EX-99.1 6 f20f2017ex15-1_fuling.htm PRESS RELEASE DATED MARCH 30, 2018 TITLED "FULING GLOBAL INC. REPORTS FULL YEAR 2017 FINANCIAL RESULTS"

Exhibit 99.1

 

Fuling Global Inc. Reports Full Year 2017 Financial Results

 

Continued Strong Growth in Both Revenues and Volume, with Increases of 21.3% and 17.7%, Respectively, in 2017

 

ALLENTOWN, PA., March 30, 2018 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) (“Fuling Global” or the “Company”), a 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 twelve months ended December 31, 2017.

 

   For the Twelve Months Ended December 31, 
($ millions, except per share data)  2017   2016   % Change 
Revenues  $127.3   $104.9    21.3% 
Gross profit  $26.1   $25.2    3.2% 
Gross margin   20.5%   24.1%   -3.6 percentage points 
Operating income  $7.6   $8.5    -10.8% 
Operating margin   6.0%   8.1%   -2.2 percentage points 
Net income attributable to Fuling Global  $6.3   $7.9    -21.0% 
Diluted earnings per share  $0.40   $0.50    -21.1% 

 

●Revenues increased by 21.3% to $127.25 million for the year of 2017 from $104.88 million for the prior year, as a result of the combined effect of increases in both sales volume and blended average selling prices (“ASP”).

 

●Total sales volume increased by 17.7% to 50,284 tons for the year of 2017 from 42,723 tons for the prior year. The increase in sales volume was across all product categories. Blended ASP also increased by 3.1% to $2.53 per kilogram for the year of 2017 from $2.45 per kilogram for the prior year.

 

●Gross profit increased by 3.2% to $26.05 million for the year of 2017 from $25.24 million for the prior year. Gross margin decreased by 3.6 percentage points to 20.5% for the year of 2017 from 24.1% for the prior year. The decrease in gross margin was primarily due to increase in the price of raw materials, particularly Polypropylene.

 

●Net income attributable to Fuling Global was $6.28 million, or $0.40 per basic and diluted share, for the year of 2017, compared to $7.94 million, or $0.50 per basic and diluted share for the prior year. The decrease in net income attributable to Fuling Global was mainly due to the increase in total operating income and the decrease in subsidy income that more than offset the increase in gross profit.

 

“2017 proved to be another strong year for Fuling Gobal with both revenues and shipment volume reaching record high. The growths were across all major geographical regions and all product categories,” said Mr. Xinfu Hu, Chief Executive Officer of Fuling Global.

 

Ms. Guilan Jiang, Chairwoman of Fuling Global, further commented, “With continuing order momentum and increased manufacturing capacity, we are increasingly confident in our ability to further extend our top-line growth streak in 2018 and beyond. As we continue to face uncertainty in market factors, particularly pricing environment for raw materials and our final products, we look for ways to further improve our productivity and profitability through process optimization and cost control in 2018.”

 

   

 

 

Fiscal Year 2017 Financial Results

 

Revenues

 

For the year of 2017, total revenues increased by $22.37 million, or 21.3%, to $127.25 million from $104.88 million for the prior year. The increase in total revenues was a combined result of increases in both sales volume and blended ASP.

 

Overall sales volume increased by 7,561 tons, or 17.7%, to 50,284 tons for the year of 2017 from 42,723 tons for the prior year. The increase in sales volume was across all product categories. Sales volume of cutlery increased by 2,310 tons, or 8.5%, to 29,638 tons for the year of 2017 from 27,328 tons for the prior year. Sales volume of straws increased by 1,590 tons, or 35.8%, to 6,025 tons for the year of 2017 from 4,435 tons for the prior year. Sales volume of cups and plates increased by 2,516 tons, or 31.1%, to 10,602 tons for the year of 2017 from 8,086 tons for the prior year. Sales volume of other products increased by 1,145 tons, or 39.8%, to 4,020 tons for the year of 2017 from 2,875 tons for the prior year.

 

Blended ASP increased by $0.08 per kilogram, or 3.1%, to $2.53 per kilogram for the year of 2017 from $2.45 per kilogram for the prior year. The increase in blended ASP was mainly related to cutlery and other products and partially offset by decrease in ASP for straws and cups and plates. ASP of cutlery increased by $0.12 per kilogram, or 6.1%, to $2.12 per kilogram for the year of 2017 from $2.00 per kilogram for the prior year. ASP of straws decreased by $0.24 per kilogram, or 6.9%, to $3.19 per kilogram for the year of 2017 from $3.43 per kilogram for the prior year. ASP of cups and plates decreased by $0.20 per kilogram, or 5.9%, to $3.24 per kilogram for the year of 2017 from $3.44 per kilogram for the prior year. ASP of other products increased by $0.19 per kilogram, or 7.4%, to $2.69 per kilogram for the year of 2017 from $2.51 per kilogram for the prior year.

 

The increase in revenues was across all product categories. Revenues from cutlery sales increased by $8.23 million, or 15.1%, to $62.85 million for the year of 2017 from $54.62 million for the prior year. Revenues from straws sales increased by $4.03 million, or 26.5%, to $19.25 million for the year of 2017 from $15.22 million for the prior year. Revenues from cups and plates sales increased by $6.49 million, or 23.3%, to $34.33 million for the year of 2017 from $27.84 million for the prior year. Revenues from other products sales increased by $3.62 million, or 50.2%, to $10.83 million for the year of 2017 from $7.21 million for the prior year. Cutlery, straws, cups and plates, and other products accounted for 49.4%, 15.1%, 27.0%, and 8.5% of total revenues for the year of 2017, compared to 52.1%, 14.5%, 26.5%, and 6.9% for the prior year, respectively.

 

   For the Twelve Months Ended December 31, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
Cutlery  $62,846    49.4%  $54,619    52.1%  $8,227    15.1%
Straws   19,248    15.1%   15,219    14.5%   4,029    26.5%
Cups and plates   34,330    27.0%   27,835    26.5%   6,495    23.3%
Others   10,826    8.5%   7,209    6.9%   3,617    50.2%
Total  $127,250    100.0%  $104,882    100.0%  $22,368    21.3%

 

On a geographical basis, sales in the U.S., Fuling Global’s largest market, increased by $14.28 million, or 15.0%, to $109.17 million for the year of 2017 from $94.90 million for the prior year. Sales in China, our second largest market, increased by $3.91 million, or 93.1%, to $8.11 million for the year of 2017 from $4.20 million for the prior year. Sales in Europe increased by $2.94 million, or 92.2%, to $6.14 million for the year of 2017 from $3.19 million for the prior year. Sales in Canada increased by $0.96 million, or 97.9%, to $1.94 million for the year of 2017 from $0.98 million for the prior year.

 

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   For the Twelve Months Ended December 31, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
U.S.  $109,174    85.8%  $94,899    90.5%  $14,275    15.0%
China   8,111    6.4%   4,200    4.0%   3,911    93.1%
Europe   6,137    4.8%   3,193    3.0%   2,944    92.2%
Canada   1,944    1.5%   982    0.9%   962    97.9%
Others   1,884    1.5%   1,607    1.6%   276    17.2%
Total  $127,250    100.0%  $104,882    100.0%  $22,368    21.3%

 

Gross profit

 

Total cost of goods sold increased by $21.56 million, or 27.1%, to $101.20 million for the year of 2017 from $79.64 million for the prior year. The increase was mainly due to increased sale volume as well as higher unit price of raw materials, particularly Polypropylene. Gross profit increased by $0.81 million, or 3.2%, to $26.05 million for the year of 2017 from $25.24 million for the prior year. Gross margin was 20.5% the year of 2017, compared to 24.1% for the prior year.

 

Operating income

 

Selling expenses increased by $0.76 million, or 11.1%, to $7.62 million for the year of 2017 from $6.86 million for the prior year. As a percentage of sales, selling expenses were 6.0% in 2017, compared to 6.5% in the prior year. General and administrative expenses increased by $0.37 million, or 4.9%, to $7.88 million for the year of 2017 from $7.51 million for the prior year. As a percentage of sales, general and administrative expenses were 6.2% in 2017, compared to 7.2% in the prior year. Research and development expenses increased by $0.60 million, or 25.4%, to $2.95 million for the year of 2017 from $2.36 million for the prior year. As a percentage of sales, research and development expenses accounted for 2.3% in 2017, compared to 2.2% in the prior year. We expect research and development expenses in 2018 to stay at current levels as we continue to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop biodegradable materials and reduce reliance on fossil-based raw materials. 

 

As a result, total operating expenses increased by $1.73 million, or 10.4%, to $18.45 million for the year of 2017 from $16.72 million for the prior year.

 

Operating income decreased by $0.92 million, or 10.8%, to $7.60 million for the year of 2017 from $8.52 million for the prior year. Operating margin was 6.0% for the year of 2017, compared to 8.1% for the prior year. The decrease in operating margin was primarily due to decrease in gross margin and partially offset by decrease in operating expenses as a percentage of total revenues.

 

Income before income taxes

 

Total net other expense, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.48 million for the year of 2017, compared to total net other income of $1.46 million for the prior year. The difference was mainly due to decreased subsidy income and other income as well as increased interest expense in 2017.

 

Income before income taxes decreased by $2.86 million, or 28.7%, to $7.11 million for the year of 2017 from $9.97 million for the prior year. The decrease was a result of increased operating expenses that more than offset increased gross profit in 2017.

 

Provision for income taxes was $0.82 million for the year of 2017, compared to $2.03 million for the prior year.

 

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Net income

 

Net income decreased by $1.65 million, or 20.8%, to $6.29 million for the year of 2017 from $7.94 million for the prior year. After deduction of non-controlling interest, net income attributable to Fuling Global decreased by $1.67 million, or 21.0%, to $6.28 million for the year of 2017 from $7.94 million for the prior year.

 

Basic and diluted earnings per share were $0.40 for the year of 2017, compared to $0.50 for the prior year. The decrease in earnings per share was mainly due to decrease in net income as a result of increased operating expenses and other net expenses that more than offset increased gross profit in 2017.

 

Financial Condition

 

As of December 31, 2017, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $4.12 million, $4.37 million, and $0.11 million, respectively, compared to $4.01 million, $2.33 million, and $1.54 million, respectively, at the end of 2016. Short-term borrowing and bank notes payable were $29.70 million and $5.04 million, respectively, as of December 31, 2017, compared to $17.79 million and $2.56 million, respectively, at the end of 2016. Long-term borrowing was $1.80 million as of December 31, 2017, compared to $0.84 million at the end of 2016.

 

Net cash provided by operating activities was $2.47 million for the year of 2017, compared to $5.15 million for the prior year. Net cash used in investing activities was $14.41 million for the year of 2017, compared to $24.08 million for the prior year. Net cash provided by financing activities was $11.98 million for the year of 2017, compared to $7.70 million for the prior year.

 

About Fuling Global Inc.

 

Fuling Global Inc. (“Fuling Global”) is a 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:

 

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

 

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

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(AUDITED)

 

   For the Years Ended December 31, 
   2017   2016   2015 
             
Revenues  $127,250,022   $104,881,880   $91,293,675 
Cost of goods sold   101,199,010    79,640,421    67,646,107 
Gross Profit   26,051,012    25,241,459    23,647,568 
                
Operating Expenses               
Selling expenses   7,620,189    6,857,382    6,436,821 
General and administrative expenses   7,881,138    7,510,901    6,149,411 
Research and development expenses   2,953,477    2,355,539    2,091,513 
Total operating expenses   18,454,804    16,723,822    14,677,745 
                
Income from Operations   7,596,208    8,517,637    8,969,823 
                
Other Income (Expense):               
Interest income   64,704    28,586    53,019 
Interest expense   (1,171,386)   (801,728)   (1,115,633)
Subsidy income   1,043,440    1,863,365    901,852 
Foreign currency transaction gain (loss)   (398,514)   300,130    476,576 
Other expense, net   (19,838)   65,042    104,942 
Total other income (expense), net   (481,594)   1,455,395    420,756 
                
Income Before Income Taxes   7,114,614    9,973,032    9,390,579 
                
Provision for Income Taxes   823,942    2,029,979    1,442,406 
                
Net Income  $6,290,672   $7,943,053   $7,948,173 
                
Less: net income (loss) attributable to non-controlling interest   12,875    20    (93,368)
                
Net income attributable to Fuling Global Inc.  $6,277,797   $7,943,033   $8,041,541 
                
Other Comprehensive Income               
Foreign currency translation income (loss)   2,172,347    (1,913,200)   (702,167)
Comprehensive income attributable to Fuling Global Inc.  $8,450,144   $6,029,833   $7,339,374 
                
Earnings per share               
Basic and diluted  $0.40   $0.50   $0.65 
                
Weighted average number of shares               
Basic and diluted   15,759,293    15,735,588    12,335,072 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AUDITED)

 

   December 31,   December 31, 
   2017   2016 
ASSETS        
Current Assets:        
Cash and cash equivalents  $4,122,394   $4,009,784 
Restricted cash   4,366,891    2,333,607 
Certificates of deposit   105,707    1,539,082 
Accounts receivable, net   23,911,326    20,915,134 
Advances to supplier, net   612,655    639,947 
Inventories, net   20,775,035    16,731,704 
Security deposits for sale leaseback   771,814    - 
Prepaid expenses and other current assets   2,347,300    1,660,978 
Total Current Assets   57,013,122    47,830,236 
           
Property, plant and equipment, net   48,478,612    33,802,047 
Intangible assets, net   9,878,594    9,447,486 
Prepayments for construction and equipment purchases   527,568    2,192,236 
Security deposits for sale leaseback - long term   543,996    723,206 
Other assets   287,741    269,329 
Total Assets  $116,729,633   $94,264,540 
           
  LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Current Liabilities:          
Short term borrowings  $29,696,842   $17,790,962 
Bank notes payable   5,035,849    2,556,768 
Advances from customers   588,143    604,873 
Accounts payable   14,175,530    16,333,445 
Accrued and other liabilities   2,933,015    2,195,853 
Other payable - sale leaseback   2,755,931    1,931,076 
Taxes payable   289,804    164,571 
Deferred gains   87,605    650,343 
Due to Related party   -    53,082 
Total Current Liabilities   55,562,719    42,280,973 
           
Long term payable - sale leaseback   1,371,359    1,675,314 
Long term borrowings   1,801,887    836,471 
Total Liabilities   58,735,965    44,792,758 
           
Commitments and contingencies          
           
Shareholders’ Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,780,205 and 15,756,500 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively   15,781    15,757 
Additional paid in capital   29,904,285    29,845,442 
Statutory reserve   4,617,039    4,017,957 
Retained earnings   22,654,848    16,976,133 
Accumulated other comprehensive income (loss)   651,597    (1,520,750)
Total Fuling Global Inc.’s equity   57,843,550    49,334,539 
           
Non-controlling interest   150,118    137,243 
Total Shareholders’ Equity   57,993,668    49,471,782 
           
Total Liabilities and Shareholders’ Equity  $116,729,633   $94,264,540 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AUDITED)

 

   For the Years Ended December 31, 
   2017   2016   2015 
CASH FLOWS FROM OPERATING ACTIVITIES            
Net income  $6,290,672   $7,943,053   $7,948,173 
Adjustments to reconcile net income to net cash provided by operating activities:               
Stock based compensation   58,867    123,339    23,088 
Deferred tax expense   -    319,252    (319,252)
Depreciation and amortization   4,086,740    3,177,954    2,681,293 
Bad debt provisions   160,902    2,835    36,938 
Unrealized losses (gains)   34,417    (60,225)   - 
Inventory reserve   24,675    32,576    - 
Gain on disposal of fixed assets   116,989    (12,687)   - 
Changes in operating assets:               
Accounts receivable   (2,372,548)   (6,870,015)   (2,224,191)
Advances to suppliers   (24,826)   (338,783)   364,925 
Inventories   (3,510,031)   (3,688,956)   1,184,796 
Other assets   (85,699)   (1,382,287)   95,350 
Security deposit for sale leaseback   (523,839)   (755,934)   - 
Changes in operating liabilities:               
Accounts payable   (1,096,970)   6,019,466    (2,737,576)
Advance from customers   (50,007)   43,277    (66,731)
Deferred gains   (583,978)   679,774    - 
Taxes payable   (678,259)   (557,587)   425,412 
Accrued and other liabilities   627,533    470,105    548,382 
Net cash provided by operating activities   2,474,638    5,145,157    7,960,607 
CASH FLOWS FROM INVESTING ACTIVITIES               
Purchase of property and equipment   (6,547,155)   (4,010,576)   (5,471,455)
Additions to construction in progress   (10,231,413)   (12,679,337)   - 
Cash receipts from disposal property and equipment   13,352    19,296    - 
Cash decrease in certificates of deposit   1,479,874    1,505,061    (1,986,668)
Prepayments for construction and equipment purchase   (480,689)   (1,974,046)   (1,047,526)
Repayments of deposit and prepayments for construction and equipment purchase   1,358,566    1,354,585    - 
Purchase of intangible assets   (2,602)   (8,298,564)   (264,577)
Net cash used in investing activities   (14,410,067)   (24,083,581)   (8,770,226)
CASH FLOWS FROM FINANCING ACTIVITIES               
Proceeds from short-term borrowings   35,582,827    30,660,941    42,684,057 
Repayments of short-term borrowings   (25,270,011)   (26,983,488)   (46,039,616)
Proceeds from long-term borrowings   1,048,749    836,471    - 
Proceeds from bank notes payable   8,175,964    6,150,573    5,318,470 
Repayments of bank notes payable   (5,954,218)   (6,252,747)   (5,560,034)
Repayment of third party borrowing   -    (180,611)   - 
Proceeds from loans from related parties   -    55,484    - 
Repayments of loans from related parties   (57,148)   -    (37,764)
Proceeds from other payable - sales lease back   2,906,977    3,941,746    - 
Repayments of other payable - sales lease back   (2,638,787)   (172,154)   - 
Change in restricted cash   (1,811,242)   (358,888)   97,928 
Proceeds from issuance of stocks   -    -    18,594,972 
Net cash provided by financing activities   11,983,111    7,697,327    15,058,013 
EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH EQUIVALENTS   64,928    (322,674)   (74,554)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   112,610    (11,563,771)   14,173,840 
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR   4,009,784    15,573,554    1,399,714 
CASH AND CASH EQUIVALENTS, ENDING OF THE YEAR  $4,122,394   $4,009,783   $15,573,554 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:               
Cash paid during the period for:               
Interest paid  $836,401   $762,868   $1,136,896 
Income tax paid  $1,433,998   $2,331,173   $1,257,004 
Non-cash investing activities:               
Transfer from construction in progress to fixed assets  $15,545,784   $1,209,221   $3,913,677 
Accounts payable for purchasing fixed assets  $1,162,202   $-   $- 
Transfer from advance payments to fixed assets  $191,868   $296,853   $726,445 

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