Fuling Global Inc. Reports Full Year 2018 Financial Results

ALLENTOWN, Pa., April 5, 2019 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) ("Fuling Global" or the "Company"), a specialized producer and distributor of plastic and paper serviceware, with precision manufacturing facilities in both the U.S., Mexico and China, today announced its financial results for the twelve months ended December 31, 2018.

• Total revenues increased by 11.6% to $138.66 million for the year of 2018 from $124.21 million for the prior year, driven by increased sales volume and blended average selling price ("ASP").
• Total sales volume increased by 8.8% to 49.9 million kilograms for the year of 2018 from 45.9 million kilograms for the prior year. The increase in sales volume was across all product categories. Blended ASP also increased by 2.6% to $2.78 per kilogram for the year of 2018 from $2.71 per kilogram for the prior year.
• Gross profit increased by 13.8% to $29.75 million for the year of 2018 from $26.13 million for the prior year. Gross margin increased by 0.5 percentage points to 21.5% for the year of 2018 from 21.0% for the prior year. The increase in gross margin was primarily due to lower unit cost of raw materials and higher ASP, partially offset by increased labor cost.
• Net income attributable to Fuling Global was $9.86 million, or $0.62 per basic and diluted share, for the year of 2018, compared to $6.28 million, or $0.40 per basic and diluted share, for the prior year. Net income from continuing operations was $9.85 million, or $0.62 per share, for the year of 2018, compared to $8.27 million, or $0.52 per share, for the prior year.

Mr. Xinfu Hu, Chief Executive Officer of the Company, commented, "With sales volume and revenues growing by 8.8% and 11.6%, respectively, our 2018 results highlighted continued strength in our business. Profitability also improved significantly with net income from continuing operations increasing by 19.1%, thanks to favorable pricing environment (increase in blended ASP and decrease in unit cost of raw materials), stringent cost control that more than offset increase in labor cost and streamlined manufacturing process."

Ms. Guilan Jiang, Chairwoman of the Company, added, "As we are steadfast in executing our long-term strategic plan while pursuing lean manufacturing and stringent cost control, we have exited 2018 on a strong footing and with increasing optimism. We look forward to extending our streak of shipment and top line growths in 2019 and beyond."

Full Year 2018 Financial Results

Revenues

For the year of 2018, total revenues increased by $14.46 million, or 11.6%, to $138.66 million from $124.21 million for the prior year. The increase in total revenues was driven by an 8.8% increase of sales volume and a 2.6% increase in blended ASP. Revenues from Zhejiang Great Plastics Technology Co., Ltd., our discontinued business, was $5.6 million and $3.0 million for the year of 2018 and 2017, respectively, and were included in net loss from discontinued operation.

Overall sales volume increased by 4.0 million kilograms, or 8.8%, to 49.9 million kilograms for the year of 2018 from 45.9 million kilograms for the prior year. The increase in sales volume was across all product categories. Sales volume of cutlery increased by 0.9 million kilograms, or 3.0%, to 30.3 million kilograms for the year of 2018 from 29.4 million kilograms for the prior year. Sales volume of straws increased by 1.6 million kilograms, or 86.7%, to 3.5 million kilograms for the year of 2018 from 1.9 million kilograms for the prior year. Sales volume of cups and plates increased by 1.1 million kilograms, or 10.7%, to 11.7 million kilograms for the year of 2018 from 10.6 million kilograms for the prior year. Sales volume of other products increased by 0.4 million kilograms, or 9.7%, to 4.4 million kilograms for the year of 2018 from 4.0 million kilograms for the prior year.

Blended ASP increased by $0.07 per kilogram, or 2.6%, to $2.78 per kilogram for the year of 2018 from $2.71 per kilogram for the prior year. The increase in blended ASP was mainly related to cutlery, cups and plates and other products, and partially offset by decrease in ASP for straws. ASP of cutlery increased by $0.09 per kilogram, or 4.1%, to $2.20 per kilogram for the year of 2018 from $2.11 per kilogram for the prior year. ASP of straws decreased by $3.23 per kilogram, or 32.2%, to $6.80 per kilogram for the year of 2018 from $10.03 per kilogram for the prior year. ASP of cups and plates increased by $0.03 per kilogram, or 0.8%, to $3.19 per kilogram for the year of 2018 from $3.16 per kilogram for the prior year. ASP of other products increased by $0.04 per kilogram, or 1.7%, to $2.52 per kilogram for the year of 2018 from $2.47 per kilogram for the prior year.

The increase in revenues was across all product categories. Revenues from cutlery sales increased by $4.46 million, or 7.2%, to $66.56 million for the year of 2018 from $62.10 million for the prior year. Revenues from straws sales increased by $4.94 million, or 26.5%, to $23.57 million for the year of 2018 from $18.63 million for the prior year. Revenues from cups and plates sales increased by $3.90 million, or 11.6%, to $37.44 million for the year of 2018 from $33.54 million for the prior year. Revenues from other products sales increased by $1.16 million, or 11.6%, to $11.09 million for the year of 2018 from $9.94 million for the prior year. Cutlery, straws, cups and plates, and other products accounted for 48.0%, 17.0%, 27.0%, and 8.0% of total revenues for the year of 2018, compared to 50.0%, 15.0%, 27.0%, and 8.0% for the prior year, respectively.

On a geographical basis, sales in the U.S., Fuling Global's largest market, increased by $11.74 million, or 11.0%, to $118.31 million for the year of 2018 from $106.56 million for the prior year. Sales in China increased by $0.55 million, or 7.0%, to $8.29 million for the year of 2018 from $7.74 million for the prior year. Sales in Europe increased by $0.52 million, or 8.5%, to $6.62 million for the year of 2018 from $6.10 million for the prior year. Sales in other countries increased by $1.65 million, or 43.3%, to $5.45 million for the year of 2018 from $3.80 million for the prior year.

Gross profit

Total cost of goods sold increased by $10.83 million, or 11.0%, to $108.91 million for the year of 2018 from $98.08 million for the prior year. The increase was primarily due to increased sale volume as well as lower unit price of raw materials. Oil prices started to decrease from the middle of 2018 and decreased oil prices led to decreased unit price of raw materials in 2018.

Gross profit increased by $3.62 million, or 13.8%, to $29.75 million for the year of 2018 from $26.13 million for the prior year. Gross margin was 21.5% the year of 2018, compared to 21.0% for the prior year. The increase in gross margin was primarily attributable to decreased unit cost of raw materials and higher average selling price, partially offset by increased labor cost in 2018. Gross margin for cutlery, straws, cups and plates and other products were 16.5%, 16.8%, 33.1%, and 25.4%, respectively, in the year of 2018, compared to 15.8%, 15.9%, 33.3%, and 26.6%, respectively, in the prior year.

Operating income

Selling expenses increased by $1.00 million, or 14.6%, to $7.83 million for the year of 2018 from $6.83 million for the prior year. As a percentage of sales, selling expenses were 5.6% in the year of 2018, compared to 5.5% in the prior year. The increase in selling expenses was consistent with the increase in revenues. General and administrative expenses increased by $1.07 million, or 14.7%, to $8.32 million for the year of 2018 from $7.25 million for the prior year. As a percentage of sales, general and administrative expenses were 6.0% in the year of 2018, compared to 5.8% in the prior year. Research and development expenses increased by $0.48 million, or 16.2%, to $3.43 million for the year of 2018 from $2.95 million for the prior year. As a percentage of sales, research and development expenses were 2.5% in the year of 2018, compared to 2.4% in the prior year. We expect to increase our R&D expenditures proportionate to our revenue increase, as we continue to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop biodegradable materials and reduce reliance on fossil-based raw materials.

As a result, total operating expenses increased by $2.54 million, or 14.9%, to $19.58 million for the year of 2018 from $17.04 million for the prior year.

Operating income increased by $1.08 million, or 11.8%, to $10.17 million for the year of 2018 from $9.09 million for the prior year. Operating margin was 7.3% for the year of 2018, compared to 7.3% for the prior year. The operating margin was unchanged mainly because the increase in gross margin was partially offset by increase in operating expenses as a percentage of sales.

Income before income taxes

Total net other income, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.81 million for the year of 2018, compared to total net other expense of $0.04 million for the prior year. The difference was mainly due to increased subsidy income and other income and partially offset by increased interest expense in the year of 2018.

Income before income taxes increased by $1.92 million, or 21.2%, to $10.97 million for the year of 2018 from $9.05 million for the prior year.

Provision for income taxes was $1.13 million for the year of 2018, compared to $0.79 million for the prior year.

Net income

Net income from continuing operations increased by $1.58 million, or 19.1%, to $9.85 million for the year of 2018 from $8.27 million for the prior year. Net loss from discontinued operations was $0.09 million for the year of 2018, compared to $1.97 million for the prior year. As a result, net income increased by $3.47 million, or 55.1%, to $9.76 million for the year of 2018 from $6.29 million for the prior year. After deduction of non-controlling interest, net income attributable to Fuling Global increased by $3.59 million, or 57.1%, to $9.86 million for the year of 2018 from $6.28 million for the prior year.

Basic and diluted earnings per share were $0.62 for the year of 2018, compared to $0.40 for the same period of last year. Basic and diluted earnings per share from continuing operations were $0.62 for the year of 2018, compared to $0.52 for the prior year.

Financial Condition

As of December 31, 2018, the Company had cash and cash equivalents and restricted cash of $4.40 million and $2.40 million, respectively, compared to $4.10 million and $3.77 million, respectively, at the end of 2017. Short-term borrowing and bank notes payable were $19.89 million and $2.89 million, respectively, as of December 31, 2018, compared to $27.42 million and $4.44 million, respectively, at the end of 2017. Long-term borrowing was $7.20 million as of December 31, 2018, compared to $1.80 million at the end of 2017.

Net cash provided by operating activities was $11.58 million for the year of 2018, compared to $2.47 million for the prior year. Net cash used in investing activities was $8.73 million for the year of 2018, compared to $14.35 million for the prior year. Net cash used in financing activities was $2.77 million for the year of 2018, compared to net cash provided by financing activities of $13.84 million for the prior year.

About Fuling Global Inc.

Fuling Global Inc. ("Fuling Global") is a specialized producer and distributor of plastic and paper serviceware, with precision manufacturing facilities in both the U.S., Mexico and China. The Company's plastic and paper serviceware products include disposable cutlery, drinking straws, cups, plates and other plastic products and are used by more than one hundred customers primarily from the U.S. and Europe, including Subway, Wendy's, Burger King, Taco Bell, KFC (China only), Walmart, and McKesson. More information about the Company can be found at: http://ir.fulingglobal.com/.

Forward-Looking Statements

This press release contains information about Fuling Global's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of software and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Fuling Global encourages you to review other factors that may affect its future results in Fuling Global's annual report and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

At the Company:
Gilbert Lee, CFO
Email: [email protected]
Phone: +1-610-366-8070 x1835
Web: http://ir.fulingglobal.com/

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: [email protected]
Phone: +1-732-910-9692

SOURCE Fuling Global Inc.