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.
-- 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.
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.
"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.
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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 ============ ============
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