PLTWF Planet 13 Holdings Inc (PK)

Plastec Technologies, Ltd. - (OTCBB: PLTYF (ordinary shares), PLTWF (warrants), PLTEF (units)) (“Plastec” or the “Company”), an integrated plastic manufacturing services provider that operates in the People’s Republic of China and Thailand, today reported unaudited financial results for the three months ended March 31, 2014. See attached tables at the end of this release in Hong Kong dollars (HKD). All other amounts in this press release are presented in U.S. dollars (USD) with a conversion rate of US$1.0: HK$7.8.

Financial and Operating Highlights for the Three Months Ended March 31, 2014

(all comparisons to prior year)

• Sales of $35.2 million, a decrease of 6.9% as a result the Company reducing lower margin product orders from existing customers
• Gross margin of 24.0%, compared to 20.7%, resulting primarily production of higher margin products
• Adjusted EBITDA of $8.3 million, compared to $7.1 million
• Net income of $7.9 million, or $0.62 per diluted share based on 12.9 million diluted shares outstanding, compared to $1.6 million, or $0.12 per diluted share based on 13.8 million diluted shares outstanding
• $8.8 million in cash from operations for the three months ended March 31, 2014

Balance Sheet Highlights

• $67.3 million in working capital at March 31, 2014, compared to $58.0 million at March 31, 2013
• Book value per share of $8.35 at March 31, 2014

Subsequent Events

On April 10, 2014, Plastec’s Board of Directors declared a one-time cash dividend of $0.20 per ordinary share. The dividend was paid on or about May 9, 2014 to shareholders of record as of April 25, 2014.

Management Comments

Mr. Kin Sun Sze-To, Chairman of Plastec, stated, “Our first quarter results were strong in relation to challenging sales conditions in a number of the consumer industries we serve. We continued to focus on bottom line performance, avoiding lower margin orders for the sole benefit of increasing sales.”

 

Selected Financial Highlights

(USD in millions, except number of shares and per share data)

(Results and percentages rounded to the nearest tenth)

          3 months ended March 31, 2014   3 months ended March 31, 2013  

PercentageChange

Sales $35.2 $37.8 -6.9% Cost of Revenues $26.7 $30.0 -10.8% Gross Profit $8.4 $7.8 7.9% Gross Profit Ratio 24.0% 20.7%   Income from Operations $8.7 $2.9 195% Operating Margin 24.7% 7.8% 216%   Net Income $7.9 $1.6 405.5% Net Margin 22.4% 4.1%  

Weighted Average Number of DilutedShares Outstanding

12,938,128 13,785,561 Diluted EPS $0.62 $0.12 Adjusted EBITDA* $8.3 $7.1 16.7%

* Reconciliation table at end of release

 

Balance Sheet Highlights (USD in Millions)

   

3/31/2014

  12/31/2013  

Percentage Change

Cash and Cash Equivalents $57.0 $44.7 27.5% Total Current Assets $103.5 $96.6 7.2% Total Assets $150.7 $148.1 1.8% Working Capital $67.3 $58.0 16.1% Total Long-term Debt 6.4 6.4 Total Liabilities $42.6 $45.0 -5.4% Shareholders’ Equity $108.1 $103.0 4.9% Total Liabilities and Shareholders' Equity $150.7 $148.1 1.8%  

Financial Review

• Total sales for three months ended March 31, 2014 decreased to $35.2 million from $37.8 million in the prior-year period. The decline in total sales was largely due to a reduction in lower margin product orders.
• The Company’s gross profit increased by 7.9% to $8.4 million during the period ended March 31, 2014, and gross profit margin improved to 24.0% from 20.7% for the prior-year period. The increase in gross profit and margin was due to a number of factors including a focus on new models from existing customers, which typically carry a much higher margin than second generation orders, and a reduction in costs of revenues resulting from the Company’s efforts to further streamline its manufacturing process.
• Income from operations was $8.7 million, or 24.7% of revenues, during period ended March 31, 2014, compared to $2.9 million, or 7.8%, in the prior-year period.
• Adjusted EBITDA for the three months ended March 31, 2014 was $8.3 million, compared to $7.1 million in the prior-year period.
• Net income for the period ended March 31, 2014 was $7.9 million or $0.62 per share based on approximately 12.9 million weighted average diluted shares outstanding, compared to $1.6 million, or $0.12 per share based on approximately 13.8 million weighted average diluted shares, in the prior-year.

Securities Repurchase Update

The Company has a 12-month repurchase plan in place through September 25, 2014, allowing Plastec to purchase up to $5 million of its ordinary shares and warrants in both open market and privately negotiated transactions at the discretion of the Company’s management and as market conditions allow. As of the date of this press release, Plastec had repurchased 586,010 ordinary shares and no warrants under the current plan.

The Company also announced today that it will expand the scope of the repurchase plan further to include Plastec’s units (under ticker “PLTEF”), with all other terms of the repurchase plan remaining unchanged.

About Plastec

Originally founded in 1993 by Chairman and CEO, Mr. Kin Sun Sze-To, Plastec is an integrated plastic manufacturing services provider that operates in the People’s Republic of China and Thailand through its wholly owned subsidiaries. With over 4,700 employees, Plastec provides precision plastic manufacturing services from mold design and fabrication, plastic injection manufacturing to secondary-process finishing, as well as parts assembly.

Forward Looking Statements

This press release contains “forward-looking statements.” These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements.

  PLASTEC TECHNOLOGIES, LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)    

For the 3-monthperiod ended March 31,

2014   2013   HK$   HK$   Revenues 274,253 294,686 Cost of revenues (208,547 )   (233,772 ) Gross profit 65,706 60,914   Operating income/(expenses), net Selling, general and administrative expenses (29,850 ) (37,944 ) Other income 57 86 Gain on disposal of a subsidiary 32,162 - Written-off of property, plant and equipment (440 ) -

Gain/(loss) on disposal of property, plant andequipment

188

   

(67

)

Total operating income/(expenses), net 2,117     (37,925 )   Income from operations 67,823 22,989   Interest income 167 51 Interest expense (420 )   (388 ) Income before income tax expense 67,570 22,652   Income tax expense (6,005 )   (10,474 ) Net income 61,565 12,178   Other comprehensive income/(expenses) Foreign currency translation adjustment (2,151 )   1,318  

Comprehensive income attributable toPlastec Technologies, Ltd.

59,414

   

13,496

    Net income per share:   Weighted average number of ordinary shares 12,938,128     13,785,561    

Weighted average number of dilutedordinary shares

12,938,128

   

13,785,561

   

Basic income per shareattributable to Plastec Technologies, Ltd.

HK$4.8

   

HK$0.9

   

Diluted income per shareattributable to Plastec Technologies, Ltd.

HK$4.8

   

HK$0.9

      PLASTEC TECHNOLOGIES, LTD. CONSOLIDATED BALANCE SHEETS (Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)      

(Unaudited)

 

(Audited)

March 31,

December 31,

 

2014

 

2013

HK$

HK$

ASSETS

  Current assets Cash and cash equivalents 444,811 348,901

Trade receivables, net of allowances for doubtful accounts ofHK$nil, and HK$nil as of December 31, 2013 and March 31,2014 respectively

237,548

269,419

Inventories 91,539 107,058 Deposits, prepayment and other receivables   33,626   28,139 Total current assets 807,524 753,517   Property, plant and equipment, net 330,018 364,149 Prepaid lease payments, net 20,838 22,167 Other assets 2,517 2,325 Deferred tax assets 13,853 12,225 Intangible assets   438   438 Total assets   1,175,188   1,154,821

LIABILITIES AND SHAREHOLDERS’ EQUITY

                  Current liabilities Bank borrowings 33,485 37,782 Trade payables 87,979 105,428 Other payables and accruals 95,712 116,608 Dividend payables 20,183 - Tax payable   44,984           41,389 Total current liabilities 282,343 301,207   Bank borrowings   50,000           50,000 Total liabilities   332,343           351,207   Commitments and contingencies - -   Shareholders’ equity

Ordinary shares (US$0.001 par value; 100,000,000 authorized12,938,128 and 12,938,128 shares issued and outstandingas of December 31, 2013 and March 31, 2014 respectively)

 

101

 

101

Additional paid-in capital 26,455 26,455 Accumulated other comprehensive income 15,750 17,901 Retained earnings   800,539           759,157 Total shareholders’ equity   842,845           803,614                 Total liabilities and shareholders’ equity   1,175,188       1,154,821   PLASTEC TECHNOLOGIES, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)      

For the 3-monthperiod ended March 31,

  2014     2013     HK$ HK$ Operating activities Net income 61,565 12,178 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,550 32,217 Gain on disposal of a subsidiary (32,162 ) - Loss on written-off of property, plant and equipment 440 - Loss/(gain) on disposal of property, plant and equipment (186 ) 67 Deferred tax charge (985 ) - Changes in operating assets and liabilities: Trade receivables 31,871 21,523 Inventories 15,519 16,323 Deposits, prepayment and other receivables (5,513 ) (8,087 ) Trade payables (17,449 ) (27,353 ) Other payables and accruals (20,308 ) (26,788 ) Tax payables   6,990     10,474   Net cash provided by operating activities   68,332     30,554     Investing activities Purchase of property, plant and equipment (8,925 ) (11,954 ) Proceeds from disposal of a subsidiary 46,052 - Proceeds from disposal of property, plant and equipment 220 350 Deposits for purchase of property, plant and equipment   (2,517 )   (116 ) Net cash provided/(used) in investing activities   34,830     (11,720 )   Financing activities Repurchases of securities - (28,080 ) Net repayment of bank borrowings   (4,297 )   (19,587 ) Net cash used in financing activities   (4,297 )   (47,667 )   Effect of exchange rate changes on cash and cash equivalents (2,955 ) 1,318   Net increase/(decrease) in cash and cash equivalents 98,865 (28,833 ) Cash and cash equivalents, beginning of the period   348,901     309,862   Cash and cash equivalents, end of the period   444,811     282,347     Supplementary disclosures of cash flow information: Interest paid, net   254     337   Income taxes paid   -     -       PLASTEC TECHNOLOGIES, LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (Hong Kong dollars in thousands)     Three Months Ended March 31   March 31 2014   2013 HKD   HKD Net Income (note) 29,598 12,159   Plus Interest expenses 420 388 Minus Interest income (167 ) (51 ) Plus Income tax expenses 6,005 10,474     Income from operations 35,856 22,970   Plus Depreciation and Amortization 28,550 32,217       Adjusted EBITDA 64,406     55,187     Note: Excl. other income and gain/(loss) on disposals/written-off  

This press release includes financial information (EBITDA) not derived in accordance with generally accepted accounting principles or international financial reporting standards. Plastec believes that the presentation of such financial information provides more useful information to investors as it indicates more clearly Plastec’s future performance. EBITDA was derived by taking earnings before interest expense (net), taxes, depreciation and amortization

Plastec Technologies, Ltd.HL Ning, Chief Financial Officerning@plastec.com.hkorEli D. Scher, Directoreli@plastec.com.hkorINVESTOR RELATIONS:The Equity Group Inc.Adam Prior, Senior Vice President(212) 836-9606aprior@equityny.comorIn ChinaKatherine Yao, Associate86 10 6587 6435kyao@equityny.com