Gulf Resources, Inc.

Greetings. Welcome to the Gulf Resources third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Helen Chu. You may begin.

Thank you, operator. Good morning, ladies and gentlemen, and good evening for those of you joining us from the U.S. And we'd like to welcome all of you to GovResources' third quarter 2023 conference call. I'm Helen Xu, the IR Director. Our CEO of the company, Mr. Shelby Liu, also joining this call today. I'd like to remind you to all our listeners that in this call, certain maintenance statements during the call will contain forelooking information about Gulf Resources Incorporation and its subsidiaries' business as a product within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3B-6 under the Securities Exchange Act of 1934. and are 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, including, but not limited to, the general economic and business condition in the PRC, the risks associated with the pandemic outbreak, future product development and production capabilities, shipments to end customers and the market acceptance of new and existing products, additional competition from existing and new competitors from the bromine and the other oil fields and the power production chemicals, changing technology, the ability to make future bromine assets and the various other sectors beyond the company's control, all four looking statements are expressly qualified in their entirety by this cautionary statement and the risk factors detailed within the company's report filed with the SEC. Gulf Resources assumes no obligation to revise or update any forelooking statement to reflect events or circumstances after the date of this call. Accordingly, our company believes the expectations reflected in those forelooking statements are reasonable and there can be no assurance of such will prove to be correct. In addition, any reference to a company's future performance represents the management's estimates as of today, the 20th of November, 2023. For those of you unable to listen to the entire call at this time, A replay will be available at the company's website. The call is also accessible through the webcast and the link is accessible through our website. So please locate our press release issued earlier for the details. Before focusing on the major content of this conference call, we'd like to briefly discuss the proposed change in our chairmanship. Mr. Yang founded our company, and Mr. Liu joined the company in 2007 and became CEO in 2009. Mr. Yang, who has investments in many companies in Shandong Province, has decided not to stand for re-election as chairman at the annual meeting on November 30, 2023. The board has nominated Mr. Liu to serve as our next chairman. I would also like to refer to a recent press release discussing our flood prevention plan. As we issued earlier that in year 2018, Shougang City experienced the devastating impact of typhoon Rivia, regarded as one of the most destructive typhoons in history, resulting with the region receiving 14.9 inches of rainfall. The overflow of three major reservoirs along the Minghe River led to extensive flooding in farmlands, residential rooms, and industrial factories. All of the company's plumbing factories, crude salt tanks, and mining areas were seriously impacted. The company incurred substantial expenses, amounting for more than $40 million, including the write-offs and the road repairs, equipment replacement, Crusade Perry construction, and the re-dreaming of flood wells. A year later, the typhoon Lekima struck Shogun City again, suppressing the destructive force of its prestigious predecessor. Once again, the company had to spend more than $6 million rectify the aftermath involving the road repairs, equipment replacement, construction, and the drilling of affected wells. So to mitigate the similar damages in the future, the company had commenced a flood prevention initiative. Our strategy involved the renovation of the channels of four major rivers within our mining area. encompassing the tributary of Mihe River. The aim is to prevent flooding that could harm the wells, aqueducts, and cruise oil tanks at our plant. The projected expenditure for this initiative amounts to approximately $50.5 million. As of this quarter, ending by September 30, 2023, the company disbursed amounted approximately 15.15 million for the initial phase of this project. Apart from reducing risk to surrounding regions, we anticipated that there are three notable advantages from this flood prevention plan. It is expected to firstly enhance the probability of obtaining approvals to reopen factories number two and number 10. Secondly, enable the trading of additional wealth across our five operating factories. And number three, mitigate the risk and associated expenses related to future stops induced flooding. Given the company's current financial position, and its substantial cash resources, the company believes that the flood prevention plan will yield favorable returns over the long term to the company. So now let's turn to the results of the third quarter and the nine months. During the third quarter, the sales declined by 74%. Net income after tax was a loss of approximately $1.8 million compared to a profit approximately of $9.0 million. Net loss per share was $0.17 compared to a net profit of $0.86. Shareholders' equity was approximately $260.8 million or $24.99 per share. So the results for the three months ended September 30, 2023. In the third quarter of 2023, revenue declined by 74% to approximately $5.9 million from approximately $22.9 million. Especially, the booming revenues declined by 75% to approximately $4.9 million from approximately $19.8 million. The decrease in this net revenue was primarily due to the reduction in the volume of tons sold for 43% and a 57% decrease in the average selling price of bromine. During the quarter, the average selling price was $3,237 compared to $7,474. As of November 13, 2023, based on the sensors.com data, the price of bromine has seen an increase of approximately 7.4% to $3,477. The decrease in selling price of bromine reflects both economic weakness in China and an excess inventory of anticipatives Following the aftermath of COVID, a reduction in tonnage sold reflects the company's strategic decision not to engage in a price competition, aiming to safeguard the long-term value of its resources. Additionally, crude salt revenues declined by 70% due to an 18% decline in pricing and a 63% decrease in tons produced. As crude salt is a byproduct of bromine, the decreased production of bromine resulted in a reduction in production of crude salt as well. There were no revenues generated from our chemical products business yet, while our natural gas business obtained approximately $68,000 in revenues through its equipment leasing. Gross profit for the quarter was amounted to a loss, of $508.0 billion compared to a profit of approximately $14.5 million in the previous year. Especially, our Bromley business suffered a gross profit loss of approximately $1.1 million compared to a profit of $12.5 million, while Cruz Salt achieved a gross profit of $511,500 compared to $1.9 million previously approximately. The company incurred direct labor and factory overheads amounting to approximately 1.0 during the planned shutdown compared to approximately 1.9 previously. General administrative expenses were approximately $762.9 thousand compared to $584.5 thousand previously. Consequently, a loss from operations was amounted to approximately $2.3 million compared to a profit of approximately $11.9 million in a period priori. The net income after tax was a loss of approximately $1.8 million compared to a profit of approximately $9.0 million. And the net loss per share was 17 cents compared to a net profit of 86 cents. Results for the nine months ended September 30, 2023. Revenues over the nine months declined by 51%, decreasing of approximately $23.2 million from approximately $47.5 million. Specially, roaming revenue also fell by 51% from approximately $20.7 million from approximately $41.9 million. Notably, there was a 9% increase in bromine toll sold, reflecting the addition of Faction 8. However, despite this, the gross profit margin decreased to 7%, down from 57%. Throughout the nine months, the average selling price of bromine was $3,493. per ton compared to the previous of 7,674 per ton. Revenues from crude salts also declined by 51% to approximately $2.3 million from approximately $5.5 million. While the production volume declined by 51%, no revenue was generated from chemical business yet. Conversely, revenue from natural gas increased by 13% from the equipment's leasing. The gross profit for nine months totaled approximately $2.7 million compared to $26.4 million. to approximately $27.7 million in the previous period. Our crude salt business achieved a gross profit of approximately $1.0 million compared to approximately $2.6 million. Meanwhile, the chemical business recorded no gross profit and the natural gas business marked a gross profit of approximately $150,000 compared to approximately $132,600 previously. The company incurred direct labor and factory overheads during the planned shutdown amounted to approximately $4.5 million compared to approximately $6.0 million in the previous period. General and administrative expenses were approximately $2.3 million compared to approximately $3.4 million as previously. As a result, our loss from operations were amounted to approximately $4 million compared to a profit of $17.0 million as previously. Net income was a loss of approximately $3.0 million compared to a profit of $12.7 million previously, and the net loss per share was $0.29 compared to a profit of $1.22. Cash flow during the nine months ended by September 30, 2023, we generated approximately $9.9 million from operating activities and invested approximately $15.2 million primarily in our flood protection program. Balance sheet, end of September 30th, 2023. Our cash balance was approximately $103.8 million based on the shares issued and outstanding ended by September 30th, 2023. they're translated to $9.95 in cash per share. The net net cash, which is cash minus all liabilities, worth $8.21 per share. Working capital worth approximately $10.07 per share. Shareholders' equity worth 260.7 million dollar approximately or 24.99 per share so now let me turn the call over to miss liu for his um additional commentary hello

Hello, everyone.