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IT Tech Packaging, Inc. Announces First Quarter 2024 Unaudited Financial Results

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IT Tech Packaging, Inc. announced unaudited financial results for Q1 2024, reporting a revenue of $6.86 million with a profit of $0.40 million. Despite industry challenges, the company aims to optimize operations and explore new markets for growth.

Positive
  • The company reported an increase in gross profit by 224.08% to $0.40 million.

  • The gross profit margin improved by 7.21 percentage points to 5.81%.

  • The company aims to optimize raw material structure and minimize purchase price for production efficiency.

Negative
  • Revenue decreased by 65.32% to $6.86 million, mainly due to production suspensions.

  • Net loss increased by 37.08% to $3.75 million, with a loss per share of $0.37.

  • EBITDA decreased significantly to negative $0.02 million from $1.21 million.

Insights

Analyzing the first quarter financial results of IT Tech Packaging, Inc., it's evident that the company has experienced a significant decline in revenue of 65.32%, with total earnings reducing from approximately $19.79 million in Q1 2023 to about $6.86 million in Q1 2024. This sharp fall is primarily attributed to the production halt of their corrugating medium paper and tissue paper products. Notably, while the gross profit has turned positive compared to the previous year—a move from a gross loss of $0.28 million to a profit of $0.40 million—the net loss widened from $2.73 million to $3.75 million and EBITDA swung from a positive $1.21 million to negative $0.02 million.

The increase in Selling, General and Administrative (SG&A) expenses by 56.32% without a corresponding rise in revenue is a concerning factor that signifies potential inefficiencies and heightened operational costs. For an investor, this signals a challenging operational environment and a need for the company to reevaluate its cost structure. It's also essential to note that the company's operating loss margin expanded significantly, which may impact its ability to sustain operations without strategic adjustments.

From a market dynamics perspective, IT Tech Packaging's mention of sluggish demand and intense competition, both domestic and from imports, alongside interest rate hikes, provides a macroeconomic context for the industry's performance. Investors should be aware of these wider economic pressures, as they are likely to persist and can influence the company's ability to rebound in the near term.

The company's approach to combat these challenges includes optimizing raw material structure, exploring new products and market diversification, which are constructive strategies. However, their effectiveness will largely depend on the execution and market response in a tough economic climate. The proactive policies by the Chinese government to stimulate the economy could benefit the sector in the long run, yet the exact impact on IT Tech Packaging's bottom line remains uncertain, warranting a cautious outlook.

Looking closely at IT Tech Packaging's supply chain and inventory management, the increase in net inventory, though marginal, in conjunction with a significant revenue decline, could indicate overstocking or slowing demand that an investor would find troubling. While the company aims to maintain efficient production and quality control, the reported measures may not suffice if the demand for their products continues to drop.

It's also critical to assess the company's financial position and liquidity, as their current liabilities are close to overtaking current assets, which could put pressure on their working capital and liquidity status in the forthcoming quarters. The noted increase in net accounts receivable is another point of interest, suggesting potential collection challenges or extended credit terms in a bid to maintain sales, which could affect cash flows.

BAODING, China, May 10, 2024 /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, 2024.

Mr. Zhenyong Liu commented: "In the first quarter of FY2024, we realized revenue of approximately $6.86 million with a profit of $0.40 million. During the reporting period, domestic packaging paper suffered sluggish demand and prices. In addition, the increase in production capacity of the industry peers, more intense competition from import of finished products and interest rate hikes had posed persistent pressure on the industry. Despite these daunting challenges, China is actively launching various policies to simulate the economy and support enterprises, which is believed to be effective in boosting investment and domestic demand, thereby improving the business environment of the packaging paper industry. Looking forward, we will continue to optimize the raw material structure and minimize the purchase price to ensure production efficiency and consistent quality. We also will explore new products and new markets with appropriate price adjustments to capture greater market share. Meanwhile, we believe that together with the above measures, and better control of the inventory and working capital as well as cash flow, we will make the company a healthy operation in the near future."

First Quarter 2024 Unaudited Financial Results



For the Three Months Ended March 31,

 ($ millions)


2024


2023


% Change

 Revenues


6.86


19.79


-65.32 %

 Regular Corrugating Medium Paper ("CMP")*


5.75


16.47


-65.08 %

 Light-Weight CMP**


1.08


3.06


-64.83 %

 Offset Printing Paper


-


-


n/a

 Tissue Paper Products


-


0.22


n/a

  Face Masks


-


0.04


n/a








 Gross profit


0.40


-0.28


224.08 %

 Gross profit margin


5.81 %


-1.40 %


7.21 pp****

 Regular Corrugating Medium Paper ("CMP")*


5.68 %


1.93 %


3.75 pp****

 Light-Weight CMP**


3.32 %


3.96 %


-0.64 pp****

 Offset Printing Paper


-


-


n/a

 Tissue Paper Products***


-


-316.80 %


n/a

 Face Masks


-


-7.97 %


n/a








 Operating income


-3.50


-2.77


-26.31 %

 Net loss


-3.75


-2.73


-37.08 %

 EBITDA


-0.02


1.21


-101.65 %

 Basic and Diluted earnings per share


-0.37


-0.27


-37.04 %








 * Products from PM6







 ** Products from PM1







 *** Products from PM8 and PM9







 **** pp represents percentage points







 

  • Revenue decreased by 65.32% to approximately $6.86 million, mainly due to the production suspension of corrugating medium paper ("CMP") in January and February of 2024, and production suspension of tissue paper products in the first quarter of 2024.
  • Gross profit was approximately $0.40 million, compared with gross loss of $0.28 for the same period of last year. Total gross profit margin increased by 7.21 percentage point to 5.81%.  
  • Loss from operations was approximately $3.50million, compared to loss from operations of approximately $2.77 million for the same period of last year.
  • Net loss was approximately $3.75 million, or loss per share of $0.37, compared to net loss of approximately $2.73 million, or loss per share of $0.27, for the same period of last year.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") was approximately negative $0.02 million, compared to $1.21 million for the same period of last year.

Revenue

For the first quarter of 2024, total revenue decreased by 65.32%, to approximately $6.86 million from approximately $19.79 million for the same period of last year. This was mainly due to production suspension of corrugating medium paper ("CMP") in January and February of 2024, and production suspension of tissue paper products in the first quarter of 2024.

The following table summarizes revenue, volume and ASP by product for the first quarter of 2024 and 2023, respectively:



For the Three Months Ended March 31,



2024


2023



Revenue
($'000)


Volume
(tonne)


ASP
($/tonne)


Revenue
($'000)


Volume
(tonne)


ASP
($/tonne)

 Regular CMP


5,751


15,640


368


16,468


41,663


395

 Light-Weight CMP


1,076


3,030


355


3,060


8,019


382

 Offset Printing Paper


-


-


-


-


-


-

 Tissue Paper Products


-


-


-


223


191


1,167

 Total


6,827


18,670


366


19,751


49,873


396



Revenue
($'000)


Volume
(thousand
pieces)


ASP
($/thousand
pieces)


Revenue
($'000)


Volume
(thousand
pieces)


ASP
($/thousand
pieces)

 Face Masks


-


-


-


35


1,105


32

Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 65.04%, to approximately $6.83 million and accounted for 100% of total revenue for the first quarter of 2024, compared to approximately $19.53 million, or 98.67% of total revenue for the same period of last year. The Company sold 18,670 tonnes of CMP at an ASP of $366/tonne in the first quarter of 2024, compared to 49,682 tonnes at an ASP of $393/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP decreased by 65.08%, to approximately $5.75 million for the first quarter of 2024, compared to revenue of approximately $16.47 million for the same period of last year. The Company sold 15,640 tonnes of regular CMP at an ASP of $368/tonne during the first quarter of 2024, compared to 41,663 tonnes at an ASP of $395/tonne for the same period of last year. Revenue from light-weight CMP decreased by 64.83%, to approximately $1.08 million for the first quarter of 2024, compared to revenue of approximately $3.06  million for the same period of last year. The Company sold 3,030 tonnes of light-weight CMP at an ASP of $355/tonne for the first quarter of 2024, compared to 8,019 tonnes at an ASP of $382/tonne for the same period of last year.

Revenue from offset printing paper was $nil  for the first quarter of 2024 and 2023.

Revenue from tissue paper products was $nil and $222,953 for the three months ended March 31, 2024 and 2023, respectively. Production of tissue paper products was suspended during the first quarter of 2024.

Revenue generated from selling face mask were $nil and $35,637 for the three months ended March 31, 2024 and 2023, respectively.

Gross Profit (Loss) and Gross Margin

Total cost of sales decreased by 67.79%, to approximately $6.46 million for the first quarter of 2024 from approximately $20.07 million for the same period of last year. This was mainly due to the decrease in sales quantity and the decrease in the unit material costs of CMP.

Total gross profit was approximately $0.40 million for the first quarter of 2024, compare to the gross loss of approximately $0.28 million for the same period of last year as a result of factors described above. Overall gross profit margin was 5.81% for the first quarter of 2024, compared to gross loss margin of 1.40% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 5.68%, 3.32%, nil%, nil% and nil%, respectively, for the first quarter of 2024, compared to 1.93%, 3.96%, nil%, -316.80% and -7.97%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") increased by 56.32%, to approximately $3.90 million for the first quarter of 2024 from approximately $2.50 million for the same period of last year.

Loss from Operations

Loss from operations was approximately $3.50 million for the first quarter of 2024, a decrease of 26.31%, from $2.77 million for the same period of last year. Operating loss margin was 51.02% for the first quarter of 2024, compared to 14.01% for the same period of last year.

Net Loss

Net loss was approximately $3.75 million, or loss per share of $0.37 for the first quarter of 2024, compared to $2.73 million, or loss per share of $0.27 for the same period of last year.

EBITDA

EBITDA was approximately $-0.02 million for the first quarter of 2024, compared to  $1.21 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.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)









 For the Three Months Ended March 31,

 ($ millions)


2024



2023

 Net loss


-3.75



-2.73

 Add: Income tax


0.04



-

         Net interest expense


0.21



0.25

         Depreciation and amortization


3.48



3.69

 EBITDA


-0.02



1.21

Cash, Liquidity and Financial Position

As of March 31, 2024, 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 approximately $4.51 million, $9.69 million and $3.24 million, respectively, compared to  approximately $3.92 million, $8.03 million and $4.50 million, respectively, as of December 31, 2023.

Net accounts receivable was approximately $2.39 million as of March 31, 2024, compared to approximately $0.58 million as of December 31, 2023. Net inventory was approximately $3.49 million as of March 31, 2024, compared to approximately $3.56 million as of December 31, 2023. As of March 31, 2024, the Company had current assets of approximately $30.01 million and current liabilities of approximately $24.57 million, resulting in a working capital of approximately $5.44 million. This was compared to current assets of approximately $28.36 million and current liabilities of approximately $21.42 million, resulting in a working capital of approximately $6.94 million as of December 31, 2023.

Net cash provided by operating activities was approximately $0.62 million for the first quarter of 2024, compared to approximately $4.81 million for the same period of last year. Net cash used in investing activities was approximately $0.01 million for the first quarter of 2024, compared to approximately $0.30 million for the same period of last year. Net cash provided by financing activities was approximately $0.42 million for the first quarter of 2024, compared to approximately $2.56 for the same period of last year.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks 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 American 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: +86 312 8698215

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

(unaudited)




March 31,



December 31,



2024



2023

ASSETS
















Current Assets








Cash and bank balances


$

4,514,020



$

3,918,938

Restricted cash



903,540




472,983

Accounts receivable (net of allowance for doubtful
accounts of $48,697 and $11,745 as of March 31, 2024 and
December 31, 2023, respectively)



2,386,177




575,526

Inventories



3,492,364




3,555,235

Prepayments and other current assets



17,677,417




18,981,290

Due from related parties



1,041,314




853,929









Total current assets



30,014,832




28,357,901









Prepayment on property, plant and equipment



-




-

Operating lease right-of-use assets, net



503,221




528,648

Property, plant, and equipment, net



160,205,120




163,974,022

Value-added tax recoverable



1,872,931




1,883,078

Deferred tax asset non-current



-




-









Total Assets


$

192,596,104



$

194,743,649









LIABILITIES AND STOCKHOLDERS' EQUITY
















Current Liabilities








Short-term bank loans


$

845,666



$

423,567

Current portion of long-term loans



8,116,984




6,874,497

Lease liability



102,154




100,484

Accounts payable



241,779




4,991

Advance from customers



110,787




136,167

Notes payable



246,501




-

Due to related parties



730,095




728,869

Accrued payroll and employee benefits



310,687




237,842

Other payables and accrued liabilities



13,869,095




12,912,517









Total current liabilities



24,573,748




21,418,934









Long-term loans



3,241,720




4,503,932

Lease liability - non-current



491,908




483,866

Derivative liability



20




54









Total liabilities (including amounts of the consolidated
VIE without recourse to the Company of $21,648,803 and
$20,084,995 as of March 31, 2024 and December 31, 2023,
respectively)



28,307,396




26,406,786









Commitments and Contingencies
















Stockholders' Equity








Common stock, 50,000,000 shares authorized, $0.001 par
value per share, 10,065,920 shares issued and
outstanding as of March 31, 2024 and December, 31, 2023.



10,066




10,066

Additional paid-in capital



89,172,771




89,172,771

Statutory earnings reserve



6,080,574




6,080,574

Accumulated other comprehensive loss



(10,857,153)




(10,555,534)

Retained earnings



79,882,450




83,628,986









Total stockholders' equity



164,288,708




168,336,863









Total Liabilities and Stockholders' Equity


$

192,596,104



$

194,743,649

 

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)





Three Months Ended




March 31,




2024


2023









Revenues



$

6,863,841


$

19,790,877









Cost of sales




(6,464,728)



(20,067,876)









Gross Profit (Loss)




399,113



(276,999)









Selling, general and administrative expenses




(3,900,783)



(2,495,362)









Loss from Operations




(3,501,670)



(2,772,361)









Other Income (Expense):








Interest income




2,183



136,268

Interest expense




(210,290)



(249,169)

Gain (Loss) on derivative liability




34



152,097









Loss before Income Taxes




(3,709,743)



(2,733,165)









Provision for Income Taxes




(36,793)



-









Net Loss




(3,746,536)



(2,733,165)









Other Comprehensive (Loss) Income








Foreign currency translation adjustment




(301,619)



2,502,756









Total Comprehensive Loss



$

(4,048,155)


$

(230,409)









Losses Per Share:
















Basic and Diluted Losses per Share



$

(0.37)


$

(0.27)









Outstanding – Basic and Diluted




10,065,920



10,065,920

 

 

IT TECH PACKAGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR

THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)




Three Months Ended



March 31,



2024


2023








Cash Flows from Operating Activities:







Net income


$

(3,746,536)


$

(2,733,165)

Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation and amortization



3,481,788



3,686,243

(Gain) Loss on derivative liability



(34)



(152,097)

(Gain) Loss from disposal and impairment of property, plant and equipment

-



12,926

(Recovery from) Allowance for bad debts



36,942



(246,386)

Allowances for inventories, net



(2,951)




Changes in operating assets and liabilities:







Accounts receivable



(1,847,112)



(1,988,921)

Prepayments and other current assets



1,276,805



9,461,336

Inventories



59,612



(3,062,782)

Accounts payable



236,603



(5,101)

Advance from customers



(25,123)



-

Notes payable



246,299



-

Related parties



(187,484)



(128,625)

Accrued payroll and employee benefits



73,213



126,986

Other payables and accrued liabilities



1,022,398



263,712

Income taxes payable



-



(424,198)

Net Cash Provided by Operating Activities



624,420



4,809,928








Cash Flows from Investing Activities:







Purchases of property, plant and equipment



(9,027)



(295,018)

Net Cash Used in Investing Activities



(9,027)



(295,018)








Cash Flows from Financing Activities:







Proceeds from short term bank loans



422,488



-

Proceeds from long term loans



-



2,623,410

Repayment of bank loans



-



(2,915)

Payment of capital lease obligation



-



(55,849)








Net Cash Provided by Financing Activities



422,488



2,564,646








Effect of Exchange Rate Changes on Cash and Cash Equivalents



(12,242)



146,516








Net Increase in Cash and Cash Equivalents



1,025,639



7,226,072








Cash, Cash Equivalents and Restricted Cash - Beginning of Period



4,391,921



9,524,868








Cash, Cash Equivalents and Restricted Cash - End of Period


$

5,417,560


$

16,750,940








Supplemental Disclosure of Cash Flow Information:







Cash paid for interest, net of capitalized interest cost


$

137,340


$

84,040

Cash paid for income taxes


$

$36,793


$

424,198















Cash and bank balances



4,514,020



16,750,940

Restricted cash



903,540



-

Total cash, cash equivalents and restricted cash shown in the statement of cash flows



5,417,560



16,750,940

 

 

Cision View original content:https://www.prnewswire.com/news-releases/it-tech-packaging-inc-announces-first-quarter-2024-unaudited-financial-results-302142857.html

SOURCE IT Tech Packaging, Inc.

FAQ

What were IT Tech Packaging's Q1 2024 revenue and profit figures?

IT Tech Packaging reported a revenue of $6.86 million with a profit of $0.40 million for Q1 2024.

What were the main challenges faced by IT Tech Packaging during Q1 2024?

IT Tech Packaging faced challenges due to sluggish demand, pricing pressure, and competition in the packaging paper industry.

What measures is IT Tech Packaging taking to improve its business environment?

IT Tech Packaging aims to optimize raw material structure, minimize purchase price, explore new products and markets, and improve inventory and working capital management.

IT Tech Packaging, Inc.

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