Revenue increases 28% year-over-year to $22.4 million
Operating income rose 25% to $3.7 million
BAODING, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- Orient Paper, Inc. (OTC Bulletin Board: OPAI) ("Orient Paper" or the "Company"), which controls and operates Hebei Baoding Orient Paper Milling Co., Ltd. ("HBOP"), a leading manufacturer and distributor of diversified paper products in Hebei, China, today announced financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights
-- Revenues for the second quarter of 2009 increased 27.6% year-over-year
to approximately $22.4 million
-- Gross profit increased 25.2% year-over-year to approximately $4.0
million, gross margin was 17.7%
-- Operating income rose 24.5% year-over-year to approximately $3.7
million
-- Net income was approximately $2.5 million, or $0.05 per diluted share
"We are pleased to report strong growth in revenue and operating income in the second quarter of 2009. Sales of both high-grade offset paper and corrugated paper increased drastically, with high-grade offset paper products doubling from the same quarter last year mainly due to orders from five new printing paper customers. We won nine new corrugated paper customers during the quarter, which was the biggest net income contributing product group in the quarter. Our steady growth across most of our product lines was the result of strong demand, the increase in production volume, and our growing brand recognition in the industry," commented Mr. Liu Zhenyong, chairman and chief executive officer of Orient Paper.
Second Quarter 2009 Financial Results
Revenue for the second quarter of 2009 was approximately $22.4 million compared to approximately $17.6 million for the same period in 2008, an increase of approximately 27.6%. The increase in revenue was primarily attributable to increased sales of the Company’s high-grade offset paper and corrugated paper products as a result of an expanded customer base. Revenues from high-grade offset paper increased 106.0% to approximately $4.8 million from approximately $2.3 million for the same period in 2008. The Company added five new printing paper customers during the quarter, which accounted for 17.8% of the total sales from this category. Revenue from corrugated paper was approximately $11.3 million compared to approximately $7.4 million for the same period in 2008, an increase of approximately 51.9%. Nine new accounts were added to the Company’s corrugated customer base during the second quarter of 2009, accounting for 17.2% of the total sales from corrugated paper. Revenue from medium-grade offset paper was approximately $1.1 million, down 64.3% from approximately $3.0 million during the same period in 2008. Revenue from writing paper increased 9.4% to $5.2 million from approximately $4.8 million during the same period in 2008.
Gross profit for the second quarter of 2009 increased 25.2% to approximately $4.0 million from approximately $3.2 million for the second quarter of 2008. The Company’s gross margin declined slightly from 18.1% in the second quarter of 2008 to 17.7% in the second quarter of 2009, thanks to the growth in corrugated paper sales, which generally command a lower profit margin compared to printing and writing papers.
Selling, general and administrative expenses for three months ended June 30, 2009 were approximately $0.3 million, up 36.0% from approximately $0.2 million in the same period last year. The increase in selling, general and administrative expenses was primarily attributable to increase in professional fees related to the Company’s status as a public company. Selling, general and administrative expenses as a percentage of revenue remained relatively unchanged for the second quarter of 2009 compared with the year ago period.
Operating income for second quarter of 2009 was approximately $3.7 million, up 24.5% from approximately $3.0 million in the second quarter of 2008. The increase was primarily attributable to increased sales and gross profit in the quarter ended June 30, 2009.
Interest expense was approximately $0.3 million, up from approximately $0.1 million a year ago due to imputed interest on related party loans in 2009, including catch-up interest for the first quarter of 2009.
Income tax expense was $0.9 million, up 67.0% from approximately $0.5 million a year due to an increase in the effective tax rate in the second quarter of 2009 to 26.7% from 18.9% a year ago.
Net income in the second quarter of 2009 was approximately $2.5 million, up 7.3% from approximately $2.3 million in the same period last year. Basic and diluted earnings per share for the second quarter of 2009 were $0.05, unchanged from basic diluted earnings per share a year ago. Weighted average shares used in the calculation of basic and diluted earnings per share were 45,109,295 in the quarter ended June 30, 2009 compared to 41,967,921 a year ago.
Six Months Results
Total revenue for the first six months of 2009 was approximately $40.2 million, up 29.5% from the first six months of 2008. Gross profit for the first six months of 2009 was approximately $7.3 million, up 29.2% from gross profit of approximately $5.7 million in the comparable period a year ago. Gross margin was 18.2% for the first six months of 2009, virtually unchanged from the year ago period. Operating income was approximately $6.8 million, up 30.6% from approximately $5.2 million in the first six months of 2008. Net income for the first six months of 2009 was approximately $4.8 million, up 27.3% from approximately $3.7 million in the first six months of 2008. Basic and diluted earnings per share were $0.11 for the first six months of 2009 compared to $0.09 in the first six months of 2008. Weighted average shares used in the calculation of basic and diluted earnings per share were 45,105,661 in the quarter ended June 30, 2009 compared to 41,034,954 a year ago.
Financial Condition
As of June 30, 2009, Orient Paper had approximately $6.7 million in unrestricted cash and approximately $5.4 million in working capital. Short-term debt stood at approximately $5.6 million and the company had approximately $10.1 million in long-term debt, of which approximately $8.1 million is from a group of related parties. Inventory totaled approximately $5.7 million, up from approximately $2.8 million at year-end as the Company increased its stock of raw materials to support growing demand for its products and in anticipation of rising raw material prices. As of June 30, 2009, shareholders’ equity was approximately $38.7 million, up 13.7% from shareholder’s equity of approximately $34.1 million as of December 31, 2008. For the first six months of 2009, the Company generated net cash flow from operating activities of approximately $5.1 million.
Business Outlook
"We posted solid financial results in the first half of 2009, and expect to maintain our growth momentum in revenue and operating income in the second half of the year. We are constantly seeking solutions to enhance our production efficiency and allow us to increase utilization and improve output of our existing fixed assets," said Mr. Liu Zhenyong. "Our strategic location near the printing industry in Beijing and Tianjin provides us with ready access to our primary raw materials, recycled paper, lower freight costs and better opportunities to market our diversified product portfolio. In the coming months, will pursue opportunities to introduce new, high-end paper products in the market and strengthen our position in the industry."
About Orient Paper, Inc.
Orient Paper, Inc., through its wholly owned subsidiaries, Shengde Holdings, Inc. and Baoding Shengde Paper Co., Ltd., controls and operates Hebei Baoding Orient Paper Milling Co., Ltd ("HBOP"). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugated paper, offset paper, writing paper and blueprint paper. The Company also has the capability to produce other paper and packaging-related products, such as plastic paper and craft paper. The Company uses recycled paper as its primary raw material. As one of the largest paper producers in Hebei Province, China, the Company is strategically located in Baoding, a city in close proximity to Beijing where the majority of publishing houses are based. Orient Paper is led by an experienced management team committed to diversifying the Company’s product offering and delivering tailored services to its customers. For more information, please visit http://www.orientalpapercorporation.com .
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the availability of funds and working capital to finance its activities; the actions and initiatives of current and potential competitors; the Company’s ability to introduce new products; anticipated growth in revenue and operating income; general economic and business conditions; the ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
- Financial tables follow -
ORIENT PAPER, INC.
BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
(Unaudited)
ASSETS
As of As of
June 30, December 31,
2009 2008
Current Assets:
Cash and cash equivalents $6,664,238 $3,234,419
Restricted cash 430,000 --
Accounts receivable - Trade
(net of allowance for doubtful
accounts of $55,872 and $0 as
of June 30, 2009 and 2008,
respectively) 2,737,705 1,425,899
Other receivable and
prepaid expense 4,787 --
Inventories 5,676,123 2,821,063
Total current assets 15,512,853 7,481,381
Property, Plant, and Equipment:
Building and improvements 9,835,993 9,876,637
Machinery and equipment 47,152,268 47,347,109
Vehicles 542,429 544,670
57,530,690 57,768,416
Less - Accumulated depreciation
and amortization (14,130,596) (12,427,735)
Net property, plant, and
equipment 43,400,094 45,340,681
Total Assets $58,912,947 $52,822,062
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term loans $5,592,807 $6,858,652
Accounts payable - Trade 2,779,164 --
Other payables and accrued
liabilities 1,116,541 740,846
Income taxes payable 636,759 1,047,678
Total current liabilities 10,125,271 8,647,176
Long-Term Debt, less
current portion:
Loan from credit union 1,940,159 1,948,176
Related party notes 8,104,067 8,137,554
Total long-term debt 10,044,226 10,085,730
Total liabilities 20,169,497 18,732,906
Commitments and Contingencies
Stockholders’ Equity:
Common stock, 500,000,000 shares
authorized, $0.001 par value
per share, 45,166,987 and
45,101,987 shares issued and
outstanding as of June 30, 2009
and December 31, 2008,
respectively 45,167 45,102
Additional paid-in capital 9,592,352 9,565,117
Statutory earnings reserve 3,079,063 3,079,063
Accumulated other
comprehensive income 3,446,573 3,592,839
Retained earnings 22,580,295 17,807,035
Total stockholders’ equity 38,743,450 34,089,156
Total Liabilities and
Stockholders’ Equity $58,912,947 $52,822,062
ORIENT PAPER, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2009 AND 2008
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Revenues:
Sales, net $22,400,383 $17,553,254 $40,237,862 $31,081,287
Cost of Sales:
Cost of sales 18,409,027 14,321,416 32,854,151 25,312,964
Business tax
and surcharges 22,373 61,693 78,289 114,649
Total cost
of sales 18,431,400 14,383,109 32,932,440 25,427,613
Gross Profit 3,968,983 3,170,145 7,305,422 5,653,674
Selling, General
and Administrative
Expenses 275,808 202,816 474,561 423,773
Income from
Operations 3,693,175 2,967,329 6,830,861 5,229,901
Other Income (Expense):
Interest income 6,964 -- 31,942 --
Interest (expense) (326,231) (123,174) (416,080) (230,134)
Total other
(expense) (319,267) (123,174) (384,138) (230,134)
Income before
Income Taxes 3,373,908 2,844,155 6,446,723 4,999,767
Provision for
Income Taxes (899,250) (538,590) (1,673,463) (1,249,942)
Net Income 2,474,658 2,305,565 4,773,260 3,749,825
Comprehensive Income:
Foreign currency
translation
adjustment (99,632) 521,093 (146,266) 1,739,447
Total Comprehensive
Income $2,375,026 $2,826,658 $4,626,992 $5,489,272
Earnings Per Share:
Basic and Diluted
Earning per Share $0.05 $0.05 $0.11 $0.09
Weighted Average
Number of Shares
Outstanding -
Basic and Diluted 45,109,295 41,967,921 45,105,661 41,034,954
ORIENT PAPER, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 2009 AND 2008
(Unaudited)
Six Months Ended June 30,
2009 2008
Cash Flows from Operating Activities:
Net income $4,773,260 $3,749,825
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,702,861 2,080,222
Non-cash issuance of stock for services 27,300 --
Changes in net assets and liabilities:
Accounts receivable (1,316,593) 169,346
Inventories (2,855,060) (2,335,835)
Accounts payable -- Trade 2,779,164 --
Other payables and accrued liabilities 375,695 7,276,188
Income taxes payable (410,919) 451,586
Net Cash Provided by Operating Activities 5,075,708 11,391,332
Cash Flows from Investing Activities:
Purchases of and adjustments to property,
plant, and equipment 237,726 (12,401,234)
Net Cash (Used in) Investing Activities 237,726 (12,401,234)
Cash Flows from Financing Activities:
Proceeds from and adjustment to
related party loans (8,017) 369,342
Payments on short-term loans (1,265,845) --
Proceeds from borrowing on and
adjustment to credit facility (33,487) 712,688
Net Cash Provided by (Used in)
Financing Activities (1,307,349) 1,082,030
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (146,266) 1,739,447
Net Increase in Cash and Cash Equivalents 3,859,819 1,811,575
Cash and Cash Equivalents
- Beginning of Period 3,234,419 622,661
Cash and Cash Equivalents
- End of Period $7,094,238 $2,434,236
Cash and Cash Equivalents
- End of Period Consisting of:
Cash in bank and cash on hand 6,664,238 2,434,236
Restricted cash 430,000 --
$7,094,238 $2,434,236
Supplemental Disclosure of Cash
Flow Information:
Cash paid for interest $330,918 $233,433
Cash paid for income taxes $949,509 $913,005
For more information, please contact:
Orient Paper, Inc.
Winston C. Yen, Chief Financial Officer
Phone: +1-562-818-3817 (Los Angeles)
Email: info@orientalpapercorporation.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
