Fuling Global Inc. Reports First Quarter of 2016 Financial Results

ALLENTOWN, Pa., May 16, 2016 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"), a specialized producer and distributor of environmentally-friendly plastic serviceware, with precision manufacturing facilities in both the U.S. and China, today announced its financial results for the three months ended March 31, 2016.

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, "Our first quarter results were, once again, highlighted by increase in sales volume, which grew by 4.6% to 7,418 tons and offset the 4.7% decrease in average selling price ("ASP") resulting from decline in crude oil price. Both gross profit and gross margin increased year-over-year with improvement in gross margin across all product categories. Net income attributable to Fuling Global was $0.7 million, down from the $1.2 million a year ago as a result of increased SG&A expenses and provision for income taxes that more than offset the increase in gross profit."

Ms. Guilan Jiang, Chairwoman of Fuling Global, added, "While putting the IPO proceeds to work, including the $10.2 million purchase of a 32.86-acre land parcel for a new factory in Wenling City and the ongoing expansion at our Allentown facility, we are setting the stage for growth in years to come. We look forward to continuing working with our suppliers, customers, partners and shareholders to take our business to the next level."      

First Quarter of 2016 Financial Highlights

Please note, certain expense items, primarily expenses associated with ocean freight, were previously reported as selling expenses and have been reclassified as cost of goods sold. As a result, cost of goods sold, gross profit, gross margin, selling expenses, and total operating expenses for 2015 have been adjusted retrospectively.

• Revenues were essentially unchanged at $20.6 million for the first quarter of 2016, with increase in sales volume offsetting decrease in ASP.
• Total sales volume increased by 4.6% to 7,418 tons for the three months ended March 31, 2016 from 7,092 tons for the same period of last year. The increase in total sales volume was primarily related to increased sales of cups and plates and other products and partially offset by decline in sales of cutlery and straws.
• Blended ASP decreased by 4.7% to $2.77 per kilogram for the three months ended March 31, 2016 from $2.91 per kilogram for the same period of last year. The decrease in ASP was across all product categories as a result of decrease in crude oil prices.
• Gross profit increased by 13.3% to $5.2 million for the three months ended March 31, 2016 from $4.6 million for the same period of last year. Gross margin was 25.3% for the three months ended March 31, 2016, compared to 22.3% for the same period of last year. The increase in gross margin was across all product categories, particularly for straws.
• Net income attributable to Fuling Global was $0.7 million, or $0.05 per basic and diluted share, for the three months ended March 31, 2016, compared to $1.2 million, or $0.11 per basic and diluted share, for the same period of last year.

First Quarter of 2016 Financial Results

Revenues

For the three months ended March 31, 2016, total revenues were essentially unchanged at $20.6 million with increase in overall sales volume offsetting by decline in ASP. Overall sales volume increased by 326 tons, or 4.6%, to 7,418 tons for the three months ended March 31, 2016 from 7,092 tons for the same period of last year. The increase in overall sales volume was primarily related to increased sales of cups and plates and other products and partially offset by decline in sales of cutlery and straws. Blended ASP decreased by $0.14 per kilogram, or 4.7%, to $2.77 per kilogram for the three months ended March 31, 2016 from $2.91 per kilogram for the same period of last year. The decrease in ASP was across all product categories as a result of decrease in crude oil prices. 

Cutlery, straws, cups and plates, and other products accounted for 56.8%, 10.2%, 26.7%, and 6.3% of total revenues for the three months ended March 31, 2016, compared to 60.6%, 12.2%, 23.6%, and 3.6% for the same period of last year, respectively. 

On a geographical basis, sales in Fuling Global's largest market, the U.S., decreased a bit to $19.5 million for the three months ended March 31, 2016 from $19.6 million for the same period of last year. Sales in Europe increased by 9.1% to $0.4 million while sale in Canada increased by 18.6% to $0.2 million for the three months ended March 31, 2016. Sales in China was $0.3 million, versus $nil for the same period of last year.

Gross profit

Total cost of goods sold decreased by $0.7 million, or 4.2%, to $15.4 million for the three months ended March 31, 2016 from $16.0 million for the same period of last year. Gross profit increased by $0.6 million, or 13.3%, to $5.2 million for the three months ended March 31, 2016 from $4.6 million for the same period of last year. Gross margin was 25.3% for the three months ended March 31, 2016, compared to 22.3% for the same period of last year. The increase in gross margin was across all product categories, particularly for straws. Gross margins for cutlery, straws, cups and plates, and other products were 23.9%, 35.3%, 26.4%, and 24.8%, respectively, for the three months ended March 31, 2016, compared to 23.8%, 23.3%, 20.1%, and 21.6%, respectively, for the same period of last year.

Operating income

Selling expenses increased by $0.25 million, or 18.3%, to $1.63 million for the three months ended March 31, 2016 from $1.38 million for the same period of last year. The increase in selling expenses was due to increase in sales commission and export credit insurance cost. General and administrative expenses increased by $0.53 million, or 34.4%, to $2.06 million for the three months ended March 31, 2016 from $1.53 million for the same period of last year. The increase in general and administrative expenses was due to professional fees related to being a public company as well as increase in administrative expenses at our Allentown facility. Research and development expenses increased by $0.1 million, or 26.0%, to $0.4 million for the three months ended March 31, 2016 from $0.3 million for the same period of last year. As a result, total operating expenses increased by $0.9 million, or 26.7%, to $4.1 million for the three months ended March 31, 2016 from $3.2 million for the same period of last year.

Operating income decreased by $0.25 million, or 19.0%, to $1.09 million for the three months ended March 31, 2016 from $1.34 million for the same period of last year. Operating margin was 5.3% for the three months ended March 31, 2016, compared to 6.5% for the same period of last year.

Income before income taxes

After adjustment for interest income and expenses, subsidy income and other non-operating income and expenses, income before income taxes decreased by $0.34 million, or 24.5%, to $1.03 million for the three months ended March 31, 2016 from $1.37 million for the same period of last year.

Provision for income taxes was $0.3 million for the three months ended March 31, 2016, compared to $0.1 million for the same period of last tear.  

Net income

Net income decreased by $0.5 million, or 42.0%, to $0.7 million for the three months ended March 31, 2016 from $1.2 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global was $0.7 million, or $0.05 per basic and diluted share, for the three months ended March 31, 2016, compared to $1.2 million, or $0.11 per basic and diluted share, for the same period of last year.

Financial Condition

As of March 31, 2016, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $8.4 million, $1.6 million, and $3.3 million, respectively, compared to $15.6 million, $2.1 million, and $3.2 million, respectively at the end of 2015. Short-term borrowing and bank notes payable were $17.9 million and $2.9 million, respectively, as of March 31, 2016, compared to $15.3 million and $2.8 million, respectively, at the end of 2015.

Net cash used in operating activities was $2.7 million for the three months ended March 31, 2016, compared to $2.8 million for the same period of last year.

Net cash used in investing activities was $7.4 million for the three months ended March 31, 2016, compared to $2.5 million for the same period of last year.

Net cash provided by financing activities was $2.8 million for the three months ended March 31, 2016, compared to $5.4 million for the same period of last year.

Recent Updates

On April 12, 2016, the Company announced that it has purchased a 32.86-acre land parcel for its newest factory in Wenling, China for approximately $10.24 million. The Company anticipates that it will complete construction, equipment installation and testing and will ultimately commence commercial production in the new factory in the first quarter of 2017. 

On March 8, 2016, the Company provided an update on the use of proceeds from its initial public offering (the "IPO") and announced that it has disbursed approximately $11 million of the IPO proceeds to increase the registered capital of Taizhou Fuling Plastics Co., Ltd. ("Taizhou Fuling") from $11.11 million to $21.63 million. Taizhou Fuling is a PRC company that is wholly owned by the Company through Total Faith Holdings Limited. The Wenling Bureau of Commerce had granted Taizhou Fuling official approval for the increase in registered capital. The Company is also investing approximately $8 million of the IPO proceeds in its business in the United States.

On March 3, 2016, Gilbert Lee, the Company's Chief Financial Officer, presented at VirtualInvestorConferences.com and provided a comprehensive overview of the Company for investors.

On January 12, 2016, the Company announced that it had hosted a team of scientists from the Chinese Academy of Sciences' Technical Institute of Physics and Chemistry ("TIPC") and Chinese Academy of Engineering ("CAE"), including CAE Academician Yicheng Wu, TIPC Deputy Director Yong Huang and TIPC NRCEP Chief Engineer Junhui Ji. The purposes of the meeting were to review 2015 accomplishments and set directions in 2016 for the Company's Academician and Expert Workstation (the "Workstation") and to further expand the scope of cooperation and collaboration through the Workstation platform in jointly developing new plastics materials and technologies.

Earnings Conference Call

The Company will host its first quarter of 2016 financial results conference call at 8:00 am Eastern Time (5:00 am Pacific Time/8:00 pm Beijing Time) on Tuesday, May 17, 2016. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "Fuling Global Inc./ FORK".

Please dial in at least fifteen minutes before the call to ensure timely participation. For those unable to participate, an audio replay of the conference call will be available beginning approximately one hour after the end of the live call through May 24, 2016. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access code No. 10086390.

About Fuling Global Inc.

Fuling Global Inc. ("Fuling Global") is a specialized producer and distributor of environmentally friendly 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, KFC (China only), Walmart, McKesson, and Woolworths. 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, CFOEmail: [email protected] Phone: +1-610-366-8070x1835 Web: http://ir.fulingglobal.com/

Investor Relations: Tina Xiao                            Weitian Group LLCEmail: [email protected] Phone: +1-917-609-0333

 

 

 

 

 

 

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SOURCE Fuling Global Inc.