SOURCE: Guanwei Recycling Corp.

Guanwei Recycling Corp.

August 14, 2013 07:30 ET

Guanwei Recycling Second Quarter Results Reflect Continuing Favorable Trends

FUQING CITY, CHINA--(Marketwired - Aug 14, 2013) -

Sales of Self-Manufactured Recycled LDPE Rose on Slightly Higher Volume and Increased Selling Prices While Labor and Raw Material Costs Continued To Stabilize

Company Sees Product Demand and Selling Prices Continuing to Rise Moderately Through Year End

2013 Second Quarter Investor Conference Call to Be Held Friday, August 16th at 8:00am ET

Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), today reported that in its second quarter ended June 30, 2013, it experienced a continuation of the positive trends in sales and costs that began to develop in the second half of 2012. Sales in the quarter of self manufactured recycled LDPE rose 5.21% compared with the prior year quarter, based on moderate gains in selling prices as well as sales volume, while raw material and labor costs in the quarter continued to stabilize. Consequently, there was further improvement in the gross profit margin leading to a 2.37% increase in net income compared with the second quarter of last year.

Financial Highlights

  • Net revenues in the second quarter of 2013 were $17,732,347, including $17,266,070 in sales of manufactured recycled LDPE and $466,277 in sales of sorted non-LDPE materials. 2013 second quarter sales of manufactured recycled LDPE were up 5.21% compared with the $16,410,448 in sales of manufactured recycled LDPE in the same period last year. Revenues in last year's second quarter of $18,694,938 also included sales of sorted non-LDPE materials of $511,361 as well as $1,773,129 in excess inventory that was sold with a negligible markup to recoup costs. The increased sales of manufactured recycled LDPE in the 2013 second quarter reflected a 2.23% increase in average selling prices to approximately $1,239 per ton, as well as a 2.96% increase in volume to 13,939 tons sold.

  • For the six months ended June 30, 2013, revenue from the sale of manufactured recycled LDPE was $31,778,819, a 4.35% increase over the prior year period, reflecting an increase in the average selling price of approximately 1.57% and an increase in tons sold of 2.66% compared with the prior year's first six months. Total revenues in the first six months of 2013 were $32,572,153 compared with $34,866,428 in the prior year period which included $3,462,210 in low margin sales of raw materials. Sales of sorted non-LDPE materials totaled $793,334 and $949,128 for the six months ended June 30, 2013 and 2012, respectively.

  • During the second quarter of 2013, the cost of imported plastic waste -- which is the Company's primary raw material -- increased 8.41% to $748 per ton compared with $690 per ton in the second quarter of 2012. However, the $748 per ton cost in the 2013 second quarter was 2.35% lower than the $766 per ton cost in the first quarter this year. Additionally, following a significant increase in labor costs in 2012, labor cost per ton in the 2013 second quarter declined 3.57% compared with the same quarter last year. As a result of better control of labor and overhead costs, gross margin in the 2013 second quarter was 28.96% compared with 28.34% in the same period in 2012, excluding the sale of raw materials.

  • In the first six months of 2013, the Company's average manufacturing costs declined slightly compared with the same period a year earlier. While per ton raw material costs increased 4.71% to $756 per ton in the first half of 2013, labor costs per ton declined 8.93% compared to the same period a year earlier.

  • Net income in the second quarter of 2013 increased 2.37% to $3,237,997 from $3,163,030 in the year earlier quarter. EPS was $0.31 in both periods based on approximately 10.41 million diluted weighted average number of common shares outstanding in the 2013 quarter compared with approximately 10.35 million shares in the 2012 second quarter. For the first six months of 2013, net income rose 7.17% to $5,603,390, compared with $5,228,286 in the first half of 2012. EPS in the first six months of 2013 was $0.54 on approximately 10.41 million diluted weighted average number of common shares outstanding, compared with $0.51 on approximately 10.18 million shares in the year earlier period.

Financial Strength

As of June 30, 2013, the Company reported that it had no bank debt and cash and cash equivalents of $15,399,617, up from $12,083,358 as of December 31, 2012. Working capital as of June 30, 2013 and December 31, 2012 was $42,057,689 and $35,505,028, respectively. The increase in working capital in part reflects the increase in cash and cash equivalents, an increase in advances to suppliers which led to a reduction in accounts payable, and a partially offsetting decrease in accounts receivable resulting from ongoing efforts to speed collection from customers.

Outlook

"We anticipate the steady progress we have made over the past couple of quarters will continue through the remainder of the year, as current indications are that raw material costs will continue to stabilize and demand for recycled LDPE will continue to grow," stated Mr. Chen Min, Chairman and CEO.

"Further," he added, "we are well positioned to capitalize on stronger demand for our products as China's economy strengthens further and we retain our competitive advantage by staying focused on being the environmental leader in the industry."

Conference Call Invitation

The Company will discuss 2013 second quarter results during a live conference call and webcast on Friday, August 16th, 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 Second Quarter Conference Call, Conference ID: 4635647. There will be a playback available until August 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: 4635647.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=105748 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 (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 BALANCE SHEETS
    June 30,
2013
  December 31,
2012
ASSETS            
Current assets            
  Cash and cash equivalents   $ 15,399,617   $ 12,083,358
  Accounts receivable     7,611,692     9,305,104
  Inventories     18,888,447     18,696,648
    Advances to suppliers     3,173,698     1,827,480
    Value added tax refundable     11,813     -
    Prepaid expenses and other current assets     144,290     131,564
        Total current assets     45,229,557     42,044,154
             
Property, plant and equipment, net     10,304,955     10,223,874
Land use right, net     669,674     663,800
Other assets     204,108     202,346
        Total Assets   $ 56,408,294   $ 53,134,174
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities            
  Accounts payable   $ 571,029   $ 4,082,982
  Accrued expenses and other payables     646,600     796,705
  Value added taxes payable     -     110,484
  Amount due to shareholder     772,524     517,863
  Income tax payable     1,181,715     1,031,092
      Total current liabilities     3,171,868     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 June 30, 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     3,584,987     2,546,999
  Retained earnings     46,067,761     40,464,371
      Total shareholders' equity     53,236,426     46,595,048
             
      Total liabilities and shareholders' equity   $ 56,408,294   $ 53,134,174
                   
                   
 
 
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2013     2012     2013     2012  
                                 
Net revenue   $ 17,732,347     $ 18,694,938     $ 32,572,153     $ 34,866,428  
Cost of revenue     12,596,865       13,803,142       23,557,730       26,419,246  
Gross profit     5,135,482       4,891,796       9,014,423       8,447,182  
                                 
Operating expenses:                                
Selling and marketing     116,565       78,228       272,471       167,750  
General and administrative     571,243       464,158       1,170,530       1,123,028  
Total operating expenses     687,808       542,386       1,443,001       1,290,778  
                                 
Income from operations     4,447,674       4,349,410       7,571,422       7,156,404  
                                 
Other income (expenses)                                
Interest income     14,540       14,336       27,942       28,508  
Net foreign exchange gain (loss)     (12,878 )     (61,606 )     47,065       (29,680 )
Miscellaneous     (9,121 )     -       (9,802 )     -  
Total other income (expense)     (7,459 )     (47,270 )     65,205       (1,172 )
                                 
Income before income taxes     4,440,215       4,302,140       7,636,627       7,155,232  
                                 
Income taxes     1,202,218       1,139,110       2,033,237       1,926,949  
                                 
Net income     3,237,997       3,163,030       5,603,390       5,228,286  
                                 
Other comprehensive income - foreign currency translation adjustments     774,693       18,029       1,037,988       231,447  
                                 
Comprehensive income   $ 4,012,690     $ 3,181,059     $ 6,641,378     $ 5,459,733  
                                 
Earnings per share - basic and diluted   $ 0.31     $ 0.31     $ 0.54     $ 0.51  
                                 
Weighted average number of common shares outstanding - basic and diluted     10,407,839       10,354,048       10,407,839       10,177,026  
                                 
                                 
 
 
GUANWEI RECYCLING CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    Six Months Ended
June 30,
 
    2013     2012  
                 
Cash flows from operating activities                
Net income   $ 5,603,390     $ 5,228,286  
                 
Adjustments to reconcile net income to net cash provided by operating activities                
Depreciation of property, plant and equipment     511,086       401,947  
Amortization of land use rights     7,795       7,717  
                 
Changes in operating assets and liabilities:                
Accounts receivable     1,866,159       (928,136 )
Inventories     193,491       (1,676,025 )
Advances to suppliers     (1,294,453 )     -  
Value added taxes refundable     (11,687 )     (665,921 )
Prepaid expenses and other current assets     (11,355 )     742,871  
Other assets     2,404       2,380  
Accounts payable     (3,558,330 )     (1,864,905 )
Accrued expenses and other payables     (172,425 )     (92,906 )
Value added taxes payable     (111,574 )     -  
Income tax payable     127,888       (33,839 )
Net cash provided by operating activities     3,152,389       1,121,469  
                 
Cash flows from investing activities                
Deposit for property, plant and equipment     -       (645,755 )
Purchase of property, plant and equipment     (373,718 )     (100,572 )
Net cash used in investing activities     (373,718 )     (746,327 )
                 
Cash flows from financing activities                
Advance from shareholder     254,661       323,582  
Net cash provided by financing activities     254,661       323,582  
                 
Effect of exchange rate change on cash     282,927       84,839  
                 
Net increase in cash and cash equivalents     3,316,259       783,563  
                 
Cash and cash equivalents at the beginning of period     12,083,358       12,432,803  
Cash and cash equivalents at the end of period   $ 15,399,617     $ 13,216,366  
                 
Supplemental disclosure of cash flow information                
Income taxes paid   $ 1,905,349     $ 1,960,785  
Non-cash investing and financing activities                
Accrued expense related to purchases of property, plant and equipment   $ 8,013     $ -  
Issuance of common stock to repay debt to shareholder   $ -       1,468,167  
                 
                 

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