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ReTo Eco-Solutions Reports Full Year 2019 Financial Results

ReTo Eco-Solutions Reports Full Year 2019 Financial Results

(Summary description)ReTo Eco-Solutions Reports Full Year 2019 Financial Results

ReTo Eco-Solutions Reports Full Year 2019 Financial Results

(Summary description)ReTo Eco-Solutions Reports Full Year 2019 Financial Results

Information

BEIJING, Oct, 30, 2020 /PRNewswire/ -- ReTo Eco-Solutions, Inc. (the "Company," "we" or "ReTo") (NASDAQ: RETO), a one-stop, total technology solutions provider for the healthy improvement of ecological environments, today announced financial results for the year ended December 31, 2019.

 

Mr. Li Hengfang, ReTo's Chairman and Chief Executive Officer, commented, "We believe our 2019 financial results reflect the adverse impact of multiple non-recuring items, and do not reflect ReTo's healthy underlying business fundamentals, the growth trajectory of the markets we are targeting or the inherent value of our extensive proprietary systems, technical expertise and highly experienced team."

 

Mr. Hengfang continued, "Our focus on improving the environment through sustainable development, directly aligns ReTo with our customers and the communities they serve, and presents us with many opportunities for growth. We intend to increase our revenue and market share by expanding our business network internationally. In order to expand our international market, we plan to add four to five distributors in South America and the Middle East. In addition, we  plan to participate in targeted international marketing events, such as seminars, workshops, and trade shows, to promote our products with potential new customers in order to strengthen our network and further expand our sales.  While we are cautious given the ongoing worldwide impact of COVID-19, we are confident that we have in place the critical elements needed to achieve improved financial results, fortify our competitive position and put the Company on track for long-term success, as evidenced by the significant increase in revenue and profit generating contracts we have recently secured."

 

Our 2019 consolidated financial statements included the operating results from both continuing operations and our discontinued operation. Our subsidiary Gu'an REIT was primarily engaged in manufacturing and distribution of machinery and equipment used for environmental-friendly construction materials production. On January 2, 2020, we sold our 100% ownership interest in Gu'an REIT to a third-party. The discontinued operation represents a strategic shift that has a major effect on our operations and financial results. The assets and liabilities related to the discontinued operations are classified as assets/liabilities held for sale as of December 31, 2019 and 2018, while results of operations related to the discontinued operations for the years ended December 31, 2019, 2018 and 2017, were reported as income (loss) from discontinued operations.

 

Revenues from our continuing operations for the year ended December 31, 2019 increased by approximately $0.3 million, or 1%, to approximately $29.6 million, as compared to $29.3 million for the year ended December 31, 2018.  The increase was mainly due to increased machinery and equipment products sales, offset by a decrease of revenue from construction materials. The Company's municipal construction and technology consulting services businesses did not make a material contribution to revenue for the year ended December 31, 2019.

 

Revenue from machinery and equipment sales associated with our continuing operations were $14.0 million for the year ended December 31, 2019, an increase of $4.9 million, or 53%, as compared to $9.2 million for the year ended December 31, 2018. The increase is primarily due to increased demand for the Company's automated machine models and the diversification of its product offerings to meet customers' demand for environmentally-friendly equipment.

 

Sales of the Company's environmentally-friendly construction materials associated with our continuing operations was $15.3 million for the year ended December 31, 2019, a decrease of $3.5 million or 19%, as compared $18.8 million for the year ended December 31, 2018. The decrease was primarily due to more rigorous environmental protection procedures implemented by government authorities in Hainan Province, which raised the quality standard of construction materials used in the municipal project construction.

 

Cost of revenues associated with our continuing operations  were $22.2 million for the year ended December 31, 2019, an increase of $6.9 million or 45%, as compared to $15.3 million for the year ended December 31, 2018. The increase mainly reflects higher costs associated with the Company's construction materials sales, as it complies with more rigorous environmental protection procedures implemented by the Chinese government combined with higher third- party equipment purchase costs in order to fulfill customer orders during November through December 2019. The higher third-party purchase costs also negatively impacted gross margin.

 

Operating expenses were $15.5 million for the year ended December 31, 2019, an increase of $6.3 million or 68%, as compared to $9.3 million for the year ended December 31, 2018. The increase was due to an impairment of fixed assets of $1.5 million and the incurrence of $8.3 million in non-recurring bad debt expenses on uncollectible accounts receivable and advance payments as certain customers in China and India experienced that experienced financial distress, delayed or defaulted on payments, reduced the scale of their business, or suffered disruptions in their business.

 

Separately, the Company recorded a $2.2 million non-recurring impairment of acquisition deposit for the year ended December 31, 2019. The Company determined not to proceed with a definitive agreement following unsatisfactory negotiations with a third-party target company Ruihan Concrete Technology Co., Ltd. ("Ruihan") for the purpose of a potential acquisition or business cooperation in the construction material area. As of December 31, 2019, the Company did not receive the refund from Ruihan after rigorous collection efforts given Ruihan's financial difficulty and remote collection prospects.

 

Reflecting the adverse impact of the above mentioned increase in cost of revenues, non-recurring $8.3 million in bad debt expenses and $2.2 million impairment of acquisition deposit, net loss attributable to the Company was $14.8 million or $0.66 per basic and diluted share for the year ended December 31, 2019, as compared to net income attributable to the Company of $4.5 million or $0.20 per basic and diluted share for the year ended December 31, 2018.

 

Subsequent Year to Date 2020 Business Highlights:

  • The Company's subsidiary, Xinyi REIT New Material Co., Ltd., officially commenced construction of a new Xinyi City waste treatment center. ReTo reached an agreement in 2019 with the Xinyi Municipal Government for the project, however, construction of the urban waste treatment facility was delayed due to the COVID-19 pandemic. Under the 5 year agreement, in addition to design, engineering and construction, ReTo will also use its proprietary technologies and handling systems to promote the goal of reducing, recycling and reusing construction waste in the urban area of Xinyi City. Upon completion, it is estimated that the annual processing volume of construction waste will exceed 600,000 tons.

 

  • ReTo announced the completion and local governmental acceptance of the design, engineering, supply and ongoing maintenance ("O&M") for sewage treatment projects it was awarded in the Henan province. ReTo was awarded contracts covering 4 villages in Bo'ai County, Jiaozuo City, located in Henan province. The projects were awarded based on ReTo's success on similar environmental projects, along with its proven technical excellence and proprietary technologies, which serve as the foundation for its sustainable environmental systems and solutions.

 

  • The Company announced it is promoting its proprietary equipment sales through an expansion of its entrusted operation and maintenance business ("O&M"). As a result of its efforts, the Company recently signed additional equipment contracts in the aggregate amount of RMB 3 Million with customers in Shijiazhuang City, Hebei Province and Jinan City, Shandong Province.

 

  • ReTo secured a contract from the Jiangsu Xinyi Port Terminal valued at RMB 5 million. The Jiangsu Xinyi Port Terminal is a major hub for commerce in China and internationally. In order to complete the contract effectively and efficiently, ReTo will use its proprietary equipment, technologies and processes to convert solid waste into high-quality ground paving material. ReTo has begun installation of its proprietary equipment at the terminal. Upon quality control testing, ReTo will perform ongoing operating and management services.

 

  • The Company's Board of Directors approved an aftermarket services expansion of the ReTo's one-stop solution to meet the expanding and increasingly complex ecological needs of its customers. The service expansion will include equipment operation and maintenance services, which is expected to help generate higher service margin revenue, while also promoting the equipment market and sales.

 

  • ReTo was selected to install and maintain an eco-friendly, state-of-the-art wastewater treatment solution in Beijing. The project is part of the high visibility Yanqing to Chongli Expressway, which was built to link the Yanqing district of Beijing and the Chongli district of Zhangjiakou, two competition zones for the 2022 Beijing Winter Olympics. Construction of the initial station has been completed.

 

About ReTo Eco-Solutions, Inc. (NASDAQ: RETO)

Founded in 1999, ReTo (NASDAQ: RETO) is a leader in ecological innovation, with sustainable environmental priorities and seeks to empower communities through its proprietary technologies, systems and solutions, which have been used to bring clean water and fertile soil to villages and cities worldwide. The Company is founded on its strategy of Technology Improves Ecology and is a full spectrum provider of products and services, ranging from the production of environmentally-friendly construction materials, environmental protection equipment and manufacturing equipment used to produce environmentally-friendly construction materials, to project consulting, design and installation for the health and improvement of ecological environments,  such as ecological soil restoration, through solid waste treatment.  For more information, please visit: http://en.retoeco.com

 

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) its ability to assist in environmental protection; and 2) its ability to complete new projects; 3) its ability to create shareholder value through its business and strategic initiatives; and 4) its ability to increase its market, network and expansion of sales 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 and ecological solutions 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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 
   

For the Years ended

December 31,

 
   

2019

   

2018

   

2017

 

Revenues – third party customers

 

$

29,467,755

   

$

27,354,058

   

$

25,904,393

 

Revenues – related parties

   

83,972

     

1,940,811

     

-

 

Total Revenues

   

29,551,727

     

29,294,869

     

25,904,393

 
                         

Cost of revenues – third party customers

   

22,136,559

     

13,897,146

     

11,042,287

 

Cost of revenues – related parties

   

54,598

     

1,372,302

     

-

 

Total cost of revenues

   

22,191,157

     

15,269,448

     

11,042,287

 

Gross Profit

   

7,360,570

     

14,025,421

     

14,862,106

 
                         

Operating Expenses

                       

Selling expenses

   

1,308,436

     

1,902,323

     

1,720,630

 

General and administrative expenses

   

3,954,024

     

4,976,118

     

4,132,128

 

Bad debt expenses

   

8,331,344

     

1,724,133

     

880,395

 

Impairment of fixed assets

   

1,490,298

     

-

     

-

 

Research and development expenses

   

438,371

     

656,563

     

478,532

 

Total Operating Expenses

   

15,522,473

     

9,259,137

     

7,211,685

 
                         

(Loss) income from Operations

   

(8,161,903)

 

     

4,766,284

     

7,650,421

 
                         

Other Income (expenses):

                       

Interest expense

   

(1,253,855)

 

     

(1,069,758)

     

(971,052)

 

Interest income

   

4,549

     

5,940

     

4,055

 

Impairment of acquisition deposit

   

(2,172,000)

 

     

-

     

-

 

Other income (expenses), net

   

293,996

     

(6,604)

     

149,853

 

Total Other Expenses, net

   

(3,127,310)

 

     

(1,070,422)

     

(817,144)

 
                         

(Loss) income before provision for income taxes

   

(11,289,213)

 

     

3,695,862

     

6,833,277

 

Provision for income taxes

   

1,006,905

     

1,042,474

     

2,132,297

 

Net (loss) income from continuing operations

   

(12,296,118)

 

     

2,653,388

     

4,700,980

 

Net (loss) income from discontinued operations of Gu'an REIT

   

(2,801,131)

 

     

1,914,294

     

1,945,805

 

Net (Loss) Income

   

(15,097,249)

 

     

4,567,682

     

6,646,785

 
                         

Less: net (loss) income attributable to noncontrolling interest

   

(294,635)

 

     

87,064

     

668,396

 

Net (loss) income attributable to ReTo Eco-Solutions, Inc.

 

$

(14,802,614)

   

$

4,480,618

   

$

5,978,390

 
                         

Net (loss) Income

 

$

(15,097,249)

   

$

4,567,682

   

$

6,646,785

 

Other Comprehensive (loss) income:

                       

Foreign currency translation adjustment:

   

(576,743)

     

(3,015,577)

     

2,109,103

 

Comprehensive (Loss) Income

   

(15,673,992)

     

1,552,105

     

8,755,888

 

Less: comprehensive (loss) income attributable to noncontrolling interest

   

(449,125)

     

(39,742)

     

1,265,817

 

Comprehensive (loss) income attributable to ReTo Eco-Solutions, Inc.

 

$

(15,224,867)

   

$

1,591,847

   

$

7,490,071

 
                         

(Loss) Earnings per share

                       

Basic and diluted

 

$

(0.66)

   

$

0.20

   

$

0.35

 
                         

Weighted average number of shares

                       

Basic and diluted

   

22,888,219

     

22,760,000

     

19,130,137

 


 

RETO ECO-SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 
   

December 31,

   

December 31,

 
   

2019

   

2018

 

ASSETS

           

Current Assets:

           

Cash and cash equivalents

 

$

897,281

   

$

1,458,483

 

Restricted cash

   

84,237

     

85,293

 

Accounts receivable, net – third parties

   

11,252,002

     

13,840,895

 

Accounts receivable, net - related party

   

469,474

     

450,473

 

Advances to suppliers, net – third parties

   

2,449,629

     

2,682,177

 

Advances to suppliers, net - related party

   

-

     

151,678

 

Inventories, net

   

888,203

     

1,212,344

 

Prepayments and other current assets

   

435,273

     

903,880

 

Acquisition deposit

   

-

     

2,181,000

 

Prepayment for construction of properties

   

3,661,800

     

-

 

Current assets held for sale associated with discontinued operation of Gu'an REIT

   

5,326,348

     

6,555,729

 

Total Current Assets

   

25,464,247

     

29,521,952

 
                 

Property, plant and equipment, net

   

37,457,643

     

39,973,965

 

Intangible assets, net

   

6,145,179

     

6,395,138

 

Long-term investment in equity investee

   

28,720

     

-

 

Prepayment for construction of properties

   

-

     

3,707,700

 

Deferred tax assets

   

-

     

494,280

 

Right-of-use assets

   

505,630

     

-

 

Non-current assets held for sale associated with discontinued operation of Gu'an REIT

   

1,193,825

     

1,911,887

 

Total Assets

 

$

70,795,244

   

$

82,004,922

 
                 

LIABILITIES AND EQUITY

               
                 

Current Liabilities:

               

Short term loans

 

$

8,309,098

   

$

8,858,457

 

Long term bank loans - current portion

   

1,436,000

     

436,200

 

Advances from customers

   

3,087,315

     

3,523,024

 

Deferred revenue

   

471,375

     

473,358

 

Accounts payable

   

1,151,570

     

803,224

 

Accounts payable - related party

   

1,485,049

     

557,584

 

Accrued and other liabilities

   

2,487,616

     

2,266,260

 

Taxes payable

   

1,806,777

     

1,156,336

 

Due to related parties

   

405,222

     

599,890

 

Operating lease liabilities, current

   

177,903

     

-

 

Advance payment from the buyer associated with discontinued operation of Gu'an REIT

   

1,392,920

     

-

 

Current liabilities held for sale associated with discontinued operation of Gu'an REIT

   

3,004,924

     

2,007,334

 

Total Current Liabilities

   

25,215,769

     

20,681,667

 
                 

Long term bank loans

   

7,323,600

     

8,142,400

 

Operating lease liabilities - noncurrent

   

301,012

     

-

 

Total Liabilities

   

32,840,381

     

28,824,067

 
                 

Commitments and Contingencies

               
                 

Stockholders' Equity:

               

Common Stock, $0.001 par value, 200,000,000 shares authorized, 23,160,000 shares and 22,760,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively

   

23,160

     

22,760

 

Additional paid-in capital

   

42,725,852

     

42,278,252

 

Statutory reserve

   

2,632,797

     

2,632,797

 

 Retained earnings (accumulated deficit)

   

(5,718,368)

     

9,084,246

 

Accumulated other comprehensive loss

   

(3,527,438)

     

(3,105,185)

 

Total RETO Eco Solutions Inc. Stockholders' Equity

   

36,136,003

     

50,912,870

 
                 

Noncontrolling interest

   

1,818,860

     

2,267,985

 

Total Equity

   

37,954,863

     

53,180,855

 
                 

Total Liabilities and  Equity

 

$

70,795,244

   

$

82,004,922

 

 

For more information, please contact:

ReTo Eco-Solutions, Inc.

Giorgio Zhao

Beijing Phone: +86-010-64827328

ir@retoeco.com or 310@reit.cc

Global IR Partners

David Pasquale

New York Phone: +1-914-337-8801

RETO@globalirpartners.com

SOURCE ReTo Eco-Solutions, Inc.

 

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http://retoeco.com

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Copyright © 2016 All rights reserved Reto   Powered by www.300.cn Beijing    京ICP备12027322号  

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Copyright © 2016 All rights reserved Reto   Powered by www.300.cn Beijing    京ICP备12027322号  

这是描述信息