Exhibit 15.1

 

Fuling Global Inc. Reports Fiscal Year 2015 Financial Results

 

Company to Host Earnings Conference Call on Thursday, March 31, 8:00 am ET

 

ALLENTOWN, Pa., March 30, 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 fiscal year ended December 31, 2015.

 

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, "In 2015, we succeeded in growing our revenues by 10% and our net income attributable to shareholders by 7%, to $8.0 million, in spite of the continued free fall of crude oil prices. While the 2015 average monthly prices for polypropylene ("PP"), general purpose polystyrene ("GPPS"), and high impact polystyrene ("HIPS") dropped by 26%, 31%, and 29%, compared to 2014 average monthly prices, respectively, we grew our top-line through a 30% increase in overall sales volume. We view the 2015 financial performance as a testament to the robustness of our business and great efforts from our team."

 

Ms. Guilan Jiang, Chairwoman of Fuling Global, added, "We reached a variety of key milestones in 2015. First, our business continued to grow at a solid pace, as our revenues and net income achieved the highest levels in company history, despite continued pricing pressure as a result of lower crude oil prices. Second, our Allentown facility began commercial production in June with fully operational six straw production lines. Last but not least, we successfully raised $20.2 million in our initial public offering (the "IPO") in November, becoming the first U.S.-listed plastic serviceware supplier with manufacturing facilities in both the U.S. as well as in China. Our IPO significantly raised our company's profile in our industry, and our market and financial positions have also improved. We are planning for the future, from the continued ramp-up of our U.S. operations in our Allentown facility to the development of our new factory in Wenling. In short, we believe the future has never been brighter for Fuling Global and we look forward to continuing solid growth of our business in 2016 and beyond."

 

Fiscal Year 2015 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 2014 have been adjusted retrospectively.

 

   For the Twelve Months Ended December 31, 
($ millions, expect per share data)  2015   2014   % Change 
Revenues  $91.3   $83.2    9.8%
Gross profit  $23.6   $22.1    7.1%
Gross margin   25.9%   26.5%   -0.6%
Operating margin   9.8%   11.6%   -1.8%
Net income attributable to Fuling Global  $8.0   $7.5    7.4%
Diluted earnings per share  $0.65   $0.64    1.6%

 

·Revenues grew by 10% year-over-year to $91.3 million for 2015, mainly driven by a 30% increase in sales volume that more than offset the impact of a 16% decrease in average selling price ("ASP"). The Company sold 32,776 tons of products with blended ASP of $2.79 per kilogram in 2015, compared to 25,213 tons and $3.30 per kilogram in 2014.

 

·Net income attributable to Fuling Global increased by 7% to $8.0 million, or $0.65 per basic and diluted share, for the year of 2015, compared to $7.5 million, or $0.64 per basic and diluted share, for 2014.

 

·Gross profit increased by 7% to $23.6 million for the year of 2015. Gross margin decreased by 64 basis points to 25.9%, mainly due to change in product mix with increased revenues share from the relatively lower margin cutlery.

 

 

 

 

Fiscal Year 2015 Financial Results

 

Revenues

 

For the fiscal year ended December 31, 2015, total revenues increased by $8.1 million, or 10%, to $91.3 million from $83.2 million for the same period of last year. The increase in total revenues was mainly driven by the 30% increase in overall sales volume and partially offset by the 16% decrease in blended ASP. Overall sales volume increased by 7,563 tons, or 30%, to 32,776 tons for the year of 2015 from 25,213 tons for the same period of last year, while blended ASP decreased by $0.51 per kilogram, or 16%, to $2.79 per kilogram for the year of 2015 from $3.30 per kilogram for the same period of last year.

 

Revenues from cutlery increased by $10.0 million, or 22%, to $55.2 million for the year of 2015 from $45.2 million for same period of last year. The increase in revenues from cutlery was primarily driven by a 40% increase in sales volume and partially offset by a 13% decrease in ASP. The Company sold 22,780 tons of cutlery at $2.43 per kilogram for fiscal 2015, compared to 16,302 tons at $2.77 per kilogram for the same period of last year. Revenues from straws decreased by $2.0 million, or 15%, to $11.1 million for fiscal 2015 from $13.1 million for the same period of last year. The Company sold 3,042 tons of straws at $3.65 per kilogram for fiscal 2015, compared to 2,819 tons at $4.63 per kilogram for the same period of last year. Revenues from cups and plates decreased by $1.8 million, or 8%, to $20.9 million for the year of 2015 from $22.7 million for the same period of last year. The Company sold 5,818 tons of cups and plates at $3.60 per kilogram for 2015, compared to 5,744 tons at $3.95 per kilogram for the same period of last year. Revenues from other products, including products for family use, party and other entertainment purposes, increased by $1.8 million, or 82%, to $4.0 million for 2015 from $2.2 million for the same period of last year. The increase in revenues from other products was primarily driven by a 228% increase in sales volume to 1,137 tons for fiscal 2015 from 347 tons for the same period of last year and partially offset by a 45% decrease in ASP to $3.54 per kilogram for the year of 2015 from $6.39 per kilogram for the same period of last year.

 

  For the Twelve Months Ended December 31, 
   2015   2014 
  Revenues
($'000)
   Volume
(tons)
   ASP
($/kg)
   Revenues
($'000)
   Volume
(tons)
   ASP
($/kg)
 
Cutlery  $55,242    22,780   $2.43   $45,211    16,302   $2.77 
Straws   11,092    3,042    3.65    13,055    2,819    4.63 
Cups and plates   20,938    5,818    3.60    

22,699

    5,744    3.95 
Other products   4,022    1,137    3.54    2,216    347    6.39 
Total  $91,294    32,776   $2.79   $83,181    25,213   $3.30 

 

Cutlery, straws, cups and plates, and other products accounted for 60.5%, 12.1%, 22.9%, and 4.4% of total revenues for the year of 2015, compared to 54.4%, 15.7%, 27.3%, and 2.7% for the same period of last year, respectively.

 

On a geographical basis, sales in Fuling Global's largest markets, the U.S. and Europe grew by 11% and 34%, respectively, increasing by a total of $8.9 million. Revenues from smaller markets decreased by an aggregate of $0.8 million, resulting in a net increase in revenues of $8.1 million. The following table provides regional information about changes in Fuling Global's revenues.

 

  For the Twelve Months Ended December 31, 
   2015   2014    Y/Y Change 
  Revenues
($'000)
   % of
Total
   Revenues
($'000)
   % of
Total
   Amount
($'000)
   % 
U.S.  $85,145    93.3%  $76,930    92.5%  $8,215    11%
Europe  $2,588    2.8%  $1,933    2.3%  $655    34%
Australia  $635    0.7%  $1,214    1.5%  $(579)   -48%
Canada  $1,082    1.2%  $1,198    1.4%  $(116)   -10%
Central and South America  $222    0.2%  $760    0.9%  $(538)   -71%
Middle East  $498    0.6%  $683    0.8%  $(185)   -27%
China  $1,124    1.2%  $463    0.6%  $661    143%
Total  $91,294    100.0%  $83,181    100.0%  $8,113    10%

 

 

 

  

Gross profit

 

Total cost of goods sold increased by $6.5 million, or 11%, to $67.6 million for the year of 2015 from $61.1 million for the same period of last year, which is in line with growth in revenues. Gross profit increased by $1.6 million, or 7%, to $23.6 million for the year of 2015 from $22.1 million for the same period of last year. Gross margin was 25.9% for the year of 2015, compared to 26.5% for the same period of last year. The decrease in overall gross margin was mainly due to change in product mix, with increased revenues share from the relatively lower margin cutlery. Gross margins for cutlery, straws, cups and plates, and other products were 24%, 26%, 41%, and 39%, respectively, for fiscal 2015, compared to 22%, 27%, 41%, and 38%, respectively, for the same period of last year.

 

  For the Twelve Months Ended December 31, 
   2015   2014 
  Revenues
($'000)
   COGS
($'000)
   Gross
Margin
(%)
   Revenues
($'000)
   COGS
($'000)
   Gross
Margin
(%)
 
Cutlery  $55,242   $42,211    24%  $45,211   $35,204    22%
Straws   11,092    8,234    26%   13,055    9,500    27%
Cups and plates   20,938    12,297    41%   22,699    13,473    41%
Other products   4,022    2,455    39%   2,216    1,373    38%
Tax   2,449    1,554                     
Total  $91,294   $67,646    25.9%  $83,181   $61,104    26.5%

 

Operating income

 

Selling expenses increased by $0.4 million, or 6%, to $6.4 million for the year of 2015 from $6.1 million for the same period of last year. The increase in selling expenses was in line with the increase in revenues. General and administrative expenses increased by $2.3 million, or 59%, to $6.1 million for the year of 2015 from $3.9 million for the same period of last year. The increase in general and administrative expenses was due to increases of $0.2 million for IPO-related expenses, $1.4 million related to our business expansion, especially in the U.S., and $0.3 million in rental and insurance expenses in our Allentown facility. Research and development expenses decreased by $0.4 million, or 16%, to $2.1 million for the year of 2015 from $2.5 million for the same period of last year. As a result, total operating expenses increased by $2.2 million, or 18%, to $14.7 million for 2015 from $12.4 million for the same period of last year.

 

Operating income decreased by $0.7 million, or 7%, to $9.0 million for the year of 2015 from $9.6 million for the same period of last year. Operating margin was 9.8% for the year of 2015, compared to 11.6% 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 $0.3 million, or 3%, to $9.4 million for the year of 2015 from $9.1 million for the same period of last year.

 

Provision for income taxes was $1.4 million for the year of 2015, up slightly from the $1.4 million for the same period of last tear.

 

Net income

 

Net income increased by $0.2 million, or 3%, to $7.9 million for the year of 2015 from $7.7 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global was $8.0 million, or $0.65 per basic and diluted share, for the year of 2015, compared to $7.5 million, or $0.64 per basic and diluted share, for the same period of last year.

 

Financial Condition

 

As of December 31, 2015, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $15.6 million, $2.1 million, and $3.2 million, respectively, compared to $1.4 million, $2.4 million, and $1.4 million, respectively at the end of 2014. Short-term borrowing and bank notes payable were $15.3 million and $2.8 million, respectively, as of December 31, 2015, compared to $19.5 million and $3.2 million, respectively, at the end of 2014.

 

Net cash provided by operating activities was $8.0 million for fiscal 2015, compared to $5.4 million for the same period of last year.

 

Net cash used in investing activities was $8.8 million for 2015, compared to $6.0 million for the same period of last year. The increase in net cash used in investing activities in 2015 was primarily attributable to increased payments associated with the acquisition of property and equipment in 2014 for $2.1 million, as well as increase of investment made for certificate of deposit for $0.6 million.

  

 

 

 

Net cash provided by financing activities was $15.1 million for fiscal 2015, compared to net cash used in financing activities of $0.8 million for the same period of last year. The increase in net cash provided from financing activities in 2015 was primarily attributable to (a) the 2014 Dividend, net of shareholder contribution for $2.7 million, compared to $18.6 million of capital contribution from our initial public offering; (b) offset by repayment of short term borrowings for $3.6 million in 2015, compared to $0.5 million in 2014.

 

Recent Updates

 

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 million to $22 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 Fuling'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.

 

On October 30, 2015, the Company announced the pricing of its IPO of 4 million ordinary shares at price of $5.00 per share. The base IPO was closed on November 2, 2015 and the Company's ordinary shares commenced trading on the NASDAQ Capital Market on November 4, 2015 under the ticker symbol "FORK". On November 12, 2015, the Company announced that the IPO underwriters had exercised their over-subscription option to purchase an additional 38,423 shares at the IPO price of $5.00 per share. As a result, the Company had raised $20,192,115 in gross proceeds, or $18,594,972 in net proceeds. In total the Company sold 4,038,423 ordinary shares in its IPO.

 

Earnings Conference Call

 

The Company will host its fourth quarter and fiscal year 2015 financial results conference call at 8:00 am Eastern Time (5:00 am Pacific Time/8:00 pm Beijing Time) on Thursday, March 31, 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: Thursday, March 31, 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 April 8, 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. 10083184.

 

 

 

 

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

CONSOLIDATED BALANCE SHEETS

  

 

   December 31,   December 31, 
   2015   2014 
         
ASSETS
Current Assets:          
Cash and cash equivalents  $15,573,554   $1,399,714 
Restricted cash   2,129,162    2,348,170 
Certificates of deposit   3,186,892    1,352,716 
Accounts receivable, net   14,725,030    13,018,702 
Advances to supplier, net   312,328    739,002 
Inventories, net   13,493,685    14,935,076 
Prepaid expenses and other current assets   425,477    906,705 
Total Current Assets   49,846,128    34,700,085 
           
Property, plant and equipment, net   21,556,866    20,517,240 
Intangible assets, net   1,778,264    1,650,037 
Other non-current assets   2,228,900    356,425 
Deferred tax assets   319,252    - 
Total Assets  $75,729,410   $57,223,787 
           
           
LIABILITIES AND SHAREHOLDERS' EQUITY
           
Current Liabilities:          
Short term borrowings  $15,264,827   $19,524,207 
Bank notes payable   2,839,783    3,244,333 
Advances from customers   597,226    695,873 
Accounts payable   10,972,851    14,194,154 
Accrued and other liabilities   1,808,135    1,316,921 
Taxes payable   743,147    560,253 
Loan from third parties   184,851    195,249 
Due to related parties   -    38,273 
Total Current Liabilities   32,410,820    39,769,263 
           
Total  Liabilities   32,410,820    39,769,263 
           
Commitments and contingencies          
           
Shareholders' Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,732,795 and 11,666,667 shares issued and outstanding as of December 31, 2015 and December 31, 2014   15,733    11,667 
Additional paid in capital   29,722,127    11,108,133 
Statutory reserve   2,868,844    1,862,365 
Retained earnings   10,182,213    3,147,151 
Accumulated other comprehensive income   392,450    1,094,617 
Total Fuling Global Inc.'s equity   43,181,367    17,223,933 
           
Noncontrolling interest   137,223    230,591 
Total Shareholders' Equity   43,318,590    17,454,524 
           
Total Liabilities and Shareholders' Equity  $75,729,410   $57,223,787 

  

 

 

  

  FULING GLOBAL INC. AND SUBSIDIARIES

  CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

   

 

   For the Years Ended December 31, 
   2015   2014 
         
Revenues  $91,293,675   $83,181,113 
Cost of goods sold   67,646,107    61,103,936 
Gross Profit   23,647,568    22,077,177 
           
Operating Expenses          
Selling expenses   6,436,821    6,064,466 
General and administrative expenses   6,149,411    3,879,615 
Research and development expenses   2,091,513    2,484,566 
Total operating expenses   14,677,745    12,428,647 
           
Income from Operations   8,969,823    9,648,530 
           
Other Income (Expense):          
Interest income   53,019    41,448 
Interest expense   (1,115,633)   (1,197,986)
Subsidy income   901,852    597,122 
Foreign currency transaction gain   476,576    36,163 
Other income (expense), net   104,942    (28,336)
Total other income (expense), net   420,756    (551,589)
           
Income Before Income Taxes   9,390,579    9,096,941 
           
Provision for Income Taxes   1,442,406    1,368,798 
           
Net Income  $7,948,173   $7,728,143 
           
Less: net (loss) income attributable to noncontrolling interest   (93,368)   241,975 
           
Net income attributable to Fuling Global Inc.   8,041,541    7,486,168 
           
Other Comprehensive Income          
Foreign currency translation loss   (702,167)   (164,781)
Comprehensive Income  $7,339,374   $7,321,387 
           
Earning per share          
Basic and diluted  $0.65   $0.64 
           
Weighted average number of shares          
Basic and diluted   12,335,072    11,666,667 
           
Cash dividends per share          
Basic and diluted  $-   $0.88 

  

 

 

  

FULING GLOBAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

    

   

   For the Years Ended December 31, 
   2015   2014 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income  $7,948,173   $7,728,143 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock based compensation   23,088    - 
Deferred tax expense (benefit)   (319,252)   155,705 
Depreciation and amortization   2,681,293    1,707,496 
Bad debt provisions   36,938    33,252 
Gain on disposal of fixed assets   -    37,466 
Changes in operating assets:          
Accounts receivable   (2,224,191)   (4,378,994)
Advances to suppliers   364,925    30,592 
Inventories   1,184,796    (2,733,597)
Other assets   95,350    (255,284)
Changes in operating liabilities:          
Accounts payable   (2,737,576)   1,728,498 
Advance from customers   (66,731)   262,743 
Taxes payable   425,412    605,132 
Accrued and other liabilities   548,382    468,916 
Net cash provided by operating activities   7,960,607    5,390,068 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (5,471,455)   (4,734,094)
Proceeds from disposal of property and equipment   -    73,508 
Cash invested in certificates of deposit   (1,986,668)   (1,352,782)
Advance payments on equipment purchase   (1,047,526)   - 
Purchase of intangible assets   (264,577)   - 
Net cash used in investing activities   (8,770,226)   (6,013,368)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term borrowings   42,684,057    39,549,931 
Repayments of short-term borrowings   (46,039,616)   (40,004,616)
Proceeds from bank notes payable   5,318,470    3,244,492 
Repayments of bank notes payable   (5,560,034)   (3,267,330)
Repayments of loans from related parties   (37,764)   (183,621)
Change of restricted cash   97,928    2,605,466 
Proceeds from issuance of shares/capital contribution   18,594,972    7,530,000 
Dividends paid to shareholders   -    (10,274,848)
Net cash provided by (used in) financing activities   15,058,013    (800,526)
           
EFFECT OF EXCHANGE RATES CHANGES ON CASH   (74,554)   124,745 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   14,173,840    (1,299,081)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR   1,399,714    2,698,795 
           
CASH AND CASH EQUIVALENTS, ENDING OF THE YEAR  $15,573,554.00   $1,399,714 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest paid  $1,136,896   $833,401 
Income tax paid  $1,257,004   $1,065,518 
Non-cash investing activities:          
Transfer from construction in progress to fixed assets  $3,913,677   $- 
Transfer from advance payments to fixed assets  $726,445   $-