Press Releases

Fuling Global Inc. Reports Third Quarter 2016 Financial Results

ALLENTOWN, Pa., Nov. 14, 2016 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"), an environmentally-friendly specialized producer and distributor of plastic serviceware, with precision manufacturing facilities in both the U.S. and China, today announced its financial results for the three and nine months ended September 30, 2016.

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, "We are very pleased to report strong results for the third quarter as volume and revenues grew by 46.2% and 24.5%, respectively, and revenues was record high since our inception. As we continue to add new customers and gain share at some existing customers, we expect to continue to run our production at nearly full capacity in the near term to meet the growing demand for our products. With further growth increasingly hinging on capacity expansion, we expect Phase I of the new Wenling factory to be completed by the first quarter of 2017, which will double our overall annual production capacity from 40,000 tons to 80,000 tons over the next three years, and set us up for strong growth in 2017 and beyond."

Third Quarter of 2016 Financial Highlights



For the Three Months Ended September 30,

($ millions, except per share data)


2016


2015


% Change

Revenues


$27.9


$22.4


24.5%

Gross profit


$6.9


$6.2


10.9%

Gross margin


24.8%


27.9%


-3.1 pp

Operating income


$2.4


$2.7


-11.4%

Operating margin


8.6%


12.1%


-3.5 pp

Net income attributable to Fuling Global


$2.1


$2.7


-24.2%

Diluted earnings per share


$0.13


$0.23


-43.8%

*Note: pp represents percentage points

  • Revenues increased by 24.5% to $27.9 million for the three months ended September 30, 2016 from $22.4 million, for the same period of last year, mainly due to increase in overall sales volume and partially offset by decrease in blended average sales price ("ASP").
  • Gross profit increased by 10.9% to $6.9 million for the three months ended September 30, 2016 from $6.2 million for the same period of last year. Gross margin decreased by 3.1 percentage points to 24.8% from 27.9% for the same period of last year.
  • Net income attributable to Fuling Global decreased by 24.2% to $2.1 million, or $0.13 per basic and diluted share, for the three months ended September 30, 2016 from $2.7 million, or $0.23 per basic and diluted share, for the same period of last year. The decreases in net income and earnings per share were primarily due to the increase in general and administrative expenses that more than offset increase in revenues and gross profit.
  • Total sales volume increased by 46.2% to 11,453 tons for the three months ended September 30, 2016 from 7,835 tons for the same period of last year. The increase in sales volume was across the board in all product categories with the strongest growth in cups and plates.
  • Blended ASP decreased by 14.8% to $2.44 per kilogram for the three months ended September 30, 2016 from $2.86 per kilogram for the same period of last year. The decrease in blended ASP was in line with the decrease in crude oil prices.

Third Quarter 2016 Financial Results

Revenues

For the three months ended September 30, 2016, total revenues increased by $5.5 million, or 24.5%, to $27.9 million from $22.4 million for the same period of last year. Overall sales volume increased by 3,618 tons, or 46.2%, to 11,453 tons for the three months ended September 30, 2016 from 7,835 tons for the same period of last year. Blended ASP decreased by $0.42 per kilogram, or 14.8%, to $2.44 per kilogram for the three months ended September 30, 2016 from $2.86 per kilogram for the same period of last year.

Cutlery, straws, cups and plates, and other products accounted for 56.6%, 10.7%, 24.9%, and 7.8% of total revenues for the three months ended September 30, 2016, compared to 53.2%, 17.1%, 24.3%, and 5.4% for the same period of last year, respectively.


For the Three Months Ended September 30,


2016


2015


Y/Y Change


Revenues
($'000)


% of Total


Revenues
($'000)


% of Total


Amount
($'000)


%

Cutlery

$

15,793


56.6%


$

11,920


53.2%


$

3,873


32.5%

Straws


2,980


10.7%



3,839


17.1%



(859)


-22.4%

Cups and plates


6,946


24.9%



5,433


24.3%



1,513


27.9%

Others


2,181


7.8%



1,217


5.4%



964


79.2%

Total

$

27,901


100.0%


$

22,409


100.0%


$

5,492


24.5%

On a geographical basis, sales in Fuling Global's largest market, the U.S., increased by $4.3 million, or 22.4%, to $23.6 million for the three months ended September 30, 2016 from $19.3 million for the same period of last year. Sales in Europe increased by $1.0 million, or 2,594.8%, to $1.1 million. Sales in China were $1.8 million for the three months ended September 30, 2016, compared to $0.13 million for the same period of last year. Sales in Canada were $0.7 million for the three months ended September 30, 2016, up 103.6% from the same period of last year.


For the Three Months Ended September 30,


2016


2015


Y/Y Change


Revenues
($'000)


% of Total


Revenues
($'000)


% of Total


Amount
($'000)


%

U.S.

$

23,567


84.5%


$

19,258


85.9%


$

4,309


22.4%

Europe


1,078


3.9%



40


0.2%



1,038


2,594.8%

Canada


663


2.4%



326


1.4%



337


103.6%

China


1,800


6.5%



128


0.6%



1,672


1,309.7%

Others


793


2.8%



2,657


11.9%



(1,864)


-70.2%

Total

$

27,901


100.0%


$

22,409


100.0%


$

5,492


24.5%

Gross profit

Total cost of goods sold increased by $4.8 million, or 29.8%, to $21.0 million for the three months ended September 30, 2016 from $16.2 million for the same period of last year. Gross profit increased by $0.7 million, or 10.9%, to $6.9 million for the three months ended September 30, 2016 from $6.2 million for the same period of last year. Gross margin was 24.8% for the three months ended September 30, 2016, compared to 27.9% for the same period of last year.

Operating income

Selling expenses were relatively flat at $1.7 million for the three months ended September 30, 2016 compared with the same period of last year. General and administrative expenses increased by $1.0 million, or 91.3%, to $2.1 million for the three months ended September 30, 2016 from $1.1 million for the same period of last year. The increase in general and administrative expenses were due to professional fees related to being a public company as well as increase in administrative expenses at our new Allentown facility. Research and development expenses decreased slightly by 1.2% to $0.6 million for the three months ended September 30, 2016 from $0.7 million for the same period of last year. As a result, total operating expenses increased by $1.0 million, or 28.0%, to $4.5 million for the three months ended September 30, 2016 from $3.5 million for the same period of last year.

Operating income decreased by $0.3 million, or 11.4%, to $2.4 million for the three months ended September 30, 2016 from $2.7 million for the same period of last year. Operating margin was 8.6% for the three months ended September 30, 2016, compared to 12.1% 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 $0.8 million, or 25.4%, to $2.3 million for the three months ended September 30, 2016 from $3.1 million for the same period of last year. The decrease was primarily due to higher general and administrative expenses more than offsetting increases in revenues and gross profit.

Provision for income taxes was $0.3 million for the three months ended September 30, 2016, compared to $0.4 million for the same period of last year.

Net income

Net income decreased by $0.7 million, or 25.5%, to $2.0 million for the three months ended September 30, 2016 from $2.7 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global was $2.1 million, or $0.13 per basic and diluted share, for the three months ended September 30, 2016, compared to $2.7 million, or $0.23 per basic and diluted share, for the same period of last year.

Year-to-Date 2016 Financial Results



For the Nine Months Ended September 30,

($ millions, except per share data)


2016


2015


% Change

Revenues


$73.1


$68.2


7.2%

Gross profit


$19.5


$18.3


6.3%

Gross margin


26.6%


26.9%


-0.3 pp

Operating income


$7.2


$8.0


-10.2%

Operating margin


9.9%


11.8%


-1.9 pp

Net income attributable to Fuling Global


$7.5


$7.0


7.7%

Diluted earnings per share


$0.48


$0.60


-20.2%

*Note: pp represents percentage points

Revenues

For the nine months ended September 30, 2016, total revenues increased by $4.9 million, or 7.2%, to $73.1 million from $68.2 million for the same period of last year. Overall sales volume increased by 6,029 tons, or 25.4%, to 29,791 tons for the nine months ended September 30, 2016 from 23,762 tons for the same period of last year. The increase in sales volume was across the board with cups and plates growing over 50%. Blended ASP decreased by $0.42 per kilogram, or 14.5%, to $2.45 per kilogram for the nine months ended September 30, 2016 from $2.87 per kilogram for the same period of last year. The decrease in ASP was across most of our product categories as a result of decline in crude oil prices.

Cutlery, straws, cups and plates, and other products accounted for 57.7%, 10.3%, 25.0%, and 7.0% of total revenues for the nine months ended September 30, 2016, compared to 57.7%, 13.6%, 24.3%, and 4.4% for the same period of last year, respectively.


For the Nine Months Ended September 30,


2016


2015


Y/Y Change


Revenues
($'000)


% of Total


Revenues
($'000)


% of Total


Amount
($'000)


%

Cutlery

$

42,184


57.7%


$

39,355


57.7%


$

2,829


7.2%

Straws


7,503


10.3%



9,280


13.6%



(1,777)


-19.1%

Cups and plates


18,261


25.0%



16,535


24.3%



1,727


10.4%

Others


5,125


7.0%



2,985


4.4%



2,140


71.7%

Total

$

73,073


100.0%


$

68,154


100.0%


$

4,919


7.2%

On a geographical basis, sales in Fuling Global's largest market, the U.S., increased by $2.7 million, or 4.2%, to $65.6 million for the nine months ended September 30, 2016 from $62.9 million for the same period of last year. Sales in Europe increased by $1.6 million, or 161.6%, to $2.5 million. Sales in China were $2.6 million for the nine months ended September 30, 2016, compared to $0.4 million for the same period of last year. Sales in Canada were $1.2 million for the nine months ended September 30, 2016, up 45.5% from the same period of last year.


For the Nine Months Ended September 30,


2016


2015


Y/Y Change


Revenues
($'000)


% of Total


Revenues
($'000)


% of Total


Amount
($'000)


%

U.S.

$

65,571


89.7%


$

62,916


92.3%


$

2,655


4.2%

Europe


2,528


3.5%



966


1.4%



1,561


161.6%

Canada


1,156


1.6%



795


1.2%



362


45.5%

China


2,578


3.5%



442


0.6%



2,136


482.6%

Others


1,240


1.7%



3,035


4.5%



(1,795)


-59.2%

Total

$

73,073


100.0%


$

68,154


100.0%


$

4,919


7.2%

Gross profit

Total cost of goods sold increased by $3.8 million, or 7.6%, to $53.6 million for the nine months ended September 30, 2016 from $49.8 million for the same period of last year. Gross profit increased by $1.2 million, or 6.3%, to $19.5 million for the nine months ended September 30, 2016 from $18.3 million for the same period of last year. Gross margin was 26.6% for the nine months ended September 30, 2016, compared to 26.9% for the same period of last year.

Operating income

Selling expenses decreased by $0.1 million, or 1.6%, to $4.8 million for the nine months ended September 30, 2016 from $4.9 million for the same period of last year. The decrease in selling expenses was primarily due to decrease in ocean freight costs partially offset by increase in commissions. General and administrative expenses increased by $1.9 million, or 49.8%, to $5.7 million for the nine months ended September 30, 2016 from $3.8 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. As we spent significant efforts and resources training new staff, testing machines, and streamlining production lines in the first nine months of this year, we expect more moderate increases in general and administrative expenses with increasing productivity and operating efficiency for the rest of this year. Research and development expenses increased by $0.1 million, or 9.7%, to $1.7 million for the nine months ended September 30, 2016 from $1.6 million for the same period of last year.

As a result, total operating expenses increased by $2.0 million, or 19.2%, to $12.2 million for the nine months ended September 30, 2016 from $10.3 million for the same period of last year.

Operating income decreased by $0.8 million, or 10.2%, to $7.2 million for the nine months ended September 30, 2016 from $8.0 million for the same period of last year. Operating margin was 9.9% for the nine months ended September 30, 2016, compared to 11.8% 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 increased by $0.6 million, or 7.9%, to $8.8 million for the nine months ended September 30, 2016 from $8.2 million for the same period of last year. The increase was primarily due to higher subsidy income received from local government in the second quarter of this year partially offset by slightly lower operating income.

Provision for income taxes was $1.24 million for the nine months ended September 30, 2016, compared to $1.16 million for the same period of last year.

Net income

Net income increased by $0.6 million, or 8.0%, to $7.6 million for the nine months ended September 30, 2016 from $7.0 million for the same period of last year. This increase was primarily due to: 1) $1.7 million increase in subsidiary income; 2) $1.2 million increase in gross profit; and 3) partially offset by $2.0 million increase in operating expenses.

After deduction of non-controlling interest, net income attributable to Fuling Global increased by $0.5 million, or 7.7%, to $7.5 million for the nine months ended September 30, 2016 from $7.0 million for the same period of last year.

Basic and diluted earnings per share were $0.48 for the nine months ended September 30, 2016, compared to $0.60 for the same period of last year.

Financial Condition

As of September 30, 2016, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $2.3 million, $2.6 million, and $0.1 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 $15.8 million and $3.1 million, respectively, as of September 30, 2016, compared to $15.3 million and $2.8 million, respectively, at the end of 2015.

Net cash provided by operating activities was $1.5 million for the nine months ended September 30, 2016, compared to $3.0 million for the same period of last year.

Net cash used in investing activities was $16.1 million for the nine months ended September 30, 2016, compared to $3.3 million for the same period of last year.

Net cash provided by financing activities was $1.5 million for the nine months ended September 30, 2016, compared to $1.5 million for the same period of last year.

Recent Update

On November 5, 2016, the Company held its 2016 annual meeting of shareholders (the "Annual Meeting") at the Company's Allentown facility at 6690 Grant Way, Allentown, PA 18106. At the Annual Meeting, the Company's shareholders 1) Elected five directors, Ms. Guilan Jiang, Ms. Sujuan Zhu, Mr. Jian Cao, Mr. Hong(Simon) He and Mr. Donald T. Cunningham, Jr., to serve on the Board of Directors of the Company until the 2017 annual meeting of stockholders; and 2) Ratified the appointment of Friedman LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2016.

About Fuling Global Inc.

Fuling Global Inc. ("Fuling Global") is an environmentally-friendly specialized producer and distributor of plastic servicewares, 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:

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

At the Company:
Gilbert Lee, CFO
Email: ir@fulingplasticusa.com
Phone: +1-610-366-8070x1835
Web: http://ir.fulingglobal.com/

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




 September 30, 


 December 31, 




2016


2015







ASSETS

Current Assets:






Cash and cash equivalents


$

2,254,051

$

15,573,554

Restricted cash



2,581,118


2,129,162

Certificates of deposit



102,902


3,186,892

Accounts receivable, net



16,875,831


14,725,030

Advances to supplier, net



729,040


312,328

Inventories, net



16,051,742


13,493,685

Prepaid expenses and other current assets



3,065,000


425,477

Total Current Assets      



41,659,684


49,846,128







Property, plant and equipment, net



29,956,045


21,556,866

Intangible assets, net



9,885,970


1,778,264

Prepayments for construction and equipment purchase



3,451,507


2,003,400

Other non-current assets



166,239


225,500

Deferred tax assets



467,177


319,252

Total Assets

$

85,586,622

$

75,729,410













LIABILITIES AND SHAREHOLDERS' EQUITY







Current Liabilities:






Short term borrowings


$

15,783,833

$

15,264,827

Bank notes payable



3,148,595


2,839,783

Advances from customers



658,849


597,226

Accounts payable 



12,503,674


10,972,851

Accrued and other liabilities



2,136,670


1,808,135

Taxes payable



383,406


743,147

Loan from third parties



-


184,851

Total Current Liabilities 



34,615,027


32,410,820







Long term borrowing 



843,715


-

Total  Liabilities 


35,458,742


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 September 30, 2016 and December 31, 2015


15,733


15,733

Additional paid in capital



29,825,878


29,722,127

Statutory reserve



3,748,541


2,868,844

Retained earnings



16,795,586


10,182,213

Accumulated other comprehensive income (loss)



(460,764)


392,450

Total Fuling Global Inc.'s equity



49,924,974


43,181,367







Noncontrolling interest



202,906


137,223

Total Shareholders' Equity  



50,127,880


43,318,590







Total Liabilities and Shareholders' Equity


$

85,586,622

$

75,729,410







 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

(UNAUDITED)




 For the Three Months Ended September 30, 



 For the Nine Months Ended September 30, 



2016


2015



2016


2015











Revenues

$

27,900,613

$

22,408,759


$

73,072,804

$

68,154,114

Cost of goods sold


20,976,558


16,164,344



53,611,804


49,843,677

Gross Profit


6,924,055


6,244,415



19,461,000


18,310,437



24.8%


27.9%



26.6%


26.9%

Operating Expenses










Selling expenses


1,728,965


1,754,821



4,812,765


4,891,326

General and administrative expenses


2,143,300


1,120,577



5,692,015


3,798,716

Research and development expenses


642,606


650,570



1,736,919


1,583,449

Total operating expenses


4,514,871


3,525,968



12,241,699


10,273,491











Income from Operations


2,409,184


2,718,447



7,219,301


8,036,946



8.63%


12.13%



9.9%


11.8%

Other Income (Expense):










Interest income


7,507


30,337



25,086


49,298

Interest expense


(187,503)


(268,890)



(615,878)


(906,794)

Subsidy income


196,447


213,357



2,054,436


367,779

Foreign currency transaction gain (loss)


(287,642)


459,360



134,885


754,923

Other expense, net


171,055


(56,427)



(21,940)


(147,232)

Total other income (expense), net


(100,136)


377,737



1,576,589


117,974











Income Before Income Taxes


2,309,048


3,096,184



8,795,890


8,154,920











Provision for Income Taxes


308,594


410,456



1,237,137


1,155,524











Net Income 

$

2,000,454

$

2,685,728


$

7,558,753

$

6,999,396











Less: net income (loss) attributable to noncontrolling interest


(70,153)


(44,826)



65,683


40,612











Net income attributable to Fuling Global Inc.


2,070,607


2,730,554



7,493,070


6,958,784











Other Comprehensive Income










Foreign currency translation loss


(271,722)


(782,876)



(853,214)


(782,078)

Comprehensive income attributable to Fuling Global Inc.

$

1,798,885

$

1,947,678


$

6,639,856

$

6,176,706











Earnings per share










Basic and diluted

$

0.13

$

0.23


$

0.48

$

0.60











Weighted average number of shares










Basic and diluted


15,732,795


11,666,667



15,732,795


11,666,667











Cash dividends per share










Basic and diluted

$

-

$

-


$

-

$

-





















The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)





 For the Nine Months Ended September 30, 




2016


2015

CASH FLOWS FROM OPERATING ACTIVITIES






Net income      

$

7,558,753

$

6,999,396


Adjustments to reconcile net income to net cash






  provided by operating activities:






Stock based compensation


103,752


-


Deferred tax benefit


(147,925)


-


Depreciation and amortization


2,025,892


1,650,944


Bad debt provisions


93,672


57,193


Inventory reserve


38,592


-


Gain on disposal of fixed assets


(12,811)


-


Changes in operating assets:






   Accounts receivable


(2,390,053)


778,619


   Advances to suppliers


(2,051,239)


(1,101,282)


   Inventories


(2,755,941)


(714,486)


   Other assets


(2,667,035)


543,807


Changes in operating liabilities:






   Accounts payable


1,633,617


(4,967,288)


   Advance from customers


76,931


(85,926)


   Taxes payable


(345,894)


42,374


   Accrued and other liabilities


329,547


(250,549)


       Net cash (used in) provided by operating activities    


1,489,859


2,952,802







CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property and equipment


(3,115,264)


(2,002,241)


Payments of construction in progress


(6,113,768)


-


Cash receipts from disposal property and equipment


19,483


-


Cash receipts from certificates of deposit


3,039,711


-


Prepayments for construction and equipment purchase


(1,518,656)


(1,049,349)


Purchase of intangible assets


(8,378,405)


(266,947)


        Net cash used in investing activities


(16,066,898)


(3,318,537)







CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from short-term borrowings


20,633,979


36,160,712


Repayments of short-term borrowings


(19,695,027)


(35,409,841)


Proceeds from long-term borrowings


843,715


-


Proceeds from bank notes payable


4,839,723


4,084,697


Repayments of bank notes payable


(4,449,644)


(4,714,801)


Repayment of third party borrowing


(182,365)


-


Repayments of loans from related parties


-


(38,102)


Change of restricted cash 


(515,902)


1,393,471


        Net cash provided by financing activities      


1,474,479


1,476,136







EFFECT OF EXCHANGE RATES CHANGES ON CASH


(216,942)


(100,598)







NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(13,319,503)


1,009,803







CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


15,573,554


1,399,714







CASH AND CASH EQUIVALENTS, ENDING OF THE PERIOD

$

2,254,051

$

2,409,517







SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:






Cash paid during the period for:






Interest paid

$

579,693

$

967,248


Income tax paid

$

1,693,233

$

1,168,820


Non-cash investing activities:






Transfer from construction in progress to fixed assets

$

876,753

$

1,129,339


Transfer from advance payments to fixed assets

$

1,581,582

$

918,858







 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/fuling-global-inc-reports-third-quarter-2016-financial-results-300362351.html

SOURCE Fuling Global Inc.