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Hebron Technology Co., Ltd. Reports Financial Results for the First Half of 2018

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WENZHOU, China, Dec. 10, 2018 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") (NASDAQ: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 six months ended June 30, 2018.

Mr. Anyuan Sun, Chairman and Chief Executive Officer of Hebron, commented, "With revenues increasing by 33% to $10.33 million, our first half financial results reflected the impact of more projects being completed for our installation services during the six months ended June 30, 2018. With the multiple project wins and a growing project pipeline, we are confident about our near-term outlook and expect further growth to return in the near future."

Six Months Ended June 30, 2018 Financial Results

  • Total revenues increased by 33% to $10.33 million for the six months ended June 30, 2018, from $7.74 million for the six months ended June 30, 2017. The increase in total revenues was because of an increase in the number of projects and average revenues per project for installation services and the increased sales in fluid equipment sales.
  • Gross and operating margins were 34% and (11)%, respectively, for the six months ended June 30, 2018, compared to 37% and 2%, respectively, for the same period of last year.
  • Net loss was $1.57 million, or a loss per share of $0.10 for the six months ended June 30, 2018, compared to net loss of $0.34 million, or loss per share of $0.02, for the same period of last year.

 



For the Six Months Ended June 30,

($ millions)


2018


2017


% Change

Revenues







Installation service


7.58


6.35


19%

Fluid equipment sales


2.75


1.39


98%








Gross profit


3.55


2.87


24%

Gross margin


34%


37%


(3)pp*

Installation service


43%


41%


2pp*

Fluid equipment sales


15%


21%


(6)pp*








Operating expenses


4.68


2.7


73%

Operating income (loss)


(1.12)


0.17


(779)%

Operating margin


(11)%


2%


13pp*

Net loss


(1.57)


(0.34)


362%

Net loss margin


(15)%


(4)%


(11)pp*

Basic and diluted loss per share


(0.10)


(0.02)


400%


*pp represents percentage points

Revenues

For the six months ended June 30, 2018, total revenues increased by $2.6 million, or 33%, to $10.3 million from $7.7 million for the same period of last year. The increase in total revenues was related to the increase in revenues from installation services as more works were completed during the six months ended June 30, 2018, and well as the increased sales in fluid equipment.

Revenues from installation services increased by $1.2 million, or 19.3%, to $7.6 million for the six months ended June 30, 2018 from $6.4 million for the same period of last year. We provided installation services for 3 projects with an average project revenue of $2.5 million during the six months ended June 30, 2018, compared to 3 projects with an average project revenue of $2.1 million during the same period of last year. Revenues from fluid equipment sales increased by $1.4 million, or 98.0%, to $2.7 million for the six months ended June 30, 2018 from $1.4 million for the same period of last year.

Cost of revenues and gross profit

Total cost of revenues increased by $1.9 million, or 39.1%, to $6.8 million for the six months ended June 30, 2018 from $4.9 million for the same period of last year. Overall gross profit increased by $0.7 million, or 23.9%, to $3.6 million for the six months ended June 30, 2018 from $2.9 million for the same period of last year. Overall gross margin was 34% for the six months ended June 30, 2018, down 3 percentage points from 37% for the same period of last year.

Cost of revenues for installation services increased by $0.5 million, or 13.2%, to $4.3 million for the six months ended June 30, 2018 from $3.8 million for the same period of last year. The increase in cost of revenues was in line with the increase in revenues for installation services. Gross profit for installation services increased by $0.7 million, or 26.9%, to $3.3 million for the six months ended June 30, 2018 from $2.6 million for the same period of last year. Gross margin for installation services was 43.4% for the six months ended June 30, 2018, compared to 40.6% for the same period of last year.

Cost of revenues for fluid equipment sales increased by $1.2 million, or 109.1%, to $2.3 million for the six months ended June 30, 2018 from $1.1 million for the same period of last year. Gross profit for fluid equipment sales increased by $0.1 million, or 33.3%, to $0.4 million for the six months ended June 30, 2018 from $0.3 million for the same period of last year. Gross margin for fluid equipment sales was 14.8% for the six months ended June 30, 2018, compared to 21.4% for the same period of last year. The decreased gross margin was due to the increased competition in equipment sales and because the Company sold more products with lower margin in this period.

Operating expenses

General and administrative expenses increased by $2.9 million, or 199.2%, to $4.4 million for the six months ended June 30, 2018 from $1.5 million for the same period of last year. The increase was mainly due to higher salaries for the management, higher bad debt expense recorded for long aging advances to vendors and higher amortization expense recorded for the new facilities. Selling expenses were $0.3 million for the six months ended June 30, 2018, compared to $0.7 million for the same period of last year. Research and development expenses were $NIL for the six months ended June 30, 2018, compared to $0.5 million for the same period of last year. The decrease in research and development expenses was mainly due to the lack of new R&D projects for the six months ended June 30, 2018, while we had a R&D project for developing an intelligent valve controller system during the six months ended June 30, 2017. As such, total operating expenses increased by $2.0 million, or 73.0%, to $4.7 million for the six months ended June 30, 2018 from $2.7 million for the same period of last year.

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