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
|
|
View original
content:http://www.prnewswire.com/news-releases/reto-eco-solutions-reports-full-year-2019-financial-results-301164109.html
SOURCE ReTo Eco-Solutions, Inc.