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 fourth quarter and fiscal year ended December 31,
2015.
Fiscal Year 2015 Highlights
- Net revenues increased 43% to $162,317,120.
- Gross profit increased 67% to $53,281,250.
- Income from operations increased 90% to $45,164,710.
- Net income increased 91% to $34,068,037.
- Primary EPS increased 63% to $0.75 from $0.46.
- Fully diluted EPS increased 61% to $0.74.
- Cash flow from operations increased 51% to $70,401,210.
- Cash was $133,606,392 or $2.89 per share.
- Net net cash, (cash minus all liabilities) was $114,974,041
($2.48 per share*).
- Working capital was $174,794,678 ($3.78 per share*).
- Shareholders equity was $338,110,875 or $7.31 per share.
Fourth Quarter 2015
Highlights
- Net revenues increased 40.6% to $35.5 million
- Gross profit increased 67.5% to $11.2 million.
- Gross margin increased to 31.5% from 26.5%.
- Income from operations increased 140% to $9.6
million.
- Bromine income from operations increased 8.7%.
- Crude Salt income from operations increased 3.9%.
- Chemical income from operations increased 194.1%.
- Operating margin was 27.0% compared to 15.8% for the fourth
quarter of 2014.
- Net income was $7.3 million, or $0.16 per basic and diluted
share, versus $2.9 million.
- EPS increased 152% to $0.16 from $0.07 per share.
Fiscal Year 2015
Financial Results
Cash flow from operations increased 51% to $70,401,210 from
$46,573,777. This equals $1.51 per share. In the past two years, we
have generated cash flow from operations of $116,974,987 or $2.53
per share, well in excess of our current stock price.
|
Revenue by Segment |
Segment |
|
2015 |
|
|
2014 |
|
%change |
Bromine |
$ |
52,385,491 |
|
$ |
57,949,824 |
|
|
(10 |
)% |
Crude Salt |
$ |
10,494,939 |
|
$ |
10,752,226 |
|
|
(2 |
%) |
Chemicals |
$ |
99,436,690 |
|
$ |
44,958,281 |
|
|
121 |
% |
|
|
Income By Segment |
Segment |
|
2015 |
|
|
2014 |
|
%change |
Bromine |
$ |
10,854,711 |
|
$ |
9,500,428 |
|
|
14 |
% |
Crude Salt |
$ |
1,183,755 |
|
$ |
719,716 |
|
|
65 |
% |
Chemicals |
$ |
32,997,870 |
|
$ |
14,432,851 |
|
|
129 |
% |
|
|
|
|
|
|
|
|
|
|
On a segment basis, Bromine sales to outside customers decreased
10% to $52,385,491 from $57,949,824. However, when intercompany
transactions by SCRC are included, the overall decline is estimated
to have been only 1.3%. Reported sales volume in tons decreased 17%
to 16,569 tons, but with the inclusion of intercompany sales, the
actual decline is much lower. The selling price of Bromine
increased 10% to $3,162. At the present time, Bromine pricing
remains strong. The decline in the value of the RMB has helped to
increase prices. Even if the economy in China does not improve, we
expect bromine prices to remain strong for 2016.
Gross profit margin in the Bromine segment was 30%, compared to
25% in the previous year. Income from operations increased 14% to
$10,854,711.
In 2015, Gulf spent approximately $22.5 million on enhancement
projects for the transmission channels and ducts and our existing
bromine extraction to enhance the productivity and improve
environmental controls in Factories No. 10 and 11. It expects to
spend $15 million on enhancement projects for factories No. 1 and 9
in 2016. With its strong capital position, Gulf believes this
spending will enable it to maintain an advantage over smaller
competitors.
Revenue in crude salt declined by 2% to $10,494,939. Sales
volume declined by 3%. The price per ton increased by 1%. Gross
profit increased by 32.7%. As percentage of sales, it was 21%
compared to 15% in the previous year. Income from operations
increased 65% to $1,183,755.
Sales of chemicals increased 121% to $99,436,690 from
$44,958,281.
|
Chemical Products |
Segment |
|
2015 |
|
|
2014 |
|
%change |
Oil & gas |
$ |
27,642,028 |
|
$ |
25,689,311 |
|
|
8 |
% |
Paper manufacturing |
$ |
4,908,057 |
|
$ |
4,506,581 |
|
|
9 |
% |
Pesticides |
$ |
15,611,616 |
|
$ |
14,762,389 |
|
|
6 |
% |
Pharmaceuticals |
$ |
36,488,364 |
|
|
By Products |
$ |
14,786,625 |
|
|
Total Chemical Sales |
$ |
99,436,690 |
|
$ |
44,958,281 |
|
|
121 |
% |
|
|
|
|
|
|
|
|
|
|
Our original chemical business was quite strong with sales and
selling prices increasing in oil and gas, paper manufacturing, and
pesticides. We are especially pleased with these results, because
the end markets in these industries were generally weak, and we
believe we outperformed our competitors. Rongyuan reported sales of
$51,274,989 for the period of 2015 in which it was a subsidiary of
Gulf.
Gross margins in our traditional chemical business increased to
36% from 35%. Income from operations increased 129% to $32,997,870
from $14,432,851. Rongyuan earned $16,886,799, while our
traditional chemical business earned $16,111,071, an increase of
11.6% over 2014. Given the weakness in these segments of the
Chinese economy, we are very pleased with the results.
Net Income was $34,068,037 an increase of 91% compared to the
results in the previous year. The effective tax rates for 2015 and
2014 were 25% and 26% respectively.
In 2015, we generated $70,401,210 from operations compared to
$46,573,777 during 2014. We spent $66,305,606 on the purchase of
Rongyuan and $22,858,625 on capital expenditures, principally on
upgrading factories No. 10 and 11.
Our balance sheet remains extremely strong. We ended the year
with cash of $133,606,392 ($2.89 per share). While this is down
slightly from $146,585,601 in 2014, we managed to purchase Rongyuan
and upgrade our factories while still maintaining our strong cash
position.
Current assets were $190,821,115 down slightly from $194,127,792
in 2014. Total assets were $356,743,226 up from $322,982,152 in the
previous year.
Current liabilities were $16,076,437 up from $8,082,244 in 2014.
Working capital was $174,794,678 ($3.78 per share). Net net cash
(cash minus all liabilities) was $114,974,041 ($2.48 per share),
well in excess of our market price.
Shareholders equity was $338,110,875 or $7.31 per share.
Fourth Quarter 2015
Results
- Net revenues increased 40.6% to $35.5 million.
- Gross profit increased 67.5% to $11.2 million.
- Gross margin increased to 31.5% from 26.5%.
- Income from operations increased 140% to $9.6 million.
- Bromine income from operations increased 8.7%.
- Crude Salt income from operations increased 3.9%.
- Chemical income from operations increased 194.1%.
- Operating margin was 27.0% compared to 15.9% for the fourth
quarter of 2014.
- Net income was $7.3 million, or $0.16 per basic and diluted
share, versus $2.9 million.
- EPS increased 152% to $0.07 per share.
Gulf Resources' revenue was $35.5 million for the fourth quarter
of 2015, an increase of 40.6%, from $25.2 million for the fourth
quarter of 2014. Revenue from the bromine segment was $11.3
million, a decrease of 19%. Revenue from the crude salt segment was
$2.6 million, a decrease 5%. Revenue from the chemical products
segment was $21.5 million, an increase of 154% from the
corresponding period in 2014.
Gross profit for the fourth quarter of 2015 was $11.2 million,
an increase of 67.5%, from $6.7 million of the fourth quarter of
2014. Gross margins were 31.5% compared to 26.5% for the
corresponding period last year.
Income from operations was $9.6 million, as compared to $4.0
million in Q4 2014. Operating margins were 27.0% compared to 15.8%
last year.
Net income was $7.3 million for the fourth quarter of 2015, an
increase of 153%, from $2.9 million for the fourth quarter of
2014.
Basic and diluted earnings per share in the fourth quarter of
2015 were $0.16 compared to $0.07 in the previous year.
Weighted average number of basic shares for the three months
ended December 31, 2015 was 46,007,120, as compared with 38,725,282
for the three months ended December 31, 2014.
Business Outlook
“We are extremely pleased with our results for 2014,” Gulf’s CEO
Xiaobin Liu stated. “Although the Chinese economy was very
weak, we posted strong results in all of our business segments,
acquired Rongyuan, upgraded two of our factories, and reached an
agreement with the government of Daying County in Sichuan Province
that may allow us to build a very large natural gas and brine
business in that province.”
“As we look to 2016,” Mr. Liu said, “we do not yet see signs of
recovery in China. However, all of our businesses remain strong.
Bromine prices have risen and show no signs of dropping. Our
chemical businesses are strong, and Rongyuan has great
opportunities in the pharmaceutical industry. This should lead to
higher sales and earnings in 2016.”
“We are making strong progress in Sichuan,” Mr. Liu said. “We
are moving ahead to build our factory and install the
infrastructure needed to allow us to become a producer of
natural gas.”
“We know our investors have been very patient,” Mr. Liu
concluded. “We are committed to recognizing shareholder value and
significantly improving the price of our stock. If our natural gas
business is as successful as we hope it will be, our company will
be transformed. If it is not as successful, we will find ways of
returning capital to shareholders.”
(* All per share calculations have not
been audited and have been calculated using the end of the year
share count of 46,276,269 as
shown on the balance sheet in the 10-K).
Conference Call
Gulf Resources' management will host a conference call on
Wednesday, March 16, 2016 at 8:00 AM Eastern Time to discuss its
financial results for the fourth quarter and fiscal year ended
December 31, 2015.
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
70563980.
The webcasting is also available then, just simply click on the
link below:
http://www.investorcalendar.com/IC/CEPage.asp?ID=174794
A replay of the conference call will be available two hours
after the call's completion during 03/16/2016 11:00 EDT -
04/16/2016 23:59 EDT. To access the replay, call +1 (855) 859-2056.
International callers should call +1 (404) 537-3406. The conference
ID is 70563980.
About Gulf Resources, Inc.Gulf Resources, Inc.
operates through four wholly-owned subsidiaries, Shouguang City
Haoyuan Chemical Company Limited ("SCHC"), Shouguang Yuxin Chemical
Industry Co., Limited ("SYCI"), Shouguang City Rongyuan Chemical
Co, Limited (“SCRC”) and Daying County Haoyuan Chemical Company
Limited (“DCHC”). 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 and
gas field explorations and papermaking chemical agents. SCRC is a
leading manufacturer of materials for human and animal antibiotics
in China and other parts of Asia. DCHC was established to further
explore and develop natural gas and brine resources (including
bromine and crude salt) in China. For more information, visit
www.gulfresourcesinc.com.
Forward-Looking StatementsCertain 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.
|
GULF RESOURCES, INC. |
AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(Expressed in U.S. dollars) |
|
|
|
As of December 31, |
|
|
2015 |
|
|
2014 |
|
Current Assets |
|
|
|
|
|
|
Cash |
|
$ |
133,606,392 |
|
|
$ |
146,585,601 |
|
Accounts
receivable |
|
|
49,980,358 |
|
|
|
41,997,862 |
|
Inventories |
|
|
7,180,800 |
|
|
|
5,367,868 |
|
Prepayments and deposits |
|
|
- |
|
|
|
86,301 |
|
Prepaid land leases |
|
|
49,833 |
|
|
|
51,024 |
|
Other
receivables |
|
|
599 |
|
|
|
38,272 |
|
Deferred tax assets |
|
|
3,173 |
|
|
|
864 |
|
Total
Current Assets |
|
|
190,821,115 |
|
|
|
194,127,792 |
|
Non-Current Assets |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
127,871,323 |
|
|
|
124,350,781 |
|
Property, plant and equipment under capital leases, net |
|
|
927,218 |
|
|
|
1,339,602 |
|
Prepaid land leases, net of current portion |
|
|
5,197,216 |
|
|
|
733,560 |
|
Deferred tax assets |
|
|
2,367,180 |
|
|
|
2,430,417 |
|
Goodwill |
|
|
29,559,174 |
|
|
|
- |
|
Total non-current
assets |
|
|
165,922,111 |
|
|
|
128,854,360 |
|
Total
Assets |
|
$ |
356,743,226 |
|
|
$ |
322,982,152 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
9,929,700 |
|
|
$ |
4,004,728 |
|
Retention payable |
|
|
1,135,956 |
|
|
|
326,959 |
|
Capital lease obligation, current portion |
|
|
196,778 |
|
|
|
205,128 |
|
Taxes
payable |
|
|
4,814,003 |
|
|
|
3,545,429 |
|
Total
Current Liabilities |
|
|
16,076,437 |
|
|
|
8,082,244 |
|
Non-Current Liabilities |
|
|
|
|
|
|
|
|
Capital lease obligation, net of current portion |
|
|
2,555,914 |
|
|
|
2,826,495 |
|
Total
Liabilities |
|
$ |
18,632,351 |
|
|
$ |
10,908,739 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
PREFERRED STOCK; $0.001
par value; 1,000,000 shares authorized; none outstanding |
|
|
|
|
|
|
|
|
COMMON STOCK; $0.0005
par value; 80,000,000 shares authorized; 46,276,269 and 38,911,014
shares issued; and 46,007,120 and 38,672,865 shares outstanding as
of December 31, 2015 and 2014, respectively |
|
$ |
23,139 |
|
|
$ |
19,456 |
|
Treasury stock; 269,149 and 238,149 shares as of December 31, 2015
and 2014 |
|
|
(599,441 |
) |
|
|
(561,728 |
) |
Additional paid-in capital |
|
|
94,124,065 |
|
|
|
80,380,008 |
|
Retained earnings unappropriated |
|
|
215,286,395 |
|
|
|
183,480,402 |
|
Retained earnings appropriated |
|
|
20,340,436 |
|
|
18,078,392 |
|
Cumulative translation adjustment |
|
|
8,936,281 |
|
|
|
30,676,883 |
|
Total
Stockholders’ Equity |
|
|
338,110,875 |
|
|
|
312,073,413 |
|
Total
Liabilities and Stockholders’ Equity |
|
$ |
356,743,226 |
|
|
$ |
322,982,152 |
|
|
GULF RESOURCES, INC. |
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME |
(Expressed in U.S. dollars) |
|
|
|
Years Ended December 31, |
|
|
|
2015 |
|
|
2014 |
|
NET REVENUE |
|
|
|
|
|
|
|
Net revenue |
|
$ |
162,317,120 |
|
|
$ |
113,660,331 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES /
INCOME |
|
|
|
|
|
|
|
|
|
Cost of net revenue |
|
|
(109,035,870 |
) |
|
|
(81,737,610 |
) |
|
Sales, marketing and other
operating expenses |
|
|
(375,365 |
) |
|
|
(105,588 |
) |
|
Research and development cost |
|
|
(230,590 |
) |
|
|
(134,292 |
) |
|
Exploration cost |
|
|
(325,840 |
) |
|
|
(488,880 |
) |
|
Write-off / Impairment on property,
plant and equipment |
|
|
(969,638 |
) |
|
|
(673,705 |
) |
|
Loss from disposal of property,
plant and equipment |
|
|
- |
|
|
|
(9,866 |
) |
|
General and administrative
expenses |
|
|
(6,668,838 |
) |
|
|
(7,161,047 |
) |
|
Other operating income |
|
|
453,731 |
|
|
|
468,878 |
|
|
|
|
|
(117,152,410 |
) |
|
|
(89,842,110 |
) |
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS |
|
|
45,164,710 |
|
|
|
23,818,221 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES) |
|
|
|
|
|
|
|
Interest expense |
|
|
(194,036 |
) |
|
|
(203,296 |
) |
|
Interest income |
|
|
469,271 |
|
|
|
482,885 |
|
|
|
|
|
275,235 |
|
|
|
279,589 |
|
|
INCOME BEFORE
TAXES |
|
|
45,439,945 |
|
|
|
24,097,810 |
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
(11,371,908 |
) |
|
|
(6,226,015 |
) |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
34,068,037 |
|
|
$ |
17,871,795 |
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME: |
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
34,068,037 |
|
|
|
17,871,795 |
|
|
OTHER COMPREHENSIVE
INCOME |
|
|
|
|
|
|
|
|
|
- Foreign
currency translation adjustments |
|
|
(21,740,602 |
) |
|
|
(1,077,846 |
) |
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME |
|
$ |
12,327,435 |
|
|
$ |
16,793,949 |
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
|
|
|
BASIC |
|
$ |
0.75 |
|
|
$ |
0.46 |
|
|
DILUTED |
|
$ |
0.74 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF SHARES |
|
|
|
|
|
|
|
BASIC |
|
|
45,167,288 |
|
|
|
38,694,567 |
|
|
DILUTED |
|
|
46,109,404 |
|
|
|
39,260,627 |
|
|
GULF RESOURCES, INC. |
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Expressed in U.S. dollars) |
|
|
|
Years Ended December 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income |
|
$ |
34,068,037 |
|
|
$ |
17,871,795 |
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
Interest on capital lease
obligation |
|
|
193,162 |
|
|
|
202,656 |
|
|
|
Amortization of prepaid land
leases |
|
|
774,512 |
|
|
|
680,551 |
|
|
|
Depreciation and amortization |
|
|
29,095,648 |
|
|
|
27,642,222 |
|
|
|
Allowance for obsolete and
slow-moving inventories |
|
|
9,236 |
|
|
|
(3,174 |
) |
|
|
Write-off / Impairment loss on
property, plant and equipment |
|
|
969,638 |
|
|
|
673,705 |
|
|
|
Loss from disposal of property,
plant and equipment |
|
|
- |
|
|
|
9,866 |
|
|
|
Currency translation adjustment on
inter-company balances |
|
|
(1,575,397 |
) |
|
|
(92,412 |
) |
|
|
Deferred tax asset |
|
|
(83,856 |
) |
|
|
(121,436 |
) |
|
|
Stock-based compensation
expense |
|
|
374,600 |
|
|
|
346,100 |
|
|
|
Changes in assets and liabilities,
net of effects of acquisition: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
7,387,941 |
|
|
|
2,751,676 |
|
|
|
Inventories |
|
|
(592,841 |
) |
|
|
(84,777 |
) |
|
|
Prepayment and deposits |
|
|
92,400 |
|
|
|
(80,673 |
) |
|
|
Accounts payable and accrued
expenses |
|
|
(1,847,462 |
) |
|
|
(1,616,195 |
) |
|
|
Retention payable |
|
|
841,225 |
|
|
|
117,905 |
|
|
|
Other receivables |
|
|
37,713 |
|
|
|
(38,272 |
) |
|
|
Taxes payable |
|
|
656,654 |
|
|
|
(1,685,760 |
) |
|
|
Net cash provided by
operating activities |
|
|
70,401,210 |
|
|
|
46,573,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Additions of prepaid
land leases |
|
|
(683,129 |
) |
|
|
(664,106 |
) |
|
|
Proceeds from sales of
property, plant and equipment |
|
|
- |
|
|
|
21,514 |
|
|
|
Purchase of property,
plant and equipment |
|
|
(22,858,625 |
) |
|
|
(6,538,611 |
) |
|
|
Consideration paid for
business acquisition |
|
|
(66,305,606 |
) |
|
|
- |
|
|
|
Cash acquired from
acquisition |
|
|
14,074,720 |
|
|
|
- |
|
|
|
Net cash used
in investing activities |
|
|
(75,772,640 |
) |
|
|
(7,181,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Repurchase of common
stock |
|
|
(37,713 |
) |
|
|
(61,728 |
) |
|
|
Repayment of capital
lease obligation |
|
|
(306,683 |
) |
|
|
(304,806 |
) |
|
|
Net cash used
in financing activities |
|
|
(344,396 |
) |
|
|
(366,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE
RATE CHANGESON CASH AND CASH EQUIVALENTS |
|
|
(7,263,383 |
) |
|
|
(269,239 |
) |
|
|
NET INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS |
|
|
(12,979,209 |
) |
|
|
38,756,801 |
|
|
|
CASH AND CASH
EQUIVALENTS - BEGINNING OF YEAR |
|
|
146,585,601 |
|
|
|
107,828,800 |
|
|
|
CASH AND CASH
EQUIVALENTS - END OF YEAR |
|
$ |
133,606,392 |
|
|
$ |
146,585,601 |
|
|
|
Gulf Resources, Inc.
Web: http://www.gulfresourcesinc.com
Director of Investor Relations
Helen Xu (Haiyan Xu)
beishengrong@vip.163.com
Gulf Resources (NASDAQ:GURE)
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From Jun 2024 to Jul 2024
Gulf Resources (NASDAQ:GURE)
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From Jul 2023 to Jul 2024