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Guanwei Recycling Corp. Reports 2012 Revenues Grew 24.28% Over Prior Year

FUQING CITY, CHINA--(Marketwire - Mar 28, 2013) - Guanwei Recycling Corp. ( NASDAQ : GPRC ), a leading clean tech manufacturer in China of recycled low density polyethylene (LDPE), today reported revenues advanced 24.28% year over year to a record $79,043,356 in the year ended December 31, 2012. Operating in a relatively weaker economy in China, growth was fueled by continued domestic demand for the Company's competitively priced, high quality recycled plastic. Despite a moderation in some key costs in the second half of 2012, especially for raw materials, year over year increases in manufacturing costs slightly outpaced steady gains in sales prices. This resulted in slightly lower full year net income compared with the prior year.

2012 Highlights

  • Net revenues grew to a record $79,043,356, up 24.28% from revenues of $63,600,678 in 2011.
  • Net income declined 7.49 % from $12,793,448, or $1.28 per share in 2011, to $11,835,295, or $1.15 per share, as gross profit margins declined from 30.64% in 2011 to 23.54% in 2012. The earnings per share data retroactively reflects the reverse stock split which took place in December, 2012.
  • At year end, the Company had no bank debt, cash and cash equivalents of $12,083,358, and working capital of $35,505,028, up 49.16% from the prior year.
  • The Company maintained its competitive advantage of being licensed by Chinese and German authorities to import lower cost, higher quality plastic waste from Germany and other European raw material suppliers by continuing to meet exacting green standards.

Volume and Sales Price Increases

The Company's sales of manufactured recycled LDPE in 2012 were a record $67,331,679, up 8.77% from 2011. This increase reflected year over year growth in tonnage sales from 52,666 tons in 2011 to 55,448 tons in 2012, a 5.28% increase. Average selling prices for manufactured recycled LDPE in 2012 were approximately $1,214 per ton, a 3.32% increase from approximately $1,175 per ton a year earlier.

Sales of sorted non-LDPE materials increased 12.57% to $1,913,859 reflecting a 5.41% increase in tonnage sales to 6,135 tons as average sales prices increased 6.85% to approximately $312 per ton.

During the year, the Company also recorded $9,797,818 in low margin sales of raw materials. It had no such sales in 2011. The sales in 2012 resulted from a Company decision to increase bulk buying of raw materials to reduce costs which required sales of unused raw materials to increase storage space.

Capital Expenditures

During the year the Company incurred capital expenditures of approximately $2.69 million, primarily related to building improvements and other factory equipment purchases aimed mainly at improving its production process and efficiencies. Production capacity at year end was 80,000 tons.

Import Quota

The Company received governmental approval for an import quota in 2013 of 100,000 tons of imported plastic waste, up from 80,000 tons in 2012. At the same time, the Company's ability to utilize the import quota of Fuqing Huan Li Plastics Company was reduced from 35,000 tons in 2012, to 15,000 tons in 2013. The combined imported plastic waste tonnage allowed in 2012 was 115,000 tons which is the same combined tonnage allowed in 2013.


Mr. Min Chen, Chairman and CEO of the Company, commented, "We believe our financial strength and the continuing growth in sales we achieved in 2012 -- despite China's relatively slower economic environment -- bode well for the future, as we provide key products required in a wide variety of end uses to a broad range of customers. A primary goal this year is to improve profit margins as sales continue to expand, with a particular focus on managing key manufacturing costs to the extent possible."

He added, "We also remain committed to our U.S. listing and believe it is only a matter of time before investors recognize the outstanding growth still ahead in China, and companies such as ours that are well positioned to benefit from that growth."

Conference Call Invitation

The Company will discuss 2012 year end results during a live conference call and webcast on Monday, April 1st, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-4774 when calling within the United States or 1-480-629-9760 when calling internationally. Please ask for the Guanwei Recycling Corp. 2012 Year End Conference Call, Conference ID: 4609603. There will be a playback available until 04/08/13. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4609603.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=103983 or at ViaVid's website at http://viavid.com.


Description of Guanwei Recycling Corp.

Adhering to the highest "green" standards, Guanwei Recycling Corp. (the "Company") has generated rapid growth producing recycled low density polyethylene (LDPE) from plastic waste procured mostly in Europe for sales to more than 300 customers (including over 150 active recurring customers) in more than ten different industries in China. The Company is licensed by Chinese authorities and also has been issued a Compliance Certificate by Umweltagentur Erftstadt, which issues certificates of approval for certain plastics manufacturers that meet Germany's strict environmental standards. This enables the Company to procure high quality plastic waste directly from Germany and other European countries (Spain and Holland) with no middlemen, and permits highly economic production of the highest grades of LDPE. Additional information regarding Guanwei Recycling Corp. is available at www.guanweirecycling.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

    Year Ended December 31,  
    2012     2011  
Net revenue   $ 79,043,356     $ 63,600,678  
Cost of revenue     60,440,237       44,111,700  
    Gross profit     18,603,119       19,488,978  
Operating expenses:                
  Selling and marketing     417,597       398,513  
  General and administrative     2,297,782       1,994,873  
    Total operating expenses     2,715,379       2,393,386  
Income from operations     15,887,740       17,095,592  
Other income (expenses)                
  Interest income     55,781       88,249  
  Interest expenses     -       (29,083 )
  Net foreign exchange gain     62,806       156,602  
  Loss on disposal of property and equipment     (33,452 )     (72,174 )
  Miscellaneous     6,372       7,383  
    Total other income     91,507       150,977  
Income before income taxes     15,979,247       17,246,569  
Income taxes     4,143,952       4,453,121  
Net income     11,835,295       12,793,448  
Other comprehensive income - foreign currency translation adjustments     284,318       1,067,008  
Comprehensive income   $ 12,119,613     $ 13,860,456  
Earnings per share - basic and diluted   $ 1.15     $ 1.28  
Weighted average number of common shares outstanding                
  - basic and diluted     10,293,872       10,000,015  
    December 31,
    2012   2011
Current assets            
  Cash and cash equivalents   $ 12,083,358   $ 12,432,803
  Accounts receivable     9,305,104     4,475,386
  Inventories     18,696,648     16,858,801
  Advances to suppliers     1,827,480     -
  Value added tax refundable     -     1,221,531
  Prepaid expenses and other current assets     131,564     882,818
    Total current assets     42,044,154     35,871,339
Property, plant and equipment, net     10,223,874     8,151,012
Construction in progress     -     174,295
Land use right, net     663,800     673,762
Other assets     202,346     205,437
    Total Assets   $ 53,134,174   $ 45,075,845
Current liabilities            
  Accounts payable   $ 4,082,982   $ 8,741,822
  Accrued expenses and other payables     796,705     714,072
  Value added taxes payable     110,484     -
  Amount due to shareholder     517,863     1,468,167
  Income tax payable     1,031,092     1,144,516
    Total current liabilities     6,539,126     12,068,577
Commitments and contingencies            
Shareholders' Equity            
  Common stock, $0.001 par value, 500,000,000 shares authorized, 10,407,839 and 10,000,015 shares issued and outstanding, as of December 31, 2012 and December 31, 2011     10,408     10,000
  Additional paid-in capital     2,767,787     1,300,028
  PRC statutory reserves     805,483     805,483
  Accumulated other comprehensive income     2,546,999     2,262,681
  Retained earnings     40,464,371     28,629,076
    Total shareholders' equity     46,595,048     33,007,268
    Total liabilities and shareholders' equity   $ 53,134,174   $ 45,075,845