Guanwei Recycling Corp. Reports Third Quarter Results
November 13 2013 - 7:25AM
Marketwired
Guanwei Recycling Corp. Reports Third Quarter Results
Positive Trends Continued in Selling Prices, Raw Material and
Labor Costs but an Approximately One Week Unplanned Interruption in
Production Slightly Lowered Results; Company Maintains Favorable
Outlook for Remainder of the Year; Investor Conference Call to Be
Held Thursday, November 14th at 8:00am ET
FUQING CITY, CHINA--(Marketwired - Nov 13, 2013) - Guanwei
Recycling Corp. (NASDAQ: GPRC), China's leading clean tech
manufacturer of recycled low density polyethylene (LDPE), reported
today that the positive trends it began to see in the second half
of 2012 in selling prices and stabilized labor and raw material
costs continued through its third quarter ended September 30, 2013.
An approximately one week interruption in production and shipping
cycles in the 2013 third quarter, however, slightly lowered
revenues and net income in the quarter compared with the prior
year.
Mr. Chen Min, Chairman and CEO of the Company, explained that
the interruption in production was a consequence of heightened
inspections of its facilities by various government agencies
stemming from the government's new "Green Fence" policy which
tightens requirements for imported waste materials.
"Going forward," he said, "we anticipate maintaining our
industry leading environmental practices and see no material impact
on our business from this new policy. We are therefore maintaining
our favorable outlook for the remainder of the year, based on
anticipated moderately improved demand and selling prices for our
products, in an improving economy, coupled with continuing
anticipated stabilization in our labor and raw material costs."
Financial Highlights
- Reflecting the approximately one week interruption in
production described above, net revenues in the 2013 third quarter
were $16,299,676, down 8.97% from the same period last year. This
decrease reflected a 9.61% decrease in year over year sales of
manufactured recycled LDPE from $17,430,616 to $15,755,342 in the
2013 third quarter, and sales of $544,334 of sorted non-LDPE
materials in the 2013 third quarter, up 14.51% from $475,358 in the
same period in 2012. Revenues from LDPE sales in the 2013 third
quarter reflected a 3.89% increase in average selling prices in the
quarter to approximately $1,255 per ton, compared with
approximately $1,208 per ton a year earlier. The average selling
price in this year's first quarter was $1,223 per ton. Labor costs
in the 2013 third quarter remained steady at approximately $51 per
ton, while the per ton raw material costs for recycled LDPE and
sorted non-LDPE material increased 7.6% to $750, compared with $697
in the 2012 third quarter, and $748 in the second quarter this
year. The reduced LDPE sales volume in the 2013 third quarter of
12,553 tons, compared with 14,427 tons in the corresponding quarter
last year.
- Net income in the 2013 third quarter was $2,857,806, or $0.27
per share, compared with $3,622,832, or $0.35 per share in the same
quarter last year. The diluted weighted average number of common
shares in both periods was 10,407,839. The decrease in net income
in the 2013 third quarter primarily reflects the reduced production
volume stemming from the approximately one week interruption in the
period in production and sales cycles as previously described.
Gross margins in the quarter also were impacted by the reduced
production, as many of the costs relating to production are fixed
costs.
- For the nine months ended September 30, 2013, revenues from the
sale of manufactured recycled LDPE were $47,534,161, down 0.73%
from the same period last year. Primarily reflecting the
approximately week long interruption of production in the 2013
third quarter, in the 2013 nine month period the sales volume of
manufactured recycled LDPE was down 3.05% to 38,359 tons from
39,565 tons in the corresponding period the prior year. This was
somewhat offset by a 2.4% increase in selling price in the first
nine months of 2013 to approximately $1,239 per ton, from $1,210
per ton in the year earlier period. Year over year revenues from
sales of sorted non-LDPE material also declined in the 2013 nine
month period by 6.09% to $1,337,668. A 3.5% year over year increase
in average selling price to $325 per ton could not fully offset a
9.61% decline in year over year tonnage sold to 4,119 tons.
Combined sales of manufactured LDPE and sorted non-LDPE materials
were $48,871,829 in the first nine months of 2013. In 2012,
revenues in the comparable period of $52,772,402 also included
$3,462,238 in sales of excess raw material inventory. The cost of
plastic waste raw material in the first nine months of 2013
increased 5.88% to $756 per ton, compared with the same period in
2012, while labor costs remained stable throughout 2013 at
approximately $51 per ton.
- Net income in the first nine months of 2013 decreased $389,922,
or 4.41%, to $8,461,196 or $0.81 per share, from $8,851,118, or
$0.86 per share in the same period last year. These results
primarily reflect the decline in sales volume stemming from the
approximately one week long interruption of production and sales
cycles in the 2013 third quarter, and the resulting slight decline
in margins. The diluted weighted average number of common shares
outstanding was 10,407,839 in the first nine months of 2013, as
compared with 10,254,521 in the year earlier period.
No Bank Debt, Increased Working Capital and Cash and Cash
Equivalents
As of the end of the 2013 third quarter, the Company continued
to improve its already strong financial position. As of September
30, 2013, working capital increased approximately $9.37 million to
$44,877,259 from $35,505,028 as of December 31, 2012. This
reflected, in part, an increase in cash and cash equivalents to
$15,643,526, and a decrease in accounts receivable reflecting
continuing efforts to speed collections from clients. The Company
also reported that it had no outstanding bank debt as of the end of
the quarter.
Continuing Optimism
"Although disappointed by the week long interruption in our
production and sales volume in the quarter," Mr. Chen stated, "we
continue to be pleased by the steady improvements in other core
elements of our business, as well as growing indications of an
improving economic environment in China. By retaining the
advantages that come from our environmental leadership -- including
the very competitive selling prices we expect to continue to be
able to offer our customers -- we remain very confident in a
favorable growth outlook for our Company."
Conference Call Invitation
The Company will discuss 2013 third quarter results during a
live conference call and webcast on Thursday, November 14th, at
8:00am ET.
To participate in the call, interested participants should call
1-877-941-1429 when
calling within the United States or 1-480-629-9857 when
calling internationally. Please ask for the Guanwei Recycling Corp.
2013 Third Quarter Conference Call, Conference ID:. 4650133 There
will be a playback available until November 21, 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: 4650133
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link
http://public.viavid.com/index.php?id=106885 or at ViaVid's website
at http://viavid.com.
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 |
|
|
|
|
|
|
|
|
September 30, 2013 |
|
December 31, 2012 |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
15,643,526 |
|
$ |
12,083,358 |
|
Accounts receivable |
|
|
6,895,178 |
|
|
9,305,104 |
|
Inventories |
|
|
21,341,585 |
|
|
18,696,648 |
|
Advances to suppliers |
|
|
3,436,370 |
|
|
1,827,480 |
|
Value added tax refundable |
|
|
421,737 |
|
|
- |
|
Prepaid expenses and other current assets |
|
|
188,271 |
|
|
131,564 |
|
|
Total
current assets |
|
|
47,926,667 |
|
|
42,044,154 |
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
10,678,366 |
|
|
10,223,874 |
Land use right, net |
|
|
669,728 |
|
|
663,800 |
Other assets |
|
|
204,110 |
|
|
202,346 |
|
|
Total
Assets |
|
$ |
59,478,871 |
|
$ |
53,134,174 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
663,151 |
|
$ |
4,082,982 |
|
Accrued expenses and other payables |
|
|
612,603 |
|
|
796,705 |
|
Value added taxes payable |
|
|
- |
|
|
110,484 |
|
Amount due to shareholder |
|
|
848,315 |
|
|
517,863 |
|
Income tax payable |
|
|
925,339 |
|
|
1,031,092 |
|
|
Total
current liabilities |
|
|
3,049,408 |
|
|
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
September 30, 2013 and December 31, 2012 |
|
|
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 |
|
|
3,920,218 |
|
|
2,546,999 |
|
Retained earnings |
|
|
48,925,567 |
|
|
40,464,371 |
|
|
Total
shareholders' equity |
|
|
56,429,463 |
|
|
46,595,048 |
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders' equity |
|
$ |
59,478,871 |
|
$ |
53,134,174 |
|
|
|
|
|
|
GUANWEI RECYCLING CORP. |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME |
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
16,299,676 |
|
|
$ |
17,905,974 |
|
|
$ |
48,871,829 |
|
$ |
52,772,402 |
|
Cost of revenue |
|
|
11,866,421 |
|
|
|
12,374,450 |
|
|
|
35,424,151 |
|
|
38,793,696 |
|
|
|
Gross
profit |
|
|
4,433,255 |
|
|
|
5,531,524 |
|
|
|
13,447,678 |
|
|
13,978,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
131,103 |
|
|
|
125,536 |
|
|
|
403,574 |
|
|
293,286 |
|
|
General and administrative |
|
|
555,375 |
|
|
|
524,112 |
|
|
|
1,725,905 |
|
|
1,647,140 |
|
|
|
Total
operating expenses |
|
|
686,478 |
|
|
|
649,648 |
|
|
|
2,129,479 |
|
|
1,940,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
3,746,777 |
|
|
|
4,881,876 |
|
|
|
11,318,199 |
|
|
12,038,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
15,218 |
|
|
|
14,395 |
|
|
|
43,160 |
|
|
42,903 |
|
|
Gain (loss) on disposal of property, plant and
equipment |
|
|
3,589 |
|
|
|
(1,046 |
) |
|
|
3,589 |
|
|
(1,046 |
) |
|
Net foreign exchange gain (loss) |
|
|
36,171 |
|
|
|
(92,074 |
) |
|
|
83,236 |
|
|
(121,754 |
) |
|
Miscellaneous |
|
|
(21,441 |
) |
|
|
3,455 |
|
|
|
(31,243 |
|
|
3,455 |
|
|
|
Total
other income (expense) |
|
|
33,537 |
|
|
|
(75,270 |
) |
|
|
98,742 |
|
|
(76,442 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
3,780,314 |
|
|
|
4,806,606 |
|
|
|
11,416,941 |
|
|
11,961,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
922,508 |
|
|
|
1,183,774 |
|
|
|
2,955,745 |
|
|
3,110,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
2,857,806 |
|
|
|
3,622,832 |
|
|
|
8,461,196 |
|
|
8,851,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income - foreign currency
translation adjustments |
|
|
335,231 |
|
|
|
(47,331 |
) |
|
|
1,373,219 |
|
|
166,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
3,193,037 |
|
|
$ |
3,575,501 |
|
|
$ |
9,834,415 |
|
$ |
9,017,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted |
|
$ |
0.27 |
|
|
$ |
0.35 |
|
|
$ |
0.81 |
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
basic and diluted |
|
|
10,407,839 |
|
|
|
10,407,839 |
|
|
|
10,407,839 |
|
|
10,254,521 |
|
|
|
|
|
|
|
GUANWEI RECYCLING CORP. |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
8,461,196 |
|
|
$ |
8,851,118 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
785,250 |
|
|
|
622,531 |
|
Amortization of land use rights |
|
|
11,742 |
|
|
|
11,564 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
(3,589 |
) |
|
|
1,046 |
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,626,799 |
|
|
|
(1,589,634 |
) |
Inventories |
|
|
(2,116,631 |
) |
|
|
(4,683,299 |
) |
Advances to suppliers |
|
|
(1,540,560 |
) |
|
|
- |
|
Value
added taxes refundable |
|
|
(416,524 |
) |
|
|
(581,644 |
) |
Prepaid expenses and other current assets |
|
|
(54,407 |
) |
|
|
770,237 |
|
Other
assets |
|
|
3,621 |
|
|
|
3,567 |
|
Accounts payable |
|
|
(3,485,792 |
) |
|
|
(685,283 |
) |
Accrued expenses and other payables |
|
|
(210,404 |
) |
|
|
15,870 |
|
Value
added taxes payable |
|
|
(112,047 |
) |
|
|
- |
|
Income tax payable |
|
|
(131,777 |
) |
|
|
33,083 |
|
Net
cash provided by operating activities |
|
|
3,816,877 |
|
|
|
2,769,156 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
|
|
Proceeds from disposal property, plant and equipment |
|
|
4,828 |
|
|
|
- |
|
Purchase of property, plant and equipment |
|
|
(956,300 |
) |
|
|
(2,412,469 |
) |
Net
cash used in investing activities |
|
|
(951,472 |
) |
|
|
(2,412,469 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
Advance from shareholder |
|
|
330,452 |
|
|
|
383,118 |
|
Net
cash provided by financing activities |
|
|
330,452 |
|
|
|
383,118 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate change on cash |
|
|
364,311 |
|
|
|
64,288 |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents |
|
|
3,560,168 |
|
|
|
804,093 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at the beginning of period |
|
|
12,083,358 |
|
|
|
12,432,803 |
|
Cash
and cash equivalents at the end of period |
|
$ |
15,643,526 |
|
|
$ |
13,236,896 |
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
3,087,522 |
|
|
$ |
3,077,637 |
|
Non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Accrued expense related to purchases of property, plant and
equipment |
|
$ |
8,047 |
|
|
$ |
79,258 |
|
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
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