IT Tech Packaging, Inc. Announces First Quarter 2021 Unaudited Financial Results

BAODING, China, May 11, 2021 /PRNewswire/ -- IT Tech Packaging, Inc. (NYSE AMERICAN: ITP) ("IT Tech Packaging" or the "Company"), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

• Revenue increased by 176.9% to $24.21 million, primarily attributable to increase in sales volume of CMP and offset printing paper, as well as the increase in Average Selling Prices ("ASPs") of CMP and tissue paper products.
• Gross profit was $1.83 million, compared to gross loss of $0.17 million for the same period of last year. Gross margin was 7.5%, compared to gross loss margin of 1.9% for the same period of last year.
• Loss from operations was $0.72 million, compared to the loss from operations of $2.87 million for the same period of last year.
• Net loss was $4.34 million, or loss per share of $0.12, compared to net loss of $2.44 million, or loss per share of $0.11, for the same period of last year.
• Earnings before interest, taxes, depreciation and amortization ("EBITDA") was negative $0.07 million, compared to $1.04 million for the same period of last year.

Mr. Zhenyong Liu, Chairman and Chief Executive Officer of the Company, commented, "We continued to making improvements in the sales volume of CMP products for this quarter. Our total revenue had an increase of 176.9% to $24.2 million, resulted from 129.4% growth of overall sales volume and a 20.7% increase in average selling prices over our main products. The average selling prices of over our main products for this quarter increased 11.9% from the fourth quarter 2020 .

We took a quick recovery from the impact of global outbreaks of COVID-19 pandemic, posting growing revenues from sales of tissue paper, offset printing paper and CMP products. Our production and sales of tissue paper products have been growing up steadily since the launch of PM8 and PM9 in December 2018 and November 2019. Currently, we have completed fundamental constructions on its new tissue paper production line (the "PM10") and is working on the installation of accessory equipment. Amid robust domestic market demand for tissue paper products and improved production efficiency, we anticipate continue expanding our capacity as we expect to see strong growth from tissue paper business segment that we believe will greatly boost our overall performance. In addition, we are also expanding our business to high and new technology business such as combined heat and power generation project utilizing bio mass technology project ("Biomass CHP Project") and expect to diversify our sources of revenue and ensure our stable modes of profit-making."        

First Quarter 2021 Financial Results

Revenue

For the first quarter of 2021, total revenue increased by $15.47 million, or 176.9%, to $24.21 million from $8.74 million for the same period of last year. The increase in total revenue was mainly due to the increase in both sales volume and average selling prices of CMP and offset printing paper products. The following table summarizes revenue, volume and ASPs by products for the first quarter of 2021 and 2020, respectively:

Revenue from CMP, including both regular CMP and Light-Weight CMP, increased by $12.97 million, or 167.7%, to $20.71 million and accounted for 85.6% of total revenue for the first quarter of 2021, compared to $7.74 million, or 88.5% of total revenue, for the same period of last year. The Company sold 41,296 tonnes of CMP at an ASP of $502/tonne in the first quarter of 2021, compared to 18,677 tonnes at an ASP of $414/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP increased by $11.24 million, or 196.5%, to $16.96 million, resulting from sales of 33,626 tonnes at an ASP of $504/tonne, during the first quarter of 2021, compared to revenue of $5.72 million, resulting from sales of 13,788 tonnes at an ASP of $415/tonne, for the same period of last year. Revenue from light-weight CMP increased by $1.73 million, or 85.9%, to $3.75 million, resulting from sales of 7,670 tonnes at an ASP of $489/tonne for the first quarter of 2021, compared to revenue of $2.02 million, resulting from sales of 4,889 tonnes at an ASP of $412/tonne for the same period of last year.

Revenue from offset printing paper increased by $2.12 million, or 100.0%, to $2.12 million for the first quarter of 2021, from $nil for the same period of last year. The Company sold 3,142 tonnes of offset printing paper at an ASP of $673/tonne in the first quarter of 2021.

Revenue from tissue paper products increased by $0.24 million, or 24.4%, to $1.25 million, resulting from sales of 1,120 tonnes at an ASP of $1,117/tonne, for the first quarter of 2021, compared to revenue of $1.01 million, resulting from sales of 1,185 tonnes at an ASP of $849/tonne for the same period of last year.

Revenue generated from selling face masks was $0.13 million for the first quarter of 2021. The Company sold 3,836 thousand pieces of face masks in the first quarter of 2021.

Gross Profit (Loss) and Gross Profit (Loss) Margin

Total cost of sales increased by $13.47 million, or 151.1%, to $22.38 million for the first quarter of 2021, from $8.91 million for the same period of last year. The increase in total cost of sales was mainly due to the increase in sales volume of CMP and offset printing paper products, as well as increase in material costs. Costs of sales per tonne for regular CMP, light-weight CMP, offset printing paper and tissue paper products were $462, $435, $543 and $1,525, respectively, for the first quarter of 2021, compared to $395, $359, $nil and $1,450 per tonne, respectively, for the same period of last year.  Average unit purchase costs of recycled paper board, major raw material used for our production, was approximately $289/tonne for the first quarter of 2021, compared to $198/tonne for the same period of last year.

Total gross profit was $1.83 million for the first quarter of 2021, compare to the gross loss of $0.17 million for the same period of last year as a result of factors described above. Overall gross profit margin was 7.6% for the first quarter of 2021, compared to the gross loss margin of 1.9% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper and face mask products were 8.5%, 10.9%, 19.4%, -36.5% and 18.8%, respectively, for the first quarter of 2021, compared to  4.9%, 12.9%, nil%, -70.7% and nil%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") decreased by $0.14 million, or 5.3%, to $2.56 million for the first quarter of 2021 from $2.70 million for the same period of last year. As a percentage of total revenue, SG&A was 10.6% for the first quarter of 2021, compared to 30.8% for the same period of last year.

Loss from Operations

Loss from operations was $0.72 million for the first quarter of 2021, compared to the loss from operations of $2.87 million for the same period of last year. The decrease in loss from operations was primarily due to the increase in gross profit. Operating loss margin was 3.0% for the first quarter of 2021, compared to 32.8% for the same period of last year.

Net Loss and Net Loss per Share

Net loss was $4.34 million, or $0.12 loss per basic and diluted share, for the first quarter of 2021, compared to the net loss of $2.44 million, or $0.11 per basic and diluted share, for the same period of last year.

EBITDA

EBITDA was $-0.07 million for the first quarter of 2021, compared to $1.04 million for the same period of the prior year.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission ("SEC"). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

Cash, Liquidity and Financial Position

As of March 12, 2021, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of $37.44 million, $12.08 million and $4.57 million, respectively, compared to $4.14 million, $12.16 million and $4.60 million, respectively, as of December 31, 2020.

Net accounts receivable was $5.21 million as of March 31, 2021, compared to $2.39 million as of December 31, 2020. Net inventory was $7.43 million as of March 31, 2021, compared to $1.23 million as of December 31, 2020. As of March 31, 2021, the Company had current assets of $61.14 million and current liabilities of $20.21 million, resulting in a working capital of $40.93 million. This was compared to current assets of $14.91 million and current liabilities of $18.34 million, resulting in a working capital deficit of $3.43 million as of December 31, 2020.

Net cash used in operating activities was $8.28 million for the first quarter of 2021, compared to net cash provided by operating activities of $6.86 million for the same period of last year. Net cash used in investing activities was $0.04 million for the first quarter of 2021, compared to $0.76 million for the same period of last year. Net cash provided by financing activities was $41.79 million for the first quarter of 2021, compared to net cash from financing activities of $nil for the same period of last year.

Recent development

On April 7, 2021, the Company announced it has obtained qualification to supply central heating in industrial parks after month-long review process for its combined heat and power generation project utilizing bio mass technology ("Biomass CHP Project").

On April 20, 2021, the Company announced it has completed fundamental constructions on its new tissue paper production line (the "PM10") and is working on the installation of accessory equipment.

Earnings Conference Call

The Company's management will host a conference call to discuss its first quarter 2021 unaudited financial results at 8:00 am US Eastern Time on Wednesday, May 12, 2021. To attend the conference call, please use the information below.

Date/Time: 8:00 am US Eastern Time (8:00 PM Beijing/Hong Kong Time) on Wednesday, May 12, 2021

Conference Title: IT Tech Packaging, Inc. First Quarter 2021 Earnings Conference Call

Conference ID: 8863957

To attend the conference call, please register in advance of the conference using the link: http://apac.directeventreg.com/registration/event/8863957 to complete the online registration at least 15 minutes prior to the start of the call. Upon registering, the conference access information including participant dial-in numbers, a Direct Event passcode and a registrant ID will be provided to you via an email.

This conference call will be broadcast live on the Internet and can be accessed by all interested parties at  https://edge.media-server.com/mmc/p/4vc6vupv. Please access the link at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software.

A playback will be available through 11:00 am ET on May 12, 2021 to 9:59 am ET on May 20, 2021. To listen, please dial+1-855-452-5696 if calling from the United States, or +61-281-990-299 if calling internationally. Use the conference ID 8863957 to access the replay.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China's Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE MKT since December 2009. For more information, please visit: http://www.itpackaging.cn/ .

Safe Harbor Statements

This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company's public filings with the Securities and Exchange Commission, including the Company's latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

For more information, please contact:

At the Company Email:
ir@itpackaging.cn
Tel: +86 0312 8698215

Investor Relations:
Janice Wang
EverGreen Consulting Inc.
Email: ir@changqingconsulting.com

View original content:http://www.prnewswire.com/news-releases/it-tech-packaging-inc-announces-first-quarter-2021-unaudited-financial-results-301289162.html