Fuling Global Inc. Reports 2019 First Half Financial Results

Author: Fuling Global Inc. / 2023-07-23 21:18 / Source: Fuling Global Inc.

Fuling Global Inc. Reports 2019 First Half Financial Results

ALLENTOWN,Pa.,Oct. 22,2019 -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"),a manufacturer and distributor of environmentally friendly plastic and paper foodservice disposable products,today announced financial results for the six months ended June 30,2019.

Financial Highlights:

Revenues increased by 6% to $70.9 million for the first half of 2019,from $66.8 million for the comparable period last year.

Gross profit for the first six months of 2019 increased by 61% to $16.7 million,from $10.4 million for the same period last year.

Net income from continuing operations increased sharply to $7.4 million,or $0.47 per share,compared with $0.9 million,or $0.06 per share,for the first half of 2018.

Net income attributable to Fuling Global was $7.7 million,or $0.49 per share,for the first half of 2019,compared with $0.4 million,or $0.02 per share,for the same period last year.

Revenues by Product Category:

For the six months ended June 30,

2019

2018

Y/Y

Change

($'000)

Cutlery

$ 29,524

$ 33,222

(11%)

Straws

16,050

10,647

51%

Cups and plates

20,334

17,910

14%

Others

4,955

5,065

(2%)

Revenues by Geography:

For the six months ended June 30,

2019

2018

Y/Y

Change

($'000)

United States

$ 61,654

$ 56,795

China

4,047

5,242

(23%)

Europe

2,251

1,885

19%

Canada

1,018

1,834

(44%)

Other countries

1,893

1,089

74%

Gross profit advanced to $16.7 million,or 24% of total revenue,up from $10.4 million,or 16% of total revenue,for the same period of last year. The increase in gross profit was primarily attributable to unit price declines in raw materials,as well as favorable exchange rates.

Selling expenses were $4.0 million,or 6% of total revenues,in the first half of 2019,compared with $3.7 million,or 5% of total revenues,for the same period of last year. General and administrative expenses were $3.6 million,compared with $3.5 million,for the same period of last year. Research and development expenses amounted to $1.9 million,or 3% of total revenues,compared with $1.4 million,or 2% of total revenues,for the same period of last year. The Company expects research and development expenses to remain at similar levels for the second half of 2019,as it continues to seek the use of environmentally friendly materials,develop biodegradable materials,and reduce reliance on fossil-based raw materials.

Total operating expenses were $9.5 million for the first half of 2019,compared with $8.7 million for the same period of last year.

Operating income increased substantially to $7.1 million for the first half of 2019,from $1.7 million for the same period of last year. Operating margin was 10% for the first half of 2019,compared with 3% for the same period of last year.

Total net other income,which includes interest income and expenses,subsidy income and other non-operating income and expenses,was $1.6 million for the first half of 2019,compared with total net other expense of $0.7 million for the same period last year. The difference was primarily related to a one-time subsidy received from the local government in Wenling,China,for the completion of the phase II expansion of the Company's newest facility in China,which added an additional 400,000 square feet to the initial 600,000 square foot,state-of-the-art plastic serviceware factory.

The Company's effective tax rate for the first half of 2019 was 15.3%,compared with 13.2% for the same period in 2018.

Net income from continuing operations for the first half of 2019 increased significantly to $7.4 million from $0.9 million in the same period last year. Net income per share from continuing operations for the first half of 2019 increased to $0.47 from $0.06 for the first half of 2018. Net income attributable to Fuling Global was $7.7 million,compared with $0.4 million in the first half of 2018.

"Fuling Global had a very strong first half of 2019,with our focus on producing straws,cups and plates,generating substantial revenue increases," said Xinfu Hu,Chief Executive Officer. "Significant progress was also made to ensure our ability to effectively and efficiently serve our U.S. customers and to expand to other global markets with the start of production in our Mexico factory in mid-August and the completion of our phase II facility expansion in Wenling. We are in the process of opening a new factory in Indonesia as well,to further mitigate global trade risks."

"Our first half results demonstrate Fuling Global's ability to successfully execute our long-term strategic plan," said Guilan Jiang,Chairwoman. "At the same time,we continue to make great strides toward effecting more efficient purchasing and manufacturing processes,developing new and more environmentally friendly products,and keeping costs as low as possible. We are in a great position to continue on the path of growth through the remainder of 2019 and beyond."

Financial Condition

As of June 30,2019,the Company had cash and cash equivalents and restricted cash of $7.6 million and $2.1 million,respectively,compared with $4.4 million and $2.4 million,as of December 31,2018. Short-term borrowing and bank notes payable were $21.5 million and $2.7 million,as of June 30,compared with $19.9 million and $2.9 million,2018. Long-term borrowing was $7.1 million as of June 30,compared with $7.2 million as of December 31,2018.

Net cash provided by operating activities was $9.2 million for the first half of 2019,compared with $0.7 million for the same period last year. The increase was mainly attributed to the increase in net income of $7.3 million and the reduction of accounts receivable. Net cash used in investing activities was $6.1 million for the first half of 2019,compared with $8.5 million for the same period of last year. Net cash used in financing activities was $0.1 million for the first half of 2019,compared with net cashed provided by financing activities of $5.1 million for the same period last year.

About Fuling Global Inc.

Fuling Global Inc. is a specialized producer and distributor of plastic and paper serviceware for the foodservice industry,with precision manufacturing facilities in the U.S.,Mexico and China. The Company's plastic and paper serviceware products include disposable cutlery,drinking straws,cups,plates and other plastic and paper products and are used by more than one hundred customers primarily from the U.S.,China 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 as defined by the Private Securities Litigation Reform Act of 1995. 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 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 annual report and in its other filings with the Securities and Exchange Commission. Fuling Global disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Company Contact:

Investor Relations Contact:

Fuling Global Inc.

PondelWilkinson Inc.

Gilbert Lee,CFO

Judy Lin Sfetcu / Roger Pondel

Email: glee@fulingusa.com

Email: jsfetcu@pondel.com

Phone: +1-610-366-8070 x1835

Phone: +1-310-279-5980

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

For the Six Months Ended June 30,

2019

2018

Revenues

70,862,675

66,844,625

Cost of goods sold

54,209,044

56,452,983

Gross profit

16,653,631

10,391,642

Operating expenses

Selling expenses

3,986,284

3,672,220

General and administrative expenses

3,641,681

3,549,096

Research and development expenses

1,897,415

1,448,730

Total operating expenses

9,525,380

8,670,046

Income from operations

7,128,721,596

Other income (expense):

Interest income

11,140

22,557

Interest expense

(838,644)

(827,272)

Subsidy income

2,345,561

Foreign currency transaction gain (loss)

75,574

(14,316)

Other income (expense),net

29,847

120,297

Total other income (expense),net

1,623,478

(698,734)

Income before income taxes

8,751,729

1,022,862

Provision for income taxes

1,340,153

135,422

Net income from continuing operations

7,411,576

887,440

Discontinued operations:

Net income (loss) from discontinued operations,net of tax

259,042

(503,517)

Net income

7,618

383,923

Less: net (loss) income attributable to non-controlling interest from continuing operations

(59,841)

15,944

Net income attributable to Fuling Global Inc.

7,730,459

367,979

Other comprehensive income

Foreign currency translation loss

(23,496)

(617,025)

Comprehensive income attributable to Fuling Global Inc.

7,706,963

(249,046)

Earnings (loss) per share - Basic and diluted

Continuing operations

0.47

0.06

Discontinued operations

0.02

(0.03)

Weighted average number of shares - Basic and diluted

Continuing operations and discontinued operations

15,795,910

15,780,205

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

2019

December 31,

2018

(Unaudited)

(Audited)

ASSETS

Current Assets:

Cash and cash equivalents

7,646,898

4,400,402

Restricted cash

2,141,081

2,396,993

Accounts receivable,net

26,325,411

27,760,956

Advances to supplier,net

900,955

1,255,420

Inventories,net

22,061,669

22,274,613

Security deposits

515,524

Prepaid expenses and other current assets

1,290,513

1,394,234

Current assets from discontinued operation

20,945

37,761

Total Current Assets

60,902,996

59,520,379

Property,plant and equipment,net

53,858,069

51,836,633

Intangible assets,net

8,084,128

8,157,916

Prepayments for construction and equipment purchases

1,001,320

1,222,888

Security deposits - long term

1,514,534

1,590,671

Other assets

954,328

297,906

Right-of-use lease assets

3,429,760

Non-current assets from discontinued operations

13,697

Total Assets

129,745,135

122,640,090

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Short term borrowings

21,541,520

19,890,641

Bank notes payable

2,704,064

2,888,053

Advances from customers

395,315

393,749

Accounts payable

12,351,799

18,186,400

Accounts payable - related party

592,992

82,014

Accrued and other liabilities

1,414,990

2,121,304

Other loans payable - current

3,470,790

2,847,859

Taxes payable

191,924

247,635

Deferred gains

224,329

291,170

Due to related party

15,575

12,200

Operating lease liabilities - current

832,692

Current liabilities from discontinued operation

298,724

528,263

Total Current Liabilities

44,034,714

47,489,288

Deferred tax liability

779,239

577,826

Long term borrowings

7,063,341

7,203,357

Other loan payable – non-current

2,659

2,635,567

Operating lease liabilities – non-current

2,739,566

Total Liabilities

57,338,520

57,906,038

Shareholders' Equity

Common stock: $0.001 par value,70,000,000 shares authorized,15,910 and 15,910 shares issued and outstanding as of June 30,2019 and December 31,2018,respectively

15,797

Additional paid in capital

30,987

30,009,545

Statutory reserve

6,349,766

5,532,945

Retained earnings

38,516,072

31,602,434

Accumulated other comprehensive loss

(2,495,750)