Guanwei Recycling Corp. (NASDAQ:
GPRC)
, China's leading clean tech
manufacturer of recycled low density polyethylene (LDPE), reported
today that in its third quarter ended September 30, 2012 a reversal
in an approximately year long trend of manufacturing cost increases
outpacing increases in selling prices helped generate a 7.32% year
over year increase in net income on a 7.36% increase in sales, as
gross profit in the quarter increased 11.59%.
Financial Highlights
- Net revenues in the 2012 third quarter increased 7.36% to
$17,905,974 compared with $16,679,012 in the same period last year
based on increases in sales prices and tonnage sold. Tonnage sales
of self-manufactured recycled LDPE increased 5.77% to 14,427 tons
year over year while recycled LDPE prices in the same time period
increased 0.75% to $1,208 per ton.
- Gross profit in the 2012 third quarter compared with the prior
year period increased by $574,704, or 11.59%, to $5,531,524. Wages
and welfare costs, which had increased substantially in the first
half of the year, stabilized in the third quarter, as did costs for
raw materials and overhead. At the same time, selling prices for
manufactured recycled LDPE and sorted non-LDPE materials outpaced
costs.
- 2012 third quarter net income grew 7.32% to $3,622,832, or
$0.17 per share, on 20,815,654 diluted shares outstanding compared
with $3,375,758, or $0.17 per share, in the third quarter of 2011
on 20,000,006 diluted shares outstanding.
- Revenues for the nine months ended September 30, 2012, which
included the low margin sale of $3,462,238 of certain raw materials
in the first half of 2012, increased 13.30% to $52,772,402 compared
with the year ago period. There were no raw materials sales in the
first nine months of 2011.
- Net income of $8,851,118 in the first nine months of 2012, or
$0.43 per share, on 20,509,042 diluted shares outstanding, was
7.26% lower than the $9,544,400 in net income, or $0.48 per share
on 20,000,006 diluted shares outstanding in the same period in
2011. This decline primarily reflected increased raw material,
labor and overhead costs in the first half of 2012 until this trend
was reversed in the third quarter of 2012.
Financial Strength
As of September 30, 2012, the Company had cash and cash
equivalents of $13,236,896 and no short term borrowings. Working
capital as of September 30, 2012 was $32.4 million, compared with
$23.8 million at the same time last year. This increase reflected
higher accounts receivable as the Company continued to expand
credit sales to long term customers with good credit history,
increased inventories and increased cash as a result of achieving
net profits period after period.
Capital Expenditures
Net cash used in investing activities in the nine months ended
September 30, 2012 was $2,412,469. During this period, the Company
built additional storage space for raw materials to better manage
its production cycle. It also acquired additional machinery and
equipment which was placed into service in the third quarter of
2012.
Management Comment
Mr. Min Chen, Chairman and CEO of the Company, stated, "Despite
the economic downturn in China we again managed to generate quarter
over quarter sales growth from our increasingly diversified
customer base, and saw what we believe is a key turning point in
the third quarter with costs moderating as our revenues continued
to grow. Looking ahead, we anticipate further moderate increases in
selling prices while costs for raw materials, labor and overhead
should continue to stabilize or perhaps increase slightly. With the
expectation of continued long term strong demand for recycled LDPE,
we remain very optimistic about our continuing growth potential in
an improving economy."
Conference Call Invitation
The Company will discuss 2012 third quarter and nine month
results during a live conference call and webcast on Wednesday, November 14th, at 8:00am ET. This will
follow distribution of a news release with the Company's third
quarter and nine month results on Tuesday, November 13, 2012.
To participate in the call, interested participants should call
1-877-941-8418 when calling within the United States or
1-480-629-9809 when calling internationally. Please ask for the
Guanwei Recycling Corp. 2012 Third Quarter Conference Call,
Conference ID: 4575618. There will be a playback available until
11/21/12. To listen to the playback, please call 1-877-870-5176
when calling within the United States or1-858-384-5517 when calling
internationally. Use the Replay Pin Number: 4575618.
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link
http://public.viavid.com/index.php?id=102532 or at ViaVid's website
at http://viavid.com.
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 (including over 150 active recurring customers) in
more than ten different industries in China. Guanwei Recycling
Corp. is one of the few plastic recyclers in China that has been
issued a Compliance Certificate by Umweltagentur Erftstadt, which
issues certificates of approval for certain plastics manufacturers
which meet strict environmental standards in Germany. 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 Nine Months Ended
September 30, September 30,
------------------------ -------------------------
2012 2011 2012 2011
----------- ----------- ------------ -----------
Net revenue $17,905,974 $16,679,012 $ 52,772,402 $46,579,286
Cost of revenue 12,374,450 11,722,192 38,793,696 32,291,990
----------- ----------- ------------ -----------
Gross profit 5,531,524 4,956,820 13,978,706 14,287,296
----------- ----------- ------------ -----------
Operating expenses:
Selling and marketing 125,536 95,288 293,286 299,233
General and
administrative 524,112 431,316 1,647,140 1,404,042
----------- ----------- ------------ -----------
Total operating
expenses 649,648 526,604 1,940,426 1,703,275
----------- ----------- ------------ -----------
Income from operations 4,881,876 4,430,216 12,038,280 12,584,021
----------- ----------- ------------ -----------
Other income (expenses)
Interest income 14,395 22,889 42,903 70,302
Interest expenses - (3,453) - (28,667)
Net foreign exchange
(loss) gain (92,074) 67,485 (121,754) 198,609
Miscellaneous 2,409 - 2,409 10,398
----------- ----------- ------------ -----------
Total other
(expenses) income (75,270) 86,921 (76,442) 250,642
----------- ----------- ------------ -----------
Income before income
taxes 4,806,606 4,517,137 11,961,838 12,834,663
Income taxes 1,183,774 1,141,379 3,110,720 3,290,263
----------- ----------- ------------ -----------
Net income 3,622,832 3,375,758 8,851,118 9,544,400
Other comprehensive
(loss) income -
foreign currency
translation
adjustments (47,331) 527,199 166,087 1,070,727
----------- ----------- ------------ -----------
Comprehensive income $ 3,575,501 $ 3,902,957 $ 9,017,205 $10,615,127
=========== =========== ============ ===========
Earnings per share
attributable to
shareholders of
Guanwei Recycling
Corp. - basic and
diluted $ 0.17 $ 0.17 $ 0.43 $ 0.48
=========== =========== ============ ===========
Weighted average number
of common shares
outstanding
- basic and diluted 20,815,654 20,000,006 20,509,042 20,000,006
=========== =========== ============ ===========
Contacts: Richard Sun guanweirecycling@gmail.com Ken
Donenfeld DGI Investor Relations kdonenfeld@dgiir.com Tel:
212-425-5700 Fax: 646-381-9727
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