Tantech Reports Full Year 2021 Financial Results

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Jul 18, 2022, 08:00 ET

Highlights (Full Year 2021 Compared to Full Year 2020)

30.7% Increase in Revenue to $55.3 Million
133.0% Increase in Gross Profit to $10.4 Million
8.3 Percentage Point Expansion in Gross Margin
$105.8 Million Current Asset Balance with $21.8 Million in Current Liabilities at December 31, 2021, with a $7.2 Million Market Capitalization at July 12, 2022

LISHUI, China, July 18, 2022 /PRNewswire/ -- Tantech Holdings Ltd (NASDAQ: TANH) ("Tantech" or the "Company"), a clean energy company, today reported its audited financial results for the twelve months ended December 31, 2021.

Mr. Wangfeng Yan, Chief Executive Officer of Tantech, said, "We achieved a record 30.7% increase in revenue to $55.3 million for the full year 2021 compared to the full year 2020. On top of that we drove a 133.0% increase in gross profit to 10.4 million, with an 8.3 percentage point expansion in gross margin. Our results are even more impressive given our team's ability to execute and remain focused in the face of the COVID-19 pandemic and closures in China, and global supply chain challenges. This impacted our profitability in 2021 and continues to in 2022 but we are working diligently with our supply chain partners to mitigate costs, secure inventory and best support demand from our customers."

Mr. Wangfeng Yan, Chief Executive Officer of Tantech, continued, "Overall, we are pleased with our continued execution on multiple fronts as we drove growth in our core business, made major progress in the transformation of our EV and specialty vehicles business, and strengthened our balance sheet. We are excited about opportunities in the specialty EV market based on customer feedback and forecasts for specialty EVs, including electric driverless street sweepers, supported by the global zero-emission vehicle trend, as well as favorable government policies and support in terms of subsidies, grants and tax rebates. Domestically, China has become the largest new energy vehicle market in the world led by the government's endorsement and its focus on petroleum resource independence, environmental protection and the 'Made in China 2025' industrial upgrade. We are already collaborating with technology companies and consultants on developing specialty EVs, and plan to invest heavily in this area in 2022."

"Finally," concluded Mr. Wangfeng Yan, Chief Executive Officer of Tantech, "the fact that we ended 2021 with a $105.8 million current asset balance with just $21.8 million in current liabilities – and our recent market capitalization was just $7.2 million – underscores the significant opportunity we believe exists to fund our growth initiatives and build value for shareholders. We are confident that we can achieve our goal by continuing to successfully execute and delivering positive proof points on our EV and speciality vehicle business transformation, while showing a further expansion in revenue and profit growth."

	Financial Results For the Twelve Months Ended December 31,
($ millions, except per share data and percentages)	2021			2020			Change
Revenues	$	55.3		$	42.3			30.7	%
Gross profit	$	10.4		$	4.5			133.0	%
Gross margin		18.9	%		10.6	%		8.3	percentage points
Operating expenses	$	18.9		$	14.8			27.8	%
Net (loss) income attributable to common stockholders of Tantech Holdings Ltd	$	(8.4)		$	(6.5)			28.2	%
Basic/Diluted (loss) earnings per share	$	(2.01)		$	(2.21)		$	(9.0)	%

Total revenue increased by approximately $13.0 million, or 30.7%, to approximately $55.3 million in fiscal 2021 from approximately $42.3 million in fiscal 2020. The increase was mainly attributable to the significant increase of our revenues from consumer products due to higher sales volume from existing and new customers. Revenue from Company's EV segment increased 382.4% to approximately $1.9 million in fiscal 2021, as compared to approximately $0.4 million in fiscal 2020, with increased sales of smart electronic sanitation vehicles, income from the sale of electric specialty vehicles and power batteries and commission income for electric specialty vehicles sold on behalf of other manufacturers.
Our gross profit increased by approximately $6.0 million, or 133.0% to approximately $10.4 million in fiscal 2021 from approximately $4.5 million in fiscal 2020. The gross profit margin was 18.9% in fiscal 2021, as compared to 10.6% in fiscal 2020. On a segment basis, gross margins for consumer product and EV segments were 18.7% and 24.2%, respectively, for fiscal 2021, compared to 10.7% and (3.0)%, respectively, for fiscal 2020. The increase in overall gross margin was primarily attributable to the higher selling price and lower unit cost related to consumer product segment and EV segment.
Research and development expenses increased by $7.2 million, or 804.8%, to $8.1 million in fiscal 2021 from $0.9 million in fiscal 2020. The increase was primarily due to the R&D activities in connection with our EV segment. During fiscal 2021, we increased our investment significantly for smart electric sanitation vehicles designed to be used in closed industrial parks and residential communities. We have successfully manufactured sanitation vehicles and generated revenue approximately $1.9 million from EV sales in fiscal year 2021.
Total operating expenses increased by $4.1 million, or 27.8%, to $18.9 million in fiscal 2021 from $14.8 million in fiscal 2020, which was mainly due to increases of approximately $7.9 million in general and administrative expense and $7.2 million in research and development expenses, offset by a decrease of approximately $12.0 million in impairment of intangible assets for fiscal 2021, as compared to of the fiscal 2020.
Loss before income tax was approximately $8.3 million in fiscal 2021, a decrease of approximately $2.4 million compared to a loss of approximately $10.6 million in fiscal 2020. The decrease was primarily attributable to an increase of approximately $6.0 million in gross profit compared to fiscal 2020.
As of December 31, 2021, the Company had cash and restricted cash on hand of approximately $43.6 million. Current assets were approximately $105.8 million and current liabilities were approximately $21.8 million, which resulted in a current ratio of 4.9:1. Total stockholders' equity as of December 31, 2021 was approximately $112.5 million.

About Tantech Holdings Ltd

For the past decade, Tantech has been a highly specialized high-tech enterprise producing, researching and developing bamboo charcoal-based products with an established domestic and international sales and distribution network. Since 2017, when the Company acquired 70% of Shangchi Automobile, a vehicle manufacturer based in Zhangjiagang City, Jiangsu Province, it has manufactured and sold vehicles. The Company established two new subsidiaries, Lishui Smart New Energy Automobile Co., Ltd. and Zhejiang Shangchi New Energy Automobile Co., Ltd., in November 2020, to produce and sell street sweepers and other electric vehicles. The Company is fully ISO 90000 and ISO 14000 certified and has received a number of national, provincial and local honors, awards and certifications for its products and scientific research efforts. The Company's subsidiary, First International Commercial Factoring (Shenzhen) Co., LTD, is engaged in commercial factoring for businesses in and related to its supply chain. In May 2022, the Company established a wholly-owned subsidiary, EPakia Inc. Based in the Mid-Atlantic region of the United States, EPakia plans to develop biodegradable packaging business in the United States and other international markets. For more information, please visit: http://ir.tantech.cn.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the sales, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the Company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as expressly required by applicable law.

Tantech Holdings Ltd and Subsidiaries
Consolidated Balance Sheets
(audited)

	For the Twelve Months Ended December 31,
	2021		2020
Assets
Current Assets
Cash and cash equivalents	$	43,144,049	$	37,119,195
Restricted cash		422,832		220,109
Accounts receivable, net		44,962,926		34,410,597
Inventories, net		1,069,698		671,251
Due from related party		10,354,051		-
Advances to suppliers, net		3,420,628		6,854,461
Advances to suppliers – related party		—		1,533,000
Prepaid taxes		1,609,466		1,046,667
Prepaid expenses and other receivables, net		824,239		45,467
Total Current Assets		105,807,889		81,900,747
Property, plant and equipment, net		2,103,947		2,477,912

Other Assets
Manufacturing rebate receivable		—		5,755,237
Intangible assets, net		205,971		664,033
Right of use assets		313,172		—
Long-term Investment		26,096,079		25,497,316
Total Other Assets		26,615,222		31,916,586
Total Assets (Note 3 at VIE)	$	134,527,058	$	116,295,245

Liabilities and Stockholders' Equity
Current Liabilities
Short-term bank loans	$	4,719,552	$	5,564,790
Bank acceptance notes payable		—		1,753,109
Accounts payable		1,563,787		1,543,994
Due to related parties		1,847,421		2,019,087
Customer deposits		3,580,622		3,183,088
Taxes payable		823,701		571,354
Loan payable to third parties		7,002,385		306,600
Lease liabilities-current		115,330		—
Accrued liabilities and other payables		2,114,258		1,861,835
Total Current Liabilities		21,767,056		16,803,857
Lease liabilities non-current		223,291		—
Total Liabilities		21,990,347		16,803,857

Stockholders' Equity
Common stock, $0.01 par value, 60,000,000 shares authorized, 6,399,460 and 3,589,409 shares issued and outstanding as of December 31, 2021 and 2020, respectively*		63,995		35,894
Additional paid-in capital		69,566,786		48,392,181
Statutory reserves		6,874,614		6,437,506
Retained earnings		36,684,794		45,480,031
Accumulated other comprehensive income (loss)		1,071,149		(1,493,070)
Total Stockholders' Equity attributable to the Company		114,261,338		98,852,542
Noncontrolling interest		(1,724,627)		638,846
Total Stockholders' Equity		112,536,711		99,491,388
Total Liabilities and Stockholders' Equity	$	134,527,058	$	116,295,245

*Retroactively restated for one-for-ten reverse split with effective date of February 25, 2022.
* please see "Note 3: Variable Interest Entities" in the notes accompanying the audited financial statements filed on the Company's Report of Foreign Private Issuer on Form 20-F dated July 18, 2022.

Tantech Holdings Ltd and Subsidiaries
Consolidated Statements of Comprehensive Loss
(audited)

	For the Twelve Months Ended
	December 31,
	2021		2020
Revenues	$	55,263,673	$	42,283,670
Cost of revenues		44,832,347		37,807,297
Gross Profit		10,431,326		4,476,373

Operating expenses
Selling expenses		221,364		977,201
General and administrative expenses		8,831,407		955,210
Share based compensation		1,840,000		—
Impairment of goodwill and intangible asset		—		11,998,606
Research and development expenses		8,053,400		890,316
Total operating expenses		18,946,171		14,821,333

Loss from operations		(8,514,845)		(10,344,960)

Other income (expenses)
Interest income		117,735		50,732
Interest expense		(740,400)		(300,125)
Rental income from related party		117,958		—
Gain from sale property to a related party		545,874		—
Other income (loss), net		210,176		(39,530)
Total other income (expenses)		251,343		(288,923)

Loss before income tax expense		(8,263,502)		(10,633,883)
Income tax expense (credit)		2,429,480		(611,655)
Net loss		(10,692,982)		(10,022,228)
Less: net loss attributable to noncontrolling interest		(2,334,853)		(3,501,808)
Net loss attributable to common stockholders of Tantech Holdings Ltd	$	(8,358,129)	$	(6,520,420)

Net loss		(10,692,982)		(10,022,228)
Other comprehensive income (loss):
Foreign currency translation adjustment		2,535,599		5,892,311
Comprehensive loss		(8,157,383)		(4,129,917)
Less: Comprehensive loss attributable to noncontrolling interest		(2,363,473)		(3,707,370)
Comprehensive loss attributable to common stockholders of Tantech Holdings Ltd	$	(5,793,910)	$	(422,547)

Loss per share - Basic and Diluted*	$	(2.01)	$	(2.21)
Weighted Average Shares Outstanding - Basic and Diluted Continuing operations and discontinued operations*		4,148,737		2,956,624

*Retroactively restated for one-for-ten reverse split with effective date of February 25, 2022.

Tantech Holdings Ltd and Subsidiaries
Consolidated Statements of Cash Flows
(audited)

	For the Twelve Months Ended,
	December 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(10,692,982)	$	(10,022,228)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Allowance (Reversal of) for doubtful accounts - accounts receivable		(52,789)		(845,416)
Reversal of allowance for doubtful accounts - advance to suppliers		(142,799)		(378,233)
Write off manufacturing rebate receivable		5,819,059		—
Reversal of allowance for doubtful accounts – other receivables		—		(84,573)
Share based compensation		1,840,000		—
Inventory reserve		359,501		92,064
Impairment of goodwill and intangible asset		—		11,998,606
Decrease in deferred tax liability		—		(1,799,791)
Depreciation expense		444,462		436,427
Amortization of intangible asset		472,140		441,489
Amortization of right of use assets		44,964		—
(Gain) Loss from disposal of property, plant and equipment		(545,844)		68,614
Issuance of common stock for service		—		33,812
Contingent liability		535,389		—
Changes in operating assets and liabilities:
Accounts receivable - non-related party		(9,573,463)		8,024,036
Advances to suppliers		3,694,066		7,093,022
Advances to suppliers - related party		1,550,000		(1,448,000)
Inventory		(737,552)		(125,492)
Prepaid expenses and other receivables		(768,288)		133,768
Manufacturing rebate receivable				2,374,720
Accounts payable		(16,266)		(206,261)
Accrued liabilities and other payables		(323,441)		313,552
Customer deposits		318,875		(3,792,409)
Collection of receivables from discontinued operations		—		—
Lease liabilities		(19,824)		—
Taxes payable		(295,666)		1,863,853
Net cash (used in) provided by operating activities		(8,090,458)		14,171,560

Cash flows from investing activities
Acquisition of property, plant and equipment		(220,308)		(144,806)
Proceeds from disposal of property, plant and equipment		748,612		21,842
Additions to intangible assets		(4,220)		—
Net cash provided by (used in) investing activities		524,084		(122,964)

Cash flows from financing activities
Proceeds from loans from third parties		6,917,589		—
Repayment of loans from third parties		(310,000)		—
Bank acceptance notes payable, net of repayment		(1,772,550)		1,448,667
Proceeds from bank loans		7,774,800		9,568,384
Repayment of bank loans		(8,738,900)		(11,230,688)
Proceeds from (repayment of) loans from related parties, net		(10,428,196)		98,474
Proceeds from issuance of common stock and warrants		19,362,706		9,055,232
Net cash provided by) financing activities		12,805,449		8,940,069

Effect of exchange rate changes on cash, restricted cash and cash equivalents		988,502		1,704,662

Net increase in cash, restricted cash and cash equivalents		6,227,577		24,693,327

Cash, restricted cash and cash equivalents, beginning of year		37,339,304		12,645,977

Cash, restricted cash and cash equivalents, end of year	$	43,566,881	$	37,339,304

Supplemental disclosure information:
Income taxes paid	$	2,278,134	$	436,566
Interest paid	$	265,248	$	308,690

Supplemental non-cash activities:
Common shares issued for service	$	1,840,000	$	33,812