EX-99.1 2 ea159674ex99-1_ittechpack.htm PRESS RELEASE DATED MAY 10, 2022

Exhibit 99.1

 

IT Tech Packaging, Inc. Announces First Quarter 2022 Unaudited Financial Results

 

BAODING, China, May 10 2022 /PRNewswire/ – IT Tech Packaging, Inc. (NYSE American: ITP) (“IT Tech Packaging” or the “Company”), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the first quarter ended March 31, 2022.

 

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “In the first quarter of 2022, our business was significantly affected by the dynamic and challenging macro environment and resurgence of COVID-19. We have resumed our business operation, and we expect to actively improve our business plans and launch a series of initiatives to optimize our revenue structure and diversify our business to counter the adverse effects of COVID-19 and the governmental policy developments on our operations and financial results. Looking forward, we believe our business fundamentals will defend our leading position in the industry and we remain intently focused on ramping production,broadening the market, and driving long-term value for shareholders in 2022 and beyond.”

 

First Quarter 2022 Unaudited Financial Results

 

   For the Three Months Ended March 31, 
($ millions)  2022   2021   % Change 
Revenues   15.48    24.21    -36.1%
Regular Corrugating Medium Paper (“CMP”)*   13.10    16.96    -22.8%
Light-Weight CMP**   1.93    3.75    -48.6%
Offset Printing Paper   -    2.12    -100.0%
Tissue Paper Products   0.40    1.25    -68.2%
Face Masks   0.06    0.13    -56.6%
                
Gross profit   0.31    1.83    -83.0%
Gross profit (loss) margin   2.0%   7.6%   -5.6 pp****
Regular Corrugating Medium Paper (“CMP”)*   5.4%   8.5%   -3.1 pp****
Light-Weight CMP**   8.2%   10.9%   -2.7 pp****
Offset Printing Paper   -    19.4%   -19.4 pp****
Tissue Paper Products***   -141.5%   -36.5%   -105.0 pp****
Face Masks   29.5%   18.8%   10.7 pp****
                
Operating loss   -2.96    -0.72    -308.2%
Net loss   -2.49    -4.34    42.7%
EBITDA   1.20    -0.07    1,814.3%
Basic and Diluted loss per share   -0.03    -0.12    75.0%

 

*Products from PM6

 

**Products from PM1

 

***Products from PM8 and PM9

 

****pp represents percentage points

 

●Revenue decreased by 36.1% to approximately $15.48 million, mainly due to the decrease in sales volume of regular CMP, offset printing paper and tissue paper products.
   
●Gross profit decreased by 83.0% to approximately $0.31 million. Total gross margin decreased by 5.6 percentage point to 2.0%. 
   
●Loss from operations was approximately $2.96 million, compared to loss from operations of approximately $0.72 million for the same period of last year.
   
●Net loss was approximately $2.49 million, or loss per share of $0.03, compared to net loss of approximately $4.34 million, or loss per share of $0.12, for the same period of last year.
   
●Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was approximately $1.20 million, compared to negative $0.07 million for the same period of last year.

 

 

 

 

Revenue

 

For the first quarter of 2022, total revenue decreased by 36.1%, to approximately $15.48 million from approximately $24.21 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of regular CMP, offset printing paper and tissue paper products.

 

The following table summarizes revenue, volume and ASP by product for the first quarter of 2022 and 2021, respectively:

 

   For the Three Months Ended March 31, 
   2022   2021 
   Revenue
($’000)		   Volume
(tonne)		   ASP
($/tonne)		   Revenue
($’000)		   Volume
(tonne)		   ASP
($/tonne)		 
Regular CMP   13,099    25,245    519    16,964    33,626    504 
Light-Weight CMP   1,927    3,841    502    3,748    7,670    489 
Offset Printing Paper   -    -    -    2,116    3,142    673 
Tissue Paper Products   398    397    1,003    1,251    1,120    1,117 
Total   15,425    29,483    523    24,079    45,558    529 

 

   Revenue
($’000)		   Volume
(thousand
pieces)		   ASP
($/thousand
pieces)		   Revenue
($’000)		   Volume
(thousand
pieces)		   ASP
($/thousand
pieces)		 
Face Masks   57    3,014    19    130    3,836    34 

 

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 27.5%, to approximately $15.03 million and accounted for 97.1% of total revenue for the first quarter of 2022, compared to approximately $20.71 million, or 85.6% of total revenue for the same period of last year. The Company sold 29,086 tonnes of CMP at an ASP of $517/tonne in the first quarter of 2022, compared to 41,296 tonnes at an ASP of $502/tonne in the same period of last year.

 

Of the total CMP sales, revenue from regular CMP decreased by 22.8%, to approximately $13.10 million for the first quarter of 2022, compared to revenue of approximately $16.96 million for the same period of last year. The Company sold 25,245 tonnes of regular CMPat an ASP of $519/tonne during the first quarter of 2022, compared to 33,626 tonnes at an ASP of $504/tonne for the same period of last year. Revenue from light-weight CMP decreased by 48.6%, to approximately $1.93 million for the first quarter of 2022, compared to revenue of approximately $3.75 million for the same period of last year. The Company sold 3,841 tonnes of light-weight CMP at an ASP of $502/tonne for the first quarter of 2022, compared to 7,670 tonnes at an ASP of $489/tonne for the same period of last year.

 

Revenue from offset printing paper was nil  for the first quarter of 2022, compared to revenue of approximately $2.12 million for the same period of last year. The Company sold 3,142 tonnes of offset printing paper at an ASP of $673/tonne in the first quarter of 2021.

 

Revenue from tissue paper products decreased by 68.2%, to approximately $0.40 million for the first quarter of 2022, from approximately $1.25 million for the same period of last year. The Company sold 397 tonnes of tissue paper products at an ASP of $1,003/tonne for the first quarter of 2022, compared to 1,120 tonnes at an ASP of $1,117/tonne for the same period of last year.

 

Revenue from face masks decreased by 56.6%, to approximately $56,596 for the first quarter ended March 31, 2022, from $130,458 for the same period of last year. The Company sold 3,014 thousand pieces of face masks for the first quarter of2022, compared to 3,836 thousand pieces of face masks for the same period oflast year.

 

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Gross Profit and Gross Margin

 

Total cost of sales decreased by 32.2%, to approximately $15.17 million for the first quarter of 2022 from approximately $22.38 million for the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of regular CMP, offset printing paper and tissue paper products.  Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $491, $461,$nil and $2,424, respectively, for the first quarter of 2022, compared to $462, $435, $543 and $1,525, respectively, for the same period of last year.

 

Total gross profit was approximately $0.31 million for the first quarter of 2022, compare to the gross profit of approximately $1.83 million for the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the first quarter of 2022, compared to 7.6% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 5.4%, 8.2%, nil%, -141.5% and 29.5%, respectively, for the first quarter of 2022, compared to 8.5%, 10.9%, 19.4%, -36.5% and 18.8%, respectively, for the same period of last year.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses (“SG&A”) increased by 29.2%, to approximately $3.30 million for the first quarter of 2022 from approximately $2.56 million for the same period of last year.

 

Loss from Operations

 

Loss from operations was approximately $2.96 million for the first quarter of 2022, a decrease of 308.2%, from loss from operations of approximately $0.72 million for the same period of last year. Operating loss margin was 19.1% for the first quarter of 2022, compared to operating loss margin of 3.0% for the same period of last year.

 

Net Loss

 

Net loss was approximately $2.49 million, or loss per share of $0.03, compared to net loss of approximately $4.34 million, or loss per share of $0.12, for the same period of last year.

 

EBITDA

 

EBITDA was approximately $1.20 million for the first quarter of 2022, compared to approximately negative $0.07 million for the same period of last year.

 

Note 1: Non-GAAP Financial Measures

 

In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

 

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Reconciliation of Net Income to EBITDA

 

(Amounts expressed in US$)

 

   For the Three
Months Ended
March 31,		 
($ millions)  2022   2021 
Net loss   -2.49    -4.34 
Add: Income tax   -0.35    -0.10 
Net interest expense   0.27    0.28 
Depreciation and amortization   3.77    4.09 
EBITDA   1.20    -0.07 

 

Cash, Liquidity and Financial Position

 

As of March 31, 2022, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of approximately $15.36 million, $13.58 million and $2.99 million, respectively, compared to  approximately $11.20 million, $13.52 million and $2.98 million, respectively, as of December 31, 2021.

 

Net accounts receivable was approximately $4.98 million as of March 31, 2022, compared to approximately $4.87 million as of December 31, 2021. Net inventory was approximately $4.35 million as of March 31, 2022, compared to approximately $5.84 million as of December 31, 2021. As of March 31, 2022, the Company had current assets of approximately $48.62 million and current liabilities of approximately $19.94 million, resulting in a working capital of approximately $28.68 million. This was compared to current assets of approximately $55.52 million and current liabilities of approximately $20.43 million, resulting in a working capital of approximately $35.09 million as of December 31, 2021.

 

Net cash provided by operating activities was approximately $4.41 million for the first quarter of 2022, compared to net cash used in operating activities of approximately $8.28 million for the same period of last year. Net cash used in investing activities was approximately $7.18 million for the first quarter of 2022, compared to approximately $0.04 million for the same period of last year. Net cash provided by financing activities was approximately $6.89 million for the first quarter of 2022, compared to approximately $41.79 million for the same period of last year.

 

About IT Tech Packaging, Inc.

 

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China’s Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE American since December 2009. For more information, please visit: http://www.itpackaging.cn/.

 

Safe Harbor Statements

 

This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

 

For more information, please contact:

 

At the Company

Email: ir@itpackaging.cn

Tel: +86 312 8698215

 

Investor Relations

Ascent Investor Relations LLC

Ms. Tina Xiao

Email: tina.xiao@ascent-ir.com

Tel: +1-917-609-0333

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

 

   March 31,   December 31, 
   2022   2021 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets          
Cash and bank balances  $15,358,443   $11,201,612 
Restricted cash   -    - 
Accounts receivable (net of allowance for doubtful accounts of $73,563 and $69,053 as of March 31, 2022 and December 31, 2021, respectively)   4,984,738    4,868,934 
Inventories   4,354,676    5,844,895 
Prepayments and other current assets   23,025,189    25,796,640 
Due from related parties   892,743    7,804,068 
           
Total current assets   48,615,789    55,516,149 
           
Prepayment on property, plant and equipment   -    43,446,210 
Finance lease right-of-use assets, net   2,254,357    2,286,459 
Property, plant, and equipment, net   174,077,916    126,587,428 
Value-added tax recoverable   2,396,938    2,430,277 
Deferred tax asset non-current   11,666,488    11,268,679 
Total Assets  $239,011,488   $241,535,202 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Short-term bank loans  $5,984,374   $5,958,561 
Current portion of long-term loans from credit union   6,868,089    6,838,465 
Lease liability   228,051    210,161 
Accounts payable   72,616    10,255 
Advance from customers   39,866    39,694 
Due to related parties   727,433    727,433 
Accrued payroll and employee benefits   278,287    291,206 
Other payables and accrued liabilities   5,739,631    5,250,539 
Income taxes payable   -    1,108,038 
Total current liabilities   19,938,347    20,434,352 
           
Loans from credit union   2,992,974    2,980,065 
Deferred gain on sale-leaseback   131,185    155,110 
Lease liability - non-current   84,204    152,233 
Derivative liability   1,676,946    2,063,534 
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $17,240,190 and $17,924,475 as of March 31, 2022 and December 31, 2021, respectively)   24,823,656    25,785,294 
           
Commitments and Contingencies          
           
Stockholders’ Equity          
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 99,049,900 shares issued and outstanding as of March 31, 2022 and December, 31,2021.   99,050    99,050 
Additional paid-in capital   88,927,787    88,927,787 
Statutory earnings reserve   6,080,574    6,080,574 
Accumulated other comprehensive income   11,422,306    10,496,168 
Retained earnings   107,658,115    110,146,329 
Total stockholders’ equity   214,187,832    215,749,908 
Total Liabilities and Stockholders’ Equity  $239,011,488   $241,535,202 

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2022   2021 
         
Revenues  $15,481,618   $24,209,427 
Cost of sales   (15,171,173)   (22,378,422)
           
Gross Profit   310,445    1,831,005 
           
Selling, general and administrative expenses   (3,300,881)   (2,555,318)
Gain on acquisition   34,003    - 
           
Loss from Operations   (2,956,433)   (724,313)
           
Other Income (Expense):          
Interest income   3,455    4,333 
Subsidy income   -    196,787 
Interest expense   (270,813)   (278,901)
Gain (Loss) on derivative liability   386,588    (3,636,967)
Loss before Income Taxes   (2,837,203)   (4,439,061)
           
Provision for Income Taxes   348,989    100,205 
           
Net Loss   (2,488,214)   (4,338,856)
           
Other Comprehensive Income (Loss)          
Foreign currency translation adjustment   926,138    (1,468,770)
           
Total Comprehensive Loss  $(1,562,076)  $(5,807,626)
           
Losses Per Share:          
           
Basic and Diluted Losses per Share  $(0.03)  $(0.12)
           
Outstanding – Basic and Diluted   99,049,900    36,156,280 

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2022   2021 
Cash Flows from Operating Activities:          
Net income  $(2,488,214)  $(4,338,856)
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   3,773,236    4,092,487 
(Gain) Loss on derivative liability   (386,588)   3,636,967 
Gain on acquisition   (34,001)   - 
Allowance for bad debts   4,211    52,018 
Deferred tax   (348,989)   (589,094)
Changes in operating assets and liabilities:          
Accounts receivable   (98,921)   (2,920,798)
Prepayments and other current assets   3,056,189    (3,645,323)
Inventories   1,515,515    (6,270,151)
Accounts payable   62,315    1,785,742 
Related parties   -    (311,679)
Accrued payroll and employee benefits   (14,181)   86,375 
Other payables and accrued liabilities   483,666    (84,719)
Income taxes payable   (1,112,820)   226,699 
Net Cash Provided by (Used in) Operating Activities   4,411,418    (8,280,332)
           
Cash Flows from Investing Activities:          
Purchases of property, plant and equipment   (368,504)   (44,599)
Acquisition of land   (6,807,468)   - 
Net Cash Used in Investing Activities   (7,175,972)   (44,599)
           
Cash Flows from Financing Activities:          
Proceeds from issuance of shares and warrants, net   -    41,837,553 
Payment of capital lease obligation   (51,708)   (43,230)
Loan repaid by a related party   6,945,022    - 
           
Net Cash Provided by Financing Activities   6,893,314    41,794,323 
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents   28,071    (170,838)
           
Net Increase in Cash and Cash Equivalents   4,156,831    33,298,554 
           
Cash, Cash Equivalents and Restricted Cash - Beginning of Period   11,201,612    4,142,437 
           
Cash, Cash Equivalents and Restricted Cash - End of Period  $15,358,443   $37,440,991 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest, net of capitalized interest cost  $85,094   $97,642 
Cash paid for income taxes  $1,112,820   $262,191 
           
Cash and bank balances   15,358,443    37,440,991 
Restricted cash   -    - 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows   15,358,443    37,440,991 

 

 

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