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Yulong Celebrates 1 Year IPO Anniversary With Solid Growth Trend

2016-08-03 21:00 1287

PINGDINGSHAN, China, August 3, 2016 /PRNewswire/ --

Highlights:

  • Yulong is now one of the leading Construction Waste Management (CWM) companies in Henan Province with exclusive CWM licenses in Pingdingshan and Shangqiu
  • CWM, catalyst of top and bottom line growth, has overall gross margin of over 58%
  • 25-year exclusive CWM contract with a potential $7 million annual revenue or over $170 million over life of contract
  • A 4-year and a 5-year contract with the potential to generate revenue of up to $35 million and $55 million, respectively, over the life of the contract
  • Approximately $32 million in cash and cash equivalents, as of March 31, 2016 sufficient to support short- to mid-term expansion efforts

Yulong Eco-Materials Limited (NasdaqCM: YECO), an eco-friendly building products and construction waste management (CWM) company, announced a corporate and business update by recapping milestones since its listing on Nasdaq one year earlier.

Yulong Zhu, the company's CEO noted, "Building upon and leveraging our technical experience we gained over the years from operating our profitable, cash flow generating fly-ash brick and concrete businesses - within a very short period we have been able to expand our breadth of eco-friendly offering into a new, highly profitable business - the construction waste management segment, which provides integrated solutions to solve China's construction waste problem. We are extremely proud of our achievements. Yulong today is a vertically integrated, eco-friendly and well-structured business, well positioned to take advantage of the tremendous opportunities in the Henan Province and beyond."

Since mid-2015, supported by its fly-ash brick and concrete business segments, Yulong has achieved many milestones and is now one of the leading CWM companies in Henan Province, offering local and provincial governments a cost-effective and technically advanced solution to manage and reduce construction waste and related pollution. The company's CWM operations were featured in a video news-story on Bloomberg TV: http://www.bloomberg.com/news/videos/2015-10-22/turning-china-s-demolition-trash-to-treasure.

Since April 2015, when its new waste processing plant in Pingdingshan first became operational, Yulong's CWM business has taken off. For the first nine months of fiscal 2016, this segment generated a total $5.5 million in revenue, and is expected to contribute over 15% of total revenue for fiscal 2016. Management is confident that the CWM business has a strong potential to significantly improve Yulong's future financial performance and is expected to be a continued catalyst for future growth.

The company has secured several long-term, multi-million-dollar CWM contracts which should provide substantial revenues for several years to come. Milestones for the last 12-months include:

  • A 20-year exclusive CWM license in Pingdingshan
  • A 25-year exclusive waste hauling and recycling contract, with potential revenue of $7 million annually or $170 million over the life of the contract, for the city of Shangqiu
  • An 18-month contract potentially worth up to $3.9 million to clean and process construction waste at a section of a new high-speed railway in the Lingyuan District of the City of Shangqiu
  • Sole provider of CWM services in Zhengzhou
    • A contract potentially worth up to $35 million, over the next four years, to recycle construction waste for the Zheng Dong New District of Zhengzhou City
    • A contract potentially worth up to $55 million for a period of five years to provide recycling services to the Zhengzhou City Airport Zone

The CWM business segment is providing Yulong with four new substantial revenue sources, as follows:

  • Hauling: several government contracts to haul waste from construction sites.
  • Recycling: several government contracts to recycle construction waste at our state-of-the-art plant in Pingdingshan or by using our portable recycling stations near construction sites.
  • Recycled aggregates: publication of Henan provincial technical code allows the company to begin selling its processed construction waste, or recycled aggregates, as roadbed materials for highways in Henan Province.
  • Recycled brick: part of the recycled aggregates (fine sorted) is used as raw material, at Yulong's plant to manufacture a wide range of brick products.

To date, the company has stored over 5 million cubic meters of recycled aggregates from its ongoing projects in the cities of Zhengzhou and Shangqiu. The sale of these recycled aggregates could generate over $5 million in revenue over the next 12 months. Over the next five years, the company expects to generate $4 million in annual revenues from the sale of recycled aggregates as roadbed materials in Henan. Our CWM segment has an overall gross margin of over 58% currently, and is projected to generate approximately $10 million in annual revenue going forward.

Mr. Zhu also noted, "We will continue to execute our business plan to:

  • Maintain our leading market position for our concrete and fly-ash brick businesses to continue generating cash flow to support our growth initiatives;
  • Expand our CWM business to other cities in Henan and beyond; and
  • Seek consolidation opportunities to take advantage of opportunities arising from a fragmented market - we are in process of evaluating a request from local government to consolidate local unlicensed construction waste hauling businesses in Shangqiu City.

"Our business plan is supported by our strong financial position - as of March 31, 2016 we had approximately $32 million in cash and cash equivalents, which is sufficient to support our short- to mid-term expansion efforts. Due to a high demand for our unique services and solid business plan, our CWM business continues to expand at a rapid pace. As a result, and as previously announced, our total revenue and net income for fiscal 2016, vs. fiscal 2015, are expected to increase between 7% and 12% and between 27% and 38%, respectively, and we expect this trend to continue in fiscal 2017. We believe that we have positioned the company well to further grow our business and maintain and reinforce our market positions, with the ultimate goal to increase shareholder value. We look forward to reporting our progress in the coming weeks and months."

About Yulong Eco-Materials

Yulong is a vertically integrated manufacturer of eco-friendly building products and a construction waste management company located in the city of Pingdingshan in Henan Province, China. The company is currently Pingdingshan's leading producer of fly-ash bricks and concrete as well as the exclusive provider of construction waste management services in parts of Pingdingshan and Shangqiu.

Forward-Looking Statements

This press release contains forward-looking statements, particularly as related to, among other things, the business plans of the Company, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. The words or phrases "plans," "would be," "will allow," "intends to," "may result," "are expected to," "will continue," "anticipates," "expects," "estimate," "project," "indicate," "could," "potentially," "should," "believe," "think," "considers" or similar expressions are intended to identify "forward-looking statements." These forward-looking statements fall within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Such forward-looking statements are based on current expectations, involve known and unknown risks, a reliance on third parties for information, transactions or orders that may be cancelled, and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties related to the fluctuation of local, regional, and global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic reports and on documents we file from time to time with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

Contact:

Investor Relations Counsel:
The Equity Group Inc.
Lena Cati
Vice President
212-836-9611 / lcati@equityny.com
www.theequitygroup.com

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Source: Yulong Eco-Materials Limited
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