SOURCE: Guanwei Recycling Corp.

March 31, 2011 12:35 ET

Guanwei Recycling Corp. 2010 Net Income Grew 54% Year Over Year as Core Manufactured Product Revenues Increased 41%

Continuing Strong Demand in China for Recycled Plastic, Increased Product Prices and Higher Gross Margins Contributed to Gains

Investor Conference Call to Be Held Tuesday, April 5, at 8:00am EDT

FUQING CITY, CHINA--(Marketwire - March 31, 2011) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), today announced it achieved another year of outstanding results in 2010. 

  • Sales of the Company's self manufactured recycled LDPE, its core product, comprised 94% of total revenues and grew 41% year-over-year in 2010 to $44,475,726. Tonnage sold in 2010 increased to 41,478 tons, up 33% from 31,149 tons sold in the prior year and the average selling price per ton during the year was $1,072, up 5.93% from $1,012 per ton a year earlier.

  • Net income in 2010 of $9,927,396 was 54% higher than net income in 2009 of $6,446,941. 2010 EPS on 20,000,000 diluted weighted average shares outstanding was $0.50, compared with EPS of $0.49 in 2009 on 13,249,315 weighted average shares, ($0.32 on 20,000,000 diluted shares).

  • In addition to core manufactured product sales, reported total revenues in 2010 of $47,534,645 included $1,991,009 in third quarter sales of purchased LDPE to satisfy requirements of certain customers, and $1,067,910 in sales of non-LDPE plastic waste. In 2009, reported revenues of $47,263,803 included sales of $7,512,903 of purchased LDPE, a practice the Company has since limited, and $756,644 in sorted non-LDPE plastic waste. Additionally, in 2009 the Company atypically sold $7,483,107 of raw material inventory to reduce possible risk in the prevailing economic climate, and had no such sales in 2010.

  • Gross profit margin increased 46.35% from 22% last year to 32.30% in 2010. In 2009 the gross profit margin was unusually low due to lower margins on the direct sales of raw material inventory. In 2010 there also was an increase in the selling price of recycled LDPE which, nevertheless, remained approximately 40% below the selling price of "virgin" LDPE throughout the year.

  • Cash and cash equivalents as of December 31, 2010 were $14,940,236 as compared with $7,302,209 at the end of the prior year. The Company's favorable cash conversion cycle helped generate sufficient working capital.

Other Significant Accomplishments in 2010

  • The Company achieved a diversified base of more than 300 customers in ten different industries.

  • While continuing to expand long term waste supply arrangements, during 2010 the Company grew the number of European suppliers to ten. 

  • In late 2010, construction of a new 4000 square meter raw material warehouse was completed and placed into use. This permitted the former material warehouse to be converted for expansion of the Company's classification and sorting operations which will support future increases in production capacity

Continuing Strong Growth Ahead

Mr. Chen Min, Chairman and CEO of the Company, commented, "We are very pleased with our substantial accomplishments and growth in 2010. The strong demand from our diversified customer base supports our outlook for continuing growth." 

"Further," Mr. Chen stated, "with the competitive advantage of being able to directly purchase our waste from European suppliers we believe in our ability to maintain gross margins. In this regard, we will keep working to maintain and enhance our supplier relationships as well as our 'green' manufacturing facilities to remain qualified for the European and Chinese environmental certifications we've achieved. Additionally, recent prices for recycled LDPE have been slightly higher than the average price in 2010." 

Tripling Aggregate Import Quota

Mr. Chen added, "In early 2010, we began the process of seeking to increase our government quota for imported plastic waste. By July this year we expect to obtain final approval for what will amount to a tripling of our current aggregate quota of 59,000 tons of imported waste to an aggregate of 185,000 tons annually. This is based on an anticipated new, 150,000 ton annual quota and a continuation of the 35,000 ton quota for which we have previously contracted."

Conference Call Invitation

The Company will discuss year end results during a live conference call and webcast on Tuesday, April 5, 2011, at 8:00am EDT.

To participate in the call, interested participants should call 1-877-941-8416 when calling within the United States or 1-480-629-9811 when calling internationally. Please ask for the Guanwei Recycling Corp. 2010 Full Year Earnings Conference Call, Conference ID: 4430113. There will be a playback available until April 12th. 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: 4430113.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=000083A5 or at ViaVid's website at www.viavid.net.

(SEE ATTACHED TABLE)

Description of Guanwei Recycling Corp.

Guanwei Recycling Corp. is China's largest manufacturer of recycled low density polyethylene (LDPE). Adhering to the highest "green" standards, it has generated rapid growth producing LDPE from plastic waste procured mostly in Europe for sales to more than 300 customers in ten different industries in China. Guanwei Recycling Corp. is one of the few plastic recyclers in China that has been audited by German authorities, most recently Umweltagentur Erftstadt, for compliance with German pollution and environmental standards. This allows 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.  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  
(Expressed in U.S. dollars)  
   
   
      Year Ended December 31,  
      2010       2009  
                 
Net Revenue   $ 47,534,645     $ 47,263,803  
                 
Cost of Revenue     32,179,321       36,830,700  
Gross profit     15,355,324       10,433,103  
                 
Selling and marketing expenses     346,409       448,227  
General and administrative expenses     1,568,653       1,155,657  
Income from operations     13,440,262       8,829,219  
                 
Interest income     28,704       11,422  
Interest expenses     (85,474 )     (78,669 )
Income before income taxes     13,383,492       8,761,972  
                 
Income taxes     3,456,096       2,315,031  
                 
Net income   $ 9,927,396     $ 6,446,941  
                 
Comprehensive Income:                
                 
Net income   $ 9,927,396     $ 6,446,941  
                 
Other comprehensive income                
  - Foreign currency translation adjustments     488,683       34,369  
                 
Comprehensive income   $ 10,416,079     $ 6,481,310  
                 
Earnings per share attributable to shareholders of Guanwei Recycling Corp.                
    - Fully diluted   $ 0.50     $    
      - weighted average             0.49  
Weighted average number of shares of common stock used in computing basic and diluted earnings per share     20,000,006       13,249,315  

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