Wetouch Technology Inc (WETH)

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Wetouch Technology Inc. (WETH) Reports Second Quarter 2021 Unaudited Financial Results :

https://www.otcmarkets.com/filing/html?id=15149095&guid=UrN1k6-asmnFrth

-Revenues increased by 186.8% to $15.2 million-

-Net income increased by 155.0% to $5.1 million-

Chengdu, China, Aug. 10, 2021 (GLOBE NEWSWIRE) -- Wetouch Technology Inc. (OTCQB: WETH) ("Wetouch" or "the Company"), a specialty manufacturer of medium to large sized projected capacitive touchscreens, today announced its unaudited financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Financial Highlights

Revenues were US$15.2 million, an increase of 186.8% from $5.3 million in the second quarter of 2020

Gross profit was $7.9 million, an increase of 192.6% from $2.7 million in the second quarter of 2020.

Gross margin was 51.9%, compared with 50.7% in the second quarter of 2020.

Net income was $5.1 million, compared to $2.0 million in the second quarter of 2020.

Total volume shipped was 711,548 units, an increase of 145.6% from 289,668 units in the second quarter of 2020.

Cash flow from operations was $11.1 million, compared to $5.6 million in the six months ended June 30, 2020.

Cash as of the end of the second quarter of 2021 was $52.6 million, compared to $23.0 million as of December 31, 2020.

Basic and diluted EPS were $0.2, compared with $0.1 in the same period of 2020.

“Our second quarter results continued to be strong leading off our fiscal year 2021 on a positive note, and we are pleased with our progress and remain on track to deliver full-year robust top and bottom-line growth. Business conditions remained exceptionally strong through the second quarter with record bookings and backlog for product to be shipped over multiple quarters. The commitment of each one of our employees is paying off and once again we are generating record growth in new customer business. At the same time, existing customers are increasingly purchasing our products both in China and abroad.” Mr. Guangde Cai, Chairman of WETH, commented, “Geographically, sales from PRC increased by 206.3%, complemented by a 157.1% increase from overseas. Units sold increased by 145.6% to 711,548 touchscreens in the second quarter of 2021 from 289,668 units in the same period last year. Average selling price of our products also increased by 18.0% thanks to the increased sales of new models of higher-end products of such as touch screens used in gaming machine with higher selling price in domestic market during the three-month period ended June 30, 2021. As one of the leading manufacturers of medium to large sized projected capacitive touchscreens in China, we are confident that our exceptional products and services, as well as our constantly improved and expanded product offering, would enable us to gain market share and deliver long-term value for our shareholders."

Second Quarter 2021 Financial Results

Total Revenues. We generated revenue of $15.2 million and $5.3 million for the three months ended June 30, 2021 and 2020, respectively, an increase of $9.9 million, or 186.8%, compared to $5.3 million in the same period of last year. This was due to an increase of 145.6% in sales volume and of 18.0% in the average selling price of our products, and 9.7% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

Gross Profit and Gross Profit Margin. Gross profit was $7.9 million in the second quarter ended June 30, 2021, compared to $2.7 million in the same period of 2020. Our gross profit margin increased to 51.9% for the second quarter ended June 30, 2021 as compared to 50.7% for the same period of 2020, primarily due to product mix shift to higher gross profit margin products such as POS touchscreens, gaming touchscreens, industrial control computer touchscreens and medical touchscreens.

Gain on Asset Disposal. Gain on asset disposal was $7.6 million for the six-month period ended June 30, 2021 compared to nil in the same period in 2020. Pursuant to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch is under the government-directed relocation order to relocate no later than December 31, 2021 and received compensation accordingly. On March 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received compensation of RMB115.2 million ($17.8 million) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. During the six-month period ended June 30, 2021, the Company recorded a gain of $7,625,165 for the asset disposal.

Income Tax Expenses. Income tax expense was $1.9 million for the three-month periods ended June 30, 2021, as compared to $0.3 million in the same period a year ago. The effective income tax rates for the three-month periods ended June 30, 2021 and 2020 were 27.1% and 14.9%, respectively. The increase of the effective income tax rate was partially due to the increase of $0.6 million income tax clearance for Sichuan Wetouch for the year ended 2020.

Net Income. We had a net income of $5.1 million in the second quarter of 2021 compared to a net income of $2.0 million in the same quarter of 2020.

Basic and diluted EPS. Basic and diluted net income per share were $0.2, compared with $0.1 in the same period of 2020.

Cash and cash equivalents. As of June 30, 2021, our cash and cash equivalents were $52.6 million, as compared to $24.0 million at December 31, 2020.