Guanwei Recycling Second Quarter Results Reflect Continuing Favorable Trends

Guanwei Recycling Second Quarter Results Reflect Continuing Favorable Trends 
FUQING CITY, CHINA -- (Marketwired) -- 08/14/13 --  
Sales of Self-Manufactured Recycled LDPE Rose on Slightly Higher
Volume and Increased Selling Prices While Labor and Raw Material
Costs Continued To Stabilize 
Company Sees Product Demand and Selling Prices Continuing to Rise
Moderately Through Year End 
2013 Second Quarter Investor Conference Call to Be Held Friday,
August 16th at 8:00am ET 
Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech
manufacturer of recycled low density polyethylene (LDPE), today
reported that in its second quarter ended June 30, 2013, it
experienced a continuation of the positive trends in sales and costs
that began to develop in the second half of 2012. Sales in the
quarter of self manufactured recycled LDPE rose 5.21% compared with
the prior year quarter, based on moderate gains in selling prices as
well as sales volume, while raw material and labor costs in the
quarter continued to stabilize. Consequently, there was further
improvement in the gross profit margin leading to a 2.37% increase in
net income compared with the second quarter of last year. 
Financial Highlights 


 
--  Net revenues in the second quarter of 2013 were $17,732,347, including
    $17,266,070 in sales of manufactured recycled LDPE and $466,277 in
    sales of sorted non-LDPE materials. 2013 second quarter sales of
    manufactured recycled LDPE were up 5.21% compared with the $16,410,448
    in sales of manufactured recycled LDPE in the same period last year.
    Revenues in last year's second quarter of $18,694,938 also included
    sales of sorted non-LDPE materials of $511,361 as well as $1,773,129
    in excess inventory that was sold with a negligible markup to recoup
    costs. The increased sales of manufactured recycled LDPE in the 2013
    second quarter reflected a 2.23% increase in average selling prices to
    approximately $1,239 per ton, as well as a 2.96% increase in volume to
    13,939 tons sold.
    
    
--  For the six months ended June 30, 2013, revenue from the sale of
    manufactured recycled LDPE was $31,778,819, a 4.35% increase over the
    prior year period, reflecting an increase in the average selling price
    of approximately 1.57% and an increase in tons sold of 2.66% compared
    with the prior year's first six months. Total revenues in the first
    six months of 2013 were $32,572,153 compared with $34,866,428 in the
    prior year period which included $3,462,210 in low margin sales of raw
    materials. Sales of sorted non-LDPE materials totaled $793,334 and
    $949,128 for the six months ended June 30, 2013 and 2012,
    respectively.
    
    
--  During the second quarter of 2013, the cost of imported plastic waste
    -- which is the Company's primary raw material -- increased 8.41% to
    $748 per ton compared with $690 per ton in the second quarter of 2012.
    However, the $748 per ton cost in the 2013 second quarter was 2.35%
    lower than the $766 per ton cost in the first quarter this year.
    Additionally, following a significant increase in labor costs in 2012,
    labor cost per ton in the 2013 second quarter declined 3.57% compared
    with the same quarter last year. As a result of better control of
    labor and overhead costs, gross margin in the 2013 second quarter was
    28.96% compared with 28.34% in the same period in 2012, excluding the
    sale of raw materials.
    
    
--  In the first six months of 2013, the Company's average manufacturing
    costs declined slightly compared with the same period a year earlier.
    While per ton raw material costs increased 4.71% to $756 per ton in
    the first half of 2013, labor costs per ton declined 8.93% compared to
    the same period a year earlier.
    
    
--  Net income in the second quarter of 2013 increased 2.37% to $3,237,997
    from $3,163,030 in the year earlier quarter. EPS was $0.31 in both
    periods based on approximately 10.41 million diluted weighted average
    number of common shares outstanding in the 2013 quarter compared with
    approximately 10.35 million shares in the 2012 second quarter. For the
    first six months of 2013, net income rose 7.17% to $5,603,390,
    compared with $5,228,286 in the first half of 2012. EPS in the first
    six months of 2013 was $0.54 on approximately 10.41 million diluted
    weighted average number of common shares outstanding, compared with
    $0.51 on approximately 10.18 million shares in the year earlier
    period.

  
Financial Strength 
As of June 30, 2013, the Company reported that it had no bank debt
and cash and cash equivalents of $15,399,617, up from $12,083,358 as
of December 31, 2012. Working capital as of June 30, 2013 and
December 31, 2012 was $42,057,689 and $35,505,028, respectively. The
increase in working capital in part reflects the increase in cash and
cash equivalents, an increase in advances to suppliers which led to a
reduction in accounts payable, and a partially offsetting decrease in
accounts receivable resulting from ongoing efforts to speed
collection from customers. 
Outlook 
"We anticipate the steady progress we have made over the past couple
of quarters will continue through the remainder of the year, as
current indications are that raw material costs will continue to
stabilize and demand for recycled LDPE will continue to grow," stated
Mr. Chen Min, Chairman and CEO. 
"Further," he added, "we are well positioned to capitalize on
stronger demand for our products as China's economy strengthens
further and we retain our competitive advantage by staying focused on
being the environmental leader in the industry."  
Conference Call Invitation 
The Company will discuss 2013 second quarter results during a live
conference call and webcast on Friday, August 16th, 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 Second Quarter Conference Call,
Conference ID: 4635647. There will be a playback available until
August 23, 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: 4635647. 
This call is being webcast by ViaVid Broadcasting and can be accessed
by clicking on this link http://public.viavid.com/index.php?id=105748
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 (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              
                                                    June 30,    December 31,
                                                      2013          2012    
ASSETS                                                                      
Current assets                                                              
  Cash and cash equivalents                       $ 15,399,617  $ 12,083,358
  Accounts receivable                                7,611,692     9,305,104
  Inventories                                       18,888,447    18,696,648
    Advances to suppliers                            3,173,698     1,827,480
    Value added tax refundable                          11,813             -
    Prepaid expenses and other current assets          144,290       131,564
        Total current assets                        45,229,557    42,044,154
                                                                            
Property, plant and equipment, net                  10,304,955    10,223,874
Land use right, net                                    669,674       663,800
Other assets                                           204,108       202,346
        Total Assets                              $ 56,408,294  $ 53,134,174
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                                         
  Accounts payable                                $    571,029  $  4,082,982
  Accrued expenses and other payables                  646,600       796,705
  Value added taxes payable                                  -       110,484
  Amount due to shareholder                            772,524       517,863
  Income tax payable                                 1,181,715     1,031,092
      Total current liabilities                      3,171,868     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 June 30, 2013 and December                              
 31, 20112                                              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             3,584,987     2,546,999
  Retained earnings                                 46,067,761    40,464,371
      Total shareholders' equity                    53,236,426    46,595,048
                                                                            
      Total liabilities and shareholders' equity  $ 56,408,294  $ 53,134,174
                                                                            
                                                                            
                                                                            
                                                                            
                           GUANWEI RECYCLING CORP.                          
   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE  
                                   INCOME                                   
                            Three Months Ended         Six Months Ended     
                                 June 30,                  June 30,         
                             2013         2012         2013         2012    
                                                                            
Net revenue              $17,732,347  $18,694,938  $32,572,153  $34,866,428 
Cost of revenue           12,596,865   13,803,142   23,557,730   26,419,246 
Gross profit               5,135,482    4,891,796    9,014,423    8,447,182 
                                                                            
Operating expenses:                                                         
Selling and marketing        116,565       78,228      272,471      167,750 
General and                                                                 
 administrative              571,243      464,158    1,170,530    1,123,028 
Total operating expenses     687,808      542,386    1,443,001    1,290,778 
                                                                            
Income from operations     4,447,674    4,349,410    7,571,422    7,156,404 
                                                                            
Other income (expenses)                                                     
Interest income               14,540       14,336       27,942       28,508 
Net foreign exchange                                                        
 gain (loss)                 (12,878)     (61,606)      47,065      (29,680)
Miscellaneous                 (9,121)           -       (9,802)           - 
Total other income                                                          
 (expense)                    (7,459)     (47,270)      65,205       (1,172)
                                                                            
Income before income                                                        
 taxes                     4,440,215    4,302,140    7,636,627    7,155,232 
                                                                            
Income taxes               1,202,218    1,139,110    2,033,237    1,926,949 
                                                                            
Net income                 3,237,997    3,163,030    5,603,390    5,228,286 
                                                                            
Other comprehensive                                                         
 income - foreign                                                           
 currency translation                                                       
 adjustments                 774,693       18,029    1,037,988      231,447 
                                                                            
Comprehensive income     $ 4,012,690  $ 3,181,059  $ 6,641,378  $ 5,459,733 
                                                                            
Earnings per share -                                                        
 basic and diluted       $      0.31  $      0.31  $      0.54  $      0.51 
                                                                            
Weighted average number                                                     
 of common shares                                                           
 outstanding - basic and                                                    
 diluted                  10,407,839   10,354,048   10,407,839   10,177,026 
                                                                            
                                                                            
                                                                            
                                                                            
                           GUANWEI RECYCLING CORP.                          
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
                                                      Six Months Ended      
                                                          June 30,          
                                                     2013          2012     
                                                                            
Cash flows from operating activities                                        
Net income                                       $  5,603,390  $  5,228,286 
                                                                            
Adjustments to reconcile net income to net cash                             
 provided by operating activities                                           
Depreciation of property, plant and equipment         511,086       401,947 
Amortization of land use rights                         7,795         7,717 
                                                                            
Changes in operating assets and liabilities:                                
Accounts receivable                                 1,866,159      (928,136)
Inventories                                           193,491    (1,676,025)
Advances to suppliers                              (1,294,453)            - 
Value added taxes refundable                          (11,687)     (665,921)
Prepaid expenses and other current assets             (11,355)      742,871 
Other assets                                            2,404         2,380 
Accounts payable                                   (3,558,330)   (1,864,905)
Accrued expenses and other payables                  (172,425)      (92,906)
Value added taxes payable                            (111,574)            - 
Income tax payable                                    127,888       (33,839)
Net cash provided by operating activities           3,152,389     1,121,469 
                                                                            
Cash flows from investing activities                                        
Deposit for property, plant and equipment                   -      (645,755)
Purchase of property, plant and equipment            (373,718)     (100,572)
Net cash used in investing activities                (373,718)     (746,327)
                                                                            
Cash flows from financing activities                                        
Advance from shareholder                              254,661       323,582 
Net cash provided by financing activities             254,661       323,582 
                                                                            
Effect of exchange rate change on cash                282,927        84,839 
                                                                            
Net increase in cash and cash equivalents           3,316,259       783,563 
                                                                            
Cash and cash equivalents at the beginning of                               
 period                                            12,083,358    12,432,803 
Cash and cash equivalents at the end of period   $ 15,399,617  $ 13,216,366 
                                                                            
Supplemental disclosure of cash flow                                        
 information                                                                
Income taxes paid                                $  1,905,349  $  1,960,785 
                                                 ============  ============ 
Non-cash investing and financing activities                                 
Accrued expense related to purchases of                                     
 property, plant and equipment                   $      8,013  $          - 
                                                 ============  ============ 
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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