Fuling Global Inc. Reports 2019 Financial Results

WENLING,China and ALLENTOWN,Pa.,April 15,2020 -- 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 sharply higher financial results for the twelve months ended December 31,2019.

Full Year 2019 Financial Highlights:

Revenues increased 9.0% to $151.1 million,from $138.7 million for 2018.

Gross profit grew 26.4% to $37.6 million,from $29.8 million for 2018.

Net income from continuing operations increased 46.3% to $14.4 million,or $0.91 per share,compared with $9.8 million,or $0.62 per share,for 2018.

Net income attributable to Fuling Global increased 52.2% to $15.0 million,or $0.95 per share,compared with $9.9 million,for 2018.

"The positive results for 2019 reflected our focus on producing high-quality and environmentally friendly straws,cups and plates for a growing global market," said Xinfu Hu,Chief Executive Officer of Fuling Global. "We continued to make progress enhancing our manufacturing footprint with the opening of our newest plant in Indonesia,which is now our largest production plant outside of China. This state-of-the-art facility is currently manufacturing straws,and has the capability to produce sauce cups,take-out boxes,paper bags and paper cups. As we continue to penetrate new geographic markets,this plant enables Fuling Global to even better serve our growing worldwide customer base."

"We had a strong 2019 by successfully executing on our long-term strategic plan," said Guilan Jiang,Chairwoman of Fuling Global. "Our strategy,focused on highly efficient manufacturing and development of an increasing number of environmentally friendly products to meet growing demand,puts us in a solid position for long-term growth and shareholder value enhancement. Cups and plates represented our largest growth category in 2019,as the market increasingly favors environmentally friendly products,versus Styrofoam. During the first quarter of 2020,our facilities in China experienced disruption because of the COVID-19 outbreak,but since the end of March they have been up and running at full capacity," Ms. Jiang added.

Revenues by Product Category:

For the twelve months ended December 31,

2019

2018

Y/Y Change

($'000)

($'000)

Cups and plates

$ 48,126

$ 37,439

29%

Cutlery

68,649

66,559

3%

Straws

21,888

23,573

(7%)

Others

12,450

11,093

12%

Revenues by Geography:

For the twelve months ended December 31,

2019

2018

Y/Y

Change

($'000)

($'000)

United States

$ 129,660

$ 118,308

10%

China

10,220

8,286

23%

Canada

5,575

1,636

241%

Europe

1,457

6,622

(78%)

Other countries

4,201

3,812

10%

Gross profit for 2019 advanced to $37.6 million,or 24.9% of total revenue,from $29.8 million,or 21.5% of total revenue,for the comparable period in 2018. The increase in gross profit was primarily attributable to lower raw material unit cost,offset by increased labor cost.

Selling expenses were $8.9 million,or 5.9% of total revenues,for 2019,compared with $7.8 million,or 5.6% of total revenues,for the prior year. General and administrative expenses were $9.5 million,or 6.3% of total revenues,compared with $8.3 million,or 6.0% of total revenues,for 2018. Research and development expenses amounted to $3.9 million,or 2.6% of total revenues,compared with $3.4 million,or 2.5% of total revenues,for the prior year. The Company expects to increase its research and development expenditures approximately proportionate to the expected revenue increases,as it continues to seek the use of environmentally friendly materials,develop new biodegradable materials,and reduce reliance on fossil-based raw materials.

Total operating expenses were $22.3 million for 2019,compared with $19.6 million for the prior year.

Operating income increased substantially to $15.4 million for 2019,from $10.2 million for 2018. Operating margin rose to 10.2% of total revenues for 2019,compared with 7.3% for 2018.

Total net other income,which includes interest income and expenses,subsidy income and other non-operating income and expenses,was $1.6 million for 2019,compared with total net other income of $0.8 million for 2018. The difference primarily related to a subsidy income of approximately $3.0 million received from the Wenling,China government in 2019,compared with approximately $1.7 million in 2018,offset by foreign currency transaction gain of $0.3 million in 2019 versus $0.8 million in 2018. The subsidy income received was for the completion of the Company's expansion of its newest facility in China,which added an additional 400,000 square feet to the initial 600,000 square feet of the state-of-the-art plastic serviceware manufacturing factory. All subsidies received were one-time grants and may not occur again in the future.

The Company's effective tax rate for 2019 was 15.1%,compared with 10.3% for in 2018. The increase was primarily due to more taxable income generated from the Company's Chinese subsidiaries in 2019 compared with 2018.

Strong Balance Sheet

As of December 31,2019,the Company had cash and cash equivalents and restricted cash of $8.6 million and $1.1 million,respectively,compared with $4.4 million and $2.4 million,as of December 31,2018. Short-term borrowings and bank notes payable were reduced to $17.2 million and $1.8 million,compared with $19.9 million and $2.9 million,2018. Long-term borrowings were $10.3 million as of December 31,compared with $7.2 million as of December 31,2018.

Net cash provided by operating activities was $11.0 million for the year ended December 31,compared with $11.6 million for 2018. Net cash used in investing activities was $6.7 million for 2019,compared with $8.7 million for 2018. Net cash used in financing activities was $1.4 million for 2019,compared with $2.8 million for 2018.

About Fuling Global Inc.

Fuling Global manufactures and distributes environmentally-friendly disposable serviceware for the foodservice industry from six precision manufacturing facilities in the U.S.,Mexico,Indonesia 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,including some of the world's most notable quick-service restaurants and retailers,primarily in the U.S. China,Canada and European countries. 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.

FULING GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Year Ended December 31,

2019

2018

Revenues

$

151,113,371

$

138,664,272

Cost of goods sold

113,503,127

108,914,256

Gross profit

37,610,244

29,750,016

Operating expenses

Selling expenses

8,937,988

7,830,280

General and administrative expenses

9,455,186

8,323,207

Research and development expenses

3,860,929

3,430,529

Total operating expenses

22,254,103

19,584,016

Income from operations

15,356,141

10,166,000

Other income (expense):

Interest income

27,637

32,810

Interest expense

(1,679,609)

(1,768,434)

Subsidy income

2,994,383

1,705,956

Investment loss

(639)

(8,667)

Foreign currency transaction gain (loss)

300,097

780,406

Other income (expense),net

(37,951)

65,926

Total other income (expense),net

1,603,918

807,997

Income before income taxes

16,960,059

10,973,997

Provision for income taxes

2,554,432

1,126,736

Net income from continuing operations

$

14,405,627

$

9,847,261

Discontinued operations:

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

516,999

(88,302)

Net income

14,922,626

9,758,959

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

(92,594)

(104,533)

Net income attributable to Fuling Global Inc.

$

15,015,220

$

9,863,492

Other comprehensive income

Foreign currency translation loss

(636,386)

(3,123,851)

Comprehensive income attributable to Fuling Global Inc.

$

14,378,834

$

6,739,641

Earnings (loss) per share - Basic and diluted

Continuing operations

$

0.91

$

0.62

Discontinued operations

$

0.03

$

(0.01)

Weighted average number of shares - Basic and diluted

Continuing operations and discontinued operations

15,796,857

15,782,055

FULING GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

2019

December 31,

2018

ASSETS

Current Assets:

Cash and cash equivalents

$

8,754

$

4,400,402

Restricted cash

1,102,591

2,396,993

Accounts receivable,net

23,829,251

27,760,956

Advances to supplier,net

2,299,873

1,255,420

Inventories,779,671

22,274,613

Security deposits

508,037

-

Prepaid expenses and other current assets

1,194,215

1,394,234

Current assets from discontinued operation

-

37,761

Total Current Assets

61,298,392

59,520,379

Property,plant and equipment,net

54,103,612

51,836,633

Intangible assets,net

7,882,850

8,157,916

Prepayments for construction and equipment purchases

1,617,584

1,222,888

Security deposits - long term

1,492,537

1,590,671

Other assets

424,648

297,906

Right-of-use lease assets

7,507,445

-

Non-current assets from discontinued operations

-

13,697

Total Assets

$

134,327,068

$

122,640,090

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Short term borrowings

$

17,197,339

$

19,890,641

Bank notes payable

1,802,884

2,888,053

Advances from customers

267,805

393,749

Accounts payable

10,809,902

18,186,400

Accounts payable - related party

303,083

82,014

Accrued and other liabilities

1,936,320

2,121,304

Other loans payable - current

2,985,476

2,859

Taxes payable

182,058

247,635

Deferred gains

154,750

291,170

Due to related party

97,559

12,200

Operating lease liabilities - current

910,897

-

Current liabilities from discontinued operation

-

528,263

Total Current Liabilities

36,648,073

47,489,288

Deferred tax liability

887,098

577,826

Long term borrowings

10,246,011

7,203,357

Other loan payable – non-current

1,373,402

2,635,567

Operating lease liabilities – non-current

6,899

-

Total Liabilities

55,258,483

57,906,038

Shareholders' Equity

Common stock: $0.001 par value,70,000,000 shares authorized,

15,803,763 and 15,795,910 shares issued and outstanding as of December 31,2019 and December 31,2018,respectively

15,804

15,797

Additional paid in capital

30,057,831

30,009,545

Statutory reserve

6,962,390

5,532,945

Retained earnings

45,188,209

31,602,434

Accumulated other comprehensive loss

(3,108,640)

(2,472,254)

Total Fuling Global Inc.'s equity

79,115,594

64,688,467

Non-controlling interest

(47,009)

45,585

Total Shareholders' Equity

79,068,585

64,734,052

Total Liabilities and Shareholders' Equity

$

134,090