Guanwei Recycling Corp. Reports Third Quarter Results

Guanwei Recycling Corp. Reports Third Quarter Results 
Positive Trends Continued in Selling Prices, Raw Material and Labor
Costs but an Approximately One Week Unplanned Interruption in
Production Slightly Lowered Results; Company Maintains Favorable
Outlook for Remainder of the Year; Investor Conference Call to Be
Held Thursday, November 14th at 8:00am ET 
FUQING CITY, CHINA -- (Marketwired) -- 11/13/13 --  Guanwei Recycling
Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of
recycled low density polyethylene (LDPE), reported today that the
positive trends it began to see in the second half of 2012 in selling
prices and stabilized labor and raw material costs continued through
its third quarter ended September 30, 2013. An approximately one week
interruption in production and shipping cycles in the 2013 third
quarter, however, slightly lowered revenues and net income in the
quarter compared with the prior year. 
Mr. Chen Min, Chairman and CEO of the Company, explained that the
interruption in production was a consequence of heightened
inspections of its facilities by various government agencies stemming
from the government's new "Green Fence" policy which tightens
requirements for imported waste materials.  
"Going forward," he said, "we anticipate maintaining our industry
leading environmental practices and see no material impact on our
business from this new policy. We are therefore maintaining our
favorable outlook for the remainder of the year, based on anticipated
moderately improved demand and selling prices for our products, in an
improving economy, coupled with continuing anticipated stabilization
in our labor and raw material costs." 
Financial Highlights 


 
--  Reflecting the approximately one week interruption in production
    described above, net revenues in the 2013 third quarter were
    $16,299,676, down 8.97% from the same period last year. This decrease
    reflected a 9.61% decrease in year over year sales of manufactured
    recycled LDPE from $17,430,616 to $15,755,342 in the 2013 third
    quarter, and sales of $544,334 of sorted non-LDPE materials in the
    2013 third quarter, up 14.51% from $475,358 in the same period in
    2012. Revenues from LDPE sales in the 2013 third quarter reflected a
    3.89% increase in average selling prices in the quarter to
    approximately $1,255 per ton, compared with approximately $1,208 per
    ton a year earlier. The average selling price in this year's first
    quarter was $1,223 per ton. Labor costs in the 2013 third quarter
    remained steady at approximately $51 per ton, while the per ton raw
    material costs for recycled LDPE and sorted non-LDPE material
    increased 7.6% to $750, compared with $697 in the 2012 third quarter,
    and $748 in the second quarter this year. The reduced LDPE sales
    volume in the 2013 third quarter of 12,553 tons, compared with 14,427
    tons in the corresponding quarter last year.
    
    
--  Net income in the 2013 third quarter was $2,857,806, or $0.27 per
    share, compared with $3,622,832, or $0.35 per share in the same
    quarter last year. The diluted weighted average number of common
    shares in both periods was 10,407,839. The decrease in net income in
    the 2013 third quarter primarily reflects the reduced production
    volume stemming from the approximately one week interruption in the
    period in production and sales cycles as previously described. Gross
    margins in the quarter also were impacted by the reduced production,
    as many of the costs relating to production are fixed costs.
    
    
--  For the nine months ended September 30, 2013, revenues from the sale
    of manufactured recycled LDPE were $47,534,161, down 0.73% from the
    same period last year. Primarily reflecting the approximately week
    long interruption of production in the 2013 third quarter, in the 2013
    nine month period the sales volume of manufactured recycled LDPE was
    down 3.05% to 38,359 tons from 39,565 tons in the corresponding period
    the prior year. This was somewhat offset by a 2.4% increase in selling
    price in the first nine months of 2013 to approximately $1,239 per
    ton, from $1,210 per ton in the year earlier period. Year over year
    revenues from sales of sorted non-LDPE material also declined in the
    2013 nine month period by 6.09% to $1,337,668. A 3.5% year over year
    increase in average selling price to $325 per ton could not fully
    offset a 9.61% decline in year over year tonnage sold to 4,119 tons.
    Combined sales of manufactured LDPE and sorted non-LDPE materials were
    $48,871,829 in the first nine months of 2013. In 2012, revenues in the
    comparable period of $52,772,402 also included $3,462,238 in sales of
    excess raw material inventory. The cost of plastic waste raw material
    in the first nine months of 2013 increased 5.88% to $756 per ton,
    compared with the same period in 2012, while labor costs remained
    stable throughout 2013 at approximately $51 per ton.
    
    
--  Net income in the first nine months of 2013 decreased $389,922, or
    4.41%, to $8,461,196 or $0.81 per share, from $8,851,118, or $0.86 per
    share in the same period last year. These results primarily reflect
    the decline in sales volume stemming from the approximately one week
    long interruption of production and sales cycles in the 2013 third
    quarter, and the resulting slight decline in margins. The diluted
    weighted average number of common shares outstanding was 10,407,839 in
    the first nine months of 2013, as compared with 10,254,521 in the year
    earlier period.

  
No Bank Debt, Increased Working Capital and Cash and Cash Equivalents 
As of the end of the 2013 third quarter, the Company continued to
improve its already strong financial position. As of September 30,
2013, working capital increased approximately $9.37 million to
$44,877,259 from $35,505,028 as of December 31, 2012. This reflected,
in part, an increase in cash and cash equivalents to $15,643,526, and
a decrease in accounts receivable reflecting continuing efforts to
speed collections from clients. The Company also reported that it had
no outstanding bank debt as of the end of the quarter. 
Continuing Optimism 
"Although disappointed by the week long interruption in our
production and sales volume in the quarter," Mr. Chen stated, "we
continue to be pleased by the steady improvements in other core
elements of our business, as well as growing indications of an
improving economic environment in China. By retaining the advantages
that come from our environmental leadership -- including the very
competitive selling prices we expect to continue to be able to offer
our customers -- we remain very confident in a favorable growth
outlook for our Company." 
Conference Call Invitation 
The Company will discuss 2013 third quarter results during a live
conference call and webcast on Thursday, November 14th, at 8:00am ET. 
To participate in the call, interested participants should call
1-877-941-1429 when calling within the United States or
1-480-629-9857 when calling internationally. Please ask for the
Guanwei Recycling Corp. 2013 Third Quarter Conference Call,
Conference ID:. 4650133 There will be a playback available until
November 21, 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: 4650133 
This call is being webcast by ViaVid Broadcasting and can be accessed
by clicking on this link http://public.viavid.com/index.php?id=106885
or at ViaVid's website at http://viavid.com. 
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              
                                                                            
                                                                            
                                               September 30,   December 31, 
                                                    2013           2012     
                                               -------------- --------------
ASSETS                                                                      
Current assets                                                              
  Cash and cash equivalents                    $   15,643,526 $   12,083,358
  Accounts receivable                               6,895,178      9,305,104
  Inventories                                      21,341,585     18,696,648
  Advances to suppliers                             3,436,370      1,827,480
  Value added tax refundable                          421,737              -
  Prepaid expenses and other current assets           188,271        131,564
                                               -------------- --------------
    Total current assets                           47,926,667     42,044,154
                                                                            
Property, plant and equipment, net                 10,678,366     10,223,874
Land use right, net                                   669,728        663,800
Other assets                                          204,110        202,346
                                               -------------- --------------
    Total Assets                               $   59,478,871 $   53,134,174
                                               ============== ==============
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                                         
  Accounts payable                             $      663,151 $    4,082,982
  Accrued expenses and other payables                 612,603        796,705
  Value added taxes payable                                 -        110,484
  Amount due to shareholder                           848,315        517,863
  Income tax payable                                  925,339      1,031,092
                                               -------------- --------------
    Total current liabilities                       3,049,408      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 September 30, 2013                                
   and December 31, 2012                               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            3,920,218      2,546,999
  Retained earnings                                48,925,567     40,464,371
                                               -------------- --------------
    Total shareholders' equity                     56,429,463     46,595,048
                                               -------------- --------------
                                                                            
    Total liabilities and shareholders' equity $   59,478,871 $   53,134,174
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                          GUANWEI RECYCLING CORP.                           
  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE   
                                   INCOME                                   
                                                                            
                          Three Months Ended          Nine Months Ended     
                             September 30,              September 30,       
                      --------------------------  ------------------------- 
                          2013          2012          2013         2012     
                      ------------  ------------  ------------ ------------ 
                                                                            
Net revenue           $ 16,299,676  $ 17,905,974  $ 48,871,829 $ 52,772,402 
Cost of revenue         11,866,421    12,374,450    35,424,151   38,793,696 
                      ------------  ------------  ------------ ------------ 
    Gross profit         4,433,255     5,531,524    13,447,678   13,978,706 
                      ------------  ------------  ------------ ------------ 
                                                                            
Operating expenses:                                                         
  Selling and                                                               
   marketing               131,103       125,536       403,574      293,286 
  General and                                                               
   administrative          555,375       524,112     1,725,905    1,647,140 
                      ------------  ------------  ------------ ------------ 
    Total operating                                                         
     expenses              686,478       649,648     2,129,479    1,940,426 
                      ------------  ------------  ------------ ------------ 
                                                                            
Income from                                                                 
 operations              3,746,777     4,881,876    11,318,199   12,038,280 
                      ------------  ------------  ------------ ------------
 
                                                                            
Other income                                                                
 (expenses)                                                                 
  Interest income           15,218        14,395        43,160       42,903 
  Gain (loss) on                                                            
   disposal of                                                              
   property, plant                                                          
   and equipment             3,589        (1,046)        3,589       (1,046)
  Net foreign                                                               
   exchange gain                                                            
   (loss)                   36,171       (92,074)       83,236     (121,754)
  Miscellaneous            (21,441)        3,455       (31,243        3,455 
                      ------------  ------------  ------------ ------------ 
    Total other                                                             
     income (expense)       33,537       (75,270)       98,742      (76,442)
                      ------------  ------------  ------------ ------------ 
                                                                            
Income before income                                                        
 taxes                   3,780,314     4,806,606    11,416,941   11,961,838 
                                                                            
Income taxes               922,508     1,183,774     2,955,745    3,110,720 
                      ------------  ------------  ------------ ------------ 
                                                                            
Net income               2,857,806     3,622,832     8,461,196    8,851,118 
                                                                            
Other comprehensive                                                         
 income - foreign                                                           
 currency translation                                                       
 adjustments               335,231       (47,331)    1,373,219      166,087 
                      ------------  ------------  ------------ ------------ 
                                                                            
Comprehensive income  $  3,193,037  $  3,575,501  $  9,834,415 $  9,017,205 
                      ============  ============  ============ ============ 
                                                                            
Earnings per share -                                                        
 basic and diluted    $       0.27  $       0.35  $       0.81 $       0.86 
                      ============  ============  ============ ============ 
                                                                            
                                                                            
Weighted average                                                            
 number of common                                                           
 shares outstanding -                                                       
 basic and diluted      10,407,839    10,407,839    10,407,839   10,254,521 
                      ============  ============  ============ ============ 
                                                                            
                                                                            
                                                                            
                          GUANWEI RECYCLING CORP.                           
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS          
                                                                            
                                                   Nine Months Ended        
                                                      September 30,         
                                             ------------------------------ 
                                                  2013            2012      
                                             --------------  -------------- 
                                                                            
Cash flows from operating activities                                        
Net income                                   $    8,461,196  $    8,851,118 
                                                                            
Adjustments to reconcile net income to net                                  
 cash provided by operating activities                                      
Depreciation of property, plant and                                         
 equipment                                          785,250         622,531 
Amortization of land use rights                      11,742          11,564 
(Gain) loss on disposal of property, plant                                  
 and equipment                                       (3,589)          1,046 
                                                                            
Change in operating assets and liabilities:                                 
Accounts receivable                               2,626,799      (1,589,634)
Inventories                                      (2,116,631)     (4,683,299)
Advances to suppliers                            (1,540,560)              - 
Value added taxes refundable                       (416,524)       (581,644)
Prepaid expenses and other current assets           (54,407)        770,237 
Other assets                                          3,621           3,567 
Accounts payable                                 (3,485,792)       (685,283)
Accrued expenses and other payables                (210,404)         15,870 
Value added taxes payable                          (112,047)              - 
Income tax payable                                 (131,777)         33,083 
                                             --------------  -------------- 
Net cash provided by operating activities         3,816,877       2,769,156 
                                             --------------  -------------- 
                                                                            
Cash flows from investing activities                                        
Proceeds from disposal property, plant and                                  
 equipment                                            4,828               - 
Purchase of property, plant and equipment          (956,300)     (2,412,469)
                                             --------------  -------------- 
Net cash used in investing activities              (951,472)     (2,412,469)
                                             --------------  -------------- 
                                                                            
Cash flows from financing activities                                        
Advance from shareholder                            330,452         383,118 
                                             --------------  -------------- 
Net cash provided by financing activities           330,452         383,118 
                                             --------------  -------------- 
                                                                            
Effect of exchange rate change on cash              364,311          64,288 
                                             --------------  -------------- 
                                                                            
Net increase in cash and cash equivalents         3,560,168         804,093 
                                                                            
Cash and cash equivalents at the beginning                                  
 of period                                       12,083,358      12,432,803 
                                             --------------  -------------- 
Cash and cash equivalents at the end of                                     
 period                                      $   15,643,526  $   13,236,896 
                                             ==============  ============== 
Supplemental disclosure of cash flow                                        
 information                                                                
Income taxes paid                            $    3,087,522  $    3,077,637 
                                             ==============  ============== 
Non-cash investing and financing activities                                 
Accrued expense related to purchases of                                     
 property, plant and equipment               $        8,047  $       79,258 
                                             ==============  ============== 
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