MRO Magazine

Yulong Fiscal 2016 Q1 Year-over-Year Net Income Increases 52%; Revenue up 14%

By Business Wire News   



PINGDINGSHAN, China

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 update

  • 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.

 
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
 
 
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
 
 

Investor Relations Counsel:
The Equity Group Inc.
Lena Cati, 212-836-9611
Vice President
lcati@equityny.com
www.theequitygroup.com
or
Asia IR•PR
Jimmy Caplan, 512-329-9505
Managing Director
jimmy@asia-irpr.com
or
Media Relations:
Asia IR•PR
Rick Eisenberg, 212-496-6828
Managing Director
rick@asia-irpr.com

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