August 12, 2024
(press release)
–
BAODING, China, Aug. 12, 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 second quarter ended June 30, 2024. Second Quarter 2024 Unaudited Financial Results For the Three Months Ended June 30, ($ millions) 2024 2023 % Change Revenues 26.25 30.02 -12.56 % Regular Corrugating Medium Paper ("CMP")* 21.98 21.93 0.24 % Light-Weight CMP** 4.23 4.54 -6.93 % Offset Printing Paper - 3.16 n/a Tissue Paper Products - 0.34 n/a Face Masks - 0.04 n/a Gross profit (loss) 3.27 1.18 176.75 % Gross profit margin 12.44 % 3.93 % 8.51 pp**** Regular Corrugating Medium Paper ("CMP")* 12.22 % 6.81 % 5.41 pp**** Light-Weight CMP** 12.82 % 7.14 % 5.68 pp**** Offset Printing Paper - 2.42 % n/a Tissue Paper Products*** - -206.06 % n/a Face Masks - -8.06 % n/a Operating income (loss) 0.55 -0.52 205.60 % Net income (loss) -0.08 -1.25 93.80 % EBITDA 3.93 2.83 38.87 % Basic and Diluted earnings (loss) per share -0.01 -0.12 -93.33 % * Products from PM6 ** Products from PM1 *** Products from PM8 and PM9 **** pp represents percentage points Revenue For the second quarter of 2024, total revenue decreased by 12.56%, to approximately $26.25 million from approximately $30.02 million for the same period of last year. This was mainly due to the production suspension of offset printing paper and tissue paper products in the second quarter of 2024. The following table summarizes revenue, volume and ASP by product for the second quarter of 2024 and 2023, respectively: For the Three Months Ended June 30, 2024 2023 Revenue Volume ASP Revenue Volume ASP Regular CMP 21,984 62,813 350 21,931 60.063 365 Light-Weight CMP 4,229 12,552 337 4,544 12,877 353 Offset Printing Paper - - - 3,156 5,403 584 Tissue Paper Products - - - 344 293 1,175 Total 26,213 75,365 348 29,976 78,636 381 Revenue Volume ASP Revenue Volume ASP Face Masks - - - 44 1,411 31 Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 0.99%, to approximately $26.21 million and accounted for 99.86% of total revenue for the second quarter of 2024, compared to approximately $26.48 million, or 88.19% of total revenue for the same period of last year. The Company sold 75,365 tonnes of CMP at an ASP of $348/tonne in the second quarter of 2024, compared to 72,940 tonnes at an ASP of $363/tonne in the same period of last year. Of the total CMP sales, revenue from regular CMP increased by 0.24%, to approximately $21.98 million for the second quarter of 2024, compared to revenue of approximately $21.93 million for the same period of last year. The Company sold 62,813 tonnes of regular CMP at an ASP of $350/tonne during the second quarter of 2024, compared to 60,063 tonnes at an ASP of $365/tonne for the same period of last year. Revenue from light-weight CMP decreased by 6.93%, to approximately $4.23 million for the second quarter of 2024, compared to revenue of approximately $4.54 million for the same period of last year. The Company sold 12,552 tonnes of light-weight CMP at an ASP of $337/tonne for the second quarter of 2024, compared to 12,877 tonnes at an ASP of $353/tonne for the same period of last year. Revenue from offset printing paper was $nil and $3.16 million for the second quarter of 2024 and 2023. Production of offset printing products was suspended during the second quarter of 2024. Revenue from tissue paper products was $nil and $0.34 million for the three months ended June 30, 2024 and 2023, respectively. Production of tissue paper products was suspended during the second quarter of 2024. Revenue generated from selling face mask were $nil and $0.04 million for the three months ended June 30, 2024 and 2023, respectively. Gross Profit (Loss) and Gross Margin Total cost of sales decreased by 20.30%, to approximately $22.98 million for the second quarter of 2024 from approximately $28.84 million for the same period of last year. due to the decrease in sales quantity of offset printing paper and tissue paper products and the decrease of the unit material cost of CMP products. Total gross profit was approximately $3.27 million for the second quarter of 2024, compared to the gross profit of approximately $1.18 million for the same period of last year as a result of factors described above. Overall gross profit margin was 12.44% for the second quarter of 2024, compared to gross profit margin of 3.93% 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 12.22%, 12.82%, nil%, nil% and nil%, respectively, for the second quarter of 2024, compared to 6.81%, 7.14%, 2.42%, -206.06% and -8.06%, respectively, for the same period of last year. Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") increased by 105.35%, to approximately $2.72 million for the second quarter of 2024 from approximately $1.32 million for the same period of last year. The increase was mainly due to the increase in depreciation of idle fixed assets during production suspension. Income (Loss) from Operations Income from operations was approximately $0.55 million for the second quarter of 2024, an increase of 205.60%, from loss from operations of $0.52 million for the same period of last year. Operating margin was 2.09% for the second quarter of 2024, compared to operating loss margin was 1.73% for the same period of last year. Net Loss Net loss was approximately $0.08 million, or loss per share of $0.01 for the second quarter of 2024, compared to net loss of $1.25 million, or loss per share of $0.12 for the same period of last year. EBITDA EBITDA was approximately $3.93 million for the second quarter of 2024, compared to $2.83 million for the same period of last year. Note 1: Non-GAAP Financial Measures In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP. Reconciliation of Net Income to EBITDA For the Three Months Ended June 30, ($ millions) 2024 2023 Net income (loss) -0.08 -1.25 Add: Income tax 0.42 0.35 Net interest expense 0.21 0.27 Depreciation and amortization 3.38 3.46 EBITDA 3.93 2.83 First Half of 2024 Unaudited Financial Results For the Six Months Ended June 30, ($ millions) 2024 2023 % Change Revenues 33.11 49.81 -33.52 % Regular Corrugating Medium Paper ("CMP")* 27.73 38.40 -27.77 % Light-Weight CMP** 5.31 7.60 -30.23 % Offset Printing Paper - 3.16 n/a Tissue Paper Products - 0.57 n/a Face Masks - 0.08 n/a Gross profit (loss) 3.66 0.90 305.87 % Gross profit (loss) margin 11.07 % 1.81 % 9.26pp**** Regular Corrugating Medium Paper ("CMP")* 10.86 % 4.71 % 6.15 pp**** Light-Weight CMP** 10.90 5.86 % 5.04 pp**** Offset Printing Paper - 2.42 % n/a Tissue Paper Products*** - -249.58 % n/a Face Masks - -8.02 % n/a Operating income (loss) -2.95 -3.29 -10.24 % Net income (loss) -3.82 -3.99 -4.07 % EBITDA 3.91 4.03 -2.98 Basic and Diluted loss per share -0.38 -0.40 -5.00 % * Products from PM6 ** Products from PM1 *** Products from PM8 and PM9 **** pp represents percentage points Revenue For the first half of 2024, total revenue decreased by 33.52%, to approximately $33.11 million from approximately $49.81 million for the same period of last year. The increase in total revenue was mainly due to the production suspension of CMP in January and February of 2024, and production suspension of offset printing paper and tissue paper products in the first half of 2024. The following table summarizes revenue, volume and ASP by product for the first half of 2024 and 2023, respectively: For the Six Months Ended June 30, 2024 2023 Revenue Volume ASP Revenue Volume ASP Regular CMP 27,734 78,452 354 38,399 101,726 377 Light-Weight CMP 5,305 15,582 340 7,604 20,896 364 Offset Printing Paper - - - 3,156 5,403 584 Tissue Paper Products - - - 567 484 1,172 Total 33,040 94,034 351 49,726 128,509 387 Revenue Volume ASP Revenue Volume ASP Face Masks - - - 79 2,516 32 Revenue from CMP, including both regular CMP and light-Weight CMP, decreased by 28.18%, to approximately $33.04 million and accounted for 99.78% of total revenue for first half of 2024, compared to approximately $46.00million, or 92.36% of total revenue for the same period of last year. The Company sold 94,034tonnes of CMP at an ASP of $351/tonne in first half of 2024, compared to 122,622 tonnes at an ASP of $375/tonne in the same period of last year. Of the total CMP sales, revenue from regular CMP decreased by 27.77%, to approximately $27.73 million for first half of 2024, compared to revenue of approximately $38.40 million for the same period of last year. The Company sold 78,452 tonnes of regular CMP at an ASP of $354/tonne during the first half of 2024, compared to 101,726 tonnes at an ASP of $377/tonne for the same period of last year. Revenue from light-weight CMP decreased by 30.23%, to approximately $5.31 million for the first half of 2024, compared to revenue of approximately $7.60 million for the same period of last year. The Company sold 15,582 tonnesof light-weight CMP at an ASP of $340/tonne for the first half of 2024, compared to 20,896 tonnes at an ASP of $364/tonne for the same period of last year. Revenue from offset printing paper was $nil for the first half of 2024. Revenue from tissue paper products was $nil for the first half of 2024,from approximately $0.57 million for the same period of last year. The Company sold nil tonnes of tissue paper products for the first half of 2024, compared to 484 tonnes at an ASP of $1,172/tonne for the same period of last year. Revenue from face masks was $nil for the first half of 2024, from $0.08 million for the same period of last year. The Company sold nil thousand pieces of face masks for the first half of 2024, compared to 2,516 thousand pieces of face masks for the same period of last year. Gross Profit and Gross Margin Total cost of sales decreased by 39.79%, to approximately $29.45 million for the first half of 2024 from approximately $48.91million for the same period of last year. The increase was mainly a result of the decrease in sales quantity and the decrease in the unit material costs of CMP. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper, and tissue paper products were $315, $303,$nil and $nil, respectively, for the first half of 2024, compared to $360, $343, $570 and $4,097, respectively, for the same period of last year. Total gross profit was approximately $3.66 million for the first half of 2024, compared to the gross profit of approximately $0.90 million for the same period of last year as a result of factors described above. Overall gross margin was 11.07% for the first half of 2024, compared to 1.81% 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 10.86%, 10.90%, nil%, nil% and nil%, respectively, for the first half of 2024, compared to 4.71%, 5.86%, 2.42%, -249.58% and -8.02%, respectively, for the same period of last year. Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") increased by 73.31%, to approximately $6.62 million for the first half of 2024 from approximately $3.82 million for the same period of last year. Income (Loss) from Operations Loss from operations was approximately $2.95 million for the first half of 2024, representing a decrease of 10.24%, from loss from operations of approximately $3.29 million for the same period of last year. Operating loss margin was 8.92% for the first half of 2024, compared to operating loss margin of 6.61% for the same period of last year. Net Income (Loss) Net loss was approximately $3.82 million, or loss per share of $0.38, for the first half of 2024, compared to net loss of approximately $3.99 million, or loss per share of $0.40, for the same period of last year. EBITDA EBITDA was approximately $3.91 million for the first half of 2024, compared to approximately $4.03 million for the same period of last year. Note 1: Non-GAAP Financial Measures In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP. Reconciliation of Net Income to EBITDA For the Six Months Ended June 30, ($ millions) 2024 2023 Net income (loss) -3.82 -3.99 Add: Income tax 0.45 0.35 Net interest expense 0.42 0.52 Depreciation and amortization 6.86 7.15 EBITDA 3.91 4.03 Cash, Liquidity and Financial Position As of June 30, 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 $5.14 million, $8.39 million and $4.49 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 $2.64 million as of June 30, 2024, compared to approximately $0.58 million as of December 31, 2023. Net inventory was approximately $5.28 million as of June 30, 2024, compared to approximately $3.56 million as of December 31, 2023. As of June 30, 2024, the Company had current assets of approximately $33.43 million and current liabilities of approximately $22.92 million, resulting in a working capital of approximately $10.51 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 $1.35 million for the second quarter of 2024, compared to approximately $5.75 million for the same period of last year. Net cash used in investing activities was approximately $0.06 million for the second quarter of 2024, compared to approximately $5.57 million for the same period of last year. Net cash provided by financing activities was approximately $0.42 million for the second quarter of 2024, compared to approximately $2.82 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. IT TECH PACKAGING, INC. June 30, December 31, 2024 2023 ASSETS Current Assets Cash and bank balances $ 5,144,414 $ 3,918,938 Restricted cash 899,508 472,983 Accounts receivable (net of allowance for doubtful accounts of 2,638,219 575,526 Inventories 5,282,420 3,555,235 Prepayments and other current assets 18,246,164 18,981,290 Due from related parties 1,219,553 853,929 Total current assets 33,430,278 28,357,901 Operating lease right-of-use assets, net 476,771 528,648 Property, plant, and equipment, net 155,624,752 163,974,022 Value-added tax recoverable 1,830,425 1,883,078 Deferred tax asset non-current - - Total Assets $ 191,362,226 $ 194,743,649 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term bank loans $ 841,893 $ 423,567 Current portion of long-term loans 6,817,927 6,874,497 Lease liability 103,568 100,484 Accounts payable - 4,991 Advance from customers 73,386 136,167 Notes payable 429,451 - Due to related parties 731,486 728,869 Accrued payroll and employee benefits 369,565 237,842 Other payables and accrued liabilities 13,135,687 12,912,517 Income taxes payable 415,635 - Total current liabilities 22,918,598 21,418,934 Long-term loans 4,490,094 4,503,932 Lease liability - non-current 498,718 483,866 Derivative liability 5 54 Total liabilities (including amounts of the consolidated VIE 27,907,415 26,406,786 Commitments and Contingencies Stockholders' Equity Common stock, 50,000,000 shares authorized, $0.001 par value 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 (11,613,303) (10,555,534) Retained earnings 79,804,703 83,628,986 Total stockholders' equity 163,454,811 168,336,863 Total Liabilities and Stockholders' Equity $ 191,362,226 $ 194,743,649 IT TECH PACKAGING, INC. Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Revenues $ 26,249,788 $ 30,019,914 $ 33,113,629 $ 49,810,791 Cost of sales (22,984,488) (28,840,056) (29,449,216) (48,907,932) Gross Profit 3,265,300 1,179,858 3,664,413 902,859 Selling, general and administrative expenses (2,717,548) (1,323,405) (6,618,331) (3,818,767) Loss on impairment of assets - (375,136) - (375,136) Income (Loss) from Operations 547,752 (518,683) (2,953,918) (3,291,044) Other Income (Expense): Interest income 2,807 53,637 4,990 189,905 Interest expense (211,551) (270,681) (421,841) (519,850) Gain (Loss) on derivative liability 15 (166,506) 49 (14,409) Income (Loss) before Income Taxes 339,023 (902,233) (3,370,720) (3,635,398) Provision for Income Taxes (416,770) (351,260) (453,563) (351,260) Net Loss (77,747) (1,253,493) (3,824,283) (3,986,658) Other Comprehensive Loss Foreign currency translation adjustment (756,150) (9,063,695) (1,057,769) (6,560,939) Total Comprehensive Loss $ (833,897) $ (10,317,188) $ (4,882,052) $ (10,547,597) Losses Per Share: Basic and Diluted Losses per Share $ (0.008) $ (0.12) $ (0.38) $ (0.40) Outstanding – Basic and Diluted 10,065,920 10,065,920 10,065,920 10,065,920 IT TECH PACKAGING, INC. Six Months Ended June 30, 2024 2023 Cash Flows from Operating Activities: Net income $ (3,824,283) $ (3,986,658) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,862,883 7,150,057 (Gain) Loss on derivative liability (49) 14,409 Loss from disposal and impairment of property, plant and equipment - 501,934 (Recovery from) Allowance for bad debts 49,462 (830,847) Allowances for inventories, net (2,948) - Deferred tax - - Changes in operating assets and liabilities: Accounts receivable (2,121,357) (1,674,665) Prepayments and other current assets 660,470 7,634,922 Inventories (1,751,011) (3,940,417) Accounts payable (4,974) 127,215 Advance from customers (62,107) 10,567 Notes payable 430,624 - Related parties (369,287) (90,617) Accrued payroll and employee benefits 133,504 154,398 Other payables and accrued liabilities 928,640 743,936 Income taxes payable 416,770 (67,515) Net Cash Provided by Operating Activities 1,346,337 5,746,719 Cash Flows from Investing Activities: Purchases of property, plant and equipment (62,640) (5,565,713) Proceeds from sale of property, plant and equipment - - Acquisition of land - - Net Cash Used in Investing Activities (62,640) (5,565,713) Cash Flows from Financing Activities: Proceeds from issuance of shares and warrants, net - - Proceeds from short term bank loans 844,191 860,919 Proceeds from long term loans - 2,582,756 Repayment of bank loans (422,095) (507,942) Payment of capital lease obligation - (112,136) Loan to a related party (net) - - Net Cash Provided by Financing Activities 422,096 2,823,597 Effect of Exchange Rate Changes on Cash and Cash Equivalents (53,792) (548,712) Net Increase in Cash and Cash Equivalents 1,652,001 2,455,891 Cash, Cash Equivalents and Restricted Cash - Beginning of Period 4,391,921 9,524,868 Cash, Cash Equivalents and Restricted Cash - End of Period $ 6,043,922 $ 11,980,759 Supplemental Disclosure of Cash Flow Information: Cash paid for interest, net of capitalized interest cost $ 278,188 $ 199,014 Cash paid for income taxes $ 36,793 $ 418,775 Cash and bank balances 5,144,414 11,980,759 Restricted cash 899,508 - Total cash, cash equivalents and restricted cash shown in the statement of cash flows 6,043,922 11,980,759 SOURCE IT Tech Packaging, Inc.
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CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2024 AND DECEMBER 31, 2023
(unaudited)
$61,000 and $11,745 as of June 30, 2024 and December 31,
2023, respectively)
without recourse to the Company of $21,006,676 and
$20,084,995 as of June 30, 2024 and December 31, 2023,
respectively)
per share, 10,065,920 shares issued and outstanding as of June
30, 2024 and December, 31, 2023.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
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