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

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."

* Reconciliation Table At End of This Release

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.