EX-99.1 2 tv492169_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

Hebron Technology Co., Ltd. Reports Fiscal Year 2017 Financial Results

 

WENZHOU, China, April 27, 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 fiscal year ended December 31, 2017.

 

Mr. Anyuan Sun, Chairman and Chief Executive Officer of Hebron, commented, "We are glad to see our continuing efforts on marketing and R&D have paid off in the second half of fiscal year 2017, resulting in a profitable year for us with a revenue increase of 7.8% and a net income increase of 20.2%. We believe our efforts have markedly improved the quality of our products and services. Further, we have developed greater access to our most desired clientele and have emphasized contracts that afford us greater opportunity to scale. Our fiscal year 2017 performance is in line with our internal expectations, and we look forward to creating long term shareholder value in the years ahead."

 

Fiscal Year 2017 Financial Highlights

 

            
   For Twelve Months Ended December 31 
($ millions, except per share data)  2017   2016   % Change 
Revenue   29.20    27.10    7.8%
Installation service   23.75    24.30    -2.3%
Fluid equipment sales   5.45    2.80    94.8%
Gross profit   10.44    10.46    -0.2%
Gross margin   35.8%   38.6%   -2.8pts.
Operating income   3.88    7.98    -51.4%
Operating margin   13.3%   29.5%   -16.2pts.
Net income   7.14    5.93    20.2%
EPS   0.49    0.49    1.6%

 

·Total revenues increased by 7.8% to $29.20 million for the twelve months ended December 31, 2017. The increase in total revenues was primarily due to an increase in revenues from sales of fluid equipment related to an increase in Valve demand resulting from our efforts to expand sales network and increase marketing activities.

 

·Gross and operating margins were 35.8% and 13.3%, respectively, for the twelve months ended December 31, 2017, compared to 38.6% and 29.5%, respectively, for the same period of the prior fiscal year. 

 

·Net income was $7.14 million, or earnings per share of $0.49, for the twelve months ended December 31, 2017, compared to net income of $5.93 million, or earnings per share of $0.49, for the same period of the prior fiscal year.

 

 

 

 

Fiscal Year 2017 Financial Results

 

   For Twelve Months Ended December 31 
   2017   2016 
($ millions)  Revenues   COGS   Gross Margin   Revenues   COGS   Gross Margin 
Installation service   23.75    14.28    39.9%   24.30    14.36    40.9%
Fluid equipment sales   5.45    4.48    17.9%   2.80    2.27    18.8%
Total   29.20    18.76    35.8%   27.10    16.64    38.6%

 

Revenues

 

For the twelve months ended December 31, 2017, total revenues increased by $2.10 million, or 7.8%, to $29.20 million from $27.10 million for the same period of the prior fiscal year. The increase in total revenues was primarily due to an increase in revenues from sales of fluid equipment related to an increase in Valve demand resulting from our efforts to expand sales network and increase marketing activities.

 

Revenues from installation services decreased by $0.55 million, or 2.3%, to $23.75 million for the twelve months ended December 31, 2017 from $24.30 million for the same period of the prior fiscal year. The decrease in revenues from installation services was due to a decrease in contract amount during fiscal year 2017. The Company provided installation services for 12 projects with an average project revenue of $2.0 million during the twelve months ended December 31, 2017, compared to 10 projects with an average project revenue of $2.4 million during the same period of the prior fiscal year. Revenues from fluid equipment sales increased by $2.65 million, or 94.8%, to $5.45 million for the twelve months ended December 31, 2017 from $2.80 million for the same period of the prior fiscal year.

 

Cost of revenues and gross profit

 

Total cost of revenues increased by $2.12 million, or 12.7%, to $18.76 million for the twelve months ended December 31, 2017 from $16.64 million for the same period of the prior fiscal year. Overall gross profit decreased by $0.02 million, or 0.2%, to $10.44 million for the twelve months ended December 31, 2017 from $10.46 million for the same period of the prior fiscal year. Overall gross margin decreased by 2.8 percentage points to 35.8% for the twelve months ended December 31, 2017, compared to 38.6% for the same period of the prior fiscal year.

 

Cost of revenues for installation services decreased by $0.09 million, or 0.6%, to $14.28 million for the twelve months ended December 31, 2017 from $14.36 million for the same period of the prior fiscal year. The decrease in cost of revenues for installation services was in line with the decrease in revenues for installation services for fiscal year 2017. Gross profit for installation services decreased by $0.47 million, or 4.7%, to $9.47 million for the twelve months ended December 31, 2017 from $9.94 million for the same period of the prior fiscal year. Gross margin for installation services was 39.9% for the twelve months ended December 31, 2017, compared to 40.9% for the same period of the prior fiscal year.

 

Cost of revenues for fluid equipment sales increased by $2.21 million, or 97.0%, to $4.48 million for the twelve months ended December 31, 2017 from $2.72 million for the same period of the prior fiscal year. The increase in cost of revenues for fluid equipment sales was consistent with the 95.0% increase in the fluid equipment sales in fiscal year 2017. Gross profit for fluid equipment sales increased by $0.45 million, or 85.2%, to $0.97 million for the twelve months ended December 31, 2017 from $0.53 million for the same period of the prior fiscal year. Gross margin for fluid equipment sales was 17.9% for the twelve months ended December 31, 2017, compared to 18.8% for the same period of the prior fiscal year.

 

 

 

 

Operating expenses

 

General and administrative expenses increased by $3.17 million, or 449.1%, to $3.87 million for the twelve months ended December 31, 2017 from $0.71 million for the same period of the prior fiscal year. The increase in general and administrative expenses was mainly due to the Company’s incurring approximately $0.8 million in expenses for consulting related to the acquisition of new technology for improving its manufacturing and installation processes, and approximately $0.8 million in expenses for consulting related to mergers and acquisitions. In addition, bad debt expenses increased $0.4 million due to advances to vendors and other receivables, and investor relations and NASDAQ fees increased $0.13 million due to the Company’s listing on NASDAQ in December 2016. In addition, conference expenses increased $0.22 million due to the Company’s personnel attending oversea exhibitions.

 

Selling expenses increased by $0.45 million, or 25.6%, to $2.19 million for the twelve months ended December 31, 2017 from $1.74 million for the same period of the prior fiscal year. The increase in selling expenses was mainly due to more marketing activities incurred after the Company listed on Nasdaq in December 2016.

 

Research and development expenses increased by $0.47 million, or 1,401.7%, to $0.51 million for the twelve months ended December 31, 2017 from $0.03 million for the same period of the prior fiscal year. The increase in research and development expense was due to an increase in the investment on research and development activities in developing intellectual valve controller system.

 

As such, total operating expenses increased by $4.09 million, or 164.7%, to $6.57 million for the twelve months ended December 31, 2017 from $2.48 million for the same period of the prior fiscal year.

 

Operating income

 

Operating income decreased by $4.10 million, or 51.4%, to $3.88 million for the twelve months ended December 31, 2017 from $7.98 million for the same period of the prior fiscal year. Operating margin was 13.3% for the twelve months ended December 31, 2017, compared to 29.5% for the same period of the prior fiscal year.

 

Income before income taxes and income tax

 

Income before income taxes decreased by $3.74 million, or 47.1%, to $4.20 million for the twelve months ended December 31, 2017 from $7.94 million for the same period of the prior fiscal year. Income tax recovery was $2.94 million for the twelve months ended December 31, 2017, compared to an income tax provision of $2.00 million for the same period of the prior fiscal year.

 

 

 

 

Net income and earnings per share

 

Net income was $7.14 million, or earnings per share of $0.49, for the twelve months ended December 31, 2017, compared to net income of $5.93 million, or earnings per share of $0.49, for the same period of the prior fiscal year.

 

Financial Condition

 

As of December 31, 2017, the Company had cash and cash equivalents of $3.22 million, compared to $11.88 million as of December 31, 2016. Net cash used in operating activities was $6.10 million for the twelve months ended December 31, 2017, compared to net cash provided by operating activities of $1.58 million for the same period of the prior fiscal year. Net cash used in investing activities was $3.13 million for the twelve months ended December 31, 2017, compared to $0.98 million for the same period of the prior fiscal year. Net cash provided by financing activities was $0.86 million for the twelve months ended December 31, 2017, compared to $10.27 million for the same period of the prior fiscal year.

 

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.

 

 

 

 

For more information, please contact:

 

In China:

 

Hebron Technology Co., Ltd.

Ms. Yingping Chen

Secretary
Phone: +86-180-6776-3129

 

In the United States:

 

Ascent Investor Relations LLC

Ms. Tina Xiao
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com

 

 

 

 

 

 

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

    December 31,     December 31,  
    2017     2016  
ASSETS                
CURRENT ASSETS:                
Cash   $ 3,220,781     $ 11,875,893  
Restricted Cash     55,322       -  
Contracts receivable, net     16,904,972       12,928,033  
Accounts receivable, net     1,419,305       187,852  
Notes receivable     689,171       277,745  
Retainage receivables, net     2,564,404       2,425,500  
Inventories     1,582,501       2,249,623  
Prepayments and advances to suppliers, net     11,904,107       4,537,823  
Other receivables, net     240,284       96,602  
TOTAL CURRENT ASSETS     38,580,847       34,579,071  
                 
Property and equipment at cost, net of accumulated depreciation     14,588,262       11,186,013  
Land use right, net of accumulated amortization     1,086,148       1,071,310  
Deposits for rent     46,101       -  
Deferred tax assets     247,324       242,963  
                 
TOTAL ASSETS   $ 54,548,682     $ 47,079,357  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
CURRENT LIABILITIES:                
Short-term loans   $ 457,940     $ 287,986  
Notes Payable     55,322       -  
Accounts payable     1,276,784       1,185,215  
Accrued expenses and other current liabilities     1,327,513       1,009,878  
Other loan payable - current     179,182       -  
Advances from customers     2,825,215       3,060,962  
Deferred revenue     -       1,042,511  
Taxes payable     7,067,593       8,744,563  
Due to related parties     -       68,397  
TOTAL CURRENT LIABILITIES     13,189,549       15,399,512  
                 
Other loan payable - long-term     411,683          
Long-term loans     414,912       532,775  
                 
TOTAL LIABILITIES     14,016,144       15,932,287  
                 
COMMITMENTS AND CONTINGENCIES                
                 
SHAREHOLDERS' EQUITY:                
Common stock, $0.001 par value, 50,000,000 shares authorized, 14,695,347  shares issued and outstanding as of December 31, 2017 and 2016, respectively     14,695       14,695  
Additional paid-in capital     10,237,965       10,237,965  
Retained earnings     29,877,491       22,741,104  
Accumulated other comprehensive income (loss)     402,387       (1,846,694 )
TOTAL SHAREHOLDERS' EQUITY     40,532,538       31,147,070  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 54,548,682     $ 47,079,357  

 

 
 

  

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE INCOME

 

    For the Years Ended December 31,  
    2017     2016     2015  
REVENUE                        
Installation service   $ 23,748,141     $ 24,299,062     $ 20,069,997  
Fluid equipment sales     5,452,304       2,798,774       2,925,126  
      29,200,445       27,097,836       22,995,123  
COST OF REVENUE                        
Cost of product and services     18,080,777       16,192,810       13,875,768  
Business and sales related taxes     675,507       443,448       380,043  
GROSS PROFIT     10,444,161       10,461,578       8,739,312  
                         
OPERATING EXPENSES                        
                         
General and administrative expenses     3,871,309       705,038       1,129,679  
Selling expenses     2,187,253       1,742,147       1,434,230  
Research and development expenses     508,282       33,847       121,760  
Total operating expenses     6,566,844       2,481,032       2,685,669  
INCOME FROM OPERATIONS     3,877,317       7,980,546       6,053,643  
                         
OTHER INCOME (EXPENSE)                        
                         
Other income, net     377,174       6,431       15,321  
Interest expense     (56,953 )     (49,625 )     (55,619 )
Total other income (expense), net     320,221       (43,194 )     (40,298 )
                         
INCOME BEFORE INCOME TAXES     4,197,538       7,937,352       6,013,345  
INCOME TAXES PROVISION (RECOVERY)     (2,938,849 )     2,002,467       1,617,751  
                         
NET INCOME   $ 7,136,387     $ 5,934,885     $ 4,395,594  
                         
OTHER COMPREHENSIVE INCOME (LOSS)                        
                         
Foreign currency translation income (loss)     2,249,081       (1,401,124 )     (927,892 )
                         
COMPREHENSIVE INCOME   $ 9,385,468     $ 4,533,761     $ 3,467,702  
                         
Basic and diluted earnings per common share                        
Basic   $ 0.49     $ 0.49     $ 0.37  
Diluted   $ 0.49     $ 0.49     $ 0.37  
                         
Weighted average number of shares outstanding                        
Basic     14,695,347       12,029,538       12,000,000  
Diluted     14,695,347       12,046,045       12,000,000  

 

 
 

   

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

 

    Common Stock     Additional
paid in		     Retained     Accumulated
Other
Comprehensive		        
    Shares     Amount     capital     Earnings     Income (Loss)     Total  
Balance at January 1, 2015     12,000,000     $ 12,000     $ 108,970     $ 12,410,625     $ 482,322     $ 13,013,917  
                                                 
Net income     -       -       -       4,395,594       -       4,395,594  
Foreign currency translation loss     -       -       -       -       (927,892 )     (927,892 )
Balance at December 31, 2015     12,000,000     $ 12,000     $ 108,970     $ 16,806,219     $ (445,570 )   $ 16,481,619  
                                                 
Issuance 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     14,695,347     $ 14,695     $ 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     14,695,347     $ 14,695     $ 10,237,965     $ 29,877,491     $ 402,387     $ 40,532,538  

 

 
 

   

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    For the Years Ended December 31,  
    2017     2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:                        
Net income   $ 7,136,387     $ 5,934,885     $ 4,395,594  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                        
Depreciation and amortization     939,995       517,402       444,396  
Loss on disposition of property and equipment     12,179       228,245       -  
Deferred tax expense (benefit)     11,526       56,968       (89,079 )
Provision for (recovery of) doubtful accounts     187,715       (227,873 )     367,314  
Changes in operating assets and liabilities:                        
Contracts receivable     (2,992,867 )     (5,893,527 )     (3,166,105 )
Accounts receivable     (950,850 )     922,611       (973,278 )
Notes receivable     (378,205 )     (85,107 )     (218,890 )
Retainage receivables     (80,360 )     (548,357 )     (379,078 )
Prepayment and advances to suppliers     (7,127,018 )     (2,861,600 )     19,284  
Inventories     788,000       427,878       (1,106,157 )
Other receivables     (156,074 )     (1,535 )     111,811  
Accounts payable     26,450       (290,717 )     895,595  
Notes Payable     53,272       -       -  
Advances from customers     (370,964 )     528,193       525,257  
Deferred revenue     (1,071,355 )     3,161       586,790  
Taxes payable     (2,365,120 )     2,484,264       2,191,174  
Accrued expenses and other current liabilities     240,505       382,410       327,325  
NET CASH PROVIDED BY (USED IN ) OPERATING ACTIVITIES     (6,096,784 )     1,577,301       3,931,953  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:                        
Acquisitions of property and equipment     (3,126,777 )     (7,667 )     (239,917 )
Payments for construction in progress     -       (973,254 )     (2,896,545 )
NET CASH USED IN INVESTING ACTIVITIES     (3,126,777 )     (980,921 )     (3,136,462 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:                        
Proceeds from short-term bank loans     295,954       301,019       848,478  
Repayment of short-term bank loans     -       (795,443 )     (839,648 )
Proceeds from long-term loans     173,873       556,885       -  
Repayment of long-term loans     (47,353 )     -       -  
Proceeds from other loan     582,205                  
Repayment of other loan     (21,457 )                
Proceeds from (repayment of) related parties     (66,582 )     72,009       -  
Proceeds from issuance of shares in IPO     -       10,131,690       -  
Restricted cash     (53,272 )     -       -  
NET CASH PROVIDED BY FINANCING ACTIVITIES     863,368       10,266,160       8,830  
                         
EFFECT OF EXCHANGE RATE CHANGE ON CASH     (294,919 )     (104,290 )     (63,145 )
NET INCREASE IN CASH     (8,655,112 )     10,758,250       741,176  
CASH-beginning of year     11,875,893       1,117,643       376,467  
                         
CASH-end of year   $ 3,220,781     $ 11,875,893     $ 1,117,643  
                         
SUPPLEMENTAL CASH FLOW DISCLOSURES:                        
Cash paid for income tax   $ -     $ -     $ 1,603  
Cash paid for interest   $ 75,704     $ 50,705     $ 55,619  
                         
Non-cash financing activities                        
Warrants issued to placement agent in connection with the Company’s IPO   $ -       488,730       -