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Gulf Resources Announces Third Quarter 2021 Unaudited Financial Results

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Gulf Resources, Inc. (Nasdaq: GURE) reported strong third quarter 2021 results with revenues of $17.75 million, a 69.4% increase from the previous year. Gross margins improved to 53.8%, and the company achieved a net profit of $5.4 million, compared to a loss last year. For the nine-month period, revenues rose by 108.3% to $34.2 million. Management indicated that rising bromine prices are favorable for Q4 profitability, despite challenges from supply chain disruptions and energy usage restrictions affecting production timelines.

Positive
  • Revenue increased by 69.4% to $17.75 million in Q3 2021.
  • Net profit of $5.4 million compared to a loss of $2.9 million in the previous quarter.
  • Earnings per share reached $0.52 compared to a loss of $0.30 a year earlier.
  • Bromine sales surged 62.4% to $14.9 million, with a significant increase in gross profit.
  • Cash balance of $98.9 million and strong working capital of $104.7 million.
Negative
  • Challenges from supply chain issues affecting bromine and chemical deliveries.
  • Production delays due to electrical usage restrictions in Shouguang City.
  • Operating losses reported in Chemicals and Natural Gas segments.

SHOUGUANG, China, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq: GURE) ("Gulf Resources", "we," or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced unaudited financial results for the third quarter 2021.

3rd Quarter Income

  • Revenues in the third quarter increased 69.4% to $17,753,669 versus $10,482,185 in the same period of 2020.
  • Gross margins increased to 53.8% from 35.6%
  • Income from operations was $7.1 million compared to a loss of $2.7 million in the 3rd quarter of 2020.
  • Net profit was $5.4 million compared to a loss of $2.9 million in the previous quarter.
  • Earnings per share were $0.52 compared to a loss of $0.30 in the same quarter of the previous year.

Nine Months

  • Revenues in the 9 months increased 108.3% to $34.2 million.
  • Gross margins improved to 43.5% from 22.6%.
  • Income from operations was $1.4 million versus a loss of $10.5 million.
  • Earnings per share were $0.02 versus a loss of $0.91.

Balance Sheet
At the end of the third quarter,

  • Cash equaled $98.9 million
  • Working capital was $104.7 million
  • Shareholders’ equity was $282.2 million
  • Based on 10,469,477 shares outstanding,
    • Cash per share was $9.44
    • Net net cash per share (cash minus all liabilities) was $7.31 per share
    • Working capital per share was $10.00
    • Book value per share was $26.9

Cash Flow

  • During the nine-month period ended September 30, 2021 cash flow provided by operating activities of approximately $11.1 million was mainly due to non-cash adjustments related to depreciation and amortization of property, plant and equipment, and restricted stock expense offset by a net loss of $12.32 million and an increase in accounts receivable of $6.89 million.
  • During the nine-month period ended September 30, 2020 cash flow provided by operating activities of approximately $3.26 million was mainly due to non-cash adjustments related to depreciation and amortization of property, plant and equipment, and restricted stock expense offset by a net loss of $8.7 million and an increase in accounts receivable of $2.28 million.

3rd Quarter Segment Reporting
Bromine

  • Bromine sales increased 62.4% to $14.9 million.
  • Production increased only 9%, so most of the increase was due to improved pricing.
  • Gross profit was 55.7% versus 39.3% in the same period of the previous year.
  • Income from operations increased 252% to $6.9 million.

Crude Salt

  • Revenues in crude salt increased 118% to $2.8 million.
  • Gross profit increased 921% to $1.2 million.
  • Income from operations was $561,373 versus a loss of ($484,278) in the previous year.

Chemicals and Natural Gas

  • Chemicals reported an operating loss of ($535,047).
  • Natural gas reported an operating loss of ($49,295).

Subsequent Events
As reported in our press release of Oct. 20, 2021, the weeks since the end of the quarter have been extremely eventful.

The company updated investors on the impact of issues in the world and Chinese economy on its business operations.

Bromine prices have risen substantially throughout the world and even more substantially in China. In the world market, shipping issues have disrupted delivery. As a result, China has been unable to import its normal share of bromine.

With the shortage in supply and demand, prices of bromine have soared to the highest levels ever recorded.

Since the raw material price increases are lower than the bromine price increase, we believe this type of pricing should be good for our Fourth Quarter 2021 profitability.

The Company has no idea how long the current shortages will last, however, we will keep shareholders informed of any changes we have seen.

The world and Chinese economies have been impacted by supply chain issues in many industries including the energy industry. Shipping shortages have disrupted delivery of many products throughout the world. China has also been impacted by shortages of energy. For example, in some regions of China, the government have restricted electrical usage, including Shouguang City. And some businesses under construction have been restricted from electrical usage in Shouguang City.

The supply chain issues as well as the electric restrictions have delayed the production and delivery of some equipment to the Company‘s new chemical factory. In addition, the Company’s new Yuxin chemical factory has also been restricted from the electrical usage. This means the installation, timing of testing and beginning trial production at the chemical factory will be delayed. At this time, the Company is not in a position to determine the extent of the delays, but it will keep shareholders advised.

Mr. Liu Xiaobin, the CEO of Gulf stated, “This is a very complicated time. The huge increase in pricing of bromine augers well for our short-term profits. However, we will not make any projections at this time because of the volatility of the pricing of bromine and the temporary delays in the opening of our chemical factory and other facilities.”

Conference Call

Gulf Resources management will host a conference call on Tuesday, November 16, 2021 at 08:00 AM Eastern Time to discuss its Third Quarter 2021 results ended September 30, 2021.

Mr. Xiaobin Liu, CEO of Gulf Resources, will be hosting the call. The Company's management team will be available for investor questions following the prepared remarks.

To participate in this live conference call, please dial +1 (888) 506-0062 five to ten minutes prior to the scheduled conference call time. International callers should dial +1 (973) 528-0011.The Entry Code is184394.

The webcasting is also available then, just simply click on the link below:
http://www.gulfresourcesinc.com/news-28.html

A replay of the conference call will be available two hours after the call's completion during 11/16/2021 11:00 AM ET - 11/22/2021 11:00 AM ET. To access the replay, call +1 (877) 481-4010. International callers should call +1 (919) 882-2331. The Replay Passcode is 43677.

About Gulf Resources, Inc.

Gulf Resources, Inc. operates through three wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC"), ShouguangYuxin Chemical Industry Co., Limited ("SYCI"), and Daying County Haoyuan Chemical Company Limited (“DCHC”). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil and gas field explorations and papermaking chemical agents, and materials for human and animal antibiotics. DCHC was established to further explore and develop natural gas and brine resources (including bromine and crude salt) in China. For more information, visit http://www.gulfresourcesinc.com.

Forward-Looking Statements

Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, the risks associated with the ongoing impact of COVID-19 pandemic, uncertainties associated with obtaining governmental approvals, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.

CONTACT: Gulf Resources, Inc.

Web:http://www.gulfresourcesinc.com
 Director of Investor Relations
 Helen Xu (Haiyan Xu)
 beishengrong@vip.163.com 

 

GULF RESOURCES, INC.
 AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)

 

 September 30, 2021
Unaudited
 December 31,
2020
Audited
Current Assets       
Cash$98,880,826  $94,222,538 
Accounts receivable 13,433,116   6,521,798 
Inventories, net 489,502   419,609 
Prepayments and deposits 5,116,702   6,146,461 
Other receivable 559   559 
Total Current Assets 117,920,705   107,310,965 
Non-Current Assets       
Property, plant and equipment, net 150,414,047   148,947,689 
Finance lease right-of use assets 183,118   186,272 
Operating lease right-of –use assets 8,328,584   8,868,661 
Prepaid land leases, net of current portion 10,194,743   10,134,004 
Deferred tax assets 17,397,924   18,590,227 
Total non-current assets 186,518,416   186,726,853 
Total Assets$304,439,121  $294,037,818 
        
Liabilities and Stockholders’ Equity       
Current Liabilities       
Accounts, other payable and accrued expenses$10,227,804  $5,081,701 
Taxes payable-current 2,223,200   1,326,179 
Finance lease liability, current portion 191,719   217,070 
Operating lease liabilities, current portion 474,695   477,350 
Total Current Liabilities 13,117,418   7,102,300 
Non-Current Liabilities       
Finance lease liability, net of current portion 1,740,499   1,888,903 
Operating lease liabilities, net of current portion 7,357,483   8,022,342 
Total Non-Current Liabilities 9,097,982   9,911,245 
Total Liabilities$22,215,400  $17,013,545 
Commitment and Loss Contingencies       
        
Stockholders’ Equity       
PREFERRED STOCK; $0.001 par value; 1,000,000 shares authorized; none outstanding$—    $—   
COMMON STOCK; $0.0005 par value; 80,000,000 shares authorized; 10,515,307 and 10,043,307 shares issued; 10,469,477 and 9,997,477 shares outstanding as of September 30, 2021 and December 31, 2020, respectively 24,375   24,139 
Treasury stock; 45,830 and 45,830  shares as of September 30, 2021 and December 31, 2020 at cost (510,329)  (510,329)
Additional paid-in capital 100,569,160   97,435,316 
Retained earnings unappropriated 151,576,627   151,388,356 
Retained earnings appropriated 24,233,544   24,233,544 
Accumulated other comprehensive loss 6,330,344   4,453,247 
Total Stockholders’ Equity 282,223,721   277,024,273 
Total Liabilities and Stockholders’ Equity$304,439,121  $294,037,818 
        

See accompanying notes to the condensed consolidated financial statements


GULF RESOURCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in U.S. dollars)
(UNAUDITED)

                
 Three-Month Period Ended
September 30,
 Nine -Month Period Ended
September 30,
 2021 2020 2021 2020
        
NET REVENUE               
Net revenue$17,753,669  $10,482,185  $34,160,920  $16,399,338 
                
OPERATING INCOME (EXPENSE)               
Cost of net revenue (8,197,697)  (6,750,055)  (19,294,860)  (12,694,271)
Sales, marketing and other operating expenses (19,035)  (15,785)  (44,205)  (28,866)
Direct labor and factory overheads incurred during plant shutdown (1,229,058)  (1,538,193)  (5,237,258)  (6,886,215)
General and administrative expenses (1,209,818)  (4,911,970)  (8,150,769)  (7,297,010)
Other operating income (loss) (86)  —     (86)  (15,775)
Total operating expense (10,655,694)  (13,216,003)  (32,727,178)  (26,922,137)
                
INCOME(LOSS) FROM OPERATIONS 7,097,975   (2,733,818)  1,433,742   (10,522,799)
                
OTHER INCOME (EXPENSE)               
Interest expense (32,420)  (32,257)  (108,650)  (102,573)
Interest income 73,707   70,819   221,597   216,662 
Other (income) expenses 4,636   —     4,636   —   
INCOME(LOSS) BEFORE TAXES 7,143,898   (2,695,256)  1,551,325   (10,408,710)
                
INCOME TAX BENEFIT (1,750,283)  (217,325)  (1,363,054)  1,711,751 
NET INCOME(LOSS)$5,393,615  $(2,912,581) $188,271  $(8,696,959)
                
COMPREHENSIVE LOSS:               
NET INCOME(LOSS)$5,393,615  $(2,912,581) $188,271  $(8,696,959)
OTHER COMPREHENSIVE LOSS               
- Foreign currency translation adjustments (1,272,449)  11,120,339   1,877,097   6,826,849 
COMPREHENSIVE INCOME(LOSS)$4,121,166  $8,207,758  $2,065,368  $(1,870,110)
                
INCOME(LOSS) PER SHARE:               
BASIC AND DILUTED$0.52  $(0.30) $0.02  $(0.91)
                
WEIGHTED AVERAGE NUMBER OF SHARES:               
                
BASIC AND DILUTED 10,469,477   9,566,333   10,469,477   9,533,729 
                

See accompanying notes to the condensed consolidated financial statements.


GULF RESOURCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
(UNAUDITED)

 

        
 Nine-Month Period Ended
September 30,
 2021 2020
    
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income(loss)$188,271  $(8,696,959)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:       
Interest on finance lease obligation 103,212   102,220 
Depreciation and amortization 12,316,639   11,907,702 
Unrealized exchange gain on translation of inter-company balances 283,287   648,331 
Deferred tax asset 1,363,055   (1,712,229)
Common stock issued for services 3,134,080   2,350,250 
Issuance of stock options to employee —     —   
Changes in assets and liabilities:       
Accounts receivable (6,890,373)  (2,273,999)
Inventories (67,328)  300,136 
Prepayments and deposits (2,744,904)  36,012 
Other receivables —     —   
Accounts and Other payable and accrued expenses 2,598,030   371,284 
Retention payable —     —   
Taxes payable 905,230   716,371 
Prepaid land leases —     (372,259)
Operating lease (126,655)  (118,850)
Net cash provided by (used in) by operating activities 11,062,544   3,258,010 
        
CASH FLOWS USED IN INVESTING ACTIVITIES       
Purchase of property, plant and equipment (8,560,152)  (9,860,142)
Net cash used in investing activities (8,560,152)  (9,860,142)
        
CASH FLOWS USED IN FINANCING ACTIVITIES       
Repayment of finance lease obligation (290,597)  (264,976)
Net cash used in financing activities (290,597)  (264,976)
        
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2,446,493   2,188,934 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,658,288   (4,678,174)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 94,222,538   100,301,986 
CASH AND CASH EQUIVALENTS - END OF PERIOD$98,880,826  $95,623,812 
        
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION       
Cash paid during the periods for:       
Income taxes$—    $—   
Operating right-of-use assets obtained in exchange for lease obligations$—    $—   
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES       
        

See accompanying notes to the condensed consolidated financial statements.

 


FAQ

What were Gulf Resources' earnings results for Q3 2021?

Gulf Resources reported revenues of $17.75 million, a net profit of $5.4 million, and earnings per share of $0.52 for Q3 2021.

How did Gulf Resources perform in the nine-month period ending September 30, 2021?

For the nine-month period, Gulf Resources achieved revenues of $34.2 million, reflecting a 108.3% increase.

What challenges is Gulf Resources facing currently?

Gulf Resources is experiencing production delays due to electrical usage restrictions and supply chain issues affecting bromine and chemical deliveries.

What is the outlook for Gulf Resources' profitability in Q4 2021?

Management indicated that rising bromine prices are expected to positively impact profitability despite ongoing challenges.

When will Gulf Resources hold its conference call to discuss Q3 results?

The conference call will take place on November 16, 2021, at 08:00 AM Eastern Time.

Gulf Resources, Inc. (NV)

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SHOUGUANG CITY, SHANDONG