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| 8-K - CURRENT REPORT - Yulong Eco-Materials Ltd | f8k092815_yulongecomaterials.htm |
Exhibit 99.1
YULONG ECO-MATERIALS REPORTS FISCAL 2015 FINANCIAL RESULTS
PINGDINGSHAN, China, September 28, 2015 -- Yulong Eco-Materials Limited (NasdaqCM:YECO), a vertically-integrated manufacturer of eco-friendly building products and a construction waste recycling company, today announced its fiscal 2015 results for the year ended June 30, 2015.
Fiscal 2015 Financial and Recent Operational Highlights
| ● | Fiscal 2015 revenue of $46.2 million increased 4% on $44.5 million in fiscal 2014; |
| ● | Fiscal 2015 net income of $8.7 million or $1.08 per share; |
| ● | Ended fiscal 2015 with approximately $16.5 million in cash; |
| ● | Working capital sufficient to support expansion efforts; |
| ● | New eco-friendly brick plant and waste recycling plant, with exclusive hauling license in Pingdingshan, became operational in April 2015; |
| ● | State-of-the-art research center established to develop new eco-friendly products and increase efficiency of existing construction waste products; |
| ● | Expanded its recycling business outside of Pingdingshan. |
Yulong’s revenue increase in fiscal 2015 was primarily the result of greater customer demand for the company’s fly-ash bricks, higher selling prices for concrete, as well as new revenue contributed by the recycling business which commenced operation in April 2015.
For fiscal 2015, the company’s gross margin decreased to 36.5%, as compared to 38.1% in fiscal 2014, mainly due to the higher cost of raw materials for our brick products, and the higher cost of raw material for higher grades of concrete sold during the period. This decrease was offset slightly by a 49.7% gross margin generated by our new, high-margin recycling business, which Yulong commenced in late April 2015. Although the contribution of the recycling business to fiscal 2015’s financial and operational performance was not significant (as a percentage of total revenue), this business is expected to become a material contributor to both top and bottom lines in fiscal 2016.
Yulong’s reduction in year-over-year net income - $8.7 million in fiscal 2015 vs. $10.7 million in fiscal 2014 - was mainly the result of an increase in general and administrative (G&A) expenses. Specifically, G&A expenses in fiscal 2015 increased to $3.4 million vs. $0.8 million a year earlier as a result of $0.9 million in start-up costs related to the new recycling and brick plants, and also an increase in professional fees mainly associated with preparation for the company’s initial public offering - fees which were not incurred in fiscal 2014.
Yulong closed its initial public offering on July 1, 2015, netting proceeds of approximately $10.9 million. These funds, which have improved the company’s cash position and working capital, will allow Yulong to purchase additional trucks and mobile recycling stations to service new contracts outside of Pingdingshan and complete the second production line of its new brick facility.
Moving Forward – 2016 and Beyond
Yulong remains one of the leading brick and cement suppliers in Pingdingshan with approximately 50% and 30% market share, respectively, in fiscal 2015. Recent steps taken by management are opening new avenues to further increase market share in Pingdingshan and expand into new areas.
Yulong’s Chief Executive Officer, Mr. Yulong Zhu, noted, “In April 2015, we completed the construction of our eco-friendly construction waste recycling plant, a new brick plant that uses the waste that we recycle as raw materials, and a state-of-the-art research and development center that will be instrumental in developing new eco-friendly products and increase efficiency of existing construction waste products. Using our recycled materials, we can now provide our existing and potential customers with a wider range of higher quality brick products that can be used for pavements, gardens and squares.
“Furthermore, the company’s exclusive hauling license in Pingdingshan and eco-friendly recycling plant, added to its recent success in securing hauling and recycling agreements in cities outside of its base in Pingdingshan, will serve as catalysts for improved operational performance expected in fiscal 2016.
“While fiscal 2015 was a year in which we established our hauling and recycling business and completed what we believe to be one of our province’s most advanced eco-friendly brick factories, fiscal 2016 has already emerged as a year in which we have expanded our business into new geographic markets and secured highly lucrative contracts.”
In August 2015, Yulong commenced waste hauling and recycling operations on a high-speed rail project in Shangqiu, Henan Province, a contract that can potentially net the company up to $4 million in revenue over 18 months. Earlier in September 2015, Yulong landed a construction waste recycling agreement for Zhengzhou City with potential revenue of $35 million over four years.
“Several other contracts in other cities of Henan Province are currently being bid on,” said Mr. Zhu, “and we are hopeful that we will be able to announce positive results from these efforts soon.”
One of China’s most profound needs is to clean up the overflowing construction waste currently found in dozens of our nation’s major cities. “We believe we are positioning the company to be a leader in providing this vital service.”
About Yulong Eco-Materials
Yulong is a vertically integrated manufacturer of eco-friendly building products and a construction waste recycling company located in the city of Pingdingshan in Henan Province, China. The Company is currently the city’s leading producer of fly-ash bricks and concrete, and in April 2015 became Pingdingshan’s exclusive hauling and construction waste recycling operations provider.
Forward-Looking Statements
This press release contains forward-looking statements, particularly as related to, among other things, the business plans of the Company, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. The words or phrases "plans," "would be," "will allow," "intends to," "may result," "are expected to," "will continue," "anticipates," "expects," "estimate," "project," "indicate," "could," "potentially," "should," "believe," "think," "considers" or similar expressions are intended to identify "forward-looking statements." These forward-looking statements fall within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Such forward-looking statements are based on current expectations, involve known and unknown risks, a reliance on third parties for information, transactions or orders that may be cancelled, and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties related to the fluctuation of local, regional, and global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic reports and on documents we file from time to time with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
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| YULONG ECO-MATERIALS LIMITED AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| June 30, | June 30, | |||||||
| 2015 | 2014 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 16,470,299 | $ | 19,732,770 | ||||
| Accounts receivable, net | 9,329,495 | 5,181,394 | ||||||
| Deposits and other receivables | 286,153 | 350,120 | ||||||
| Inventories | 364,254 | 421,998 | ||||||
| Advances to suppliers | 17,421 | 57,415 | ||||||
| Prepaid expenses | 373,617 | 72,356 | ||||||
| Other receivables-related parties | - | 936,608 | ||||||
| Total current assets | 26,841,239 | 26,752,661 | ||||||
| PLANT AND EQUIPMENT, net | 41,267,655 | 34,381,554 | ||||||
| OTHER ASSETS | ||||||||
| Prepayments | 3,658,748 | 5,771,681 | ||||||
| Intangible assets, net | 4,913,376 | 2,449,759 | ||||||
| Deferred tax asset | 520,147 | 188,381 | ||||||
| Long-term deposit | 397,300 | 11,294 | ||||||
| Total other assets | 9,489,571 | 8,421,115 | ||||||
| Total assets | $ | 77,598,465 | $ | 69,555,330 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short term loan - bank | $ | 7,972,190 | $ | 7,751,250 | ||||
| Accounts payable, trade | 1,726,158 | 1,820,585 | ||||||
| Other payables and accrued liabilities | 4,817,399 | 735,789 | ||||||
| Other payables - related parties | 2,584,104 | 182,000 | ||||||
| Customer deposits | - | 402,499 | ||||||
| Taxes payable | 1,098,093 | 1,113,617 | ||||||
| Capital lease obligation-current portion | 4,615,083 | 1,610,492 | ||||||
| Dividends payable | 7,994,125 | - | ||||||
| Total current liabilities | 30,807,152 | 13,616,232 | ||||||
| LONG TERM LIABILITIES | ||||||||
| Other payables | - | 487,500 | ||||||
| Other payables - related parties | - | 9,801,110 | ||||||
| Dividends payable | - | 7,935,525 | ||||||
| Capital lease obligation-net of current portion | 138,952 | 68,361 | ||||||
| Total long term liabilities | 138,952 | 18,292,496 | ||||||
| Total liabilities | 30,946,104 | 31,908,728 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Common stock, $0.00125 par value, 100,000,000 shares authorized, 8,000,000 shares issued and outstanding* | 10,000 | 10,000 | ||||||
| Subscription receivable | (10,000 | ) | (10,000 | ) | ||||
| Additional paid-in capital | 19,011,464 | 19,011,464 | ||||||
| Statutory reserves | 3,922,228 | 3,771,665 | ||||||
| Retained earnings | 21,211,829 | 12,682,821 | ||||||
| Accumulated other comprehensive income | 2,506,840 | 2,180,652 | ||||||
| Total Yulong Eco-Materials Limited's equity | 46,652,361 | 37,646,602 | ||||||
| Total liabilities and equity | $ | 77,598,465 | $ | 69,555,330 | ||||
| * Giving retroactive effect to the 4-for-5 reverse stock split effected on March 3, 2015. |
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| YULONG ECO-MATERIALS LIMITED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
| For the Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| REVENUES | ||||||||
| Bricks | $ | 15,586,654 | $ | 14,956,906 | ||||
| Concrete | 29,967,622 | 29,499,530 | ||||||
| Recycling | 676,108 | - | ||||||
| TOTAL REVENUES | 46,230,384 | 44,456,436 | ||||||
| COST OF REVENUES | ||||||||
| Bricks | 6,139,759 | 5,773,533 | ||||||
| Concrete | 22,883,040 | 21,729,928 | ||||||
| Recycling | 340,186 | - | ||||||
| TOTAL COST OF REVENUES | 29,362,985 | 27,503,461 | ||||||
| GROSS PROFIT | 16,867,399 | 16,952,975 | ||||||
| OPERATING EXPENSES: | ||||||||
| Selling | 634,390 | 930,470 | ||||||
| General and administrative | 3,374,557 | 806,037 | ||||||
| Total operating expenses | 4,008,947 | 1,736,507 | ||||||
| INCOME FROM OPERATIONS | 12,858,452 | 15,216,468 | ||||||
| OTHER INCOME (EXPENSE), net | ||||||||
| Interest income | 70,065 | 18,186 | ||||||
| Interest expense | (1,297,102 | ) | (1,183,580 | ) | ||||
| Other finance expense | (1,094 | ) | (16,628 | ) | ||||
| Other expense, net | (52,731 | ) | (83,125 | ) | ||||
| Total other expense, net | (1,280,862 | ) | (1,265,147 | ) | ||||
| INCOME BEFORE INCOME TAXES | 11,577,590 | 13,951,321 | ||||||
| PROVISION FOR INCOME TAXES | 2,898,019 | 3,259,147 | ||||||
| NET INCOME | 8,679,571 | 10,692,174 | ||||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation adjustments | 326,188 | 94,109 | ||||||
| COMPREHENSIVE INCOME | $ | 9,005,759 | $ | 10,786,283 | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||||||
| Basic and diluted* | 8,000,000 | 8,000,000 | ||||||
| EARNINGS PER SHARE | ||||||||
| Basic and diluted* | $ | 1.08 | $ | 1.34 | ||||
| * Giving retroactive effect to the 4-for-5 reverse stock split effected on March 3, 2015. |
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Contact:
Investor Relations Counsel:
The Equity Group Inc.
Lena Cati, 212-836-9611
Vice President
lcati@equityny.com
www.theequitygroup.com
or
Asia IR•PR
Jimmy Caplan, 512-329-9505
jimmy@asia-irpr.com
or
Media Relations:
Asia IR•PR
Rick Eisenberg, 212-496-6828
rick@asia-irpr.com
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