Attached files
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| 8-K - CURRENT REPORT - Yulong Eco-Materials Ltd | f8k111215_yulongecomaterial.htm |
Exhibit 99.1
YULONG FISCAL 2016 Q1 YEAR-OVER-YEAR NET INCOME INCREASES 52%; REVENUE UP 14%
New Construction Waste Management Operations Produce Record Margins of 63%
PINGDINGSHAN, China, November 12, 2015 -- Yulong Eco-Materials Limited (NasdaqCM:YECO), an eco-friendly building products and construction waste management company, today announced its financial results for fiscal 2016 Q1 period ended September 30, 2015.
Financial Snapshot ($ million)
| Q1 fiscal 2016 | Q1 fiscal 2015 | % change | ||||||||||
| Revenue | 13.4 | 11.7 | 14 | % | ||||||||
| Gross profit | 5.4 | 4.1 | 32 | % | ||||||||
| Gross Margin | 40.8 | % | 35.4 | % | ||||||||
| Net income | 3.6 | 2.3 | 52 | % | ||||||||
| EPS* | 0.30 | 0.29 | 3.4 | % | ||||||||
| Cash as of 9/30 | 30.3 | 16.5 | 83 | % | ||||||||
| Total Liabilities as of 9/30 | 21.5 | 30.9 | (30.7 | )% | ||||||||
*Basic and diluted earnings per share for the first quarter of fiscal 2016 were calculated on approximately 48% more shares outstanding than in the prior year period, due to new shares issued in Yulong’s IPO completed on July 1, 2015.
As expected, fiscal 2016 Q1 top and bottom line improved substantially as compared to fiscal 2015 Q1 due to incremental revenue of $2 million contributed by the company’s construction waste management (CWM) division, which commenced commercial operations in April 2015. This CWM revenue more than offset the slight decreases in Yulong’s brick and concrete products’ revenue compared to the same period of fiscal 2015. Of note, Yulong’s CWM division generated approximately $0.7 million in fiscal 2015 Q4. We expect this positive trend to continue in the coming quarters and generate significant revenue from our recently signed CWM contracts.
The company’s CWM division posted a gross margin of 63.4%, the highest rate ever achieved by a company division and the primary catalyst for Yulong’s improved bottom line performance in the quarter.
Business updates
| ● | Stable traditional fly-ash brick and concrete divisions |
| ● | CWM operations started in April 2015 with a 20-year exclusive license in Pingdingshan City |
| ● | Expanded CWM service to Shangqiu City with a contract worth up to $3.9 million related to a high speed train project, in July 2015 |
| ● | Commenced CWM service in Zhengdong New District in Zhengzhou City with a contract potentially worth up to $35 million, in September 2015 |
| ● | Commenced CWM service in Zhengzhou Airport Zone in Zhengzhou City with a contract potentially worth up to $55 million, in September 2015 |
| ● | Obtained a 25-year exclusive license of CWM service in Shangqiu City with total potential revenue of up to $170 million, in September 2015 |
Commenting on the company’s improved performance in the first quarter of fiscal 2016, chief executive Yulong Zhu said, “The CWM division played an essential role in helping us expand our operations to additional cities, and added nearly $2 million in high margin revenue while tapping into a new market with enormous growth possibilities.
“Currently, the CWM division is providing recycling services to the Zhengzhou City Airport Zone -- a contract potentially worth $55 million in revenue over five years -- as well as processing and recycling construction waste in Shangqiu, an exclusive 25- year contract worth about $7 million in revenue per year.”
Mr. Zhu continued, “By the third quarter of fiscal 2016, we expect the CWM division to begin selling its recycled waste materials to contractors constructing major roads and highways in Henan Province. We project these sales to generate between $7.0 million and $9.5 million per year, with gross margin of over 50%.”
Mr. Zhu concluded, “At September 30, 2015, Yulong had cash and cash equivalents of about $30 million. During fiscal 2016 Q1, the company generated approximately $4 million in cash from operations, mainly from its traditional fly-ash brick and concrete divisions, which continue to generate stable cash flow.”
About Yulong Eco-Materials
Yulong is a vertically integrated manufacturer of eco-friendly building products and a construction waste management company located in the city of Pingdingshan in Henan Province, China. The Company is currently Pingdingshan’s leading producer of fly-ash bricks and concrete as well as its exclusive provider of waste management services.
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, | June 30, | |||||||
| 2015 | 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 30,324,137 | $ | 16,470,299 | ||||
| Accounts receivable | 8,826,905 | 9,329,495 | ||||||
| Deposits and other receivables | 731,455 | 286,153 | ||||||
| Inventories | 495,636 | 364,254 | ||||||
| Advances to suppliers | 37,918 | 17,421 | ||||||
| Prepaid expenses and other | 386,724 | 373,617 | ||||||
| Other receivables - related party | 157,200 | - | ||||||
| Total current assets | 40,959,975 | 26,841,239 | ||||||
| PLANT AND EQUIPMENT, net | 39,991,110 | 41,267,655 | ||||||
| OTHER ASSETS | ||||||||
| Prepayments | 3,392,483 | 3,658,748 | ||||||
| Intangible assets, net | 4,680,951 | 4,913,376 | ||||||
| Deferred tax asset | 555,567 | 520,147 | ||||||
| Long-term deposit | 617,676 | 397,300 | ||||||
| Total other assets | 9,246,677 | 9,489,571 | ||||||
| Total assets | $ | 90,197,762 | $ | 77,598,465 | ||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short term loan - bank | $ | 7,498,440 | $ | 7,972,190 | ||||
| Accounts payable, trade | 2,505,550 | 1,726,158 | ||||||
| Other payables and accrued liabilities | 4,951,751 | 4,817,399 | ||||||
| Other payables - related parties | 276,024 | 2,584,104 | ||||||
| Customer deposits | 1,572 | - | ||||||
| Taxes payable | 1,837,611 | 1,098,093 | ||||||
| Capital lease obligation-current portion | 4,246,319 | 4,615,083 | ||||||
| Dividends payable | - | 7,994,125 | ||||||
| Warrant liabilities | 127,181 | - | ||||||
| Total current liabilities | 21,444,448 | 30,807,152 | ||||||
| LONG TERM LIABILITIES | ||||||||
| Capital lease obligation-net of current portion | 12,382 | 138,952 | ||||||
| Total long term liabilities | 12,382 | 138,952 | ||||||
| Total liabilities | 21,456,830 | 30,946,104 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Common stock, $0.00125 par value, 100,000,000 shares authorized, 11,869,938 and 8,000,000 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively | 14,838 | 10,000 | ||||||
| Subscription receivable | (10,000 | ) | (10,000 | ) | ||||
| Additional paid-in capital | 40,166,016 | 19,011,464 | ||||||
| Statutory reserves | 3,922,228 | 3,922,228 | ||||||
| Retained earnings | 24,792,512 | 21,211,829 | ||||||
| Accumulated other comprehensive (loss) income | (144,662 | ) | 2,506,840 | |||||
| Total Yulong Eco-Materials Limited's equity | 68,740,932 | 46,652,361 | ||||||
| Total liabilities and equity | $ | 90,197,762 | $ | 77,598,465 | ||||
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YULONG ECO-MATERIALS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
| For the Three Months Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| REVENUES | ||||||||
| Bricks | $ | 4,035,101 | $ | 4,176,234 | ||||
| Concrete | 7,338,329 | 7,500,681 | ||||||
| Recycling | 1,977,438 | - | ||||||
| TOTAL REVENUES | 13,350,868 | 11,676,915 | ||||||
| COST OF REVENUES | ||||||||
| Bricks | 1,785,624 | 1,632,440 | ||||||
| Concrete | 5,396,158 | 5,911,063 | ||||||
| Recycling | 723,325 | - | ||||||
| TOTAL COST OF REVENUES | 7,905,107 | 7,543,503 | ||||||
| GROSS PROFIT | 5,445,761 | 4,133,412 | ||||||
| OPERATING EXPENSES: | ||||||||
| Selling | 144,648 | 195,958 | ||||||
| General and administrative | 778,625 | 606,574 | ||||||
| Total operating expenses | 923,273 | 802,532 | ||||||
| INCOME FROM OPERATIONS | 4,522,488 | 3,330,880 | ||||||
| OTHER INCOME (EXPENSE), net | ||||||||
| Interest income | 19,903 | 16,931 | ||||||
| Interest expense | (268,165 | ) | (327,384 | ) | ||||
| Change in fair value of warrant liabilities | 348,199 | - | ||||||
| Foreign exchange transaction loss | (5,934 | ) | - | |||||
| Other finance expense | (16,510 | ) | (311 | ) | ||||
| Other income (expense), net | 49,334 | (35,972 | ) | |||||
| Total other income (expense), net | 126,827 | (346,736 | ) | |||||
| INCOME BEFORE INCOME TAXES | 4,649,315 | 2,984,144 | ||||||
| PROVISION FOR INCOME TAXES | 1,068,632 | 636,423 | ||||||
| NET INCOME | 3,580,683 | 2,347,721 | ||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Foreign currency translation adjustments | (2,651,502 | ) | 3,021 | |||||
| COMPREHENSIVE INCOME | $ | 929,181 | $ | 2,350,742 | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||||||
| Basic and diluted | 11,869,938 | 8,000,000 | ||||||
| EARNINGS PER SHARE | ||||||||
| Basic and diluted | $ | 0.30 | $ | 0.29 | ||||
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www.theequitygroup.com
or
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or
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