Press Releases

Fuling Global Inc. Reports Full Year 2017 Financial Results

Continued Strong Growth in Both Revenues and Volume, with Increases of 21.3% and 17.7%, Respectively, in 2017

ALLENTOWN, PA., March 30, 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 twelve months ended December 31, 2017.



For the Twelve Months Ended December 31,

($ millions, except per share data)


2017


2016


% Change

Revenues


$127.3


$104.9


21.3%

Gross profit


$26.1


$25.2


3.2%

Gross margin


20.5%


24.1%


-3.6 percentage points

Operating income


$7.6


$8.5


-10.8%

Operating margin


6.0%


8.1%


-2.2 percentage points

Net income attributable to Fuling Global


$6.3


$7.9


-21.0%

Diluted earnings per share


$0.40


$0.50


-21.1%

 

  • Revenues increased by 21.3% to $127.25 million for the year of 2017 from $104.88 million for the prior year, as a result of the combined effect of increases in both sales volume and blended average selling prices ("ASP").
  • Total sales volume increased by 17.7% to 50,284 tons for the year of 2017 from 42,723 tons for the prior year. The increase in sales volume was across all product categories. Blended ASP also increased by 3.1% to $2.53 per kilogram for the year of 2017 from $2.45 per kilogram for the prior year.
  • Gross profit increased by 3.2% to $26.05 million for the year of 2017 from $25.24 million for the prior year. Gross margin decreased by 3.6 percentage points to 20.5% for the year of 2017 from 24.1% for the prior year. The decrease in gross margin was primarily due to increase in the price of raw materials, particularly Polypropylene.
  • Net income attributable to Fuling Global was $6.28 million, or $0.40 per basic and diluted share, for the year of 2017, compared to $7.94 million, or $0.50 per basic and diluted share for the prior year. The decrease in net income attributable to Fuling Global was mainly due to the increase in total operating income and the decrease in subsidy income that more than offset the increase in gross profit.

"2017 proved to be another strong year for Fuling Gobal with both revenues and shipment volume reaching record high. The growths were across all major geographical regions and all product categories," said Mr. Xinfu Hu, Chief Executive Officer of Fuling Global.

Ms. Guilan Jiang, Chairwoman of Fuling Global, further commented, "With continuing order momentum and increased manufacturing capacity, we are increasingly confident in our ability to further extend our top-line growth streak in 2018 and beyond. As we continue to face uncertainty in market factors, particularly pricing environment for raw materials and our final products, we look for ways to further improve our productivity and profitability through process optimization and cost control in 2018."

Fiscal Year 2017 Financial Results

Revenues

For the year of 2017, total revenues increased by $22.37 million, or 21.3%, to $127.25 million from $104.88 million for the prior year. The increase in total revenues was a combined result of increases in both sales volume and blended ASP.

Overall sales volume increased by 7,561 tons, or 17.7%, to 50,284 tons for the year of 2017 from 42,723 tons for the prior year. The increase in sales volume was across all product categories. Sales volume of cutlery increased by 2,310 tons, or 8.5%, to 29,638 tons for the year of 2017 from 27,328 tons for the prior year. Sales volume of straws increased by 1,590 tons, or 35.8%, to 6,025 tons for the year of 2017 from 4,435 tons for the prior year. Sales volume of cups and plates increased by 2,516 tons, or 31.1%, to 10,602 tons for the year of 2017 from 8,086 tons for the prior year. Sales volume of other products increased by 1,145 tons, or 39.8%, to 4,020 tons for the year of 2017 from 2,875 tons for the prior year.

Blended ASP increased by $0.08 per kilogram, or 3.1%, to $2.53 per kilogram for the year of 2017 from $2.45 per kilogram for the prior year. The increase in blended ASP was mainly related to cutlery and other products and partially offset by decrease in ASP for straws and cups and plates. ASP of cutlery increased by $0.12 per kilogram, or 6.1%, to $2.12 per kilogram for the year of 2017 from $2.00 per kilogram for the prior year. ASP of straws decreased by $0.24 per kilogram, or 6.9%, to $3.19 per kilogram for the year of 2017 from $3.43 per kilogram for the prior year. ASP of cups and plates decreased by $0.20 per kilogram, or 5.9%, to $3.24 per kilogram for the year of 2017 from $3.44 per kilogram for the prior year. ASP of other products increased by $0.19 per kilogram, or 7.4%, to $2.69 per kilogram for the year of 2017 from $2.51 per kilogram for the prior year.

The increase in revenues was across all product categories. Revenues from cutlery sales increased by $8.23 million, or 15.1%, to $62.85 million for the year of 2017 from $54.62 million for the prior year. Revenues from straws sales increased by $4.03 million, or 26.5%, to $19.25 million for the year of 2017 from $15.22 million for the prior year. Revenues from cups and plates sales increased by $6.49 million, or 23.3%, to $34.33 million for the year of 2017 from $27.84 million for the prior year. Revenues from other products sales increased by $3.62 million, or 50.2%, to $10.83 million for the year of 2017 from $7.21 million for the prior year. Cutlery, straws, cups and plates, and other products accounted for 49.4%, 15.1%, 27.0%, and 8.5% of total revenues for the year of 2017, compared to 52.1%, 14.5%, 26.5%, and 6.9% for the prior year, respectively.


For the Twelve Months Ended December 31,



2017



2016



Y/Y Change



Revenues
($'000)


% of
Total



Revenues
($'000)


% of
Total



Amount
($'000)


%

Cutlery

$

62,846


49.4%


$

54,619


52.1%


$

8,227


15.1%

Straws


19,248


15.1%



15,219


14.5%



4,029


26.5%

Cups and
plates


34,330


27.0%



27,835


26.5%



6,495


23.3%

Others


10,826


8.5%



7,209


6.9%



3,617


50.2%

Total

$

127,250


100.0%


$

104,882


100.0%


$

22,368


21.3%

On a geographical basis, sales in the U.S., Fuling Global's largest market, increased by $14.28 million, or 15.0%, to $109.17 million for the year of 2017 from $94.90 million for the prior year. Sales in China, our second largest market, increased by $3.91 million, or 93.1%, to $8.11 million for the year of 2017 from $4.20 million for the prior year. Sales in Europe increased by $2.94 million, or 92.2%, to $6.14 million for the year of 2017 from $3.19 million for the prior year. Sales in Canada increased by $0.96 million, or 97.9%, to $1.94 million for the year of 2017 from $0.98 million for the prior year.



For the Twelve Months Ended December 31,



2017



2016



Y/Y Change



Revenues
($'000)


% of
Total



Revenues
($'000)


% of
Total



Amount
($'000)


%

U.S.

$

109,174


85.8%


$

94,899


90.5%


$

14,275


15.0%

China


8,111


6.4%



4,200


4.0%



3,911


93.1%

Europe


6,137


4.8%



3,193


3.0%



2,944


92.2%

Canada


1,944


1.5%



982


0.9%



962


97.9%

Others


1,884


1.5%



1,607


1.6%



276


17.2%

Total

$

127,249


100.0%


$

104,882


100.0%


$

22,368


21.3%

Gross profit

Total cost of goods sold increased by $21.56 million, or 27.1%, to $101.20 million for the year of 2017 from $79.64 million for the prior year. The increase was mainly due to increased sale volume as well as higher unit price of raw materials, particularly Polypropylene. Gross profit increased by $0.81 million, or 3.2%, to $26.05 million for the year of 2017 from $25.24 million for the prior year. Gross margin was 20.5% the year of 2017, compared to 24.1% for the prior year.

Operating income

Selling expenses increased by $0.76 million, or 11.1%, to $7.62 million for the year of 2017 from $6.86 million for the prior year. As a percentage of sales, selling expenses were 6.0% in 2017, compared to 6.5% in the prior year. General and administrative expenses increased by $0.37 million, or 4.9%, to $7.88 million for the year of 2017 from $7.51 million for the prior year. As a percentage of sales, general and administrative expenses were 6.2% in 2017, compared to 7.2% in the prior year. Research and development expenses increased by $0.60 million, or 25.4%, to $2.95 million for the year of 2017 from $2.36 million for the prior year. As a percentage of sales, research and development expenses accounted for 2.3% in 2017, compared to 2.2% in the prior year. We expect research and development expenses in 2018 to stay at 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 $1.73 million, or 10.4%, to $18.45 million for the year of 2017 from $16.72 million for the prior year.

Operating income decreased by $0.92 million, or 10.8%, to $7.60 million for the year of 2017 from $8.52 million for the prior year. Operating margin was 6.0% for the year of 2017, compared to 8.1% for the prior year. The decrease in operating margin was primarily due to decrease in gross margin and partially offset by decrease in operating expenses as a percentage of total revenues.

Income before income taxes

Total net other expense, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.48 million for the year of 2017, compared to total net other income of $1.46 million for the prior year. The difference was mainly due to decreased subsidy income and other income as well as increased interest expense in 2017.  

Income before income taxes decreased by $2.86 million, or 28.7%, to $7.11 million for the year of 2017 from $9.97 million for the prior year. The decrease was a result of increased operating expenses that more than offset increased gross profit in 2017.

Provision for income taxes was $0.82 million for the year of 2017, compared to $2.03 million for the prior year.  

Net income

Net income decreased by $1.65 million, or 20.8%, to $6.29 million for the year of 2017 from $7.94 million for the prior year. After deduction of non-controlling interest, net income attributable to Fuling Global decreased by $1.67 million, or 21.0%, to $6.28 million for the year of 2017 from $7.94 million for the prior year.

Basic and diluted earnings per share were $0.40 for the year of 2017, compared to $0.50 for the prior year. The decrease in earnings per share was mainly due to decrease in net income as a result of increased operating expenses and other net expenses that more than offset increased gross profit in 2017.

Financial Condition

As of December 31, 2017, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $4.12 million, $4.37 million, and $0.11 million, respectively, compared to $4.01 million, $2.33 million, and $1.54 million, respectively, at the end of 2016. Short-term borrowing and bank notes payable were $29.70 million and $5.04 million, respectively, as of December 31, 2017, compared to $17.79 million and $2.56 million, respectively, at the end of 2016. Long-term borrowing was $1.80 million as of December 31, 2017, compared to $0.84 million at the end of 2016.

Net cash provided by operating activities was $2.47 million for the year of 2017, compared to $5.15 million for the prior year. Net cash used in investing activities was $14.41 million for the year of 2017, compared to $24.08 million for the prior year. Net cash provided by financing activities was $11.98 million for the year of 2017, compared to $7.70 million for the prior 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 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: +1-610-366-8070 x1835
Web: http://ir.fulingglobal.com/

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: tony.tian@weitian-ir.com
Phone: +1-732-910-9692

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(AUDITED)



For the Years Ended December 31,


2017


2016


2015







Revenues

$

127,250,022


$

104,881,880


$

91,293,675

Cost of goods sold


101,199,010



79,640,421



67,646,107

Gross Profit


26,051,012



25,241,459



23,647,568










Operating Expenses









Selling expenses


7,620,189



6,857,382



6,436,821

General and administrative expenses


7,881,138



7,510,901



6,149,411

Research and development expenses


2,953,477



2,355,539



2,091,513

Total operating expenses


18,454,804



16,723,822



14,677,745










Income from Operations


7,596,208



8,517,637



8,969,823










Other Income (Expense):









Interest income


64,704



28,586



53,019

Interest expense


(1,171,386)



(801,728)



(1,115,633)

Subsidy income


1,043,440



1,863,365



901,852

Foreign currency transaction gain (loss)


(398,514)



300,130



476,576

Other expense, net


(19,838)



65,042



104,942

Total other income (expense), net


(481,594)



1,455,395



420,756










Income Before Income Taxes


7,114,614



9,973,032



9,390,579










Provision for Income Taxes


823,942



2,029,979



1,442,406










Net Income

$

6,290,672


$

7,943,053


$

7,948,173










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


12,875



20



(93,368)










Net income attributable to Fuling Global Inc.

$

6,277,797


$

7,943,033


$

8,041,541










Other Comprehensive Income









Foreign currency translation income (loss)


2,172,347



(1,913,200)



(702,167)

Comprehensive income attributable to Fuling Global Inc.

$

8,450,144


$

6,029,833


$

7,339,374










Earnings per share









Basic and diluted

$

0.40


$

0.50


$

0.65










Weighted average number of shares









Basic and diluted


15,759,293



15,735,588



12,335,072

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AUDITED)



December
31,


December
31,


2017


2016

ASSETS




Current Assets:




Cash and cash equivalents

$

4,122,394


$

4,009,784

Restricted cash


4,366,891



2,333,607

Certificates of deposit


105,707



1,539,082

Accounts receivable, net


23,911,326



20,915,134

Advances to supplier, net


612,655



639,947

Inventories, net


20,775,035



16,731,704

Security deposits for sale leaseback


771,814



-

Prepaid expenses and other current assets


2,347,300



1,660,978

Total Current Assets      


57,013,122



47,830,236







Property, plant and equipment, net


48,478,612



33,802,047

Intangible assets, net


9,878,594



9,447,486

Prepayments for construction and equipment purchases


527,568



2,192,236

Security deposits for sale leaseback - long term


543,996



723,206

Other assets


287,741



269,329

Total Assets

$

116,729,633


$

94,264,540







  LIABILITIES AND SHAREHOLDERS' EQUITY












Current Liabilities:






Short term borrowings

$

29,696,842


$

17,790,962

Bank notes payable


5,035,849



2,556,768

Advances from customers


588,143



604,873

Accounts payable


14,175,530



16,333,445

Accrued and other liabilities


2,933,015



2,195,853

Other payable - sale leaseback


2,755,931



1,931,076

Taxes payable


289,804



164,571

Deferred gains


87,605



650,343

Due to Related party


-



53,082

Total Current Liabilities 


55,562,719



42,280,973







Long term payable - sale leaseback


1,371,359



1,675,314

Long term borrowings


1,801,887



836,471

Total Liabilities 


58,735,965



44,792,758







Commitments and contingencies












Shareholders' Equity






Common stock: $0.001 par value, 70,000,000 shares authorized, 15,780,205 and
   15,756,500 shares issued and outstanding as of December 31, 2017 and December 31,
   2016, respectively


15,781



15,757

Additional paid in capital


29,904,285



29,845,442

Statutory reserve


4,617,039



4,017,957

Retained earnings


22,654,848



16,976,133

Accumulated other comprehensive income (loss)


651,597



(1,520,750)

Total Fuling Global Inc.'s equity


57,843,550



49,334,539







Non-controlling interest


150,118



137,243

Total Shareholders' Equity  


57,993,668



49,471,782







Total Liabilities and Shareholders' Equity

$

116,729,633


$

94,264,540

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AUDITED)



For the Years Ended December 31,


2017


2016


2015







CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

6,290,672


$

7,943,053


$

7,948,173

Adjustments to reconcile net income to net cash provided by operating
activities:









Stock based compensation


58,867



123,339



23,088

Deferred tax expense


-



319,252



(319,252)

Depreciation and amortization


4,086,740



3,177,954



2,681,293

Bad debt provisions


160,902



2,835



36,938

Unrealized losses (gains)


34,417



(60,225)



-

Inventory reserve


24,675



32,576



-

Gain on disposal of fixed assets


116,989



(12,687)



-

Changes in operating assets:









Accounts receivable


(2,372,548)



(6,870,015)



(2,224,191)

Advances to suppliers


(24,826)



(338,783)



364,925

Inventories


(3,510,031)



(3,688,956)



1,184,796

Other assets


(85,699)



(1,382,287)



95,350

Security deposit for sale leaseback


(523,839)



(755,934)



-

Changes in operating liabilities:









Accounts payable


(1,096,970)



6,019,466



(2,737,576)

Advance from customers


(50,007)



43,277



(66,731)

Deferred gains


(583,978)



679,774



-

Taxes payable


(678,259)



(557,587)



425,412

Accrued and other liabilities


627,533



470,105



548,382

Net cash provided by operating activities


2,474,638



5,145,157



7,960,607










CASH FLOWS FROM INVESTING ACTIVITIES









Purchase of property and equipment


(6,547,155)



(4,010,576)



(5,471,455)

Additions to construction in progress


(10,231,413)



(12,679,337)



-

Cash receipts from disposal property and equipment


13,352



19,296



-

Cash decrease in certificates of deposit


1,479,874



1,505,061



(1,986,668)

Prepayments for construction and equipment purchase


(480,689)



(1,974,046)



(1,047,526)

Repayments of deposit and prepayments for construction and equipment purchase


1,358,566



1,354,585



-

Purchase of intangible assets


(2,602)



(8,298,564)



(264,577)

Net cash used in investing activities


(14,410,067)



(24,083,581)



(8,770,226)










CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from short-term borrowings


35,582,827



30,660,941



42,684,057

Repayments of short-term borrowings


(25,270,011)



(26,983,488)



(46,039,616)

Proceeds from long-term borrowings


1,048,749



836,471



-

Proceeds from bank notes payable


8,175,964



6,150,573



5,318,470

Repayments of bank notes payable


(5,954,218)



(6,252,747)



(5,560,034)

Repayment of third party borrowing


-



(180,611)



-

Proceeds from loans from related parties


-



55,484



-

Repayments of loans from related parties


(57,148)



-



(37,764)

Proceeds from other payable - sales lease back


2,906,977



3,941,746



-

Repayments of other payable - sales lease back


(2,638,787)



(172,154)



-

Change in restricted cash


(1,811,242)



(358,888)



97,928

Proceeds from issuance of stocks


-



-



18,594,972

Net cash provided by financing activities


11,983,111



7,697,327



15,058,013










EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH
EQUIVALENTS


64,928



(322,674)



(74,554)










NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


112,610



(11,563,771)



14,173,840










CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR


4,009,784



15,573,554



1,399,714










CASH AND CASH EQUIVALENTS, ENDING OF THE YEAR

$

4,122,394


$

4,009,783


$

15,573,554










SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:









Cash paid during the period for:









Interest paid

$

836,401


$

762,868


$

1,136,896

Income tax paid

$

1,433,998


$

2,331,173


$

1,257,004

Non-cash investing activities:









Transfer from construction in progress to fixed assets

$

15,545,784


$

1,209,221


$

3,913,677

Accounts payable for purchasing fixed assets

$

1,162,202


$

-


$

-

Transfer from advance payments to fixed assets

$

191,868


$

296,853


$

726,445

 

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SOURCE Fuling Global Inc.