Plastec Technologies Reports Unaudited Fiscal 2013 Second Quarter and Six-Month Financial Results

Updated

Plastec Technologies Reports Unaudited Fiscal 2013 Second Quarter and Six-Month Financial Results

HONG KONG--(BUSINESS WIRE)-- Plastec Technologies, Ltd. - (OTCBB: PLTYF (ordinary shares), PLTWF (warrants), PLTEF (units)) ("Plastec" or the "Company"), an integrated plastic manufacturing services provider that operates in the People's Republic of China, today reported unaudited financial results for the fiscal 2013 second quarter and six months ended June 30, 2013. See attached tables at the end of this release in Hong Kong dollars (HKD). All other amounts in this press release are presented in U.S. dollars (USD) with a conversion rate of US$1.0: HK$7.8.

FY 2013 Q2 Financial and Operating Highlights


(all comparisons to same period of prior year)

  • Sales of $38.5 million, a decrease of 15.0% as a result of a reduction in lower margin product orders from existing customers

  • Gross margin of 25.5%, compared to 11.2%, resulting primarily from streamlining of production costs during period and a more favorable product mix

  • Adjusted EBITDA of $8.6 million, compared to $7.2 million

  • Net income of $5.7 million, or $0.42 per diluted share based on 13.7 million diluted shares outstanding, compared to $1.8 million, or $0.13 per diluted share based on 14.3 million diluted shares outstanding

Fiscal 2013 Six-Month Financial and Operating Highlights

(all comparisons to same period of prior year)

  • Sales of $76.3 million, a decrease of 3.0%

  • Gross margin of 23.1%, compared to 10.4%

  • Adjusted EBITDA of $15.7 million, compared to $12.8 million

  • Net income of $7.3 million, or $0.53 per diluted share based on 13.7 million diluted shares outstanding, compared to $2.1 million, or $0.14 per diluted share based on 14.7 million diluted shares outstanding

  • $10.1 million in cash generated from operations for the six months ended June 30, 2013, compared to $5.5 million

Balance Sheet Highlights (at June 30, 2013)

  • $47.7 million in working capital at June 30, 2013, compared to $39.9 million at December 31, 2012

  • No long-term debt

Management Comments

Mr. Kin Sun Sze-To, Chairman of Plastec, stated, "Plastec had another good quarter and a strong first half of 2013. Despite operating in a slow growth macro environment, we saw solid margin expansion due to streamlining of our production costs and focus on higher margin product orders from our customers. Although our total orders were down compared to the prior year, the Company improved its gross margin, operating income, and overall profitability during the period. I believe our entire organization has done a great job in terms of driving productivity in what continues to be a low growth environment."

Mr. Sze-To continued, "Our outlook for the rest of the year remains unchanged from the end of the first quarter. Macro indicators are increasingly mixed, which makes predicting the timing of our customer orders more difficult. However, we continue to focus on balancing cost and growth and increasing customer satisfaction. We have been pleased with our low default rate and feel this is a primary driver of customer retention throughout our history. We also remain confident that our business will continue to provide us with profitable growth opportunities in other markets where our precision molding service would provide a solid value proposition for new customers."

Selected Financial Highlights in USD ($ in millions, except number of shares and per share data)

3 months ended
June 30, 2013

3 months ended
June 30, 2012

Percentage

Change

6 months ended
June 30, 2013

6 months ended
June 30, 2012

Percentage

Change

Sales

$38.5

$45.3

-15.0%

$76.3

$78.7

-3.0%

Cost of Revenues

$28.7

$40.3

-28.8%

$58.6

$70.5

-16.8%

Gross Profit

$9.8

$5.1

94.1%

$17.6

$8.2

114.9%

Gross Profit Ratio

25.5%

11.2%

23.1%

10.4%

Income from Operations

$4.5

$2.3

98.6%

$7.4

$2.9

157.3%

Operating Margin

11.6%

5.0%

9.7%

3.7%

Net Income

$5.7

$1.8

217.2%

$7.3

$2.1

237.9%

Net Margin

14.8%

4.0%

9.5%

2.7%

Weighted Average Number

of Diluted Ordinary Shares

Outstanding

13,666,376

14,342,697

13,725,640

14,685,790

Diluted EPS

$0.42

$0.13

230.0%

$0.53

$0.14

272.7%

Adjusted EBITDA*

$8.6

$7.2

20.0%

$15.7

$12.8

23.0%

* Reconciliation Table At End of This Release

Balance Sheet Highlights in USD ($ in millions)

6/30/2013

12/31/2012

Percentage

Change

(Unaudited)

(Audited)

Cash and Cash Equivalents

$38.2

$39.7

-3.9%

Total Current Assets

$89.2

$89.8

-0.6%

Total Assets

$145.3

$151.2

-3.9%

Working Capital

$47.7

$39.9

19.5%

Total Long-term Debt

0

0

Total Liabilities

$41.6

$51.4

-19.1%

Shareholders' Equity

$103.7

$99.8

3.9%

Total Liabilities and Shareholders' Equity

$145.3

$151.2

-3.9%

2013 Second Quarter and First Half Financial Review

  • Total sales for the three months ended June 30, 2013 decreased to $38.5 million from $45.3 million in the prior-year period. The decline in total sales was largely due to a reduction in lower margin product orders from Plastec's customers, with many choosing to focus orders on new models. Total sales for the six months ended June 30, 2013 were $76.3 million, compared to $78.7 million in the first half of 2012.

  • Despite lower sales during the quarter, the Company's gross profit increased by 94.1% during the three month period ended June 30, 2013, and gross profit margin improved to 25.5% from 11.2% for the prior year period. The increase in gross profit and margin was due to a number of factors: a focus on new models from existing customers, which typically carry a much higher margin than second generation orders; a reduction in costs of revenues resulting from the Company's efforts to further streamline its manufacturing process; and difficult economic conditions in the prior year period. For the six months ended June 30, 2013, the Company's gross profit was $17.6 million, or 23.1% of revenues, compared to $8.2 million, or 10.4% of revenues, in the prior year period.

  • Income from operations was $4.5 million, or 11.6% of revenues, during the three months ended June 30, 2013, compared to $2.3 million, or 5.0%, in the prior-year period. This was largely due to increased gross profit during the period, offset by higher selling, general and administrative expenses as a result of increased salary and allowances for supervisory and administration staff during the period. For the first half of 2013, the Company reported income from operations of $7.4 million, or 9.7%, compared to $2.9 million, or 3.7%, during the first half of 2012.

  • Adjusted EBITDA for the three months ended June 30, 2013 was $8.6 million, compared to $7.2 million in the prior-year period. For the first half of 2013, adjusted EBITDA was 15.7 million, compared to $12.8 million in the first half of 2012.

  • Net income for the three months ended June 30, 2013 was $5.7 million, or $0.42 per share based on approximately 13.7 million weighted average diluted shares outstanding, compared to $1.8 million, or $0.13 per share based on approximately 14.3 million weighted average diluted shares, in the prior-year period. The Company recorded a tax credit of approximately $1.3 million in the second quarter ended June 30, 2013 compared to an income tax expense of approximately $0.4 million in the corresponding period in the prior year. The tax credit resulted from disposals of certain fixed assets associated with deferred tax liabilities that had to be eliminated and credited to the income statement. For the six months ended June 30, 2013, net income was $7.3 million, or $0.53 per share based on approximately 13.7 million weighted average diluted shares outstanding, compared to $2.1 million, or $0.14 per share based on approximately 14.7 million weighted average diluted shares, in the prior-year period.

Share Repurchase Update

In December 2012, the Company approved a twelve-month extension of its previously announced share repurchase plan through December 9, 2013, allowing Plastec to purchase up to $5 million of its ordinary shares in both open market and privately negotiated transactions at the discretion of the Company's management and as market conditions allow. The Company also expanded the scope of the repurchase plan to include Plastec's publicly-held warrants, with all other terms of the repurchase plan remaining unchanged. To date, the Company repurchased 758,775 shares and 80,000 warrants under its repurchase plan.

About Plastec

Originally founded in 1993 by Chairman and CEO, Mr. Kin Sun Sze-To, Plastec is an integrated plastic manufacturing services provider that operates in the People's Republic of China through its wholly owned subsidiaries. With approximately 5,400 employees, Plastec provides precision plastic manufacturing services from mold design and fabrication, plastic injection manufacturing to secondary-process finishing, as well as parts assembly.

Forward Looking Statements

This press release contains "forward-looking statements." These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements.

PLASTEC TECHNOLOGIES, LTD.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

For the 3-month

period ended June 30,

For the 6-month

period ended June 30,

2013

2012

2013

2012

HK$

HK$

HK$

HK$

Revenues

300,381

353,510

595,067

613,643

Cost of revenues

(223,637)

(313,966)

(457,409)

(549,598)

Gross profit

76,744

39,544

137,658

64,045

Operating expenses, net

Selling, general and administrative expenses

(41,781)

(21,991)

(79,725)

(42,697)

Other income

2,644

530

2,730

1,117

Gain/(loss) on disposal of property, plant and equipment

(2,705)

(511)

(2,772)

38

Total operating expenses, net

(41,842)

(21,972)

(79,767)

(41,542)

Income from operations

34,902

17,572

57,891

22,503

Interest income

54

49

105

94

Interest expense

(290)

(554)

(678)

(1,214)

Income before income tax expense

34,666

17,067

57,318

21,383

Income tax expense

9,812

(3,044)

(662)

(4,618)

Net income

44,478

14,023

56,656

16,765

Other comprehensive income

Foreign currency translation adjustment

979

-

2,297

119

Comprehensive income attributable to

Plastec Technologies, Ltd.

45,457

14,023

58,953

16,884

Net income per share:

Weighted average number of ordinary shares

13,666,376

14,342,697

13,725,640

14,685,790

Weighted average number of diluted

ordinary shares

13,666,376

14,342,697

13,725,640

14,685,790

Basic income per share

attributable to Plastec Technologies, Ltd.

HK$3.3

HK$1.0

HK$4.1

HK$1.1

Diluted income per share

attributable to Plastec Technologies, Ltd.

HK$3.3

HK$1.0

HK$4.1

HK$1.1

PLASTEC TECHNOLOGIES, LTD.

CONSOLIDATED BALANCE SHEETS

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

(Unaudited)

(Audited)

June 30,
2013

December 31,
2012

HK$

HK$

ASSETS

Current assets

Cash and cash equivalents

297,848

309,862

Trade receivables, net of allowances for doubtful accounts of

HK$nil, and HK$nil as of December 31, 2012 and June 30,

2013, respectively

251,316

257,299

Inventories

88,811

97,467

Deposits, prepayment and other receivables

58,160

35,471

Total current assets

696,135

700,099

Property, plant and equipment, net

400,379

440,383

Prepaid lease payments, net

22,943

23,719

Other assets

10,883

14,503

Deferred tax assets

2,732

-

Intangible assets

438

438

Total assets

1,133,510

1,179,142

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Bank borrowings

54,975

96,892

Trade payables

134,219

151,436

Other payables and accruals

95,909

115,715

Tax payable

39,206

25,225

Total current liabilities

324,309

389,268

Deferred tax liabilities

-

11,629

Total liabilities

324,309

400,897

Commitments and contingencies

-

-

Shareholders' equity

Ordinary shares (US$0.001 par value; 100,000,000

authorized 14,292,228 and 13,598,128 shares issued and

outstanding as of December 31, 2012 and June 30, 2013,


respectively)

107

112

Additional paid-in capital

57,340

85,332

Accumulated other comprehensive income

16,821

14,524

Retained earnings

734,933

678,277

Total shareholders' equity

809,201

778,245

Total liabilities and shareholders' equity

1,133,510

1,179,142

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