Gulf Resources Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Gulf Resources Reports Fourth Quarter and Fiscal Year 2013 Financial Results

SHOUGUANG, China, March 17, 2014 (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 fourth quarter and fiscal year ended December
31, 2013.

Fourth Quarter 2013 Highlights

  *Revenue was $30.1 million, a year-over-year increase of 36.5%
  *Gross profit was $9.1 million, a year-over-year increase of 117%
  *Gross margin increased to 30.4% from 19.1% for the fourth quarter of 2012
  *Income from operations was $7.6 million as compared to $2.6 million in the
    fourth quarter of 2012, a year-over-year increase of 186%
  *Operating margin was 25.1% compared to 12.0% for the fourth quarter of
    2012
  *Net income was $5.6 million or $0.15 per basic share and $0.14 per diluted
    share, versus $1.9 million, or $0.05 per basic and diluted share a year
    ago, a year-over-year increase of 195%

Fiscal Year 2013 Highlights

  *Revenue was $118.4 million, a year-over-year increase of 16%
  *Gross profit was $34.2 million, an increase of 21%
  *Gross margin was 29%, compared to 28% in 2012
  *Net income was $21.0 million, or $0.55 per basic share and $0.54 per
    diluted share from $15.0 million, or $0.43 per basic and diluted share
    compared with the same period of year 2012 , a year-over-year increase of
    40%
  *Cash totaled $107.8 million as of December 31, 2013

"Although the PRC government continued imposing macro-economic tightening
policy to slow down the economy which began in the second half of 2011, the
Company made persistent efforts to expand sales markets, increase production
utilization rate and decrease management and administration expenses during
the fiscal 2013. We are pleased to report that Company's crude salt and
chemical products segments did performance well, sales volume of bromine
segments also increased with slightly decrease in average selling prices, in
fiscal year 2013 as compared with the fiscal year 2012, which resulted in a
16% increase in net revenue and a 40% increase in net income in fiscal year
2013 as compared with fiscal 2012," said Xiaobin Liu, Chief Executive Officer
of Gulf Resources.

Fourth Quarter 2013 Results

Gulf Resources' revenue was $30.1 million for the fourth quarter of 2013, an
increase of 36.5% from $22.0 million for the fourth quarter of 2012. The
increase in net revenue was primarily attributable to the increased revenue
from the entire three business segments include bromine segment, crude salt
segment and chemical products segment. Revenue from the bromine and crude salt
segments was $14.2 million and $3.8 million, respectively, representing a
increase of 24.7% and increase of 39.5% for bromine and crude salt segments,
respectively. The total revenue of both bromine and crude salt business
segments represented 59.8% of sales revenue for the fourth quarter of
2013.Revenue from the chemical products segment was $12.1 million, or 40.2% of
total revenue, for the fourth quarter of 2013, an increase of 52.5% from $7.9
million in the corresponding period in 2012. The increase in revenue from this
chemical product segment was mainly due to sales volume and prices increasing
from all of the chemical products as compared to the same quarter last year.

Gross profit for the fourth quarter of 2013 was $9.1 million, an increase of
117% from $4.2 million of the fourth quarter of 2012, and gross profit margin
for the three months ended December 31, 2013 was 30.4%, as compared to 19.1%
for the corresponding period last year. The increase in gross margin was
mainly due to the increase of sales volume and price in chemical product
segment, as compared to the same period last year.

Sales, marketing and other operating expenses for the fourth quarter of 2013
were $25,576, as compared with $21,204 for the corresponding quarter last
year.

General and administrative expenses for the fourth quarter of 2013 were $2.2
million, as compared to $1.0 million for the fourth quarter of 2012. The
increased general and administrative expenses for the fourth quarter in 2013
were mainly due to the increase in the depreciation of the newly acquired
office units in a commercial building in September 2012 and increase of
depreciation of property, plant and equipment for Factory No. 3, whose
operations were temporarily suspended due to relocation in fiscal year 2013
compared to previous year in which the depreciation was classified as cost of
goods sold.

Income from operations for the fourth quarter of 2013 was $7.6 million, as
compared to $2.6 million for the corresponding quarter of 2012. The operating
margin was 25.1% for the fourth quarter of 2013, as compared to 12% for the
fourth quarter of 2012.

For the fourth quarter of 2013, the Company incurred other income of $50,212,
as compared to $13,302 for the corresponding quarter last year.

Income taxes were $2.0 million for the fourth quarter of 2013, a increase of
165.6%% from $0.8 million for the fourth quarter of 2012. The Company's
effective tax rate was 26% during the quarter, as compared to 28% in the same
quarter last year.

Net income was $5.6 million for the fourth quarter of 2013, an increase of
194.7% from $1.9 million for the fourth quarter of 2012. Basic and diluted
earnings per share in the fourth quarter of 2013 were $0.15 per basic share
and $0.14 per diluted share as compared to $0.05 per basic and diluted share
in the fourth quarter of 2012. Weighted average number of basic shares for the
three months ended December 31, 2013 was 38,477,982, as compared with
34,706,356 for the three months ended December 31, 2012.

Fiscal Year 2013 Financial Results

Net revenue for the fiscal year 2013, was $118,391,783, representing an
increase of $16,690,901 or 16% over the same period in 2012. This increase was
primarily attributable to the increase of revenue from all of our segments,
specifically, (i) revenue from our bromine segment increased from $56,332,785
for the fiscal year 2012 to $60,488,886 for the same period in 2013, an
increase of approximately 7%; (ii) revenue from our crude salt segment
increased from $11,143,848 for the fiscal year 2012 to $13,790,128 for the
same period in 2013, an increase of approximately 24%; and (iii) revenue from
our chemical products segment increased from $34,224,249 for the fiscal year
2012 to $44,112,769 for the same period in 2013, an increase of approximately
29%. Gross profit was $34,182,647, or 29%, of net revenue for fiscal year 2013
as compared to $28,261,541, or 28%, of net revenue for fiscal year 2012.
Income from operations was $28,443,493 for the fiscal year 2013 (or 24% of net
revenue), an increase of $7,958,638 (or approximately 39%) over income from
operations for the fiscal year 2012. Net income was $20,967,357 for the fiscal
year 2013, an increase of $5,971,855 (or approximately 40%) as compared to the
same period in 2012.

Financial Condition

As of December 31, 2013, Gulf Resources had cash of $107.8 million, current
liabilities of $11.3 million, and shareholders' equity of $295 million. At
fiscal year end, the Company had working capital of $146.8 million with
positive cash flow from operating activities of $40.2 million. The Company
received Compensation proceeds approximately $3.9 million from the
Transportation Bureau of Dongying City and other local government agencies,
due to the requisition of land where the original Factory No.3 was located for
railway construction and used approximately $3.2 million for the construction
of our new Factory No.3.

Business Outlook

"Based on the business operation experience from year 2013, company will
continue as it is in the foreseeable future, and continually looking for both
of horizontal and vertical acquisition targets, in order to increase the
Company's anti-risk ability and profitability." said Mr. Xiaobin Liu, CEO of
the Company.

Conference Call

Gulf Resources' management will host a conference call on Tuesday, March 18,
2014 at 8:00 AM EDT to discuss its financial results for the fourth quarter
and fiscal year ended December 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
prepared remarks.

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 call +1 (706) 643-1666. The conference participant ID is
14079661.

A replay of the conference call will be available two hours after the call's
completion during 03/18/2014 11:00 EDT - 04/18/2014 23:59 EDT. To access the
replay, call +1 (855) 859-2056. International callers should call +1 (404)
537-3406. The conference ID is 14079661.

This conference call will be broadcast live over the Internet and can be
accessed by all interested parties by clicking on
http://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 Gulf Resources, 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, visit www.gulfresourcesinc.com.

The Gulf Resources, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=15631

Forward-Looking Statements

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.

GULF RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
                                                              
                                                As of December 31,
                                                2013           2012
Current Assets                                                 
Cash                                             $107,828,800 $65,241,035
Accounts receivable                              44,885,354     35,969,900
Inventories                                      5,301,995      5,993,598
Prepayments and deposits                         4,583          --
Prepaid land leases                              50,548         47,307
Deferred tax assets                              1,657          6,973
Total Current Assets                             158,072,937    107,258,813
Non-Current Assets                                             
Property, plant and equipment, net               146,400,436    165,942,542
Property, plant and equipment under capital      1,701,328      1,996,478
leases, net
Prepaid land leases, net of current portion      753,928        748,502
Deferred tax assets                              2,316,176      2,246,699
Total non-current assets                         151,171,868    170,934,221
Total Assets                                     $309,244,805 $278,193,034
                                                              
Liabilities and Stockholders' Equity                           
Current Liabilities                                            
Accounts payable and accrued expenses            $5,645,831   $6,533,236
Retention payable                                209,126        1,432,690
Capital lease obligation, current portion        202,392        193,164
Taxes payable                                    5,248,486      2,856,658
Total Current Liabilities                        11,305,835     11,015,748
Non-Current Liabilities                                        
Capital lease obligation, net of current portion 2,943,878      2,952,902
Total Liabilities                                $14,249,713  $13,968,650
                                                              
Stockholders' Equity                                           
PREFERRED STOCK; $0.001 par                                    
value; 1,000,000 shares authorized; none         $ --           $ --
outstanding
COMMON STOCK; $0.0005 par value; 80,000,000
shares authorized; 38,765,201 and 38,552,070
shares issued; and 38,580,602 and 38,367,471     19,383         19,276
shares outstanding as of December 31, 2013 and
2012, respectively
Treasury stock; 184,599 shares as of December    (500,000)      (500,000)
31, 2013 at cost
Additional paid-in capital                       80,033,981     79,489,188
Retained earnings unappropriated                 166,421,427    146,745,754
Retained earnings appropriated                   17,265,572     15,973,887
Cumulative translation adjustment                31,754,729     22,496,279
Total Stockholders' Equity                       294,995,092    264,224,384
Total Liabilities and Stockholders' Equity       $309,244,805 $278,193,034


GULF RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Expressed in U.S. dollars)
                                                              
                                                Years Ended December 31,
                                                2013           2012
NET REVENUE                                                    
Net revenue                                      $118,391,783 $101,700,882
                                                              
OPERATING EXPENSES / INCOME                                    
Cost of net revenue                              (84,209,136)   (73,439,341)
Sales, marketing and other operating expenses    (96,372)       (82,004)
Research and development cost                    (140,445)      (164,586)
Write-off / Impairment on property, plant and    (27,964)       (1,042,138)
equipment
General and administrative expenses              (8,563,282)    (6,792,110)
Gain on relocation of factory                    2,501,336      --
Other operating income                           587,573        304,152
                                                (89,948,290)   (81,216,027)
                                                              
INCOME FROM OPERATIONS                           28,443,493     20,484,855
                                                              
OTHER INCOME (EXPENSES)                                        
Interest expense                                 (208,250)      (210,705)
Interest income                                  339,798        312,806
                                                131,548        102,101
INCOME BEFORE TAXES                              28,575,041     20,586,956
                                                              
INCOME TAXES                                     (7,607,683)    (5,591,453)
                                                              
NET INCOME                                       $20,967,358  $14,995,503
                                                              
COMPREHENSIVE INCOME:                                          
NET INCOME                                       20,967,358    14,995,503
OTHER COMPREHENSIVE INCOME                                     
- Foreign currency translation adjustments       9,258,450      733,013
                                                              
COMPREHENSIVE INCOME                             $30,225,808  $15,728,516
                                                              
EARNINGS PER SHARE                                             
BASIC                                            $0.55        $0.43
DILUTED                                          $0.54        $0.43
                                                              
WEIGHTED AVERAGE NUMBER OF SHARES                              
BASIC                                            38,395,921     34,706,356
DILUTED                                          38,827,330     35,067,950


GULF RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
                                                 Years Ended December 31,
                                                 2013           2012
CASH FLOWS FROM OPERATING ACTIVITIES                            
Net income                                        $20,967,358  $14,995,503
Adjustments to reconcile net income to net cash                 
provided by operating activities:
Interest on capital lease obligation              207,393        209,584
Amortization of prepaid land leases               660,002        493,849
Depreciation and amortization                     27,460,693     23,317,594
Allowance for obsolete and slow-moving            (21,265)       13,023
inventories
Write-off / Impairment loss on property, plant    27,964         1,042,138
and equipment
Gain on relocation of factory                     (2,501,336)    --
Demolition expenditure net off against gain on    (1,059,965)    --
relocation of factory
Currency translation adjustment on inter-company  774,405        61,090
balances
Deferred tax asset                                5,502          489,334
Stock-based compensation expense                  544,900        510,500
Changes in assets and liabilities:                              
Accounts receivable                               (7,777,332)    (13,936,332)
Inventories                                       879,952        (1,550,213)
Prepayment and deposits                           (4,583)        307,600
Accounts payable and accrued expenses             (1,057,016)    (850,229)
Retention payable                                 (1,233,988)    866,148
Other receivables                                 18,000         --
Taxes payable                                     2,260,588      (1,204,287)
Net cash provided by operating activities         40,151,272     24,765,302
                                                               
CASH FLOWS USED IN INVESTING ACTIVITIES                         
Additions of prepaid land leases                  (638,076)      (477,678)
Proceeds from sales of property, plant and        143            --
equipment
Purchase of property, plant and equipment         (3,192,681)    (37,399,421)
Compensation proceeds received                    3,868,483      --
Net cash provided by (used in) investing          37,869         (37,877,099)
activities
                                                               
CASH FLOWS FROM FINANCING ACTIVITIES                            
Repayment of capital lease obligation             (302,497)      (297,598)
Net cash used in financing activities             (302,497)      (297,598)
                                                               
EFFECTS OF EXCHANGE RATE CHANGES                  2,701,121      74,370
ON CASH AND CASH EQUIVALENTS                                    
NET INCREASE (DECREASE)IN CASH AND CASH           42,587,765     (13,335,025)
EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR     65,241,035     78,576,060
CASH AND CASH EQUIVALENTS - END OF YEAR           $107,828,800 $65,241,035

CONTACT: Gulf Resources, Inc.
         Web: http://www.gulfresourcesinc.com
        
         CEO Assistant & Director of Investor Relations
         Helen Xu
         Beishengrong@vip.163.com
        
         IR Manager
         Max Ma
         Max_vx@163.com

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