ReTo Eco-Solutions, Inc. (NASDAQ:RETO) (“ReTo” or the
“Company”), a manufacturer and distributor of eco-friendly
construction materials as well as equipment used for the production
of these eco-friendly construction materials, and consultation,
design, project implementation and construction of urban ecological
environments including those for the purpose of capturing,
controlling and reusing rainwater, commonly called “sponge cities”,
today announced its financial results for the six and twelve months
ended December 31, 2017.
Second Half 2017 Financial Highlights (all comparisons to
prior year unless noted)
For the Six Months Ended December 31,
($ millions, except per share data)
2017
2016 % Change Revenues $20.6 $18.9 8.6%
Gross profit $10.4 $7.8 34.0% Gross margin 50.7% 41.1% 9.6
percentage points Operating income $6.0 $4.1 47.9% Operating margin
29.3% 21.5% 7.8 percentage points Net income attributable to RETO
$3.3 $1.8 85.3% Diluted earnings per share $0.20
$0.10 86.7%
- Revenues increased by 8.6% to $20.6
million primarily due to increases in sales for construction
materials and technological consulting and other services and
partially offset by decrease in sales of machinery and
equipment.
- Gross profit increased by 34.0% to
$10.4 million while gross margin increased by 9.6 percentage points
to 50.7%.
- Operating income increased by 47.9% to
$6.0 million and operating margin increased by 7.8 percentage
points to 29.3%
- Net income was $3.3 million, or $0.20
per basic and diluted share, for the second half of 2017, compared
to $1.8 million, or $0.10 per basic and diluted share, for the same
period of the prior year.
Full Year 2017 Financial Highlights
For the Twelve Months Ended December
31, ($ millions, except per share data)
2017
2016 % Change Revenues $35.6
$32.4 9.6% Gross profit $18.0 $14.2 26.9% Gross margin 50.5% 43.6%
6.9 percentage points Operating income $10.3 $8.2 25.2% Operating
margin 28.8% 25.3% 3.6 percentage points Net income attributable to
RETO $6.0 $4.1 45.7% Diluted earnings per share $0.35
$0.25 39.2%
- Revenues increased by 9.6% to $35.6
million. The increase in revenues was across all four business
segments.
- Gross profit increased by 26.9% to
$18.0 million while gross margin increased by 6.9 percentage points
to 50.5%.
- Operating income increased by 25.2% to
$10.3 million and operating margin increased by 3.6 percentage
points to 28.8%
- Net income was $6.0 million, or $0.35
per basic and diluted share, for 2017, compared to $4.1 million, or
$0.25 per basic and diluted share, for 2016.
"We are very pleased to report strong financial results for the
year of 2017 with revenues growing by 9.6% to $35.6 million and net
income attributable to ReTo increasing by 45.7% to $6.0 million,
respectively, both were record highs since our inception," said Mr.
Hengfang Li, Chairman and Chief Executive Officer of ReTo.
Mr. Li continued, "While 2017 was clearly a banner year for ReTo
highlighted by our successful IPO in November 2017, we expect the
growth momentum to continue in the near future as we continue to
increase market penetration of existing products, develop new
products, and expand our geographical outreach in both domestic and
international markets.”
Second Half 2017 Unaudited Financial Results
Revenues
Total revenues increased by $1.6 million, or 8.6%, to $20.6
million for the second half of 2017 from $18.9 million for the same
period of the prior year. The increase in total revenues was
primarily due to increased sales for construction materials and
technological consulting and other services and partially offset by
decrease in sales for machinery and equipment.
For the Six Months Ended December 31,
2017 2016
Revenues($'000)
Gross Profit($'000)
Gross Margin(%)
Revenues($'000)
Gross Profit($'000)
Gross Margin(%)
Machinery and equipment $ 7,508 $ 3,801 50.6% $ 7,804 $ 5,198 66.6%
Construction materials 11,443 5,602 49.0% 10,582 2,373 22.4%
Municipal construction projects 250 90 36.0% - - - Technological
consulting and other services 1,360 928 68.2% 540 208 38.4%
Total $ 20,562 $
10,421
50.7% $ 18,927
$
7,779 41.1%
The machinery and equipment we manufacture mostly consist of
large-scale automatic environmental protection equipment with
hydraulic integration, which can be used to produce various types
of eco-friendly construction materials and meet the needs of
various ecological projects. Revenues from the machinery and
equipment segment decreased by $0.3 million, or 3.8%, to $7.5
million for the second half of 2017 from $7.8 million for the same
period of the prior year.
Construction materials are mostly eco-friendly made from mining
waste (iron tailings) and fly-ash and used for ground works,
landscaping, hydraulic engineering projects and wall projects.
Revenues from construction materials increased by $0.9 million, or
8.1%, to $11.4 million for the second half of 2017 from $10.6
million for the same period of the prior year. The increase in
revenues from construction materials was related to increases in
both sales volume and average selling price.
Municipal construction includes such projects as sponge city
projects, sewage pipeline construction, public plaza construction,
and landscaping. Our environmental-friendly construction materials
such as brick and block may be used in these municipal construction
projects as required by local governments. Revenues from municipal
construction projects were $0.3 million related to one municipal
construction project for the second half of 2017. We did not book
revenues from municipal construction projects in the second half of
2016.
We started to provide environmental-protection related
consulting services to customers in the second half of 2016. Our
subsidiaries Beijing REIT and Dingxuan provided such services to
customers by assisting them in planning the
environmental-protection projects, providing market research and
feasibility reports reviewing and assisting customers to finalize
the design, installation, testing and inspection, as well as
providing employee training services. Revenues from technological
consulting and other services increased by $0.8 million, or 151.7%,
to $1.4 million for the second half of 2017 from $0.5 million for
the same period of the prior year.
Revenues from machinery and equipment, construction materials,
municipal construction projects and technological consulting and
other services accounted for 36.5%, 55.7%, 1.2%, and 6.6%,
respectively, of total revenues in the second half of 2017,
compared to 41.2%, 55.9%, 0, and 2.9%, respectively, of total
revenues in the same period of the prior year.
Cost of goods sold
Total cost of goods sold decreased by $1.0 million, or 9.0%, to
$10.1 million for the second half of 2017 from $11.1 million for
the same period of the prior year. The decrease in cost of goods
sold was mainly due to decrease in per unit costs related to our
construction materials business. As a percentage of revenues, total
cost of goods sold was 49.3% in the second half of 2017, compared
to 58.9% for the same period of the prior year.
Costs of goods sold for machinery and equipment, construction
materials, municipal construction projects and technological
consulting and other services were $3.7 million, $5.8 million, $0.2
million, and $0.4 million, respectively, for the second half of
2017, compared to $2.6 million, $8.2 million, $0, and $0.3 million,
respectively, for the same period of the prior year.
Gross profit and gross margin
Overall gross profit increased by $2.6 million, or 34.0%, to
$10.4 million for the second half of 2017 from $7.8 million for the
same period of the prior year. Gross profits for machinery and
equipment, construction materials, municipal construction projects
and technological consulting and other services were $3.8 million,
$5.6 million, $0.1 million, and $0.9 million, respectively, for the
second half of 2017, compared to $5.2 million, $2.4 million, $0,
and $0.2 million, respectively, for the same period of the prior
year.
Overall gross margin was 50.7% for the second half of 2017,
compared to 41.1% for the same period of the prior year. Gross
margins for machinery and equipment, construction materials,
municipal construction projects and technological consulting and
other services were 50.6%, 49.0%, 36.0%, and 68.2%, respectively,
for the second half of 2017, compared to 66.6%, 22.4%, $0, and
38.4%, respectively, for the same period of the prior year.
Operating expenses
Selling expenses increased by $0.2 million, or 15.8%, to $1.2
million for the second half of 2017 from $1.0 million for the same
period of the prior year. The increase in selling expenses was
mainly due to higher sales commission and increased marketing
expenses in the second half of 2017. As a percentage of revenues,
selling expenses were 5.8% for the second half of 2017, compared to
5.5% for the same period of the prior year.
General and administrative expenses increased by $0.5 million,
or 21.1%, to $2.9 million for the second half of 2017 from $2.4
million for the same period of the prior year. The increase in
general and administrative expenses was mainly due to higher bad
debt expense incurred in the second half of 2017. As a percentage
of revenues, general and administrative expenses were 13.9% for the
second half of 2017, compared to 12.5% for the same period of the
prior year.
Research and development expenses increased by $32,321, or
10.3%, to $0.35 million for the second half of 2017 from $0.31
million for the same period of the prior year. As a percentage of
revenues, research and development expenses were 1.7% for the
second half of 2017 and 2016.
Total operating expenses increased by $0.7 million, or 18.7%, to
$4.4 million for the second half of 2017 from $3.7 million for the
same period of the prior year. As a percentage of revenues,
operating expenses were 21.4% for the second half of 2017, compared
to 19.6% for the same period of the prior year.
Operating income and operating margin
Income from operations increased by $1.9 million, or 47.9%, to
$6.0 million for the second half of 2017 from $4.1 million for the
same period of the prior year. Operating margin was 29.3% for the
second half of 2017, compared to 21.5% for the same period of the
prior year.
Other income (expenses)
Net other expenses were $0.3 million, including interest expense
of $0.4 million and other income of $0.1 million, for the second
half of 2017. As a comparison, net other expenses were $1.0
million, including interest expense of $0.7 million and other
expenses of $0.3 million, for the same period of the prior year.
The decrease of interest expense was due to less borrowings during
the second half of 2017.
Income before income taxes
Income before income taxes increased by $2.7 million, or 89.4%,
to $5.7 million for the second half of 2017 from $3.0 million for
the same period of the prior year. The increase was primarily
attributable to increased sales and gross margin and partially
offset by the increased operating expense as discussed above.
Provision for income taxes
Provision for income taxes was $1.9 million for the second half
of 2017, compared to $1.1 million for the same period of the prior
year. The effective tax rates were 33.5% and 36.9% for the second
half of 2017 and 2016, respectively.
Net income and EPS
As a result, net income increased by $1.9 million, or 99.6%, to
$3.8 million for the second half of 2017 from $1.9 million for the
same period of the prior year. After deducting for non-controlling
interest, net income attributable to RETO was $3.3 million, or
$0.20 per basic and diluted share, for the second half of 2017.
This compared to $1.8 million, or $0.10 per basic and diluted
share, for the same period of the prior year.
Full Year 2017 Financial Results
Revenues
Total revenues increased by $3.1 million, or 9.6%, to $35.6
million for 2017 from $32.4 million for 2016. The increase in
revenues was across all four business segments.
For the Twelve Months Ended December
31, 2017 2016
Revenues($'000)
Gross Profit($'000)
Gross Margin(%)
Revenues($'000)
Gross Profit($'000)
Gross Margin(%)
Machinery and equipment $ 14,485 $ 7,789 53.8% $ 13,167 $ 7,743
58.8% Construction materials 19,456 9,156 47.1% 18,425 6,091 33.1%
Municipal construction projects 250 90 36.0% - - - Technological
consulting and other services 1,360 928 68.2% 833 318 38.2%
Total $ 35,551 $
17,962
50.5% $ 32,424
$
14,152 43.6%
Revenues from the machinery and equipment segment increased by
$1.3 million, or 10.0%, to $14.5 million for 2017 from $13.2
million for 2016. We sold 18 production lines and 33 large
equipment sets to customers during 2017, compared to 32 production
lines and 20 large equipment sets sold during 2016.
Revenues from construction materials increased by $1.0 million,
or 5.6%, to $19.5 million for 2017 from $18.4 million for 2016. The
increase in revenues from construction materials was related to
increases in both sales volume and average selling price. We sold
approximately 5.0 million square meters of bricks and block during
2017 and 2016, respectively.
Revenues from municipal construction projects was $0.3 million
related to one municipal construction project for 2017. The Company
did not book revenues from municipal construction projects in
2016.
Revenues from technological consulting and other services
increased by $0.5 million, or 63.2%, to $1.4 million for 2017 from
$0.8 million for 2016.
Revenues from machinery and equipment, construction materials,
municipal construction projects and technological consulting and
other services accounted for 40.7%, 54.7%, 0.7%, and 3.8%,
respectively, of total revenues in 2017, compared to 40.6%, 56.8%,
$0, and 2.6%, respectively, of total revenues in 2016.
Cost of goods sold
Total cost of goods sold decreased by $0.7 million, or 3.7%, to
$17.6 million for 2017 from $18.3 million for 2016. The decrease in
cost of goods sold was mainly due to decrease in per unit costs
related to our construction materials business. As a percentage of
revenues, total cost of goods sold was 49.5% in 2017, compared to
56.4% for the prior year.
Costs of goods sold for machinery and equipment, construction
materials, municipal construction projects and technological
consulting and other services were $6.7 million, $10.3 million,
$0.1 million, and $0.4 million, respectively, in 2017, compared to
$5.4 million, $12.3 million,$0, and $0.5 million, respectively, in
2016.
Gross profit and gross margin
Overall gross profit increased by $3.8 million, or 26.9%, to
$18.0 million for 2017 from $14.2 million for 2016. Gross profits
for machinery and equipment, construction materials, municipal
construction projects and technological consulting and other
services were $7.8 million, $9.2 million, $0.1 million, and $0.9
million, respectively, in 2017, compared to $7.7 million, $6.1
million, $0, and $0.3 million, respectively, in 2016.
Overall gross margin was 50.5% for 2017, compared to 43.6% for
the prior year. Gross margins for machinery and equipment,
construction materials, municipal construction projects and
technological consulting and other services were 53.8%, 47.1%,
36.0%, and 68.2%, respectively, in 2017, compared to 58.8%, 33.1%,
0, and 38.2%, respectively, in 2016.
Operating expenses
Selling expenses increased by $0.2 million, or 13.7%, to $1.8
million for 2017 from $1.6 million for 2016. The increase in
selling expenses was mainly due to higher sales commissions and
increased marketing expenses in 2017. As a percentage of revenues,
selling expenses were 5.1% for 2017, compared to 4.9% for the prior
year.
General and administrative expenses increased by $1.4 million,
or 36.9%, to $5.3 million for 2017 from $3.9 million for 2016. The
increase in general and administrative expenses was mainly due to
higher bad debt expense incurred in 2017. As a percentage of
revenues, general and administrative expenses were 14.9% for 2017,
compared to 12.0% for 2016.
Research and development expenses increased by $0.1 million, or
19.8%, to $0.6 million for 2017 from $0.5 million for 2016. As a
percentage of revenues, research and development expenses were 1.7%
for 2017, compared to 1.6% for 2016.
Total operating expenses increased by $1.7 million, or 29.3%, to
$7.7 million for 2017 from $6.0 million for 2016. As a percentage
of revenues, operating expenses were 21.7% for 2017, compared to
18.4% for 2016.
Operating income and operating margin
Income from operations increased by $2.1 million, or 25.2%, to
$10.3 million for 2017 from $8.2 million for 2016. Operating margin
was 28.8% for 2017, compared to 25.3% for 2016.
Other income (expenses)
Net other expenses were $0.8 million, including interest expense
of $1.0 million and other income of $0.2 million, for 2017. As a
comparison, net other expenses were $1.7 million, including
interest expense of $1.5 million and other expenses of $0.3
million, for 2016. The decrease of interest expense was due to less
borrowings during 2017.
Income before income taxes
Income before income taxes increased by $3.0 million, or 45.7%,
to $9.4 million for 2017 from $6.5 million for 2016. The increase
was primarily attributable to increased sales and gross margin and
partially offset by the increased operating expense as discussed
above.
Provision for income taxes
Provision for income taxes was $2.8 million for 2017, compared
to $2.0 million for 2016. The effective tax rates were 29.3% and
30.2% for 2017 and 2016, respectively.
Net income and EPS
As a result, net income increased by $2.1 million, or 47.6%, to
$6.6 million for 2017 from $4.5 million for 2016. After deducting
for non-controlling interest, net income attributable to RETO was
$6.0 million, or $0.35 per basic and diluted share, for 2017. This
compared to $4.1 million, or $0.25 per basic and diluted share, for
2016.
Financial Conditions
As of December 31, 2017, we had cash and cash equivalents of
$10.9 million and restricted cash of $0, compared to $1.6 million
and $0.2 million, respectively, at the end of 2016. Total loan
balance was $15.0 million as of December 31, 2017, compared to
$16.4 million at the end of 2016. Total working capital was $7.0
million as of December 31, 2017, versus working capital deficit of
$7.0 million at the end of 2016.
Net cash provided by operating activities was $2.5 million for
2017, compared to $3.9 million for 2016. Net cash used in investing
activities was $7.4 million for 2017, compared to $9.3 million for
2016. During 2017, the Company paid $4.6 million on the
construction in progress projects to build a new factory facility
and purchase of equipment for the Company’s subsidiary REIT Xinyi.
Net cash provided by financing activities was $14.2 million for
2017, compared to $6.7 million for 2016.
Recent Developments
In December 2017, we closed our initial public offering (“IPO”)
of 3,220,000 shares of common shares at a public offering price of
$5.00 per share. The gross proceeds from the offering were
approximately $16.1 million before deducting placement agent
commissions and other offering expenses, resulting in net proceeds
of approximately $14.3 million. In connection with the offering,
the Company's common shares began trading on the NASDAQ Capital
Market beginning on November 29, 2017 under the symbol "RETO".
About ReTo Eco-Solutions, Inc.
Founded in 1999 and headquartered in Beijing, ReTo is a
manufacturer and distributor of eco-friendly construction materials
(aggregates, bricks, pavers and tiles), made from mining waste
(iron tailings) and fly-ash, as well as equipment used for the
production of these eco-friendly construction materials. The
Company also provides a full range of eco-friendly project
solutions, including consultation, design, project implementation
and construction, relating to all stages of sponge-city projects
for customers. The Company’s clients are located or have been
located in mainland China, and internationally, including Canada,
the United States, Middle East, India, Maldives North Africa and
Brazil.
Notice
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
Forward-Looking
Statements
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements that are other than
statements of historical facts. When the Company uses words such as
"may," "will," "intend," "should," "believe," "expect,"
"anticipate," "project," "estimate" or similar expressions that do
not relate solely to historical matters, it is making
forward-looking statements. Specifically, the Company's statements
regarding: 1) the Company’s continued growth and business outlook;
2) the Company’s ability to increase market penetration of existing
products; 3) the Company’s ability to develop new products; and 4)
the Company’s ability to expand its geographical outreach in
domestic and international markets are forward-looking statements.
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that may cause the actual
results to differ materially from the Company's expectations
discussed in the forward-looking statements. These statements are
subject to uncertainties and risks including, but not limited to,
the following: the Company's goals and strategies; the Company's
future business development; product and service demand and
acceptance; changes in technology; economic conditions; the growth
of construction in China and internationally; reputation and brand;
the impact of competition and pricing; government regulations;
fluctuations in general economic and business conditions in China
and internationally and assumptions underlying or related to any of
the foregoing and other risks contained in reports filed by the
Company with the Securities and Exchange Commission. For these
reasons, among others, investors are cautioned not to place undue
reliance upon any forward-looking statements in this press release.
Additional factors are discussed in the Company's filings with the
U.S. Securities and Exchange Commission, which are available for
review at www.sec.gov. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof.
RETO ECO-SOLUTIONS INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2017
2016
ASSETS
Current Assets: Cash and cash equivalents $ 10,863,040 $
1,594,594 Restricted cash - 230,400 Accounts receivable, net
18,503,286 15,207,029 Advances to suppliers, net 1,847,637
1,882,408 Inventories 1,611,836 1,308,526 Acquisition deposit -
565,000 Prepaid expenses and other current assets 774,665
356,498
Total Current Assets 33,600,464 21,144,455
Property, plant and equipment, net 39,833,280 34,160,330
Intangible assets, net 7,401,550 7,092,370 Other assets - 174,829
Deferred tax assets 296,535 89,015
Total
Assets $ 81,131,829 $ 62,660,999
LIABILITIES AND
EQUITY
Current Liabilities: Short term bank loans, net $
7,540,381 $ 5,734,666 Long term bank loans-current portion
4,460,524 4,391,260 Bank notes payable - 720,000 Advances from
customers 7,078,609 7,924,658 Deferred revenue 520,872 507,200
Accounts payable 2,506,484 4,405,118 Accrued and other liabilities
716,960 915,307 Taxes payable 3,352,512 2,310,902 Due to related
parties 375,697 1,199,620
Total Current
Liabilities 26,552,039 28,108,731 Long
term bank loans 2,951,040 6,249,600
Total
Liabilities 29,503,079 34,358,331
Commitments and Contingencies Equity:
Common Stock, $0.001 par value, 200,000,000 shares authorized,
22,760,000 and 18,640,000 shares issued and outstanding as of
December 31, 2017 and 2016* 22,760 18,640 Additional paid-in
capital 42,278,252 23,741,828 Statutory reserve 1,989,475 1,033,524
Accumulated earnings 5,246,950 224,512 Accumulated other
comprehensive loss (216,414 ) (1,728,096 )
Total
RETO Eco Solutions Inc. Stockholders’ Equity 49,321,023
23,290,408 Noncontrolling interest 2,307,727
5,012,260
Total Equity 51,628,750
28,302,668
Total Liabilities and Equity $
81,131,829 $ 62,660,999
RETO ECO-SOLUTIONS INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
For the Years ended
December 31,
2017 2016 2015
Revenues $ 35,551,016 $ 32,424,269 $ 17,384,373 Cost of
goods sold 17,588,738 18,272,017 9,265,313
Gross Profit 17,962,278
14,152,252 8,119,060 Operating Expenses
Selling expenses 1,797,926 1,580,825 1,462,144 General and
administrative expenses 5,308,079 3,878,709 2,607,846 Research and
development expenses 603,445 503,688 458,246
Total Operating Expenses 7,709,450 5,963,222
4,528,236
Income from Operations
10,252,828 8,189,030 3,590,824
Other
Expense: Interest expense (1,012,960 ) (1,450,389 ) (1,032,329
) Other income (expense) 166,997 (283,205 )
92,880
Total Other Expense, net (845,963 )
(1,733,594 ) (939,449 )
Income Before Income
Taxes 9,406,865 6,455,436 2,651,375
Provision for Income Taxes 2,760,080 1,952,356
295,760
Net Income 6,646,785 4,503,080
2,355,615 Less: net income attributable to noncontrolling
interest 668,396 399,559 41,270
Net income
attributable to ReTo Eco-Solutions, Inc. $
5,978,389 $ 4,103,521 $
2,314,345 Net Income $ 6,646,785 $ 4,503,080 $
2,355,615 Other Comprehensive Income (loss): Foreign currency
translation income (loss) 2,109,103 (1,699,975 )
(905,144 )
Comprehensive Income 8,755,888 2,803,105
1,450,471 Less: comprehensive income (loss) attributable to
noncontrolling interest 1,265,817 (26,394 )
(65,195 )
Comprehensive income attributable to ReTo
Eco-Solutions, Inc. $ 7,490,071 $
2,829,499 $ 1,515,666 Earnings per
share Basic and diluted
$ 0.35 $
0.25 $ 0.13 Weighted average number
of shares Basic and diluted *
19,130,137
18,043,836 17,840,000
RETO ECO-SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
For the Years endedDecember 31, 2017
2016 2015 CASH FLOWS FROM
OPERATING ACTIVITIES Net income $ 6,646,785 $ 4,503,080 $ 2,355,615
Adjustments to reconcile net income to net cash provided by
operating activities: Gain from disposal of property and equipment
- - (12,598 ) Deferred tax benefit (194,045 ) (44,685 ) (45,448 )
Depreciation and amortization 1,566,739 1,361,260 1,257,220 Bad
debt provisions 876,924 1,101,698 311,331 Changes in operating
assets: Accounts receivable (3,174,381 ) (7,451,292 ) (5,353,931 )
Advances to suppliers 198,355 (1,761,639 ) 1,206,987 Inventories
(207,182 ) 745,161 353,894 Other assets (320,500 ) 6,281 (15,751 )
Changes in operating liabilities: Advances from customers
(1,328,663 ) 3,028,340 (368,457 ) Deferred revenue (19,733 )
(20,067 ) (21,400 ) Accounts payable (2,113,907 ) 231,012 1,809,758
Billings in excess of costs and estimated earnings - (174,038 )
65,924 Taxes payable 853,072 2,078,982 420,593 Accrued and other
liabilities (248,546 ) 333,863 (105,410 ) Net
cash provided by operating activities 2,534,918
3,937,956 1,858,327 CASH FLOWS FROM INVESTING
ACTIVITIES Proceeds from property and equipment disposal - - 17,655
Addition of property, equipment and construction in progress
(4,639,003 ) (9,372,067 ) (2,709,343 ) Purchase of intangible
assets - (1,681,870 ) - Deposit made for planned acquisition of
minority interest - (565,000 ) - Acquisition of minority interest
(2,735,000 ) - - Collection (payment) on project deposit -
2,317,700 (2,471,700 ) Net cash used in investing
activities (7,374,003 ) (9,301,237 )
(5,163,388 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds
from short-term bank loans 9,767,793 7,597,297 - Deferred financing
costs paid - (98,774 ) - Proceeds from long-term bank loans -
752,500 5,617,500 Repayment of short-term bank loans (8,244,905 )
(6,772,500 ) (4,250,197 ) Repayment of long-term bank loans
(3,799,654 ) (1,962,331 ) (3,624,960 ) Proceeds from (repayment of)
bank notes, net (739,984 ) - 802,500 Proceeds received from stock
issuance for reorganization - 4,457,500 - Payments to original
shareholders of Beijing REIT - (3,466,260 ) - Proceeds from
investor loan - 3,200,000 - Gross proceeds from Initial Public
Offering – stock issuance 16,100,000 - - Direct costs disbursed
from Initial Public Offering proceeds (1,829,806 ) - - Proceeds
from private placement sale of stock 3,600,000 - - Proceeds from
(repayment of) related party loans, net (854,401 ) 817,495 424,019
Capital contribution from noncontrolling shareholders - 2,218,617
2,912,760 Change in restricted cash, net 236,795
(90,300 ) (160,500 ) Net cash provided by financing
activities 14,235,838 6,653,244 1,721,122
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(128,307 ) (227,996 ) 85,022 NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,268,446
1,061,967 (1,498,917 ) CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 1,594,594 532,627 2,031,544
CASH AND CASH EQUIVALENTS, END OF YEAR $ 10,863,040 $ 1,594,594 $
532,627
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION: Interest paid $ 997,948 $ 1,430,901 $ 1,237,325
Income tax paid $ 1,903,343 $ 719,479 $ 34,867
Non-Cash
Financing Activities Conversion of investor loan to equity $ -
$ 3,200,000 $ 3,325,019 Withdrawal of capital by original minority
shareholder in REIT Changjiang $ - $ - $ (3,325,019 )
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version on businesswire.com: https://www.businesswire.com/news/home/20180425006872/en/
ReTo Eco-Solutions, Inc.ir@retoeco.comorInvestor
Relations:Weitian Group LLCTony Tian, CFA,
+1-732-910-9692tony.tian@weitian-ir.com
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