ONP [IT TECH PACKAGING] 8-K: IT Tech Packaging, Inc. Announces Third Quarter 2019

Ticker: ONP, Company: IT TECH PACKAGING, INC., Type: 8-K, Date: 2019-11-07
Original SEC Filing: Click here


Webplus: ONP/20191107/8-K/2_EX-99.1/000.htm SEC Original: f8k110719ex99-1_ittechpack.htm
IT Tech Packaging, Inc. Announces Third Quarter 2019 Financial Results Continued Improvement in Margin and Profitability, Strong Growth in Sales Volume, Net Income and Operating Income, with Increases of 53%, 266% and 313%, Respectively, in Q3 2019, Reached the Highest Level Since Q4 2016 Company to Host Earnings Conference Call on Friday, November 8, 2019, at 8:00 am EST BAODING,



EX-99.1 2 f8k110719ex99-1_ittechpack.htm PRESS RELEASE DATED NOVEMBER 7, 2019, ANNOUNCING UNAUDITED FINANCIAL RESULTS AND OPERATIONAL RESULTS OF THE COMPANY FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2019

Exhibit 99.1

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

Continued Improvement in Margin and Profitability,

Strong Growth in Sales Volume, Net Income and Operating Income, with Increases of 53%, 266% and 313%, Respectively, in Q3 2019, Reached the Highest Level Since Q4 2016

Company to Host Earnings Conference Call on Friday, November 8, 2019, at 8:00 am EST

BAODING, China, November 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.

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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.

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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.

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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

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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.

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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.

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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.

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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: ir@itpackaging.cn

Tel: +86 0312 8698215

Investor Relations:
Melody Shi, CPA

EverGreen Consulting Inc.
Email: ir@changqingconsulting.com

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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

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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

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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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Webplus: ONP/20191107/8-K/1/000.htm SEC Original: f8k110719_ittechpackaging.htm



8-K 1 f8k110719_ittechpackaging.htm CURRENT REPORT

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock ITP NYSE MKT

Item 2.02 Results of Operations and Financial Condition.

On November 7, 2019, IT Tech Packaging, Inc. (the “Company”) issued a press release announcing its unaudited financial results and operational results for the third quarter ended September 30, 2019. A copy of the press release making the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit
Number
Description
99.1 Press Release dated November 7, 2019, announcing unaudited financial results and operational results of the Company for the third quarter ended September 30, 2019.

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

IT TECH PACKAGING, INC.
Date: November 7, 2019 By: /s/ Zhenyong Liu
Name: Zhenyong Liu
Title: Chief Executive Officer

2

Company Info:

Ticker: ONP, Company: IT TECH PACKAGING, INC., Type: 8-K, Date: 2019-11-07CIK: 0001358190, Location: F4, SIC: 2670, SIC Desc: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES)
Business Phone & Address:
SCIENCE PARK, JULI ROAD, XUSHUI COUNTY, BAODING CITY
HEBEI PROVINCE, 072550

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