Q4 2021 Gulf Resources Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to the Gulf Resources' conference to discuss fourth quarter and full year 2021 financial results.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It's now my pleasure to turn the floor over to your host Helen Zhu.
The floor is yours.
Okay. Thank you operator, good morning, ladies and gentlemen, and good evening to all.
Joining us from China, and we'd like to welcome all of you to Gulf resources fourth quarter and full year 2021.
This conference call.
The answer is.
Our CEO of the company Mr. Sheldon you also joining us on this.
Our call today I'd like to remind you to all of this note that this call certain.
Management's statements during the call with Goldman.
Forward looking information about coffee Saatchi incorporation.
CBOE.
And the product.
Okay.
Rest of the site.
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90, <unk> Street, and the new sweep the cash.
Under the Securities Exchange Act of 90 <unk> Paul.
Subject to the Safe Harbor Clayton <unk>.
Actual results may differ from those discussed today.
Into account number.
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That's not limited to the general economic and business conditions.
China.
Associated with that.
<unk>.
The damage at the bright future.
Future product development and production capabilities shipments to end customers market acceptance of new and existing products.
Additional competition from existing and new competition from the bromine and.
Sure.
Chemicals products changing technology.
To make future bromine assets and the release other factors beyond the Companys control.
All forward looking statements.
Brett you qualified.
Piracy.
Cautionary statements and the risk factors detailed in the Companys reports filed with the SEC.
Coffee sourcing as you know.
Geisha to revise or update any form.
Statements to reflect EBIT.
Circumstances after that date.
<unk> of this call Accordingly, our company believes that expectations, reflecting those forward looking statements are reasonable.
<unk> can be no assurance.
Such will prove to be correct.
And in reference to the Companys future performance.
Present the management.
Estimates as of today, the 13th of April 2022.
For those of you unable to listen to the entire call at this time.
A replay will be available at the Companys website.
Call is also accessible through the webcast.
Wendy is accessible through our webcast.
Please locate our press release issued earlier for the details.
So first of all I'd add to that as we view the fiscal year and fourth quarter 2021.
And then product.
Updating investors on each of our segments.
Of that 2020 west difficult year with revenues exceeding.
Approximately by UBS.
Zika is 95% compared to the premium.
Physical yet.
Gross profit was approximately tens of one $9 million or you, Chris 217% from the previous year.
Margins were 15, 7% versus 41, 2%.
Property.
Our taxes improved approximately <unk> 9 million to $5 two media from a loss of approximately $9 7 million.
Z.
Approximately $6 3 million come to a 17% op profit, reflecting the cancellation of <unk>.
For our tax assets.
Loss after taxes declined 18, 9% to.
924, Belgium and $718.
So let me step towards comparability to the methanol facility that depreciation expenses.
<unk>, new full $3 million.
For clothes factory number two number eight and number 10.
Second reason there are approximately $2 7 million for the cancellation of a deferred tax asset.
And the third reason.
Approximately three $1 million in compensation charges for the shares being issued a companys monumental Duncan.
And the staff.
So now as you see on the operating results by segment.
The next move bromine segment.
Revenues in bromine increased by 78% to approximately $48 8 million increase was due to an increase in volume of 24%.
An increase in pricing.
7%.
Yes, 2021, the average selling price of bromine worse.
RMB 42, Dogger forehead slide 44.
Price is RMB five.
5600.
Gross profit increased by 182% to approximately $26 million gross profit margins were 53% compared to 37%.
Net income in bromine increased by 700 can be 7% to approximately $13 $4 million.
For crude Salt segment revenue also includes stock increased by hundreds and.
One person to approximately $6 $1 million.
For the fiscal year, the crude swap segment lost approximately one $1 million compared to a loss of three $6 million in the previous year.
Lastly, let's look at the chemicals and natural gas segment.
The chemical products segment.
<unk> paid a loss of approximately $2 5 million roughly in line with the loss in the previous year.
Chemical business did not operate in year 2021, the natural gas segment.
A lot of.
Approximately $167000 and natural gas Bank Amendment also did not operate in year 2021.
Now, let's review our first quarter 2021 results in the first quarter of 2021 revenues increased 76, 7% to approximately $29 million gross margin increased 156 and the 2%.
Marty.
Were 62, 4% compared to 43, 1% in the previous year.
Flagging, the higher prices for both bromine and crude salt income from operation.
<unk> increased.
350%.
Increased <unk>.
718, 1%.
The company incurred a loss of approximately $1 $1 million versus a profit in it.
Previous year.
Number of unique accounting impact.
<unk> first quarter results.
Firstly, the depreciation in the fourth quarter was approximately $4 $5 million.
Then the previous year, primarily because we took all the depreciation for the three factories.
Closed in one quarter.
As will mentioned earlier.
Secondly, the tax rate was 129% of profit instead of the traditional 25 purchase because we canceled.
<unk> tax assets.
Doug.
Excluding this one time event, we would have shown a profit in the fourth quarter and in the year and the hull.
Now, let's look at cash flow for the year the company generated <unk> 3 million dollar cash.
Operations compared to $9 3 million in the previous year.
Capital expenditures were $31 million compared to $21 7 million in the previous year approximately $23 million worse.
Upgrading will echo that and as a result is on the chemical and crude salt segments.
These expenditures.
And.
There are approximately $8 $4 million.
Equipment for the new cancer Factsheet.
Now, let's look at the balance sheet. The company ended the year with cash.
$95 8 million Donuts.
Per share basis.
10 million 47 471 billion.
920, full shares issued and outstanding and lead by.
December 31st 2001 is to eat caused two nine solar and thinking.
The net cash per share were <unk>.
<unk> and <unk>.
Working capital per share was $9 <unk>.
Shareholders equity was $27 77.
Now, let's review our business by segment.
Firstly, let's look at bromine and crude salt segment.
The pricing.
Bromine.
Bromine prices have declined from the record high.
<unk> achieved were closed.
<unk> remains substantially higher than last year. According to a sensor Stockholm bromine prices per ton was $36.
222.
On April 15 2021.
15th.
<unk> 600 <unk>.
The cost saves.
Yes 2022.
We expect higher prices to continue for a number of reasons.
First the bromine side.
<unk> has been permanently shutdown secondly, because of the winter shutdown and Neil Colby.
Restrictions.
Some of our customers have not yet we assumed the protection.
Demand for bromine products such as pharmaceuticals.
And the pipeline is increasing fast.
Last call.
It could potentially lead to an even more significant price increase is the use of zinc bromine batteries. The company's strong zinc bromine is now being used.
Hybrid batteries appear to offer significant applications for <unk> and the power storage.
<unk> does not know how important.
Application could be flat.
According to a savvy market data for a custom published.
April seven.
Is it type of the market for zinc and broaden the batteries is protected.
To grow from $8 6 billion.
Two of them to be one with $26 million.
2027.
I'm, not making any projections, but we see it.
Adoption of this battery could it have a significant positive impact on the price of bromine.
Factory number.
Two number.
The government is continuing its environmental planning cost of pollution.
The population against the pollution and the impact of the notes.
Online.
Turn to complex make us increasingly optimistic.
The company will receive approval to open one or more of these factories.
2022.
I'd like to be required to invest in mute.
And that's a total cost of these rectification with depending on the requirements of the government.
<unk> cannot be estimated until the government gives us capacity construction.
<unk> is the current price of bromine expect factories will be strong contributors to profit.
Chemical factory segment.
Following the Elektra stickiness chicken.
<unk> in.
In February <unk>, two we got some chemical production at that time, the company requested the production and delivery of most of the payment.
PDT measured manner, we have launched 30, when all the equipment will be delivered as some of our windows are still close to cost.
Yes.
Albeit restrictions each cannot however, we do believe that <unk> should be delivered and installed by the third quarter of 2022.
<unk> cost by the extra seating issues may decrease.
Total cost of the <unk> expense by approximately $5 million.
As we have previously noted.
Once the equipment is installed we will begin test and.
<unk> production this process should take about.
Approximately to be six months.
Assuming this could be another win quite closure.
Commercial production to begin in 2023.
Our company has.
Strong demand for the types of pharmaceutical intermediate products and the byproduct.
Having a factual report that.
Pricing remains extremely strong the company believes expect she will generate sales and profit.
2024.
The company will be actively posting photographs of the factsheet.
Leicester can follow our progress.
Lastly, let's look at our Sichuan natural gas on the right projects.
The company is still waiting for the provincial government of Sichuan to finalize its NAND and our resource planning for Strep Province, We hope investors can understand that this plan is not only for that is for the entire problem.
About 84 million people now test for our project as a result, we cannot project <unk> will complete its work.
However, we do remain optimistic about the long term potential.
In that some investors have asked why we remain optimistic about this project there are two reasons.
Yes.
Central Government has approved reserve privately owned and prices.
Allowed to participate in the natural gas protection Steven This approval, we can now.
Since the application will be denied.
While we have been reaching for the problems to complete its planned the fundamentals on the line.
These projects have.
Significantly.
Natural gas price continues to rise antenna has a shortage of energy.
It can be energy bromine prices and we have discussed also continued to lag the company would like to remind investors that the bromine concentration is to Trump.
Trial argument would be high.
Beneficiary and cash investments have also asked why we do not put our substantial cash balance in long term financing instruments.
Could you provide us is.
Additional income.
So yes, we have not yet handle on the timing of decisions by the government opportunities on which we could capitalize.
We are now moving ahead and complete the construction of our chemical connection.
Indeed, we will receive.
Approval to open one or more of our closed bromine factories in year 2022, opioid use factory that will require some capital expenditures as well.
And when we receive approval in Sichuan Province, we want to be very aggressive in trading for both natural gas and brine resources now suggest in our existing location well, but in other locations that we have identified.
You can see the acquisition.
Guidance.
We will provide guidance for the full year when we report.
Our first quarter in about one month.
Because of the winter closures and the impact of the coach.
On crude salt production.
First quarter 2000 through the first quarter is the weakest quarter offer yet in the first quarter of 2022, the company expects first quarter revenue to be higher than most of the previous year.
Also expect.
Love to be very sticky in the deal.
However.
Smith.
Good any potential non recurring factors.
Write offs now.
Now, let me turn the call to our COO Mr. Liu.
That's all.
Great.
Or should I go for your virtual.
So, our Shanghai, and Doug and Jeff I'll answer you.
Our union diesel due to current churn in the Teva deal Humphrey.
Thank you.
And Mr. <unk> Liu the CFO of the company first of all I would like to welcome all of you to Gulf Resources earnings call fourth quarter and fiscal year 2021.
Core to the premiere pure.
I'm going for the last two or three from Timna when the mayor either though.
We're sold out on or this is on for Yaron.
Payphones revaluation.
With our insurer.
Two questions for me.
Yes.
Sure.
So as I mentioned, returning for grid hardening initiatives in Asia.
Well, Michelle Cheng from some parts of the firm.
Yes.
That change up.
The last four years have been very difficult for our company.
We must have.
Predicted the our business would be impacted by one of the worst typhoons in Chinese history.
Have predicted Colgate.
The current we cannot have predicted impact that COVID-19 could have on the planning processes.
All of the government.
Well, we believe we are beginning to see significant progress.
On all fronts.
Well I'm not very sure that Hershey Gouger Dunbar station goal.
I'm very human donors.
Or come down.
Sure the Sundar neutral.
Going there Gordon so sure to answer your question.
Sure sure.
How are you.
Oh gosh.
Glenda Columbia astonishing.
So as a whole you Josh social Bonita.
Peter.
Yes.
Please send them to the phone client or long term debt at June <unk>.
Two is you have on how much you are sure chiara being partial tushar.
Our system test.
Do you guys have a long term so we often times don't guarantee.
Yes.
You can go to multi.
We are very encouraged about the continuing high price of bromine as we noted in our press release, we are seeing new demand for bromine and supply remains highly competent.
At these levels, our bromine and crude salt business should be profitable. We also believe we will be able to get approval for F&B one of our bromine factories this year.
Now that following the electricity restrictions are being eased.
Moving as fast as we can.
Finish construction and <unk>.
Again.
And then can begin testing and trial production in our new issue can actually expect this factsheet, which will primarily project pharmaceutical in lithium.
Products with higher gross margin.
<unk> sure.
Hello, Mariana Yoshi issues lingering from time to ensure her social Domingo controlled alterra in sheet.
Sure sure.
Sure China Chisel.
Mobile phone attributing Stifel.
With us from the launching.
The elements it up to your question to Bob.
EMEA, which will go into <unk> <unk> syndrome and sure.
For PC.
<unk>.
There will be the build on machines.
Well my assumption.
Our net.
Could she shareholder Xiaomi also the social currently with <unk> syndrome.
Timna what about their hartzell are the highlights.
Despite the delays.
I'm confident that we will be able to produce natural gas and bromine strength, China needs more natural gas and bromine and we expect to be part of this development, while we cannot determine if or when this will occur.
No. The OTT is huge it has a <unk>.
Cash to grow our company and the new <unk> compliant, we believe that the sales and profit will increase in 2022 and is subsequently yes, now let me turn the call back.
<unk> four question.
So operator can we open our Q&A section.
Certainly ladies and gentlemen, the floor is now opened for questions. If you have any questions or comments. Please press star one on your phone at this time.
We ask that while posing your question you. Please pickup your handset listening on speaker phone to provide optimum sound quality. Please.
Please hold while we pull for questions.
Your first question for today is coming from Asher Stein Asher Your line is live.
Yes, hi.
<unk>.
My question relates to buybacks and goodbye.
Jim.
Adjusted before but it appears that the net current assets of the company is around $9 per share.
I got an email from me over this quarter, saying that there's no actual restrictions on share buybacks or dividends just that it's really difficult.
But in my opinion.
The company can.
<unk>.
Share buybacks for.
You bet dividend, we've shared pretty much work group and the company would be better off liquidating AUM returning will be.
The cash the shareholders want to know what your opinion on that is.
Okay.
So I assume the major question that is the company consider any buyback based on the current and next.
<unk> per share was $9 17.
Yes. My question. My question. My question is that the net current assets.
Per share is around $9.
Obviously, the share price well below them and obviously the reason is because.
The company is not returning value to shareholders.
Through buybacks.
Any way you want.
No ways to get cash back to shareholders.
So I don't see where that where that value.
You are going to come from the company.
Got.
Has the company started any process, which will return value to shareholders through buybacks.
Okay I got you. Okay. Thank you I will translate for Mr. <unk> for your question Firstly.
It was an in house digital ambitions lie to you posted your edge sustained complement issues like <unk> Chan officially changing terms with the Hiseq consumable Chandler's, Russia may 13th such hat.
Should that all right. Thanks, it sounds equals cash at home depot sales have gone through May of 2019 share how do you how quickly advancing projects Diego Hotel playbook.
Michael.
Sure the Macondo.
When do you think about what are you assuming <unk> younger concessions on your 100 year. We should let you talk for just a short obviously opportunities a year or so.
Go Hawks.
No.
Hum.
Okay.
Hi, Alicia like.
Mr response data as we can play in all of this call.
And even in our press release that accompany.
Once too.
Because of its major concentration still its operation and we have three businesses three major business segments, our bromine factories, we have to.
We open them, we may need the cash on hand to Oklahoma, and Arkansas factories, which is also under construction now.
And our natural gas in Sichuan project, which may need fronts anytime with government approved and we need to to more investment on that project for the company's current concrete attrition still wants to put his efforts to put to make case operations back on normal firstly.
Then after everything is on track and the business our normal operation then you can see the buyback.
I'll pay dividend at that time to reward our shareholders and investors.
Got it thanks.
Okay. Thank you Youre welcome.
Yes.
Your next question for today is coming from Frank Many Frank your line of lives.
Thank you I have a suggestion that should dramatically increase Gulf resources share price and liquidity.
You should hire a good investment banker to sell Gulf resources to an appropriate buyer.
Gulf resources could be bought with the buyer of shares.
The buyer should be a publicly traded company with a good business reasonable share price and much higher trading volume in Gulf resources.
A reasonable price should be at least $12 per share.
I say this because of the Companys cash working capital.
Shareholders' equity and business as recently reported.
The buyer could keep the current Gulf Resources' employees to operate your business.
Mr. Lu Please comment what do you think of this idea where you discussed this with your board of directors.
Okay. Thank you and we will translate.
The occupancy issue as opposed to a friend to many many pressures.
Hi, Jamie.
Jamie tissue, Susan Hardwick, Hong Kong Nonbank Constitution will get there.
Can you maybe some more channels to grow 10% in equity was ramping according to local taxes that you mentioned that sharp sharp downhole.
<unk> could you kind of comment Michelle ash with Amanda.
Hi, Sean Toulon needle injection.
Great.
Pricing power.
<unk> total.
I think it certainly does.
Hi.
Jose.
The process of how you saw either Archie.
Perpetual, but also with other transit highest gold town.
Hi.
So that's the background.
Michael Douglas just.
Just as a separate issue.
Currently patients.
<unk>.
Do you have that coal fly bankable constitution jobs all quarters. So.
It seems kind of a post.
That should help with Asa temporal Michael.
How do you tell them going forward.
Yes.
Perfect.
Response from Israel to state is that there is one call one investor.
In contact you as a company chairmen.
Before previously.
The youngest idea.
The chairman and across the Atlantic is tasso biased.
Also based on Chairman's opening yes. He think he build up this company with <unk> efforts and hard work.
Please does not want to sell all of it.
To others, but they too can see the two when the economy become better and the controls and the.
We are making to those with final investment bank to increase the value of the company.
And to assign tech investors.
Investors.
And try to increase the company's value more.
Okay, I think everybody that.
Follows Gulf resources knows that.
A big problem is the share price and the liquidity and and I know one issue is.
Dividends, the difficulty of dividends and I just think that.
The idea of selling the company.
To accompany that.
With public and had a higher trading volume and a reasonable share price would be a good way for the investors to get the price.
Price they deserve.
Dean.
I think we've got your idea and.
There is a discussion with chairman and the board already and the PMA is hard to make the decision for him and then abroad as well. They think they may find investment bankers to increase the value of the company more than cover the controls better.
Maybe with the situation become battery market and they tried to increase the value for our investors.
Okay. Thank you very much.
Youre welcome.
Once again, if there are any questions or comments. Please press star one now.
Your next question for today is coming from Randy Liggett, Randy Your line is live.
Hey, Alan how are you this morning.
Hi, Randy Fine. Thank you good Hey, I, just wanted to check in and see whatever happens to the idea of hiring a more kind of.
I don't want to say world well, yes worldwide PR firm to get to get the story out a little bit more.
Hey, gentlemen, right before me he is right I mean, the volume is just for it.
Not much Yao can do about that but I think a good PR firm could certainly help with that.
We are making a ton of money and managing the company well, but the store just can't seem to get out there and you can only do so March now I was just wondering whatever happened that idea.
Okay. Thank you I will translate Mr. First Amazon adjust should take a backseat closer than the immediate prior sure fantastic upfront.
And could that examine mattagami haggling pathogenesis.
First of all colleague Charlie <unk>.
You're going to you won't have to hold back on political culture.
We don't convert into that.
I'm looking at kind of how many channels are going through that type of units are available to the bank towards the door to his role and I'm sure that you of course, you can have that John because we don't control the consulate Dow Jones from Jordan controller towards a $90 million.
Yes.
Right.
Hello.
Finally.
Thank you.
Okay.
<unk>.
Cellcom into.
Thank you this income.
Sure.
Thank you Amanda.
Okay.
Two.
Two of them are going here.
Hum.
For instance.
One quarter guidance, but you can make a banker.
Sure Michael I'm glad that used vehicle carioca.
Your.
Your guidance.
Okay.
Kind of a typical mortgage.
Okay.
Hi, Randy but thank.
Thank you for your comment.
And then he said that the company always in.
<unk> Hello.
Yes, Ma'am our company has always <unk>.
Thank you about this suggestion and we have been looking for the.
What worked well, we'll know what the PR firm.
Yes.
But Q2, Youll know that policy now call it.
Try and China, we have difficulties to medical.
Michael.
Face to face discussion.
The possible PR firm.
This call is being part of the West East in China, We can go out.
Like overseas you can come in China, <unk> and <unk> would.
Would be much easier for our discussion on this matter is done.
Okay. Okay.
I appreciate it I'll talk to you soon.
Thank you.
Okay. Thank you.
There are no further questions in queue.
Okay.
And then Taylor on demand because you don't have that potential.
Hi, operator.
No more questions of how close the call.
To close our call for today and the 10- Q4 , albeit I think in this call for today.
Good day.
Thank you ladies and gentlemen, this does conclude today's event.
You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
<unk>.
Thank you Kenny.
Okay.
Okay.