Keyuan Petrochemicals Inc. Announces First Quarter 2012 Financial Results
-- Q1 2012 revenues increased 24.9% YOY to approximately $183.3 million
-- Reaffirms FY 2012 revenue and production guidance of $880.0 million and 760,000 MT, respectively
NINGBO, China, May 22, 2012 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the three months ended March 31, 2012.
"Our first three months 2012 revenues benefitted from solid customer demand and expanded production capacity," declared Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by higher raw materials costs, with a series of initiatives on major projects and our SBS facility ramping into commercial production, I believe Keyuan's core earnings potential continues to improve."
Financial Summary
| Three months ended March 31, 2012 |
Q1 2012 |
Q1 2011 |
Chg. |
| Net Revenues |
$183.3M |
$146.8M |
24.9% |
| Gross Profit |
$9.5M |
$12.7M |
-25.2% |
| Net Income (a) |
$1.6M |
$4.9M |
-67.3% |
| EPS (Diluted) |
$0.03 |
$0.08 |
-62.5% |
| Weighted Average Diluted Shares Outstanding |
57.6M |
63.9M |
-9.9% |
|
(a) Net Income (loss) attributable to KEYP common stockholders. |
First Quarter 2012 Financial Results
Sales for the first quarter ended March 31, 2012 were $183.3 million, an increase of $36.5 million, or 24.9% from the first quarter of 2011. The Company sold 157,853 metric tons (MT) of petrochemical products at an average price of $1,161 per MT in the first quarter of 2012 compared to 148,768 MT and $834 per MT, respectively, in the first quarter of 2011.
Cost of goods sold was $173.9 million in the first quarter of 2012 compared to $134.1 million in the first quarter of 2011, with a gross profit of $9.5 million or 5.18% in the first quarter of 2012 compared to a gross profit of $12.7 million or 8.65% in the same period a year ago. The main reason for the decrease in the gross margin was the increase in our raw materials prices. The Company uses fuel oil as its raw material for production, which is a product of heavy crude oil. For crude oil, the average Brent oil price for the three months ended March 31, 2012 was $118 per barrel, as compared to $103 in the same period of 2011, an increase of 15%. Going forward, management believes that major fluctuations in the price of raw materials will continue to have a major impact on our gross margin. Accordingly, the Company plans to conduct a series of initiatives to improve yield rate in order to minimize the impact on our gross margin in future quarters.
Operating expenses for the first quarter of 2012 were approximately $2.9 million, consisting of $0.3 million in selling expenses and $2.6 million in general and administrative expenses. General and administrative expenses were lower by approximately $0.6 million compared to the same period in 2011. Operating income was $6.6 million in the three months ended March 31, 2012 compared to $8.9 million in the corresponding period in 2011.
Net income attributable to common shareholders was $1.6 million for the first quarter of 2012, with diluted net loss per share of $0.03 compared to net income of $4.9 million and diluted earnings per share of $0.08 in the first quarter of 2011. The diluted weighted average number of the shares outstanding decreased from 63.9 million to 57.6 million in the first quarter of 2012.
Full Year 2012 Guidance
Management is forecasting $880 million of revenues, $30 million of net income and 760,000 MT of production for 2012. This assumes approximately $100 million to $110 million of revenue and $10 million to $11 million of net income contribution from its SBS production facility.
Updates on Internal Control
Since early 2012, the Company has implemented an overall comprehensive budget management system ("The General Rule of Budget Performance Assessment"), which is executed and controlled by the planning finance department to review and instruct all other departments. The budget control system includes evaluating a "Budget Enforcement Monthly Assessment Form" and a "Budget Enforcement Monthly Record Form" on monthly basis to greatly improve the Company's operating efficiency.
The Company began to implement a management and evaluation system for personnel position responsibility standards, training, assessment and promotion which defines the talent introduction plan and payroll multiplication plan; forms the effective incentive system and commitment system; and is designed to retain personnel and prevent talent losses.
About Keyuan Petrochemicals, Inc.
Keyuan Petrochemicals, Inc., established in 2007 and operating through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd., is located in Ningbo, China and is a leading independent manufacturer and supplier of various petrochemical products. Having commenced production in October 2010, Keyuan's operations include an annual petrochemical manufacturing design capacity of 720,000 MT for a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. In order to meet increasing market demand, Keyuan plans to expand its manufacturing capacity to include a SBS production facility which was completed in September 2011 and one production line has entered into commercial production by November 2011. The Company plans to add additional storage capacity, a raw material pre-treatment facility, an asphalt production facility, and an ABS production facility.
Cautionary Statement Regarding Forward-Looking Information
This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf months are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
Angel Gu
Keyuan Petrochemicals, Inc
Phone: +0086-1-381-986-4827
Email: [email protected]
Web: www.keyuanpetrochemicals.com
| KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES |
|||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
| March 31, |
December 31, |
||||
| 2012 |
2011 |
||||
| (unaudited) |
|||||
| ASSETS |
|||||
| Current assets: |
|||||
| Cash |
$ |
23,155,356 |
$ |
7,325,017 |
|
| Pledged bank deposits |
160,787,809 |
156,318,066 |
|||
| Bills receivable |
266,701 |
1,574,000 |
|||
| Accounts receivable |
0 |
2,226,288 |
|||
| Inventories |
55,098,878 |
38,945,968 |
|||
| Prepayments to suppliers |
52,411,212 |
15,781,294 |
|||
| Consumption tax refund receivable |
76,219,573 |
55,809,560 |
|||
| Amounts due from related parties |
39,600 |
39,350 |
|||
| Other current assets |
55,837,854 |
45,978,428 |
|||
| Deferred income tax assets |
37,585 |
37,348 |
|||
| Total current assets |
423,854,568 |
324,035,319 |
|||
| Property, plant and equipment, net |
197,107,187 |
190,867,621 |
|||
| Intangible assets, net |
957,990 |
978,503 |
|||
| Land use rights |
11,026,335 |
11,068,762 |
|||
| VAT recoverable |
2,589,946 |
2,893,635 |
|||
| Total assets |
$ |
635,536,026 |
$ |
529,843,840 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
| Current liabilities: |
|||||
| Short-term bank borrowings |
$ |
256,521,610 |
$ |
225,969,421 |
|
| Bills payable |
94,366,800 |
63,550,250 |
|||
| Current portion of long-term bank borrowings |
15,840,000 |
15,740,000 |
|||
| Accounts payable |
118,709,156 |
97,588,137 |
|||
| Advances from customers |
32,249,204 |
7,821,623 |
|||
| Accrued expenses and other payables |
25,537,857 |
30,287,946 |
|||
| Income taxes payable |
1,530,600 |
186,326 |
|||
| Dividends payable |
2,381,759 |
2,381,759 |
|||
| Amounts due to related parties |
113,798 |
621,077 |
|||
| Total liabilities, all current |
547,250,784 |
444,146,539 |
|||
| Series B convertible preferred stock: |
|||||
| Par value: $0.001; Authorized: 8,000,000 shares |
|||||
| 6% cumulative dividend with liquidation preference |
|||||
| over common stock |
|||||
| Issued and outstanding: 5,333,340 shares, |
|||||
| liquidation preference of $ 20,000,000 |
16,451,552 |
16,451,552 |
|||
| Commitments and contingencies |
0 |
0 |
|||
| Stockholders' equity: |
|||||
| Common stock: |
|||||
| Par value:$0.001; Authorized: 100,000,000 shares; |
|||||
| Issued and outstanding: 57,646,160 shares as at March 31, 2012 and |
|||||
| December 31, 2011 |
57,646 |
57,646 |
|||
| Additional paid-in capital |
49,571,104 |
49,198,278 |
|||
| Statutory reserve |
3,744,304 |
3,744,304 |
|||
| Accumulated other comprehensive income |
7,123,222 |
6,545,811 |
|||
| Retained earnings |
11,337,414 |
9,699,710 |
|||
| Total stockholders' equity |
71,833,690 |
69,245,749 |
|||
| Total liabilities and stockholders' equity |
$ |
635,536,026 |
$ |
529,843,840 |
|
| KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES |
||||||
| Three Months Ended March 31, |
||||||
| 2012 |
2011 |
|||||
| (unaudited) |
(unaudited) |
|||||
| Sales |
||||||
| External parties |
$ |
183,324,688 |
$ |
124,154,798 |
||
| Related parties |
0 |
22,609,819 |
||||
| Total Sales |
183,324,688 |
146,764,617 |
||||
| Cost of sales |
||||||
| External parties |
173,851,709 |
113,814,197 |
||||
| Related parties |
0 |
20,299,359 |
||||
| Cost of sales |
173,851,709 |
134,113,556 |
||||
| Gross profit |
9,472,979 |
12,651,061 |
||||
| Selling expenses |
252,906 |
539,132 |
||||
| General and administrative expenses |
2,610,195 |
3,235,080 |
||||
| Total operating expenses |
2,863,101 |
3,774,212 |
||||
| Income from operations |
6,609,878 |
8,876,849 |
||||
| Other income(expense): |
||||||
| Interest income |
939,234 |
906,944 |
||||
| Interest expense |
-4,378,700 |
-3,196,629 |
||||
| Other income (expense), net |
-186,228 |
879,130 |
||||
| Total other expense, net |
-3,625,694 |
-1,410,555 |
||||
| Income before income taxes |
2,984,184 |
7,466,294 |
||||
| Income tax expense |
1,346,483 |
2,252,151 |
||||
| Net income attributable to Keyuan |
||||||
| Petrochemicals Inc. stockholders |
1,637,701 |
5,214,143 |
||||
| Dividends to Series B convertible |
||||||
| Preferred stockholders |
0 |
296,260 |
||||
| Net income attributable to Keyuan |
||||||
| Petrochemicals Inc. common stockholders |
1,637,701 |
4,917,883 |
||||
| Other comprehensive income: |
||||||
| Foreign currency translation adjustment |
577,412 |
557,297 |
||||
| Other comprehensive income |
577,412 |
557,297 |
||||
| Comprehensive income |
$ |
2,215,113 |
$ |
5,771,440 |
||
| Earnings per share: |
||||||
| Attributable to common stock: |
||||||
| - Basic |
$ |
0.03 |
$ |
0.09 |
||
| - Diluted |
$ |
0.03 |
$ |
0.08 |
||
| Weighted average number of shares of common stock |
||||||
| used in calculation |
||||||
| Basic |
57,646,160 |
57,578,300 |
||||
| Diluted |
57,646,160 |
63,880,139 |
||||
| KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES |
||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
| Three Months Ended March 31, |
||||||
| 2012 |
2011 |
|||||
| (unaudited) |
(unaudited) |
|||||
| Cash flows from operating activities: |
||||||
| Net income |
$ |
1,637,701 |
$ |
5,214,143 |
||
| Adjustments to reconcile net income to net cash |
||||||
| provided by (used in) operating activities: |
||||||
| Loss on disposal of property and equipment |
0 |
3,483 |
||||
| Depreciation |
2,816,623 |
2,500,670 |
||||
| Amortization |
26,798 |
25,680 |
||||
| Land use rights amortization |
113,034 |
108,353 |
||||
| Share-based compensation expense |
406,440 |
668,427 |
||||
| Changes in operating assets and liabilities: |
||||||
| Bills receivable |
1,320,625 |
-137,963 |
||||
| Accounts receivable |
2,246,090 |
0 |
||||
| Inventories |
-15,945,642 |
32,506,267 |
||||
| Prepayments to suppliers |
-33,856,552 |
-4,611,229 |
||||
| Consumption tax refund receivable |
-20,106,087 |
14,385,368 |
||||
| Other current assets |
-12,190,406 |
-5,762,117 |
||||
| Accounts payable |
20,183,367 |
13,330,081 |
||||
| Advances from customers |
24,439,449 |
-1,950,637 |
||||
| Income taxes payable |
1,346,483 |
-3,190,044 |
||||
| Accrued expenses and other payables |
-2,456,395 |
-442,096 |
||||
| Net cash (used in) provided by operating activities |
-30,018,472 |
52,648,387 |
||||
| Cash flows from investing activities: |
||||||
| Proceeds from property disposal |
0 |
10,448 |
||||
| Purchase of property, plant and equipment, including capitalized interest |
-10,352,581 |
-46,014 |
||||
| Net cash used in investing activities |
-10,352,581 |
-35,566 |
||||
| Cash flows from financing activities: |
||||||
| Pledged bank deposits used for bank borrowings |
-3,485,396 |
-18,904,378 |
||||
| Proceeds from short-term bank borrowings |
156,025,477 |
40,705,375 |
||||
| Repayment of short-term bank borrowings |
-127,182,606 |
-30,283,820 |
||||
| Proceeds from bills payable |
65,425,600 |
33,175,240 |
||||
| Prepayment of bills payable |
-34,936,000 |
-43,066,940 |
||||
| Repayments of long-term bank borrowings |
0 |
-12,935,300 |
||||
| Short-term financing from related parties |
0 |
7,738,095 |
||||
| Short –term financing to related parties |
0 |
-7,609,000 |
||||
| Proceeds from warrants exercise |
0 |
4,865 |
||||
| Dividends paid |
0 |
-219,976 |
||||
| Net cash provided by (used in) financing activities |
55,847,075 |
-31,395,839 |
||||
| Effect of foreign currency exchange rate changes on cash |
354,317 |
208,968 |
||||
| Net increase in cash |
15,830,339 |
21,418,950 |
||||
| Cash at beginning of the period |
7,325,017 |
29,336,241 |
||||
| Cash at end of the period |
$ |
23,155,356 |
$ |
50,755,191 |
||
| Supplemental disclosure of cash flow information: |
||||||
| Income taxes paid |
$ |
0 |
$ |
5,442,195 |
||
| Interest paid, net of capitalized interest |
4,378,701 |
3,196,629 |
||||
| Dividends accrued |
0 |
296,260 |
||||
| Non-cash financing activities: |
||||||
| Payable for purchase of property, plant and equipment |
2,516,115 |
12,736,521 |
||||
SOURCE Keyuan Petrochemicals, Inc.
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