Company to Host Earnings Conference Call on
Monday, May 14, 2018, at 8:00 am ET
BAODING, China, May 11, 2018 /PRNewswire/ -- Orient Paper,
Inc. (NYSE MKT: ONP) ("Orient Paper" or the "Company"), a leading
manufacturer and distributor of diversified paper products in
North China, today announced its
unaudited financial results for the first quarter ended
March 31, 2018.
Mr. Zhenyong Liu, Chairman and
Chief Executive Officer of Orient Paper, commented, "Our
disappointing first quarter results reflected the impact of a
temporary suspension of production due to government-mandated
restrictions on the supply of natural gas that lasted for most of
the first quarter. However, production at our manufacturing
facilities has been back to normal since mid-March and we
anticipate a strong rebound in our business in the second
quarter."
First Quarter 2018 Unaudited Financial Results
|
|
For the
Three Months Ended March 31,
|
($
millions)
|
|
2018
|
|
2017
|
|
%
Change
|
Revenues
|
|
1.9
|
|
25.3
|
|
-92.5%
|
Regular
Corrugating Medium Paper ("CMP")*
|
|
0.9
|
|
19.5
|
|
-95.3%
|
Light-Weight
CMP**
|
|
0.7
|
|
2.2
|
|
-70.5%
|
Offset Printing
Paper
|
|
0.3
|
|
2.9
|
|
-88.8%
|
Tissue Paper
Products
|
|
0.0
|
|
0.7
|
|
-100.0%
|
|
|
|
|
|
|
|
Gross profit
(loss)
|
|
-0.7
|
|
5.7
|
|
-112.3%
|
Gross profit
(loss) margin
|
|
-36.8%
|
|
22.4%
|
|
-59.2 pp
|
Regular
Corrugating Medium Paper ("CMP")*
|
|
-20.2%
|
|
22.3%
|
|
-42.5 pp
|
Light-Weight
CMP**
|
|
-59.5%
|
|
23.3%
|
|
-82.8 pp
|
Offset Printing
Paper
|
|
-37.7%
|
|
25.5%
|
|
-63.2 pp
|
Tissue Paper
Products
|
|
NM
|
|
7.9%
|
|
NM
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
-4.5
|
|
2.9
|
|
-257.4%
|
Net income
(loss)
|
|
-4.1
|
|
1.7
|
|
-339.3%
|
EBITDA
|
|
-0.5
|
|
6.5
|
|
-107.5%
|
Basic and
Diluted earnings (loss) per share
|
|
-0.19
|
|
0.08
|
|
-337.5%
|
|
|
|
|
|
|
|
* Products
from PM6
|
|
|
|
|
|
|
** Products
from PM1
|
|
|
|
|
|
|
*** pp
represents percentage points
|
|
|
|
|
|
|
Revenue
For the first quarter of 2018, total revenue decreased by
$23.4 million, or 92.5%, to
$1.9 million from $25.3 million for the same period of the prior
year. The decrease in total revenue was mainly due to decreases in
sales volume across all product categories and partially offset by
an increase in blended ASP. In late
January, 2018, the Company temporarily suspended its production due
to government-mandated restrictions on the natural gas supply. The
company resumed production on March 14,
2018. As a result, both the production and sales volume
decreased significantly in the first quarter of 2018. The following
table summarizes revenue, volume and ASP by product for the first
quarter of 2018 and 2017, respectively:
|
For the
Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
Revenue
($'000)
|
|
Volume
(tonne)
|
|
ASP
($/tonne)
|
|
Revenue
($'000)
|
|
Volume
(tonne)
|
|
ASP
($/tonne)
|
Regular
CMP
|
908
|
|
1,672
|
|
543
|
|
19,452
|
|
47,792
|
|
407
|
Light-Weight
CMP
|
652
|
|
1,251
|
|
521
|
|
2,210
|
|
5,023
|
|
440
|
Offset Printing
Paper
|
329
|
|
379
|
|
867
|
|
2,925
|
|
4,756
|
|
615
|
Tissue Paper
Products
|
-
|
|
-
|
|
-
|
|
703
|
|
558
|
|
1,260
|
Total
|
1,888
|
#
|
3,302
|
|
572
|
|
25,290
|
|
58,129
|
|
435
|
Revenue from CMP, including both regular CMP and light-Weight
CMP, decreased by $20.1 million, or
92.8%, to $1.6 million and accounted
for 82.6% of total revenue for the first quarter of 2018, compared
to $21.7 million, or 85.7% of total
revenue, for the same period of the prior year. The Company sold
2,923 tonnes of CMP at an ASP of $534/tonne in the first quarter of 2018, compared
to 52,815 tonnes at an ASP of $410/tonne in the same period of the prior
year.
Of the total CMP sales, revenue from regular CMP decreased by
$18.5 million, or 95.3%, to
$0.9 million, resulting from sales of
1,672 tonnes at an ASP of $543/tonne,
during the first quarter of 2018, compared to revenue of
$19.5 million, resulting from sales
of 47,792 tonnes at an ASP of $407/tonne, for the same period of the prior
year. Revenue from light-weight CMP decreased by $1.6 million, or 70.5%, to $0.7 million, resulting from sales of 1,251
tonnes at an ASP of $521/tonne for
the first quarter of 2018, compared to revenue of $2.2 million, resulting from sales of 5,023
tonnes at an ASP of $440/tonne for
the same period of the prior year.
Revenue from offset printing paper decreased by $2.6 million, or 88.8%, to $0.3 million for the first quarter of 2018, from
$2.9 million for the same period of
the prior year. The Company sold 379 tonnes of offset printing
paper at an ASP of $867/tonne in the
first quarter of 2018, compared to 4,756 tonnes at an ASP of
$615/tonne in the same period of the
prior year.
Production of tissue paper was suspended in September and
October 2017 for the replacement of
coal boilers, and intermittent production resumed in the following
months due to volatility in the price of tissue paper. We had no
revenue from tissue paper products for the first quarter of 2018,
compared to $0.7 million, resulting
from sales of 558 tonnes at an ASP of $1,260/tonne, for the first quarter of 2017. We
expect to resume and increase production of tissue products once
the market condition becomes more favorable.
Gross Profit (loss) and Gross (Loss) Margin
Total cost of sales decreased by $17.1
million, or 86.8%, to $2.6
million for the first quarter of 2018, from $19.6 million for the same period of the prior
year. Cost of sales per tonne was $782 for the first quarter of 2018, compared to
$338 for the same period of the prior
year. The increase in overall cost of sales per tonne was mainly
due to increased unit cost of manufacturing overhead due to the
production suspension in the first quarter of 2018, as well as
higher average unit purchase costs of recycled paper board and
recycled scrap binding. Costs of sales per tonne for regular CMP,
light-weight CMP, offset printing paper, and tissue paper products
were, $653, $831, $1,194, and
$nil, respectively, for the first quarter of 2018, compared to
$316, $337, $458, and
$1,161, respectively, for the same
period of the prior year.
Gross loss was $0.7 million for
the first quarter of 2018, compared to gross profit of $5.7 million for the same period of the prior
year. Overall gross loss margin was 36.8% for the first quarter of
2018, compared to gross profit margin of 22.4% for the same period
of the prior year. The decrease in gross profit and gross margin
were mainly due to the decrease in sales volume and increase in
unit cost of recycled paper board and recycled scrap binding and
partially offset by the increase in ASP as discussed above. Gross
loss margins for regular CMP, light-weight CMP, offset printing
paper, and tissue paper products were 20.2%, 59.5%, 37.7%, and nil,
respectively, for the first quarter of 2018, compared to gross
profit margin of 22.3%, 23.3%, 25.5%, and 7.9%, respectively, for
the same period of the prior year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A")
increased by $1.0 million, or 37.1%,
to $3.8 million for the first quarter
of 2018 from $2.8 million for the
same period of the prior year. The increase was mainly due to the
depreciation of idle equipment during the suspension of production
in the first quarter of 2018. As a percentage of total revenue,
SG&A was 202.0% for the first quarter of 2018, compared to
11.0% for the same period of the prior year.
Income (loss) from Operations
Loss from operations was $4.5
million for the first quarter of 2018, compared to income
from operations of $2.9 million for
the same period of the prior year. The decrease in operating income
was primarily due to the decrease in gross profit and increase in
selling, general and administrative expenses as discussed above.
Operating loss margin was 239.4% for the first quarter of 2018,
compare to operating profit margin of 11.4% for the same period of
the prior year.
Net Income (loss)
Net loss was $4.1 million, or net
loss of $0.19 per basic and diluted
share, for the first quarter of 2018, compared to net income of
$1.7 million, or net earnings of
$0.08 per basic and diluted share,
for the same period of the prior year.
EBITDA
EBITDA was negative $0.5 million
for the first quarter of 2018, compared to $6.5 million for the same period of the prior
year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release
includes a discussion of EBITDA, a non-GAAP financial measure as
defined by the Securities and Exchange Commission ("SEC"). The
Company defines EBITDA as net income before interest, income taxes,
depreciation and amortization. EBITDA is a key measure used by
management to evaluate our results and make strategic decisions.
Management believes this measure is useful to investors because it
is an indicator of operational performance. Because not all
companies use identical calculations, the Company's presentation of
EBITDA may not be comparable to similarly titled measures of other
companies, and should not be viewed as an alternative to measures
of financial performance or changes in cash flows calculated in
accordance with the U.S. GAAP.
Reconciliation of
Net Income to EBITDA
|
(Amounts expressed
in US$)
|
|
|
|
For the
Three Months Ended March 31,
|
($
millions)
|
|
2018
|
|
|
2017
|
Net
income
|
$
|
-4.1
|
|
$
|
1.7
|
Add: Income
tax
|
|
-0.5
|
|
|
0.5
|
Net
interest expense
|
|
0.4
|
|
|
0.7
|
Depreciation and amortization
|
|
3.7
|
|
|
3.6
|
EBITDA
|
$
|
-0.5
|
|
$
|
6.5
|
Cash, Liquidity and Financial Position
As of March 31, 2018, the Company
had cash and cash equivalents, short-term debt (including related
party loan), notes payable and long-term debt (including related
party loans) of $0.7 million,
$19.7 million, $4.0 million and $7.6
million, respectively, compared to $2.9 million, $13.6
million, $6.1 million and
$11.9 million, respectively, at the
end of 2017. Net accounts receivable was $0.8 million as of March
31, 2018, compared to $1.8
million as of December 31,
2017. Net inventory was $9.0
million as of March 31, 2018,
compared to $8.5 million at the end
of 2017. As of March 31, 2018, the
Company had current assets of $17.8
million and current liabilities of $25.8 million, resulting in a working capital
deficit of $8.0 million. This
compared to current assets of $20.0
million, current liabilities of $21.8
million and working capital deficit of $1.8 million at the end of 2017.
Net cash used in operating activities was $4.9 million for the three months ended
March 31, 2018, compared to net cash
provided by operating activities of $1.4
million for the same period of the prior year. Net cash used
in investing activities was $0.7
million for the three months ended March 31, 2018, compared to $5.3 million for the same period of the prior
year. Net cash provided by financing activities was $0.8 million for the three months ended
March 31, 2018, compared to
$9.8 million for the same period of
the prior year.
Earnings Conference Call
The Company's management will host a conference call to discuss
its first quarter 2018 financial results at 8:00 am US Eastern
Time (5:00 am US Pacific Time/
8:00 pm Beijing
Time) on Monday, May 14, 2018.
To attend the conference call, please dial-in using the
information below. When prompted upon dialing-in, please provide
the conference ID or ask for the "Orient Paper First Quarter 2018
Earnings Conference Call."
Conference
Call
|
|
Date:
|
Monday, May 14,
2018
|
Time:
|
8:00 am ET (5:00 am
US Pacific Time/ 8:00 pm Beijing Time)
|
International Toll
Free:
|
United States:
+1-855-500-8701
Mainland China:
400-120-0654
Hong Kong:
800-906-606
International:
+65-6713-5440
|
Conference
ID:
|
8354088
|
This conference call will be broadcast live over the Internet,
and can be accessed by all interested parties
at http://www.orientpaperinc.com/ or https://edge.media-server.com/m6/p/v6h3sapo.
Please access the link at least fifteen minutes prior to the
start of the call to register, download, and install any necessary
audio software.
A playback will be available through 9:59
ET May 22, 2018. To listen,
please dial +1-855-452-5696 if calling from the United States, or +61-290-034-211 if
calling internationally. Use the passcode 8354088 to access the
replay.
About Orient Paper, Inc.
Orient Paper, Inc. ("Orient Paper") is a leading paper
manufacturer in North China. Using
recycled paper as its primary raw material (with the exception of
its digital photo paper and tissue paper products), Orient Paper
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, Orient Paper 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.
Orient Paper's production facilities are controlled and operated
by its wholly owned subsidiary Shengde Holdings Inc., which in turn
controls and operates Baoding Shengde Paper Co., Ltd., and Hebei
Baoding Orient Paper Milling Co., Ltd.
Founded in 1996, Orient Paper has been listed on the NYSE MKT
under the ticker symbol "ONP" since December
2009. (For more information, please
visit http://www.orientpaperinc.com)
Safe Harbor Statements
This press release may contain forward-looking statements.
These forward-looking statements involve inherent risks and
uncertainties that could cause actual results to differ materially
from those projected or anticipated, including risks outlined in
the Company's public filings with the Securities and Exchange
Commission, including the Company's latest annual report on Form
10-K. All information provided in this press release speaks as of
the date hereof. Except as otherwise required by law, the Company
undertakes no obligation to update or revise its forward-looking
statements.
For more information, please contact:
Company Contact:
Orient Paper, Inc.
Email: ir@orientpaperinc.com
Investor Relations:
Tony
Tian,
CFA
Weitian Group LLC
Email: tony.tian@weitian-ir.com
Phone: +1-732-910-9692
ORIENT PAPER,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31,
2018 AND DECEMBER 31, 2017
(Unaudited)
|
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and bank
balances
|
$
|
740,309
|
|
$
|
2,895,790
|
Restricted
cash
|
|
3,975,764
|
|
|
6,121,637
|
Accounts receivable
(net of allowance for doubtful accounts of $16,699 and $37,626 as
of March 31, 2018 and December 2017, respectively)
|
|
818,255
|
|
|
1,843,682
|
Inventories
|
|
9,009,448
|
|
|
8,474,165
|
Prepayments and other
current assets
|
|
3,246,169
|
|
|
651,523
|
|
|
|
|
|
|
Total current
assets
|
|
17,789,945
|
|
|
19,986,797
|
|
|
|
|
|
|
Property, plant, and
equipment, net
|
|
193,753,101
|
|
|
189,388,709
|
Value-added tax
recoverable
|
|
3,138,164
|
|
|
3,041,416
|
Deferred tax asset
non-current
|
|
7,371,246
|
|
|
6,572,559
|
|
|
|
|
|
|
Total
Assets
|
$
|
222,052,456
|
|
$
|
218,989,481
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Short-term bank
loans
|
$
|
13,040,505
|
|
$
|
7,192,923
|
Current portion of
long-term loans from credit union
|
|
6,615,671
|
|
|
6,366,502
|
Accounts
payable
|
|
308,880
|
|
|
422,705
|
Notes
payable
|
|
3,975,764
|
|
|
6,121,637
|
Due to a related
party
|
|
102,498
|
|
|
60,378
|
Accrued payroll and
employee benefits
|
|
307,472
|
|
|
231,247
|
Other payables and
accrued liabilities
|
|
939,233
|
|
|
836,337
|
Income taxes
payable
|
|
546,127
|
|
|
525,804
|
|
|
|
|
|
|
Total current
liabilities
|
|
25,836,150
|
|
|
21,757,533
|
|
|
|
|
|
|
Loans from credit
union
|
|
1,240,438
|
|
|
1,193,719
|
Loans from a related
party
|
|
6,361,222
|
|
|
10,712,865
|
|
|
|
|
|
|
Total liabilities
(including amounts of the consolidated VIE without recourse to the
Company of $30,913,599 and $31,235,520 as of March 31, 2018 and
2017, respectively)
|
|
33,437,810
|
|
|
33,664,117
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
Common stock,
500,000,000 shares authorized, $0.001 par value per share,
21,450,316 shares issued and outstanding as of March 31, 2018 and
2017, respectively
|
|
21,450
|
|
|
21,450
|
Additional paid-in
capital
|
|
50,635,243
|
|
|
50,635,243
|
Statutory earnings
reserve
|
|
6,080,574
|
|
|
6,080,574
|
Accumulated other
comprehensive income
|
|
12,844,357
|
|
|
5,468,799
|
Retained
earnings
|
|
119,033,022
|
|
|
123,119,298
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
188,614,646
|
|
|
185,325,364
|
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
|
222,052,456
|
|
$
|
218,989,481
|
ORIENT PAPER,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
FOR THE THREE
MONTHS ENDED MARCH 31, 2018 AND 2017
(Unaudited)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
|
|
|
|
Revenues
|
$
|
1,888,194
|
|
$
|
25,289,659
|
|
|
|
|
|
|
Cost of
sales
|
|
(2,583,502)
|
|
|
(19,635,739)
|
|
|
|
|
|
|
Gross (Loss)
Profit
|
|
(695,308)
|
|
|
5,653,920
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(3,813,794)
|
|
|
(2,782,342)
|
Loss from disposal of
property, plant and equipment
|
|
(10,376)
|
|
|
-
|
|
|
|
|
|
|
(Loss) Income from
Operations
|
|
(4,519,478)
|
|
|
2,871,578
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
Interest
income
|
|
44,763
|
|
|
17,945
|
Subsidy
income
|
|
253,281
|
|
|
40,712
|
Interest
expense
|
|
(403,811)
|
|
|
(679,084)
|
|
|
|
|
|
|
(Loss) Income
before Income Taxes
|
|
(4,625,245)
|
|
|
2,251,151
|
|
|
|
|
|
|
Provision for
Income Taxes
|
|
538,969
|
|
|
(543,282)
|
|
|
|
|
|
|
Net (Loss)
Income
|
|
(4,086,276)
|
|
|
1,707,869
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
7,375,558
|
|
|
956,292
|
|
|
|
|
|
|
Total
Comprehensive Income
|
$
|
3,289,282
|
|
$
|
2,664,161
|
|
|
|
|
|
|
(Losses) Earnings
Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
(Losses) Earnings per Share
|
$
|
(0.19)
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding –
Basic and Diluted
|
|
21,450,316
|
|
|
21,450,316
|
ORIENT PAPER,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE
MONTHS ENDED MARCH 31, 2018 AND 2017
(Unaudited)
|
|
Three Months
Ended
|
|
March
31,
|
|
2018
|
|
2017
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
Net income
|
$
|
(4,086,276)
|
|
$
|
1,707,869
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,730,585
|
|
|
3,615,359
|
Loss from disposal of
property, plant and equipment
|
|
10,376
|
|
|
-
|
Allowance for bad
debts
|
|
(22,297)
|
|
|
(16,112)
|
Share-based
compensation expenses
|
|
-
|
|
|
-
|
Deferred
tax
|
|
(538,969)
|
|
|
(578,139)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
1,114,843
|
|
|
805,599
|
Prepayments and other
current assets
|
|
(2,535,170)
|
|
|
(3,939,630)
|
Inventories
|
|
(202,692)
|
|
|
(2,358,426)
|
Accounts
payable
|
|
(129,770)
|
|
|
(69,194)
|
Advance from
customers
|
|
-
|
|
|
(29,079)
|
Notes
payable
|
|
(2,374,507)
|
|
|
3,634,936
|
Due to a related
party
|
|
39,575
|
|
|
36,349
|
Accrued payroll and
employee benefits
|
|
66,867
|
|
|
127,180
|
Other payables and
accrued liabilities
|
|
69,841
|
|
|
(1,228,505)
|
Income taxes
payable
|
|
-
|
|
|
(345,594)
|
Net Cash (Used in)
Provided by Operating Activities
|
|
(4,857,594)
|
|
|
1,362,613
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(707,162)
|
|
|
(5,258,905)
|
|
|
|
|
|
|
Net Cash Used in
Investing Activities
|
|
(707,162)
|
|
|
(5,258,905)
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
Proceeds from related
party loans
|
|
4,749,015
|
|
|
-
|
Repayments of related
party loans
|
|
(9,498,029)
|
|
|
-
|
Proceeds from short
term bank loans
|
|
9,972,931
|
|
|
9,887,026
|
Repayment of bank
loans
|
|
(4,432,414)
|
|
|
-
|
Payment of capital
lease obligation
|
|
-
|
|
|
(63,613)
|
|
|
|
|
|
|
Net Cash Provided
by Financing Activities
|
|
791,503
|
|
|
9,823,413
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
471,899
|
|
|
23,654
|
|
|
|
|
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
|
(4,301,354)
|
|
|
5,950,775
|
|
|
|
|
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning of
Period
|
|
9,017,427
|
|
|
4,494,964
|
|
|
|
|
|
|
Cash, Cash
Equivalents and Restricted Cash - End of Period
|
$
|
4,716,073
|
|
$
|
10,445,739
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
Cash paid for
interest, net of capitalized interest cost
|
$
|
787,353
|
|
$
|
713,199
|
Cash paid for income
taxes
|
$
|
-
|
|
$
|
1,467,016
|
|
|
|
|
|
|
Cash and bank
balances
|
|
740,309
|
|
|
4,648,049
|
Restricted
cash
|
|
3,975,764
|
|
|
5,797,690
|
Total cash, cash
equivalents and restricted cash shown in the statement of cash
flows
|
|
4,716,073
|
|
|
10,445,739
|
View original
content:http://www.prnewswire.com/news-releases/orient-paper-inc-announces-first-quarter-2018-financial-results-300647198.html
SOURCE Orient Paper, Inc.