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%


-2.8 pts.

Operating income


3.88


7.98


-51.4%

Operating margin


13.3%


29.5%


-16.2 pts.

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 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



-

 

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