Gulf Resources Announces First Quarter of 2022 Financial Results and Plan to Present 6-year Financial Plan by the end of June 2022
May 13 2022 - 4:38PM
Gulf Resources, Inc. (Nasdaq: GURE) ("Gulf Resources", “we,” or the
"Company"), a leading manufacturer of bromine, crude salt and
specialty chemical products in China, today announced financial
results for the first quarter ended March 31, 2022 as well as its
plan to provide investors with its 6 year financial plan by the end
of June 2022.
- Despite the closure of all our
operating facilities for 51 of the 90 days of the first quarter,
2022 and the additional time to restart production, the costs of
our closed facilities, and a negative non-cash charge on foreign
currency translation losses, Gulf Resources reported near breakeven
results for the first quarter. During this period, our operating
loss was reduced 98% to $65,087 from $3,281,424.
- With the strong increases in bromine
pricing, we expect the remaining quarters of 2022 and the year as a
whole will be profitable even without contributions from chemicals
and natural gas. These estimates exclude any potential nonrecurring
factors or write-offs.
- Company is in the final stages of
preparing its 6-year plan. This plan will be presented to investors
on a conference call by the end of the next month.
First Quarter 2022
- In the first quarter, net revenues increased 70% to $8,930,737
from $5,259,243. Our factories were closed for environmental
reasons until February 21, 2022. In the previous year, they were
closed until February 19, 2021. We had 39 days of operations in
2022 versus 41 days in 2021. Our daily revenues increased
78.5%.
- Gross profits increased 306% to $4,380,769 from
$1,077,854.
- Direct labor and factory overheads incurred during the plant
shutdown were $2,184,591. General and administrative expenses
increased 29% to $2,242,501. A major factor impacting G&A was a
swing in unrecorded foreign translation losses.
- The loss from operations decreased 98% to $65,087 from
$3,281,424.
- If the direct labor and factory overheads of $2,242,501 and the
foreign translation losses of $283,789 are excluded, the first
quarter of 2022 would have been very profitable, even with only 39
days of operations.
Business Segment
DataBromine
- Revenues in bromine increased 69% to $8,126,015. Tonnes
produced increased 5% to 1,005. The average selling price increased
60.5% to $8,086.
- At the present time, based on the spot price from sunsirs.com
and the current exchange rate, the selling price of bromine is
$8,270, higher than in the first quarter.
- Gross profits were $4,205,690 compared to $1,296,944, an
increase of 224%. As a percentage of sales, gross margins were
51.8% compared to 27%.
- Our utilization rate was 19% compared to 17% in the previous
year. Given that our factories were only open for 39 days versus 41
in the previous year, our utilization rate was much improved.
- Net profits in bromine were $1,348,834 versus a loss of
$1,279,565. These numbers include overhead costs of the closed
factories, G&A, and negative non-cash foreign currency
adjustments.
- Total assets in our bromine business increased to $186 million
from $144.7 million in the previous year. We have been drilling new
wells, building aqueducts, and making other improvements.
- We believe we will receive approval to open at least one and
potentially more of its closed factories in 2022.
Crude Salt
- As with bromine, the crude salt facilities were open only 39 of
the 90 days in the quarter. In addition, because of low
temperatures, winter is a very slow time for crude salt
production.
- Nonetheless, Crude salt revenues increased 68% to 754,044.
- Despite the substantial revenue increase, the cost of revenues
declined 6% to 629,560.
- Gross profit was $124,484 compared to a loss of $219,090.
- For the quarter, including its share of costs from closed
facilities, corporate overhead, and unrecorded foreign exchange
losses, crude salt lost $521,921 versus $1,009,585.
Chemicals
- Chemicals had $0 revenues and an operating loss of $513,282.
The construction of our new Yuxin factory has been delayed by
electricity restrictions as well as by the winter shutdown. On Feb.
22, 2022, we announced that we believed electricity restrictions
were being eased. As a result, we contacted our suppliers and will
have the remainder of the equipment produced and delivered, so we
can complete installation and begin testing and trial production.
At this time, we may begin commercial production during 2023.
Natural Gas
- Our natural gas business reported revenues of $50,678 on the
rental of some of our equipment. The business reported a loss of
$26,739.
- The company is still waiting for the provincial government of
Sichuan to finalize the land and resource planning for Sichuan
Province. The company has no assurances on the timing of these
plans. However, since the government of China has approved that
privately owned enterprises are allowed to participate in natural
gas production and since there is great demand for natural gas in
China, the company remains optimistic about this project.
Balance Sheet
- The company ended the quarter with cash of $105,661,999, an
increase of $9,894,736 from the level in the previous year.
- Cash per share was $10.05*.
- Shareholders’ equity was $288,068,305
- Shareholders’ equity per share was $27.39*
Cash Flow
- Despite the closure of our facilities for more than half of the
quarter, Gulf generated strong cash flow from operating activities
of $8,445,682.
- We spent $395,060 on property plant and equipment.
- Free cash flow excluding the impact of foreign currency
translation was $8,050,622.
Subsequent Event
- The Company’s wholly-owned
subsidiary, Shouguang Hengde Salt Industry Co. LTD, was registered
in April 2022 in Shandong Province, China, for future crude salt
production and trading. At present, this subsidiary does not have
any operations.
“We were very pleased with our quarter,” stated Mr. Liu Xiaobin,
the CEO of Gulf Resources. “Although our factories were closed for
51 of the 90 days and although we required time to restart them,
our bromine business still generated over $8 million in revenues
and $4 million in gross profit. Bromine pricing has remained
extremely strong. Imports have become more expensive. Capacity in
China has been reduced, because of environmental controls, and
demand remains strong. We are seeing increased use of bromine in
pharmaceuticals and other products, such as zinc-bromine batteries.
We also expect to receive permission for at least one of our closed
factories in 2022. We are extremely bullish on the opportunity in
this sector. Based on the improvements we have made to increase
productivity and our current outlook on pricing. We will be
providing investors with our 6-year plan by the end of June
2022.”
“Results in our crude salt business should improve as the
weather warms,” Mr. Liu continued. “We are very optimistic about
the opportunities for our new Yuxin chemical business. We are
planning to finish construction and begin test and trial
production, and we may begin commercial production during
2023.”
“We are also optimistic that we will receive permission to drill
for natural gas and brine in Sichuan Province. China faces great
shortages of natural gas and we hope to be part of the
solution.”
“Finally,” Mr. Liu concluded, “Our management has been working
diligently to complete our 6-year plan, which we have promised
investors. Our plan will include detailed projections through 2027.
We believe investors will be encouraged when they review our
projections. Our plan is to hold a conference call by the end of
the next month where we will review these projections with our
investors.”(*These calculations are based on the number of
shares issued of 10,517,754 shares as of March
31, 2022)
Conference CallGulf Resources management will
host a conference call on Monday, May 16, 2022 at 08:30 AM ET to
discuss financial results for the first quarter 2022.Mr. Xiaobin
Liu, CEO of Gulf Resources, will be hosting the call. The Company
management team will be available for investor questions following
the prepared remarks. To participate in this live conference call,
please dial Toll Free +1 (888) 506-0062 five to ten minutes prior
to the scheduled conference call time. International callers should
dial +1 (973) 528-0011, and please reference to “Gulf Resources” or
Participant Access Code: 448480 while dial in.The webcasting is
also available then, just simply click on the link
below:http://www.gulfresourcesinc.com/news-28.html
A replay of the conference call will be available two hours
after the call's completion and expired by Wednesday, May 23, 2022.
To access the replay, call +1 (877) 481-4010. International callers
should call +1 (919) 882-2331. The Replay Passcode is 45597.
About Gulf Resources, Inc.Gulf Resources, Inc.
operates through three wholly-owned subsidiaries, Shouguang City
Haoyuan Chemical Company Limited ("SCHC"), ShouguangYuxin Chemical
Industry Co., Limited ("SYCI"), 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, and
materials for human and animal antibiotics. 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, the risks associated with the COVID-19 pandemic outbreak,
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: Gulf Resources, Inc.
Web: |
http://www.gulfresourcesinc.com |
|
Director of Investor
Relations |
|
Helen Xu (Haiyan Xu) |
|
beishengrong@vip.163.com |
GULF RESOURCES, INC. |
AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Expressed in U.S. dollars) |
|
March 31, 2022(Unaudited) |
|
December 31, 2021(Audited) |
Current Assets |
|
|
|
|
|
|
|
Cash |
$ |
105,661,999 |
|
|
$ |
95,767,263 |
|
Accounts receivable |
|
11,102,039 |
|
|
|
14,525,807 |
|
Inventories, net |
|
515,562 |
|
|
|
691,111 |
|
Prepayments and deposits |
|
4,904,466 |
|
|
|
4,450,037 |
|
Other receivable |
|
644 |
|
|
|
644 |
|
Total Current Assets |
|
122,184,710 |
|
|
|
115,434,862 |
|
Non-Current Assets |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
182,415,845 |
|
|
|
162,657,546 |
|
Finance lease right-of use assets |
|
184,155 |
|
|
|
184,824 |
|
Operating lease right-of-use assets |
|
9,562,685 |
|
|
|
8,311,127 |
|
Prepaid land leases, net of current portion |
|
10,419,032 |
|
|
|
10,368,469 |
|
Deferred tax assets |
|
12,896,492 |
|
|
|
12,900,034 |
|
Total non-current assets |
|
215,478,209 |
|
|
|
194,422,000 |
|
Total Assets |
$ |
337,662,919 |
|
|
$ |
309,856,862 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Payable and accrued expenses |
$ |
35,036,051 |
|
|
$ |
10,530,776 |
|
Taxes payable-current |
|
1,472,666 |
|
|
|
775,708 |
|
Amount due to a related party |
|
1,854,380 |
|
|
|
1,849,044 |
|
Finance lease liability, current portion |
|
262,033 |
|
|
|
227,429 |
|
Operating lease liabilities, current portion |
|
481,540 |
|
|
|
506,579 |
|
Total Current Liabilities |
|
39,106,670 |
|
|
|
13,889,536 |
|
Non-Current Liabilities |
|
|
|
|
|
|
|
Finance lease liability, net of current portion |
|
1,778,089 |
|
|
|
1,770,526 |
|
Operating lease liabilities, net of current portion |
|
8,709,855 |
|
|
|
7,557,583 |
|
Total Non-Current Liabilities |
|
10,487,944 |
|
|
|
9,328,109 |
|
Total Liabilities |
$ |
49,594,614 |
|
|
$ |
23,217,645 |
|
|
|
|
|
|
|
|
|
Commitment and Loss Contingencies |
|
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
— |
|
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; 10,517,754 shares issued; and
10,471,924 shares outstanding as of March 31 31, 2022 and December
31, 2021 |
|
24,376 |
|
|
|
24,376 |
|
Treasury stock; 45,830 shares as of March 31, 2022 and December 31,
2021 at cost |
|
(510,329 |
) |
|
|
(510,329 |
) |
Additional paid-in capital |
|
100,569,159 |
|
|
|
100,569,159 |
|
Retained earnings unappropriated |
|
150,343,692 |
|
|
|
150,463,638 |
|
Retained earnings appropriated |
|
24,233,544 |
|
|
|
24,233,544 |
|
Accumulated other comprehensive income |
|
13,407,863 |
|
|
|
11,858,829 |
|
Total Stockholders’ Equity |
|
288,068,305 |
|
|
|
286,639,217 |
|
Total Liabilities and Stockholders’ Equity |
$ |
337,662,919 |
|
|
$ |
309,856,862 |
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
GULF RESOURCES, INC.AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(Expressed in
U.S. dollars)(UNAUDITED)
|
|
|
|
|
|
|
|
|
Three-Month Period EndedMarch 31, |
|
2022 |
|
2021 |
|
|
|
|
NET REVENUE |
|
|
|
|
|
|
|
Net revenue |
$ |
8,930,737 |
|
|
$ |
5,259,243 |
|
|
|
|
|
|
|
|
|
Direct labor and factory overheads incurred during plant
shutdown |
|
(2,184,591 |
) |
|
|
(2,613,483 |
) |
General and administrative expenses |
|
(2,242,501 |
) |
|
|
(1,736,250 |
) |
Other operating expense |
|
(8,404 |
) |
|
|
— |
|
|
|
(8,995,824 |
) |
|
|
(8,540,667 |
) |
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
(65,087 |
) |
|
|
(3,281,424 |
) |
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
Interest expense |
|
(34,692 |
) |
|
|
(36,862 |
) |
Interest income |
|
75,528 |
|
|
|
72,453 |
|
LOSS BEFORE TAXES |
|
(24,251 |
) |
|
|
(3,245,833 |
) |
|
|
|
|
|
|
|
|
INCOME
TAX BENEFIT |
|
(95,695 |
) |
|
|
743,709 |
|
|
|
|
|
|
|
|
|
NET LOSS |
$ |
(119,946 |
) |
|
$ |
(2,502,124 |
) |
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS: |
|
|
|
|
|
|
|
NET LOSS |
$ |
(119,946 |
) |
|
$ |
(2,502,124 |
) |
OTHER COMPREHENSIVE LOSS |
|
|
|
|
|
|
|
- Foreign currency translation
adjustments |
|
1,549,034 |
|
|
|
(2,184,690 |
) |
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
(LOSS) |
$ |
1,429,088 |
|
|
$ |
(4,686,814 |
) |
|
|
|
|
|
|
|
|
LOSS PER SHARE: |
|
|
|
|
|
|
|
BASIC AND DILUTED |
$ |
(0.01 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF
SHARES: |
|
|
|
|
|
|
|
BASIC AND DILUTED |
|
10,471,924 |
|
|
|
9,997,477 |
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
GULF RESOURCES, INC. |
AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Expressed in U.S. dollars) |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three-Month Period Ended March 31, |
|
2022 |
|
2021 |
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
Net loss |
$ |
(119,946 |
) |
|
$ |
(2,502,124 |
) |
Adjustments to reconcile net
loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
Interest on capital lease obligation |
|
33,622 |
|
|
|
35,538 |
|
Depreciation and amortization |
|
5,003,078 |
|
|
|
4,104,357 |
|
Unrealized exchange (gain)
loss on translation of inter-company balances |
|
283,789 |
|
|
|
104,812 |
|
Deferred tax asset |
|
95,695 |
|
|
|
(743,709 |
) |
Common stock issued for services |
|
— |
|
|
|
— |
|
Changes in assets and
liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
3,483,711 |
|
|
|
1,637,800 |
|
Inventories |
|
178,444 |
|
|
|
(162,099 |
) |
Prepayments and deposits |
|
(446,365 |
) |
|
|
(71,888 |
) |
Other receivables |
|
— |
|
|
|
— |
|
Accounts and Other payable and accrued expenses |
|
487,228 |
|
|
|
830,751 |
|
Retention payable |
|
— |
|
|
|
— |
|
Taxes payable |
|
704,492 |
|
|
|
72,758 |
|
Prepaid land leases |
|
— |
|
|
|
— |
|
Operating leases |
|
(1,258,066 |
) |
|
|
35,199 |
|
Net cash provided by
operating activities |
|
8,445,682 |
|
|
|
3,341,395 |
|
|
|
|
|
|
|
|
|
CASH FLOWS USED IN INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Purchase of property, plant
and equipment |
|
(395,060 |
) |
|
|
— |
|
Net cash used in
investing activities |
|
(395,060 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
EFFECTS OF EXCHANGE RATE
CHANGESON CASH AND CASH EQUIVALENTS |
|
1,844,114 |
|
|
|
(864,609 |
) |
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS |
|
9,894,736 |
|
|
|
2,476,786 |
|
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD |
|
95,767,263 |
|
|
|
94,222,538 |
|
CASH AND CASH EQUIVALENTS -
END OF PERIOD |
$ |
105,661,999 |
|
|
$ |
96,699,324 |
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
Gulf Resources (NASDAQ:GURE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Gulf Resources (NASDAQ:GURE)
Historical Stock Chart
From Sep 2023 to Sep 2024