, 2013. In late September 2013, the
Transportation Bureau of Dongying City and other local government
agencies requested to requisition the land where the original
Factory No. 3 was located for railway construction. We recognized
such amount in this quarter in 2013.
Other operating income was $107,006 for the three-month period
ended September 30, 2013, an increase of $21,756 (or 26%) as
compared to $85,250 for the same period in 2012 for sales of
wastewater.
Income from operations was $10,892,520 for the three-month
period ended September 30, 2013 (or 33% of net revenue), an
increase of $5,263,639, or approximately 94%, over the income from
operations for the same period in 2012. The increase resulted
primarily from the increase in the demand for all of our segment
products.
Other income, net of $35,653 represented bank interest income,
net of capital lease interest expense for the three-month period
ended September 30, 2013, an increase of $21,992 (or approximately
161%) as compared to the same period in 2012
Net income was $8,109,729 for the three-month period ended
September 30, 2013, an increase of $3,996,513 (or approximately
97%) compared to the same period in 2012. This significant increase
was primarily attributable to the overall increase in demand for
our products and gain on relocation of original Factory No.3.
Income taxes were $2.8 million for the third quarter of 2013, an
increase of 84% from $1.5 million for the third quarter of 2012.
The Company's effective tax rate was 26% and 27% for the
three-month periods ended September 30, 2013 and 2012,
respectively.
Nine Months Ended September 30, 2013
Net revenue for the nine-month period ended September 30,
2013 was $88,291,753, representing an increase of approximately
$8.6 million (or 11%) over the same period in 2012. This increase
was primarily attributable to the increase of revenues from all of
our segments. Gross profit was $25,039,824, or 28%, of net
revenue for the nine-month period ended September 30, 2013 compared
to $24,048,429, or 30%, of net revenue for the same period in 2012.
The decrease in gross profit percentage was primarily attributable
to a drop in the margin percentage of bromine and crude salt
segments. Income from operations was $20,876,743 for the nine-month
period ended September 30, 2013 (or 24% of net revenue), an
increase of $3,037,560, or approximately 17%, over income from
operations for the same period in 2012. The increase resulted
primarily from the increase in the demand for all of our segment
products and gain on relocation of original Factory No.3.
Net income was $15.3 million, or $0.40 per basic and diluted
share, respectively, compared to $13.1 million, or $0.38 per basic
and $0.37 per diluted share, respectively, for the same period a
year ago.
Financial Condition
As of September 30, 2013, Gulf Resources had cash of $97.2
million, total liabilities of $15.0 million, and stockholders'
equity of $286.7 million. Ended September 30, 2013, the Company had
working capital of $135.7 million. As of September 30, 2013,
the Company generated $31.4 million in cash flow from operations,
and we used approximately $0.6 million cash for the prepayment of
land leases and approximately $0.3 million cash for the
construction of our new Factory No.3 due to the resumption of
leased land by the Transportation Bureau of Dongying City and other
local government agencies for railway construction.
Business Outlook
"The Chemical products segment did have a great performance for
the third quarter of 2013 as compared to the same period of 2012
with gross profit margin increased from 29% to 34%. We also noted
an upward trend in the average selling price of crude salt since
the third quarter of 2011 due to the stable demand of the crude
salt. The average selling price increased from $37.19 per tonne in
the third quarter of 2011 to $41.39 per tonne in the third quarter
of 2013. We expect the average selling price of crude salt to
remain at current levels through the end of 2013. Since we are
still impacted by China's macro-economic conditions, our
bromine price still remains at a competitively low price which
result in gross profit margin only increase 2% percent in the
condition our sales volume increase 20%. The Company will be
continually looking for both of horizontal and vertical acquisition
targets, try to expand sales markets, increase its production
utilization rate and decrease management and administration
expenses." said Mr. Xiaobin Liu, CEO of the Company.
Conference Call
Gulf Resources' management will host a conference call on
Monday, November 11, 2013 at 8:00 AM Eastern Time to discuss its
financial results for the Third quarter ended September 30,
2013.
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 dial +1 (706)
643-1666. The conference participant pass code is 97694824.
A replay of the conference call will be available for 14 days
starting starting from 11:00 AM ET on Monday, November 11, 2013. To
access the replay, dial +1 (855) 859-2056. International callers
should dial +1 (404) 537-3406. The pass code is 97694824.
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
Helen Xu
beishengrong@vip.163.com
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