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spk01: Hello, ladies and gentlemen, and welcome to IT Tech Packaging's third quarter of 2021 Earnings Conference Call. 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 the company's Chairman and Chief Executive Officer, Mr. Chen Yong-du, and the company's Chief Financial Officer, Ms. Jing Hao. Remarks from both Ms. Liu and Ms. Hao will be delivered in English by interpreters. IT Tech Packaging announced its third quarter of 2021 financial results by press release on November 10, 2021, which can be found on the company's website at www.ittackaging.cn. Ms. Liu will start today's presentation with an overview for the third quarter of 2021 performance. Then Ms. Hao, will share more details about the company's financial results. Before we start, 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 are the statements of historical fact in the announcement are forward-looking statements. including but not limited to anticipated revenues from the corrugating medium paper, tissue paper, offset printing paper, and the face mask 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 ability to attract or retain qualified senior management professionals 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 expectations, 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 changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot be assured 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 the management's prepared remarks and it is now available for download for the company's website at www.itpackaging.cn. Please note that there will be discussions on non-GAAP financial measures or EBITDA or earnings before interest, taxes, depreciation, and amortization. Please refer to our press release for a complete reconciliation of EBITDA to net income. As a kind reminder, all members in the presentation are quoted in u.s dollars and all comparisons refer to year-over-year comparisons unless otherwise stated at this time i would like to turn the call over to mr shangli chairman and chief executive officer of i.t tech packaging his overview will be delivered in english by connie kang connie please go ahead thank you operator and good morning everyone
spk02: Thanks for joining IT Tech Packaging's third quarter 2021 learning conference call today. I will provide an overview of the company's performance for the third quarter of 2021. For the first nine months this year, we continued to make improvements in the sales of corrugated medium paper, or CMP, offset printing paper and tissue paper products. 69.2% to $111.8 million, resulting from 36.3% growth of overall sales volume and a 25.6% increase in average selling prices over all categories of products. We recorded 34.8% increase of gross profit. Despite the demand of paper products is impacted by factors such as resurgence of COVID-19, double reduction policy, and the trend for paperless offices. We expect the earnings per town will be significantly improved by the uprising price. Also, many living paper manufacturers adjusted the production according to the dual control of energy consumption policy. which will cause a shortage of supply. We have confidence and will continue to provide high-quality products. We expect the performance in the upcoming quarter will be significantly better. Thank you again for all your support and attention. Now I will turn the call over to Mrs. Jean Hao, our CFO, who will review our financial results for the third quarter of 2021. Her review will be delivered in English by Connie Kahn. Thanks, everyone, for being on the call. Next, on behalf of the management team, I will summarize some key financial results for the third quarter and first nine months of 2021. Also, I will occasionally refer to the specific production line associated with your products. I will make clear which products I'm referring to for reference The numbering system of our production line is provided on slide number 18. Now let's look at financial performance for the third quarter of 2021. Let's turn to slide number 7. For the third quarter of 2021, total revenue increased by 35.2% to $45.1 million due to the increase in sales volume of regular for skating medium paper and the increase in average selling price of CMT and tissue paper products. Then turn to slide eight. For the third quarter of 2021, the CMT segment, including both regular CMT and lightweight CMT, generated revenue of 37.3 million, representing 82.8% of total revenue. 31.2 million of revenue was from our regular CMP products, and 6.1 million was from light-freak CMP. CMP segment volume increased by 22.1% to 74,444 towns, of which 51,947 towns were regular CMPs. and 12,497 towns were live with BMP. Every selling price for ASP for regular BMP increased by 24.1% to 504 per town. And ASP for live with BMP increased by 24.4% to 490 per town. Let's turn to next page. For the third quarter of 2021, the offset printing paper generated revenue of 4.8 million, decreased by 1.3 million, or 21.7% from the same period of last year. The offset printing paper volume decreased by 31.5% to 7,045 pounds. ASPs for offsetting printing paper increased by 14.3% to 681 per count. Then, turning to slide 10. For the third quarter of 2021, tissue paper products generated revenue of 2.8 million, increased by 0.4 million, or 18.1%. This resulted from the sales of 2,646-count tissue paper products, with a 7.3% decrease, and an AFP of 1,063 per count, with an increase of 27.5%. Moving to slide 11, with those 3 million 180,000 pieces of face masks and generated revenue of $0.2 million from selling face masks for the third quarter 2021. Slide number 12 summarizes the change in our revenue mix for the third quarter 2021. Total cost of sales increased by $12.5 million to $43.3 million. leading to the total gross profit of $1.8 million, 29.1% decrease from the gross profit of $2.6 million for the same period of last year. And overall gross margin was 4.0% for the third quarter of 2021. For the third quarter of 2021, SG&A expenses decreased by 15.5%. to $2.0 million and operating loss was $0.2 million compared to income from operations of $0.2 million for the same period of last year. Operating loss margin was 0.4% compared to operating margin of 0.5% for the same period of last year. For the third quarter of 2021, net income was $1.5 million, resulting in a net income of $0.03 per basic and dilutive share. This compared to a net loss of $0.5 million, or the net loss of $0.02 for the basic and dilutive share for the same period of last year. For the third quarter of 2021, earnings before interest, taxes, depreciation, Amortization increased by $1.7 million to $5.3 million from $3.6 million for the same period of last year. Now shifting gear to year-to-date financial results. For the 9 months and December 30, 2021, total revenue increased by 69.2% to $111.5 as a result of increasing sales volume and ASPs over all people product categories. For the nine months ended September 30, 2021, the CMP segments, including both regular and lightweight CMPs, generated revenue of $94.8 million, representing a $91.8 million 81.9% of total revenue, 78.4 million in revenue was from our regular CMP products, and 16.4 million was from live-use CMP. Volume for the CMP segment increases by 36.3% to 106.3%. 738 towns, of which 56,080 towns were regular CMPs, and 33,658 towns were likely CMPs. ASP for regular CMP increased by 28.1% to 502 per town, while ASP for lightweight BMP increased by 27.8% to 488 per town. For the nine months ended September 30, 2021, our offset printing paper segment generated revenue of $14.1 million. We shipped 20,602 tons of offset printing paper for nine months ended December 30th, 2021. An increase of 65.3% from the same period of last year. ASP of offset printing paper increased by 15.4% to 684 per ton. For the nine months ended December 30th, Tissue paper products generated revenue of $6.5 million increased by $0.7 million, or 12.6%, with a share of 5,963 tons of tissue paper products with a 13.9% decrease at an ASP of $1,089 per ton. with an increase of 30.7%. For the nine months ended September 30, 2021, face masks generated revenue of $0.4 million with sales volume of 9.7 million pieces of face masks. For the nine months ended September 30, 2021, total cost of sales increased by 45.9 million to 108.8 million, leading to a total gross profit of 6.7 million and an increase of 34.8% from last year. Overall gross margin of 5.8% reflects a decrease of 1.5 percentage points from last year. For the nine months ended December 30, 2021, SG&A expenses were 7.2 million compared to 8.4 million for the same period last year. For the nine months ended December 30, 2021, operating loss decreased from 3.5 million to 0.5 million. Operating loss margin was 0.4 million. compared to operating loss margin of 5.1% for the same period of last year. For the nine months ended September 30, 2021, net loss was 3.2 million, or 0.06, a loss per basic and derivative share, compared to net loss of 3.9 million, or 0.06. one-fifth loss per basic and relative share for the same period of last year. For the nine months ended September 30, 2021, earnings before interest, taxes, depreciation, and amortization decreased from $7.2 million to $2.7 million for the same period of last year. Now moving to slide 19 and 20. Let's look at the balance sheet and the liquidity. As of September 30, 2021, the company has cash and bank balances short-term debt, including bank loans, current portion of long-term loans from credit union and relative party loans, and long-term debt, including loans from credit union of $26.6 million. 12.2 million and 4.5 million respectively compared to 4.1 million, 12.2 million and 4.6 million respectively at the end of 2020. Net accounts receivable was 4.1 million as of December 30, 2021 compared to 2.4 million as of December 31, 2020. Net inventory was 7.6 a million as of September 30, 2021, compared to 1.2 million at the end of 2020. As of September 30, 2021, the company has current assets of 62.2 million and the current liabilities of 18.7 million, results in working capital of 43.5 million. This was compared to current assets of $14.9 million and current liabilities of $18.3 million, resulting in a working capital deficit of $3.4 million at the end of 2020. Net cash using operating activities was $6.4 million for the first nine months of 2021. compared to net cash provided by operating activities of $2.4 million for the same period of last year. Net cash using investing activities was $12.8 million for the first nine months of 2021, compared to $2.6 million for the same period of last year. Net cash provided by financing activities was $41.5 million first nine months of 2021, compared to net cash used in financial activities of $2.2 million for the same period of last year. That's all for IT Packaging's third quarter of 2021 earnings conference call. I would like to thank everyone for joining us today. If you have any questions, please contact us through email at irfitpackaging.cn. We appreciate your interest and support in IT tech packaging and look forward to speaking with you again next time. Operator, please go ahead.
spk01: Thank you again for attending IT tech packaging third quarter of 2021 earnings conference call. This concludes our call today and we thank you all for listening in. Goodbye.
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