China Ceramics' : CCCL) CEO Jia Dong Huang on Q1 2016 Results - Earnings Call Transcript

China Ceramics Co. Ltd (NASDAQ:CCCL)

Q1 2016 Earnings Conference Call

June 02, 2016 08:00 AM ET

Executives

David Rudnick - Precept Investor Relations

Jia Dong Huang - Chairman & Chief Executive Officer

Edmund Hen - Chief Financial Officer

Analysts

Operator

Good morning. My name is Angie, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session [Operator Instructions].

I would now like to turn the conference over to David Rudnick. Please go ahead, sir.

David Rudnick

Thank you, Angie. Good morning, ladies and gentlemen, and good evening to those of you who are joining us from China. Welcome to China Ceramics first quarter 2016 earnings conference call. With us today are China Ceramics' Chairman and Chief Executive Officer, Mr. Jia Dong Huang; and its Chief Financial Officer, Mr. Edmund Hen.

Before I turn the call over to Mr. Huang, I remind our listeners that during this call, management's prepared remarks contain forward-looking statements which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from those discussed today. Refer to more detailed discussion of the risks and uncertainties in the Company's filings with the Securities and Exchange Commission. In addition, any projections as the Company's future performance represent management's estimates as of today, June 2, 2016. China Ceramics assumes no obligation to update these projections in the future as market conditions change.

To supplement the financial results presented in accordance with U.S. GAAP management will make reference to earnings before interest, taxes, depreciation and amortization which we will call by its abbreviated name EBITDA. EBITDA is a non-GAAP financial measure reconciled from net income, which the Company believes provide meaningful additional information to better understand its operating performance. A table reconciling net income to EBITDA can be found in the earnings press release issued earlier today.

And now, it's my pleasure to turn the call over to China Ceramic's Chairman and CEO, Mr. Jia Don Huang; and China Ceramic's CFO, Mr. Edmund Hen. Wei Shi Dai will be translating for Mr. Huang. Mr. Huang, you may proceed.

Jia Dong Huang

Thank you, David. On behalf of the Company, I would like to welcome everyone to our first quarter 2016 earnings conference call.

As anticipated, our first quarter 2016 revenue was substantially down from the year ago period reflecting the currently challenging market conditions in our sector in China. However, despite a 41% contraction in sales volume compared to the first quarter of 2015, we were able to report a reasonable level of cash flow in the first quarter. In addition, a decrease in our cost of sales including lower depreciation expenses enabled us to achieve improved profitability as compared to the year ago quarter.

In the first quarter, we maintained a reduced utilization of existing plant capacity based on the market environment in order to keep our operating costs low. We utilized the production facilities capable of producing 13 million square meters of ceramic tiles per year out of a total annual production capacity of 72 million square meters. We will bring additional capacity online as the business environment improves. Although sales volume in the first quarter was lower than in past periods. We saw sound demand for our higher margins ceramic tiles which sustained the average selling price of our product.