Press Releases

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%

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.  

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

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

 

 

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

 

 

 

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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SOURCE Fuling Global Inc.