BAODING, China, Aug. 13, 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 decreased by 12.56% to approximately $26.25 million, mainly due to the production suspension of offset printing paper and tissue paper products in the second quarter of 2024. Gross profit was approximately $3.27 million, compared with gross profit of $1.18 for the same period of last year. Total gross profit margin increased by 8.51 percentage point to 12.44%. Income from operations was approximately $0.55 million, compared to loss from operations of approximately $0.52 million for the same period of last year. Net loss was approximately $0.08 million, or loss per share of $0.01, compared to net loss of approximately $1.25 million, or loss per share of $0.12, for the same period of last year. Earnings before interest, taxes, depreciation and amortization ("EBITDA") was approximately $3.93 million, compared to $2.83 million for the same period of last year.
Revenue
For the second quarter of 2024, total revenue decreased by 12.56%, to approximately $26.25 million from approximately $30.02 million for the same period of last year. This was mainly due to the production suspension of offset printing paper and tissue paper products in the second quarter of 2024.
The following table summarizes revenue, volume and ASP by product for the second quarter of 2024 and 2023, respectively:
For the Three Months Ended June 30,
2024
2023
Revenue($’000)
Volume(tonne)
ASP($/tonne)
Revenue($’000)
Volume(tonne)
ASP($/tonne)
Regular CMP
21,984
62,813
350
21,931
60.063
365
Light-Weight CMP
4,229
12,552
337
4,544
12,877
353
Offset Printing Paper
–
–
–
3,156
5,403
584
Tissue Paper Products
–
–
–
344
293
1,175
Total
26,213
75,365
348
29,976
78,636
381
Revenue($’000)
Volume(thousandpieces)
ASP($/thousandpieces)
Revenue($’000)
Volume(thousandpieces)
ASP($/thousandpieces)
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 $2.83 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA(Amounts expressed in US$)
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 $49.81 million for the same period of last year. The increase in total revenue was mainly due to the production suspension of CMP in January and February of 2024, and production suspension of offset printing paper and tissue paper products in the first half of 2024.
The following table summarizes revenue, volume and ASP by product for the first half of 2024 and 2023, respectively:
For the Six Months Ended June 30,
2024
2023
Revenue($’000)
Volume(tonne)
ASP($/tonne)
Revenue($’000)
Volume(tonne)
ASP($/tonne)
Regular CMP
27,734
78,452
354
38,399
101,726
377
Light-Weight CMP
5,305
15,582
340
7,604
20,896
364
Offset Printing Paper
–
–
–
3,156
5,403
584
Tissue Paper Products
–
–
–
567
484
1,172
Total
33,040
94,034
351
49,726
128,509
387
Revenue($’000)
Volume(thousandpieces)
ASP($/thousandpieces)
Revenue($’000)
Volume(thousandpieces)
ASP($/thousandpieces)
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 $4.03 million for the same period of last year.
Note 1: Non-GAAP Financial Measures
In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.
Reconciliation of Net Income to EBITDA(Amounts expressed in US$)
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.CONDENSED CONSOLIDATED BALANCE SHEETSAS OF JUNE 30, 2024 AND DECEMBER 31, 2023(unaudited)
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$61,000 and $11,745 as of June 30, 2024 and December 31,2023, respectively)
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 VIEwithout recourse to the Company of $21,006,676 and$20,084,995 as of June 30, 2024 and December 31, 2023,respectively)
27,907,415
26,406,786
Commitments and Contingencies
Stockholders’ Equity
Common stock, 50,000,000 shares authorized, $0.001 par valueper share, 10,065,920 shares issued and outstanding as of June30, 2024 and December, 31, 2023.
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.CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023(Unaudited)
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.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023(Unaudited)
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
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