Second Quarter 2010 Highlights -- Revenue was $46.8 million for the three months ended June 30, 2010, a year-over-year increase of 58.0% -- Gross profit was $23.1 million for the three months ended June 30, 2010, a year-over-year increase of 75.4% -- Gross margin increased to 49.3% from 44.4% for the three months ended June 30, 2010 -- Income from operations was $21.9 million for the three months ended June 30, 2010, a year-over-year increase of 82.0% -- Operating margin was 46.8%, compared to 40.6% for the three months ended June 30, 2010 -- Net income was $16.4 million, or $0.47 per basic and diluted share for the three months ended June 30, 2010, an increase of 83.1% from $9.0 million, or $0.29 per basic and diluted share, a year ago -- Cash totaled $55.2 million as of June 30, 2010 -- Acquired bromine and crude salt production assets, bringing total annual bromine production capacity to 46,300 tonnes and annual crude salt production capacity to 550,000 tonnes -- Completed production line for wastewater treatment chemical additives and began trial production
Second Quarter 2010 Results
"We are pleased to report another strong quarter with solid double-digit
growth in both the top and bottom line. Our strong financial performance in
the second quarter was mainly due to the positive pricing environment for
bromine. For the three months ended
Gulf Resources' revenue was
Revenue from the chemical products segment was
Gross profit for the three months ended
Selling, general and administrative expenses for the three months ended
Income from operations for the three months ended
For the three months ended
Income taxes were
Net income was
Weighted average number of diluted shares for the three months ended
Results for Six Months
Revenues for the six months ended
Financial Condition
As of
The Company believes its available funds and cash flows generated from operations are sufficient to meet its anticipated ongoing operating needs for the next twelve months. However, the Company will likely need to raise additional capital in order to execute its ongoing program of acquiring unlicensed bromine and other properties.
Business Outlook
For the second half of the year, Gulf Resources plans to increase research and development activities in end-user markets for bromine and is assessing technologies as well as acquisition opportunities that increase its competitiveness in downstream industries.
"This year we will make a push for R&D in order to increase our
competitiveness in downstream bromine-based products, such as water treatment
chemicals and pharmaceutical intermediates, and to diversify our revenue
sources," said Mr. Liu. "We continue to evaluate acquisition targets to expand
our market share in bromine and crude salt production. With a limited number
of licensed properties in the bromine market, we expect to solidify our market
leadership with future acquisitions and increase production capacity to meet
the solid demand of bromine and crude salt end user markets in
"Following the rapid increase in the first half of the year, we have seen market prices of bromine begin to stabilize. However, we have successfully renegotiated contract prices with all of our major customers near current levels. We believe the new contract prices will allow us to benefit from the strong pricing environment and maintain our profitability," concluded Mr. Liu.
The Company reiterates guidance for revenue between
Conference Call
Gulf Resources' management will host a conference call on
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through two wholly-owned subsidiaries,
Shouguang City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin
Chemical Industry Co., Limited ("SYCI"). The Company believes that it is one
of the largest producers of bromine in
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, future product development and production capabilities, the market price of bromine, 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.
GULF RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollars) (UNAUDITED) June 30, 2010 December 31, 2009 Current Assets Cash $55,197,372 $45,536,735 Accounts receivable 25,057,316 14,960,002 Inventories 630,835 650,332 Prepayment and deposit 918,354 233,330 Prepaid land lease 58,850 46,133 Deferred tax asset 107,205 85,672 Other receivable -- 2,195,208 Total Current Assets 81,969,932 63,707,412 Property, plant and equipment, net 99,462,015 81,993,894 Prepaid land lease, net of current portion 716,858 721,862 Total Assets $182,148,805 $146,423,168 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued expenses $10,642,759 $5,823,745 Retention payable 1,104,750 660,150 Due to related parties 232,400 1,190 Taxes payable 8,889,490 5,555,113 Total Current Liabilities 20,869,399 12,040,198 Total Liabilities 20,869,399 12,040,198 Stockholders' Equity PREFERRED STOCK ; $0.001 par value; 1,000,000 shares authorized none outstanding $-- $-- COMMON STOCK; $0.0005 par value; 100,000,000 shares authorized; 34,640,007 and 34,541,066 shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively 17,320 17,271 Additional paid in capital 66,533,170 64,718,026 Retained earnings unappropriated 84,226,870 59,808,289 Retained earnings appropriated 5,679,769 5,679,769 Cumulative translation adjustment 4,822,277 4,159,615 Total Stockholders' Equity 161,279,406 134,382,970 Total Liabilities and Stockholders' Equity $182,148,805 $146,423,168 GULF RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in U.S. dollars) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2010 2009 2010 2009 NET REVENUE Net revenue $46,751,809 $29,590,897 $76,445,227 $53,224,436 OPERATING EXPENSES Cost of net revenue (23,689,903) (16,445,804) (39,925,402) (29,986,744) Sales, marketing and other operating expenses (75,687) (5,902) (75,687) (10,783) Research and development cost (377,220) (125,095) (502,422) (250,065) General and administrative expenses (731,593) (990,539) (3,009,084) (2,085,038) (24,874,403) (17,567,340) (43,512,595) (32,332,630) INCOME FROM OPERATIONS 21,877,406 12,023,557 32,932,632 20,891,806 OTHER INCOME (EXPENSES) Interest expense (52) (33) (226) (27,043) Interest income 59,824 23,762 113,584 45,792 Sundry income -- -- 21,998 -- INCOME BEFORE TAXES 21,937,178 12,047,286 33,067,988 20,910,555 INCOME TAXES (5,510,733) (3,075,682) (8,649,407) (5,405,837) NET INCOME $16,426,445 $8,971,604 $24,418,581 $15,504,718 EARNINGS PER SHARE: BASIC $0.47 $0.29 $0.71 $0.52 DILUTED $0.47 $0.29 $0.70 $0.52 WEIGHTED AVERAGE NUMBER OF SHARES: BASIC 34,587,479 30,542,211 34,574,514 29,860,581 DILUTED 34,738,667 30,542,211 34,750,714 29,860,581 GULF RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in U.S. dollars) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2010 2009 2010 2009 NET INCOME $16,426,445 $8,971,604 $24,418,581 $15,504,718 OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment 682,398 (6,200) 662,662 (55,638) COMPREHENSIVE INCOME $17,108,843 $8,965,404 $25,081,243 $15,449,080 GULF RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollars) (UNAUDITED) Six Months Ended June 30, 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES Net income $24,418,581 $15,504,718 Adjustments to reconcile net income Amortization of warrants -- 309,500 Amortization of prepaid expenses 46,379 7,983 Amortization of prepaid expenses by shares issued for consulting fee -- 32,232 Depreciation and amortization 4,787,674 3,026,880 Stock-based compensation expense 1,188,966 -- Deferred tax asset (21,445) -- Bad debt provision -- 61,455 Changes in assets and liabilities Accounts receivable (10,055,752) (475,162) Inventories 19,405 88,034 Prepayment and deposit (682,423) (410,997) Accounts payable and accrued expenses 4,920,174 419,562 Taxes payable 3,320,663 691,379 Net cash provided by operating activities 27,942,222 19,255,584 CASH FLOWS USED IN INVESTING ACTIVITIES Additions of prepaid land lease (50,940) -- Purchase of property, plant and equipment (20,283,022) (15,663,051) Construction in progress (551,699) (3,299,175) Net cash used in investing activities (20,885,661) (18,962,226) CASH FLOWS PROVIDED BY FINANCING ACTIVITIES Proceeds from exercising stock options 18,000 -- Proceeds from private placement 2,192,919 -- Advance from a related party 231,210 6,829,785 Net cash provided by financing activities 2,442,129 6,829,785 EFFECTS OF EXCHANGE RATE CHANGE ON CASH 161,947 (43,992) NET INCREASE IN CASH & CASH EQUIVALENT 9,660,637 7,079,151 CASH & CASH EQUIVALENT - BEGINNING OF PERIOD 45,536,735 30,878,044 CASH & CASH EQUIVALENT - END OF PERIOD $55,197,372 $37,957,195 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Income taxes $6,157,079 $4,615,907 Interest paid $226 $27,009 SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES Issuance of common stock for settlement of stockholder's notes payable $-- $21,287,493 Issuance of common stock for acquiring property, plant and equipment $608,227 $615,000 Issuance of common stock for exercising warrants $8 $-- For further information, please contact: Gulf Resources, Inc. David Wang, VP of Finance Email: gfre.2008@vip.163.com Helen Xu Email: beishengrong@vip.163.com Web: http://www.gulfresourcesinc.cn/ CCG Investor Relations Mr. Crocker Coulson, President Phone: +1-646-213-1915 Email: crocker.coulson@ccgir.com Web: http://www.ccgirasia.com/
SOURCE Gulf Resources, Inc.