Exhibit 99.1

 

Fuling Global Inc. Reports First Half of 2018 Financial Results

 

ALLENTOWN, PA., Sept. 28, 2018 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) (“Fuling Global” or the “Company”), a 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 six months ended June 30, 2018. Revenues increased by 18.0% to $67.11 million for the first half of 2018 from $56.88 million for the same period of last year, primarily due increased sales volume.

 

   For the Six Months Ended June 30,
($ millions, except per share data)  2018   2017   % Change
Revenues  $67.11   $56.88   18.0%
Gross profit  $10.43   $11.37   -8.3%
Gross margin   15.5%   20.0%  -4.5 percentage points
Operating income  $1.17   $3.42   -66.0%
Operating margin   1.7%   6.0%  -4.3 percentage points
Net income attributable to Fuling Global  $0.37   $2.90   -87.3%
Diluted earnings per share  $0.02   $0.18   -87.3%

 

Total sales volume increased by 17.0% to 25,654 tons for the first half of 2018 from 21,934 tons for the same period of last year. The increase in sales volume was across all product categories. Blended average selling price (“ASP”) also increased by 0.9% to $2.62 per kilogram for the first half of 2018 from $2.59 per kilogram for the same period of last year. 
   
Gross profit decreased by 8.3% to $10.43 million for the first half of 2018 from $11.37 million for the same period of last year. Gross margin decreased by 4.5 percentage points to 15.5% for the first half of 2018 from 20.0% for the same period of last year. The decrease in gross margin was primarily due to increase in the price of raw materials, particularly polypropylene and Polyethylene Terephthalate (“PET”), as oil prices increased significantly in the first half of 2018.

 

Net income attributable to Fuling Global was $0.37 million, or $0.02 per basic and diluted share, for the first half of 2018, compared to $2.90 million, or $0.18 per basic and diluted share, for the same period of last year. The decrease in net income attributable to Fuling Global was mainly due to decreased gross profit as well as increased operating expenses and interest expenses.

 

Mr. Xinfu Hu, Chief Executive Officer of the Company, commented, “We continued to see solid growth in sales volume across all product categories that led to an 18% year-over-year increase in total revenues, highlighting continuing order strength for our business. However, margins and profitability decreased due to increase in unit cost of materials, which we were not able to fully pass over to our customers.”

 

Ms. Guilan Jiang, Chairwoman of the Company, further commented, “We have a strategic plan for 2018 and beyond that includes continuing investment for capacity expansion, stringent cost control, and heightened marketing effort in key markets including the U.S. and China. Despite uncertainties in marketing factors such as price volatilities for both raw materials and our products that may affect our short-term financial performance, we believe that our market position is stronger than ever and well positioned for delivering long-term returns for our shareholders.”

 

 

 

 

First Half of 2018 Financial Results

 

Revenues

 

For the first half of 2018, total revenues increased by $10.23 million, or 18.0%, to $67.11 million from $56.88 million for the same period of last year. The increase in total revenues was primarily due to increase in overall sales volume.

 

Overall sales volume increased by 3,720 tons, or 17.0%, to 25,654 tons for the first half of 2018 from 21,934 tons for the same period of last year. The increase in sales volume was across all product categories. Sales volume of cutlery increased by 1,344 tons, or 10.5%, to 14,116 tons for the first half of 2018 from 12,772 tons for the same period of last year. Sales volume of straws increased by 1,538 tons, or 54.6%, to 4,355 tons for the first half of 2018 from 2,817 tons for same period of last year. Sales volume of cups and plates increased by 364 tons, or 7.6%, to 5,133 tons for the first half of 2018 from 4,769 tons for the same period of prior year. Sales volume of other products increased by 474 tons, or 30.1%, to 2,050 tons for the first half of 2018 from 1,576 tons for the same period of last year. 

 

Blended ASP increased by $0.02 per kilogram, or 0.9%, to $2.62 per kilogram for the first half of 2018 from $2.59 per kilogram for the same period of last year. The increase in blended ASP was mainly related to cutlery and cups and plates and partially offset by decrease in ASP for straws and other products. ASP of cutlery increased by $0.21 per kilogram, or 9.9%, to $2.35 per kilogram for the first half of 2018 from $2.14 per kilogram for the same period of last year. ASP of straws decreased by $0.71 per kilogram, or 22.1%, to $2.51 per kilogram for the first half of 2018 from $3.22 per kilogram for the same period of last year. ASP of cups and plates increased by $0.20 per kilogram, or 6.0%, to $3.49 per kilogram for the first half of 2018 from $3.29 per kilogram for the same period of last year. ASP of other products decreased by $0.56 per kilogram, or 18.5%, to $2.47 per kilogram for the first half of 2018 from $3.03 per kilogram for the same period of last year. 

 

The increase in revenues was across all product categories. Revenues from cutlery sales increased by $5.88 million, or 21.5%, to $33.22 million for the first half of 2018 from $27.34 million for the same period of last year. Revenues from straws sales increased by $1.85 million, or 20.4%, to $10.92 million for the first half of 2018 from $9.06 million for the same period of last year. Revenues from cups and plates sales increased by $2.21 million, or 14.1%, to $17.91 million for the first half of 2018 from $15.70 million for the same period of last year. Revenues from other products sales increased by $0.29 million, or 6.0%, to $5.07 million for the first half of 2018 from $4.78 million for the same period of last year. Cutlery, straws, cups and plates, and other products accounted for 49.5%, 16.3%, 26.7%, and 7.5% of total revenues for the first half of 2018, compared to 48.1%, 15.9%, 27.6%, and 8.4% for the same period of last year, respectively.

 

   For the Six Months Ended June 30, 
   2018   2017   Y/Y Change 
   Revenues ($'000)   % of Total   Revenues ($'000)   % of Total   Amount ($'000)   % 
Cutlery  $33,222    49.5%  $27,341    48.1%  $5,881    21.5%
Straws   10,917    16.3%   9,064    15.9%   1,853    20.4%
Cups and plates   17,910    26.7%   15,702    27.6%   2,209    14.1%
Others   5,065    7.5%   4,778    8.4%   287    6.0%
Total  $67,115    100.0%  $56,885    100.0%  $10,230    18.0%

 

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On a geographical basis, sales in the U.S., Fuling Global’s largest market, increased by $7.40 million, or 14.9%, to $57.02 million for the first half of 2018 from $49.63 million for the same period of last year. Sales in China, our second largest market, increased by $1.69 million, or 47.4%, to $5.26 million for the first half of 2018 from $3.57 million for the same period of last year. Sales in Europe decreased by $0.15 million, or 7.5%, to $1.89 million for the first half of 2018 from $2.05 million for the same period of last year. Sales in other countries increased by $1.29 million, or 78.8%, to $2.94 million for the first half of 2018 from $1.64 million for the same period of last year.

 

   For the Six Months Ended June 30, 
   2018   2017   Y/Y Change 
   Revenues ($'000)   % of Total   Revenues ($'000)   % of Total   Amount ($'000)   % 
U.S.  $57,024    85.0%  $49,626    87.2%  $7,398    14.9%
Europe   1,893    2.8%   2,047    3.6%   (154)   -7.5%
China   5,263    7.8%   3,571    6.3%   1,692    47.4%
Others   2,935    4.4%   1,641    2.9%   1,293    78.8%
Total  $67,115    100.0%  $56,885    100.0%  $10,230    18.0%

 

Gross profit

 

Total cost of goods sold increased by $11.17 million, or 24.5%, to $56.68 million for the first half of 2018 from $45.51 million for the same period of last year. The increase was mainly due to increased sale volume as well as higher unit price of raw materials, particularly Polypropylene and polyethylene terephthalate.

 

Gross profit decreased by $0.94 million, or 8.3%, to $10.43 million for the first half of 2018 from $11.37 million for the same period of last year. Gross margin was 15.5% the first half of 2018, compared to 20.0% for the same period of last year.

 

Operating income

 

Selling expenses increased by $0.89 million, or 28.4%, to $4.02 million for the first half of 2018 from $3.13 million for the same period of last year. As a percentage of sales, selling expenses were 6.0% in the first half of 2018, compared to 5.5% in the same period of last year. General and administrative expenses increased by $0.12 million, or 3.3%, to $3.80 million for the first half of 2018 from $3.68 million for the same period of last year. As a percentage of sales, general and administrative expenses were 5.7% in the first half of 2018, compared to 6.5% in the same period of last year. Research and development expenses increased by $0.31 million, or 27.2%, to $1.45 million for the first half of 2018 from $1.14 million for the same period of last year. As a percentage of sales, research and development expenses were 2.2% in the first half of 2018, compared to 2.0% in the same period of last year. We expect research and development expenses in the second half of 2018 to stay at the current levels as we continue to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop biodegradable materials and reduce reliance on fossil-based raw materials. 

 

As a result, total operating expenses increased by $1.32 million, or 16.6%, to $9.27 million for the first half of 2018 from $7.95 million for the same period of last year.

 

Operating income decreased by $2.26 million, or 66.0%, to $1.17 million for the first half of 2018 from $3.42 million for the same period of last year. Operating margin was 1.7% for the first half of 2018, compared to 6.0% for the same period of last year. The decrease in operating margin was primarily due to decrease in gross margin as well as increase in operating expenses as a percentage of sales.

 

Income before income taxes

 

Total net other expense, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.71 million for the first half of 2018, compared to total net other income of $0.16 million for the same period of last year. The difference was mainly due to decreased subsidy income as well as increased interest expense in the first half of 2018.

 

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Income before income taxes decreased by $3.13 million, or 87.2%, to $0.46 million for the first half of 2018 from $3.59 million for the same period of last year. The decrease was a result of decreased gross profit as well as increased operating expenses and other expenses in the first half of 2018.

 

Provision for income taxes was $0.07 million for the first half of 2018, compared to $0.64 million for the same period of last year.

 

Net income

 

Net income decreased by $2.56 million, or 87.1%, to $0.38 million for the first half of 2018 from $2.94 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global decreased by $2.53 million, or 87.3%, to $0.37 million for the first half of 2018 from $2.90 million for the same period of last year.

 

Basic and diluted earnings per share were $0.02 for the first half of 2018, compared to $0.18 for the same period of last year. The decrease in earnings per share was mainly due to decrease in net income as results of increased operating expenses and other expenses as well as decreased gross profit in the first half of 2018.

 

Financial Condition

 

As of June 30, 2018, the Company had cash and cash equivalents and restricted cash of $3.82 million and $1.77 million, respectively, compared to $4.12 million and $4.37 million, respectively, at the end of 2017. Short-term borrowing and bank notes payable were $30.15 million and $2.95 million, respectively, as of June 30, 2018, compared to $29.70 million and $5.04 million, respectively, at the end of 2017. Long-term borrowing was $4.10 million as of June 30, 2018, compared to $1.80 million at the end of 2017.

 

Net cash provided by operating activities was $0.71 million for the first half of 2018, compared to $1.47 million for the same period of last year. Net cash used in investing activities was $8.26 million for the first half of 2018, compared to $4.69 million for the same period of last year. Net cash provided by financing activities was $7.13 million for the first half of 2018, compared to $1.18 million for the same period of last year.

 

About Fuling Global Inc.

 

Fuling Global Inc. (“Fuling Global”) is a specialized producer and distributor of 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, 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. 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.

 

For more information, please contact:

 

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

 

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,
2018
   December 31,
2017
 
   (Unaudited)     
ASSETS
Current Assets:        
Cash and cash equivalents  $3,818,056   $4,122,394 
Restricted cash   1,767,699    4,366,891 
Certificates of deposit   -    105,707 
Accounts receivable, net   23,770,559    23,911,326 
Advances to supplier, net   1,238,685    612,655 
Inventories, net   21,896,258    20,775,035 
Security deposits for sale leaseback   -    771,814 
Prepaid expenses and other current assets   2,089,312    2,347,300 
Total Current Assets   54,580,569    57,013,122 
           
Property, plant and equipment, net   52,501,913    48,478,612 
Intangible assets, net   9,614,973    9,878,594 
Prepayments for construction and equipment purchases   1,391,579    527,568 
Security deposits for sale leaseback - long term   1,653,292    543,996 
Other assets   398,457    287,741 
Total Assets  $120,140,783   $116,729,633 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY
           
Current Liabilities:          
Short term borrowings  $30,148,692   $29,696,842 
Bank notes payable   2,945,417    5,035,849 
Advances from customers   425,049    588,143 
Accounts payable   14,675,587    14,175,530 
Accrued and other liabilities   2,290,695    2,933,015 
Other payable - sale leaseback   2,959,972    2,755,931 
Taxes payable   185,377    289,804 
Deferred gains   372,471    87,605 
Total Current Liabilities   54,003,260    55,562,719 
           
Long term payable - sale leaseback   4,219,310    1,371,359 
Long term borrowings   4,099,570    1,801,887 
Total  Liabilities   62,322,140    58,735,965 
           
Commitments and contingencies          
           
Shareholders’ Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,780,205 shares issued and outstanding as of June 30, 2018 and December 31, 2017   15,781    15,781 
Additional paid in capital   29,962,362    29,904,285 
Statutory reserve   4,679,861    4,617,039 
Retained earnings   22,960,005    22,654,848 
Accumulated other comprehensive income   34,572    651,597 
Total Fuling Global Inc.’s equity   57,652,581    57,843,550 
           
Non-controlling interest   166,062    150,118 
Total Shareholders’ Equity   57,818,643    57,993,668 
           
Total Liabilities and Shareholders’ Equity  $120,140,783   $116,729,633 

  

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

   For the Six Months Ended
June 30,
 
   2018   2017 
         
Revenues  $67,114,936   $56,884,747 
Cost of goods sold   56,680,917    45,512,711 
Gross Profit   10,434,019    11,372,036 
           
Operating Expenses          
Selling expenses   4,022,978    3,126,131 
General and administrative expenses   3,797,173    3,680,503 
Research and development expenses   1,448,730    1,142,701 
Total operating expenses   9,268,881    7,949,335 
           
Income from Operations   1,165,138    3,422,701 
           
Other Income (Expense):          
Interest income   24,071    12,739 
Interest expense   (877,165)   (473,429)
Subsidy income   13,353    604,185 
Foreign currency transaction gain (loss)   16,690    (112,943)
Other income, net   113,479    133,027 
Total other income (expense), net   (709,572)   163,579 
           
Income Before Income Taxes   455,566    3,586,280 
           
Provision for Income Taxes   71,643    642,800 
           
Net Income  $383,923   $2,943,480 
           
Less: net income attributable to non-controlling interest   15,944    46,118 
           
Net income attributable to Fuling Global Inc.  $367,979   $2,897,362 
           
Other Comprehensive Income (Loss)          
Foreign currency translation income (loss)   (617,025)   879,540 
Comprehensive income (loss) attributable to Fuling Global Inc.  $(249,046)  $3,776,902 
           
Earnings per share          
Basic and diluted  $0.02   $0.18 
           
Weighted average number of shares          
Basic and diluted   15,780,205    15,756,500 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Six Months Ended
June 30,
 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income  $383,923   $2,943,480 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock based compensation   58,077    23,705 
Depreciation and amortization   2,703,536    1,687,155 
Bad debt provisions (recovery)   (23,180)   34,174 
Unrealized losses   1,829    10,006 
Inventory reserve   36,034    36,309 
Gain on disposal of fixed assets   6,818    70,027 
Changes in operating assets:          
Accounts receivable   (116,266)   961,264 
Advances to suppliers   (602,049)   (342,192)
Inventories   (1,428,318)   1,567,315 
Other assets   104,598    198,146 
Security deposit for sale leaseback   (373,498)   (514,917)
Changes in operating liabilities:          
Accounts payable   565,733    (3,104,839)
Advance from customers   (158,663)   (141,695)
Deferred gains   297,635    (1,228,802)
Taxes payable   (110,499)   (320,375)
Accrued and other liabilities   (633,404)   (412,896)
Net cash provided by operating activities   712,306    1,465,865 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (1,249,745)   (544,086)
Additions to construction in progress   (5,766,494)   (4,145,718)
Cash receipts from disposal property and equipment   -    13,125 
Cash increase (decrease) in certificates of deposit   108,064    (748,697)
Cash (decrease) increase in prepayments for construction and equipment purchase   (1,351,474)   730,815 
Purchase of intangible assets   (2,047)   - 
Net cash used in investing activities   (8,261,696)   (4,694,561)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term borrowings   17,933,236    10,059,805 
Repayments of short-term borrowings   (16,992,166)   (11,484,507)
Proceeds from long-term borrowings   2,399,228    587,667 
Proceeds from bank notes payable   3,061,836    3,270,048 
Repayments of bank notes payable   (5,148,108)   (2,582,752)
Repayments of loans from related parties   2,758    (53,621)
Proceeds from other payable - sale leaseback   6,012,612    2,790,345 
Repayments of other payable - sale leaseback   (2,768,860)   (1,093,236)
Change in restricted cash   2,628,630    (313,034)
Net cash provided by financing activities   7,129,166    1,180,715 
           
EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH EQUIVALENTS   115,886    84,824 
           
NET (DECREASE) IN CASH AND CASH EQUIVALENTS   (304,338)   (1,963,157)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD   4,122,394    4,009,784 
           
CASH AND CASH EQUIVALENTS, ENDING OF THE PERIOD  $3,818,056   $2,046,627 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest paid  $632,067   $425,543 
Income tax paid  $242,365   $754,331 
Non-cash investing activities:          
Transfer from construction in progress to fixed assets  $40,033   $15,289,807 
Transfer from accounts payable to fixed assets  $151,698   $912,059 
Transfer from advance payments to fixed assets  $-   $504,644 

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