SHOUGUANG, China, May 9, 2013 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq:GURE) ("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 first quarter ended March 31, 2013.
First Quarter 2013 Highlights
"Due to the lower demand of bromine as influenced by continuing macroeconomic tightening policy imposed by the Chinese government, the average selling price of bromine decreased from $3,569 per tonne for the first quarter in 2012 to $3,053 per tonne for the same period this year , we reported lower operating performance in this quarter in comparison to the same period of last year as we were unable to offset the deceasing revenue of bromine segment by those increasing from crude salt and chemical products segments," said Mr. Xiaobin Liu, CEO of the Company.
First Quarter 2013 Results
Gulf Resources' net revenue was $22,502,580 for three-month period ended March 31, 2013, a decrease of approximately $1.3 million (or 5%) as compared to the same period in 2012. This decrease was primarily attributable to the reduction of our bromine segment products, which decreased from $13,453,882 for the three-month period ended March 31, 2012 to $11,734,367 for the same period in 2013, a decrease of approximately 13%.
Revenue from the crude salt segment increased from $2,274,924 for the three-month period ended March 31, 2012 to $2,450,786 for the same period in 2013, an increase of approximately 8%. Revenue from the chemical products segment slightly increased from $8,079,868 for the three-month period ended March 31, 2012 to $8,317,427 for the same period in 2013, an increase of approximately 3%.
Gross profit was $4,517,108, or 20%, of net revenue for three-month period ended March 31, 2013 compared to $6,692,792, or 28%, of net revenue for the same period in 2012. The decrease in gross profit percentage was primarily attributable to a drop in the margin percentage in all of our three segments.
The total research and development costs incurred for the three-month periods ended March 31, 2013 and 2012 were $17,702 and $42,798, respectively, a decrease of 59%. Research and development costs for the three-month period ended March 31, 2013and 2012 represented raw materials used by Shouguang Yuxin Chemical Industry Co., Ltd for testing the manufacturing routine.
General and administrative expenses were $1,969,217 for the three-month period ended March 31, 2013, a decrease of $142,988 (or 7%) as compared to $2,112,205 for the same period in 2012. The decrease of $142,988 was primarily due to the decrease in legal cost in connection with class action litigation from $411,289 for the three-month period ended March 31,2012 to $93,200 for the same period in 2013 since the workload was reduced during the settlement stage discussion, partially offset by an increase in the depreciation of the newly acquired office units in a commercial building in September 2012.
Income from operations was $2,605,448 for the three-month period ended March 31, 2013 (or 12% of net revenue), a decrease of $1,971,651, or approximately 43%, over income from operations for the same period in 2012. The decrease resulted primarily from the decrease of selling price of our bromine segment and the increase in depreciation and amortization of the plant and machinery due to the enhancement projects from in the second quarter of 2012 to our extraction wells and transmission channels and ducts, which accelerated the depreciation and amortization of the plant and machinery.
Other operating income, which represented the sales of wastewater to some of our customers, was $95,562 for the three-month period ended March 31, 2013, representing an increase of $38,488 (or 67%) from $57,074 for the same period in 2012.
Other income, net of $19,837 represented bank interest income, net of capital lease interest expense for the three -month period ended March 31, 2013, a decrease of $24,641 (or approximately 55%) as compared to the same period in 2012, mainly due to lower average bank balance held in the period ended March 31,2013 compared to period ended March 31,2012.
Net income was $1,882,965 for the three-month period ended March 31, 2013, a decrease of $1,404,142 (or approximately 43%) compared to the same period in 2012. This decrease was primarily attributable to the decrease of selling price for our bromine segment due to the macro-economic tightening policy imposed by the PRC government to slow down the economy.
Income taxes were $0.7 million for the first quarter of 2013, a decrease of 44.0% from $1.3 million for the first quarter of 2012. The Company's effective tax rate was 28% and 29% for the three-month periods ended March 31, 2013 and 2012 respectively.
As of March 31, 2013, Gulf Resources had cash of $78.5 million, total liabilities of $12.7 million, and stockholders' equity of $266.9 million. For the three months ended March 31, 2013, the Company had working capital of $105.3 million. As of March 31, 2013, the Company generated $13.3 million in cash flow from operations, and used $290,071 in investing activities for additions of prepaid land leases.
On April 18, 2013 the Company announced that its board of directors has approved a new share repurchase program under which the Company is authorized, but not obligated, to purchase up to $2 million of its issued and outstanding shares of common stock from time to time over the next 12 months. Please refer to the link http://finance.yahoo.com/news/gulf-resources-announces-2-million-123000718.html for further details
On April 30, 2013, the class action parties of the class action litigation executed a stipulation and agreement of settlement. The proposed settlement is subject to review and approval of the Court. The Company currently cannot estimate the amount or range of the overall costs in connection with this litigation. The Company believes that such costs will be reimbursed by the insurance company to the extent covered by the insurance policies.
Then Company's 2013 Annual Meeting of the stockholders will be held on June 18, 2013, at 10:00 a.m. (local time), at the Company's headquarters located at Level 11, Vegetable Building, Industrial Park of the East City, Shouguang City , Shandong Province 262700
"Due to the cold weather in winter, the Chinese New Year, as well as the macro-economic tightening policy imposed by the PRC government, the Company did not perform well during the first quarter in 2013. But we should also see that the selling price of bromine has increased to $3,053 per tonne during this quarter, as compared to $2,954 per tonne in the fourth quarter in 2012. We believe that this indicates an increasing demand of bromine from the downstream industrial customers. Therefore, we are confidence that we can achieve the earning targets set forth in the financial guidance announced in January this year," said Mr. Xiaobin Liu, CEO of the Company
Gulf Resources' management will host a conference call on Friday, May 10, 2013 at 8:00 AM Eastern Time to discuss its financial results for the first quarter ended March 31, 2013.
Hosting the call will be Mr. Xiaobin Liu, CEO of Gulf Resources. The Company's management team will be available for investor questions following the prepared remarks.
To participate in this live conference call, please dial +1 (877) 275-8968 five to ten minutes prior to the scheduled conference call time. International callers should dial +1 (706) 643-1666. The conference participant pass code is 68758186.
A replay of the conference call will be available for 14 days starting from 11:00 AM ET on Friday, May 10, 2013. To access the replay, dial +1 (855) 859-2056. International callers should dial +1 (404) 537-3406. The pass code is 68758186.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://www.gulfresourcesinc.com/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.
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, visit www.gulfresourcesinc.com.
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.
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