Tantech Holdings Ltd. Announces Fiscal Year 2018 Financial Results
LISHUI, China, May 15, 2019 /PRNewswire/ -- Tantech Holdings Ltd. (NASDAQ: TANH), ("Tantech" or the "Company"), an alternative energy company with diversified operations, including the manufacturing of bamboo-based charcoal products and Electric Vehicles (EVs), today announced its financial results for its fiscal year ended December 31, 2018.
Financial Highlights (All Figures Approximated)
-- Total revenues decreased by approximately $12.7 million, or 30.1%, to approximately $29.6 million -- Total gross profit from the following segments decreased by 23.9%, or approximately $2.5 million, to $8.0 million - Gross profit from the Company's consumer products segment decreased by 1.9%, or $0.15 million, to $8.04 million - Gross profit from the Company's trading segment increased by 17.0%, or $0.1 million, to $0.5million - Gross profit from the Company's electronic vehicle segment decreased by 126%, or $2.4 million, to $0.50 million -- Despite the overall decline in revenues and gross profit, the Company was still able to achieve net income attributable to common stockholders of $2.0 million, or $0.07 per share, for fiscal year 2018.
Mr. Zhengyu Wang, Chairman and CEO of Tantech said: "Tantech's overall performance in 2018 did not meet our expectations due to a much more competitive business environment, which led to lower sales of certain products. However, as the Company further streamlined its business lines in 2018, we have reduced the supply chain risks and made some breakthroughs in business, laying down a solid foundation for future growth. As such, we expect that both revenue and earnings growth will be improved this year compared with 2018."
"This year and beyond, the company will focus on manufacturing and selling bamboo charcoal-based consumer products and environment-friendly electric motor vehicles. Since 2019, the Chinese government has further reduced its subsidy for electric motor vehicles. As a result, we expect to receive fewer subsidies from the government going forward. In the past years, during which the Company's sales of electric motor vehicles were subsidized by the government, it took the Company two to three years to recover the subsidies, which contributed to a large accounts receivable balance. As a specialist in the electric logistics vehicle market, the Company expects to continue to improve its competitiveness so as to reach more customers and improve the Company's cash management. Also, the Company expects to expand into the auto parts sector, capitalizing on its rich customer resources in the automotive industry to build a strong brand image in the industry. In addition, assuming sufficient cash flow, the Company expects to increase investment in the mining sector. In 2018, the Company's 18% equity interest in Libo Haokun, a marble mining company, saw an increase in book value, which to some extent improved shareholder returns. " Mr. Wang concluded.
Full Year 2018 Financial Results
Revenues
Revenues decreased by approximately $12.7 million, or 30.1%, to approximately $29.6 million in fiscal 2018 from approximately $42.3 million in fiscal 2017. The decrease was mainly attributable to the significant decrease of our consumer products and electronic vehicle ("EV") segments due to a change of our business strategy and less customer demand. The revenue from our trading segment increased due to higher demands.
For the Twelve Months Ended December 31, 2018 2017 Revenues Gross Gross Revenues Gross Gross ($'000) Profit Margin ($'000) Profit Margin ($'000) (%) ($'000) (%) Consumer product 22,388 8,040 35.9% 31,889 8,196 25.7% Trading 3,777 487 12.9% 1,829 417 22.8% Electric Vehicles 3,396 (498) (14.7)% 8,579 1,943 22.6% Total 29,561 8,029 27.2% 40,297 10,556 25%
Revenues from the Company's consumer product segment decreased by $9.5 million, or 29.8%, to $22.4 million for fiscal 2018 from $31.9 million for the prior fiscal year. The gross margin of the Company's consumer product segment increased from 25.7% in fiscal 2017 to 35.9% in fiscal 2018. The decrease in revenue from the consumer product segment in 2018 was due to the following reasons. First, as a result of increasing competition from E-commerce retailers and the change of shopping habits among younger consumers, potential customers are increasingly buying consumer products online with unknown brands in order to save money. Therefore, orders from the Company's customers for its consumer products decreased considerably. Second, in 2018, the Company reduced its cooperation with certain supermarket customers with low selling prices and unfavorable profit margins. And third, in response to market competition, the Company also reduced sales of less popular products with lower gross margin. The overall decrease in the Company's revenue from its consumer product segments reflected the above factors.
Revenue from the Company's trading segment was approximately $3.8 million in fiscal 2018, an increase of 106% from $1.9 million in fiscal 2017. Starting in fiscal 2017, the Company focused on promoting its "Charcoal Doctor" products in the market. As a result, domestic sales of "Charcoal Doctor" products have increased significantly. The decline in gross margin in fiscal 2018 compared to fiscal 2017 was due to the fact that almost all the Company's sales were made to the Chinese domestic market which have lower margins.
In July 2017, the Company completed the acquisition of a 70% equity interest of Suzhou E-Motors Co., Ltd, which became known as Shangchi Automobile in 2019 ("Shangchi Automobile"), a specialty electric vehicles and power batteries manufacturer based in Jiangsu Province, China. The revenue for this EV segment was approximately $3.4 million in fiscal 2018 with negative gross margin of 14.7%. The Company sold 110 types of logistic electronic cars in fiscal 2018 with average price of approximately $15,000, and the Company expects sales growth in fiscal 2019.
Cost of revenues
Cost of revenues decreased by approximately $10.2 million, or 32.2%, to approximately $21.5 million in fiscal 2018 from approximately $31.7 million in fiscal 2017. As a percentage of revenues, the cost of revenue decreased to 73% in fiscal 2018 from 75% in fiscal 2017. The decrease in cost of revenues as a percentage of revenues in fiscal 2018 was mainly attributable to the lower cost of revenues from the consumer products and EV segments due to lower sales. On the other hand, the cost of revenue for trading segment increased to in line with the increased sales.
Gross profit
Gross profit decreased by approximately $2.5 million, or 23.9%, to approximately $8.0 million in fiscal 2018 from approximately $10.5 million in fiscal 2017. The gross profit margin was 27.2% in fiscal 2018, as compared to 25.0% in fiscal 2017. On a segment-by-segment basis, gross margins for consumer product, trading and EV were 35.9%, 12.9%, and (14.7%), respectively, for fiscal 2018, compared to 25.7%, 22.8% and 22.6%, respectively, for fiscal 2017. The decrease in gross margin was primarily attributable to lower selling prices in the trading segment and EV segment in fiscal 2018.
Selling expenses
Selling expenses decreased by approximately $0.4 million to approximately $0.3 million in fiscal 2018 compared to approximately $0.7 million in fiscal 2017. As a percentage of sales, selling expenses were 1.1% of revenues in fiscal 2018, as compared to 1.7% of revenues in fiscal 2017. The decrease of the selling expenses was mainly attribute to decreased sales.
General and administrative expenses
General and administrative expenses increased by approximately $0.3 million, or 7.5%, to approximately $4.9 million in fiscal 2018 from approximately $4.6 million in fiscal 2017. As a percentage of revenues, general and administrative expenses increased to 16.8% in fiscal 2018, compared to 10.9% in fiscal 2017. The slight increase was primarily attributable to the fact that $0.2 million more bad debt and inventory impairment provision was recorded in fiscal 2018.
Research and development expenses
Research and development expenses decreased by $0.2 million, or 38.4%, to $0.4 million in fiscal 2018 from $0.6 million in fiscal 2017. The decrease was primarily due to less R&D activity during fiscal 2018 due to a change of business strategies. We intend to spend more resources on R&D for our electric vehicle segment going forward.
Provision for income taxes
Provision for income taxes was approximately $1.0 million in fiscal 2018, a decrease of approximately $0.5 million or 32.5%, from approximately $1.5 million in fiscal 2017. The decrease was mainly due to lower income before income taxes from continuing operations in fiscal 2018 compared to fiscal 2017. The Company provided full valuation allowance in fiscal 2018 on bad debt reserves due to uncertainties in realizing those tax benefits in the future.
Net income attributable to common stockholders
Net income attributable to common stockholders was approximately $2.0 million in fiscal 2018, a decrease of approximately $1.8 million from approximately $3.8 million in fiscal 2017. The decrease was attributable to a general overall decline of revenue and gross profits. As of December 31, 2018, the Company ceased operating Tantech Babiku and Lishui Zhongzhu, and it is planning to sell the remaining operations of Tantech Energy because of a business strategy change. The net income for these discontinued operations was approximately $0.08 million in fiscal 2018 compared to $0.07 million in fiscal 2017.
Recent Updates
On February 26, 2019, Tantech Charcoal entered into a short term loan agreement with Bank of China (Lishui Branch) to borrow approximately $1.5 million (RMB 10 million) for one year with an annual interest rate of 4.35%. The purpose of the loan was for working capital needs. The loan was guaranteed by Tantech Bamboo, two individual related parties, Zhengyu Wang and Yefang Zhang and a third party, Zhejiang Meifeng Tea Industry Co., Ltd. The loan was also collateralized by two properties owned by Zhengyu Wang and Yefang Zhang.
On March 18, 2019, Tantech Bamboo entered into a short-term loan agreement with Bank of China (Lishui Branch) to borrow approximately $2.8 million (RMB 18.78 million) with an annual interest rate of 6.05%. Repayment of principal of approximately $150,000 (RMB 1 million) will be due on January 14, 2020 and the repayment of the remaining principal of approximately $2.7 million (RMB17,780,000) will be due on March 17, 2020. The purpose of the loan was to fund working capital needs. The loan was collateralized by building and land use right of Tantech Bamboo with maximum guaranteed amount up to approximately $3.9 million (RMB25,960,000). The loan was also guaranteed by three related parties, Zhengyu Wang, CEO of the Company and his wife, Yefang Zhang and Lishui Jiuanju Trading Co., Ltd., the president of which was also the COO of the Company.
About Tantech Holdings Ltd.
Established in 2001 and headquartered in Lishui City, Zhejiang Province, China, Tantech Holdings Ltd., together with its subsidiaries, develops and manufactures bamboo-based charcoal products in China and internationally. It operates through three segments: Consumer Products, Trading, and electronic vehicle. The Company provides its products for industrial energy applications, as well as household cooking, heating, purification, agricultural, and cleaning uses. The company also exports its bamboo vinegar, bamboo charcoal purification, and EDLC carbon products. For more information about Tantech Holdings Ltd., please visit: http://www.tantech.cn/en/index.asp
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 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.
For more information please contact:
Tantech Holdings Ltd.
Ms. Ye Ren
IR Manager
+86-578-261-2869
ir@tantech.cn
Tantech Holdings Ltd and Subsidiaries Consolidated Balance Sheets December 31, December 31, 2018 2017 --- Assets Current Assets Cash and cash equivalents $ 7,748,416 $ 9,717,909 Restricted cash 2,121,377 3,901,526 Notes receivable 15,370 Accounts receivable, net 32,495,361 44,832,946 Inventories, net 1,957,058 2,572,558 Advances to suppliers, net 14,387,228 11,217,764 Prepaid value-added taxes 2,136,988 2,969,656 Prepaid expenses and other receivables, net 954,362 1,685,120 Current assets from discontinued operations 8,513,154 12,332,035 Total current assets 70,313,944 89,244,884 Property, plant and equipment, net 3,240,620 3,374,879 Other Assets Advances to suppliers 2,109,005 Manufacturing rebate receivable 9,795,512 9,269,118 Intangible assets, net 15,268,062 15,976,144 Long-term Investment 18,156,000 Goodwill 8,861,361 9,001,924 Non-current assets from discontinued operations 8,558,515 9,511,772 Total Assets $ 134,194,014 $ 138,487,726 === Liabilities and Stockholders' Equity Current Liabilities Short-term bank loans $ 7,683,014 $ 5,208,893 Bank acceptance notes payable 2,121,377 6,975,526 Accounts payable 2,524,462 5,335,363 Due to related parties 2,102,175 2,995,228 Customer deposits 865,615 1,001,726 Taxes payable 344,563 542,392 Due to third parties 3,253,253 708,864 Accrued liabilities and other payables 1,598,104 1,564,336 Liabilities from discontinued operations 1,662,252 2,456,934 Total Current Liabilities 22,154,815 26,789,262 Deferred tax liability 2,053,512 2,086,086 Total Liabilities 24,208,327 28,875,348 Stockholders' Equity Common stock, $0.001 par value, 50,000,000 shares authorized, 28,853,242 and 28,703,242 shares issued and outstanding as of December 31, 2018 and 2017, respectively 28,853 28,703 Additional paid-in capital 39,310,178 39,067,328 Statutory reserves 6,461,788 6,461,788 Retained earnings 58,333,136 56,356,369 Accumulated other comprehensive loss (2,066,364) (1,101,270) Total Stockholders' Equity attributable to the Company 102,067,591 100,812,918 Noncontrolling interest 7,918,096 8,799,460 Total Stockholders' Equity 109,985,687 109,612,378 Total Liabilities and Stockholders' Equity $ 134,194,014 $ 138,487,726 ===
Tantech Holdings Ltd and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2018 2017 2016 --- Revenues $ 29,561,399 $ 42,297,612 $ 39,902,342 Cost of revenues 21,532,319 31,741,753 26,879,316 Gross Profit 8,029,080 10,555,859 13,023,026 Operating expenses Selling expenses 320,479 730,834 621,818 General and administrative expenses 4,971,804 4,625,563 3,613,289 Research and development expenses 386,628 627,577 136,626 Total operating expenses 5,678,911 5,983,974 4,371,733 Income from operations 2,350,169 4,571,885 8,651,293 Other income (expenses) Interest income 56,894 18,648 571 Interest expense (626,343) (551,044) (470,656) Government subsidy income 52,597 Other income, net 247,069 436,095 99,025 Total other income (expenses) (322,380) (96,301) (318,463) Income before provision for income taxes 2,027,789 4,475,584 8,332,830 Provision for income taxes 1,031,158 1,528,003 1,367,270 Net income from continuing operations 996,631 2,947,581 6,965,560 Discontinued operation: Net income (loss) from discontinued operations, net of tax 83,367 65,550 (2,357,867) Net income 1,079,998 3,013,131 4,607,693 Less: net income (loss) attributable to the noncontrolling interest from continuing operations (896,769) (754,084) 308,442 Net income attributable to common stockholders of Tantech Holdings Ltd. $ 1,976,767 $ 3,767,215 $ 4,299,251 === Net income 1,079,998 3,013,131 4,607,693 Other comprehensive income (loss): Foreign currency translation adjustment (949,689) 4,341,324 (5,448,209) Comprehensive income (loss) 130,309 7,354,455 (840,516) Less: Comprehensive income (loss) attributable to noncontrolling interest (881,364) (784,186) 70,029 Comprehensive income (loss) attributable to common stockholders of Tantech Holdings Ltd. $ 1,011,673 $ 8,138,641 $ (910,545) === Earnings (loss) per share -Basic and Diluted Continuing operations $ 0.07 $ 0.15 $ 0.19 === Discontinued operations $ 0.00 $ 0.00 $ (0.10) === Weighted Average Shares Outstanding - Basic and diluted Continuing operations and discontinued operations 28,745,571 25,971,912 23,019,185
Tantech Holdings Ltd and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2018 2017 2016 --- Cash flows from operating activities Net income $ 1,079,998 $ 3,013,131 $ 4,607,693 Net (income) loss from discontinued operations (83,367) (65,550) 2,357,867 Net income from continuing operations 996,631 2,947,581 6,965,560 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Allowance for doubtful accounts -accounts receivable 910,811 2,632,813 239,487 Allowance for doubtful accounts -advance to suppliers 777,848 (45,507) 927,218 Allowance for doubtful accounts - other receivables 66,305 (16,827) 59,742 Allowance for doubtful accounts -due from related party 364,288 Inventory reserve (recovery) 700,379 13,908 (84,414) Depreciation expense 628,144 576,953 497,970 Amortization of intangible asset 443,318 201,647 6,842 Amortization of prepaid consulting expense 102,263 Gain from disposal of property, plant and equipment (44,814) (1,875,493) Changes in operating assets and liabilities: Accounts receivable - non-related party 7,023,546 (1,001,613) (6,272,566) Accounts receivable - related party 3,249,359 Advances to suppliers (3,555,851) 2,826,316 (7,354,381) Advances to supplier non current 1,558,916 6,839,953 (451,731) Inventory (147,485) 804,763 (317,545) Other receivables 767,849 (829,716) 9,424 Government rebate receivable (644,959) (2,942,190) Accounts payable (2,621,226) (532,039) (893,016) Accrued liabilities and other payables 49,492 (1,489,128) 362,212 Customer deposits (115,771) (247,059) 58,122 Taxes payable 573,660 (1,927,737) 174,817 Deferred tax liability (98,473) Net cash provided by (used in) continuing operations 11,082,703 5,936,625 (6,170,732) Net cash provided by (used in) discontinued operations 3,582,177 (3,785,614) (898,699) Net cash provided by (used in) operating activities 14,664,880 2,151,011 (7,069,431) Cash flows from investing activities Acquisition of property, plant and equipment (559,038) (1,302,721) (8,282) Proceeds from disposal of property, plant and equipment 54,089 662,144 Additions to intangible assets (2,585) Payment for business acquisition (4,552,240) (3,372,925) Payment for investment (17,448,000) Cash acquired from business acquisition 35,707 Changes in deposit for asset acquisition 443,400 Net cash used in continuing operations (17,955,534) (4,713,710) (3,381,207) Net cash provided by (used in) discontinued operations (39,976) 1,220,458 1,503,233 Net cash used in investing activities (17,995,510) (3,493,252) (1,877,974) Cash flows from financing activities Proceeds from (repayment of) loans from third party 2,455,806 (187,706) 885,694 Note receivable 14,540 (14,780) Bank acceptance notes payable, net of repayment (4,560,185) 4,911,990 1,806,924 Proceeds from bank loans 10,291,412 10,093,262 7,001,831 Repayments of bank loans (7,835,606) (11,957,020) (8,251,620) Repayment of loans from related parties (1,175,971) (477,565) Proceeds from issuance of common stocks 5,968,208 7,957,100 Net cash provided by (used in) continuing operations (810,004) 8,336,389 9,399,929 Net cash provided by discontinued operations Net cash provided by (used in) financing activities (810,004) 8,336,389 9,399,929 Effect of exchange rate changes on cash, restricted cash and cash equivalents 390,992 424,298 (491,196) Net increase (decrease) in cash, restricted cash and cash equivalents (3,749,642) 7,418,446 (38,672) Cash, restricted cash and cash equivalents, beginning of year 13,619,435 6,200,989 6,239,661 Cash, restricted cash and cash equivalents, end of year $ 9,869,793 $ 13,619,435 $ 6,200,989 === Supplemental disclosure information: Income taxes paid $ 1,044,480 $ 1,156,976 $ 696,435 === Interest paid $ 608,048 $ 479,358 $ 261,625 === Supplemental non-cash activities: Common shares issued for service $ 243,000 $ $ - Common shares issued for Minority interest buyback $ $ $ 2,160,142 Common shares issued for acquisition of Shangchi Automobile $ $ 6,500,000 $ - Net book value of assets and liabilities of Shangchi Automobile acquired $ $ 11,122,410 $ -
View original content:http://www.prnewswire.com/news-releases/tantech-holdings-ltd-announces-fiscal-year-2018-financial-results-300851146.html
SOURCE Tantech Holdings Ltd.