FUQING CITY, CHINA -- (Marketwire) -- 11/13/12 -- Guanwei Recycling Corp. (NASDAQ: GPRC), China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), reported today that in its third quarter ended September 30, 2012 a reversal in an approximately year long trend of manufacturing cost increases outpacing increases in selling prices helped generate a 7.32% year over year increase in net income on a 7.36% increase in sales, as gross profit in the quarter increased 11.59%.
•Net revenues in the 2012 third quarter increased 7.36% to $17,905,974 compared with $16,679,012 in the same period last year based on increases in sales prices and tonnage sold. Tonnage sales of self-manufactured recycled LDPE increased 5.77% to 14,427 tons year over year while recycled LDPE prices in the same time period increased 0.75% to $1,208 per ton. •Gross profit in the 2012 third quarter compared with the prior year period increased by $574,704, or 11.59%, to $5,531,524. Wages and welfare costs, which had increased substantially in the first half of the year, stabilized in the third quarter, as did costs for raw materials and overhead. At the same time, selling prices for manufactured recycled LDPE and sorted non-LDPE materials outpaced costs. •2012 third quarter net income grew 7.32% to $3,622,832, or $0.17 per share, on 20,815,654 diluted shares outstanding compared with $3,375,758, or $0.17 per share, in the third quarter of 2011 on 20,000,006 diluted shares outstanding. •Revenues for the nine months ended September 30, 2012, which included the low margin sale of $3,462,238 of certain raw materials in the first half of 2012, increased 13.30% to $52,772,402 compared with the year ago period. There were no raw materials sales in the first nine months of 2011. •Net income of $8,851,118 in the first nine months of 2012, or $0.43 per share, on 20,509,042 diluted shares outstanding, was 7.26% lower than the $9,544,400 in net income, or $0.48 per share on 20,000,006 diluted shares outstanding in the same period in 2011. This decline primarily reflected increased raw material, labor and overhead costs in the first half of 2012 until this trend was reversed in the third quarter of 2012.
As of September 30, 2012, the Company had cash and cash equivalents of $13,236,896 and no short term borrowings. Working capital as of September 30, 2012 was $32.4 million, compared with $23.8 million at the same time last year. This increase reflected higher accounts receivable as the Company continued to expand credit sales to long term customers with good credit history, increased inventories and increased cash as a result of achieving net profits period after period.
Net cash used in investing activities in the nine months ended September 30, 2012 was $2,412,469. During this period, the Company built additional storage space for raw materials to better manage its production cycle. It also acquired additional machinery and equipment which was placed into service in the third quarter of 2012.
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