WENZHOU, China, May 15, 2019 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") HEBT, a developer, manufacturer and installer of valves and pipe fittings for use in the pharmaceutical, biological, food and beverage, and other clean industries, today announced its financial results for the fiscal year ended December 31, 2018.
Fiscal Year 2018 Financial Highlights
Year ended December 31, | Changes | |||||||||||||||
2018 | 2017 | ($) | (%) | |||||||||||||
Revenue | $ | 25,290,060 | $ | 29,200,445 | (3,910,385) | (13) | % | |||||||||
Installation service | 17,297,212 | 23,748,141 | (6,450,929) | (27) | % | |||||||||||
Fluid equipment sales | 7,992,848 | 5,452,304 | 2,540,544 | 47 | % | |||||||||||
Gross profit | 7,577,952 | 10,444,161 | (2,866,209) | (27) | % | |||||||||||
(Loss) Income from operations | (5,329,410) | 3,877,317 | (9,206,727) | (238) | % | |||||||||||
Net income | (5,144,715) | 7,136,387 | (12,281,102) | (172) | % | |||||||||||
Basic and diluted EPS | $ | (0.33) | $ | 0.49 | (0.82) | (167) | % | |||||||||
- Total revenues decreased by 13.0% to $25.29 million for the twelve months ended December 31, 2018.
- Operating (loss) income decreased 237.5% to operation loss of $5.3 million for the twelve months ended December 31, 2018 from operation income of $4.07 million for the same period of the prior fiscal year, primarily due to bad debt provision of $7.9 million for the twelve months ended December 31, 2018.
- Net loss was $5.14 million, for the twelve months ended December 31, 2018, compared to net income of $7.14 million for the same period of the prior fiscal year.
Years ended December 31, | Changes | Changes | ||||||||||||||||||||||
2018 | % | 2017 | % | ($) | (%) | |||||||||||||||||||
Installation service | 6,356,004 | 37 | % | 9,470,074 | 40 | % | (3,114,070) | (33) | % | |||||||||||||||
Fluid equipment sales | 1,221,948 | 15 | % | 974,087 | 18 | % | 247,861 | 25 | % | |||||||||||||||
Gross profit | 7,577,952 | 30 | % | 10,444,161 | 36 | % | (2,886,209) | (27) | % | |||||||||||||||
Revenues
Total revenues decreased by 13.0% to $25.29 million for the twelve months ended December 31, 2018 mainly due to decreasing installation revenues. Revenue from installation service was $17.30 million for the year ended December 31, 2018, representing a 27% decrease from last year. Due to market competition, the Company had 6 major installation projects in fiscal 2018, comparing to 12 major installation projects in fiscal 2017 although the average individual contract amount increased from $2.0 million in fiscal 2017 to $2.6 million in fiscal 2018. Revenues from fluid equipment sales increased by 47% to $7.99 million for the twelve months ended December 31, 2018 due to increasing valve demands.
Cost of revenues and gross profit
Total cost of revenues decreased by $1.04 million to $17.71 million for the twelve months ended December 31, 2018, mainly due to decrease in the cost of installation service in fiscal 2018. For fiscal 2018, cost of installation service was $10.94 million representing a decrease of $3.3 million from 2017 due to lower installation service revenue, offset by an increase of $2.29 million in cost of fluid equipment sales.
Overall gross profit decreased by 27% or $2.89 million to $7.58 million for the twelve months ended December 31, 2018 from $10.44 million for the same period of the prior fiscal year. is the decrease was primarily due to gross profit from installation sales decreasing 33% in fiscal 2018 as compared to fiscal 2017.
Overall gross profit margin for fiscal 2018 was 30%, decreased from 36% in fiscal 2017. The gross profit margins for both of the Company's installation service and fluid equipment sales decreased by 3% from fiscal 2017.
Operating expenses
Total operating expenses increased by $6.3 million, or 96.6%, to $12.9 million for the twelve months ended December 31, 2018. The significant increase in operating expense was primarily due to $7.7 million increase in bad debt provision, which was offset by a decrease of $0.8 million in selling expense and a $0.4 million decrease in general and administrative expenses.
For fiscal 2018, the Company's general and administrative expenses were $3.30 million, representing an approximate decrease of $0.4 million compared to fiscal 2017. The decrease in general and administrative expenses was mainly due to the Company's lesser professional fees in fiscal 2018.
For fiscal 2018, the Company's research and development ("R&D") expenses were $0.36 million, representing a decrease of $0.15 million from fiscal 2017. The decrease in R&D expense was due to less R&D projects and devices in fiscal year 2018.
For fiscal 2018, the Company's selling expenses were $1.34 million, representing a 39% decrease from fiscal 2017. The decrease was mainly due to less revenue in fiscal 2018.
Operating (loss) income
Operating loss was $5.3 million for twelve months ended December 31, 2018, representing a decrease of 237% from operating income of $4.07 million in fiscal 2017, which was mainly due to less revenue and significant increase in operating expense during fiscal 2018.
Net income
Net loss was $5.14 million for the twelve months ended December 31, 2018, compared to net income of $7.14 million for fiscal 2017.
Financial Condition
As of December 31, 2018, the Company had cash and restricted cash balance of $3.07 million.
Net cash used in operating activities was approximately $0.73 million for the twelve months ended December 31, 2018, compared to net cash used in operating activities of $6.10 million for the same period of the prior fiscal year.
Net cash used in investing activities was approximately $0.12 million for fiscal 2018, compared to approximately $3.13 million for fiscal 2017.
Net cash provided by financing activities was approximately $0.73 million for fiscal 2018, compared to approximately $0.92 million for fiscal 2017.
About Hebron Technology Co., Ltd.
Established in January 2005 and headquartered in Wenzhou City, Zhejiang Province, China, Hebron Technology Co., Ltd. ("Hebron" or the "Company") engages in research, development, and manufacture of highly specialized valves and pipe fitting products for use in the pharmaceutical, biological, food and beverage, and other clean industries. The Company also offers its customers comprehensive pipeline design, installation, construction, and ongoing maintenance services as holistic solution services. For more information about the Company, please visit www.xibolun.com.
Forward-Looking Statements
This press release contains information about Hebron's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Hebron encourages you to review other factors that may affect its future results in Hebron's registration statement and in its other filings with the Securities and Exchange Commission.
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 947,588 | $ | 3,220,781 | ||||
Restricted Cash | 2,124,655 | 55,322 | ||||||
Contracts receivable, net | 24,669,365 | 16,904,972 | ||||||
Accounts receivable, net | 2,655,845 | 1,419,305 | ||||||
Notes receivable | 81,611 | 689,171 | ||||||
Retainage receivables, net | 3,146,986 | 2,564,404 | ||||||
Inventories | 365,480 | 1,582,501 | ||||||
Prepayments and advances to suppliers, net | 3,568,003 | 11,904,107 | ||||||
Other receivables, net | 767,681 | 240,284 | ||||||
Prepaid expenses and other current assets | 94,539 | - | ||||||
TOTAL CURRENT ASSETS | 38,421,753 | 38,580,847 | ||||||
Property and equipment at cost, net of accumulated depreciation | 12,515,894 | 14,588,262 | ||||||
Land use right, net of accumulated amortization | 969,339 | 1,086,148 | ||||||
Deposits for rent | 43,633 | 46,101 | ||||||
Equity investment | 3,054,090 | - | ||||||
Deferred tax assets | 1,648,967 | 247,324 | ||||||
TOTAL ASSETS | $ | 56,653,676 | $ | 54,548,682 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Short-term loans | $ | 1,698,058 | $ | 457,940 | ||||
Notes Payable | 2,117,382 | 55,322 | ||||||
Accounts payable | 1,361,687 | 1,276,784 | ||||||
Accrued expenses and other current liabilities | 2,112,472 | 1,327,513 | ||||||
Other loan payable - current | 177,291 | 179,182 | ||||||
Advances from customers | 3,131,338 | 2,825,215 | ||||||
Taxes payable | 9,085,746 | 7,067,593 | ||||||
TOTAL CURRENT LIABILITIES | 19,683,974 | 13,189,549 | ||||||
Other loan payable - long-term | 212,351 | 411,683 | ||||||
Long-term loans | - | 414,912 | ||||||
TOTAL LIABILITIES | 19,896,325 | 14,016,144 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY: | ||||||||
Common stock | ||||||||
Class A common stock, $0.001 par value, 40,000,000 shares authorized, 8,491,177 and 6,916,947 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 8,491 | 6,917 | ||||||
Class B common stock, $0.001 par value, 10,000,000 shares authorized, 7,778,400 shares issued and outstanding as of December 31, 2018 and 2017, respectively. | 7,778 | 7,778 | ||||||
Additional paid-in capital | 13,361,447 | 10,237,965 | ||||||
Retained earnings | 24,732,776 | 29,877,491 | ||||||
Accumulated other comprehensive income (loss) | (1,353,141) | 402,387 | ||||||
TOTAL SHAREHOLDERS' EQUITY | 36,757,351 | 40,532,538 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 56,653,676 | $ | 54,548,682 | ||||
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
REVENUE | ||||||||||||
Installation service | $ | 17,297,212 | $ | 23,748,141 | $ | 24,299,062 | ||||||
Fluid equipment sales | 7,992,848 | 5,452,304 | 2,798,774 | |||||||||
25,290,060 | 29,200,445 | 27,097,836 | ||||||||||
COST OF REVENUE | ||||||||||||
Cost of product and services | 17,458,252 | 18,080,777 | 16,192,810 | |||||||||
Business and sales related taxes | 253,856 | 675,507 | 443,448 | |||||||||
GROSS PROFIT | 7,577,952 | 10,444,161 | 10,461,578 | |||||||||
OPERATING EXPENSES | ||||||||||||
General and administrative expenses | 3,298,188 | 3,683,594 | 932,911 | |||||||||
Selling expenses | 1,337,321 | 2,187,253 | 1,742,147 | |||||||||
Bad debt expenses (recovery) | 7,913,442 | 187,715 | (227,873) | |||||||||
Research and development expenses | 358,411 | 508,282 | 33,847 | |||||||||
Total operating expenses | 12,907,362 | 6,566,844 | 2,481,032 | |||||||||
(LOSS) INCOME FROM OPERATIONS | (5,329,410) | 3,877,317 | 7,980,546 | |||||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Other income, net | (426,585) | 377,174 | 6,431 | |||||||||
Interest expense | (208,306) | (56,953) | (49,625) | |||||||||
Income from investment | 168,534 | - | - | |||||||||
Total other (expense) income, net | (466,357) | 320,221 | (43,194) | |||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (5,795,767) | 4,197,538 | 7,937,352 | |||||||||
(BENEFIT FROM) PROVISION FOR INCOME TAXES | (651,052) | (2,938,849) | 2,002,467 | |||||||||
NET (LOSS) INCOME | $ | (5,144,715) | $ | 7,136,387 | $ | 5,934,885 | ||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Foreign currency translation (loss) income | (1,755,528) | 2,249,081 | (1,401,124) | |||||||||
COMPREHENSIVE (LOSS) INCOME | $ | (6,900,243) | $ | 9,385,468 | $ | 4,533,761 | ||||||
Basic and diluted (loss) earnings per common share | ||||||||||||
Basic | $ | (0.33) | $ | 0.49 | $ | 0.49 | ||||||
Diluted | $ | (0.33) | $ | 0.49 | $ | 0.49 | ||||||
Weighted average number of shares outstanding | ||||||||||||
Basic | 15,760,633 | 14,695,347 | 12,029,538 | |||||||||
Diluted | 15,760,633 | 14,695,347 | 12,046,045 | |||||||||
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Class A Common Stock | Class B Common Stock | Additional | Retained | Accumulated | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | capital | Earnings | Income (Loss) | Total | |||||||||||||||||||||||||
Balance at January 1, 2016* | 4,221,600 | $ | 4,222 | 7,778,400 | $ | 7,778 | $ | 108,970 | $ | 16,806,219 | $ | (445,570) | $ | 16,481,619 | ||||||||||||||||||
Issuance Class A shares - IPO | 2,695,347 | 2,695 | - | - | 10,128,995 | - | - | 10,131,690 | ||||||||||||||||||||||||
Net income | - | - | - | 5,934,885 | - | 5,934,885 | ||||||||||||||||||||||||||
Foreign currency translation loss | - | - | - | - | (1,401,124) | (1,401,124) | ||||||||||||||||||||||||||
Balance at December 31, 2016 | 6,916,947 | 6,917 | 7,778,400 | 7,778 | 10,237,965 | 22,741,104 | (1,846,694) | 31,147,070 | ||||||||||||||||||||||||
Net income | - | - | - | - | - | 7,136,387 | - | 7,136,387 | ||||||||||||||||||||||||
Foreign currency translation income | - | - | - | - | - | 2,249,081 | 2,249,081 | |||||||||||||||||||||||||
Balance at December 31, 2017 | 6,916,947 | 6,917 | 7,778,400 | 7,778 | 10,237,965 | 29,877,491 | 402,387 | 40,532,538 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | (5,144,715) | - | (5,144,715) | ||||||||||||||||||||||||
Foreign currency translation loss | - | - | - | - | - | - | (1,755,528) | (1,755,528) | ||||||||||||||||||||||||
Issuance of class A common stock for consulting services | 131,452 | 131 | - | - | 239,369 | - | - | 239,500 | ||||||||||||||||||||||||
Issuance of class A common stock for equity investment | 1,442,778 | 1,443 | - | - | 2,884,113 | - | - | 2,885,556 | ||||||||||||||||||||||||
Balance at December 31, 2018 | 8,491,177 | $ | 8,491 | 7,778,400 | $ | 7,778 | $ | 13,361,447 | $ | 24,732,776 | $ | (1,353,141) | $ | 36,757,351 | ||||||||||||||||||
* Retrospectively adjusted the reclassification of the Company's common stock (see Note 14)
HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income (loss) | $ | (5,144,715) | $ | 7,136,387 | $ | 5,934,885 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 1,195,161 | 939,995 | 517,402 | |||||||||
Loss on disposition of property and equipment | 283,487 | 12,179 | 228,245 | |||||||||
Deferred tax expense (benefit) | (1,471,938) | 11,526 | 56,968 | |||||||||
Bad debt expense (recovery) | 7,913,442 | 187,715 | (227,873) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Contracts receivable | (9,019,036) | (2,992,867) | (5,893,527) | |||||||||
Accounts receivable | (1,383,452) | (950,850) | 922,611 | |||||||||
Notes receivable | 593,674 | (378,205) | (85,107) | |||||||||
Retainage receivables | (748,903) | (80,360) | (548,357) | |||||||||
Prepayment and advances to suppliers | 93,149 | (7,127,018) | (2,861,600) | |||||||||
Inventories | 1,177,956 | 788,000 | 427,878 | |||||||||
Other receivables | (598,764) | (156,074) | (1,535) | |||||||||
Accounts payable | 146,546 | 26,450 | (290,717) | |||||||||
Notes Payable | 2,148,292 | 53,272 | - | |||||||||
Advances from customers | 429,217 | (370,964) | 528,193 | |||||||||
Deferred revenue | - | (1,071,355) | 3,161 | |||||||||
Taxes payable | 2,770,253 | (2,365,120) | 2,484,264 | |||||||||
Accrued expenses and other current liabilities | 890,551 | 240,505 | 382,410 | |||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (725,080) | (6,096,784) | 1,577,301 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Acquisitions of property and equipment | (74,210) | (3,126,777) | (7,667) | |||||||||
Payments for intangible assets | (41,000) | - | - | |||||||||
Payments for construction in progress | - | - | (973,254) | |||||||||
NET CASH (USED IN) INVESTING ACTIVITIES | (115,210) | (3,126,777) | (980,921) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from short-term bank loans | 1,995,763 | 295,954 | 301,019 | |||||||||
Repayment of short-term bank loans | (1,088,667) | - | (795,443) | |||||||||
Proceeds from long-term loans | - | 173,873 | 556,885 | |||||||||
Repayment of long-term loans | - | (47,353) | - | |||||||||
Repayment/Proceeds from other loan | (176,427) | 582,205 | - | |||||||||
Repayment of other loan | - | (21,457) | - | |||||||||
Repayment of (proceeds from) related parties | - | (66,582) | 72,009 | |||||||||
Proceeds from issuance of shares in IPO | - | - | 10,131,690 | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 730,669 | 916,640 | 10,266,160 | |||||||||
EFFECT OF EXCHANGE RATE CHANGE ON CASH | (94,239) | (292,869) | (104,290) | |||||||||
NET (DECREASE) INCREASE IN CASH | (203,860) | (8,599,790) | 10,758,250 | |||||||||
CASH AND RESTRICTED CASH-beginning of year | 3,276,103 | 11,875,893 | 1,117,643 | |||||||||
CASH AND RESTRICTED CASH-end of year | $ | 3,072,243 | $ | 3,276,103 | $ | 11,875,893 | ||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||||||
Cash paid for income taxes | $ | 42,250 | $ | - | $ | - | ||||||
Cash paid for interest | $ | 91,917 | $ | 75,704 | $ | 50,705 | ||||||
Non-cash financing activities | ||||||||||||
Warrants issued to placement agent in connection with the Company's IPO | $ | - | $ | - | $ | 488,730 | ||||||
Issuance of shares for consulting services | $ | 239,500 | $ | - | $ | - | ||||||
Issuance of shares for equity investment | $ | 2,885,556 | $ | - | $ | - | ||||||
SOURCE Hebron Technology Co., Ltd.
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