BAODING,  China, May 10, 2024 /PRNewswire/ —  IT Tech Packaging (NYSE:), Inc. (NYSE American: ITP) (“IT Tech Packaging” or the “Company”), a leading manufacturer and distributor of diversified paper products in North China, today announced its unaudited financial results for the first quarter ended March 31, 2024.

Mr. Zhenyong Liu commented: “In the first quarter of FY2024, we realized revenue of approximately $6.86 million with a profit of $0.40 million. During the reporting period, domestic packaging paper suffered sluggish demand and prices. In addition, the increase in production capacity of the industry peers, more intense competition from import of finished products and interest rate hikes had posed persistent pressure on the industry. Despite these daunting challenges, China is actively launching various policies to simulate the economy and support enterprises, which is believed to be effective in boosting investment and domestic demand, thereby improving the business environment of the packaging paper industry. Looking forward, we will continue to optimize the raw material structure and minimize the purchase price to ensure production efficiency and consistent quality. We also will explore new products and new markets with appropriate price adjustments to capture greater market share. Meanwhile, we believe that together with the above measures, and better control of the inventory and working capital as well as cash flow, we will make the company a healthy operation in the near future.”

First Quarter 2024 Unaudited Financial Results

• Revenue decreased by 65.32% to  approximately $6.86 million, mainly due to the production suspension of corrugating medium paper (“CMP”) in January and February of 2024, and production suspension of tissue paper products in the first quarter of 2024.
• Gross profit was  approximately $0.40 million, compared with gross loss of $0.28 for the same period of last year. Total gross profit margin increased by 7.21 percentage point to 5.81%.    
• Loss from operations was  approximately $3.50million, compared to loss from operations of  approximately $2.77 million  for the same period of last year.
• Net loss was  approximately $3.75 million, or loss per share of $0.37, compared to net loss of  approximately $2.73 million, or loss per share of $0.27, for the same period of last year.
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was approximately negative $0.02 million, compared to $1.21 million for the same period of last year.

Revenue

For the first quarter of 2024, total revenue decreased by 65.32%, to  approximately $6.86 million  from  approximately $19.79 million  for the same period of last year. This was mainly due to production suspension of corrugating medium paper (“CMP”) in January and February of 2024, and production suspension of tissue paper products in the first quarter of 2024.

The following table summarizes revenue, volume and ASP by product for the first quarter of 2024 and 2023, respectively:

Revenue from  CMP, including both regular CMP and light-Weight CMP, decreased by 65.04%, to  approximately $6.83 million  and accounted for 100% of total revenue for the first quarter of 2024, compared to  approximately $19.53 million, or 98.67% of total revenue for the same period of last year. The Company sold 18,670 tonnes of CMP at an ASP of  $366/tonne in the first quarter of 2024, compared to 49,682  tonnes at an ASP of  $393/tonne in the same period of last year.

Of the total CMP sales, revenue from regular CMP decreased by 65.08%, to  approximately $5.75 million for the first quarter of 2024, compared to revenue of  approximately $16.47 million for the same period of last year. The Company sold 15,640 tonnes of regular CMP at an ASP of  $368/tonne during the first quarter of 2024, compared to 41,663 tonnes at an ASP of  $395/tonne for the same period of last year. Revenue from light-weight CMP decreased by 64.83%, to  approximately $1.08 million for the first quarter of 2024, compared to revenue of  approximately $3.06   million for the same period of last year. The Company sold 3,030 tonnes of light-weight CMP at an ASP of  $355/tonne for the first quarter of 2024, compared to 8,019 tonnes at an ASP of  $382/tonne for the same period of last year.

Revenue from offset printing paper was $nil  for the first quarter of 2024 and 2023.

Revenue from tissue paper products was $nil and $222,953 for the three months ended March 31, 2024 and 2023, respectively. Production of tissue paper products was suspended during the first quarter of 2024.

Revenue generated from selling face mask were $nil and $35,637 for the three months ended March 31, 2024 and 2023, respectively.

Gross Profit (Loss) and Gross Margin

Total cost of sales decreased by 67.79%, to  approximately $6.46 million  for the first quarter of 2024 from  approximately $20.07 million  for the same period of last year. This was mainly due to the decrease in sales quantity and the decrease in the unit material costs of CMP.

Total gross profit was  approximately $0.40 million  for the first quarter of 2024, compare to the gross loss of  approximately $0.28 million  for the same period of last year as a result of factors described above. Overall gross profit margin was 5.81% for the first quarter of 2024, compared to gross loss margin of 1.40% for the same period of last year. Gross profit (loss) margins for regular CMP, light-weight CMP, offset printing paper, tissue paper products and face mask products were 5.68%, 3.32%, nil%, nil% and nil%, respectively, for the first quarter of 2024, compared to 1.93%, 3.96%, nil%, -316.80% and -7.97%, respectively, for the same period of last year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) increased by 56.32%, to approximately $3.90 million for the first quarter of 2024 from approximately $2.50 million for the same period of last year.

Loss from Operations

Loss from operations was approximately $3.50 million for the first quarter of 2024, a decrease of 26.31%, from $2.77 million for the same period of last year. Operating loss margin was 51.02% for the first quarter of 2024, compared to 14.01% for the same period of last year.

Net Loss

Net loss was approximately $3.75 million, or loss per share of $0.37 for the first quarter of 2024, compared to $2.73 million, or loss per share of $0.27 for the same period of last year.

EBITDA

EBITDA was approximately $-0.02 million for the first quarter of 2024, compared to   $1.21 million for the same period of last year.

Note 1: Non-GAAP Financial Measures

In addition to our U.S. GAAP results, this press release includes a discussion of EBITDA, a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC“). The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA is a key measure used by management to evaluate our results and make strategic decisions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company’s presentation of EBITDA may not be comparable to similarly titled measures of other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with the U.S. GAAP.

Reconciliation of Net Income to EBITDA

(Amounts expressed in US$)

Cash, Liquidity and Financial Position

As of March 31, 2024, the Company had cash and bank balances, short-term debt (including bank loans, current portion of long-term loans from credit union and related party loans), and long-term debt (including related party loans) of approximately $4.51 million, $9.69 million and $3.24 million, respectively, compared to  approximately $3.92 million, $8.03 million and $4.50 million, respectively, as of December 31, 2023.

Net accounts receivable was approximately $2.39 million as of March 31, 2024, compared to approximately $0.58 million as of December 31, 2023. Net inventory was approximately $3.49 million as of March 31, 2024, compared to approximately $3.56 million as of December 31, 2023. As of March 31, 2024, the Company had current assets of approximately $30.01 million and current liabilities of approximately $24.57 million, resulting in a working capital of approximately $5.44 million. This was compared to current assets of approximately $28.36 million and current liabilities of approximately $21.42 million, resulting in a working capital of approximately $6.94 million as of December 31, 2023.

Net cash provided by operating activities was approximately $0.62 million for the first quarter of 2024, compared to approximately $4.81 million for the same period of last year. Net cash used in investing activities was approximately $0.01 million for the first quarter of 2024, compared to approximately $0.30 million for the same period of last year. Net cash provided by financing activities was approximately $0.42 million for the first quarter of 2024, compared to approximately $2.56 for the same period of last year.

About IT Tech Packaging, Inc.

Founded in 1996, IT Tech Packaging, Inc. is a leading manufacturer and distributor of diversified paper products and single-use face masks in North China. Using recycled paper as its primary raw material (with the exception of its tissue paper products), ITP produces and distributes three categories of paper products: corrugating medium paper, offset printing paper and tissue paper products. With production based in Baoding and Xingtai in North China’s Hebei Province, ITP is located strategically close to the Beijing and Tianjin region, home to a growing base of industrial and manufacturing activities and one of the largest markets for paper products consumption in the country. ITP has been listed on the NYSE American since December 2009. For more information, please visit: http://www.itpackaging.cn/.

Safe Harbor Statements

This press release may contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company’s public filings with the Securities and Exchange Commission, including the Company’s latest annual report on Form 10-K. All information provided in this press release speaks as of the date hereof. Except as otherwise required by law, the Company undertakes no obligation to update or revise its forward-looking statements.

For more information, please contact:

At the Company
Email:  ir@itpackaging.cn
Tel: +86 312 8698215

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The Biden administration plans to raise tariffs on Chinese electric vehicles imports from 25 per cent to 100 per cent, as it intensifies efforts ahead of the US election to protect American industry.

The administration is expected to announce the move, and other tariffs on clean energy imports, on Tuesday, according to people familiar with the situation.

The sharp rise in the levies comes amid mounting concern that China could flood the US market with cheap EVs, threatening the American car industry. President Joe Biden has taken several actions in recent months to convince union members in swing states that he will protect jobs.

The Biden administration has for three years been reviewing the tariffs that then president Donald Trump put on imports from China as part of the trade war he launched in 2018. The new EV tariffs will be announced alongside the conclusion of the review, led by the US Trade Representative.

During a visit last month to Pennsylvania — a swing state in November’s election — Biden said he wanted the agency to triple tariffs on Chinese steel and aluminium. USTR also recently opened an investigation into unfair practices in the Chinese shipbuilding industry following a petition from the United Steelworkers union.

But the decision to increase tariffs on EVs comes as the administration becomes particularly concerned that China is moving far ahead in the green industrial sector, including in the production of solar panels.

“The Biden administration is trying to get ahead of the curve and ensure that the US car industry does not suffer the same fate as the US solar industry, which was virtually decimated by unfairly traded Chinese imports,” said Wendy Cutler, a former trade official and vice-president of the Asia Society Policy Institute. 

Cutler said Chinese carmakers had been prepared to swallow the cost of the existing tariffs in an effort to “cripple” their US competitors, but the higher tariffs would make that much harder.

“A quadrupling of this tariff rate, however, would more effectively shield US auto manufacturers from unfairly traded Chinese vehicles before they can gain a foothold in the US market,” Cutler said.

The Biden administration has poured billions of dollars into subsidies for EV and battery production in the US — an effort to spur investment in a domestic clean tech sector as part of a strategy to reindustrialise the rust-belt, slash carbon emissions and break dependence on Chinese supply chains.

In February, Biden also ordered an investigation into whether Chinese “connected vehicles” — a growing category of vehicles connected to the internet that includes EVs — posed a national security risk to the US.

The tariffs are the latest action by the administration that show how Biden is continuing to impose costs on China at the same time that Beijing and Washington pursue efforts to stabilise relations following a summit between the US president and Chinese President Xi Jinping last year.

News of the tariff increase comes after the US and China, the world’s two biggest emitters, said this week they would “intensify” co-operation on climate-related issues, including the rollout of green energy.

The decision to increase tariffs was first reported by Bloomberg.