SOURCE: Guanwei Recycling Corp.

Guanwei Recycling Corp.

November 14, 2011 16:36 ET

Guanwei Recycling Corp. Reports Third Quarter Results

Self Manufactured Recycled LDPE Sales up 28% on Strong Demand; Profits Down Slightly on Higher Costs but Nine Month Net up 29% on 48% Core Sales Growth; Investor Conference Call to Be Held Tuesday, November 15th at 8:00am ET

FUQING CITY, CHINA--(Marketwire - Nov 14, 2011) - Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), today reported continuing strong demand for plastics in China propelled a 28% year over year increase in third quarter sales of its self manufactured recycled LDPE core product. Higher costs in the quarter reduced margins, however, resulting in an approximately 5% decline in year over year net income. Through the first nine months of the year, net income was up 29% on a 39% gain in revenues which included a 48% increase in sales of self manufactured recycled LDPE.

Financial Highlights

  • Net revenues in the 2011 third quarter grew to $16,679,012, up 11.31% from $14,983,816 in the year earlier period. Sales in this year's third quarter of self manufactured recycled LDPE advanced more strongly to $16,348,291, up 28.42% compared with $12,730,548 a year earlier, while sales in the quarter of non-LDPE scrap materials grew 26.10% to $330,721. Last year's third quarter included $1,991,009 in sales of purchased recycled LDPE to meet the demand of certain customers; there were no resales of this lower quality, lower margin product in the 2011 quarter.
  • 2011 third quarter net income was $3,375,758, or $0.17 per share compared with $3,547,997 or $0.18 per share in the 2010 third quarter, on 20 million weighted average diluted shares in both periods. In the 2011 third quarter, the Company's cost of revenue increased 17.34% year over year to $11,722,192, mainly due to higher raw material costs, and operating expenses increased 75.75% to $526,604, mainly due to increased remuneration and staff related costs and higher depreciation expenses.
  • Net revenues rose 38.65% in the first nine months of 2011 to $46,579,286 compared with $33,594,779 in the year earlier period reflecting 47.76% year over year growth in core self manufactured recycled LDPE sales.
  • Net income in the first nine months of 2011 increased 28.57% to $9,544,400, or $0.48 per share, from $7,423,586, or $0.37 per share a year earlier, on 20 million weighted average diluted shares in both periods.
  • At the end of the 2011 third quarter, cash and cash equivalents were $15,080,995 compared with $14,940,236 on December 31, 2010. Shareholders' equity increased to $29,761,939 from $19,146,812 at year end 2010 as short term borrowings were reduced to zero from $3,716,377, and retained earnings grew nearly $10 million to $25,380,028.

Continuing Growth in Tons Sold and Selling Prices

The Company noted that the 28.42% increase in sales of manufactured recycled LDPE in the 2011 third quarter was a result of increases in both sales volume and selling price. Tonnage sales in the quarter rose 18.79% to 13,641 tons, compared with 11,483 tons a year earlier. The average selling price of $1,199 per ton in the 2011 third quarter reflected an 8.12% increase over the average selling price of $1,109 in the same quarter last year. Through the first nine months of 2011, the year over year sales increase in manufactured recycled LDPE of 47.76% resulted from a 35.20% year over year increase in tonnage sold from 28,853 tons in 2010 to 39,009 tons through the end of the 2011 third quarter. Over the same period, selling prices increased 9.34% to approximately $1,171 per ton from $1,071 per ton.

Import Quota

As previously reported on July 11, 2011, the Company received official government approval from the PRC's Ministry of Environmental Protection for an expansion of its quota for imported plastic waste, having met all of the rigorous requirements of this process. Prior to the quota expansion, the Company's aggregate annual import quota was 59,000 tons of plastic waste. That has now been increased to an aggregate of 99,000 tons in 2011. It is expected this will increase to 185,000 aggregate tons next year, which represents a tripling of the former quota, following another required abbreviated permitting process. In the Company's view, the increased quota reflects a strong government endorsement of the Company's state of the art, environmentally friendly manufacturing facilities.

Another Record Year

"We were very pleased with our continued strong revenue growth in the third quarter," stated Mr. Chen Min, Chairman and CEO of the Company, "and anticipate the strong domestic demand for recycled LDPE underlying this growth will continue for the foreseeable future and translate to another year of record results for our Company."

"We nevertheless continue to have our work cut out for us," Mr. Chen continued, "in order to reduce costs and increase profit margins. We remain focused on developing relationships with new suppliers and increasing direct purchase of raw materials from European plastic waste suppliers. We strongly believe our environmental leadership as a zero discharge manufacturer positions us well to accomplish this while, at the same time, we contribute to a better quality of life in our society. We also continue to focus on expanding our production capacity in a difficult environment for financing, and will move ahead as quickly as possible when we determine the most appropriate course of action."

Conference Call Invitation

The Company will discuss third quarter results during a live conference call and webcast on Tuesday, November 15th, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-2068 when calling within the United States or 1-480-629-9712 when calling internationally. Please ask for the Guanwei Recycling Corp. 2011 Third Quarter Conference Call, Conference ID: 4486179. There will be a playback available until 11/22/11. 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: 4486179.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link or at ViaVid's website at


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

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.

(Expressed in U.S. dollars)
Three Months Ended September 30, Nine Months Ended September 30,
2011 2010 2011 2010
Net revenue $ 16,679,012 $ 14,983,816 $ 46,579,286 $ 33,594,779
Cost of revenue 11,722,192 9,989,728 32,291,990 22,452,934
Gross profit 4,956,820 4,994,088 14,287,296 11,141,845
Operating expenses
Selling and marketing expenses 95,288 69,972 299,233 178,153
General and administrative expenses 431,316 229,657 1,404,042 960,956
526,604 299,629 1,703,275 1,139,109
Income from operations 4,430,216 4,694,459 12,584,021 10,002,736
Interest income 22,889 3,750 70,302 20,578
Interest expenses (3,453 ) (21,824 ) (28,667 ) (63,610 )
Exchange gain, net 67,485 20,768 198,609 32,903
Others - - 10,398 -
Income before income taxes 4,517,137 4,697,153 12,834,663 9,992,607
Income taxes 1,141,379 1,149,156 3,290,263 2,569,021
Net income $ 3,375,758 $ 3,547,997 $ 9,544,400 $ 7,423,586
Comprehensive Income:
Net income $ 3,375,758 $ 3,547,997 $ 9,544,400 $ 7,423,586
Other comprehensive income
- Foreign currency translation adjustments 527,199 202,863 1,070,727 269,909
Comprehensive income $ 3,902,957 $ 3,750,860 $ 10,615,127 $ 7,693,495
Earnings per share attributable to shareholders of Guanwei Recycling Corp.
- basic and diluted $ 0.17 $ 0.18 $ 0.48 $ 0.37
Weighted average number of share of common stock used in computing
basic and diluted earnings per share 20,000,006 20,000,006 20,000,006 20,000,006

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