Hebron Technology Co., Ltd. Reports Financial Results for the First Half of 2018
WENZHOU, China, Dec. 10, 2018 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") (Nasdaq: HEBT), a developer, manufacturer and installer of valves and pipe fittings for use in the pharmaceutical, biological, food and beverage, and other clean industries, today announced its financial results for the six months ended June 30, 2018.
Mr. Anyuan Sun, Chairman and Chief Executive Officer of Hebron, commented, "With revenues increasing by 33% to $10.33 million, our first half financial results reflected the impact of more projects being completed for our installation services during the six months ended June 30, 2018. With the multiple project wins and a growing project pipeline, we are confident about our near-term outlook and expect further growth to return in the near future."
Six Months Ended June 30, 2018 Financial Results
-- Total revenues increased by 33% to $10.33 million for the six months
ended June 30, 2018, from $7.74 million for the six months ended June
30, 2017. The increase in total revenues was because of an increase in
the number of projects and average revenues per project for installation
services and the increased sales in fluid equipment sales.
-- Gross and operating margins were 34% and (11)%, respectively, for the
six months ended June 30, 2018, compared to 37% and 2%, respectively,
for the same period of last year.
-- Net loss was $1.57 million, or a loss per share of $0.10 for the six
months ended June 30, 2018, compared to net loss of $0.34 million, or
loss per share of $0.02, for the same period of last year.
For the Six Months Ended June 30,
($ millions) 2018 2017
% Change
---
Revenues
Installation service 7.58 6.35 19%
Fluid equipment sales 2.75 1.39 98%
Gross profit 3.55 2.87 24%
Gross margin 34% 37%
(3)pp*
Installation service 43% 41%
2pp*
Fluid equipment sales 15% 21%
(6)pp*
Operating expenses 4.68 2.7 73%
Operating income (loss) (1.12) 0.17 (779)%
Operating margin (11)% 2%
13pp*
Net loss (1.57) (0.34) 362%
Net loss margin (15)% (4)%
(11)pp*
Basic and diluted loss per share (0.10) (0.02) 400%
*pp represents percentage points
Revenues
For the six months ended June 30, 2018, total revenues increased by $2.6 million, or 33%, to $10.3 million from $7.7 million for the same period of last year. The increase in total revenues was related to the increase in revenues from installation services as more works were completed during the six months ended June 30, 2018, and well as the increased sales in fluid equipment.
Revenues from installation services increased by $1.2 million, or 19.3%, to $7.6 million for the six months ended June 30, 2018 from $6.4 million for the same period of last year. We provided installation services for 3 projects with an average project revenue of $2.5 million during the six months ended June 30, 2018, compared to 3 projects with an average project revenue of $2.1 million during the same period of last year. Revenues from fluid equipment sales increased by $1.4 million, or 98.0%, to $2.7 million for the six months ended June 30, 2018 from $1.4 million for the same period of last year.
Cost of revenues and gross profit
Total cost of revenues increased by $1.9 million, or 39.1%, to $6.8 million for the six months ended June 30, 2018 from $4.9 million for the same period of last year. Overall gross profit increased by $0.7 million, or 23.9%, to $3.6 million for the six months ended June 30, 2018 from $2.9 million for the same period of last year. Overall gross margin was 34% for the six months ended June 30, 2018, down 3 percentage points from 37% for the same period of last year.
Cost of revenues for installation services increased by $0.5 million, or 13.2%, to $4.3 million for the six months ended June 30, 2018 from $3.8 million for the same period of last year. The increase in cost of revenues was in line with the increase in revenues for installation services. Gross profit for installation services increased by $0.7 million, or 26.9%, to $3.3 million for the six months ended June 30, 2018 from $2.6 million for the same period of last year. Gross margin for installation services was 43.4% for the six months ended June 30, 2018, compared to 40.6% for the same period of last year.
Cost of revenues for fluid equipment sales increased by $1.2 million, or 109.1%, to $2.3 million for the six months ended June 30, 2018 from $1.1 million for the same period of last year. Gross profit for fluid equipment sales increased by $0.1 million, or 33.3%, to $0.4 million for the six months ended June 30, 2018 from $0.3 million for the same period of last year. Gross margin for fluid equipment sales was 14.8% for the six months ended June 30, 2018, compared to 21.4% for the same period of last year. The decreased gross margin was due to the increased competition in equipment sales and because the Company sold more products with lower margin in this period.
Operating expenses
General and administrative expenses increased by $2.9 million, or 199.2%, to $4.4 million for the six months ended June 30, 2018 from $1.5 million for the same period of last year. The increase was mainly due to higher salaries for the management, higher bad debt expense recorded for long aging advances to vendors and higher amortization expense recorded for the new facilities. Selling expenses were $0.3 million for the six months ended June 30, 2018, compared to $0.7 million for the same period of last year. Research and development expenses were $NIL for the six months ended June 30, 2018, compared to $0.5 million for the same period of last year. The decrease in research and development expenses was mainly due to the lack of new R&D projects for the six months ended June 30, 2018, while we had a R&D project for developing an intelligent valve controller system during the six months ended June 30, 2017. As such, total operating expenses increased by $2.0 million, or 73.0%, to $4.7 million for the six months ended June 30, 2018 from $2.7 million for the same period of last year.
Operating income (loss)
Operating loss was $1.1 million for the six months ended June 30, 2018, decreased by $1.3 million, or 779.5%, compared to an operating income of $0.2 million for the same period of last year because of the increase in general and administrative expenses. Operating margin was (11)% for the six months ended June 30, 2018, compared to 2% for the same period of last year.
Income (loss) before income taxes and income tax
Loss before income taxes was $1.2 million for the six months ended June 30, 2018, compared to income before income tax of $0.1 million for the same period of last year. Income tax provision was $0.4 million for the six months ended June 30, 2018, compared to $0.5 million for the same period of last year.
Net loss and loss per share
Net loss was $1.6 million, or loss per share of $0.10 for the six months ended June 30, 2018, compared to net loss of $0.3 million, or loss per share of $0.02 for the same period of last year. The decrease in net earnings was primarily related to the increase in operating expenses.
Recent Update
Acquisition of Xuzhou Weijia Bio-Tech Co., Ltd.
On March 10, 2018, the Company entered into a share acquisition agreement (the "Agreement") with the sole shareholder of Xuzhou Weijia Bio-Tech Co., Ltd. ("Weijia Bio-Tech") and Weijia Bio-Tech to acquire 49% of the equity in Weijia Bio-Tech. As consideration, the Company was obligated to issue 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $$2,885,556) to the individuals designated by the selling shareholder of Weijia Bio-Tech. On or about April 11, 2018, the Company completed the process of acquiring 49% of the equity in Weijia Bio-Tech. On April 28, 2018, the Company completed the issuance of 1,442,778 unregistered Class A common shares pursuant to the Agreement, with an effective issuance date of April 9, 2018.
About Hebron Technology Co., Ltd.
Established in January 2005 and headquartered in Wenzhou City, Zhejiang Province, China, Hebron Technology Co., Ltd. ("Hebron" or the "Company") engages in research, development, and manufacture of highly specialized valves and pipe fitting products for use in the pharmaceutical, biological, food and beverage, and other clean industries. The Company also offers its customers comprehensive pipeline design, installation, construction, and ongoing maintenance services as holistic solution services. For more information about the Company, please visit www.xibolun.com.
Forward-Looking Statements
This press release contains information about Hebron's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Hebron encourages you to review other factors that may affect its future results in Hebron's registration statement and in its other filings with the Securities and Exchange Commission.
For more information, please contact:
In China:
Hebron Technology Co., Ltd.
Ms. Yingping Chen
Secretary
Phone: +86-180-6776-129
Email: IR@china-xbl.com
In the United States:
Ascent Investor Relations LLC
Ms. Tina Xiao
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com
HEBRON TECHNOLOGY CO., LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2018 2017
---
ASSETS
CURRENT ASSETS:
Cash $
884,436 $
3,220,781
Restricted cash 1,475,918 55,322
Contracts receivable, net 20,995,991 16,904,972
Accounts receivable, net 723,124 1,419,305
Notes receivable 689,171
Retainage receivables, net 2,972,461 2,564,404
Inventories 5,424,902 1,582,501
Prepayments and advances to suppliers, net 9,755,071 11,904,107
Other receivables, net 229,898 240,284
TOTAL CURRENT ASSETS 42,461,801 38,580,847
Long-term investment 2,885,556
Property and equipment at cost, net of accumulated depreciation 14,009,154 14,588,262
Land use right, net of accumulated amortization 1,039,608 1,086,148
Deferred tax assets 454,591 46,101
Prepayment on property and equipment 247,324
TOTAL ASSETS $
60,850,710 $
54,548,682
===
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term loans $
706,970 $
457,940
Accounts payable 5,191,560 1,332,106
Accrued expenses and other current liabilities 1,609,040 1,327,513
Other loan payable-current 179,182
Advances from customers 3,723,943 2,825,215
Taxes payable 7,574,611 7,067,593
TOTAL CURRENT LIABILITIES 18,806,124 13,189,549
Other loan payable - long term 176,139 411,683
Long-term loans 404,693 414,912
TOTAL LIABILITIES 19,386,956 14,016,144
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $0.001 par value, 50,000,000 shares authorized, 16,269,577 and 14,695,347 16,269 14,695
shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
Additional paid-in capital 13,270,947 10,237,965
Retained earnings 28,308,385 29,877,491
Accumulated other comprehensive gain (loss) (131,847) 402,387
TOTAL SHAREHOLDERS' EQUITY 41,463,754 40,532,538
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $
60,850,710 $
54,548,682
===
HEBRON TECHNOLOGY CO., LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
For the Six Months Ended June 30,
2018 2017
---
REVENUE
Installation service $
7,580,749 $
6,352,092
Fluid equipment sales 2,754,317 1,391,348
10,335,166 7,743,440
COST OF REVENUE
Cost of product and services 6,655,247 4,769,712
Business and sales related taxes 124,575 103,923
GROSS PROFIT 3,555,244 2,869,805
OPERATING EXPENSES
General and administrative expenses 4,396,710 1,469,722
Selling expenses 281,169 749,522
Research and development expenses 485,335
Total operating expenses 4,677,879 2,704,579
INCOME (LOSS) FROM OPERATIONS (1,122,635) 165,226
OTHER INCOME (EXPENSE)
Other income, net 1,736 2,256
Interest expense (56,314) (23,518)
Total other expense, net (54,578) (21,262)
INCOME (LOSS) BEFORE INCOME TAXES (1,177,213) 143,964
PROVISION FOR INCOME TAXES 391,892 487,298
NET LOSS $
(1,569,105) $
(343,334)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss) (534,234) 800,457
COMPREHENSIVE INCOME (LOSS) $
(2,103,339) $
457,123
===
Basic and diluted loss per common share
Basic and diluted $
(0.10) $
(0.02)
===
Weighted average number of shares outstanding
Basic and diluted 15,427,622 14,695,347
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SOURCE Hebron Technology Co., Ltd.
