EX-99.1 2 ea178407ex99-1_ittechpack.htm PRESS RELEASE DATED MAY 11, 2023

Exhibit 99.1

 

IT Tech Packaging, Inc. Announces First Quarter 2023 Unaudited Financial Results

 

BAODING, China, May 11,2023 /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 quarterended March 31, 2023.

 

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented,“In the first quarter of 2023, we had the revenue increased by 27.83% to approximately $19.79million.As the Chinese government carried out a serious economic stimulus and support policies, this will definitely improve the demand and overall operating environment for paper-making industry. We will seize the chance by taking management measures, such as optimizing raw material procurement, diversifying the product structure and reducing cost to improve the profitability and prepare for the market recovery.”

 

First Quarter 2023Unaudited Financial Results

 

   For the Three Months Ended March 31, 
($ millions)  2023   2022   % Change 
Revenues   19.79    15.48    27.83%
Regular Corrugating Medium Paper (“CMP”)*   16.47    13.10    25.72%
Light-Weight CMP**   3.06    1.93    58.77%
Offset Printing Paper   -    -    - 
Tissue Paper Products   0.22    0.40    -44.04%
Face Masks   0.04    0.06    -37.03%
                
Gross profit (Loss)   -0.28    0.31    -189.23%
Gross profit (loss) margin   -1.40%   2.01%   -3.41pp****
Regular Corrugating Medium Paper (“CMP”)*   1.93%   5.35%   -3.42 pp****
Light-Weight CMP**   3.96%   8.15%   -4.19 pp****
Offset Printing Paper   -    -    - 
Tissue Paper Products***   -316.80%   -141.51%   -175.29pp****
Face Masks   -7.97%   29.47%   -37.44 pp****
                
Operating loss   -2.77    -2.99    -7.29%
Net loss   -2.73    -2.49    -9.84%
EBITDA   1.21    1.20    0.83%
Basic and Diluted lossper share   -0.27    -0.25    -0.08%

 

* Products from PM6
** Products from PM1
***Products from PM8 and PM9
**** pp represents percentage points

 

●Revenue increased by 27.83% to approximately $19.79million, mainly due to the the increase in sales volume of corrugating medium paper (“CMP”), partially offset by the decrease of average selling prices of CMP.

 

●Gross loss was approximately $0.28million, compared with gross profit of $0.31 for the same period of last year. Total gross loss margin decreased by 3.41percentage point to negative 1.40%.

 

●Loss from operations was approximately $2.77million, compared to  approximately $2.99 million for the same period of last year.

 

●Net loss was approximately $2.73million, or loss per share of $0.27, compared to approximately $2.49 million, or loss per share of $0.25, for the same period of last year.

 

●Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was approximately $1.21 million, compared to$1.20 million for the same period of last year.

 

 

 

 

Revenue

 

For the first quarter of 2023, total revenue increased by 27.83%, to approximately $19.79million from approximately $15.48 million for the same period of last year. This was mainly due to the increase in sales volume of corrugating medium paper (“CMP”), partially offset by the decrease of average selling prices of CMP.

 

The following table summarizes revenue, volume and ASP by product for the first quarter of 2023 and 2022, respectively:

 

   For the Three Months Ended March 31, 
   2023   2022 
   Revenue
($’000)		   Volume
(tonne)		   ASP
($/tonne)		   Revenue
($’000)		   Volume
(tonne)		   ASP
($/tonne)		 
Regular CMP   16,468    41,663    395    13,099    25,245    519 
Light-Weight CMP   3,060    8,019    382    1,927    3,841    502 
Offset Printing Paper   -    -    -    -    -    - 
Tissue Paper Products   223    191    1,167    398    397    1,003 
Total   19,751    49,873    396    15,425    29,483    523 
                               
    Revenue
($’000)		    Volume
(thousand
pieces)		    ASP
($/thousand
pieces)		    Revenue
($’000)		    Volume
(thousand
pieces)		    ASP
($/thousand
pieces)		 
Face Masks   35    1,105    32    57    1,160    49 

 

Revenue from CMP, including both regular CMP and light-Weight CMP, increased by 29.96%, to approximately $19.53 million and accounted for 98.67% of total revenue for the first quarter of 2023, compared to approximately $15.03million, or 97.06% of total revenue for the same period of last year. The Company sold 49,682tonnes of CMP at an ASP of $393/tonne in the first quarter of 2023, compared to 29,086 tonnes at an ASP of $517/tonne in the same period of last year.

 

Of the total CMP sales, revenue from regular CMPincreased by25.72%, to approximately $16.47 million for the first quarter of 2023, compared to revenue of approximately $13.10million for the same period of last year. The Company sold 41,663tonnesof regular CMPat an ASP of $395/tonne during the first quarter of 2023, compared to25,245tonnes at an ASP of $519/tonnefor the same period of last year. Revenue from light-weight CMPincreased by 58.77%, to approximately $3.06 million for the first quarter of 2023, compared to revenue of approximately $1.93 million for the same period of last year. The Company sold8,019tonnesof light-weight CMPat an ASP of $382/tonne for the first quarter of 2023, compared to3,841tonnes at an ASP of $502/tonne for the same period of last year.

 

Revenue from offset printing paper was $nil  for the first quarter of 2023 and 2022.

 

Revenue from tissue paper products decreased by 44.04%, to approximately $0.22million for the first quarter of 2023, from approximately $0.40 million for the same period of last year. The Company sold 191tonnesof tissue paper products at an ASP of $1,167/tonne for the first quarter of 2023, compared to 397tonnes at an ASP of $1,003/tonne for the same period of last year.

 

Revenue from face masks decreased by 37.03%, to approximately $35,637 for the first quarter ended March 31, 2023, from $56,596for the same period of last year. The Company sold 1,105 thousand pieces of face masks for the first quarter of2023, compared to1,160 thousand pieces of face masks for the same period oflast year.

 

Gross Profit (Loss) and Gross Margin

 

Total cost of sales increased by 32.30%, to approximately $20.02million for the first quarter of 2023 from approximately $15.13million for the same period of last year. The increase in overall cost of saleswas mainly due to the increase in sales quantity of CMP, partially offset by the decrease in material costs of CMP.  Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $388, $367,$nil and $4,865, respectively, for the first quarter of 2023, compared to $491, $461, $nil and $2,424, respectively, for the same period of last year.

 

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Total gross losswas approximately $0.28million for the first quarter of 2023, compared to the gross profit of approximately $0.31 million for the same period of last year as a result of factors described above. Overall gross lossmargin was 1.40% for the first quarter of 2023, compared to gross profit margin was2.01% 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 1.93%, 3.96%, nil%, -316.80% and -7.97%, respectively, for the first quarter of 2023, compared to 5.35%, 8.15%, nil%, -141.51% and 29.47%, respectively, for the same period of last year.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses (“SG&A”) decreased by 24.40%, to approximately $2.50million for the first quarter of 2023 from approximately $3.30million for the same period of last year.

 

Loss from Operations

 

Loss from operations was approximately $2.77 million for the first quarter of 2023, a decrease of 7.29%, from $2.99 million for the same period of last year. Operating loss margin was 14.01% for the first quarter of 2023, compared to 19.32% for the same period of last year.

 

Net Loss

 

Net loss was approximately $2.73million, or loss per share of $0.27 for the first quarter of 2023, compared to $2.49 million, or loss per share of $0.25 for the same period of last year.

 

EBITDA

 

EBITDA was approximately $1.21million for the first quarter of 2023, compared to $1.20 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.

 

Reconciliation of Net Income to EBITDA

 

(Amounts expressed in US$)

 

   For the Three Months Ended
March 31,		 
($ millions)  2023   2022 
Net loss   -2.73    -2.49 
Add: Income tax   -    -0.35 
Net interest expense   0.25    0.27 
Depreciation and amortization   3.69    3.77 
EBITDA   1.21    1.20 

 

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Cash, Liquidity and Financial Position

 

As of March 31, 2023, 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 $16.75million, $11.67million and $6.51million, respectively, comparedto  approximately$9.52 million, $11.16 million and $4.20million, respectively, as of December 31, 2022.

 

Net accounts receivable was approximately $2.23 million as of March 31, 2023, compared to approximately $nil million as of December 31, 2022. Net inventory was approximately $5.97 million as of March 31, 2023, compared to approximately$2.87 million as of December 31, 2022. As of March 31, 2023, the Company had current assets of approximately$51.48 million and current liabilities of approximately$18.13 million, resulting in a working capital of approximately$33.35 million. This was compared to current assets of approximately $47.17 million and current liabilities of approximately $17.64 million, resulting in a working capital of approximately $29.53 millionas of December 31, 2022.

 

Net cash provided by operating activities was approximately$4.81million for the first quarter of 2023, compared to approximately $4.41 million for the same period of last year. Net cash used in investing activities was approximately$0.30 million for the first quarter of 2023, compared toapproximately$7.18 million for the same period of last year. Net cash provided by financing activities was approximately$2.56million for the first quarter of 2023, compared to approximately$6.89 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

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

 

   March 31,   December 31, 
   2023   2022 
ASSETS        
         
Current Assets        
Cash and bank balances  $16,750,940   $9,524,868 
Restricted cash   -    - 
Accounts receivable (net of allowance for doubtful accounts of $647,787 and $881,878 as of March 31, 2023 and December 31, 2022, respectively)   2,231,924    - 
Inventories   5,969,604    2,872,622 
Prepayments and other current assets   18,734,461    27,207,127 
Due from related parties   7,795,442    7,561,858 
           
Total current assets   51,482,371    47,166,475 
           
Prepayment on property, plant and equipment   881,878    1,031,502 
Operating lease right-of-use assets, net   681,817    672,722 
Finance lease right-of-use assets, net   1,927,390    1,939,970 
Property, plant, and equipment, net   149,822,883    151,569,898 
Value-added tax recoverable   2,053,290    2,066,666 
Deferred tax asset non-current   -    - 
           
Total Assets  $206,849,629   $204,447,233 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Short-term bank loans  $5,673,996   $5,598,311 
Current portion of long-term loans   5,265,073    4,835,884 
Lease liability   171,768    224,497 
Accounts payable   -    5,025 
Due to related parties   730,387    727,462 
Accrued payroll and employee benefits   295,024    165,986 
Other payables and accrued liabilities   5,993,904    5,665,558 
Income taxes payable   -    417,906 
           
Total current liabilities   18,130,152    17,640,629 
           
Long-term loans   6,513,672    4,204,118 
Deferred gain on sale-leaseback   30,298    52,314 
Lease liability - non-current   587,838    579,997 
Derivative liability   494,186    646,283 
           
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $19,412,310and $16,784,878 as of March 31, 2023 and December 31, 2022, respectively)   25,756,146    23,123,341 
           
Commitments and Contingencies          
           
Stockholders’ Equity          
Common stock, 50,000,000 shares authorized, $0.001 par value per share, 10,065,920 shares issued and outstanding as of March 31, 2023 and December, 31, 2022.   10,066    10,066 
Additional paid-in capital   89,172,771    89,172,771 
Statutory earnings reserve   6,080,574    6,080,574 
Accumulated other comprehensive loss   (5,011,784)   (7,514,540)
Retained earnings   90,841,856    93,575,021 
           
Total stockholders’ equity   181,093,483    181,323,892 
           
Total Liabilities and Stockholders’ Equity  $206,849,629   $204,447,233 

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2023   2022 
         
Revenues  $19,790,877   $15,481,618 
           
Cost of sales   (20,067,876)   (15,171,173)
           
Gross (Loss) Profit   (276,999)   310,445 
           
Selling, general and administrative expenses   (2,495,362)   (3,300,881)
           
Loss from Operations   (2,772,361)   (2,990,436)
           
Other Income (Expense):          
Interest income   136,268    3,455 
Subsidy income   -    - 
Interest expense   (249,169)   (270,813)
Gain on acquisition   -    34,003 
Gain (Loss) on derivative liability   152,097    386,588 
           
Loss before Income Taxes   (2,733,165)   (2,837,203)
           
Provision for Income Taxes   -    348,989 
           
Net Loss   (2,733,165)   (2,488,214)
           
Other Comprehensive Income          
Foreign currency translation adjustment   2,502,756    926,138 
           
Total Comprehensive Loss  $(230,409)  $(1,562,076)
           
Losses Per Share:          
           
Basic and Diluted Losses per Share  $(0.27)  $(0.25)
           
Outstanding – Basic and Diluted   10,065,920    9,915,920 

 

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IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2023   2022 
         
Cash Flows from Operating Activities:        
Net income  $(2,733,165)  $(2,488,214)
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   3,686,243    3,773,236 
(Gain) Loss on derivative liability   (152,097)   (386,588)
(Gain) Loss from disposal and impairment of property, plant and equipment   12,926    - 
(Recovery from) Allowance for bad debts   (246,386)   4,211 
Gain on acquisition   -    (34,001)
Deferred tax   -    (348,989)
Changes in operating assets and liabilities:          
Accounts receivable   (1,988,921)   (98,921)
Prepayments and other current assets   9,461,336    3,056,189 
Inventories   (3,062,782)   1,515,515 
Accounts payable   (5,101)   62,315 
Related parties   (128,625)   - 
Accrued payroll and employee benefits   126,986    (14,181)
Other payables and accrued liabilities   263,712    483,666 
Income taxes payable   (424,198)   (1,112,820)
Net Cash Provided by Operating Activities   4,809,928    4,411,418 
           
Cash Flows from Investing Activities:          
Purchases of property, plant and equipment   (295,018)   (368,504)
Acquisition of land   -    (6,807,468)
           
Net Cash Used in Investing Activities   (295,018)   (7,175,972)
           
Cash Flows from Financing Activities:          
Proceeds from long term loans   2,623,410    - 
Repayment of bank loans   (2,915)   - 
Payment of capital lease obligation   (55,849)   (51,708)
Loan to a related party (net)   -    6,945,022 
           
Net Cash Provided by Financing Activities   2,564,646    6,893,314 
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents   146,516    28,071 
           
Net Increase in Cash and Cash Equivalents   7,226,072    4,156,831 
           
Cash, Cash Equivalents and Restricted Cash - Beginning of Period   9,524,868    11,201,612 
           
Cash, Cash Equivalents and Restricted Cash - End of Period  $16,750,940   $15,358,443 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest, net of capitalized interest cost  $84,040   $85,094 
Cash paid for income taxes  $424,198   $1,112,820 
           
Cash and bank balances   16,750,940    15,358,443 
Restricted cash   -    - 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows   16,750,940    15,358,443 

 

 

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