Q2 2021 IT Tech Packaging Inc Earnings Call

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Hello, ladies and gentlemen, and welcome to participate in I T Chek packaging second quarter 2021 earnings conference call. It.

At this time I would like to inform you that this conference is being recorded and that all participants are in a listen only mode.

Joining us today are Mr. Zheng young Lou I detect packaging as chairman and Chief Executive Officer, and MS. Jing Hao off companies, the Chief Financial Officer.

Remarks from both of Mr. Lu and Biz, how it will be delivered in English by interpreters.

I detect packaging announce it second quarter 2021 financial results via press release yesterday, which can be found on the company's website at www Dot I T packaging dock CN.

First necessarily it will brief you on the Companys key operational highlights over the second quarter 2021 and MS. Hao will review the company's financial results.

Before we start the I would like to draw your attention to our safe Harbor statement.

Management's prepared remarks contain 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 its announcement are forward looking statements, including but not limited to anticipated revenues from the corrugated medium paper tissue paper and offset printing paper business segments, the actions and initiatives of current and potential competitor.

The company's ability to introduce new products, the company's ability to implement capacity expansion market acceptance of new products general economic and business conditions.

The ability to attract or retain all of care management personnel and research and development staff and other risks detailed in the company's <unk>.

Fillings 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 company and the industry the.

The company undertakes no obligation to update forward looking statements to reflect subsequent or current events or circumstances or to change or to changes in its expectation, 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 this expectation will turn out to be correct and investors are cautioned that actual results may differ materially from the anticipated results.

There is a presentation document featuring management's prepared remarks and is now available for download from the company's website at www Dot I D packaging Dot C N.

Please note.

The there will be discussions on non-GAAP financial measure or EBITDA or earnings before interest taxes depreciation and amortization.

Refer to our press release for a complete reconciliation of EBITDA to net income.

As a kind of reminder, all numbers in our presentation are quoted in U S dollars and all comparisons refer to year over year comparisons unless otherwise stated.

I would now like to turn the call over to Mr. Luiz his comments will be delivered in English by Dawn Cao from Evergreen Investor Relations Ms. Scalp lease go ahead.

Thank you operator, and good morning, everyone.

For joining our second quarter of 2021 earnings conference call.

We continue to make the improvements in the sales volume of CMP and offset printing paper products for this quarter.

Our total revenue increased by 76 on 5% to $46.5 million, resulting from the 33.9% gross of one for or sales volume and the 36% increase the average selling prices over all categories of product with it.

Reported a 18.4% increase of gross coffee on the operating income of 43 medium.

The average selling prices the overall categories of products for this quarter increased one point Cook on for the fourth quarter 2021, and recording a new high since Q4.2018.

And the robust domestic market demand for tissue paper products and improved production efficiency, we continue to expand our capacity for launching a new tissue paper production line P. M.

That will greatly boost or a walk of woman.

The company has obtained approval for surgical market products on local food and drug or the nutrition and have completed all corporation on pressing works at the Max production line with it.

On your estimated production capacity of 45 moving pieces of the mask.

It is really creating from leasing revenue.

As for returns.

The company obtained the first batch of new utility of paper could keep it great work on technology innovation in the future.

In addition, we're also expanding the business too high on new technology business.

The combined heat and power generation project, a project utilizing biomass technology project by all of them.

On the H E project on.

Back to the person find our sources of revenue on in Chihuahua they'd go most of the profit making.

Now I will turn the call over call. It yourself on mute the Hao, who will review of uncovered on the second quarter financial results.

Comments will be delivered in English by my colleague Janice won't send it. Please go ahead.

Thanks, Michelle and thanks, everyone for being on the call on behalf of the management team our summarized on K financial results for the second quarter, two I need it to anyone on.

So I will on occasion money with it to specific production lines shows 80, the ways various product all of it.

It may clear of wage products on the wafer into the Rockford.

The number of system for all of production lines provided on slide number 17.

Now, let's look at a solid financial performance for the second quarter of 2020. One please turn to slide number seven.

For the second quarter of the 2021 total revenue increased 17 six upon the fly push into 246.5 minute did two of the increase in sales of volume on Sandy and offset printing paper.

And interest in average selling price of sand, he and the tissue of Paypal product.

Turning to slide eight for the second quarter of 2021 the same day segment, including those Regulus N P and light weight CMP generated revenue of 36.8.

8 million, representing 17, nine quoting one person debt with total revenue.

Sure people on the strengthening of revenue of wedge from our readiness M P product.

On the 16th day between me and it was for on light weight CMP.

Sandy segment of the ballroom it significantly increased by 24 on the Geo question to 73900 and of 19 eight pounds of weight that the thousands body hanging on the seven pounds of regular 70, and the 30000, the 491, telling us what it like to wait for SP.

Average selling price of ASP for regulation, the increased by 35 going the one person to buy the hangar the breakdown and Nash day for lightweight send the encouraged by is there anything for it to question too well hang on it and 86 of the town.

Turning to slide nine for the second quarter 2021 we'll recognize the revenue of <unk> 2 million from all of a set of premium paper products.

I think for himself of 10400 and it.

15 counts and nasty of say 10, good and the 19 per town.

Turning to slide 10, where you recognize the revenue of to go on the 4 million from tissue paper products or is that in the quarter of 2021, resulting from the shelves of to sell in the 196 towns and then Nasby on one side on the way hindered the six penthouse.

Yeah.

Turning to slide 11.

So the two.

Men and 600, and the 35000 of pieces of Facemasks and generated a revenue of.

Going to 11 million from selling face masks for the second quarter of.

Twos on the 'twenty, one slide number two of them summarization of the changes in our revenue mix.

For the seventh quarter of 2021 total cost of sales increased by 19.7 million to 43 point of 1 million leading to total gross profit of 3 million 18 point, the 4% increase from two 6 million for the same period of loved it.

And overall gross profit margin of six four and the 5%.

For a second quarter O two zone in the 'twenty, one as G&A expenses decreased by 22.6 percentage to two point of 6 million and income from operations where.

The reported 4 million compared to loss from operations of the other point 8 million for some period of last year.

Operating income margin, whereas the other point.

90 per cent compared to operating loss margin of the strength send for us than peer of last year.

The second quarter of 2021 net loss, whereas the appointing the 5 million, resulting in the net loss of one cents per basic and diluted share this compared to a net loss of 1 million net loss of four cents per basic and diluted share with him here last year.

For the second quarter of 'twenty, 'twenty, one and it before interest taxes the debt.

Depreciation and amortization increased by six point of the 1 million to nine point as it was 3 million from $2.9 million for the same period last year.

Now I'll shoot the gear to year to date the financial results for.

It is six months of any of the June 13, 2021 total revenue increased 101 point of 5% of the 270 pool on the 7 million as a result of the increase in sales of volume of it.

N P product and also the printing paper it publix and the increase in average selling price of sandy and the tissue paper products for it.

Six months of Andy of the June 13, 2021, the Smbs Jackman, the including both deregulate and light weight CMP generated a revenue of.

57 point of 5 million, representing 81 corner three per cent of the total revenue.

$47.2 million in revenue it, whereas some of our reckless in the products and the 10 cornice. The remaining orders from light weight CMP.

Volume for the Stampede Jasmine increased by 47 per one three per cent to where it hindered and the safety you saw it in the two hinge on that 94 towns of wage 94000, It 100 and the city is three towns where reckless N P and the 'twenty was though in the 100 and the 61 pounds of lighter weight.

And Pete and I.

As people reckless and the increased by 32 on the one person the two five of hinder the and the children's health one of the ASP for light weight CMP increased by 30 pool in the 5% of two of 487 put down.

For the six months ended the June 30, 2021 tissue paper products.

Sorry, our offset the premium papers segment generated the revenue of nine point, Mr of million, whereas ship the $30 in the white hindered and 57 pounds of all of a set of premium paper, whereas six months of any of the June 13.2021 net.

The increase of five it hindered and of 21% from the same June of last year.

As people will offset the premium paper increased by 18.7% choose they can do it and 86 per town for six.

Mouse Andy of the June 13th twenty-two anyway tissue paper products generated the revenue all of the street corner, so minute increased buys of appointing three minute.

Eight four on the 7% does it resulted from sales of 3000.

300, and the 17 counts patient type of projects waste of 18 point of five per cent decrease and it nasby of why Sheldon when it hindered and aid part of town or does it increase the off so it is 3.3 per cent.

For the six months ending of the June of searching twos on the 'twenty, one fish masks generated a revenue of.

The appointed 2 million. It was sales of volume of 6 million, who handled and the 17000 pieces of face masks.

Well the six months ended the June 32 zone on the 'twenty 110th the cost of the sales increased by as the industry pointed so many of them June 17th LIBOR and the 9 million leading to total gross profit of $4.9 million and the increase of 100 and the street point of five per cent from last year our low.

Gross margin of six 9% with lunch and increase of the point of one percentage point from last year.

For the six months any of the jobs. It in 2021 SG&A expenses were five on the Germany compared to six <unk> in the 1 million wasn't here last year for.

The six months June 32 zone plenty of them lots of them operations decreased the from three point of the seven minutes to go and the 3 million operating loss margin was the appointment of Volcker scent.

Compared to Pimco and the five percentage for the period last year.

For the six months and in the June 32 Zone 21, net loss was for eight of many of the zero point 10 loss per basic and diluted share compared to net loss of the St. Paul on the Bourbon It all.

Al.

For days and the loss per basic and diluted share. It was into your last of year for six months ended the June 30, twos on the dwell anyway.

EBIT has decreased from 9 million to 4 million for same period of last year.

Moving to slide 18, and the 20 <unk>.

It looks the balance sheet, the and the liquidity.

As of June 32, going into 'twenty, one to tell me, how the cash and the balance is short term debt, including bank closed current portion of long term loans from credit Union and the related party items and the longtime Dodge and gaming related the party items of 30 per.

One 3 million.

Pinpoint two imminent and it fits point 6 million, respectively compared to four point of 1 million two of pulling the 2 million and <unk>.

For the 6 million respectively at the end of 'twenty two it.

Net accounts receivable was five point, the 6 million as of June 30, twos on the 'twenty, one compared to two point of 4 million as of December 31st the 'twenty 'twenty net.

Net inventory. It was 11.7 million as of June 32 zone. The 'twenty, one compared to one point of 2 million at the end of two of running as of the Genesis to sell on the 'twenty. One the gummy had part of the assets of six 315 drape on sentiment and in it.

Current liabilities of seven important the two minute is out of our working capital of 46 point of assessment and that's what it is compared to current assets of.

Got it.

$44.9 million and the current liabilities of eight important 3 million, resulting in a working cap two of devastate of simple on the woman and at the end of two of them in doing it.

Net of cash is in operating activities, whereas.

15.6 million for the first of half of the 2021 compared to net of cash providing the bi.

The rating activities of <unk> 9 million for Jim here last year net cash used in investing activities was.

17 momentum for the first of half of the plumbing.

One of one compared to the point of 98 Amendment for the same here last year.

Net of cash provided by financing activities was only one who on the 7 million for <unk> for the first half of the in 'twenty, one compared to net of cash from financing activities of two upon the strength was sitting here last year.

Now if it will have any questions. Please contact us through email and IR at impacting.

Packaging the C and management of the way respond to your questions through email as soon as possible.

Operator, Please go ahead.

Thank you for attending it Tech packaging second quarter 2021 earnings conference call.

This concludes our call today and we thank you all for listening in.

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Hello, ladies and gentlemen, and welcome to participate in it it Tech packaging second quarter 2021 earnings Conference call.

At this time I would like to inform you of that this conference is being recorded and that all participants are in a listen only mode.

Joining us today are Mr. Zheng young Lou I detect packaging as chairman and Chief Executive Officer, and MS. Jing Hao of companies, the Chief Financial Officer free.

Remarks from both of Mr. Lu and with how it will be delivered in English by interpreters.

I detect packaging announce it second quarter 2021 financial results via press release yesterday, which can be found on the company's website at www Dot I T packaging dock CN.

First Mr of it will brief you on the Companys key operational highlights over the second quarter 2021 and MS. Hao will review the company's financial results.

Before we start the I would like to draw your attention to our safe Harbor statement.

Management's prepared remarks contain 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 its announcement are forward looking statements, including but not limited to anticipated revenues from the <unk>.

Corrugated medium paper tissue paper, and offset printing paper business segments, the actions and initiatives of current and potential competitors the company's ability to introduce new products, the company's ability to implement capacity expansion market acceptance of new products General.

Economic and business conditions.

The other T to attract or retain the quality of care 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.

Dictations assumptions estimates and projections about the company and the industry.

The company undertakes no obligation to update forward looking statements to reflect subsequent or current events or circumstances or to change or the changes in its expectation, 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 this expectation it will turn out to be correct and investors are cautioned that actual results may differ materially from the anticipated results.

There is a presentation document featuring management's prepared remarks and is now available for download from the company's website at www Dot I D packaging Dot C N.

Please note.

There will be discussions on non-GAAP financial measure or EBITDA or earnings before interest taxes, depreciation and amortization of please.

These are for refer to our press release for a complete reconciliation of EBITDA to net income.

That's the kind of reminder, all numbers in our presentation of our coded in U S dollars and all comparisons refer to year over year comparisons unless otherwise stated.

I would now like to turn the call over to Mr. Lou his comments will be delivered in English by Dawn Cao from Evergreen Investor Relations Miscalculates go ahead.

Thank you operator on good morning, everyone.

Thanks for joining our second quarter 2021 earnings conference call.

It continued to make the improvements in the sales volume of Sam P on offset printing paper products for this quarter.

Our total revenue increased by 76 on 5% to $46.5 million, resulting from the 33.9% gross of ultra or sales volume and the 36% increase the average selling prices for all categories of product.

We reported a 18.4% increase of gross coffee and the.

Operating income of coins 40 free media.

The average selling prices the overall category of product for this quarter increased one point for click on for the fourth quarter 2021 on recording a new high since Q4.2018.

And the robust domestic market demand for tissue paper products on improved production efficiency, we continue to expand the overcapacity for launching of new tissue paper production line <unk> P M.

Got it with great leap or a walk on for months.

The company has obtained approval for surgical market products from local food and drug administration on.

<unk> completed all corporation on crafting works of the mask production line on mute.

Estimated production capacity of 45 moving pieces of market potential.

Potentially creating for me see promotional items.

The company obtained the first batch of new utility of paper could keep it great work on technology innovation in the future it.

The vision, we're also expanding the business through high on new technology business, such as combined heat and power generation projecting a project utilizing biomass technology project.

On that.

Your project on it.

Back to back for certifying our sources of revenue on being sure they'd go most of the pocket Mikey.

Now I will turn the call over call myself on mute the Hao, who will review uncovered the on the second quarter financial results.

Her comments will be delivered English by my colleague Janice lump sum of it. Please go ahead.

Sam Smith Chao and our one for being on the call on behalf of the management team. Our summarize some key financial results for the second quarter of 'twenty or 'twenty one.

Also of our occasionally refer to specific production lines are still shaky the ways various product.

It will make clear which products on the wafer into for US the number of system for our production lines provided on slide number 17.

Now, let's look at our financial performance for the second quarter of 2020, one place tend to slide number seven for <unk>.

Second quarter of the 2021 total revenue increased 17, six four on the fly push into 246 upon the 5 million due to the increase in sales of volume I understand the and offset the printing papers and increase in average selling price of seven P. M.

Tissue paper product.

Turning to slide eight for the second quarter of 'twenty or 'twenty, one the same day segment, including those Regulus N P and light weight CMP generated revenue of 36 eight.

8 million, representing 79, 1% of it with total revenue.

Certainly part of the streamlining.

Of revenue was from our readiness M P product and the 60 stages for me and it was from light weight CMP.

Sandy segment of the ballroom it significantly increased by 24 core material question to 73009 hinge on the end of 19 eight pounds of weight that the 8000 quite of hanger and the seven Townsville irregular 70, and the 30000 of 491 towns where it light weight CMP.

Average selling price of Asps for regulation the increased by 35 on the one person to buy hanger, the breakdown and Nash day for lightweight then the increased by is there anything to point it to question two.

And you had an 86 of the town.

Turning to slide nine for the second quarter 'twenty 'twenty. One we're recognized the revenue of <unk> 2 million from also the printing paper products.

Nothing for himself of 10400 and it <unk>.

<unk> counts and the SP of 600, and the 19 per town.

Turning to slide 10, where we recognize the revenue of the to go on the 4 million from tissue paper products or is that in the quarter of 2021 resulting from yourselves of to sell it in the 196 towns and then Nasby of 1000, the way hindered the sixth penthouse.

Yeah.

Turning to slide 11, where it showed the too.

Mainly on 600, and the 35 south of the pieces of Facemasks and generated a revenue of growing to 11 million from selling facemasks for the second quarter of twos on the 'twenty one.

Number two on summarization of the changes in our revenue mix for.

For the seventh quarter of two of them 21 total cost of sales increased by 19.7 million to 43 point of 1 million leading to total gross profit of 3 million.

It important the 4% increase from two 6 million for same period of last year.

And overall gross profit margin of six four and the 5%.

For a second quarter O two zone in the 'twenty, one as G&A expenses decreased by 22.6 percentage to two point of 6 million and income from operations where it.

For the reported 4 million compared to loss from operations of the other 0.8 of mainland for same period last year it.

Operating income margin, whereas the other point.

90 per cent compared to operating loss margin of the street sense for same period last year.

For the second quarter of Tis on 21 net loss, whereas the airplane the 5 million without taking on net loss of one cents per basic and diluted share this compared to a net loss of 1 million net loss of four cents per basic and diluted share for same period last year.

For the second quarter of 2021, and that's before interest taxes the throughout.

Depreciation and amortization increased by six four on the 1 million to nine point as it was 3 million from $2.9 million for sake of period last year.

Now shifting gear to year to date financial results for six months of any of the June 13, 2021 total revenue increased 101 point of 5%. The 270 per on the 7 million as a result of the increase in sales of volume of.

The Sam P product and also the printing paper it products and the increase in average selling price of sandy and the tissue paper products.

For the six months of Andy of the June 13, 2021, the Smbs Jackman, the including those who regulate and light weight CMP generated a revenue of true.

57 point, the 5 million, representing 81 corner three per cent of the total revenue.

$47.2 million in revenue it, whereas some of our regular CMP products and the 10 points of Remington was from light weight CMP.

All of them for the Stampede government increased by 47 per one three per cent to.

For hindered and the safety side of it in the two hinge on that 94 towns of wage 90 forced out on that 100, and the studies three towns where reckless N P and the 'twenty was down on the 100 and the 61 Townsville of light weight CMP.

As people reckless and the increased by 32 on the one person the two five of hinder the end of two hotel one of the ASP for light weight CMP increased by surgical on the fly person the two 487 per town.

Yeah.

For the six months ended the June 30, 2021 tissue paper products.

Sorry, our offset the premium papers segment generated the revenue of nine point, Mr of million, whereas ship. The 30557 pounds of all of a set of premium paper for six months of any of the June 30, 2021 and the increase of five of hinder the end of 21 price.

And from the same here the last year.

As people offset printing paper increased by 18.7 person chooses they can do it and 86 per account for it.

Six.

Mouse Andy of the June 13th twenty-two anyway tissue paper products generated the revenue all the streak on the seven minute increased buys of appointing 3 million.

Oh eight co on the 7% does it resulted from sales of 3000.

300, and the 17 counts patient type of projects based on 18 point of 5% of decrease and it nasby of why Sheldon why it hindered and eight per town was the increase of so these three paloma three per cent.

For six months of any of the June 13th choose on the 'twenty, one facemasks generated revenue of it.

The appointed 2 million it was shelves of volume of 6 million, who hindered and 17000 pieces of face masks.

Well it six months any of the June 32 of the on the 'twenty 110th the cost of the sales increased by 33 point of Jo Mill into 17 fly point 9 million, leading to total gross profit of four 9 million and the increase of 100 and the street point of 5% from last year our raw.

Gross margin of six 9% with match and increase of the point of one percentage point from last year.

For six months any of the jobs. It in 2021 SG&A expenses were a pipe on the Germany compared to six calling the one minute it wasn't here last year.

For the six months June 32 zone 20 of them lots of them operations decreased the from three point of the 7 million to go in the 3 million operating loss margin was the appointment of Volcker scent.

Compared to 10 core in the five percentage for the period last year.

For six months and in the June 32 is on 21 net loss, whereas for the Ada meeting all of zero point 10 loss per basic and diluted share compared to net loss of the St. Paul in the Bourbon It all.

For days and loss per basic and diluted share. It wasn't here last of year for six months any of the June 32 zone the do anyway.

EBIT has decreased from 9 million to 4 million for same period of last year.

Moving to slide 18, and the dwelling.

Let's look for balance sheet, the and the liquidity.

As of June 32 is on the 'twenty one for Calvin you had the cash and the balance is short term debt, including bank closed current portion of long term loans from crowding of the union and the related in part of items and the long term debt, including related party loans of 30.

The one 3 million.

Pinpoint sue imminent and it fits poor in the 6 million respectively compared to for point of 1 million to a point of 2 million and for <unk> 6 million, respectively. At the end of 'twenty two it.

Yeah.

Net accounts receivable was five point, the 6 million as of the June 30, twos on the 'twenty, one compared to two point of 4 million as of December 31st the 'twenty 'twenty net.

Inventory it was 11.7 million as of June 30, twos on the 'twenty, one compared to one point of Germany at the end of two of running as of the Joseph who choose on the 21. The gummy had part of the assets of six 317th drape, one shutting it in and of current.

Liabilities of seven important of Germany is out of our working capital of 46 core in the six minute reservoir of as compared to call on the assets of.

So it.

<unk> 40 for the 9 million and current liabilities of eight important 3 million is on it in our working capital deficit of circle on the 4 million at the end of the two of them in doing it.

Net of cash is in operating activities, whereas.

15.6 million towards the photos of half of 2020, one temporary June out of cash providing the bi.

The rating activities of fly 0.9 minutes for Jim here last year net cash used in investing activities the word.

The 17 momentum for the first of half of the Colombian 'twenty, one compared to the other point of 98 Amendment for the same here last year net of cash provided by financing activities, whereas all of the one who on the $7 million for them for the first half of 2021 compared to net of cash.

From financing activities of two upon the strength was sitting here last year.

Now if you have any questions. Please contact us through email and IR at.

Packaging the C and management of the way respond to your questions through email as soon as possible.

Operator, Please go ahead.

Yeah.

Thank you for attending it Tech packaging second quarter 2021 earnings conference call.

This concludes our call today and we thank you all for listening in.