IT Tech Packaging, Inc. Announces Third Quarter 2019 Financial Results

7 November 2019

BAODING, China, Nov. 7, 2019 /PRNewswire/ -- IT Tech Packaging, Inc. (NYSE MKT: 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 third quarter ended September 30, 2019.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, "We are pleased to report solid financial results for the third quarter of 2019 with 53.2% increases in sales volume across all three product categories, which reached the highest level since the fourth quarter of 2016. With continued turnarounds and recovery of the operation, we grew our top line by 23.3% and delivered 313.3% growth in operating income, in the third quarter of 2019, and tissue paper and offset printing paper products generated $1.6 million and $7.0 million revenues, respectively. With 326.8% and 266.4% growth in overall gross profit and net income, respectively, our margins and profitability improved significantly in the recorded quarter thanks to continued increase in sales volume for all products as well as decreases in cost of materials and operating expenses. Looking ahead, we expect that the stable order trend will continue to carry over into the rest of the year and 2020."

Third Quarter 2019 Unaudited Financial Results





 For the Three Months Ended September 30,

 ($ millions)



2019



2018



 % Change

 Revenues



32.94



26.72



23.3%

 Regular Corrugating Medium Paper ("CMP")*



19.33



19.22



0.6%

 Light-Weight CMP**



5.02



6.85



-26.8%

 Offset Printing Paper



7.04



0.66



973.5%

 Tissue Paper Products



1.55



0.00



NM















 Gross profit



5.37



1.26



326.8%

 Gross profit (loss) margin



16.3%



4.7%



11.6 pp***

 Regular Corrugating Medium Paper ("CMP")*



14.7%



4.9%



9.8 pp***

 Light-Weight CMP**



15.9%



5.1%



10.8 pp***

 Offset Printing Paper



33.3%



-3.3%



36.6 pp***

 Tissue Paper Products



-38.9%



NM



NM















 Operating income (loss)



3.35



-1.57



313.3%

 Net income



2.34



-1.40



266.4%

 EBITDA



7.11



1.89



276.2%

 Basic and Diluted earnings (loss) per share



0.11



-0.07



257.1%















 * Products from PM6













 ** Products from PM1













 *** pp represents percentage points













 

  • Total sales volume of CMP, offset printing paper and tissue paper products increased by 53.2% to 72,246 tonnes, reaching record highs since the fourth quarter 2016
  • Revenue increased by 23.3% to $32.9 million, primarily attributable to increase in sales volume of corrugating medium paper ("CMP"), offset printing paper and tissue paper products, partially offset by the decreases in average selling prices (ASP) for both CMP and offset printing paper
  • Gross profit increased significantly by 326.8% to $5.4 million. Gross margin increased by 11.6 percentage point to 16.3%. The increase in gross profit were primarily due to the decrease in average cost of sales per tonne for CMP and offset printing paper, which was attributable to the lower average unit purchase costs of recycled paper board and recycled white scrap paper used as raw material for CMP products and offset printing paper products. Gross margins over regular CMP, Light-Weight CMP products and offset printing paper product increased to 14.7%, 15.9% and 33.3%, respectively
  • Income from operations increased by 313.3% to $3.3 million, compared to loss from operations of $1.6 million for the same period of last year
  • Net income was $2.3 million, an increase of 3.7 million, or 266.4%, from net loss of $1.4 million for the same period of last year. Earnings per basic and diluted share was $0.11, compared to loss per basic and diluted share of $0.07, for the same period of last year
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by 276.2% to $7.1 million

Revenue

For the third quarter of 2019, total revenue increased by $6.2 million, or 23.3%, to $32.9 million from $26.7 million for the same period of last year. The increase in total revenue was mainly due to increases in sales volume of CMP products, offset printing paper and tissue paper products, partially offset by the decreases in average selling prices (ASP) for both CMP products and offset printing paper. Total sales volume of CMP, offset printing paper and tissue paper products during the period increased by 53.2% to 72,246 tonnes, compared to 47,149 tonnes sold during the same period of 2018.

The following table summarizes revenue, volume and ASP by product for the third quarter of 2019 and 2018, respectively:



2019



2018



 Revenue

($'000)



 Volume

(tonne)



 ASP

($/tonne)



 Revenue

($'000)



 Volume

(tonne)



 ASP

($/tonne)

 Regular CMP

19,332



47,487



407



19,219



33,928



566

 Light-Weight CMP

5,017



12,721



394



6,850



12,319



556

 Offset Printing Paper

7,038



10,198



690



656



902



727

 Tissue Paper Products

1,551



1,840



843



-



-



-

 Total

32,938



72,246



456



26,724



47,149



567

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by $1.7 million, or 6.6%, to $24.3 million and accounted for 73.9% of total revenue for the third quarter of 2019, compared to $26.1 million, or 97.5% of total revenue, for the same period of last year. The Company sold 60,208 tonnes of CMP at an ASP of $404/tonne in the third quarter of 2019, compared to 46,247 tonnes at an ASP of $564/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP slightly increased by $0.1 million, or 0.6%, to $19.3 million, resulting from sales of 47,487 tonnes at an ASP of $407/tonne, during the third quarter of 2019, compared to revenue of $19.2 million, resulting from sales of 33,928 tonnes at an ASP of $566/tonne, for the same period of last year. Revenue from light-weight CMP decreased by $1.8 million, or 26.8%, to $5.0 million, resulting from sales of 12,721 tonnes at an ASP of $394/tonne for the third quarter of 2019, compared to revenue of $6.8 million, resulting from sales of 12,319 tonnes at an ASP of $556/tonne for the same period of last year.

Revenue from offset printing paper increased by $6.4 million, or 973.5%, to $7.0 million for the third quarter of 2019, from $0.7 million for the same period of last year. The Company sold 10,198 tonnes of offset printing paper at an ASP of $690/tonne in the third quarter of 2019, compared to 902 tonnes at an ASP of $727/tonne in the same period of last year.

We produce tissue paper products, including toilet paper, boxed and soft-packed tissues, handkerchief tissues and paper napkins, as well as bathroom and kitchen paper towels that are marketed and sold under the Dongfang Paper brand. We launched the complete line of processing base tissue paper with designated capacity of 15,000 tonnes/year, and producing finished tissue paper products with designated capacity of 10,000 tonnes/year. With the launch of PM8 in December 2018, the production and sales of tissue paper products have increased steadily in 2019. Revenue from tissue paper products was $1.6 million, 4.7% of the total revenues and resulting from sales of 1,840 tonnes at an ASP of $843/tonne, for the third quarter of 2019.

Gross Profit and Gross Margin

Total cost of sales increased by $2.1 million, or 8.2%, to $27.6 million for the third quarter of 2019 from $25.5 million for the same period of last year. Overall cost of sales per tonne was $382 for the third quarter of 2019, compared to $540 for the same period of last year. The decrease in overall cost of sales per tonne was mainly due to decreased material costs, especially lower average unit purchase costs of recycled paper board and recycled white scrap paper, which decreased by 44.4% and 44%, respectively, in the third quarter of 2019. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $347, $332, $461, and $1,171, respectively, for the third quarter of 2019, compared to $539, $528, $751 and $nil, respectively, for the same period of last year.

Gross profit increased by $4.1 million, or 326.8%, to $5.4 million for the third quarter of 2019 from $1.3 million for the same period of last year. Overall gross margin was 16.3% for the third quarter of 2019, compared to 4.7% for the same period of last year. The increase in gross profit and gross margin were mainly related to the decrease in average cost of sales per tonne for CMP and offset printing paper, which was attributable to the lower average unit purchase costs of recycled paper board and recycled white scrap paper used as raw material for CMP products and offset printing paper products. Gross margins for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were 14.7%, 15.9%, 33.3%, and negative 38.9%, respectively, for the third quarter of 2019, compared to 4.9%, 5.1%, negative 3.3%, and nil, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") decreased by $0.8 million, or 28.5%, to $2.0 million for the third quarter of 2019 from $2.8 million for the same period of last year. The decrease was mainly related to less repair and maintenance costs incurred for the third quarter of 2019 as all of our production resumed since the first quarter of 2019, compared to the same period in 2018 that production was suspended and additional repair and maintenance costs incurred. As a percentage of total revenue, SG&A was 6.1% for the third quarter of 2019, compared to 10.6% for the same period of last year. 

Income (loss) from Operations

Income from operations was $3.3 million for the third quarter of 2019, compared to loss from operations of $1.6 million for the same period of last year. The increase in income from operations was primarily due to substantial increase in gross profit combined with decreased SG&A expenses this year as discussed above. Operating margin was 10.2% for the third quarter of 2019, compared to operating loss margin of 5.9% for the same period of last year.

Net Income

Net income was $2.3 million, or $0.11 per basic and diluted share, for the third quarter of 2019, compared to net loss of $1.4 million, or $0.07 loss per basic and diluted share, for the same period of last year.

EBITDA

EBITDA was $7.1 million for the third quarter of 2019, compared to $1.9 million for the same period of last 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 September 30,

 ($ millions)



2019





2018

 Net income (loss)



2.34





-1.40

 Add: Income tax



0.77





-0.54

         Net interest expense



0.24





0.37

         Depreciation and amortization



3.76





3.46

 EBITDA



7.11





1.89

 

Nine Months Ended September 30, 2019 Financial Results





 For the Nine Months Ended September 30,

 ($ millions)



2019



2018



 % Change

 Revenues



84.01



61.76



36.0%

 Regular Corrugating Medium Paper ("CMP")*



52.44



43.43



20.7%

 Light-Weight CMP**



13.69



13.10



4.5%

 Offset Printing Paper



13.27



5.21



154.7%

 Tissue Paper Products



4.60



0.00



NM

 Digital Photo Paper



0.00



0.01



NM















 Gross profit



8.09



3.58



126.0%

 Gross margin



9.6%



5.8%



-3.8 pp

 Regular Corrugating Medium Paper ("CMP")*



8.4%



6.6%



-1.8 pp

 Light-Weight CMP**



7.1%



5.1%



-2.0 pp

 Offset Printing Paper



29.8%



0.8%



29.0 pp

 Tissue Paper Products



-27.0%



N/A



NM















 Operating income (loss)



0.71



-6.10



111.6%

 Net income (loss)



0.07



-5.38



101.2%

 EBITDA



12.55



5.05



148.5%

 Basic and Diluted earnings per share



0.003



-0.25



101.2%















 * Products from PM6













 ** Products from PM1













 *** pp represents percentage points













Revenue

For the nine months ended September 30, 2019, total revenue increased by $22.2 million, or 36%, to $84 million from $61.8 million for the same period of last year. The increase in total revenue was mainly due to increase in sales volume of CMP, offset printing paper and tissue paper products, which was partially offset by the decrease in ASP of CMP and offset printing paper. Total sales volume of CMP, offset printing paper and tissue paper products during the period increased by 72% to 177,956 tonnes, compared to 103,446 tonnes sold during the same period of 2018.

The following table summarizes revenue, volume and ASP by product for the nine months ended September 30, 2019 and 2018, respectively:



 For the Nine Months Ended September 30,



2019



2018



 Revenue

($'000)



 Volume

(tonne)



 ASP

($/tonne)



 Revenue

($'000)



 Volume

(tonne)



 ASP

($/tonne)

 Regular CMP

52,440



121,774



431



43,434



74,141



586

 Light-Weight CMP

13,693



32,728



418



13,101



23,114



567

 Offset Printing

Paper

13,275



18,757



708



5,212



6,191



842

 Tissue Paper

Products

4,600



4,697



979



-



-



 NM

 Total

84,008



177,956



472



61,761



103,446



597

Revenue from CMP, including both regular CMP and light-Weight CMP increased by $9.6 million, or 17%, to $66.1 million, and accounted for 78.7% of total revenue for the nine months ended September 30, 2019, compared to $56.5 million, or 91.6% of total revenue for the same period of last year. The Company sold 154,502 tonnes of CMP at an ASP of $428/tonne in the nine months ended September 30, 2019, compared to 97,255 tonnes at an ASP of $581/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP increased by $9 million, or 20.7%, to $52.4 million, resulting from sales of 121,774 tonnes at an ASP of $431/tonne during the nine months ended September 30, 2019, compared to revenue of $43.4 million, resulting from sales of 74,141 tonnes at an ASP of $586/tonne for the same period of last year. Revenue from light-weight CMP increased by $0.6 million, or 4.5%, to $13.7 million, resulting from sales of 32,728 tonnes at an ASP of $418/tonne for the nine months ended September 30, 2019, compared to revenue of $13.1 million, resulting from sales of 23,114 tonnes at an ASP of $567/tonne for the same period of last year.

Revenue from offset printing paper increased by $8.1 million, or 154.7%, to $13.3 million for the nine months ended September 30, 2019 from $5.2 million for the same period of last year. The Company sold 18,757 tonnes of offset printing paper at an ASP of $708/tonne in the nine months ended September 30, 2019, compared to 6,191 tonnes at an ASP of $842/tonne in the same period of last year.

Revenue from tissue paper products was $4.6 million for the nine months ended September 30, 2019, resulting from sales of 4,697 tonnes of tissue paper products at an ASP of $979/tonne in the nine months ended September 30, 2019.

Gross Profit and Gross Margin

Total cost of sales increased by $17.8 million, or 30.5%, to $75.9 million for the nine months ended September 30, 2019 from $58.2 million for the same period of last year. The increase in overall cost of sales was mainly a result of the increase in sales volume, partially offset by the decrease of cost of recycled paper board and recycled white scrap paper. Average cost of sales per tonne for regular CMP, light-weight CMP and offset printing paper decreased by 28%, 27.7% and 40.5%, respectively. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, tissue paper products were, $394, $389, $497, and $1,244, respectively, for the nine months ended September 30, 2019, compared to $547, $538, $835, and $nil, respectively, for the same period of last year.

Total gross profit increased by $4.5 million, or 126%, to $8.1 million for the nine months ended September 30, 2019 from $3.6 million for the same period of last year. The increase was mainly due to (i) the increase in quantities sold of CMP, offset printing paper, tissue paper and (ii) the decrease of material purchase price of CMP and offset printing paper, partially offset by the decrease of ASP of these products. Overall gross margin decreased by 3.8 percentage points to 9.6% for the nine months ended September 30, 2019 from 5.8% for the same period of last year. Gross margins for regular CMP, light-weight CMP, offset printing paper and tissue paper products were 8.4%, 7.1%, 30.0% and negative 27.0%, respectively, for the nine months ended September 30,2019, compared to 6.6%, 5.1%, 0.8%, and nil, respectively, for the same period of last year.

Selling, General and Administrative Expenses

SG&A expenses decreased by $2.3 million, or 23.3%, to $7.4 million for the nine months ended September 30, 2019 from $9.7 million for the same period of last year. As a percentage of total revenue, SG&A expenses was 8.8% for the nine months ended September 30, 2019, compared to 15.7% for the same period of last year.

Income from Operations

Income from operations was$0.7 million for the nine months ended September 30, 2019, compared to loss from operations of $6.1 million for the same period of last year. Operating margin was 0.8% for the nine months ended September 30, 2019, compared to operating loss margin of 9.9% for the same period of last year.

Net Income

Net Income increased by $5.4 million, or 101.2%, to $0.07 million, or earnings per basic and diluted share of $0.003, for the nine months ended September 30, 2019. This compared to net loss of $5.4 million, or loss per basic and diluted share of $0.25, for the same period of last year.

EBITDA

EBITDA increased by $7.5 million, or 148.5%, to $12.6 million for the nine months ended September 30, 2019 from $5.1 million for the same period of last 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 Nine Months Ended September 30,

 ($ millions)



2019





2018

 Net income (loss)



0.07





-5.38

 Add: Income tax



0.21





-1.63

         Net interest expense



0.73





1.18

         Depreciation and amortization



11.55





10.87

 EBITDA



12.55





5.05

Cash, Liquidity and Financial Position

As of September 30, 2019, the Company had cash and bank balances, short-term debt (including short-term bank loans, current portion of long-term loans from credit union and related party loans) and long-term debt (including loans from credit union and related party loans) of $4.8 million, $7.4 million and $8.8 million, respectively, compared to $8.5 million, $14.3 million, and $6.9 million, respectively, at the end of 2018.

Net accounts receivable was $2.8 million as of September 30, 2019, compared to $2.9 million as of December 31, 2018. Net inventory was $7.0 million as of September 30, 2019, compared to $2.9 million at the end of 2018. As of September 30, 2019, the Company had current assets of $20.6 million and current liabilities of $61.0 million, resulting in a working capital deficit of $40.4 million. This compared to current assets of $24.2 million, current liabilities of $29.6 million and working capital deficit of $5.5 million at the end of 2018.

Net cash provided by operating activities was $4.6 million for the nine months ended September 30, 2019, compared to net cash provided by operating activities of $1.8 million for the same period of last year. Net cash used in investing activities was $6.4 million for the nine months ended September 30, 2019, compared to $1.8 million for the same period of last year. Net cash used in financing activities was $5.2 million for the nine months ended September 30, 2019, compared to net cash provided by financing activities of $0.8 million for the same period of last year.

Recent development

On October 31, 2019, the shareholders of the Company at the Company's Annual Shareholders General Meeting adopted and approved the 2019 Omnibus Equity Incentive Plan of IT Tech Packaging, Inc. (the "2019 ISP"). Under the 2019 ISP, the Company has reserved a total of 2,000,000 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.

Earnings Conference Call

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 "IT Tech Packaging Third Quarter 2019 Earnings Conference Call."

Date:

Friday, November 8, 2019

Time:

8:00 am EST

International Toll Free:

United States: +1-866-519-4004

Mainland China: 400-620-8038

Hong Kong: 800-906-601

International: +65-6713-5090

Conference ID:

1585869

This conference call will be broadcast live on the Internet and can be accessed by all interested parties at: https://edge.media-server.com/mmc/p/2ssokezr .

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 11:00 am EST on November 8, 2019 to 7:59 am EST on November 16, 2019. To listen, please dial+1-855-452-5696 if calling from the United States, or +61-281-990-299 if calling internationally. Use the passcode 1585869 to access the replay.   

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products 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 MKT since December 2009.

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:

At the Company Email: [email protected]  

Tel: +86 0312 8698215

Investor Relations:

Melody Shi, CPA

EverGreen Consulting Inc.

Email: [email protected]

 

 

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(Unaudited)











September 30,



December 31,



2019



2018

ASSETS























Current Assets











Cash and bank balances

$

4,805,861



$

8,474,809

Restricted cash



-





3,642,616

Accounts receivable (net of allowance for doubtful

accounts of $56,638 and $58,707 as of September 30,

2019 and December 2018, respectively)



2,775,304





2,876,632

Inventories



7,010,419





2,923,516

Prepayments and other current assets



5,982,730





6,241,299













Total current assets



20,574,314





24,158,872













Property, plant, and equipment, net



153,108,508





167,829,716

Value-added tax recoverable



2,620,515





2,810,331

Deferred tax asset non-current



9,827,679





8,277,091

Other non-current assets



45,273,629





-













Total Assets

$

231,404,645



$

203,076,010













LIABILITIES AND STOCKHOLDERS' EQUITY























Current Liabilities











Short-term bank loans

$

6,362,312



$

11,802,075

Current portion of long-term loans from credit union



311,046





2,491,549

Accounts payable



857,218





629,054

Advance from customers



83,315





-

Notes payable



-





3,642,616

Due to related parties



766,544





413,336

Accrued payroll and employee benefits



239,501





213,536

Other payables and accrued liabilities



51,062,036





10,222,796

Income taxes payable



1,332,680





219,305













Total current liabilities



61,014,652





29,634,267













Loans from credit union



6,701,636





4,706,259

Loans from a related party



2,120,771





2,185,569













Total liabilities (including amounts of the

consolidated VIE without recourse to the Company of

$67,168,878 and $34,008,908 as of September 30,

2019 and December 31, 2018, respectively)



69,837,059





36,526,095













Commitments and Contingencies























Stockholders' Equity











Common stock, 500,000,000 shares authorized,

$0.001 par value per share, 22,054,816 shares issued



22,684





22,360

Additional paid-in capital



51,154,544





51,137,319

Statutory earnings reserve



6,080,574





6,080,574

Accumulated other comprehensive loss



(8,329,334)





(3,263,952)

Retained earnings



112,639,118





112,573,614













Total stockholders' equity



161,567,586





166,549,915













Total Liabilities and Stockholders' Equity

$

231,404,645



$

203,076,010

 

 

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)







Three Months Ended



Nine Months Ended





September 30,



September 30,





2019





2018



2019



2018





























Revenues



$

32,937,917





$

26,723,657



$

84,008,157



$

61,761,041





























Cost of sales





(27,563,185)







(25,464,314)





(75,917,762)





(58,181,584)





























Gross Profit





5,374,732







1,259,343





8,090,395





3,579,457





























Selling, general and

administrative expenses





(2,024,547)







(2,829,933)





(7,413,879)





(9,670,992)

Gain (Loss) from disposal of

property, plant and equipment





-







237





-





(10,026)

Gain on acquisition of a

subsidiary





(879)







-





30,518





-

























































Income (Loss) from

Operations





3,349,306







(1,570,353)





707,034





(6,101,561)





























Other Income (Expense):



























Interest income





1,413







5,222





61,787





32,641

Subsidy income





(2,800)







(5,786)





233,488





244,723

Interest expense





(236,987)







(372,276)





(731,027)





(1,183,269)





























Income (Loss) before

Income Taxes





3,110,932







(1,943,193)





271,282





(7,007,466)





























Provision for Income Taxes





(772,905)







538,231





(205,780)





1,626,222





























Net Income (Loss)





2,338,027







(1,404,962)





65,502





(5,381,244)





























Other Comprehensive Loss



























Foreign currency translation

adjustment





(4,810,379)







(6,994,097)





(5,065,382)





(9,222,113)





























Total Comprehensive Loss



$

(2,472,352)





$

(8,399,059)



$

(4,999,880)



$

(14,603,357)





























Earnings (Losses) Per

Share:























































Basic and Diluted Earnings

(Losses) per Share



$

0.11





$

(0.07)



$

0.003



$

(0.25)

























































Outstanding – Basic and

Diluted





22,028,171







21,450,316





22,028,171





21,450,316

 

 

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)











Nine Months Ended





September 30,





2019





2018

















Cash Flows from Operating Activities:















Net income



$

65,502





$

(5,381,244)

Adjustments to reconcile net income to net cash provided by

operating activities:















Depreciation and amortization





11,547,650







10,873,536

Loss from disposal and impairment of property, plant and equipment

-







10,026

Allowance for bad debts





(339)







(11,444)

Gain on acquisition of a subsidiary





(30,518)







-

Deferred tax





(1,853,728)







(1,629,706)

Changes in operating assets and liabilities:















Accounts receivable





16,894







572,184

Prepayments and other current assets





185,780







(3,528,818)

Inventories





(4,307,754)







3,562,834

Accounts payable





254,749







(354,689)

Advance from customers





85,993







-

Notes payable





(3,648,250)







(2,294,280)

Related parties





367,277







114,714

Accrued payroll and employee benefits





33,334







(35,419)

Other payables and accrued liabilities





726,564







437,532

Income taxes payable





1,155,880







(525,502)

Net Cash Provided by Operating Activities





4,599,034







1,809,724

















Cash Flows from Investing Activities:















Purchases of property, plant and equipment





(4,917,650)







(1,812,280)

Acquisition of a subsidiary





(1,531,531)







-

















Net Cash Used in Investing Activities





(6,449,181)







(1,812,280)

















Cash Flows from Financing Activities:















Proceeds from related party loans





-







4,588,559

Repayments of related party loans





-







(9,177,118)

Proceeds from short term bank loans





3,940,110







9,635,974

Proceeds from credit union loans





2,334,880









Repayment of bank loans





(11,499,285)







(4,282,655)

















Net Cash (Used in) Provided by Financing Activities





(5,224,295)







764,760

















Effect of Exchange Rate Changes on Cash and Cash

Equivalents





(237,122)







(677,172)

















Net (Decrease) Increase in Cash and Cash Equivalents





(7,311,564)







85,032

















Cash, Cash Equivalents and Restricted Cash - Beginning of

Period





12,117,425







9,017,427

















Cash, Cash Equivalents and Restricted Cash - End of

Period



$

4,805,861





$

9,102,459

















Supplemental Disclosure of Cash Flow Information:















Cash paid for interest, net of capitalized interest cost



$

659,613





$

1,409,695

Cash paid for income taxes



$

888,881





$

522,547

































Cash and bank balances





4,805,861







5,468,315

Restricted cash





-







3,634,144

Total cash, cash equivalents and restricted cash shown in

the statement of cash flows





4,805,861







9,102,459

 

 

 

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SOURCE IT Tech Packaging, Inc.