IT Tech Packaging, Inc. Announces First Quarter 2021 Unaudited Financial Results

BAODING, China, May 11, 2021 /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 first quarter ended March 31, 2021.



 For the Three Months Ended March 31,

 ($ millions)


2021


2020


 % Change

 Revenues


24.21


8.74


176.9%

 Regular Corrugating Medium Paper (“CMP”)*


16.96


5.72


196.5%

 Light-Weight CMP**


3.75


2.02


85.9%

 Offset Printing Paper


2.12


NM 


NM

 Tissue Paper Products


1.25


1.01


24.4%

  Face Masks


0.13


NM


NM








 Gross profit


1.83


-0.17


1178.8%

 Gross profit (loss) margin


7.5%


-1.9%


9.4 pp****

 Regular Corrugating Medium Paper (“CMP”)*


8.5%


4.9%


3.6 pp****

 Light-Weight CMP**


10.9%


12.9%


-2.0 pp****

 Offset Printing Paper


19.4%


NM


NM

 Tissue Paper Products***


-36.5%


-70.7%


34.3 pp****

 Face Masks


18.8%


NM


NM








 Operating income (loss)


-0.72


-2.87


74.7%

 Net income(Loss) 


-4.34


-2.44


-78.1%

 EBITDA


-0.07


1.04


-106.7%

 Basic and Diluted earnings (loss) per share


-0.12


-0.11


-8.6%








 * Products from PM6







 ** Products from PM1







 *** Products from PM8 and PM9







 **** pp represents percentage points







  • Revenue increased by 176.9% to $24.21 million, primarily attributable to increase in sales volume of CMP and offset printing paper, as well as the increase in Average Selling Prices (“ASPs”) of CMP and tissue paper products.
  • Gross profit was $1.83 million, compared to gross loss of $0.17 million for the same period of last year. Gross margin was 7.5%, compared to gross loss margin of 1.9% for the same period of last year.
  • Loss from operations was $0.72 million, compared to the loss from operations of $2.87 million for the same period of last year.
  • Net loss was $4.34 million, or loss per share of $0.12, compared to net loss of $2.44 million, or loss per share of $0.11, for the same period of last year.
  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was negative $0.07 million, compared to $1.04 million for the same period of last year.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, “We continued to making improvements in the sales volume of CMP products for this quarter. Our total revenue had an increase of 176.9% to $24.2 million, resulted from 129.4% growth of overall sales volume and a 20.7% increase in average selling prices over our main products. The average selling prices of over our main products for this quarter increased 11.9% from the fourth quarter 2020 .

We took a quick recovery from the impact of global outbreaks of COVID-19 pandemic, posting growing revenues from sales of tissue paper, offset printing paper and CMP products. Our production and sales of tissue paper products have been growing up steadily since the launch of PM8 and PM9 in December 2018 and November 2019. Currently, we have completed fundamental constructions on its new tissue paper production line (the “PM10”) and is working on the installation of accessory equipment. Amid robust domestic market demand for tissue paper products and improved production efficiency, we anticipate continue expanding our capacity as we expect to see strong growth from tissue paper business segment that we believe will greatly boost our overall performance. In addition, we are also expanding our business to high and new technology business such as combined heat and power generation project utilizing bio mass technology project (“Biomass CHP Project”) and expect to diversify our sources of revenue and ensure our stable modes of profit-making.”        

First Quarter 2021 Financial Results

Revenue

For the first quarter of 2021, total revenue increased by $15.47 million, or 176.9%, to $24.21 million from $8.74 million for the same period of last year. The increase in total revenue was mainly due to the increase in both sales volume and average selling prices of CMP and offset printing paper products. The following table summarizes revenue, volume and ASPs by products for the first quarter of 2021 and 2020, respectively:


 For the Three Months Ended March 31,


2021


2020


 Revenue

($’000)


 Volume

(tonne)


 ASP

($/tonne)


 Revenue

($’000)


 Volume

(tonne)


 ASP

($/tonne)

 Regular CMP

16,964


33,626


504


5,722


13,788


415

 Light-Weight CMP

3,748


7,670


489


2,016


4,889


412

 Offset Printing Paper

2,116


3,142


673


 NM


 NM


 NM

 Tissue Paper Products

1,251


1,120


1,117


1,006


1,185


849

 Total

24,079


45,558


529


8,744


19,862


440


 Revenue

($’000)


 Volume

(thousand

pieces)


 ASP

($/thousand

pieces)


 Revenue

($’000)


 Volume

($/thousand

pieces)


 ASP

($/thousand

pieces)

 Face Masks

130


3,836


34


 NM


 NM


 NM

Revenue from CMP, including both regular CMP and Light-Weight CMP, increased by $12.97 million, or 167.7%, to $20.71 million and accounted for 85.6% of total revenue for the first quarter of 2021, compared to $7.74 million, or 88.5% of total revenue, for the same period of last year. The Company sold 41,296 tonnes of CMP at an ASP of $502/tonne in the first quarter of 2021, compared to 18,677 tonnes at an ASP of $414/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP increased by $11.24 million, or 196.5%, to $16.96 million, resulting from sales of 33,626 tonnes at an ASP of $504/tonne, during the first quarter of 2021, compared to revenue of $5.72 million, resulting from sales of 13,788 tonnes at an ASP of $415/tonne, for the same period of last year. Revenue from light-weight CMP increased by $1.73 million, or 85.9%, to $3.75 million, resulting from sales of 7,670 tonnes at an ASP of $489/tonne for the first quarter of 2021, compared to revenue of $2.02 million, resulting from sales of 4,889 tonnes at an ASP of $412/tonne for the same period of last year.

Revenue from offset printing paper increased by $2.12 million, or 100.0%, to $2.12 million for the first quarter of 2021, from $nil for the same period of last year. The Company sold 3,142 tonnes of offset printing paper at an ASP of $673/tonne in the first quarter of 2021.

Revenue from tissue paper products increased by $0.24 million, or 24.4%, to $1.25 million, resulting from sales of 1,120 tonnes at an ASP of $1,117/tonne, for the first quarter of 2021, compared to revenue of $1.01 million, resulting from sales of 1,185 tonnes at an ASP of $849/tonne for the same period of last year.

Revenue generated from selling face masks was $0.13 million for the first quarter of 2021. The Company sold 3,836 thousand pieces of face masks in the first quarter of 2021.

Gross Profit (Loss) and Gross Profit (Loss) Margin

Total cost of sales increased by $13.47 million, or 151.1%, to $22.38 million for the first quarter of 2021, from $8.91 million for the same period of last year. The increase in total cost of sales was mainly due to the increase in sales volume of CMP and offset printing paper products, as well as increase in material costs. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products were $462, $435, $543 and $1,525, respectively, for the first quarter of 2021, compared to $395, $359, $nil and $1,450 per tonne, respectively, for the same period of last year.  Average unit purchase costs of recycled paper board, major raw material used for our production, was approximately $289/tonne for the first quarter of 2021, compared to $198/tonne for the same period of last year.

Total gross profit was $1.83 million for the first quarter of 2021, compare to the gross loss of $0.17 million for the same period of last year as a result of factors described above. Overall gross profit margin was 7.6% for the first quarter of 2021, compared to the gross loss margin of 1.9% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper and face mask products were 8.5%, 10.9%, 19.4%, -36.5% and 18.8%, respectively, for the first quarter of 2021, compared to  4.9%, 12.9%, nil%, -70.7% and nil%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) decreased by $0.14 million, or 5.3%, to $2.56 million for the first quarter of 2021 from $2.70 million for the same period of last year. As a percentage of total revenue, SG&A was 10.6% for the first quarter of 2021, compared to 30.8% for the same period of last year.

Loss from Operations

Loss from operations was $0.72 million for the first quarter of 2021, compared to the loss from operations of $2.87 million for the same period of last year. The decrease in loss from operations was primarily due to the increase in gross profit. Operating loss margin was 3.0% for the first quarter of 2021, compared to 32.8% for the same period of last year.

Net Loss and Net Loss per Share

Net loss was $4.34 million, or $0.12 loss per basic and diluted share, for the first quarter of 2021, compared to the net loss of $2.44 million, or $0.11 per basic and diluted share, for the same period of last year.

EBITDA

EBITDA was $-0.07 million for the first quarter of 2021, compared to $1.04 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.



 For the Three Months Ended March 31,

 ($ millions)


2021



2020

 Net income (loss)


-4.34



-2.44

 Add: Income tax


-0.10



-0.53

         Net interest expense


0.28



0.24

         Depreciation and amortization


4.09



3.77

 EBITDA


-0.07



1.04

Cash, Liquidity and Financial Position

As of March 31, 2021, 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 $37.44 million, $12.08 million and $4.57 million, respectively, compared to $4.14 million, $12.16 million and $4.60 million, respectively, as of December 31, 2020.

Net accounts receivable was $5.21 million as of March 31, 2021, compared to $2.39 million as of December 31, 2020. Net inventory was $7.43 million as of March 31, 2021, compared to $1.23 million as of December 31, 2020. As of March 31, 2021, the Company had current assets of $61.14 million and current liabilities of $20.21 million, resulting in a working capital of $40.93 million. This was compared to current assets of $14.91 million and current liabilities of $18.34 million, resulting in a working capital deficit of $3.43 million as of December 31, 2020.

Net cash used in operating activities was $8.28 million for the first quarter of 2021, compared to net cash provided by operating activities of $6.86 million for the same period of last year. Net cash used in investing activities was $0.04 million for the first quarter of 2021, compared to $0.76 million for the same period of last year. Net cash provided by financing activities was $41.79 million for the first quarter of 2021, compared to net cash from financing activities of $nil for the same period of last year.

Recent development

On April 7, 2021, the Company announced it has obtained qualification to supply central heating in industrial parks after month-long review process for its combined heat and power generation project utilizing bio mass technology (“Biomass CHP Project”).

On April 20, 2021, the Company announced it has completed fundamental constructions on its new tissue paper production line (the “PM10”) and is working on the installation of accessory equipment.

Earnings Conference Call

The Company’s management will host a conference call to discuss its first quarter 2021 unaudited financial results at 8:00 am US Eastern Time on Wednesday, May 12, 2021. To attend the conference call, please use the information below.

Date/Time: 8:00 am US Eastern Time (8:00 PM Beijing/Hong Kong Time) on Wednesday, May 12, 2021

Conference Title: IT Tech Packaging, Inc. First Quarter 2021 Earnings Conference Call

Conference ID: 8863957

To attend the conference call, please register in advance of the conference using the link: http://apac.directeventreg.com/registration/event/8863957 to complete the online registration at least 15 minutes prior to the start of the call. Upon registering, the conference access information including participant dial-in numbers, a Direct Event passcode and a registrant ID will be provided to you via an email.

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/4vc6vupv. Please access the link at least 15 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 ET on May 12, 2021 to 9:59 am ET on May 20, 2021. To listen, please dial+1-855-452-5696 if calling from the United States, or +61-281-990-299 if calling internationally. Use the conference ID 8863957 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. For more information, please visit: http://www.itpackaging.cn/ .

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:
Janice Wang

EverGreen Consulting Inc.

Email: [email protected]

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Unaudited)








March 31,


December 31,



2021


2020

ASSETS














Current Assets







Cash and bank balances


$

37,440,991


$

4,142,437

Restricted cash





Accounts receivable (net of allowance for doubtful accounts of

$85,637 and $34,391 as of March 31, 2021 and December 2020,

respectively)



5,211,806



2,389,057

Inventories



7,431,502



1,233,801

Prepayments and other current assets



10,655,539



7,051,515

Due from related parties



400,650



92,795








Total current assets



61,140,488



14,909,605








Prepayment on property, plant and equipment



21,000,411



21,149,749

Finance lease right-of-use assets, net



2,340,142



2,397,653

Property, plant, and equipment, net



140,109,827



145,142,642

Value-added tax recoverable



2,502,526



2,566,195

Deferred tax asset non-current



14,194,939



13,708,630















Total Assets


$

241,288,333


$

199,874,474








LIABILITIES AND STOCKHOLDERS’ EQUITY














Current Liabilities







Short-term bank loans


$

6,389,908


$

6,435,348

Current portion of long-term loans from credit union



4,960,967



4,996,245

Lease liability



188,723



182,852

Accounts payable



2,355,798



592,391

Advance from customers



82,042



82,625

Due to related parties



727,433



727,433

Accrued payroll and employee benefits



308,838



224,930

Other payables and accrued liabilities



4,715,970



4,838,601

Income taxes payable



482,209



259,649








Total current liabilities



20,211,888



18,340,074








Loans from credit union



4,565,307



4,597,772

Deferred gain on sale-leaseback



347,158



387,087

Lease liability – non-current



301,654



354,107

Derivative liability



11,581,027



1,115,260








Total liabilities (including amounts of the consolidated VIE without

recourse to the Company of $19,683,842 and $17,950,224 as of

March 31, 2021 and December 31, 2020, respectively)



37,007,034



24,794,300








Commitments and Contingencies














Stockholders’ Equity







Common stock, 500,000,000 shares authorized, $0.001 par value per

share, 99,049,900 and 28,535,816 shares issued and outstanding as of

March 31, 2021 and December, 31,2020, respectively



99,050



28,536

Additional paid-in capital



88,927,786



53,989,548

Statutory earnings reserve



6,080,574



6,080,574

Accumulated other comprehensive income



4,271,952



5,740,722

Retained earnings



104,901,937



109,240,794








Total stockholders’ equity



204,281,299



175,080,174








Total Liabilities and Stockholders’ Equity


$

241,288,333


$

199,874,474

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Unaudited)




Three Months Ended



March 31,



2021


2020










Revenues


$

24,209,427


$

8,743,851










Cost of sales



(22,378,422)



(8,913,570)










Gross Profit (Loss)



1,831,005



(169,719)










Selling, general and administrative expenses



(2,555,318)



(2,696,963)


Gain on acquisition of a subsidiary






















Loss from Operations



(724,313)



(2,866,682)










Other Income (Expense):








Interest income



4,333



5,790


Subsidy income



196,787



142,998


Interest expense



(278,901)



(244,718)


Loss on derivative liability



(3,636,967)












Loss before Income Taxes



(4,439,061)



(2,962,612)










Provision for Income Taxes



100,205



526,325










Net Loss



(4,338,856)



(2,436,287)










Other Comprehensive Loss








Foreign currency translation adjustment



(1,468,770)



(2,589,754)










Total Comprehensive Loss


$

(5,807,626)


$

(5,026,041)










Losses Per Share:
















Basic and Diluted Losses per Share


$

(0.12)


$

(0.11)


















Outstanding – Basic and Diluted



36,156,280



22,054,816


IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Unaudited)






Three Months Ended



March 31,



2021


2020








Cash Flows from Operating Activities:







Net income


$

(4,338,856)


$

(2,436,287)

Adjustments to reconcile net income to net cash provided by

operating activities:







Depreciation and amortization



4,092,487



3,774,674

Loss on derivative liability



3,636,967




(Recovery from) Allowance for bad debts



52,018



(22,650)

Deferred tax



(589,094)



(541,042)

Changes in operating assets and liabilities:







Accounts receivable



(2,920,798)



1,315,128

Prepayments and other current assets



(3,645,323)



5,486,216

Inventories



(6,270,151)



(373,470)

Accounts payable



1,785,742



(41,405)

Advance from customers





54,930

Related parties



(311,679)



1,814,228

Accrued payroll and employee benefits



86,375



(62,252)

Other payables and accrued liabilities



(84,719)



(728,633)

Income taxes payable



226,699



(1,379,130)

Net Cash (Used in) Provided by Operating Activities



(8,280,332)



6,860,307








Cash Flows from Investing Activities:







Purchases of property, plant and equipment



(44,599)



(756,514)








Net Cash Used in Investing Activities



(44,599)



(756,514)








Cash Flows from Financing Activities:







Proceeds from issuance of shares and warrants, net



41,837,553



Payment of capital lease obligation



(43,230)










Net Cash Provided by Financing Activities



41,794,323










Effect of Exchange Rate Changes on Cash and Cash Equivalents



(170,838)



(229,386)








Net Increase in Cash and Cash Equivalents



33,298,554



5,874,407








Cash, Cash Equivalents and Restricted Cash – Beginning of

Period



4,142,437



5,837,745








Cash, Cash Equivalents and Restricted Cash – End of Period


$

37,440,991


$

11,712,152








Supplemental Disclosure of Cash Flow Information:







Cash paid for interest, net of capitalized interest cost


$

97,642


$

116,019

Cash paid for income taxes


$

262,191


$

1,379,130















Cash and bank balances



37,440,991



11,712,152

Restricted cash





Total cash, cash equivalents and restricted cash shown in the

statement of cash flows



37,440,991



11,712,152

SOURCE IT Tech Packaging, Inc.

Related Links

http://www.itpackaging.cn/

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