Keyuan Petrochemicals Inc. Announces Third Quarter 2013 Financial Results Net Income was approximately $2.8 million for the third quarter of 2013, a YOY increase of $9.7 million

NINGBO, China, Nov. 18, 2013 /PRNewswire-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the quarter ended September 30th, 2013.

"Although our sales volume in the last quarter was continued to be negatively impacted by the 40-day facilities shutdown in the second quarter of this year for the thorough routine inspection and maintenance that generally occurs every two years, there has been significant improvement of our sales during the last quarter comparing $94 million in the second quarter with $150.3 million in the third quarter. I believe that with our healthy backlog of sales and a clear growth strategy, Keyuan's core earnings potential will continue to improve in the next quarter and going forward," commented Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc.

Financial Summary


Q3 2013

Q3 2012

Chg.

9 Months 2013

9 Months 2012

Chg.

Sales

$150.3M

$164.3M

-8.5%

$453.8M

$532.1M

-14.7%

Gross Profit

$10.3M

$3.9M

164.7%

$21.4M

$19.8M

8.1%

Net Income/(Loss) (a)

$2.8 M

$(6.9)M

-

$5.2 M

$(4.0)M

-

EPS (Diluted)

$0.04

$(0.12)

-

$0.08

$(0.07)

-

Diluted Shares O/S

63.0M

57.6M

-

63.0M

57.6M

-

(a) Net Income/(Loss) attributable to KEYP stockholders.

Sales for the three months ended September 30, 2013 were approximately $150.3 million, compared to $164.3 million for the three months ended September 30, 2012, a decrease of $14 million, or 8.5%. The decrease was mainly due to lower sales quantities as a result of the 40-day production interruption in the quarter ended June 30, 2013. Normally it takes a short period of time for the facilities and equipment to reach to their optimum conditions after routine maintenance. The Company sold 129,066 tons of petrochemical and rubber products at an average price of $1,094 and $1,888 per metric ton, respectively, in the three months ended September 30, 2013, compared to 155,249 metric tons of petrochemical products and rubber products at an average price of $982 and $2,423 per metric ton, respectively, in the three months ended September 30, 2012. The average sales price for petrochemical products for the three months ended September 30, 2013 increased by approximately 11% compared to the same period of 2012. Petrochemical segment revenues for three months ended September 30, 2013 account for 86% of the total revenue. Although the average selling price during the three months ended September 30, 2013 was higher than that at the same period of 2012, the overall quantity of sold products decreased by 15%, which caused total sales for the three months ended September 30, 2013 to decline.

Sales for the nine months ended September 30, 2013 were approximately $453.8 million, compared to $532.1 million for the nine months ended September 30, 2012, a decrease of $78 million, or 14.7%.

Overall cost of sales was approximately $140.0 million for the three months ended September 30, 2013, or 93% of sales, as compared to the cost of approximately $160.5 million, or 98% of sales for the three months ended September 30, 2012. The decrease in the cost of sales was mainly due to the lower sales quantities due to the routine inspection and maintenance of the facilities in the quarter ended June 30, 2013 and the higher average selling price of $1,151 per metric ton for the three months ended September 30, 2013, as compared to $1,059 per ton for the three months ended September 30, 2012.

Overall cost of sales was approximately $432.4 million for the nine months ended September 30, 2013, or 95% of sales, as compared to approximately $512.3 million, or 96% of sales for the nine months ended September, 30, 2012.

Gross profit for the three months ended September 30, 2013 was approximately $10.3 million as compared to $3.9 million for the comparable period in 2012, an increase of approximately $6.4 million, or 164.7%. The increase was mainly due to the 9% of increase of average selling prices per metric ton to $1,151 for the three months ended September 30, 2013 from $1,059 per metric ton in the comparable period ended September 30, 2012.

Gross profit for the nine months ended September 30, 2013 for petrochemical segment and rubber segment was approximately $12.1 million and $ 9.3 million respectively, as compared to $15.6 million and $4.2 million, respectively, for the comparable period in 2012. The total combined gross margin increased from 3.7% for the nine months ended September 30, 2012 to 4.7 % for the nine months ended September 30, 2013.  The main reason for the increase in the gross margin is the higher average selling prices as discussed above.

Net Income was approximately $2.8 million for the three months ended September 30, 2013, as compared to net loss of approximately $6.9 million in the same period in 2012, an increase of $9.7 million. This increase was mainly due to the higher gross profit for the three months ended September 30, 2013, compared to the same period in 2012.

Net income was approximately $5.2 million for the nine months ended September 30, 2013, as compared to a net loss of approximately $4.0 million in the same period in 2012, an increase of $ 9.2 million.

Business updates

On August 9, 2013, the Company received approval for the Guangxi Project from the local government of Fangchengang City and announced the commencement of engineering and building construction for the project. The preliminary investigation for foundation piling was completed at the end of October, and the land leveling is expected to be completed by the end of 2013. The facility construction and piping lines installation are expected to be completed by the end of 2014.

As a part of the expansion plan, the Company intends to add 50,000 MT of new storage capacity in 2013, after which the total storage capacity will be 150,000 MT. Approximately 34,000 MT of new capacity has been completed through June 2013. The installation of pilings and pumps for storage tanks was completed at the end of October 2013. The project is currently in the anti-rust treatment and heating insulation stage.

About Keyuan Petrochemicals, Inc.

Keyuan Petrochemicals, Inc., established in 2007, through its PRC operating subsidiaries, Ningbo Keyuan Plastics Co., Ltd, Ningbo Keyuan Petrochemicals Co., Ltd, Keyuan Synthetic Rubbers Co., Ltd and Guangxi Keyuan Co., Ltd, is engaged in the manufacture and sale of various petrochemical products in the PRC. Having commenced production in October 2010, Keyuan's operations include an annual petrochemical manufacturing design capacity of 720,000 MT for a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. Keyuan also completed the construction of a Styrene-Butadience-Styrene (the "SBS") production facility with an annual production capacity of 70,000 MT in September 2011. One SBS production line began commercial production in December 2011 and the second line began commercial production in August 2012. In order to meet increasing market demand, Keyuan adjusted its original expansion project and is currently working to refine its manufacturing capacity to include an ABS production facility, an oil catalytic cracking processing facility, an increased annual design capacity of its ethylene-styrene facility from 80,000 MT to 200,000 MT, a transformer oil facility and an SSBR (Solution Polymerized Styrene Butadiene Rubber) production facility.

Cautionary Statement Regarding Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf months are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

 

KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)








September 30,


December 31,

2013


2012


(Unaudited)










ASSETS






Current assets:






Cash

$

23,614


$

23,378

Pledged bank deposits


353,131



201,252

Bills receivable


9,332



3,968

Accounts receivable


12,760



14,248

Inventories


64,632



48,634

Prepayments to suppliers


51,905



23,476

Consumption tax refund receivable


31,057



51,334

Amounts due from related parties


1,113



40

Other current assets


60,000



56,320

Deferred income tax assets


2,142



2,801

Total current assets


609,686



425,451







Property, plant and equipment, net


262,249



227,603

Intangible assets, net


1,019



880

Land use rights


10,734



10,708

VAT recoverable


2,343



2,232







Total assets

$

886,031


$

666,874







LIABILITIES AND STOCKHOLDERS' EQUITY






Current Liabilities:






Short-term bank borrowings

$

416,131


$

295,146

Bills payable


273,886



102,650

Accounts payable


52,794



130,387

Advances from customers


33,597



24,405

Accrued expenses and other payables


15,809



26,833

Income tax payable


1,034



2,344

Dividends payable


2,382



2,382

Amounts due to related parties


-



479

Total liabilities, all current


795,633



584,626







Series B convertible preferred stock:






Par value:$0.001; Authorized: 8000,000 shares issued and outstanding:






5,333,340 shares, liquidation preference $20,250


16,868



16,452







Commitments and contingencies


-



-







Stockholders' equity:






Common stock:






 Par value: $0.001; Authorized: 100,000,000 shares






 Issued and outstanding: 57,464,160 shares as at September 30, 2013 and December 31, 2012


58



58

Additional paid-in capital


51,556



50,653

Statutory reserve


4,076



4,071

Accumulated other comprehensive income


9,660



7,491

Retained earnings


8,180



3,523

Total stockholders' equity


73,530



65,796







Total liabilities and stockholders' equity

$

886,031


$

666,874

 

 

KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in thousands, except share and per share data)












Three Months Ended


Nine Months Ended

September 30,


September 30,



2013


2012



2013


2012

Sales

$

150,286

$

164,347


$

453,775

$

532,098

Cost of sales


140,030


160,472



432,389


512,330

Gross profit


10,256


3,875



21,386


19,768











Selling expenses


466


251



869


892

General and administration expenses


3,397


2,127



8,988


7,394

Total operating expenses


3,863


2,378



9,857


8,286











Income from operations


6,393


1,497



11,529


11,482











Other income (expense):










Interest income


2,461


1,519



6,363


4,341

Interest expense


-4,481


-5,864



-14,601


-13,173

Foreign exchange gain (loss) , net


1,044


331



7,249


-33

Other (expense) income, net


-1,342


-5,439



-2,437


-5,656

Total other (expense) income, net


-2,318


-9,453



-3,426


-14,521











Income (loss) before income taxes


4,075


-7,956



8,103


-3,039

Income tax expense (benefit)


1,284


-1,018



2,891


991

Net Income (loss) attributable to Keyuan Petrochemicals Inc. stockholders











2,791


-6,938



5,212


-4,030

Dividends to Series B convertible preferred stockholders











548


-



548


-











Net Income (loss) attributable to Keyuan Petrochemicals Inc. common stockholders

$

2,243

$

-6,938


$

4,664

$

-4,030





















Net Income (loss) attributable to Keyuan Petrochemicals Inc. stockholders

$

2,791

$

-6,938


$

5,212

$

-4,030











Other comprehensive income:










Foreign currency translation adjustment


538


-827



2,170


-697

Comprehensive income (loss)

$

3,329

$

-7,765


$

7,382

$

-4,727











Earnings (loss) per share:










Attributable to common stockholders:










-Basic

$

0.04

$

-0.12


$

0.08

$

-0.07

-Diluted

$

0.04

$

-0.12


$

0.08

$

-0.07

Weighted average number of shares of common stock used in calculation:










-Basic


57,646,160


57,646,160



57,646,160


57,646,160

-Diluted


62,979,500


57,646,160



62,579,500


57,646,160

 

 

KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands, except share data)








Nine Months Ended

September 30,


2013


2012

Cash flows from operating activities:






Net income (loss)

$

5,212


$

-4,030

Adjustments to reconcile net income (loss) to net cash used in operating activities:






Depreciation


8,865



7,341

Amortization


85



80

Land use rights amortization


344



339

Deferred income tax


726



-467

Share-based compensation expense


871



1,206

Changes in operating assets and liabilities:






 Bills receivable


-5,191



951

 Accounts receivable


1,735



-181

 Inventories


-14,496



-30,166

Prepayments to suppliers


-27,494



-13,211

 Consumption tax refund receivable


21,397



18,882

 Other current assets


-1,892



-6,491

 Accounts payable


-48,482



-54,641

 Account payable – related parties


-1,537



-625

Advances from (to) customers


8,424



23,526

 Income taxes payable


-1,356



57

 Accrued expenses and other payables


-4,202



-2,134

Net cash used in operating activities


-56,991



-59,564







Cash flows from investing activities:






Purchase of property, plant and equipment


-44,765



-27,415

Net cash used in investing activities


-44,765



-27,415







Cash flow from financing activities:






 Pledged bank deposits used for bank borrowings


-144,593



-43,821

 Proceeds from short-term bank borrowings


860,430



663,720

 Repayment of short-term bank borrowings


-780,146



-565,967

 Proceeds from bank notes


340,186



172,787

 Repayments of bank notes


-173,839



-129,313

Repayment of long term bank borrowings


-



-9,670

Net cash provided by financing activities


102,038



87,736







Effect of foreign currency exchange rate changes on cash


-46



-826







Net increase (decrease) in cash


236



-69







Cash at beginning of period


23,378



7,325

Cash at end of period

$

23,614


$

7,256







Supplemental disclosure of cash flow information:






 Income tax paid

$

3,521


$

1,821

 Interest paid, net of capitalized interest

$

15,497


$

9,265

 Non cash investing and financing activities:






 Payable for purchase of property, plant and equipment (net of VAT)

$

8,938


$

8,816

 

 

SOURCE Keyuan Petrochemicals, Inc.



RELATED LINKS
http://www.keyuanpetrochemicals.com

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