Attached files
| file | filename |
|---|---|
| 8-K - GULF RESOURCES, INC. | e606045_8k-gulf.htm |
| EX-99.1 - GULF RESOURCES, INC. | e606045_ex99-1.htm |
| EX-99.3 - GULF RESOURCES, INC. | e606045_ex99-3.htm |
| EX-99.2 - GULF RESOURCES, INC. | e606045_ex99-2.htm |
Exhibit
99.4
Gulf
Resources Reports Third Quarter 2009 Results, Increases 2009 Revenue and Net
Income Guidance
New York & Shandong Province,
November 9, 2009 - Gulf Resources, Inc. (NASDAQ Global Select: GFRE)
(“Gulf Resources” or the “Company”), a leading manufacturer of bromine, crude
salt and specialty chemical products in China, today announced its financial
results for the three and nine months ended September 30, 2009.
Third
Quarter 2009 Highlights and Recent Events
|
·
|
Net
revenue was $27.7 million, a year-over-year increase of
57.6%
|
|
·
|
Gross
profit was $12.1 million, a year-over-year increase of
96.8%
|
|
·
|
Gross
margin was 43.9%, compared to 35.1% in the third quarter of
2008
|
|
·
|
Net
income was $8.3 million, or $0.27 per basic and diluted share, up 122.9%
from $3.7 million, or $0.15 per basic and diluted share, a year
ago
|
|
·
|
Cash
totaled $19.3 million as of September 30,
2009
|
|
·
|
Appointed
Mr. Nai Hui Miao as chief operating
officer
|
|
·
|
Completed
seventh acquisition of bromine and crude salt manufacturing assets, adding
4,000 metric tons (MT) of bromine and 150,000 MT of crude salt annual
production capacity
|
|
·
|
Began
trading on the NASDAQ Global Select Market on October 27, 2009; management
celebrated the event by ringing the closing bell that same
day
|
Third
Quarter 2009 Results
"During
the third quarter, our bromine business has continued to benefit from the
recovery of China's chemical industry, mainly from the increased demand from oil
and gas exploration companies and manufacturers of flame retardants. Although
the impressive year-over-year growth in our bromine sales was partly due to the
adverse effects of the Beijing 2008 Olympic Games on bromine production and
shipments in the third quarter of 2008, the overall demand for bromine and
specialty chemical products was strong throughout the third quarter. Bromine
prices also continued recovering in the third quarter, with the average price
per MT of bromine at $1,833, up almost 9% from $1,685 per MT in the second
quarter of 2009," said Xiaobin Liu, Chief Executive Officer of Gulf
Resources.
"The
slight decrease in revenue compared with the second quarter of 2009 was mainly
due to a stabilization of sales after our customers drastically increased orders
in the second quarter in order to build up their inventories to compensate for
fewer orders placed in the beginning of the year. Our gross margin remained
high, mainly due to increased sales of crude salt and environmentally friendly
chemical products, both of which have higher gross margins than bromine.
Environmentally friendly chemical products were introduced in September last
year and accounted for 24% of our chemical product sales this quarter compared
to 22% in the second quarter of 2009," Mr. Liu continued.
Gulf
Resources' revenue was $27.7 million for the third quarter of 2009, an increase
of 57.6% from $17.6 million for the third quarter of 2008. During the third
quarter of 2009, the revenue from the bromine and crude salt segment was $18.8
million, or 68.0% of total revenue, an increase of 43.6% from $13.1 million, or
74.7% for the third quarter of 2008. Revenue from bromine increased 29%, to
$16.1 million from $12.45 million for the third quarter of 2008. Revenue from
crude salt increased to $2.7 million from only $0.65 for the same period of last
fiscal year, mainly due to the acquisition of salt pans and the improved
utilization of halogen water.
Revenue
from the chemical products segment was $8.9 million, or 32.0% of total revenue,
for the second quarter of 2009, an increase of 99.0% from $4.4 million, or 25.3%
of total revenue in the corresponding period last year. The growth in sales of
chemical products was due to the expansion of production capacity, completed in
September 2008, and strong demand for new environmentally friendly additive
products, including solid lubricant and polyether lubricant used in oil and gas
exploration.
Gross
profit for the third quarter of 2009 totaled $12.1 million, up 96.8% from $6.2
million for the third quarter of 2008. For the three months ended September 30,
2009, gross profit margin was 43.9%, compared to 35.1% for the corresponding
period last year. The increased gross profit margin was due to operational
efficiencies as the Company grew in scale and increased sales of environmentally
friendly additive products, which the Company sells at a higher unit price
compared to generic oil and gas exploration additives, and crude salt, which has
a lower production cost compared to bromine. Environmentally friendly additive
products and crude salt had gross margins of approximately 42% and 74%, while
bromine had a gross margin of 39% for the third quarter of 2009.
Research
and development and general and administrative expenses for the third quarter of
2009 were $1.0 million, down 8.1% from $1.1 million a year ago due to lower
consulting fees. Income from operations for the third quarter of 2009 was $11.1
million, an increase of 119.1% from $5.1 million a year ago. Operating margin
was 40.3% for the third quarter of 2009, compared to 29.0% for the third quarter
of 2008.
Net
income was $8.3 million for the third quarter of 2009, an increase of 122.9%
from $3.7 million for the third quarter of 2008. Basic and diluted earnings per
share in the third quarter of fiscal year 2009 was $0.27, compared to basic and
diluted earnings per share of $0.15 a year ago. Weighted average number of basic
and diluted shares for the three months ended September 30, 2009 was 30,806,546,
compared with 24,917,211 for the corresponding period of fiscal 2008, adjusted
for a one-for-four reverse split effected October 12, 2009.
Results
for Nine Months
Revenues
for the nine months ended September 30, 2009 were $80.9 million, up 27.7% from
revenues of $63.4 million for the nine months ended September 30, 2008. Gross
profit for the nine months ended September 30, 2009 was $35.4 million, up 39.8%
from gross profit of $25.3 million for the corresponding period of 2008. Gross
margin was 43.7%, compared to 39.9% for the first nine months of 2008. Operating
income was $32.0 million, up 44.7% from $22.1 million for the first nine months
of 2008. Net income was $23.8 million, or $0.79 per basic and diluted share,
compared to $16.2 million, or $0.65 per basic and diluted share, for the same
period a year ago.
Financial
Condition
As of
September 30, 2009, Gulf Resources had cash of $19.3 million, working capital of
$22.2 million, a current ratio of 2.67:1, and shareholders' equity $104.1
million. The Company had no long term debt outstanding as of September 30,
2009.
For the
nine months ended September 30, 2009, the Company generated $28.0 million in
cash flow from operations. For the same period, the Company used $33.8 million
in investing activities, mainly due to the acquisition of bromine and crude salt
manufacturing assets in February and September 2009 and the construction of new
wells, halogen water channels used for bromine and crude salt production, and a
waste water disposal system at its SYCI location. The Company is also in the
process of completing upgrades to its existing chemical production
lines.
Recent
Developments
In
September 2009, Gulf Resources acquired bromine and crude salt manufacturing
assets. The Company estimates the manufacturing assets will add 4,000 metric
tons to its annual bromine production capacity and 150,000 metric tons to its
annual crude salt production capacity. In consideration for the assets, the
Company paid approximately $11.5 million in cash and agreed to issue 1,057,342
shares of common stock valued at approximately $5.4 million. The shares have not
been issued as of November 2, 2009.
On
October 9, the Company effected a one-for-four reverse stock split in order to
meet the listing requirements of NASDAQ. After the reverse split and including
the shares to be issued to the sellers of bromine and crude salt manufacturing
assets discussed above, the Company will have approximately 31,599,553 shares of
common stock outstanding.
Business
Outlook
"We have
experienced an increase in bromine prices in line with the general expansion of
the manufacturing industry in China. The strong demand from end-user customers,
mainly producers of flame retardants and oil and gas field drilling chemicals,
and the optimism regarding future market conditions has allowed us to increase
our contract prices for the remainder of 2009, and we expect to see the effect
of higher selling prices in the fourth quarter this year," commented Mr. Liu.
"We also have a positive outlook for continued strong demand for our chemical
business in the fourth quarter. As a result, we are increasing our revenue and
net income guidance for 2009."
For
fiscal year 2009, Gulf Resources updates financial guidance to approximately
$100 million to $105 million in revenue from the previous range of $98 million
to $103 million, approximately $29 million to $31 million in net income from the
previous range of $27 million to $29 million, and diluted earnings per share of
$0.92 to $0.98 from the previous range of $0.85 to $0.92, using a share count of
31,599,553.
"We
expect the positive momentum in the bromine industry to continue in 2010, which
should reflect positively on bromine prices. Moreover, we expect our
environmentally friendly chemical products to continue to gain traction in the
market, especially as we complete the upgrades to our existing chemical
production line and start commercial production of environmentally friendly
chemicals for pesticide production early next year," concluded Mr.
Liu.
Conference
Call
Gulf
Resources’ management will host a conference call on November 10 at 8:00 a.m.
Eastern Standard Time to discuss its results for the three and nine months ended
September 30, 2009. To participate in this live conference call, please dial
888-419-5570 five to ten minutes prior to the scheduled conference call time.
International callers should call +1 617-896-9871. The conference participant
pass code is 106 766 49.
This
conference call will be broadcast live over the Internet and can be accessed by
all interested parties by clicking on http://www.gulfresourcesinc.cn/events.html.
Please access the link at least fifteen minutes prior to the start of the call
to register, download, and install any necessary audio software. For those
unable to participate during the live broadcast, a 90-day replay will be
available shortly after the call by accessing the same link.
A replay
of the conference call will be available for 14 days starting from 10:00 AM
Eastern Standard Time on Tuesday, November 10, 2009. To access the replay, call
888-286-8010. International callers should call +1 617-801-6888. The pass code
is 60534507.
About
Gulf Resources, Inc.
Gulf
Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang City
Haoyuan Chemical Company Limited (“SCHC”) and Shouguang Yuxin Chemical Industry
Co., Limited (“SYCI”). The Company believes that it is one of the largest
producers of bromine in China. Elemental Bromine is used to manufacture a wide
variety of compounds utilized in industry and agriculture. Through SYCI, the
Company manufactures chemical products utilized in a variety of applications,
including oil & gas field explorations and as papermaking chemical agents.
For more information about the Company, please visit
www.gulfresourcesinc.cn
Forward-Looking
Statements
Certain
statements in this news release contain forward-looking information about Gulf
Resources and its subsidiaries business and products within the meaning of Rule
175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange
Act of 1934, and are subject to the safe harbor created by those rules. The
actual results may differ materially depending on a number of risk factors
including, but not limited to, the general economic and business conditions in
the PRC, future product development and production capabilities, shipments to
end customers, market acceptance of new and existing products, additional
competition from existing and new competitors for bromine and other oilfield and
power production chemicals, changes in technology, the ability to make future
bromine asset purchases, and various other factors beyond its control. All
forward-looking statements are expressly qualified in their entirety by this
Cautionary Statement and the risks factors detailed in the Company's reports
filed with the Securities and Exchange Commission. Gulf Resources undertakes no
duty to revise or update any forward-looking statements to reflect events or
circumstances after the date of this release.
-
Financial tables to follow-
GULF
RESOURCES, INC.
AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
SEPTEMBER
30, 2009 AND DECEMBER 31, 2008
|
September 30,
|
December 31,
|
||||||
|
2009
|
2008
|
||||||
|
(unaudited)
|
(audited)
|
||||||
|
ASSETS
|
|
|
|
|
|||
|
|
|
|
|
||||
|
CURRENT
ASSETS
|
|
|
|
|
|||
|
Cash
|
|
$
|
19,256,504
|
|
$
|
30,878,044
|
|
|
Accounts
receivable, net of allowance
|
|
|
15,431,176
|
|
|
11,674,645
|
|
|
Inventories
|
|
|
471,469
|
|
|
418,259
|
|
|
Prepayment
and deposit
|
|
|
362,915
|
|
|
229,408
|
|
|
Prepaid
land lease
|
|
|
15,849
|
|
|
15,849
|
|
|
Deferred
tax asset
|
|
|
3,453
|
|
|
3,453
|
|
|
Other
receivable
|
|
|
2,289
|
|
|
2,641
|
|
|
|
|
35,543,655
|
|
|
43,222,299
|
||
|
PROPERTY,
PLANT AND EQUIPMENT, Net
|
|
|
81,136,111
|
|
|
45,399,456
|
|
|
|
|
|
|
|
|||
|
PREPAID
LAND LEASE, Net of current portion
|
|
|
725,824
|
|
|
737,711
|
|
|
|
|
|
|
|
|||
|
TOTAL
ASSETS
|
|
$
|
117,405,590
|
|
$
|
89,359,466
|
|
|
|
|
|
|
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
CURRENT
LIABILITIES
|
|
|
|
|
|
||
|
Accounts
payable and accrued expenses
|
|
$
|
6,653,162
|
|
$
|
4,746,993
|
|
|
Loan
Payable
|
|
|
-
|
|
|
4,034,250
|
|
|
Retention
Payable
|
660,150
|
-
|
|||||
|
Note
and loan payable – related parties
|
|
|
-
|
|
|
4,650,000
|
|
|
Due
to related party
|
|
|
769,090
|
|
|
852,068
|
|
|
Taxes
payable
|
|
|
5,253,780
|
|
|
4,269,442
|
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
13,336,182
|
|
|
18,552,753
|
|
|
|
|
|
|
|
|||
|
NON
CURRENT LIABILITIES
|
|
|
|
|
|
||
|
Note
payable, net of current portion
|
|
|
-
|
|
|
18,337,493
|
|
|
|
|
|
|
|
|||
|
TOTAL
LIABILITIES
|
|
|
13,336,182
|
|
|
36,890,246
|
|
|
|
|
|
|
|
|||
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
PREFERED
STOCK ; $0.001 par value; 1,000,000 shares
|
|
|
|
|
|
||
|
authorized
none outstanding
|
|
|
-
|
|
|
-
|
|
|
COMMON
STOCK; $0.0005 par value; 100,000,000 shares
|
|
|
|
|
|
|
|
| authorized; 31,599,552 and 24,917,210 |
|
|
|
|
|||
|
issues and Outstanding in 2009 and 2008
|
|
|
15,800
|
|
|
12,459
|
|
|
|
|
|
|
|
|||
|
ADDITIONAL
PAID-IN CAPITAL
|
|
|
40,743,524
|
|
|
13,072,668
|
|
|
|
|
|
|
|
|||
|
RETAINED
EARNINGS – UNAPPROPRIATED
|
|
|
55,649,994
|
|
|
31,817,465
|
|
|
|
|
|
|
|
|||
|
RETAINED
EARNINGS – APPROPRIATED
|
|
|
3,223,418
|
|
|
3,223,418
|
|
|
|
|
|
|
|
|||
|
CUMULATIVE
TRANSLATION ADJUSTMENT
|
|
|
4,436,672
|
|
|
4,343,210
|
|
|
|
|
|
|
|
|||
|
TOTAL
STOCKHOLDERS' EQUITY
|
|
|
104,069,408
|
|
|
52,469,220
|
|
|
|
|
|
|
|
|||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
117,405,590
|
|
$
|
89,359,466
|
|
GULF
RESOURCES, INC.
AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
NET
REVENUE
|
||||||||||||||||
|
Net
sales
|
$
|
27,667,158
|
$
|
17,554,873
|
$
|
80,891,594
|
$
|
63,354,609
|
||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||
|
Cost
of net revenue
|
15,533,613
|
11,388,348
|
45,520,357
|
38,050,971
|
||||||||||||
|
Research
and development cost
|
125,122
|
122,744
|
375,187
|
389,853
|
||||||||||||
|
General
and administrative expenses
|
870,554
|
960,747
|
2,966,375
|
2,824,377
|
||||||||||||
|
16,529,289
|
12,471,839
|
48,861,919
|
41,265,201
|
|||||||||||||
|
INCOME
FROM OPERATIONS
|
11,137,869
|
5,083,034
|
32,029,675
|
22,089,
408
|
||||||||||||
|
OTHER
INCOME (EXPENSES)
|
||||||||||||||||
|
Interest
expense
|
(102)
|
-
|
(27,144)
|
(60,111)
|
||||||||||||
|
Interest
income
|
19,815
|
26,143
|
65,607
|
70,400
|
||||||||||||
|
Sundry
income (expense)
|
-
|
779
|
-
|
(3,764)
|
||||||||||||
|
INCOME
BEFORE INCOME TAXES
|
11,157,582
|
5,109,956
|
32,068,138
|
22,095,933
|
||||||||||||
|
INCOME
TAXES current
|
2,829,772
|
1,373,055
|
8,235,609
|
5,925,532
|
||||||||||||
|
NET
INCOME
|
$
|
8,327,810
|
$
|
3,736,901
|
$
|
23,832,529
|
$
|
16,170,401
|
||||||||
|
EARNINGS
PER SHARE:
|
||||||||||||||||
|
BASIC
|
$
|
0.27
|
$
|
0.15
|
$
|
0.79
|
$
|
0.65
|
||||||||
|
DILUTED
|
$
|
0.27
|
$
|
0.15
|
$
|
0.79
|
$
|
0.65
|
||||||||
|
WEIGHTED
AVERAGE NUMBER OF SHARES:
|
||||||||||||||||
|
BASIC
|
30,806,546
|
24,917,211
|
30,179,367
|
24,917,211
|
||||||||||||
|
DILUTED
|
30,806,546
|
24,917,211
|
30,179,367
|
24,919,164
|
||||||||||||
GULF
RESOURCES, INC.
AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
NET
INCOME
|
$
|
8,327,810
|
$
|
3,736,901
|
$
|
23,832,529
|
$
|
16,170,401
|
||||||||
|
OTHER
COMPREHENSIVE INCOME
|
||||||||||||||||
|
Foreign
currency translation adjustment
|
148,833
|
228,921
|
93,462
|
2,341,313
|
||||||||||||
|
COMPREHENSIVE
INCOME
|
$
|
8,476,643
|
$
|
3,965,822
|
$
|
23,925,991
|
$
|
18,511,714
|
||||||||
GULF
RESOURCES, INC.AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE
MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
|
Nine
Months Ended September 30,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOWS PROVIDED BY OPERATING ACTIVITIES
|
||||||||
|
Net
income
|
$
|
23,832,529
|
$
|
16,170,401
|
||||
|
Adjustments
to reconcile net income
|
||||||||
|
to
net cash provided by operating activities
|
||||||||
|
Amortization
of warrants issued for expenses
|
309,500
|
602,142
|
||||||
|
Amortization
of prepaid expenses by shares issued for consulting fee
|
48,616
|
145,484
|
||||||
|
Amortization
and prepaid expense
|
11,943
|
-
|
||||||
|
Depreciation
and amortization
|
4,816,540
|
3,426,455
|
||||||
|
Bad
debt provision
|
78,150
|
|||||||
|
(Increase)
decrease in assets
|
||||||||
|
Accounts
receivable
|
(3,831,618
|
)
|
(4,426,119
|
)
|
||||
|
Inventories
|
(53,099
|
)
|
(1,659,098
|
|||||
|
Prepayment
and deposit
|
(133,215
|
)
|
(713,470
|
)
|
||||
|
Income
tax receivable
|
-
|
-
|
||||||
|
Increase
(decrease) in liabilities
|
-
|
|||||||
|
Accounts
payable and accrued expenses
|
1,874,951
|
3,102,777
|
||||||
|
Taxes
payable
|
1,004,489
|
969,282
|
||||||
|
Net
cash provided by operating activities
|
27,958,786
|
17,617,854
|
||||||
|
CASH
FLOWS USED IN INVESTING ACTIVITIES
|
||||||||
|
Property,
plant and equipment
|
(33,828,480
|
)
|
(17,365,195
|
)
|
||||
|
Net
cash used in investing activities
|
(33,828,480
|
)
|
(17,365,195
|
)
|
||||
|
CASH
FLOWS PROVIDED BY FINANCING ACTIVITIES
|
||||||||
|
Proceeds
from bank loan
|
-
|
-
|
||||||
|
Repayment
to bank loan
|
-
|
(3,843,675
|
)
|
|||||
|
Proceeds
from loan payable
|
-
|
4,023,250
|
||||||
|
Repayment
to loan payable
|
(4,031,775
|
)
|
||||||
|
Proceeds
from Note and loan payable (related parties)
|
-
|
13,635,405
|
||||||
|
Repayment
to Note and loan payable (related parties)
|
-
|
(2,670,192
|
)
|
|||||
|
Proceeds
from related party
|
8,452,194
|
|||||||
|
Repayment
to related party
|
(10,168,016
|
)
|
-
|
|||||
|
Net
cash used in provided by financing activities
|
(5,747,597
|
)
|
11,144,788
|
|||||
|
EFFECTS
OF EXCHANGE RATE CHANGE ON CASH
|
(4,249
|
)
|
703,038
|
|||||
|
NET
INCREASE (DECREASE) IN CASH
|
(11,621,540
|
)
|
12,100,485
|
|||||
|
CASH
– BEGINNING OF PERIOD
|
30,878,044
|
10,773,875
|
||||||
|
CASH
– END OF PERIOD
|
$
|
19,256,504
|
$
|
22,874,360
|
||||