Gulf Resources Reports First Quarter 2013 Financial Results
SHOUGUANG, China, May 9, 2013 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2013.
First Quarter 2013 Highlights
*Revenue was $22.5 million, a year-over-year decrease of 5%
*Gross profit was $4.5 million, a year-over-year decrease of 33%
*Gross margin decreased to 20 % as compared to 28% in the first quarter of
*Income from operations was $2.6 million as compared to $4.6 million in the
first quarter of 2012
*Operating margin was 12% compared to 19% for the first quarter of 2012
*Net income was $1.9 million or $0.05 per basic and diluted share, versus
$3.3 million, or $0.10 per basic and diluted share a year ago,
*Cash totaled $78.5 million as of March 31, 2013
"Due to the lower demand of bromine as influenced by continuing macroeconomic
tightening policy imposed by the Chinese government, the average selling price
of bromine decreased from $3,569 per tonne for the first quarter in 2012 to
$3,053 per tonne for the same period this year , we reported lower operating
performance in this quarter in comparison to the same period of last year as
we were unable to offset the deceasing revenue of bromine segment by those
increasing from crude salt and chemical products segments," said Mr. Xiaobin
Liu, CEO of the Company.
First Quarter 2013 Results
Gulf Resources' net revenue was $22,502,580 for three-month period ended March
31, 2013, a decrease of approximately $1.3 million (or 5%) as compared to the
same period in 2012. This decrease was primarily attributable to the reduction
of our bromine segment products, which decreased from $13,453,882 for the
three-month period ended March 31, 2012 to $11,734,367 for the same period in
2013, a decrease of approximately 13%.
Revenue from the crude salt segment increased from $2,274,924 for the
three-month period ended March 31, 2012 to $2,450,786 for the same period in
2013, an increase of approximately 8%. Revenue from the chemical products
segment slightly increased from $8,079,868 for the three-month period ended
March 31, 2012 to $8,317,427 for the same period in 2013, an increase of
Gross profit was $4,517,108, or 20%, of net revenue for three-month period
ended March 31, 2013 compared to $6,692,792, or 28%, of net revenue for the
same period in 2012. The decrease in gross profit percentage was primarily
attributable to a drop in the margin percentage in all of our three segments.
The total research and development costs incurred for the three-month periods
ended March 31, 2013 and 2012 were $17,702 and $42,798, respectively, a
decrease of 59%. Research and development costs for the three-month period
ended March 31, 2013and 2012 represented raw materials used by Shouguang Yuxin
Chemical Industry Co., Ltd for testing the manufacturing routine.
General and administrative expenses were $1,969,217 for the three-month period
ended March 31, 2013, a decrease of $142,988 (or 7%) as compared to $2,112,205
for the same period in 2012. The decrease of $142,988 was primarily due to the
decrease in legal cost in connection with class action litigation from
$411,289 for the three-month period ended March 31,2012 to $93,200 for the
same period in 2013 since the workload was reduced during the settlement stage
discussion, partially offset by an increase in the depreciation of the newly
acquired office units in a commercial building in September 2012.
Income from operations was $2,605,448 for the three-month period ended March
31, 2013 (or 12% of net revenue), a decrease of $1,971,651, or approximately
43%, over income from operations for the same period in 2012. The decrease
resulted primarily from the decrease of selling price of our bromine segment
and the increase in depreciation and amortization of the plant and machinery
due to the enhancement projects from in the second quarter of 2012 to our
extraction wells and transmission channels and ducts, which accelerated the
depreciation and amortization of the plant and machinery.
Other operating income, which represented the sales of wastewater to some of
our customers, was $95,562 for the three-month period ended March 31, 2013,
representing an increase of $38,488 (or 67%) from $57,074 for the same period
Other income, net of $19,837 represented bank interest income, net of capital
lease interest expense for the three -month period ended March 31, 2013, a
decrease of $24,641 (or approximately 55%) as compared to the same period in
2012, mainly due to lower average bank balance held in the period ended March
31,2013 compared to period ended March 31,2012.
Net income was $1,882,965 for the three-month period ended March 31, 2013, a
decrease of $1,404,142 (or approximately 43%) compared to the same period in
2012. This decrease was primarily attributable to the decrease of selling
price for our bromine segment due to the macro-economic tightening policy
imposed by the PRC government to slow down the economy.
Income taxes were $0.7 million for the first quarter of 2013, a decrease of
44.0% from $1.3 million for the first quarter of 2012. The Company's effective
tax rate was 28% and 29% forthe three-month periods ended March 31, 2013 and
As of March 31, 2013, Gulf Resources had cash of $78.5 million, total
liabilities of $12.7 million, and stockholders' equity of $266.9 million. For
the three months ended March 31, 2013, the Company had working capital of
$105.3 million. As of March 31, 2013, the Company generated $13.3 million in
cash flow from operations, and used $290,071 in investing activities for
additions of prepaid land leases.
On April 18, 2013 the Company announced that its board of directors has
approved a new share repurchase program under which the Company is authorized,
but not obligated, to purchase up to $2 million of its issued and outstanding
shares of common stock from time to time over the next 12 months. Please refer
to the link
for further details
On April 30, 2013, the class action parties of the class action litigation
executed a stipulation and agreement of settlement. The proposed settlement is
subject to review and approval of the Court. The Company currently cannot
estimate the amount or range of the overall costs in connection with this
litigation. The Company believes that such costs will be reimbursed by the
insurance company to the extent covered by the insurance policies.
Then Company's 2013 Annual Meeting of the stockholders will be held on June
18, 2013, at 10:00 a.m. (local time), at the Company's headquarters located at
Level 11, Vegetable Building, Industrial Park of the East City, Shouguang City
, Shandong Province 262700
"Due to the cold weather in winter, the Chinese New Year, as well as the
macro-economic tightening policy imposed by the PRC government, the Company
did not perform well during the first quarter in 2013. But we should also see
that the selling price of bromine has increased to $3,053 per tonne during
this quarter, as compared to $2,954 per tonne in the fourth quarter in 2012.
We believe that this indicates an increasing demand of bromine from the
downstream industrial customers. Therefore, we are confidence that we can
achieve the earning targets set forth in the financial guidance announced in
January this year," said Mr. Xiaobin Liu, CEO of the Company
Gulf Resources' management will host a conference call on Friday, May 10, 2013
at 8:00 AM Eastern Time to discuss its financial results for the first quarter
ended March 31, 2013.
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
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
A replay of the conference call will be available for 14 days starting from
11:00 AM ET on Friday, May 10, 2013. To access the replay, dial +1 (855)
859-2056. International callers should dial +1 (404) 537-3406. The pass code
This conference call will be broadcast live over the Internet and can be
accessed by all interested parties by clicking
onhttp://www.gulfresourcesinc.com/events.html. Please access the link at
least fifteen minutes prior to the start of the call to register, download,
and install any necessary audio software. For those unable to participate
during the live broadcast, a 90-day replay will be available shortly after the
call by accessing the same link.
About GulfResources, Inc.
Gulf Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang
City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin Chemical
Industry Co., Limited ("SYCI"). 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 & gas field explorations and as papermaking
chemical agents. For more information, visitwww.gulfresourcesinc.com.
Certain 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.
CONTACT: Max Ma
Gulf Resources, Inc. logo
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