Guanwei Recycling Corp. Reports 2013 Full Year Results
March 31 2014 - 7:55AM
Marketwired
Guanwei Recycling Corp. Reports 2013 Full Year Results
Sales Rebound in Final Quarter of 2013 Couldn't Offset
Previously Reported Interruption of Production and Sales Cycle in
Third Quarter Stemming From Government's New "Green Fence" Policy;
Growth Outlook for 2014 Remains Positive With No Anticipated
Negative Effects From New Government Policy; 2013 Year End Investor
Conference Call to Be Held Tuesday, April 1, 2014 at 8:00am ET
FUQING CITY, CHINA--(Marketwired - Mar 31, 2014) - Guanwei
Recycling Corp. (NASDAQ: GPRC), China's leading clean tech
manufacturer of recycled low density polyethylene (LDPE), today
announced somewhat lower full year results in 2013 mainly due to
the impact in its third quarter of a more than one week production
delay and interruption of its sales cycle, stemming from China's
tighter "Green Fence" policy with respect to imported waste
materials.
Despite finishing 2013 on a positive note, with fourth quarter
manufactured recycled LDPE sales volume up to 13,679 tons, an
increase of approximately 9% from third quarter sales -- and
slightly higher year over year average selling prices -- mainly due
to the production delays in the second half of 2013, full year
revenues from manufactured recycled LDPE decreased 3.74% to
approximately $64.81 million. The production delay in the second
half also impacted 2013 full year net income, which decreased
18.05% to approximately $9.7 million, or $0.93 per share, from
approximately $11.83 million, or $1.15 per share a year
earlier.
Environmental Leadership: A Competitive Edge
"Given the positive trends we experienced in the first half of
the year and again as we closed the year out, the full year result
was a disappointment," stated Mr. Chen Min, Chairman and CEO of the
Company. He added, "The government focus on imported waste, which
led to heightened examinations of our production and storage
facility, is not likely to impact our results in the future.
Further, as a leader in maintaining the highest possible
environmental standards, we applaud the government's focus on the
environment and believe our leadership and the investments we
continue to make in environmental improvements will permit our
Company to retain its key competitive edge."
Financial Highlights
- Revenues for the year ended December 31, 2013 were $72,263,043,
down 8.58% from $79,043,356 in 2012. The Company's principal
product, self-manufactured recycled LDPE, contributed $64,814,357
to the total, down 3.74% from $67,331,679 in 2012. The decline was
mainly a result of a decline in sales volume, which was primarily
the result of the interruption in production due to heightened
enforcement of examinations of production and storage facilities by
local authorities, a consequence of China's tighter policies with
respect to imported waste. This new "Green Fence" policy triggered
enforcement actions, which delayed production and shipping cycles
for one to two weeks in the second half of 2013. Consequently,
while the average selling price in 2013 increased 2.64% to
approximately $1,246 per ton from $1,214 per ton in the prior year,
the Company experienced a 6.15% volume decline in recycled LDPE
tons sold to 52,038 tons. In line with this, sales of sorted
non-LDPE materials declined 4.57% to $1,826,465 in 2013 as tonnage
sales declined approximately 10% to 5,521 tons, while the selling
price in 2013 for sorted non-LDPE material increased 6.09% to $331
per ton year over year. Also contributing to revenues in 2013, were
sales of 7,889 tons of raw material for $5,622,221. Raw material
was acquired in quantity to obtain discounts. This resulted in a
need to dispose of excess materials at very small profit near year
end to free up storage space. Similar sales in 2012 amounted to
$9,797,818 for 16,444 tons of excess materials.
- Net income in 2013 decreased $2,135,798 to $9,699,497 a decline
of 18.05% compared with the prior year. This mainly reflected the
year over year decrease in sales volume, and gross profit margin
(23.45% versus 26.29% excluding the sales of raw materials) for the
reasons described above, most significantly, the interruption in
second half production. Of note, during the year raw material
prices increased 9% to $787 per ton from $722 per ton in 2012.
Additionally, the company experienced increased labor costs,
reflecting ongoing challenges in recruiting factory workers, as the
education level in China continues to improve. The growth in these
costs exceeded the increase in selling prices. The Company
continues to focus on worker retention and on reducing costs for
and securing the availability of raw materials.
No Bank Debt, Increased Working Capital
The Company's financial position entering 2014 continued to be
very strong. As of December 31, 2013, the Company had no bank debt
and cash and cash equivalents of $11,887,032. Additionally, working
capital as of the same date was $45,459,190, a nearly $10 million
or 28.04% increase year over year. Contributing to the increase was
an increase in accounts receivable, an increase in advances to
suppliers, and a decrease in accounts payable, which was partially
offset by a decrease in inventories.
Looking Ahead
"The opportunity for continued growth in 2014 is there," stated
Mr. Chen. "In 2012 we increased our manufacturing capacity to
80,000 tons and, in January this year, received approvals for a
total of 135,000 tons of imported plastic waste. Our customer list
is well diversified and should insulate us from the fluctuating
demand in any one industry, as we continue to expand further into
the construction equipment industry in line with the Chinese
government's stimulus plans." He noted further, "Most importantly,
we will continue to aim to maintain a significant price advantage
over competitors who in most cases lack the scale or the
sophistication to match the environmental standards of our
facilities."
Conference Call Invitation The Company will discuss 2013 year
end results during a live conference call and webcast on Tuesday,
April 1, 2014 at 8:00am ET.
To participate in the call, interested participants should call
1-877-941-1427 when
calling within the United States or 1-480-629-9664 when
calling internationally. Please ask for the Guanwei Recycling Corp.
2013 Year End Conference Call, Conference ID: 4675415. There will
be a playback available until April 8, 2014. 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: 4675415.
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link
http://public.viavid.com/index.php?id=108398 or at ViaVid's website
at http://viavid.com.
SEE ATTACHED TABLES
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 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. |
CONSOLIDATED BALANCE SHEETS |
|
|
December 31, |
|
2013 |
|
2012 |
ASSETS |
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
11,887,032 |
|
$ |
12,083,358 |
|
Accounts receivable |
|
14,837,198 |
|
|
9,305,104 |
|
Inventories |
|
14,717,808 |
|
|
18,696,648 |
|
|
Advances to suppliers |
|
7,426,023 |
|
|
1,827,480 |
|
|
Prepaid expenses and other current assets |
|
136,396 |
|
|
131,564 |
Total current assets |
|
49,004,457 |
|
|
42,044,154 |
|
|
|
|
|
|
Property, plant and equipment, net |
|
11,074,021 |
|
|
10,223,874 |
Construction in progress |
|
534,556 |
|
|
- |
Land use right, net |
|
668,597 |
|
|
663,800 |
Other assets |
|
203,751 |
|
|
202,346 |
Total Assets |
$ |
61,485,382 |
|
$ |
53,134,174 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
612,303 |
|
$ |
4,082,982 |
Accrued expenses and other payables |
|
720,888 |
|
|
796,705 |
Value added taxes payable |
|
827,517 |
|
|
110,484 |
Amount due to shareholder |
|
934,892 |
|
|
517,863 |
Income tax payable |
|
449,667 |
|
|
1,031,092 |
Total current liabilities |
|
3,545,267 |
|
|
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
December 31, 2013 and December 31, 2012 |
|
10,408 |
|
|
10,408 |
|
Additional paid-in capital |
|
2,811,370 |
|
|
2,767,787 |
|
|
PRC
statutory reserves |
|
805,483 |
|
|
805,483 |
|
|
Accumulated other comprehensive income |
|
4,148,986 |
|
|
2,546,999 |
|
|
Retained earnings |
|
50,163,868 |
|
|
40,464,371 |
Total shareholders' equity |
|
57,940,115 |
|
|
46,595,048 |
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
61,485,382 |
|
$ |
53,134,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUANWEI RECYCLING CORP. |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME |
|
|
Year Ended December 31, |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
Net
revenue |
$ |
72,263,043 |
|
|
$ |
79,043,356 |
|
Cost
of revenue |
|
56,493,385 |
|
|
|
60,440,237 |
|
Gross
profit |
|
15,769,658 |
|
|
|
18,603,119 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling and marketing |
|
494,394 |
|
|
|
417,597 |
|
General and administrative |
|
2,232,352 |
|
|
|
2,297,782 |
|
Total
operating expenses |
|
2,726,746 |
|
|
|
2,715,379 |
|
|
|
|
|
|
|
|
|
Income from operations |
|
13,042,912 |
|
|
|
15,887,740 |
|
|
|
|
|
|
|
|
|
Other
income (expenses) |
|
|
|
|
|
|
|
Interest income |
|
56,387 |
|
|
|
55,781 |
|
Interest expense |
|
(43,583 |
) |
|
|
- |
|
Net
foreign exchange gain |
|
49,797 |
|
|
|
62,806 |
|
Gain
(loss) on disposal of property and equipment |
|
3,602 |
|
|
|
(33,452 |
) |
Government subsidy |
|
32,308 |
|
|
|
- |
|
Miscellaneous |
|
(31,494 |
) |
|
|
6,372 |
|
Total
other income |
|
67,017 |
|
|
|
91,507 |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
13,109,929 |
|
|
|
15,979,247 |
|
|
|
|
|
|
|
|
|
Income taxes |
|
3,410,432 |
|
|
|
4,143,952 |
|
|
|
|
|
|
|
|
|
Net
income |
|
9,699,497 |
|
|
|
11,835,295 |
|
|
|
|
|
|
|
|
|
Other
comprehensive income - foreign currency translation
adjustments |
|
1,601,987 |
|
|
|
284,318 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
$ |
11,301,484 |
|
|
$ |
12,119,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted |
$ |
0.93 |
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
-
basic and diluted |
|
10,407,839 |
|
|
|
10,293,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GUANWEI RECYCLING CORP. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
Year Ended December 31, |
|
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Net
income |
|
$ |
9,699,497 |
|
|
$ |
11,835,295 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities |
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
1,089,846 |
|
|
|
884,224 |
|
Amortization of land use rights |
|
|
15,713 |
|
|
|
15,432 |
|
(Gain) loss on disposal of property and equipment |
|
|
(3,602 |
) |
|
|
33,452 |
|
Bad
debt |
|
|
- |
|
|
|
69 |
|
Imputed interest on amount due to shareholder |
|
|
43,583 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(5,173,867 |
) |
|
|
(4,791,673 |
) |
Inventories |
|
|
4,503,312 |
|
|
|
(1,700,239 |
) |
Advances to suppliers |
|
|
(5,469,806 |
) |
|
|
(1,826,813 |
) |
Value
added taxes refundable |
|
|
- |
|
|
|
1,223,236 |
|
Prepaid expenses and other current assets |
|
|
(2,913 |
) |
|
|
790,864 |
|
Other
assets |
|
|
4,846 |
|
|
|
4,759 |
|
Accounts payable |
|
|
(3,551,548 |
) |
|
|
(4,728,146 |
) |
Accrued expenses and other payables |
|
|
(106,791 |
) |
|
|
(2,264 |
) |
Value
added taxes payable |
|
|
704,352 |
|
|
|
110,443 |
|
Income tax payable |
|
|
(605,664 |
) |
|
|
(122,679 |
) |
Net
cash provided by operating activities |
|
|
1,146,958 |
|
|
|
1,725,960 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(2,134,849 |
) |
|
|
(2,694,126 |
) |
Proceeds from disposal of property and equipment |
|
|
4,846 |
|
|
|
- |
|
Net
cash used in investing activities |
|
|
(2,130,003 |
) |
|
|
(2,694,126 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
Advance from shareholder |
|
|
417,029 |
|
|
|
517,863 |
|
Net
cash flows provided by financing activities |
|
|
417,029 |
|
|
|
517,863 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate change on cash |
|
|
369,690 |
|
|
|
100,858 |
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents |
|
|
(196,326 |
) |
|
|
(349,445 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at the beginning of year |
|
|
12,083,358 |
|
|
|
12,432,803 |
|
Cash
and cash equivalents at the end of year |
|
$ |
11,887,032 |
|
|
$ |
12,083,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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