Q3 2021 Gulf Resources Inc Earnings Call

Good day, ladies and gentlemen, and welcome to the Gulf Resources 2021 third quarter earnings Conference. At this time, all participants have been placed on listen only mode and the solar will be opened for questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Helen Zhu IR director at Gulf Resources.

How long the floor is yours.

Thank you Paul.

Ladies and gentlemen, and good evening to all of those up each on your thoughts on China and we'd like to welcome you to coffee Shaanxi third quarter of 2021 earnings Conference call.

She has director our CEO of the company Mr. Shelby Neal.

Is it also Johnny you just called today.

I'd like to remind you two O olive is from nice yet in this call. So can management statements. During the call may contain forward looking information about the coffee Celgene Corporation, and each subsidiaries business and products within the meaning of.

175 on the Sip coaches to act of 1973, and there you see the best six under the Securities Exchange Act of 97 four.

And it is subject to the safe Harbor created by those rules.

Actual results may differ from those discussed today, taking into account a number of risk factors.

Rudy, but not limited to general economic and business conditions in PRC.

[laughter] associates needs are probably 19 spanning all to break.

Yeah, sure product development and production capabilities shipments to end customers market acceptance of new and existing product.

Additional competition from existing and new competition from the bromine and other.

Hey, Nicole.

Industry, and the changing technology, the ability to make future bromine assets and.

The various other factors CEO.

The company's control.

All forward looking statements.

Breathy quantified, India and Turkey.

These cautionary statements and the risk factors detailed with the Companys reports filed with the call.

Coffee sake assume no obligation to revise or.

I'll update any forward looking statements to reflect events or circumstances. After the date of this call.

Okay.

Accordingly, our company believes expectations reflected in those forward looking statements.

Reasonable there can be no assurance of such will prove to be correct.

In addition, any reference to the company.

Asia performance, we present the company management estimates as of today, the 16th of November 2021 for those of you unable to listen to this entire call at this time.

Replay will be available at the company's website have caused also accessible through the webcast and the link accessible through our website. So please locate our press release issued earlier for the details.

So before we discuss the quarter.

To discuss our recent developments.

Three business segments and the events that have occurred after the end of quarter.

Firstly, let's look at the chemical segment.

The word and Chinese economies had been impacted by the supply chain issues in many industries.

Including the energy industry.

CPU shortages have.

Uptake Denis Leary of many products throughout the work time. There has also been impacted by shortage of energy for example in some regions of China. The governments have restricted electrical usage, including Shirwa CPU and some businesses under construction had been restricted from it.

I actually called dosage and sugar.

So the supply chain issues as well as the you know chipotle chicken.

He made the production and delivery of some equipment to accommodate new chemical factory.

In addition, the company's new chemical factory has also been distributed from the electrical usage. This means they installation hanging of testing and the beginning trial production at the chemical factory will be debate at this time the company.

Now in a position to determine the extent of the delay.

But it will keep shareholders otherwise.

New chemical effect, she will focus on pharmaceuticals intermediary products and its fine product when they produce other products by the pharmaceutical intermediary products are in high demand and provide us with higher margin.

So expect this factory will be profitable is commercial production.

Let me, let's look at the bromine segment.

As I'm sure you know that bromine prices have risen.

Substantially throughout the world and even more substantial in China.

The word market shaping issue have disrupted delivery as a result, China has eight I'm able to import it's no more shelf bromine.

We see a shortage in supply and with the mountain the prices of bromine have.

Two of the highest levels ever recorded from the second quarter of our 2022. The Endo is so called out of 2021 bromine prices increased 68, 1% reaching record levels.

And that was so called her bromine prices have increased approximately 40%.

The raw material price increases and lower than the bromine price increase we believe this type of pricing should be good for our fourth quarter 2021 profitability. The company has no idea.

And how long the current shortage will last however, we will also keep our shareholders informed if any change we have seen.

If you look at the results from the third quarter, you will be able to understand the impact of Brian bromine pricing.

Profitability in the third quarter of 2021, we sold 2511 pounds of bromine in the same quarter previous year, we sold 2301 concept bromine that average selling price.

<unk> $5939 versus 90003, sorry, $3990 I increase of 48, 8%.

At present time market prices are $10787 per ton increase.

Of 82% over the average of setting pricing the so called because theres a lag time between older received and shipping it to salaries of higher prices to impact the sales and margin in the first quarter of 2021.

In the third quarter gross profit per ton was $3310.

Versus $1569 an increase of.

111%.

If prices remain.

And if they teach our bromine business can be very profitable even current prices, we expect higher gross margins.

First quarter 2021 at this time, we expect production in the fourth quarter to be relayed to me the thing at the third quarter, the only potential issue.

Right, there's a government announces a winter shutdown because Chinese new year in 2022, Penn state, arguing that the year 2021.

Small amounts of production could be shifted from the fourth quarter to first quarter of 2022 at.

At the same time present time, we have no cook anything about the winter shutdown, we expect production from our full operating searches to be slightly higher in first quarter 2021, Daniel fourth quarter of 2020.

So for our company Rami factory number two number eight and number 10 the most.

Most recent development.

We have noted the government is completing its planning process for all mining areas due to the requirements for car production.

Our bromine and crude salt and you could use that for prevention of alert.

From our point of view, the major issue related to the treatment and disposal.

The water well the plan is not yet complete, but we know we will not be able to.

And the wastewater.

<unk> auto policy to the farmland.

This could entail constructing treatment facilities and equifax well, we cannot control the timing of government approval, we remain optimistic about being able to reopen the three bromine specialties.

Secondly, let's look at our natural gas segment.

In addition, the comes.

He also believes that the current and emerging issues impacting China could ultimately assist us receiving approval for natural gas project in Sichuan Province.

Try not badly needs new sources of natural gas.

There are not major.

<unk> gas discovery, Kim Qualcomm buying County, Sichuan Province.

Government has already ruled that primary companies can feel from natural gas.

I believe we will receive approval to return to drilling natural gas in Sichuan.

David.

Given the current price of bromine.

The company expects sales and earnings in the first quarter to be substantially better than those of the previous year.

While we are not giving specific guidance at this time.

Yeah, 2022 will be a very good year for the company because it expects higher pricing for bromine for the foreseeable future.

Improved to 43, 5% from 22, 6%.

Income from operations was $1 4 million versus a loss of $10 $5 million.

Earnings per share were two cents versus a loss of 91.

So balance sheet.

And all of the third quarter cash equaled two nine T. H quinine media dollars working cap to a worse.

Andrew bolt on spending and shareholders' equity was $282 $2 million.

On the.

She has all the spending the cash per share was $9 44 things.

Net net cash per share was $7.31 per share working capital per share was $10 book value per share was $26 $9.

Cash flow.

During the nine months period ended September 32 down in terms of what cash flow provided by operating activities.

Approximately $9 1 million was mainly due to the noncash adjustments related to the depreciation and amortization of property plant and equipment.

And it was tricky stock expenses offset by a net loss of 12 point.

Cause he too.