IT Tech Packaging, Inc. Announces Second Quarter 2021 Unaudited Financial Results

BAODING, China, Aug. 10, 2021 /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, announced today its unaudited financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Unaudited Financial Results

• Revenue increased by 76.5% to $46.53 million, primarily attributable to the increase in sales volume of CMP and offset printing paper, as well as the increase in Average Selling Prices ("ASPs") of CMP and tissue paper products.
• Gross profit was $3.03 million, compared to $2.56 million for the same period of last year. Gross margin was 6.5%, compared to 9.7% for the same period of last year.
• Income from operations was $0.43 million, compared to the loss from operations of $0.80 million for the same period of last year. Operating income margin was 0.9% for the second quarter of 2021.
• Net loss was $0.45 million, or loss per share of $0.01, compared to net loss of $0.98 million, or loss per share of $0.04, for the same period of last year.
• Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $9.03 million, compared to $2.90 million for the same period of last year.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, "We continued to making improvements in the sales volume of CMP and offset printing paper products for this quarter. Our total revenue increased by 76.5% to $46.5 million, resulting from a 33.9% growth of overall sales volume and a 36.0% increase in average selling prices over all categories of products. We recorded a 18.4% increase of gross profit and an operating income of $0.43 million.

Amid robust domestic market demand for tissue paper products and improved production efficiency, we continue to expand our capacity by launching a new tissue paper production line("PM10")that will greatly boost our overall performance. The Company has obtained approval for surgical mask products from local Food and Drug Administration and has completed all preparation and testing works at the mask production line with an annual estimated production capacity of 45 million pieces of masks, potentially creating promising financial returns. The Company obtained the first batch of new utility patents to keep its great work on technology innovation in the future. In addition, we are also expanding the business to high and new technology business such as combined heat and power generation project utilizing bio mass technology project ("Biomass CHP Project") and expect to diversify our sources of revenue and ensure our stable modes of profit-making."        

Revenue

For the second quarter of 2021, total revenue increased by $20.17 million, or 76.5%, to $46.53 million from $26.36 million for the same period of last year. The increase in total revenue was mainly due to the increase in sales volume of CMP and offset printing paper and average selling prices of CMP and tissue paper products. The following table summarizes revenue, volume and ASPs by products for the second quarter of 2021 and 2020, respectively:

Revenue from CMP, including both regular CMP and Light-Weight CMP, increased by $14.94 million, or 68.3%, to $36.81 million and accounted for 79.1% of total revenue for the second quarter of 2021, compared to $21.87 million, or 83.0% of total revenue, for the same period of last year. The Company sold 73,998 tonnes of CMP at an ASP of $497/tonne in the second quarter of 2021, compared to 59,591 tonnes at an ASP of $367/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP increased by $12.88 million, or 74.1%, to $30.25 million, resulting from sales of 60,507 tonnes at an ASP of $500/tonne, during the second quarter of 2021, compared to revenue of $17.37 million, resulting from sales of 46,980 tonnes at an ASP of $370/tonne, for the same period of last year. Revenue from light-weight CMP increased by $2.06 million, or 45.7%, to $6.56 million, resulting from sales of 13,491 tonnes at an ASP of $486/tonne for the second quarter of 2021, compared to revenue of $4.50 million, resulting from sales of 12,611 tonnes at an ASP of $357/tonne for the same period of last year.

Revenue from offset printing paper increased by $5.92 million, or 469.2%, to $7.18 million for the second quarter of 2021, from $1.26 million for the same period of last year. The Company sold 10,415 tonnes of offset printing paper at an ASP of $690/tonne in the second quarter of 2021, compared to sales volume of 2,183 tonnes of offset printing paper at an ASP of $578/tonne for the same period of last year.

Revenue from tissue paper products increased by $0.05 million, or 2.0%, to $2.43 million, resulting from sales of 2,196 tonnes at an ASP of $1,106/tonne, for the second quarter of 2021, compared to revenue of $2.38 million, resulting from sales of 2,884 tonnes at an ASP of $825/tonne for the same period of last year.

Revenue generated from selling face masks was $0.11 million for the second quarter of 2021. The Company sold 2,635 thousand pieces of face masks in the second quarter of 2021.

Gross Profit (Loss) and Gross Profit (Loss) Margin

Total cost of sales increased by $19.70 million, or 82.8%, to $43.51 million for the second quarter of 2021, from $23.80 million for the same period of last year. The increase in total cost of sales was mainly due to the increase in sales volume of CMP and offset printing paper products, as well as increase in material costs. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products were $475, $454, $567 and $1,211, respectively, for the second quarter of 2021, compared to $336, $312, $441 and $955 per tonne, respectively, for the same period of last year. 

Total gross profit was $3.03 million for the second quarter of 2021, compare to the gross loss of $2.56 million for the same period of last year as a result of factors described above. Overall gross profit margin was 6.5% for the second quarter of 2021, compared to the gross loss margin of 9.7% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper and face mask products were 5.1%, 6.7%, 17.8%, -9.6% and 10.0%, respectively, for the second quarter of 2021, compared to  9.0%, 12.5%, 23.7%, -15.7% and 59.5%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") decreased by $0.76 million, or 22.6%, to $2.60 million for the second quarter of 2021 from $3.36 million for the same period of last year. As a percentage of total revenue, SG&A was 5.6% for the second quarter of 2021, compared to 12.7% for the same period of last year.

Loss from Operations

Income from operations was $0.43 million for the second quarter of 2021, compared to the loss from operations of $0.80 million for the same period of last year. The increase in income from operations was primarily due to the increase in gross profit and decrease in selling, general and administrative expenses. Operating income margin was 0.9% for the second quarter of 2021, compared to operating loss margin of 3.0% for the same period of last year.

Net Loss and Net Loss per Share

Net loss was $0.45 million, or $0.01 loss per basic and diluted share, for the second quarter of 2021, compare to the net loss of $0.98 million, or $0.04 per basic and diluted share, for the same period of last year.

EBITDA

EBITDA was $9.03 million for the second quarter of 2021, compared to $2.90 million for the same period of the prior 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.

First Half of 2021 Unaudited Financial Results

Revenue

For the first half of 2021, total revenue increased by $35.64 million, or 101.5%, to $70.74 million from $35.11 million for the same period of last year. The increase in total revenue was mainly due to the increase in sales volume of CMP and offset printing paper and average selling prices of CMP and tissue paper products. The following table summarizes revenue, volume and ASPs by products for the first half of 2021 and 2020, respectively:

Revenue from CMP, including both regular CMP and Light-Weight CMP, increased by $27.91 million, or 94.3%, to $57.53 million and accounted for 81.3% of total revenue for the first half of 2021, compared to $29.61 million, or 84.4% of total revenue, for the same period of last year. The Company sold 115,294 tonnes of CMP at an ASP of $499/tonne in the first half of 2021, compared to 78,267 tonnes at an ASP of $378/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP increased by $24.12 million, or 104.5%, to $47.22 million, resulting from sales of 94,133 tonnes at an ASP of $502/tonne, during the first half of 2021, compared to revenue of $23.09 million, resulting from sales of 60,767 tonnes at an ASP of $380/tonne, for the same period of last year. Revenue from light-weight CMP increased by $3.79 million, or 58.2%, to $10.31 million, resulting from sales of 21,161 tonnes at an ASP of $487/tonne for the first half of 2021, compared to revenue of $6.52 million, resulting from sales of 17,500 tonnes at an ASP of $372/tonne for the same period of last year.

Revenue from offset printing paper increased by $8.04 million, or 636.8%, to $9.30 million for the first half of 2021, from $1.26 million for the same period of last year. The Company sold 13,557 tonnes of offset printing paper at an ASP of $686/tonne in the first half of 2021, compared to sales volume of 2,183 tonnes of offset printing paper at an ASP of $578/tonne for the same period of last year.

Revenue from tissue paper products increased by $0.29 million, or 8.7%, to $3.68 million, resulting from sales of 3,317 tonnes at an ASP of $1,109/tonne, for the first half of 2021, compared to revenue of $3.39 million, resulting from sales of 4,069 tonnes at an ASP of $832/tonne for the same period of last year.

Revenue generated from selling face masks was $0.24 million for the first half of 2021. The Company sold 6,470 thousand pieces of face masks in the first half of 2021.

Gross Profit (Loss) and Gross Profit (Loss) Margin

Total cost of sales increased by $33.17 million, or 101.4%, to $65.88 million for the first half of 2021, from $32.72 million for the same period of last year. The increase in total cost of sales was mainly due to the increase in sales volume of CMP and offset printing paper products, as well as increase in material costs. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products were $470, $447, $562 and $1,317, respectively, for the first half of 2021, compared to $350, $325, $441 and $1,099, respectively, for the same period of last year. 

Total gross profit was $4.86 million for the first half of 2021, compare to $2.39 million for the same period of last year as a result of factors described above. Overall gross profit margin was 6.9% for the first half of 2021, compared to 6.8% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper and face mask products were 6.3%, 8.3%, 18.1%, -18.7% and 14.8%, respectively, for the first half of 2021, compared to  8.0%, 12.6%, 23.7%, -32.1% and 59.5%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") decreased by $0.90 million, or 14.9%, to $5.15 million for the first half of 2021 from $6.05 million for the same period of last year. Loss from Operations

Loss from operations was $0.29 million for the first half of 2021, compared to the loss from operations of $3.67 million for the same period of last year. The decrease in loss from operations was primarily due to the increase in gross profit and decrease in selling, general and administrative expenses. Operating loss margin was 0.4% for the first half of 2021, compared to operating loss margin of 10.4% for the same period of last year.

Net Loss and Net Loss per Share

Net loss was $4.79 million, or $0.10 loss per basic and diluted share, for the first half of 2021, compare to the net loss of $3.42 million, or $0.14 per basic and diluted share, for the same period of last year.

EBITDA

EBITDA was $8.96 million for the first half of 2021, compared to $3.96 million for the same period of the prior 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.

Cash, Liquidity and Financial Position

As of June 30, 2021, 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 $30.27 million, $10.29 million and $6.55 million, respectively, compared to $4.14 million, $12.16 million and $4.60 million, respectively, at the end of 2020.

Net accounts receivable was $5.59 million as of June 30, 2021, compared to $2.39 million as of December 31, 2020. Net inventory was $11.67 million as of June 30, 2021, compared to $1.23 million at the end of 2020. As of June 30, 2021, the Company had current assets of $63.74 million and current liabilities of $17.19 million, resulting in a working capital of $46.55 million. This was compared to current assets of $14.91 million and current liabilities of $18.34 million, resulting in a working capital deficit of $3.43 million at the end of 2020.

Net cash used in operating activities was $15.57 million for the first half of 2021, compared to net cash provided by operating activities of $5.86 million for the same period of last year. Net cash used in investing activities was $0.17 million for the first half of 2021, compared to $0.98 million for the same period of last year. Net cash provided by financing activities was $41.67 million for the first half of 2021, compared to net cash from financing activities of $2.27 for the same period of last year.

Recent development

On May 26, 2021, the Company announced it has officially obtained approval for surgical mask products from local Food and Drug Administration (FDA) in China Hebei province. IT Tech Packaging has also shown the result in public for the required period of time and is now eligible to produce (aseptic) single-use surgical and surgical masks.

On July 6, 2021, the Company announced that the Company's tissue paper research and development center has received a Level B scale-above Certification as an industrial R&D enterprise institution in Hebei province after on-site inspection by regulators. ITP has also been granted six new utility patent certificates on paper manufacturing related equipment by the State Intellectual Property Office.

Earnings Conference Call

The Company's management will host a conference call to discuss its second quarter 2021 financial results at 8:00 am US Eastern Time on Wednesday, August 11, 2021. To attend the conference call, please use the information below.

Date/Time: 8:00 am US Eastern Time (8:00 PM Beijing/Hong Kong Time) on Wednesday, August 11, 2021

Conference Title: IT Tech Packaging, Inc. Second Quarter 2021 Earnings Conference Call

Conference ID: 2582868

To attend the conference call, please register in advance of the conference using the link: http://apac.directeventreg.com/registration/event/2582868 to complete the online registration at least 15 minutes prior to the start of the call. Upon registering, the conference access information including participant dial-in numbers, a Direct Event passcode and a registrant ID will be provided to you via an email.

This conference call will be broadcast live on the Internet and can be accessed by all interested parties at  https://edge.media-server.com/mmc/p/ye5haonx. Please access the link at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software.

A playback will be available through 11:00 am ET on August 11, 2021 to 9:59 am ET on August 19, 2021. To listen, please dial+1-855-452-5696 if calling from the United States, or +61-281-990-299 if calling internationally. Use the conference ID 2582868 to access the replay.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products 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:
[email protected]  
Tel: +86 0312 8698215

Investor Relations:
Janice Wang
EverGreen Consulting Inc.
Email: [email protected]

SOURCE IT Tech Packaging, Inc.