SOURCE: Guanwei Recycling Corp.

November 11, 2010 09:52 ET

Guanwei Recycling Corp. Reports 101% Year Over Year Gain in 2010 Third Quarter Revenues and 66% Increase in Net Income; 2010 Third Quarter EPS Was $0.19 Compared With $0.11 in the Same Period Last Year

Investor Conference Call to Be Held Monday, November 15th at 8am ET

FUQING CITY, CHINA--(Marketwire - November 11, 2010) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), today reported substantial year over year advances in revenue and net income in its third quarter ended September 30, 2010, citing increases in sales volume and selling prices as the key factors in the gains achieved.

Year Over Year Q3 Revenues More Than Double

Revenues in the 2010 third quarter increased to a record $14,983,816, more than double the $7,446,817 in reported revenues in the same quarter last year. Net income in the 2010 third quarter also advanced strongly to $3,547,997, up approximately 66% from net income of $2,139,783 in the 2009 third quarter. 2010 third quarter EPS was $0.19 compared with $0.11 per share in the third quarter last year, based on 20 million weighted average shares outstanding shares for both periods.

Nine Month Net Income Up 26.4%

For the nine months ended September 30, 2010, Guanwei reported that on revenues of $33,594,779, net income grew 26.41% to $7,423,586 or $0.38 per share, from $5,872,045 or $0.29 per share (on 20MM weighted average shares outstanding) in the same period last year. The Company noted that reported revenues in the first nine months of 2009 were $37,892,598 which includes raw materials sales of $7,483,107, and sales of purchased recycled LDPE of $7,512,903 which together totaled $14,996,010. The Company explained it has not engaged in raw material sales this year because inventories have been at a desirable level. Further, the 2010 third quarter includes sales of purchased LDPE, totaling $1,991,009.

More reflective of the Company's year over year progress is that sales of its primary product, self-manufactured recycled LDPE, grew 37.82% from $22,426,985 in the 2009 nine month period, to $30,909,623 in the first nine months of 2010.

The Company also noted that the gross margin achieved in the 2010 third quarter was 33.33%, and was 33.17% through the first nine months of the year.

Continuing Strong Demand

Mr. Chen Min, Chairman and CEO of the Company, commented, "Our third quarter results were very satisfying and point to another year of excellent growth for our Company. Clearly, demand for the recycled LDPE we produce far exceeds the available supply in the market. We plan to prudently add capacity while maintaining our margins and profitability. We are realizing increases in prices for our LDPE product while remaining quite competitive with the prices for virgin plastic, and attained gross margins of approximately 33% in the quarter, which is in our targeted range." Mr. Chen added, "To serve our diversified, growing customer base, during the quarter we also continued to strengthen our sources of supply, particularly with new agreements in Germany, as announced. We believe our strong and growing supply base in Europe will continue to provide us with a significant cost and pricing advantage over potential competitors. We have also completed construction begun in the second quarter, which has improved our manufacturing capabilities and continued to add to our capacity."

Tonnage and Pricing Increases

The Company said that in the third quarter of 2010, sales volume of manufactured recycled LDPE and sorted non-LDPE material grew to 12,684 tons from 7,901 tons in the same period last year, and from 25,193 tons in the first nine months of 2009 to 32,187 tons in the same period in 2010. The Company added that the additional relatively low margin revenue of $1,991,000 it generated from the sale of purchased recycled LDPE in the 2010 third quarter was the result of purchases made to meet the demand from certain of its existing customers.

In addition to the higher volume of sales in the third quarter of 2010, the Company also realized price increases for its manufactured LDPE and for the much smaller amount of sorted non-LDPE material it sold. Average selling prices for non-LDPE material in the quarter rose 18.86% to approximately $208 per ton, while the average selling price of manufactured recycled LDPE increased 6.12% year over year to $1,109 per ton in the quarter. This also compared with an average selling price in the first nine months of 2009 of $996 per ton.

Financial Strength

As of September 30, 2010, the Company's working capital was $10,630,383, an increase of 211.95%, or $7,222,624 compared with working capital as of December 31, 2009 of $3,407,759. The working capital increase reflected a $5.4 million increase in cash and cash equivalents, which as of September 30, 2010 was $12,706,134.

Outlook

Commenting on the outlook for the full year, Mr. Chen stated, "With the continuing strong demand for our products we are seeing continuing very robust growth, and are confident reiterating our expectation of reaching or exceeding sales of at least 42,000 tons of product in the current year. We also are confident we will continue to add new, long term sources of high quality raw material supplies, which remains a major focus of our efforts."

Conference Call Invitation

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 Third Quarter Earnings Conference Call, Conference ID: 4385116. There will be a playback available until, November 22, 2010. 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: 4385116.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=00007E02 or at ViaVid's website at www.viavid.net.

SEE TABLE BELOW

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 certified in China that also is audited by TÜV Rheinland Cert GmbH for compliance with German pollution and environmental standards, which 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.
               UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
                    OF INCOME AND COMPREHENSIVE INCOME
                       (Expressed in U.S. dollars)

                           Three Months Ended         Nine Months Ended
                              September 30,             September 30,
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------

Net revenue             $14,983,816  $ 7,446,817  $33,594,779  $37,892,598

Cost of revenue           9,989,728    4,330,429   22,452,934   29,046,957
                        -----------  -----------  -----------  -----------
Gross profit              4,994,088    3,116,388   11,141,845    8,845,641
                        -----------  -----------  -----------  -----------

Operating expenses
Selling and marketing
 expenses                    69,972       64,266      178,153      400,142
General and administrative
 expenses                   208,889      183,494      928,053      567,621
                        -----------  -----------  -----------  -----------
                            278,861      247,760    1,106,206      967,763
                        -----------  -----------  -----------  -----------

Income from operations    4,715,227    2,868,628   10,035,639    7,877,878

Interest income               3,750        5,356       20,578        7,070
Interest expenses           (21,824)     (21,524)     (63,610)     (57,307)
                        -----------  -----------  -----------  -----------
Income before income
 taxes                    4,697,153    2,852,460    9,992,607    7,827,641

Income taxes              1,149,156      712,677    2,569,021    1,955,596
                        -----------  -----------  -----------  -----------

Net income              $ 3,547,997  $ 2,139,783  $ 7,423,586  $ 5,872,045
                        ===========  ===========  ===========  ===========

Comprehensive Income:

Net income              $ 3,547,997  $ 2,139,783  $ 7,423,586  $ 5,872,045

Other comprehensive
 income (loss)
 - Foreign currency
  translation
  adjustments               202,863       12,905      269,909       21,307
                        -----------  -----------  -----------  -----------

Comprehensive income    $ 3,750,860  $ 2,152,688  $ 7,693,495  $ 5,893,352
                        ===========  ===========  ===========  ===========

Earnings per share
 attributable to
 shareholders of
 Guanwei Recycling Corp.
 - basic and diluted    $      0.19  $      0.18  $      0.38  $      0.49
                        ===========  ===========  ===========  ===========

Weighted average number
 of share of common
 stock used in computing
 basic and diluted
 earnings per share      20,000,006   12,000,000   20,000,006   12,000,000
                        ===========  ===========  ===========  ===========

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