Guanwei Recycling Corp. Reports 2013 Full Year Results

Guanwei Recycling Corp. Reports 2013 Full Year Results 
Sales Rebound in Final Quarter of 2013 Couldn't Offset Previously
Reported Interruption of Production and Sales Cycle in Third Quarter
Stemming From Government's New "Green Fence" Policy; Growth Outlook
for 2014 Remains Positive With No Anticipated Negative Effects From
New Government Policy; 2013 Year End Investor Conference Call to Be
Held Tuesday, April 1, 2014 at 8:00am ET 
FUQING CITY, CHINA -- (Marketwired) -- 03/31/14 --  Guanwei Recycling
Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of
recycled low density polyethylene (LDPE), today announced somewhat
lower full year results in 2013 mainly due to the impact in its third
quarter of a more than one week production delay and interruption of
its sales cycle, stemming from China's tighter "Green Fence" policy
with respect to imported waste materials. 
Despite finishing 2013 on a positive note, with fourth quarter
manufactured recycled LDPE sales volume up to 13,679 tons, an
increase of approximately 9% from third quarter sales -- and slightly
higher year over year average selling prices -- mainly due to the
production delays in the second half of 2013, full year revenues from
manufactured recycled LDPE decreased 3.74% to approximately $64.81
million. The production delay in the second half also impacted 2013
full year net income, which decreased 18.05% to approximately $9.7
million, or $0.93 per share, from approximately $11.83 million, or
$1.15 per share a year earlier. 
Environmental Leadership: A Competitive Edge 
"Given the positive trends we experienced in the first half of the
year and again as we closed the year out, the full year result was a
disappointment," stated Mr. Chen Min, 
 Chairman and CEO of the
Company. He added, "The government focus on imported waste, which led
to heightened examinations of our production and storage facility, is
not likely to impact our results in the future. Further, as a leader
in maintaining the highest possible environmental standards, we
applaud the government's focus on the environment and believe our
leadership and the investments we continue to make in environmental
improvements will permit our Company to retain its key competitive
edge."  
Financial Highlights 


 
--  Revenues for the year ended December 31, 2013 were $72,263,043, down
    8.58% from $79,043,356 in 2012. The Company's principal product,
    self-manufactured recycled LDPE, contributed $64,814,357 to the total,
    down 3.74% from $67,331,679 in 2012. The decline was mainly a result
    of a decline in sales volume, which was primarily the result of the
    interruption in production due to heightened enforcement of
    examinations of production and storage facilities by local
    authorities, a consequence of China's tighter policies with respect to
    imported waste. This new "Green Fence" policy triggered enforcement
    actions, which delayed production and shipping cycles for one to two
    weeks in the second half of 2013. Consequently, while the average
    selling price in 2013 increased 2.64% to approximately $1,246 per ton
    from $1,214 per ton in the prior year, the Company experienced a 6.15%
    volume decline in recycled LDPE tons sold to 52,038 tons. In line with
    this, sales of sorted non-LDPE materials declined 4.57% to $1,826,465
    in 2013 as tonnage sales declined approximately 10% to 5,521 tons,
    while the selling price in 2013 for sorted non-LDPE material increased
    6.09% to $331 per ton year over year. Also contributing to revenues in
    2013, were sales of 7,889 tons of raw material for $5,622,221. Raw
    material was acquired in quantity to obtain discounts. This resulted
    in a need to dispose of excess materials at very small profit near
    year end to free up storage space. Similar sales in 2012 amounted to
    $9,797,818 for 16,444 tons of excess materials.
    
    
--  Net income in 2013 decreased $2,135,798 to $9,699,497 a decline of
    18.05% compared with the prior year. This mainly reflected the year
    over year decrease in sales volume, and gross profit margin (23.45%
    versus 26.29% excluding the sales of raw materials) for the reasons
    described above, most significantly, the interruption in second half
    production. Of note, during the year raw material prices increased 9%
    to $787 per ton from $722 per ton in 2012. Additionally, the company
    experienced increased labor costs, reflecting ongoing challenges in
    recruiting factory workers, as the education level in China continues
    to improve. The growth in these costs exceeded the increase in selling
    prices. The Company continues to focus on worker retention and on
    reducing costs for and securing the availability of raw materials.

  
No Bank Debt, Increased Working Capital 
The Company's financial position entering 2014 continued to be very
strong. As of December 31, 2013, the Company had no bank debt and
cash and cash equivalents of $11,887,032. Additionally, working
capital as of the same date was $45,459,190, a nearly $10 million or
28.04% increase year over year. Contributing to the increase was an
increase in accounts receivable, an increase in advances to
suppliers, and a decrease in accounts payable, which was partially
offset by a decrease in inventories. 
Looking Ahead 
"The opportunity for continued growth in 2014 is there," stated Mr.
Chen. "In 2012 we increased our manufacturing capacity to 80,000 tons
and, in January this year, received approvals for a total of 135,000
tons of imported plastic waste. Our customer list is well diversified
and should insulate us from the fluctuating demand in any one
industry, as we continue to expand further into the construction
equipment industry in line with the Chinese government's stimulus
plans." He noted further, "Most importantly, we will continue to aim
to maintain a significant price advantage over competitors who in
most cases lack the scale or the sophistication to match the
environmental standards of our facilities."  
Conference Call Invitation 
The Company will discuss 2013 year end results during a live
conference call and webcast on Tuesday, April 1, 2014 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 Year End Conference Call, Conference ID:
4675415. There will be a playback available until April 8, 2014. 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: 4675415. 
This call is being webcast by ViaVid Broadcasting and can be accessed
by clicking on this link http://public.viavid.com/index.php?id=108398
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 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.                          
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                                                        December 31,        
                                               -----------------------------
                                                    2013           2012     
                                               -------------- --------------
ASSETS                                                                      
Current assets                                                              
  Cash and cash equivalents                    $   11,887,032 $   12,083,358
  Accounts receivable                              14,837,198      9,305,104
  Inventories                                      14,717,808     18,696,648
    Advances to suppliers                           7,426,023      1,827,480
    Prepaid expenses and other current assets         136,396        131,564
Total current assets                               49,004,457     42,044,154
                                                                            
Property, plant and equipment, net                 11,074,021     10,223,874
Construction in progress                              534,556              -
Land use right, net                                   668,597        663,800
Other assets                                          203,751        202,346
Total Assets                                   $   61,485,382 $   53,134,174
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                                         
Accounts payable                               $      612,303 $    4,082,982
Accrued expenses and other payables                   720,888        796,705
Value added taxes payable                             827,517        110,484
Amount due to shareholder                             934,892        517,863
Income tax payable                                    449,667      1,031,092
Total current liabilities                           3,545,267      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 December 31, 2013 and                               
 December 31, 2012                                     10,408         10,408
  Additional paid-in capital                        2,811,370      2,767,787
    PRC statutory reserves                            805,483        805,483
    Accumulated other comprehensive income          4,148,986      2,546,999
    Retained earnings                              50,163,868     40,464,371
Total shareholders' equity                         57,940,115     46,595,048
                                                                            
Total liabilities and shareholders' equity     $   61,485,382 $   53,134,174
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                                                                            
                           GUANWEI RECYCLING CORP.                          
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME         
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
Net revenue                                    $  72,263,043  $  79,043,356 
Cost of revenue                                   56,493,385     60,440,237 
Gross profit                                      15,769,658     18,603,119 
                                                                            
Operating expenses:                                                         
Selling and marketing                                494,394        417,597 
General and administrative                         2,232,352      2,297,782 
Total operating expenses                           2,726,746      2,715,379 
                                                                            
Income from operations                            13,042,912     15,887,740 
                                                                            
Other income (expenses)                                                     
Interest income                                       56,387         55,781 
Interest expense                                     (43,583)             - 
Net foreign exchange gain                             49,797         62,806 
Gain (loss) on disposal of property and                                     
 equipment                                             3,602        (33,452)
Government subsidy                                    32,308              - 
Miscellaneous                                        (31,494)         6,372 
Total other income                                    67,017         91,507 
                                                                            
Income before income taxes                        13,109,929     15,979,247 
                                                                            
Income taxes                                       3,410,432      4,143,952 
                                                                            
Net income                                         9,699,497     11,835,295 
                                                                            
Other comprehensive income - foreign currency                               
 translation adjustments                           1,601,987        284,318 
                                                                            
Comprehensive income                           $  11,301,484  $  12,119,613 
                                                                            
                                                                            
Earnings per share - basic and diluted         $        0.93  $        1.15 
                                                                            
Weighted average number of common shares                                    
 outstanding                                                                
- basic and diluted                               10,407,839     10,293,872 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                           GUANWEI RECYCLING CORP.                          
                    CONSOLIDATED STATEMENTS OF CASH FLOWS                   
                                                                            
                                                  Year Ended December 31,   
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
Cash flows from operating activities                                        
Net income                                     $   9,699,497  $  11,835,295 
                                                                            
Adjustments to reconcile net income to net                                  
 cash provided by (used in) operating                                       
 activities                                                                 
Depreciation of property, plant and equipment      1,089,846        884,224 
Amortization of land use rights                       15,713         15,432 
(Gain) loss on disposal of property and                                     
 equipment                                            (3,602)        33,452 
Bad debt                                                   -             69 
Imputed interest on amount due to shareholder         43,583              - 
                                                                            
Changes in operating assets and liabilities:                                
Accounts receivable                               (5,173,867)    (4,791,673)
Inventories                                        4,503,312     (1,700,239)
Advances to suppliers                             (5,469,806)    (1,826,813)
Value added taxes refundable                               -      1,223,236 
Prepaid expenses and other current assets             (2,913)       790,864 
Other assets                                           4,846          4,759 
Accounts payable                                  (3,551,548)    (4,728,146)
Accrued expenses and other payables                 (106,791)        (2,264)
Value added taxes payable                            704,352        110,443 
Income tax payable                                  (605,664)      (122,679)
Net cash provided by operating activities          1,146,958      1,725,960 
                                                                            
Cash flows from investing activities                                        
Purchase of property, plant and equipment         (2,134,849)    (2,694,126)
Proceeds from disposal of property and                                      
 equipment                                             4,846              - 
Net cash used in investing activities             (2,130,003)    (2,694,126)
                                                                            
Cash flows from financing activities                                        
Advance from shareholder                             417,029        517,863 
Net cash flows provided by financing                                        
 activities                                          417,029        517,863 
                                                                            
Effect of exchange rate change on cash               369,690        100,858 
                                                                            
Net decrease in cash and cash equivalents           (196,326)      (349,445)
                                                                            
Cash and cash equivalents at the beginning of                               
 year                                             12,083,358     12,432,803 
Cash and cash equivalents at the end of year   $  11,887,032  $  12,083,358 
                                               =============  ============= 

  
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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