EX-99.1 2 f6k050817ex99i_fulingglobal.htm PRESS RELEASE DATED MAY 12, 2017, TITLED "FULING GLOBAL INC. REPORTS FIRST QUARTER 2017 FINANCIAL RESULTS"

Exhibit 99.1

 

Fuling Global Inc. Reports First Quarter 2017 Financial Results

 

Sales Volume and EPS Increase by 27.8% and 86.5%, Respectively, in the First Quarter, as the

Growth Momentum Carries into 2017

 

ALLENTOWN, Pa., May 12, 2017 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"), an environmentally-friendly specialized producer and distributor of plastic serviceware, with precision manufacturing facilities in both the U.S. and China, today announced its financial results for the first quarter ended March 31, 2017.

 

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, "Although first quarter is typically our lowest sales quarter of the year due to Lunar New Year holidays, we are pleased with the solid year-over-year growth for both top- and bottom-lines with revenues and EPS growing 28.0% and 86.5%, respectively, highlighting continued momentum across all major product categories. With a robust order book, tight cost control, and improving productivity and efficiency through automation and process control, we are optimistic we will continue to improve our results in coming quarters.”

 

Ms. Guilan Jiang, Chairwoman of Fuling Global, added, “We have completed the construction of our fourth factory in China in March. We are very excited and eagerly looking forward to the commencement of commercial production later this month. The new state-of-the-art factory allows us to potentially more than double our current production capacity, setting the stage for accelerated growth in second half of year and beyond.”

 

First Quarter 2017 Financial Highlights

 

   For the Three Months Ended March 31, 
($ millions, except per share data)  2017   2016   % Change 
Revenues  $26.3   $20.6    28.0%
Gross profit  $5.1   $5.2    -2.3%
Gross margin   19.3%   25.3%   -6.0 percentage points 
Operating income  $1.5   $1.1    36.3%
Operating margin   5.6%   5.3%   0.3 percentage points 
Net income attributable to Fuling Global  $1.4   $0.7    86.8%
Diluted earnings per share  $0.09   $0.05    86.5%

 

Net income attributable to Fuling Global increased by 86.8% to $1.4 million, or $0.09 per basic and diluted share, for the first quarter of 2017 from $0.7 million, or $0.05 per basic and diluted share, for the same period of last year. The increases in net income and earnings per share were primarily due to decreased selling, general and administrative expenses and increased subsidy income in 2017.

 

●Total sales volume increased by 27.8% to 9,748 tons for the first quarter of 2017 from 7,629 tons for the same period of last year. The increase in sales volume was across the board in all product categories. Blended average selling price (“ASP”) was essentially unchanged at $2.70 per kilogram as ASPs for straws and others increased while ASPs for cutlery and cups and plates decreased.

 

●Revenues increased by 28.0% to $26.3 million for the first quarter of 2017 from $20.6 million for the same period of last year, driven by increase in overall sales volume.

 

 

 

 

●Gross profit decreased by 2.3% to $5.1 million for the first quarter of 2017 from $5.2 million for the same period of last year. Gross margin decreased by 6.0 percentage points to 19.3% from 25.3% for the same period of last year. The decrease in gross margin was due primarily to a rebound in oil prices that led to rising raw material prices. It usually takes at the minimum one quarter and sometimes two to implement product price increases, depending on market conditions.

 

First Quarter 2017 Financial Results

 

Revenues

 

For the first quarter of 2017, total revenues increased by $5.8 million, or 28.0%, to $26.3 million from $20.6 million for the same period of last year. The increase in total revenues was a result of strong growth in sales volume across all major product categories.

 

Overall sales volume increased by 2,119 tons, or 27.8%, to 9,748 tons for the first quarter of 2017 from 7,629 tons for the same period of last year. The increase in sales volume was across the board with cups and plates growing 67.3% and straws growing 61.0%. Blended ASP was essentially unchanged at $2.70 per kilogram as ASPs for straws and others increased while ASPs for cutlery and cups and plates decreased.

 

Revenues from cutlery sales increased by $1.0 million, or 8.4%, to $12.7 million for the first quarter of 2017 from $11.7 million for the same period of last year. Revenues from straws sales increased by $1.5 million, or 72.6%, to $3.6 million for the first quarter of 2017 from $2.1 million for the same period of last year. Revenues from cups and plates sales increased by $1.9 million, or 33.8%, to $7.4 million for the first quarter of 2017 from $5.5 million for the same period of last year. Revenues from other products sales increased by $1.4 million, or 107.3%, to $2.7 million for the first quarter of 2017 from $1.3 million for the same period of last year. Cutlery, straws, cups and plates, and other products accounted for 48.1%, 13.7%, 28.0%, and 10.2% of total revenues for the first quarter of 2017, compared to 56.8%, 10.2%, 26.7%, and 6.3% for the same period of last year, respectively.

 

 For the Three Months Ended March 31, 
   2017   2016   Y/Y Change 
   Revenues ($’000)  

%of

Total

   Revenues ($’000)  

% of

Total

   Amount ($’000)   % 
Cutlery  $12,663    48.1%  $11,680    56.8%  $983    8.4%
Straws   3,615    13.7%   2,095    10.2%   1,521    72.6%
Cups and plates   7,366    28.0%   5,504    26.7%   1,863    33.8%
Others   2,694    10.2%   1,299    6.3%   1,395    107.3%
Total  $26,338    100.0%  $20,578    100.0%  $5,761    28.0%

 

On a geographical basis, sales in the U.S., Fuling Global's largest market, increased by $3.9 million, or 20.1%, to $23.4 million for the first quarter of 2017 from $19.5 million for the same period of last year. Sales in Europe also increased by $0.2 million, or 50.7%, to $0.7 million for the first quarter of 2017. Sales in China, our second largest market, were the strongest and increased by almost four fold to $1.7 million for the first quarter of 2017 from $0.3 million for the same period of last year.

 

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   For the Three Months Ended March 31, 
   2017   2016   Y/Y Change 
   Revenues  ($’000)  

%of

Total

   Revenues  ($’000)  

% of

Total

   Amount  ($’000)   % 
U.S.  $23,384    88.8%  $19,475    94.6%  $3,909    20.1%
Europe   655    2.5%   434    2.1%   220    50.7%
China   1,724    6.5%   345    1.7%   1,379    399.8%
Canada   252    1.0%   205    1.0%   47    23.1%
Others   324    1.2%   119    0.6%   205    172.6%
Total  $26,338    100.0%  $20,578    100.0%  $5,760    28.0%

 

Gross profit

 

Total cost of goods sold increased by $5.9 million, or 38.2%, to $21.3 million for the first quarter of 2017 from $15.4 million for the same period of last year. The increase was mainly due to increased sale volume as well as higher unit price of raw material as oil prices increased year-over-year. Gross profit decreased by $0.1 million, or 2.3%, to $5.1 million for the first quarter of 2017 from $5.2 million for the same period of last year. Gross margin was 19.3% the first quarter of 2017, compared to 25.3% for the same period of last year.

 

Operating income

 

Selling expenses decreased by $0.5 million, or 27.6%, to $1.2 million for the first quarter of 2017 from $1.6 million for the same period of last year. As a percentage of sales, selling expenses were 4.5% in the first quarter of 2017, compared to 7.9% in the same period of last year. General and administrative expenses decreased by $0.1 million, or 5.8%, to $1.9 million for the first quarter of 2017 from $2.1 million for the same period of last year. As a percentage of sales, general and administrative expenses were 7.4% in the first quarter of 2017, compared to 10.0% in the same period of last year. Research and development expenses increased by $0.1 million, or 13.9%, to $0.5 million for the first quarter of 2017 from $0.4 million for the same period of last year. We expect R&D expense to stay at current levels as we continued to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop degradable and biodegradable materials and reduce reliance on fossil-based raw materials. 

 

As a result, total operating expenses decreased by $0.5 million, or 12.5%, to $3.6 million for the first quarter of 2017 from $4.1 million for the same period of last year.

 

Operating income increased by $0.4 million, or 36.3%, to $1.5 million for the first quarter of 2017 from $1.1 million for the same period of last year. Operating margin was 5.6% for the first quarter of 2017, compared to 5.3% for the same period of last year. The increase in operating margin was due to decrease in operating expenses as a percentage of sales and partially offset by decrease in gross margin.

 

Income before income taxes

 

Total other income, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.2 million for the first quarter of 2017, compared to total other expense of $0.1 million for the same period of last year. The increase in total other income was mainly due to a $0.3 million increase in subsidy income in the first quarter of 2017.

 

Income before income taxes increased by $0.7 million, or 67.1%, to $1.7 million for the first quarter of 2017 from $1.0 million for the same period of last year. The increase was primarily due to lower operating expenses and higher subsidy income received from local government.

 

Provision for income taxes was $0.3 million for the first quarter of 2017, essentially unchanged from the same period of last year.

 

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Net income

 

Net income increased by $0.7 million, or 98.4%, to $1.4 million for the first quarter of 2017 from $0.7 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global increased by $0.7 million, or 86.8%, to $1.4 million for the first quarter of 2017 from $0.7 million for the same period of last year.

 

Basic and diluted earnings per share were $0.09 for the first quarter of 2017, compared to $0.05 for the same period of last year. The increase in earnings per share was mainly due to increase in net income as a result of lower operating expenses and higher subsidy income in 2017.

 

Financial Condition

 

As of March 31, 2017, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $3.9 million, $2.2 million, and $2.3 million, respectively, compared to $4.0 million, $2.3 million, and $1.5 million, respectively, at the end of 2016. Short-term borrowing and bank notes payable were $17.8 million and $2.7 million, respectively, as of March 31, 2017, compared to $21.5 million and $2.6 million, respectively, at the end of 2016. Long-term borrowing was $0.9 million as of March 31, 2017, compared to $0.8 million at the end of 2016.

 

Net cash used in operating activities was $0.1 million for the first quarter of 2017, compared to $2.7 million for the same period of last year. Net cash used in investing activities was $3.3 million for the first quarter of 2017, compared to $7.4 million for the same period of last year. Net cash provided by financing activities was $3.4 million for the first quarter of 2017, compared to $2.8 million for the same period of last year.

 

About Fuling Global Inc.

 

Fuling Global Inc. ("Fuling Global") is an environmentally-friendly specialized producer and distributor of plastic serviceware, with precision manufacturing facilities in both the U.S. and China. The Company's plastic serviceware products include disposable cutlery, drinking straws, cups, plates and other plastic products and are used by more than one hundred customers primarily from the U.S. and Europe, including Subway, Wendy's, Burger King, Taco Bell, KFC (China only), Walmart, and McKesson. More information about the Company can be found at: http://ir.fulingglobal.com/.

 

Forward-Looking Statements

 

This press release contains information about Fuling Global's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its application of IPO proceeds, its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of software and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Fuling Global encourages you to review other factors that may affect its future results in Fuling Global's registration statement and in its other filings with the Securities and Exchange Commission.

 

For more information, please contact:

 

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: tony.tian@weitian-ir.com
Phone: +1-732-910-9692

 

At the Company:
Gilbert Lee, CFO
Email: ir@fulingplasticusa.com
Phone: +1-610-366-8070 x1835
Web: http://ir.fulingglobal.com/

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,   December 31, 
   2017   2016 
   (UNAUDITED)     
ASSETS
Current Assets:        
Cash and cash equivalents  $3,876,697   $4,009,784 
Restricted cash   2,176,741    2,333,607 
Certificates of deposit   2,297,924    1,539,082 
Accounts receivable, net   18,230,145    20,915,134 
Advances to supplier, net   403,724    639,947 
Inventories, net   15,409,591    16,731,704 
Prepaid expenses and other current assets   1,998,299    1,660,978 
Total Current Assets   44,393,121    47,830,236 
           
Property, plant and equipment, net   35,835,044    33,802,047 
Intangible assets, net   9,484,313    9,447,486 
Prepayments for construction and equipment purchases   2,322,613    2,192,236 
Security deposit for sale leaseback   728,685    723,206 
Other non-current assets   223,815    269,329 
Total Assets  $92,987,591   $94,264,540 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current Liabilities:          
Short term borrowings  $21,469,204   $17,790,962 
Bank notes payable   2,651,817    2,556,768 
Advances from customers   604,785    604,873 
Accounts payable   10,712,774    16,333,445 
Accrued and other liabilities   1,854,917    2,195,853 
Other payable - sale leaseback   1,945,707    1,931,076 
Taxes payable   242,411    164,571 
Deferred gains   270,964    650,343 
Due to Related party   22,945    53,082 
Total Current Liabilities   39,775,524    42,280,973 
           
Long term payable - sale leaseback   1,201,579    1,675,314 
Long term borrowing   944,033    836,471 
Total Liabilities   41,921,136    44,792,758 
           
Commitments and contingencies          
           
Shareholders' Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,756,500 and 15,756,500 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively   15,757    15,757 
Additional paid in capital   29,857,295    29,845,442 
Statutory reserve   4,151,610    4,017,957 
Retained earnings   18,242,661    16,976,133 
Accumulated other comprehensive loss   (1,367,550)   (1,520,750)
Total Fuling Global Inc.'s equity   50,899,773    49,334,539 
           
Noncontrolling interest   166,682    137,243 
Total Shareholders' Equity   51,066,455    49,471,782 
           
Total Liabilities and Shareholders' Equity  $92,987,591   $94,264,540 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

 

   For the Three Months Ended March 31, 
   2017   2016 
         
Revenues  $26,338,048   $20,577,819 
Cost of goods sold   21,250,573    15,372,996 
Gross Profit   5,087,475    5,204,823 
           
Operating Expenses          
Selling expenses   1,180,659    1,631,533 
General and administrative expenses   1,944,531    2,064,559 
Research and development expenses   476,496    418,356 
Total operating expenses   3,601,686    4,114,448 
           
Income from Operations   1,485,789    1,090,375 
           
Other Income (Expense):          
Interest income   5,980    6,613 
Interest expense   (242,661)   (201,684)
Subsidy income   366,518    40,869 
Foreign currency transaction gain (loss)   (48,395)   59,789 
Other expense, net   159,892    37,652 
Total other income, net   241,334    (56,761)
           
Income Before Income Taxes   1,727,123    1,033,614 
           
Provision for Income Taxes   297,503    313,024 
           
Net Income  $1,429,620   $720,590 
           
Less: net income (loss) attributable to noncontrolling interest   29,439    (29,109)
           
Net income attributable to Fuling Global Inc.  $1,400,181   $749,699 
           
Other Comprehensive Income          
Foreign currency translation income   153,200    233,732 
Comprehensive income attributable to Fuling Global Inc.  $1,553,381   $983,431 
           
Earnings per share          
Basic and diluted  $0.09   $0.05 
           
Weighted average number of shares          
Basic and diluted   15,756,500    15,732,795 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Three Months Ended March 31, 
   2017   2016 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income  $1,429,620   $720,590 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock based compensation   11,853    34,631 
Deferred tax benefit (loss)   -    (112,464)
Depreciation and amortization   808,699    619,319 
Bad debt provisions(recovery)   (55,273)   5,503 
Gain on disposal of fixed assets   (1,477)   (12,888)
Changes in operating assets:          
Accounts receivable   2,812,566    (335,806)
Advances to suppliers   244,196    (285,218)
Inventories   1,374,124    1,588,607 
Other assets   177,878    (634,938)
Changes in operating liabilities:          
Accounts payable   (5,823,735)   (4,151,850)
Advance from customers   (4,021)   309,220 
Deferred income   (384,541)   - 
Taxes payable   (378,085)   (180,977)
Accrued and other liabilities   (351,075)   (229,848)
Net cash used in operating activities   (139,271)   (2,666,119)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Additions to property and equipment   (90,051)   (1,207,431)
Additions to construction in progress   (2,197,643)   - 
Cash receipts from disposal property and equipment   13,099    19,602 
Cash decrease from certificates of deposit   (747,637)   (103,046)
Prepayments for construction and equipment purchase   (310,239)   (6,062,422)
Net cash used in investing activities   (3,332,471)   (7,353,297)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term borrowings   7,499,776    9,682,986 
Repayments of short-term borrowings   (3,953,506)   (7,187,968)
Proceeds from long-term borrowings   107,562    - 
Proceeds from bank notes payable   1,344,182    1,778,440 
Repayments of bank notes payable   (1,268,458)   (1,729,451)
Repayment of third party borrowing   -    (183,474)
Repayments of loans from related parties   (30,557)   - 
Repayments of other payable - sales lease back   (486,723)   - 
Change of restricted cash   174,723    488,632 
Net cash provided by financing activities   3,386,999    2,849,165 
           
EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH EQUIVALENTS   (48,344)   10,140 
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (133,087)   (7,160,111)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD   4,009,784    15,573,554 
           
CASH AND CASH EQUIVALENTS, ENDING OF THE PERIOD  $3,876,697   $8,413,443 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest paid  $214,889   $244,975 
Income tax paid  $605,258   $609,402 
Non-cash investing activities:          
Transfer from construction in progress to fixed assets  $12,059,546   $- 
Transfer from advance payments to fixed assets  $20,400   $- 

 

 

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