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

Rhea-AI Summary

IT Tech Packaging (NYSE AMERICAN: ITP) reported significant financial growth for Q1 2021, with a revenue increase of 176.9% to $24.21 million, driven by rising sales volumes and average selling prices. Gross profit surged to $1.83 million, compared to a $0.17 million loss in Q1 2020. However, the company faced a net loss of $4.34 million, a substantial increase from the $2.44 million loss reported last year. The company is expanding its tissue paper production and exploring biomass technology to diversify revenue streams.

Positive

• Revenue rose by 176.9% to $24.21 million
• Gross profit turned positive at $1.83 million, a significant recovery from a $0.17 million loss
• Operating losses decreased to $0.72 million from $2.87 million
• Current assets increased to $61.14 million with a working capital of $40.93 million
• Expansion into new tissue production lines and biomass technology

Negative

• Net loss increased to $4.34 million from $2.44 million
• EBITDA dropped to -$0.07 million from $1.04 million
• SG&A remains high at 10.6% of total revenue

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:
ir@itpackaging.cn
Tel: +86 0312 8698215

Investor Relations:
Janice Wang
EverGreen Consulting Inc.
Email: ir@changqingconsulting.com

 

 

 

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

 

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SOURCE IT Tech Packaging, Inc.

FAQ

What were IT Tech Packaging's revenues for Q1 2021?

IT Tech Packaging reported revenues of $24.21 million for Q1 2021, a 176.9% increase year-over-year.

What is the net loss for IT Tech Packaging in Q1 2021?

The net loss for IT Tech Packaging in Q1 2021 was $4.34 million, compared to $2.44 million in Q1 2020.

How did the gross profit change for IT Tech Packaging in Q1 2021?

The gross profit for IT Tech Packaging in Q1 2021 was $1.83 million, a substantial improvement from a gross loss of $0.17 million in Q1 2020.

What initiatives is IT Tech Packaging taking to improve revenue streams?

IT Tech Packaging is expanding its tissue production capacity and exploring opportunities in biomass technology.

What was the operating loss for IT Tech Packaging in Q1 2021?

The operating loss for IT Tech Packaging in Q1 2021 was $0.72 million, a reduction from $2.87 million in the previous year.