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BAODING, China , Aug. 9, 2022 /PRNewswire/ -- IT Tech Packaging, Inc. (NYSE American: ITP) ("IT Tech Packaging" or the "Company"), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the six and three months ended June 30, 2022.
Mr. Zhenyong Liu , Chairman and Chief Executive Officer of the Company, commented, "Despite the negative impact associated with the resurgence of COVID-19 pandemic to our business during the second quarter of 2022, we strived to provide high-quality products to our customers. As business activities gradually return to normal, we expect to take the necessary steps to strengthen our business resilience and improve our competitive advantages to prepare for growth opportunities ahead. With our dedicated team's effort and our long-term strategy of exploring growth opportunities in the industry, we remain confident about our business fundamentals and potential to grow. Despite the challenging environment, we anticipate to continue to execute our strategic initiatives, expand our business, and improve operating efficiency. In addition, we remain focused on improving our products to meet the evolving demands of our customers and strengthen our relationship with customers. Looking ahead to the remainder of 2022 and beyond, we believe we are well positioned to achieve our growth goals and create long-term values for shareholders."
Second Quarter 2022 Unaudited Financial Results
For the Three Months Ended June 30,
Regular Corrugating Medium Paper ("CMP")*
Gross profit (loss) margin
Regular Corrugating Medium Paper ("CMP")*
Basic and Diluted loss per share
*** Products from PM8 and PM9
**** pp represents percentage points
For the second quarter of 2022, total revenue decreased by 31.7%, to approximately $31.79 million from approximately $46.53 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products.
The following table summarizes revenue, volume and ASP by product for the second quarter of 2022 and 2021, respectively:
For the Three Months Ended June 30,
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 15.0%, to approximately $31.29 million and accounted for 98.4% of total revenue for the second quarter of 2022, compared to approximately $36.81million , or 79.1% of total revenue for the same period of last year. The Company sold 65,585 tonnes of CMP at an ASP of $477/tonne in the second quarter of 2022, compared to 73,998 tonnes at an ASP of $497/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP decreased by 14.5%, to approximately $25.85 million for the second quarter of 2022, compared to revenue of approximately $30.25 million for the same period of last year. The Company sold 53,943 tonnes of regular CMP at an ASP of $479/tonne during the second quarter of 2022, compared to 60,507 tonnes at an ASP of $500/tonne for the same period of last year. Revenue from light-weight CMP decreased by 17.1%, to approximately $5.44 million for the second quarter of 2022, compared to revenue of approximately $6.56 million for the same period of last year. The Company sold 11,642 tonnes of light-weight CMP at an ASP of $467/tonne for the second quarter of 2022, compared to 13,491 tonnes at an ASP of $486/tonne for the same period of last year.
Revenue from offset printing paper was $nil for the second quarter of 2022, compared to revenue of approximately $7.18 million for the same period of last year. The Company sold 10,415 tonnes of offset printing paper at an ASP of $690/tonne in the second quarter of 2021.
Revenue from tissue paper products decreased by 83.1%, to approximately $0.41million for the second quarter of 2022, from approximately $2.43 million for the same period of last year. The Company sold 383 tonnes of tissue paper products at an ASP of $1,074/tonne for the second quarter of 2022, compared to 2,196 tonnes at an ASP of $1,106/tonne for the same period of last year.
Revenue from face masks decreased by 19.6%, to approximately $0.09 million for the second quarter of 2022, from $0.11 million for the same period of last year. The Company sold 3,014 thousand pieces of face masks for the second quarter of 2022, compared to 2,635 thousand pieces of face masks for the same period of last year.
Gross Profit and Gross Margin
Total cost of sales decreased by 28.4%, to approximately $31.15 million for the second quarter of 2022 from approximately $43.51 million for the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of regular CMP, offset printing paper and tissue paper products. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $459, $439, $nil and $3,200, respectively, for the second quarter of 2022, compared to $475 , $454, $567 and $1,211, respectively, for the same period of last year.
Total gross profit was approximately $0.63 million for the second quarter of 2022, compare to the gross profit of approximately $3.03 million for the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the second quarter of 2022, compared to 6.5% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 4.3%, 6.0%, nil%, -198.0% and 20.8%, respectively, for the second quarter of 2022, compared to 5.1%, 6.7%, 17.7%, -9.6% and 10.0%, respectively, for the same period of last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") decreased by 28.0%, to approximately $1.87 million for the second quarter of 2022 from approximately $2.60 million for the same period of last year.
Loss from operations was approximately $1.24 million for the second quarter of 2022, a decrease of 386.9%, from income from operations of approximately $0.43 million for the same period of last year. Operating loss margin was 3.9% for the second quarter of 2022, compared to operating income margin of 0.9% for the same period of last year.
Net loss was approximately $0.29 million , or loss per share of $0.003 , for the second quarter of 2022, compared to net loss of approximately $0.45 million , or loss per share of $0.01 , for the same period of last year.
EBITDA was approximately $3.55 million for the second quarter of 2022, compared to approximately $9.03 million for the same period of last year.
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA
For the Three Months Ended June 30,
Net interest expense
Depreciation and amortization
First Half of 2022 Unaudited Financial Results
For the Six Months Ended June 30,
Regular Corrugating Medium Paper ("CMP")*
Gross profit (loss) margin
Regular Corrugating Medium Paper ("CMP")*
Basic and Diluted loss per share
*** Products from PM8 and PM9
**** pp represents percentage points
For the first half of 2022, total revenue decreased by 33.2%, to approximately $47.27 million from approximately $70.74 million for the same period of last year. The decrease in total revenue was mainly due to the decrease in sales volume of CMP, offset printing paper and tissue paper products.
The following table summarizes revenue, volume and ASP by product for the first half of 2022 and 2021, respectively:
For the Six Months Ended June 30,
Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 19.5%, to approximately $46.32 million and accounted for 98.0% of total revenue for first half of 2022, compared to approximately $57.53million , or 81.3% of total revenue for the same period of last year. The Company sold 94,671 tonnes of CMP at an ASP of $489/tonne in first half of 2022, compared to 115,294 tonnes at an ASP of $499/tonne in the same period of last year.
Of the total CMP sales, revenue from regular CMP decreased by 17.5%, to approximately $38.95 million for first half of 2022, compared to revenue of approximately $47.22 million for the same period of last year. The Company sold 79,188 tonnes of regular CMP at an ASP of $492/tonne during the first half of 2022, compared to 94,133 tonnes at an ASP of $502/tonne for the same period of last year. Revenue from light-weight CMP decreased by 28.6%, to approximately $7.36 million for the first half of 2022, compared to revenue of approximately $10.31 million for the same period of last year. The Company sold 15,483 tonnes of light-weight CMP at an ASP of $476/tonne for the first half of 2022, compared to 21,161tonnes at an ASP of $487/tonne for the same period of last year.
Revenue from offset printing paper was $nil for the first half of 2022, compared to revenue of approximately $9.30 million for the same period of last year. The Company sold 13,557 tonnes of offset printing paper at an ASP of $686/tonne in the first half of 2021.
Revenue from tissue paper products decreased by 78.0%, to approximately $0 .81 million for the first half of 2022, from approximately $3.68 million for the same period of last year. The Company sold 780 tonnes of tissue paper products at an ASP of $1,038/tonne for the first half of 2022, compared to 3,317 tonnes at an ASP of $1,109/tonne for the same period of last year.
Revenue from face masks decreased by 39.8%, to approximately $0.14 million for the first half of 2022, from $0.24 million for the same period of last year. The Company sold 12,664 thousand pieces of face masks for the first half of 2022, compared to 6,470 thousand pieces of face masks for the same period of last year.
Gross Profit and Gross Margin
Total cost of sales decreased by 29.7%, to approximately $46.33 million for the first half of 2022 from approximately $65.88 million for the same period of last year. The decrease in overall cost of sales was mainly due to the decrease in sales quantity of CMP, offset printing paper and tissue paper products. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $469, $445,$nil and $2,805, respectively, for the first half of 2022, compared to $470 , $447, $562 and $1,317, respectively, for the same period of last year.
Total gross profit was approximately $0.94 million for the first half of 2022, compare to the gross profit of approximately $4.86 million for the same period of last year as a result of factors described above. Overall gross margin was 2.0% for the first half of 2022, compared to 6.9% for the same period of last year. Gross profit(loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 4.6%, 6.5%, nil%, -170.2% and 24.2%, respectively, for the first half of 2022, compared to 6.3%, 8.3%, 18.1%, -18.7% and 14.8%, respectively, for the same period of last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased by 0.3%, to approximately $5.17 million for the first half of 2022 from approximately $5.15 million for the same period of last year.
Loss from operations was approximately $4.19 million for the first half of 2022, an increase of 1331.9%, from loss from operations of approximately $0.29 million for the same period of last year. Operating loss margin was 8.9% for the first half of 2022, compared to operating loss margin of 0.4% for the same period of last year.
Net loss was approximately $2.78 million , or loss per share of $0.03 , for the first half of 2022, compared to net loss of approximately $4.79 million , or loss per share of $0.10 , for the same period of last year.
EBITDA was approximately $4.75 million for the first half of 2022, compared to approximately $8.96 million for the same period of last year.
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA
For the Six Months Ended June 30,
Net interest expense
Depreciation and amortization
Cash, Liquidity and Financial Position
As of June 30, 2022, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of approximately $14.34million , $11.10million and $4.92million, respectively, compared to approximately $11.20 million, $13.52 million and $2.98 million, respectively, as of December 31, 2021.
Net accounts receivable was approximately $3 .82 million as of June 30, 2022, compared to approximately $4.87 million as of December 31, 2021. Net inventory was approximately $6.63 million as of June 30, 2022, compared to approximately $5.84 million as of December 31, 2021. As of June 30, 2022, the Company had current assets of approximately $48.45 million and current liabilities of approximately $17.33million, resulting in a working capital of approximately $31.12 million. This was compared to current assets of approximately $55.52 million and current liabilities of approximately $20.43 million , resulting in a working capital of approximately $35.09 million as of December 31, 2021.
Net cash provided by operating activities was approximately $3.95million for the first half of 2022, compared to net cash used in operating activities of approximately $15.57 million for the same period of last year. Net cash used in investing activities was approximately $7.32 million for the first half of 2022, compared to approximately $0.17 million for the same period of last year. Net cash provided by financing activities was approximately $6.67 million for the first half of 2022, compared to approximately $41.67 million for the same period of last year.
About IT Tech Packaging, Inc.
Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China's Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE American since December 2009. For more information, please visit: http://www.itpackaging.cn/.
This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including "will," "may," "expects," "projects," "anticipates," "plans," "believes," "estimate," "should," and certain of the other foregoing statements may be deemed forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including market and other conditions. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company undertakes no obligation to update any such forward-looking statements after the date hereof to conform to actual results or changes in expectations, except as required by law.
For more information, please contact:
At the Company Email: [email protected] Tel: +86 312 8698215
Investor Relations Ascent Investor Relations LLC Ms. Tina Xiao Email: [email protected] Tel: +1-917-609-0333
AS OF JUNE 30, 2022 AND DECEMBER 31, 2021
Accounts receivable (net of allowance for doubtful accounts of $51,319 and
$69,053 as of June 30, 2022 and December 31, 2021, respectively)
Prepayments and other current assets
Prepayment on property, plant and equipment
Finance lease right-of-use assets, net
Property, plant, and equipment, net
Current portion of long-term loans from credit union
Accrued payroll and employee benefits
Other payables and accrued liabilities
Total liabilities (including amounts of the consolidated VIE without recourse to the Company of $16,668,603 and $17,924,475 as of June 30, 2022 and December 31, 2021, respectively)
Common stock, 500,000,000 shares authorized, $0.001 par value per share, 99,049,900 shares issued and outstanding as of June 30, 2022 and December, 31,2021.
Accumulated other comprehensive (loss) income
Total Liabilities and Stockholders' Equity
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
Selling, general and administrative expenses
Gain (Loss) on derivative liability
(Loss) Income before Income Taxes
Basic and Diluted Losses per Share
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
Cash Flows from Operating Activities:
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) Loss on derivative liability
(Recovery from) Allowance for bad debts
Changes in operating assets and liabilities:
Prepayments and other current assets
Accrued payroll and employee benefits
Other payables and accrued liabilities
Net Cash Provided by (Used in) Operating Activities
Cash Flows from Investing Activities:
Purchases of property, plant and equipment
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from issuance of shares and warrants, net
Payment of capital lease obligation
Loan repaid by a related party
Net Cash Provided by Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash, Cash Equivalents and Restricted Cash - Beginning of Period
Cash, Cash Equivalents and Restricted Cash - End of Period
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest, net of capitalized interest cost
Cash paid for income taxes
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
SOURCE IT Tech Packaging, Inc.
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