SOURCE: Guanwei Recycling Corp.

Guanwei Recycling Corp.

May 15, 2013 07:25 ET

Guanwei Recycling Corp. 2013 First Quarter Net Income Grew 14.53% Year Over Year as Manufacturing Costs Continued to Stabilize

2013 First Quarter Investor Conference Call to Be Held Thursday, May 16th, at 8:00am ET

FUQING CITY, CHINA--(Marketwired - May 15, 2013) -  Guanwei Recycling Corp. (NASDAQ: GPRC), a leading clean-tech manufacturer in China of recycled low density polyethylene (LDPE), today reported net income in its first quarter ended March 31, 2013, grew 14.53% year over year as the Company achieved small year over year increases in selling prices and sales volume for its self manufactured recycled LDPE and manufacturing costs continued to stabilize. EPS in the 2013 first quarter increased to $0.23, compared with $0.21 a year earlier.

Financial Highlights

  • Net revenues in the first quarter ended March 31, 2013 were $14,839,806. This figure included $14,512,749 in sales of manufactured recycled LDPE and sales of sorted non-LDPE material of $327,057 in what typically is a slow quarter. In comparison, in the 2012 first quarter, manufactured recycled LDPE sales were $14,044,642. However, the Company's net revenues in the 2012 first quarter were $16,171,490, which included $1,689,081 in low margin raw material sales which did not take place in the 2013 first quarter. Sales of sorted non-LDPE materials in the 2012 first quarter were $437,767. The Company noted that the year over year 3.33% increase in first quarter sales of manufactured recycled LDPE in 2013 reflected a 0.99% increase in average selling prices to approximately $1,223 per ton, while sales volume increased 2.30% to 11,867 tons.

  • Gross profit in the 2013 first quarter increased 9.10% compared with the same period last year, as the cost of revenue (consisting of plastic waste raw material, labor and manufacturing overhead costs) from sales of manufactured recycled LDPE and sorted non-LDPE material declined to 73.86% of net revenue from 75.80% in the comparable quarter in 2012. Labor costs per ton, which increased strongly in 2012, stabilized and remained about the same in the 2013 first quarter as compared to the first quarter of 2012, while per ton raw material costs declined approximately 1.79% to $766 per ton. Excluding the sales of raw materials in the first quarter of 2012, gross margin improved to 26.14% in the 2013 first quarter, compared with 24.2% in last year's first quarter.

  • Net income in the first quarter of 2013 increased 14.53% to $2,365,393 or $0.23 per share, compared with $2,065,256, or $0.21 per share in the same quarter last year. The weighted average number of diluted common shares outstanding was 10,407,839 shares in the 2013 first quarter as compared with 10,000,004 shares in the year earlier period.

Financial Strength

As of March 31, 2013, working capital increased to $38,057,092 compared with $35,505,028 as of December 31, 2012. In part, this reflected an increase in cash and cash equivalents to $13,491,880 from $12,083,358 at the end of 2012. Additionally, in the 2013 first quarter, accounts receivable decreased to $7,686,940 from $9,305,104 at the end of 2012.

Outlook

"We continue to be very optimistic about our longer term outlook," stated Mr. Min Chen, Chairman and CEO of the Company, "for as the economy in China strengthens further, we anticipate demand for our lower cost, high quality recycled LDPE will continue to grow. We expect to sustain our competitive advantages by remaining focused on maintaining our environmental leadership."

He added, "Since the third quarter of 2012, we have seen continued stabilization in our manufacturing costs; in particular, the cost of imported plastic waste, our primary raw material. Based on current communications with our major suppliers, we believe that average raw material costs should remain fairly stable for the remainder of 2013."

Conference Call Invitation

The Company will discuss 2013 first quarter results during a live conference call and webcast on Thursday, May 16th, at 8:00am ET.

To participate in the call, interested participants should call 1-888-846-5003 when calling within the United States or 1-480-629-9856 when calling internationally. Please ask for the Guanwei Recycling Corp. 2013 First Quarter Conference Call, Conference ID: 4619442. There will be a playback available until May 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: 4619442.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=104736 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 STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
    Three Months Ended
March 31,
    2013     2012
               
Net revenue   $ 14,839,806     $ 16,171,490
Cost of revenue     10,960,865       12,616,104
    Gross profit     3,878,941       3,555,386
               
Operating expenses:              
  Selling and marketing     155,906       89,522
  General and administrative     599,287       658,870
    Total operating expenses     755,193       748,392
               
Income from operations     3,123,748       2,806,994
               
Other income (expenses)              
  Interest income     13,402       14,172
  Net foreign exchange gain     59,943       31,926
  Miscellaneous     (681 )     -
    Total other income     72,664       46,098
               
Income before income taxes     3,196,412       2,853,092
               
Income taxes     831,019       787,836
               
Net income     2,365,393       2,065,256
               
Other comprehensive income - foreign currency translation adjustments     263,295       213,418
               
Comprehensive income   $ 2,628,688     $ 2,278,674
               
Earnings per share - basic and diluted   $ 0.23     $ 0.21
               
               
Weighted average number of common shares outstanding - basic and diluted     10,407,839       10,000,004
 
 
 
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
         
    March 31,
2013
  December 31,
2012
ASSETS            
Current assets            
  Cash and cash equivalents   $ 13,491,880   $ 12,083,358
  Accounts receivable     7,686,940     9,305,104
  Inventories     16,647,065     18,696,648
  Advances to suppliers     2,404,054     1,827,480
  Value added tax refundable     131,661     -
  Prepaid expenses and other current assets     156,325     131,564
    Total current assets     40,517,925     42,044,154
             
Property, plant and equipment, net     10,300,807     10,223,874
Land use right, net     663,574     663,800
Other assets     202,263     202,346
    Total Assets   $ 51,684,569   $ 53,134,174
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities            
  Accounts payable   $ 183,383   $ 4,082,982
  Accrued expenses and other payables     755,983     796,705
  Value added taxes payable     -     110,484
  Amount due to shareholder     689,082     517,863
  Income tax payable     832,385     1,031,092
    Total current liabilities     2,460,833     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 March 31, 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     2,810,294     2,546,999
  Retained earnings     42,829,764     40,464,371
    Total shareholders' equity     49,223,736     46,595,048
                 
    Total liabilities and shareholders' equity   $ 51,684,569   $ 53,134,174
 
 
 
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
     
    2013     2012 
               
Cash flows from operating activities              
Net income   $ 2,365,393     $ 2,065,256
               
Adjustments to reconcile net income to net cash provided by (used in) operating activities              
Depreciation of property, plant and equipment     243,715       201,442
Amortization of land use rights     3,874       3,862
               
Changes in operating assets and liabilities:              
Accounts receivable     1,666,653       (596,896)
Inventories     2,148,983       (2,372,226)
Advances to suppliers     (565,584 )     -
Value added taxes refundable     (131,445 )     (966,504)
Prepaid expenses and other current assets     (24,388 )     639,751
Other assets     1,195       1,191
Accounts payable     (3,915,641 )     (1,091,044)
Accrued expenses and other payables     (52,857 )     (75,454)
Value added taxes payable     (110,910 )     -
Income tax payable     (204,048 )     (379,550)
Net cash provided by (used in) operating activities     1,424,940       (2,570,172)
               
Cash flows from investing activities              
Purchase of property, plant and equipment     (256,362 )     (12,727)
Net cash used in investing activities     (256,362 )     (12,727)
               
Cash flows from financing activities              
Advance from shareholder     171,219       187,647
Net cash provided by financing activities     171,219       187,647
               
Effect of exchange rate change on cash     68,725       84,558
               
Net increase in cash and cash equivalents     1,408,522       (2,310,694)
               
Cash and cash equivalents at the beginning of period     12,083,358       12,432,803
Cash and cash equivalents at the end of period   $ 13,491,880     $ 10,122,109
               
Supplemental disclosure of cash flow information              
Interest paid   $  -     $  -
Income taxes paid   $  1,035,067        1,167,386
Non-cash investing and financing activities              
Accrued expense related to purchases of property, plant and equipment   $  7,966        -

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