Q3 2022 Gulf Resources Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Gulf Resources 2022 third quarter earnings Conference call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
Now my pleasure to turn the floor over to your host Helen Xu Helen the floor is yours.
Thank you Tom.
Gentlemen, and good evening to all of you for joining us from China.
I'd like to welcome all of you to coffee Shockey startup called <unk> 2022, and this conference call.
The IR director.
Our CEO of the company used to shopping deal.
C O O b.
He will also join this call today I'd like to remind you to all our listeners.
This call certain management statements.
Given our call will contain forward looking statements about golf myself, he accomplished you're adding to your subsidiaries business and products.
Oh for sure.
175, I'm just took courage to act off 19 study three and then I.
I know that Securities Exchange Act of 95 to four.
That's subject to the safe Harbor created by those rules.
Actual results may differ from those discussed today, taking into account a number of risks that's us.
Including but not limited to general economic and business conditions in the PRC that'd be so she had to eat the Cogs 19 pandemic outbreak.
Future product development, and the protection pent up any piece shipments to end customers market acceptance of new and.
To put that.
Additional competition from existing and new competition from the bromine and other oil field and the power production chemicals change.
Change in technology.
D G to make future bromine assets and the various other factors beyond.
It's control all forward looking statement.
Yes, he qualified you'd get in parts by these cautionary statements and the risk.
Risk factors detailed in the company's reports filed that means that as you see coffee surety.
As you know vacation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Our company believes expectations reflected in those forward looking statements are reasonable there.
There can be no assurance of such will prove to be correct.
Asia and Europe .
Separate to the company's future performance the prejudice the management's estimates as of today the 15th of November 2022.
Well I'll tell you I'm able to listen to the entire call at this time.
His name is available at the company's website. The call is also accessible through the webcast.
Indeed accessible through our website. So please locate our press release issued earlier all sticky tape.
So I mean, these deals a quarter and nine months.
And then turn the call back to Mr. Miao and meal deal commentary.
After which we will have a QA section.
So firstly, let's look at the culture of the company for the third quarter operating results, which are outstanding quarter for our company.
The Cogs for that three months.
N D to September section for them to put that money to revenues increased 29% to approximately 22.8 million dollar income from operations increased 16, 8% to approximate $9 million.
Before taxes increased.
68 touch it to approximate $12 million net income increased 66 pleasant teach for approximately $90 million earnings per share increased 65% to 86 cents.
By segment segment photo contact bromine bromine revenues increased 73% to approximately $19.8 million.
Yes.
Increased 6%, while the average selling price increased 26% we had full factories operation we have prepared for.
She'd number eight four openings, we expect factory number eight to produce revenue in the first quarter 2022.
Both properties.
We're approximately two 5 million dollar increase of 15.1 question here from the results of the previous year.
Profit margins increased to 62% from 50 expenses income from operations increased pitch sitting question to approximate $10.6 million.
Crude salt segment, rather meals from crude salt you, Chris shooting person to two Pas 19, I'm talking about.
<unk> increased 3% household revenue declined to $1 million from $1 $6 million last week, you know through the relocation.
E T bromine and crude such income from operations increased.
Conversely, full present teach to approximately one $9 million from $561000 largely due to a change in allocation of costs.
So ogre centuries 2032.
The company, probably the guidance for the third quarter for our bromine and crude salt segment.
Projections were for revenue in these two segments.
20 to 21 8 million dollar actual revenues were 10, he took an $8 million.
We projected profit before tax of $9 million to $10 million extra profits before tax were a tailpipe Oh menthol.
We are very pleased to have exceeded our guidance.
Technical products.
Patton Euro.
Revenue and had a loss from operations of.
Approximately $448000 natural gas segment had revenue of.
Approximately $82000 from the rental of some of our payment back.
Direct labor and factory overhead.
Nice touch should know that we can kind of cause for our clocks that cheese.
Approximately $1 nine months ago I smoking.
Even with these costs, we were able to report earnings per share.
Oh it is six cents.
Versus the 52 cents in the previous year.
For the nine months period, ending September 32010, a tool.
The company's revenues increased <unk>, 9% to approximately 47 5 million towards the.
Income from operations increased more than 10 pets to $17 million, making.
Net income increased more than 60 times 2.7 million Telegraph I went to per share increased.
Two $1.22 from.
Sure.
By segments.
Firstly electrical catches up.
Bromine segment.
The news in this segment increased 41%.
To approximately $41 $9 million.
Net revenues were.
Was 18 1 million.
Yeah.
And the $2.2 million approximately <unk> of this increase was due to our relocation of Cogs. It's.
It's Chris Schott.
Gross profit was approximately $10 $7 million compared to 17 8 million.
Income from operations more than doubled.
Approximately $17 2 million.
Yeah.
Crude salt segment. The revenues in this segment increased to approximately $5 $5 million from full time fault meter.
Our cost includes stocks dropped to $2 9 million from $3.3 million largely due to 2.2 million indoor cost location.
Gross profit more than doubled to $2 6 million from $1 $1 million.
Income from operations was one time funding in Ghana, compared to a loss of $1 million.
Other businesses.
Can be co product lost approximately one $4 million compared to approximately $2 million in the previous year.
<unk> lost approximately $69000 compared to a loss of <unk>.
Approximately $167000 in the previous year corporate costs were.
$187000 compared to $3 4 million in the previous year.
Yeah to that company when the company incurred a pouch through part of the $1 billion.
Costs related to stock grants by September 30th two down 22.
I had to know Neil stock correct.
As noted in our 10-Q uncle Tober seven prevent any tube.
<unk> issued two one.
100000 shifts I'm sorry.
And cooking simply plan at their cost.
Approximately.
$668000.
For the nine months cash flow the company generated net cash from operations.
Approximately $37 1 million capital expenditures for the bromine segment work. So he soup had too many dogs.
First off the decline of the RMB.
Russia, and the U S dollar impacted our cash and cash equivalents by approximately $6 $7 million.
Balance sheet.
Yes, without a penny to the RMB declined sharply against these are U S. Dollar according to the website or just change in VITAS exit.
Okay.
On January 1st.
To them to put them to me to one dollar worse.
<unk>.
Thanks.
0.3557 on September 30th two downtime he tubes, one dollar work.
<unk> I.
I want to Oh full therefore, yet I think.
Decline of approximately 12 person the trough of the RMB against the U S on a cost a readout.
The impact on the balance sheet items.
The impact on our balance sheet, we ended the cross out with cash of 92 6 million dollar Oh.
$8 85.
Sure working capital was $94 1 million dollar Oh, $8 99 per share book value.
Value was $268 $6 million or 25.
And 65 cents per share.
So now I'd like to cancel the update on our business operations.
Call me, because Cogs continues to significantly impact our business. It has cost our self to me.
The bromine prices and a delay in receiving the equipment needed for our new chemical factory, we had no visibility as to when the impact of the cone.
At peak Panic will abate. However, the company is aware of that colleague even more things as you know winter months.
So issues May continue.
Bromine, killing the so called her with pre packed section eight full product.
<unk> revenues at Pac kit.
We will generate in the first quarter 2022, we have not heard anything from the local government about factories number two and pain. Yet we gave me opportunity that we may receive permission to open these factory.
Sami investment may meet in the new world crude salt palm and equity that will be required.
The chemical segments a colleague.
With that Nick and the resulting supply chain destruction.
<unk> has impacted the opening of our chemical factory, while some of the equipment has been de Levered, we're still making a feel competent.
We expect this to be deliver in that.
This quarter all activities in the first quarter of year 2010 as suite.
Once all of the equipment is C. D work it will take.
Two full months to get them installed.
After each donation that testing process.
Take two to three months.
After which we will apply for the environmental approval and other approvals from government.
After we have all the necessary approvals.
Ted will take four months to stop the trial production.
Commercial production means that by the beginning of year 2024.
That company regrets for this delay, but we could not have foreseen the continuing issues related to coffee.
Nitro gas segment. The company is continuing to wait for the government Oh, Citron province to complete the east plant.
The company believes that the trend still he presents a substantial opportunity for both nitro gas and bromine.
Company remains optimistic that that will eventually receive approval to trio for both products.
However, the company is open to considering partnerships me state owned enterprise.
First quarter 2022 protection from our bromine and crude salt segments only.
All right.
That make and the early Chinese new year are likely to impact on the fourth quarter to Anthony to it.
Chinese economy remain shut itself.
I mean prices dropped in the beginning of September .
Starting to rise.
Second week of October .
November eight.
We're at RMB 49800 yen.
Higher than that of certain temporary certainly stood out in 'twenty one.
But lord that high achieved in the fourth quarter of the year 2021.
The company expects the government to announce another winter coats.
The year to them can be true.
Can you familiar one.
February 1st.
Yeah, 2023 that will be on January 10 seconds equal to that already to date in this century.
This means there will be 10 less days of production two of them semi tool that contrast, 2023 should have approximately.
19 additional days of production because of the nature of Chinese new year.
<unk> 2004.
Uh huh.
Yes.
Given the potential of fewer days of production and the lower price of bromine. The company estimates revenues for bromine and crude salt will be in the range of $15.
For the <unk>.
8 million profit before tax will be.
After three eight to $4 $2 million in our projections.
August 13th 2022, the company indicated that bromine and crude salt wood.
It would have annual revenues between $62 million to $63 7 million.
The results for the nine months and the projections for the fourth quarter. We now project. This segment, we had revenue of $62 seven to $64 1 million.
We have also protecting these segments had profit before taxes.
Oh 10, P two totaling $1 5 million. Thanks.
Thanks to all of us at nine months and the projections for the first quarter.
Till then plenty to accompany now protects that these segments. We have had profit before taxes of 22 fold to 22 point inconvenient.
So despite slowed down costs by call me expect that exceed our orange in the guidance for bromine and crude salt for both sales and earnings.
So now I would tend to call back to Mr. Miao, and then just a little commentary.
Melville in your house.
Oh yeah.
Oh No go at your house.
Uh huh.
But it was also the sale.
Koreans are less on Yahoo unfair.
Are you do you think you do.
Cook charge, you how about the whole thing.
So what you don't want to ensure that we've got going and also the windshield sure got you.
Can you go though.
So I would do the translation for Mr. Miao is enough, stating that hi, everyone and we'll see all of the company Mr. <unk> Miao alcohol welcome all of you to Atkins it to.
2022 third quarter and nine months earnings Conference call. Andy September <unk> 2022, I will join me for me later on for the QA section following up regarding the Companys operating question.
I look on your hard at all.
Oh, well, if it goes without saying Oh soybean meal.
So as you acquire and Doug I'd like to turn job I went to you are there on yeah. Besides you do it have already.
So here or Mohan golf season.
Or just how did you do so I tend to agree with you.
It also challenging.
So UA media army yet.
So is there a renminbi.
So it shouldn't cause hunting can get easier.
<unk> well my Stirlingshire shows where the job good Joan wage tissues.
Yes.
So chunk CIO.
A woman the tapes.
All but one time conducting your heart.
Do a month so it has the town shoes chat me face how negotiation.
Well I shall issue while monthly it's all create a corridor.
Sure.
Sure so the pizza.
Okay.
So hi, everyone.
The company's CEO , Mr. Shelby Neal first of all welcome you all to attend coffee sources third quarter 2022, and this conference call.
First of all we are very pleased to have you part is such a strong so called her and the nine months results.
Runs at a penny to earnings per share with the lower RMB, making impulse more expensive and the closing of some domestic facilities.
Bromine prices will continue to be strong well means regrets D. In opening our chemical factory, we have they're confident in its long term potential. We also believe that we will eventually receive approval to Gilles for natural gas and bromine in Sichuan Province.
Well I'm afraid on central dogma, they're going for the courtyard dry shampoo.
One of these home Khunjerab propulsion.
Gordon is Hong Kong Hormel.
COBOL cement dabbled in the Chengdu Zhengzhou woman wish I wish.
That machine Menthol Lee go go on its own.
Ladies and gentlemen, Dawn you end up going through <unk>.
Okay, and then the saltwater embassy courtyard that will.
Do you ever thought about going through the Ocado call Josh.
Through local job, all Saddam, which under <unk> mirroring up with Bureau of Menthol combat ship.
Well, Mr Dog, where does your uncle's off real quick okay.
No.
Well Miss you owe me Crazy Bushing does well.
Or no.
For the.
So she's a.
Joseph you kind of through June .
Political bucco truthful.
Therefore core sheet.
We have very aware that our shareholders are unhappy at least our share price.
We want to assure you that the company amendment is even more unhappy because last year company management repaid more than 11 years.
Oh.
A big portion of their cash compensation.
And we do not believe that you can't find another case, where a company X curative officer, Ted So many years of cash salaries for sure Kimberly.
Simply put we are.
<unk>, our carriers and the welfare of our families on the price of our shares.
The stock remains at its current depressed levels no one with SAP or more that we will we know that our shareholders like that comes into buyback ship docks, we wish we could but our fortunately we cannot get approval to take money out of China too bad.
Back stock to pay dividends.
It was on your firewall Murdo, what yoga there sure.
Hey, your Bozo will show that <unk> don't see it turning to you that that grew up.
So on Chile.
Go through a Colo Hardy.
I mean, it'd be three or four critical gogo.
All of them in the pool from Joe <unk>.
<unk>.
Sure.
Yeah, it's social.
Preclinical tell you three or four so far for Ya Parker you Hook also saw tells you it's with what how the shop also crazy over them and be careful.
Yes.
Well, Matt Joe.
Sometimes I'll quit ball playing itself out I think that can go up.
Right.
So I don't see a township well most of these guys have older horses.
Almost at all.
Going forward I won't count sometimes she'd audio.
When she does her suggests they are essential to their shows that yeah. So Susan go job He's got home no problem concrete yet.
Or if we don't do big junk food crop could you fucking team of Holdco, because I'm sure quite a local telco truthful with you from the New York another.
They want it.
Yeah.
However, they are two themes, we think we can do to help the short term.
Short intermediate and long time prices off the ships in the short term a company. They can see the two pay executed Upsells, you mean, RMB and the backpack some of their shares.
<unk> Officer me to sell share took painful leaving expenses than the execution could go to a company and ultra his shares in a private transaction with the company.
Cam can you could pay that ex cookies in RMB, we will keep you.
Updated on the progress of this idea.
Over the intermediate and the long term, we are committed to gaining increased financial flexibility, we know that many of the pharmaceutical intermediates product project.
In our chemical factory, which <unk> mountain sewer also work, especially in the emerging countries in Asia. Once we open our chemical factsheet, we will consider to develop a plan to generate generation X parts.
Marci it you're going to immediately.
Well, that's and it's hybrid.
Byproducts that could enable us to have increased financial flexibility for buying back stock.
Oh, Hey, do you need it.
So now we Oh pencil QA section hi, operator.
Tom.
Yes. Thank you so much ladies and gentlemen, the floor is now open for questions.
I would like to enter the queue to ask a question at this time you May press star one on your telephone keypad.
For the Q.
We do ask if lifting on speaker phone. This morning that you. Please pickup your handset.
To ensure optimal sound quality once again, ladies and gentlemen, it'll be star one on your telephone keypad at this time, if you'd like to enter the queue to ask a question. Please hold a moment.
While we poll for questions.
And we have a question this morning coming from Glen <unk>.
Your line is live please go ahead.
Yes, good morning, and congratulations on a very strong quarter.
I have two questions.
The first is.
How many more dollars.
Of capital spending.
Is needed to complete.
The bromine.
Facilities to bring the three that are not currently online.
Online and how much more capital is needed for the chemical.
Business to get that up and running.
That's my first question I'll, let you answer and then I'll ask my second question.
Okay.
Hi, Glenn because Oh, one question because we.
We have two mall Tetchy number two and number 10 did not have permission from governments, yet so I don't know that I'm quite understand when you talk about are kept expenditure on bromine segments do you need to include these two factories all just for factory number eight.
But at the moment, let's do number eight and then if you have a projection for the other two that would be helpful.
Okay. Okay. Thank you.
Uh huh.
She lives he can't goggles are posted in the lab.
You'll get another deal any issues with them.
Tom will chime atrial goes well do share column shows you'll find me in the sealant and culture towards your question to wash out yourself wants you to wash out to shoot down short to dig out of Taiwan.
I haven't heard it when he was reservoir does your NIM should yet more tangible for batch on a hydro Apache unless you're talking about our counselors yourself, which I'm male threshold Dow Jones she crops.
Oh glad he says is right Nigel what Brighthouse you actually can see what they are trying to cross shithouse Yale you'll drive seemingly the fact that at Cagny in a hot shutdown to assure you create just.
Tricia you got your Ohio Drillship.
Oh, hi shots pushout, that's beneficial to future down the line.
Yeah, that's about.
Good.
On the short term.
Just.
Joseph Tung.
I'm, just saying you don't have it yet.
So a lot just a social one of them would share. The total so the 500 then they should Oh total unit Hominem go you coach.
Cause you to introduce your future.
<unk> your cargo and Thats, what you are towards the <unk>.
Women Die decided you do it you know Lucy She's got Deutsche Oh, the total.
It is a profit that guys are super amazing to jet Joseph Osha, well she's Hoffmann quietly.
Uh huh.
Yeah, Theres not just as was the art pushing tons of issuance of all of them, which I shouldn't have her meal. So that kind of as you wish you could see high Puccini chore.
Oh, please just some rialto yeah sure sure sure Cleveland should high as you told US again total what's the why they should know chalk AR.
I don't want my uncle, Bob So you do carnassial hyperlocal tissue.
<unk>.
Mhm.
Now, let me go probably wont happen.
Uh huh.
Oh Boy you got you're thinking about no change from what was a bad time, usually you should do a trial.
And Pasha, you just have quiet again.
Or are you more Chinese you Carla you'll oh.
If I'm a dormant tumor that's a woman.
For you and should you jumped the cash close in time.
I'm sure you're tired of it should satisfy the fee when you blend all that juncture.
Sure.
Hum.
Okay Gotcha.
Hi, Colin so firstly for your question on the bromine segment.
Let me explain first and for.
Firstly, let's look at bromine factory because it as I had mentioned before the fact sheet number eight which you got approval from government and the company already start to ease of preparation and the Capex Indeed shows that.
Factsheet, and you know which have until like a third both contracts, which have spent approximately $3 million.
Oh, it will be filmed markdown ought to be dependent on this section and it may be stopped production in first quarter and contributing to revenue in this quarter as well.
And as you got infection number two and number 10, because we did not have a government approval yet so we do not know clearly how the government will experiment.
I'm not sure really ask we only update.
Ah well chemical set our bromine factories I'll give you all have any other requirements. So the capex expenditure on this two centuries, we cannot.
All right.
Any details yet.
Okay.
Where do we see the affordability question Rami.
So Kenny coast nuclear will continue to.
Do you mind just.
Hold on just one.
Supposed to take a long time for them in general well known multinational so even if something or the EG, who knows you didnt mention how they show you Amy you tariff will do Unbar jeopardized, if you're are you and I really I'm glad as she also where there's a huge issue for us one of them, which and hi, Jim the MPL quite Mad dash at the total ultrasound.
In Nashville woman, which a meal.
<unk> you, Sir Yes, I know that you signed in June I congratulate you.
Cassel with agile.
Hum.
Secondly regarding the technical section.
Rich do you to the call meat and does the most strict environmental protection requirements by the government.
So the process for this the chemical sector may be delayed, but the capex expenditure I see the same as our budget, we're still under our budget and this number we have been disclosed in our 10-Q already.
Right, but my question is how much more capital spending.
As needed.
In the chemical facility that has not been spent to date how much more remains just a dollar number that's all I'm looking for.
Okay.
Okay.
I can.
Check Cogs for you in the 10-Q.
Do you mind email back Oh, you want to be tech it sure.
You can you can email me back, but I just want to know how much is remaining.
Is remaining to be spent on the chemicals.
Before it's open.
My last question is.
In order to generate foreign currency.
Do you just need to make sales.
Our products overseas or do you need to buy an overseas asset.
Okay.
Okay.
Wait a moment I tried to allude.
Those aren't just shifts blended yeah I'll go into it.
Joe Sure Jake why are you closer to the low share.
Megan Dow.
Josh you're going surfing Tijuana as usual.
Crucial Chinese all heartland of hydro.
Yes.
So we'll miss you one woman Oh, I've only home.
A layup often challenging lie.
The core loss ratio, yes, you own it gives us with Alcoa cohort that you share our entire social woman on lingo data I'll gladly share my actual rule.
Well I mean going through the way that they share us how old are they know where she equivalent video bundle.
Yeah.
Okay. So.
Hi, Glenn let.
<unk> stated that we hope after our chemical factory started production, we can sell some of our products.
Ex parte them to overseas and at the meantime, and there we have some of our clients and then they pay us.
<unk>.
Dollar and then the company will have more flexible in its financials.
Okay. So you do so you will export and you don't need to buy in overseas.
The business in order to generate.
Foreign currency do I understand that correctly, you'll me do Neil oversees as says I'll do you mean like a if we want to do X part, we need to buy a knife.
Over to you.
No I mean do you need to buy a overseas do you need to buy and overseas asset a distributor.
<unk>.
The selling organization or can you just export.
Oh, no we cannot to now ex part of we think we need a license for that.
We are not going to buy that at this moment, we did not talk about buying eyecatching overseas.
Okay. Thank you ill, let someone else ask questions. Thank you very much okay not welcome.
Thank you.
Once again, ladies and gentlemen, if you would like to join the queue to ask a question. At this time you May press star one on your telephone keypad to enter the queue.
Once again, ladies and gentlemen, that'll be star one on your telephone keypad at this time, if you would like to join the queue ask a question at this time. Please hold a moment again, while we poll for questions.
Okay.
Yeah.
And there are no further questions in queue at this time.
Okay.
Do you mind, asking if there's still no question I think that we can close the call for today.
Absolutely, ladies and gentlemen, if you would like to join the queue to ask a question at this time. Please press Star then one on your telephone keypad to join the queue. Once again, ladies and gentlemen, that'll be star one on your keypad at this time, if you'd like to join the queue to ask your question.
Yeah.
And there are no questions in queue at this time.
Okay. Thank you.
Don't know don't not much enjoying Jo mill, hopefully he'll then killer.
That didn't have they all have to keep asking about it.
Okay.
Hum.
Michelle.
Hi, operator, Tom I think that we can close the call for today, if there's no more question and thank you all for attending this conference call.
You have that much.
Thank you Helen and thank you, ladies and gentlemen, thank you ladies and gentlemen.
This does conclude today's conference call you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay. Thank you Tom how good thing.
Thank you.
Okay.