Hebron Technology Co., Ltd. Reports Fiscal Year 2019 Financial Results
WENZHOU, China, April 24, 2020 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") (Nasdaq: HEBT), a technology oriented enterprise group conducting business in the pharmaceutical equipment and engineering industry segment and financial service industry segment, today announced its financial results for the fiscal year ended December 31, 2019.
Fiscal Year 2019 Financial Highlights
Year ended December 31, Changes 2019 2018 ($) (%) Revenue $ 21,103,114 $ 25,290,060 (4,186,946) (17) % Installation 10,490,191 17,297,212 (6,807,021) (39) service % Fluid equipment 8,087,399 7,992,848 94,551 1 sales % Financial service - underwriting % related 2,522,143 2,522,143 100 Financial service -recurring % service 3,381 3,381 100 Gross profit 8,056,621 7,577,952 478,669 6 % Income (loss) 1,932,005 (5,329,410) 7,261,415 136 from operations % Net income 2,739,990 (5,144,715) 7,884,705 153 % Basic and $ 0.17 $ (0.33) 0.50 151 diluted EPS %
-- Total revenues decreased by 17.0% to $21.10 million for the twelve months ended December 31, 2019. -- Operating income increased by 136% to operation income of $1.93 million for the twelve months ended December 31, 2019 from operation loss of $5.33 million for the same period of the prior fiscal year, primarily due to a decrease of bad debt provision of $5.83 million for the twelve months ended December 31, 2019. -- Net income was $2.74 million for the twelve months ended December 31, 2019, compared to net loss of $5.14 million for the same period of the prior fiscal year.
Years ended December 31, Changes Changes 2019 % 2018 % ($) (%) Installation 3,851,460 37 6,356,004 37 (2,504,544) (39) service % % % Fluid 1,699,429 21 1,221,948 15 equipment % sales % % 477,481 39 Financial 2,506,032 99 % 2,506,032 100 services % % 38 30 % Gross profit 8,056,921 % 7,577,952 % 478,969 6
Revenues
Total revenues decreased by 17.0% to $21.10 million for the twelve months ended December 31, 2019 mainly due to a decrease in installation revenue. Revenue from installation service was $10.49 million for the year ended December 31, 2019, representing a 39% decrease from the prior fiscal year. Revenue from sales of our fluid equipment was $8.1 million, representing an 1% increase. Revenue from financial service was $2.5 million for year ended December 31, 2019, which was mainly generated from the underwriting related advisory service. The Company expects to continue to expand the revenue base in the financial service segment.
Cost of revenues and gross profit
Total cost of revenues decreased by $4.67 million to $13.05 million for the twelve months ended December 31, 2019, mainly due to a decrease in the cost of installation service in fiscal 2019. For fiscal 2019, cost of installation service was $6.64 million representing a decrease of $4.30 million from 2018 due to lower installation service revenue. Cost of our fluid equipment sales were $6.4 million representing a decrease of $0.4 million from 2018.
Overall gross profit increased by 6% or $0.48 million to $8.06 million for the twelve months ended December 31, 2019 from $7.58 million for the same period of the prior fiscal year. The increase was primarily a result of the high-margin financial services revenue in fiscal 2019.
Overall gross profit margin for fiscal 2019 was 38%, increased from 30% in fiscal 2018. The increase was primarily due to the high-margin financial service gross profit. The gross profit margin for the Company's equipment and engineering segment was 30%, approximately same as fiscal 2018.
Operating expenses
Total operating expenses decreased by $6.78 million, or 53%, to $6.12 million for the twelve months ended December 31, 2019. The significant decrease in operating expense was primarily due to a $5.83 million decrease in bad debt provision.
For fiscal 2019, the Company's general and administrative expenses were $2.57 million, representing an approximate decrease of $0.73 million compared to fiscal 2018. The decrease in general and administrative expenses was mainly due to the Company's lesser professional fees in fiscal 2019.
For fiscal 2019, the Company's research and development ("R&D") expenses were $0.49 million, representing an increase of $0.13 million from fiscal 2018. The increase in R&D expense was primarily due to R&D developments in our new segment - financial service segment.
For fiscal 2019, the Company's selling expenses were $0.99 million, representing a 26% decrease from fiscal 2018. The decrease was mainly due to the fact that the Company has established branding awareness in the market and therefore reduced marketing activities in fiscal 2019 and 2018.
Operating (loss) income
Operating income was $1.93 million for twelve months ended December 31, 2019, representing an increase of 136% from operating loss of $5.33 million in fiscal 2018, which was mainly due to significant decrease in bad debts provision during fiscal 2019.
Net income
Net income was $2.74 million for the twelve months ended December 31, 2019, compared to net loss of $5.14 million for fiscal 2018.
Financial Condition
As of December 31, 2019, the Company had cash and restricted cash balance of $4.41 million.
Net cash provided by operating activities was approximately $0.34 million for the twelve months ended December 31, 2019, compared to net cash used in operating activities of $0.73 million for the same period of the prior fiscal year.
Net cash used in investing activities was approximately $1.96 million for fiscal 2019, compared to approximately $0.12 million for fiscal 2018.
Net cash provided by financing activities was approximately $3.15 million for fiscal 2019, compared to approximately $0.73 million for fiscal 2018.
About Hebron Technology Co., Ltd.
Established in January 2005 and headquartered in Wenzhou City, Zhejiang Province, China, Hebron Technology Co., Ltd. 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. Following the acquisition of NiSun International Enterprise Management Group (British Virgin Islands) Co., Ltd., and its subsidiaries in July 2019, the Company also engages in financial advisory services business through contractually controlled affiliates and subsidiaries of affiliates. For more information about the Company, please visit www.xibolun.com for equipment and engineering segment and https://www.fintaike.com for financial advisory service segment.
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.
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Stated In U.S. Dollars) December 31, December 31, 2019 2018 --- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,452,647 $ 947,588 Restricted cash 959,672 2,124,655 Contracts receivable, net 30,120,533 24,669,365 Accounts receivable, net 3,024,531 2,655,845 Bank acceptance notes receivable 22,660 81,611 Inventories 635,989 365,480 Prepayments and advances to suppliers, net 2,526,056 3,568,003 Other receivables, net 516,607 767,681 Loans to third parties-current portion 2,434,715 Prepaid expenses and other current assets 18,348 94,539 TOTAL CURRENT ASSETS 43,711,758 35,274,767 NON-CURRENT ASSETS: Property and equipment at cost, net 11,889,373 12,515,894 Intangible assets, net 5,124,264 969,339 Retainage receivables, net 2,408,070 3,146,986 Right of use assets 1,915,577 Rent and other deposits 85,999 43,633 Loans to third parties - long term portion 2,872,820 Long term investments 3,708,359 3,054,090 Goodwill 11,074,864 Deferred tax assets 2,008,173 1,648,967 TOTAL ASSETS $ 84,799,257 $ 56,653,676 === LIABILITIES CURRENT LIABILITIES: Short-term loans $ 861,846 $ 1,698,058 Bank acceptance notes Payable 929,148 2,117,382 Accounts payable 2,386,061 1,361,687 Accrued expenses and other current liabilities 3,725,149 2,112,472 Operating lease liabilities 188,557 Loan payable - current 156,574 177,291 Advances from customers 1,311,004 3,131,338 Tax payable 10,915,483 9,085,746 Due to related party 7,759,443 TOTAL CURRENT LIABILITIES 28,233,265 19,683,974 Loan payable - long-term 54,726 212,351 Operating lease liabilities - long term 1,769,927 Deferred tax liabilities 805,826 TOTAL LIABILITIES 30,863,744 19,896.325 Commitments and contingencies EQUITY: Class A common stock, $0.001 par value, 40,000,000 shares authorized, 17,710,471 and 8,491,177 shares issued and outstanding as of December 31, 2019 and 2018 respectively. 17,710 8,491 Class B common stock, $0.001 par value, 10,000,000 shares authorized, nil and 7,778,400 shares issued and outstanding as of December 31, 2019 and 2018 respectively. 7,778 Additional paid-in capital 28,369,076 13,361,447 Retained earnings 27,472,766 24,732,776 Accumulated other comprehensive income (loss) (1,914,232) (1,353,141) TOTAL SHAREHOLDERS' EQUITY 53,945,320 36,757,351 Non-controlling interests (9,807) TOTAL EQUITY 53,935,513 36,757,351 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 84,799,257 $ 56,653,676 ===
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) For the Years Ended December 31, 2019 2018 2017 --- REVENUE: Installation service $ 10,490,191 $ 17,297,212 $ 23,748,141 Fluid equipment sales 8,087,399 7,992,848 5,452,304 Financial services 2,525,524 21,103,114 25,290,060 29,200,445 COST OF REVENUE Cost of revenue 12,882,094 17,458,252 18,080,777 Business and sales related taxes 164,399 253,856 675,507 GROSS PROFIT 8,056,621 7,577,952 10,444,161 OPERATING EXPENSES: General and administrative 2,566,831 3,298,188 3,683,594 Selling and marketing 985,252 1,337,321 2,187,253 Bad debt 2,079,837 7,913,442 187,715 Research and development 492,696 358,411 508,282 Total operating expenses 6,124,616 12,907,362 6,566,844 INCOME (LOSS) FROM OPERATIONS 1,932,005 (5,329,410) 3,877,317 OTHER INCOME (EXPENSE): Other income, net 1,255,149 (426,585) 377,174 Interest expense (158,119) (208,306) (56,953) Income from investments 153,554 168,534 Total other income (expense), net 1,250,584 (466,357) 320,221 INCOME (LOSS) BEFORE INCOME TAXES 3,182,589 (5,795,767) 4,197,538 PROVISION (BENEFIT) FOR INCOME TAXES 442,599 (651,052) (2,938,849) NET INCOME(LOSS) 2,739,990 (5,144,715) 7,136,387 Net income (loss) attributable to non- controlling interests NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS 2,739,990 (5,144,715) 7,136,387 OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation (loss) income (561,091) (1,755,528) 2,249,081 COMPREHENSIVE INCOME (LOSS) 2,178,899 $ (6,900,243) 9,385,468 Total comprehensive loss attributable to non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS $ 2,178,899 $ (6,900,243) $ 9,385,468 === Basic and diluted earnings (loss) per common share $ 0.17 $ (0.33) $ 0.49 === Weighted average number of shares outstanding-basic and diluted 16,269,577 15,760,633 14,695,347
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Accumulated Class A Class B Additional Other Common Stock Common Stock paid in Retained Comprehensive Non-controlling Shares Amount Shares Amount capital Earnings Income (Loss) Interests Total --- Balance at January 1, 2017 6,916,947 $ 6,917 7,778,400 $ 7,778 $ 10,237,965 $ 22,741,104 $ (1,846,694) $ 31,147,070 Net income - 7,136,687 7,136,387 Foreign currency translation gain - 2,249,081 2,249,081 --- Balance at December 31, 2017 6,916,947 6,917 7,778,400 7,778 10,237,965 29,877,491 402,387 40,532,538 Net (loss) - (5,144,715) (5,144,715) Foreign currency translation loss - (1,755,528) (1,755,528) Issuance of class A common stock for consulting services 131,452 131 239,369 239,500 Issuance of common stock for equity investment 1,442,778 1,443 2,884,113 2,885,556 Balance at December 31, 2018 8,491,177 8,491 7,778,400 7,778 13,361,447 24,732,776 (1,353,141) 36,757,351 Net income - 2,739,990 2,739,990 Foreign currency translation loss - (561,091) (561,091) Capital contribution by shareholder - 3,582,781 3,582,781 Shares to be issued for acquisition 1,440,894 1,441 11,424,848 11,426,289 Non-controlling interests arising from business combination - (9,807) (9,807) Reclassification of common stock 7,778,400 7,778 (7,778,400) (7,778) - Balance at December 31, 2019 17,710,471 $ 17,710 $ $ 28,369,076 $ 27,472,766 $ (1,914,232) (9,807) $ 53,935,513
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2019 2018 2017 --- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,739,990 $ (5,144,715) $ 7,136,387 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,225,977 1,195,161 939,995 Loss on disposition of property and equipment 283,487 12,179 Deferred tax (benefit) expense (418,131) (1,471,938) 11,526 Equity investment income (153,554) (168,534) Bad debt expense 2,079,837 7,913,442 187,715 Changes in operating assets and liabilities: Contracts receivable (5,801,693) (8,850,502) (2,992,867) Accounts receivable (1,141,352) (1,383,452) (950,850 Bank acceptance notes receivable 58,390 593,674 (378,205) Retainage receivables (489,283) (748,903) (80,360) Prepayment and advances to suppliers 1,392,426 93,149 (7,127,018) Inventories (277,176) 1,177,956 788,000 Other receivables 341,339 (598,764) (156,074) Accounts payable 822,461 146,546 26,450 Bank acceptance notes Payable (1,171,013) 2,148,292 53,272 Advances from customers (1,828,259) 429,217 (370,964) Deferred revenue (1,071,355) Taxes payable 1,933,516 2,770,253 (2,365,120) Accrued expenses and other current liabilities 1,021,758 890,551 240,505 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 335,233 (725,080) (6,096,784) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (394,988) (74,210) (3,126,777) Loans to third parties (3,611,682) Payments for intangible assets (41,000) Cash acquired from business acquisitions 2,043,176 NET CASH (USED IN) INVESTING ACTIVITIES (1,963,494) (115,210) (3,126,777) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term bank loans 911,968 1,995,763 295,954 Repayment of short-term bank loans (1,733,462) (1,088,667) Capital contribution 3,582,781 Proceeds from long-term loans 173,873 Repayment of long-term loans (47,353) (Repayment) proceeds from loan (174,861) (176,427) 560,748 Advances from and (repayments to) related parties 566,360 (66,582) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,152,786 730,669 916,640 EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENT (184,449) (94,239) (292,869) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENT 1,340,076 (203,860) (8,599,790 CASH AND CASH EQUIVALENT AND RESTRICTED CASH-beginning of year 3,072,243 3,276,103 11,875,893 CASH AND CASH EQUIVALENT AND RESTRICTED CASH-end of year $ 4,412,319 $ 3,072,243 $ 3,276,103 === SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for income taxes $ 5,158 $ 42,250 $ === Cash paid for interest $ 147,900 $ 91,917 $ 75,704 === Non-cash financing activities Warrants issued to placement agent in connection with the Company's IPO $ $ $ - Payment payable to a related party for NiSun BVI acquisition $ 7,000,000 - Issuance of shares for business combination $ 11,426,289 $ $ - Issuance of shares for consulting services $ $ 239,500 $ - Issuance of shares for equity investment $ $ 2,885,556 $ - CASH AND CASH EQUIVALENTS COMPRISE OF THE FOLLOWING: Cash and cash equivalent $ 3,452,647 $ 947,588 $ 3,220,781 Restricted cash 959,672 2,124,655 55,322 Total cash, cash equivalents and restricted cash $ 4,412,319 $ 3,072,243 $ 3,276,103 ===
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SOURCE Hebron Technology Co., Ltd.