Exhibit 99.1

 

Fuling Global Inc. Reports First Quarter of 2016 Financial Results

 

Company to Host Earnings Conference Call on Tuesday, May 17, 8:00 am ET

 

ALLENTOWN, Pa., May 16, 2016 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"), a specialized producer and distributor of environmentally-friendly plastic serviceware, with precision manufacturing facilities in both the U.S. and China, today announced its financial results for the three months ended March 31, 2016.

 

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, "Our first quarter results were, once again, highlighted by increase in sales volume, which grew by 4.6% to 7,418 tons and offset the 4.7% decrease in average selling price (“ASP”) resulting from decline in crude oil price. Both gross profit and gross margin increased year-over-year with improvement in gross margin across all product categories. Net income attributable to Fuling Global was $0.7 million, down from the $1.2 million a year ago as a result of increased SG&A expenses and provision for income taxes that more than offset the increase in gross profit.”

 

Ms. Guilan Jiang, Chairwoman of Fuling Global, added, "While putting the IPO proceeds to work, including the $10.2 million purchase of a 32.86-acre land parcel for a new factory in Wenling City and the ongoing expansion at our Allentown facility, we are setting the stage for growth in years to come. We look forward to continuing working with our suppliers, customers, partners and shareholders to take our business to the next level.”

 

First Quarter of 2016 Financial Highlights

 

Please note, certain expense items, primarily expenses associated with ocean freight, were previously reported as selling expenses and have been reclassified as cost of goods sold. As a result, cost of goods sold, gross profit, gross margin, selling expenses, and total operating expenses for 2015 have been adjusted retrospectively.

 

     For the Three Months Ended March 31,  
($ millions, except per share data)   2016     2015     % Change  
Revenues   $ 20.58     $ 20.64       -0.3 %
Gross profit   $ 5.2     $ 4.6       13.3 %
Gross margin     25.3 %     22.3 %     3.0 %
Operating margin     5.3 %     6.5 %     -1.2 %
Net income attributable to Fuling Global   $ 0.7     $ 1.2       -39.4 %
Diluted earnings per share   $ 0.05     $ 0.11       -55.1 %

 

·Revenues were essentially unchanged at $20.6 million for the first quarter of 2016, with increase in sales volume offsetting decrease in ASP.
·Total sales volume increased by 4.6% to 7,418 tons for the three months ended March 31, 2016 from 7,092 tons for the same period of last year. The increase in total sales volume was primarily related to increased sales of cups and plates and other products and partially offset by decline in sales of cutlery and straws.
·Blended ASP decreased by 4.7% to $2.77 per kilogram for the three months ended March 31, 2016 from $2.91 per kilogram for the same period of last year. The decrease in ASP was across all product categories as a result of decrease in crude oil prices.
·Gross profit increased by 13.3% to $5.2 million for the three months ended March 31, 2016 from $4.6 million for the same period of last year. Gross margin was 25.3% for the three months ended March 31, 2016, compared to 22.3% for the same period of last year. The increase in gross margin was across all product categories, particularly for straws.
·Net income attributable to Fuling Global was $0.7 million, or $0.05 per basic and diluted share, for the three months ended March 31, 2016, compared to $1.2 million, or $0.11 per basic and diluted share, for the same period of last year.

 

 

 

 

First Quarter of 2016 Financial Results

 

Revenues

 

For the three months ended March 31, 2016, total revenues were essentially unchanged at $20.6 million with increase in overall sales volume offsetting by decline in ASP. Overall sales volume increased by 326 tons, or 4.6%, to 7,418 tons for the three months ended March 31, 2016 from 7,092 tons for the same period of last year. The increase in overall sales volume was primarily related to increased sales of cups and plates and other products and partially offset by decline in sales of cutlery and straws. Blended ASP decreased by $0.14 per kilogram, or 4.7%, to $2.77 per kilogram for the three months ended March 31, 2016 from $2.91 per kilogram for the same period of last year. The decrease in ASP was across all product categories as a result of decrease in crude oil prices.

 

      For the Three Months Ended March 31,  
      2016       2015  
      Revenues       COGS       Gross Margin       Revenues       COGS       Gross Margin  
      ($'000)       ($'000)       (%)       ($'000)       ($'000)       (%)  
Cutlery   $ 11,680       8,891       24 %   $ 12,505       9,529       24 %
Straws     2,095       1,356       35 %     2,521       1,933       23 %
Cups and plates     5,504       4,048       26 %     4,869       3,891       20 %
Others products     1,299       977       25 %     744       584       22 %
Tax             101                       109          
Total   $ 20,578       15,373       25.3 %   $ 20,639       16,046       22.3 %

 

Cutlery, straws, cups and plates, and other products accounted for 56.8%, 10.2%, 26.7%, and 6.3% of total revenues for the three months ended March 31, 2016, compared to 60.6%, 12.2%, 23.6%, and 3.6% for the same period of last year, respectively.

 

On a geographical basis, sales in Fuling Global's largest market, the U.S., decreased a bit to $19.5 million for the three months ended March 31, 2016 from $19.6 million for the same period of last year. Sales in Europe increased by 9.1% to $0.4 million while sale in Canada increased by 18.6% to $0.2 million for the three months ended March 31, 2016. Sales in China was $0.3 million, versus $nil for the same period of last year.

 

    For the Three Months Ended March 31,  
    2016     2015   Y/Y Change  
    Revenues     % of     Revenues     % of     Amount        
      ($'000)       Total       ($'000)       Total       ($'000)       %  
U.S.   $ 19,475       94.6 %     19,696       95.4 %     (221 )     -1.1 %
Europe     434       2.1 %     398       1.9 %     36       9.1 %
Canada     205       1.0 %     173       0.8 %     32       18.6 %
China     345       1.7 %     -       0.0 %     345       NA  
Others     119       0.6 %     372       1.8 %     (253 )     -68.0 %
Total   $ 20,578       100.0 %     20,639       100.0 %     (61 )     -0.3 %

 

Gross profit

 

Total cost of goods sold decreased by $0.7 million, or 4.2%, to $15.4 million for the three months ended March 31, 2016 from $16.0 million for the same period of last year. Gross profit increased by $0.6 million, or 13.3%, to $5.2 million for the three months ended March 31, 2016 from $4.6 million for the same period of last year. Gross margin was 25.3% for the three months ended March 31, 2016, compared to 22.3% for the same period of last year. The increase in gross margin was across all product categories, particularly for straws. Gross margins for cutlery, straws, cups and plates, and other products were 23.9%, 35.3%, 26.4%, and 24.8%, respectively, for the three months ended March 31, 2016, compared to 23.8%, 23.3%, 20.1%, and 21.6%, respectively, for the same period of last year.

 

Operating income

 

Selling expenses increased by $0.25 million, or 18.3%, to $1.63 million for the three months ended March 31, 2016 from $1.38 million for the same period of last year. The increase in selling expenses was due to increase in sales commission and export credit insurance cost. General and administrative expenses increased by $0.53 million, or 34.4%, to $2.06 million for the three months ended March 31, 2016 from $1.53 million for the same period of last year. The increase in general and administrative expenses was due to professional fees related to being a public company as well as increase in administrative expenses at our Allentown facility. Research and development expenses increased by $0.1 million, or 26.0%, to $0.4 million for the three months ended March 31, 2016 from $0.3 million for the same period of last year. As a result, total operating expenses increased by $0.9 million, or 26.7%, to $4.1 million for the three months ended March 31, 2016 from $3.2 million for the same period of last year.

  

 

 

 

Operating income decreased by $0.25 million, or 19.0%, to $1.09 million for the three months ended March 31, 2016 from $1.34 million for the same period of last year. Operating margin was 5.3% for the three months ended March 31, 2016, compared to 6.5% for the same period of last year.

 

Income before income taxes

 

After adjustment for interest income and expenses, subsidy income and other non-operating income and expenses, income before income taxes decreased by $0.34 million, or 24.5%, to $1.03 million for the three months ended March 31, 2016 from $1.37 million for the same period of last year.

  

Provision for income taxes was $0.3 million for the three months ended March 31, 2016, compared to $0.1 million for the same period of last tear.

 

Net income

 

Net income decreased by $0.5 million, or 42.0%, to $0.7 million for the three months ended March 31, 2016 from $1.2 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global was $0.7 million, or $0.05 per basic and diluted share, for the three months ended March 31, 2016, compared to $1.2 million, or $0.11 per basic and diluted share, for the same period of last year.

 

Financial Condition

 

As of March 31, 2016, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $8.4 million, $1.6 million, and $3.3 million, respectively, compared to $15.6 million, $2.1 million, and $3.2 million, respectively at the end of 2015. Short-term borrowing and bank notes payable were $17.9 million and $2.9 million, respectively, as of March 31, 2016, compared to $15.3 million and $2.8 million, respectively, at the end of 2015.

 

Net cash used in operating activities was $2.7 million for the three months ended March 31, 2016, compared to $2.8 million for the same period of last year.

 

Net cash used in investing activities was $7.4 million for the three months ended March 31, 2016, compared to $2.5 million for the same period of last year.

 

Net cash provided by financing activities was $2.8 million for the three months ended March 31, 2016, compared to $5.4 million for the same period of last year.

 

Recent Updates

 

On April 12, 2016, the Company announced that it has purchased a 32.86-acre land parcel for its newest factory in Wenling, China for approximately $10.24 million. The Company anticipates that it will complete construction, equipment installation and testing and will ultimately commence commercial production in the new factory in the first quarter of 2017. 

 

On March 8, 2016, the Company provided an update on the use of proceeds from its initial public offering (the "IPO") and announced that it has disbursed approximately $11 million of the IPO proceeds to increase the registered capital of Taizhou Fuling Plastics Co., Ltd. ("Taizhou Fuling") from $11.11 million to $21.63 million. Taizhou Fuling is a PRC company that is wholly owned by the Company through Total Faith Holdings Limited. The Wenling Bureau of Commerce had granted Taizhou Fuling official approval for the increase in registered capital. The Company is also investing approximately $8 million of the IPO proceeds in its business in the United States.

 

 

 

 

On March 3, 2016, Gilbert Lee, the Company's Chief Financial Officer, presented at VirtualInvestorConferences.com and provided a comprehensive overview of the Company for investors.

 

On January 12, 2016, the Company announced that it had hosted a team of scientists from the Chinese Academy of Sciences' Technical Institute of Physics and Chemistry ("TIPC") and Chinese Academy of Engineering ("CAE"), including CAE Academician Yicheng Wu, TIPC Deputy Director Yong Huang and TIPC NRCEP Chief Engineer Junhui Ji. The purposes of the meeting were to review 2015 accomplishments and set directions in 2016 for the Company's Academician and Expert Workstation (the "Workstation") and to further expand the scope of cooperation and collaboration through the Workstation platform in jointly developing new plastics materials and technologies.

 

Earnings Conference Call

 

The Company will host its first quarter of 2016 financial results conference call at 8:00 am Eastern Time (5:00 am Pacific Time/8:00 pm Beijing Time) on Tuesday, May 17, 2016. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "Fuling Global Inc./ FORK".

 

Conference Call  
Date: Tuesday, May 17, 2016
Time: 8:00 am ET, U.S.
International Toll Free:

United States: +1 888-346-8982

Mainland China: 400-120-1203

Hong Kong: 800-905-945

International: +1 412-902-4272

Conference ID: Fuling Global Inc./FORK

 

Please dial in at least fifteen minutes before the call to ensure timely participation. For those unable to participate, an audio replay of the conference call will be available beginning approximately one hour after the end of the live call through May 24, 2016. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access code No. 10086390.

 

About Fuling Global Inc.

 

Fuling Global Inc. ("Fuling Global") is a specialized producer and distributor of environmentally friendly 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, KFC (China only), Walmart, McKesson, and Woolworths. 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: +1-610-366-8070x1835
Web: http://ir.fulingglobal.com/

 

Investor Relations:
Tina Xiao
Weitian Group LLC
Email: fork@weitian-ir.com
Phone: +1-917-609-0333

 

 

 

  

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)  

 

   March 31,   December 31, 
   2016   2015 
         
ASSETS    
Current Assets:          
Cash and cash equivalents  $8,413,443   $15,573,554 
Restricted cash   1,647,608    2,129,162 
Certificates of deposit   3,312,321    3,186,892 
Accounts receivable, net   15,116,039    14,725,030 
Advances to supplier, net   565,088    312,328 
Inventories, net   11,924,289    13,493,685 
Prepaid expenses and other current assets   1,001,796    425,477 
Total Current Assets   41,980,584    49,846,128 
           
Property, plant and equipment, net   22,276,571    21,556,866 
Intangible assets, net   1,780,262    1,778,264 
Prepayments for land use rights and construction   6,148,057    - 
Other non-current assets   2,380,259    2,228,900 
Deferred tax assets   431,716    319,252 
Total Assets  $74,997,449   $75,729,410 
           
           
LIABILITIES AND SHAREHOLDERS' EQUITY     
           
Current Liabilities:          
Short term borrowings  $17,895,325   $15,264,827 
Bank notes payable   2,908,111    2,839,783 
Advances from customers   913,561    597,226 
Accounts payable   6,827,051    10,972,851 
Accrued and other liabilities   1,581,702    1,808,135 
Taxes payable   564,156    743,147 
Loan from third parties   -    184,851 
Total Current Liabilities   30,689,906    32,410,820 
           
Total  Liabilities   30,689,906    32,410,820 
           
Commitments and contingencies          
           
Shareholders' Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,732,795 shares issued and outstanding as of March 31, 2016 and December 31, 2015   15,733    15,733 
Additional paid in capital   29,756,758    29,722,127 
Statutory reserve   2,998,684    2,868,844 
Retained earnings   10,802,072    10,182,213 
Accumulated other comprehensive income   626,182    392,450 
Total Fuling Global Inc.'s equity   44,199,429    43,181,367 
           
Noncontrolling interest   108,114    137,223 
Total Shareholders' Equity   44,307,543    43,318,590 
           
Total Liabilities and Shareholders' Equity  $74,997,449   $75,729,410 

 

 

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

(UNAUDITED)    

 

   For the Three Months Ended March 31, 
   2016   2015 
         
Revenues  $20,577,819   $20,638,516 
Cost of goods sold   15,372,996    16,045,597 
Gross Profit   5,204,823    4,592,919 
           
Operating Expenses          
Selling expenses   1,631,533    1,378,971 
General and administrative expenses   2,064,559    1,536,248 
Research and development expenses   418,356    332,139 
Total operating expenses   4,114,448    3,247,358 
           
Income from Operations   1,090,375    1,345,561 
           
Other Income (Expense):          
Interest income   6,613    6,069 
Interest expense   (201,684)   (306,473)
Subsidy income   40,869    60,221 
Foreign currency transaction gain   59,789    227,011 
Other income (expense), net   37,652    36,816 
Total other income (expense), net   (56,761)   23,644 
           
Income Before Income Taxes   1,033,614    1,369,205 
           
Provision for Income Taxes   313,024    127,483 
           
Net Income  $720,590   $1,241,722 
           
Less: net (loss) income attributable to noncontrolling interest   (29,109)   3,739 
           
Net income attributable to Fuling Global Inc.   749,699    1,237,983 
           
Other Comprehensive Income          
Foreign currency translation gain   233,732    163,471 
Comprehensive income attributable to Fuling Global Inc.  $983,431   $1,401,454 
           
Earnings per share          
Basic and diluted  $0.05   $0.11 
           
Weighted average number of shares          
Basic and diluted   15,732,795    11,666,667 
           
Cash dividends per share          
Basic and diluted  $-   $0.88 

  

 

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)    

 

   For the Three Months Ended March 31, 
   2016   2015 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income  $720,590   $1,241,722 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock based compensation   34,631    - 
Deferred tax benefit   (112,464)   - 
Depreciation and amortization   619,319    536,522 
Bad debt provisions   5,503    10,884 
Gain on disposal of fixed assets   (12,888)   - 
Changes in operating assets:          
Accounts receivable   (335,806)   1,051,566 
Advances to suppliers   (285,218)   (2,188,453)
Inventories   1,588,607    740,527 
Other assets   (634,938)   201,035 
Changes in operating liabilities:          
Accounts payable   (4,151,850)   (4,130,730)
Advance from customers   309,220    62,200 
Taxes payable   (180,977)   (139,457)
Accrued and other liabilities   (229,848)   (233,380)
Net cash used in operating activities   (2,666,119)   (2,847,564)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (1,207,431)   (248,933)
Cash receipts from disposal property and equipment   19,602    - 
Cash invested in certificates of deposit   (103,046)   (2,014,072)
Prepayments for land use rights and construction   (6,062,422)   - 
Purchase of intangible assets   -    (268,227)
Net cash used in investing activities   (7,353,297)   (2,531,232)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term borrowings   9,682,986    18,021,538 
Repayments of short-term borrowings   (7,187,968)   (14,409,930)
Proceeds from bank notes payable   1,778,440    1,492,038 
Repayments of bank notes payable   (1,729,451)   (1,462,305)
Repayment of third party borrowing   (183,474)   - 
Repayments of loans from related parties   -    (38,285)
Change of restricted cash   488,632    1,768,444 
Net cash provided by financing activities   2,849,165    5,371,500 
           
EFFECT OF EXCHANGE RATES CHANGES ON CASH   10,140    169,500 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (7,160,111)   162,204 
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD   15,573,554    1,399,714 
           
CASH AND CASH EQUIVALENTS, ENDING OF THE PERIOD  $8,413,443   $1,561,918 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest paid  $244,975   $306,473 
Income tax paid  $609,402   $422,743