Helen Xu
谢谢刘先生。我将继续代表公司CEO刘先生介绍公司2013年第一季度的业绩。中国经济增长放缓影响了化工行业，由于市场需求疲软，溴的销售价格低于去年同期，这是导致公司今年第一季度业绩较去年同期下降的主要因素。溴的平均销售价格从2012年第一季度的每公吨3,560美元降至本季度的每公吨3,063美元，降幅近14%。然而，溴的销售量从截至2012年3月31日的三个月期间的3,770吨增至2013年同期的3,843吨，增长2%，这得益于近年来我们溴生产工厂数量的增加。粗盐的平均销售价格从截至2012年3月31日的三个月期间的每吨约38美元增至2013年同期的每吨约39.52美元，增长4%；粗盐的销售量也从截至2012年3月31日的三个月期间的59,836吨增至2013年同期的62,007吨，增长近4%。我们化工产品板块的净收入从截至2012年3月31日的三个月期间的约8,079,000美元增至2013年同期的约8,317,000美元，增长约3%。这一增长主要归因于我们油气勘探添加剂和[第二]制造添加剂需求的增加。我们的油气勘探化学品是化工产品板块中最受欢迎的产品，在截至2013年3月31日的三个月期间贡献了4,621,678美元，约占化工板块收入的65%；在截至2012年3月31日的三个月期间贡献了4,161,559美元，约占52%。现在，我想提供更多财务业绩细节。可以看到，公司截至2013年3月31日的三个月期间的总收入为22,502,580美元，较2012年同期减少约130万美元或约5%。这一下降主要归因于我们溴板块产品的减少，从截至2012年3月31日的三个月期间的约30,453,000美元降至2013年同期的约11,734,000美元，下降约13%。毛利润为4,517,108美元，约占截至2013年3月31日的三个月期间净收入的20%，而2012年同期为6,692,792美元，约占净收入的28%。毛利率百分比的下降主要归因于我们所有三个板块的利润率百分比均有所下降。截至2013年3月31日和2012年3月31日的三个月期间的总研发费用分别为17,702美元和42,798美元，下降59%。截至2013年3月31日和2012年3月31日的三个月期间的研发费用代表公司子公司SYCI用于测试制造流程的原材料。截至2013年3月31日的三个月期间的一般及行政费用为1,969,217美元，较2012年同期的约2,112,000美元减少142,988美元，约7%。这一下降主要由于与集体诉讼相关的法律费用减少，从截至2012年3月31日的三个月期间的约411,000美元降至2013年同期的39,000美元，因为和解阶段讨论的工作量减少，部分被2012年9月新购置的商业建筑办公单元折旧增加所抵消。我们截至2013年3月31日的三个月期间的营业利润约为2,605,000美元，约占净收入的12%，较2012年同期的营业利润减少约1,972,000美元，约43%。这一下降主要由于我们溴板块销售价格的下降（如前所述），以及由于2012年第二季度对我们提取井和传输通道及管道的增强项目导致厂房和机器设备的折旧和摊销增加，加速了厂房和机器设备的折旧和摊销。其他营业收入（代表向部分客户销售废水）在截至2013年3月31日的三个月期间为95,562美元，较2012年同期的57,074美元增加38,488美元，约67%。其他收入净额19,837美元代表银行利息收入，扣除截至2013年3月31日的三个月期间的资本租赁利息支出，较2012年同期下降约55%，主要由于截至2013年3月31日的期间的平均银行存款余额低于截至2012年3月31日的期间。本季度净利润约为1,882,965美元，较去年同期下降约43%，减少约1,404,000美元。这一下降主要归因于我们溴板块销售价格的下降，这是由于中国政府实施的宏观经济紧缩政策以放缓经济增长（如刘先生早前所述）。2013年第一季度的所得税为70万美元，较2012年第一季度的130万美元下降44%。公司截至2013年3月31日和2012年3月31日的三个月期间的有效税率分别为28%和29%。截至2013年3月31日，Gulf Resources拥有现金7,850万美元，总负债1,270万美元，股东权益2.669亿美元。截至2013年3月31日的三个月期间，公司的营运资本为1.053亿美元。截至2013年3月31日，公司经营活动产生约1,330万美元现金流，投资活动使用29万美元用于预付土地租赁的增加。接下来我们将讨论后续事件。2013年4月18日，公司宣布其董事会已批准一项新的股票回购计划，根据该计划，公司被授权（但无义务）在未来12个月内不时回购最多200万美元的已发行流通普通股。2013年4月30日，集体诉讼的各方签署了和解协议，该协议需经法院审查和批准。公司目前无法估计与此诉讼相关的总成本金额或范围。公司相信，此类成本将在保险单承保范围内由保险公司报销。公司2013年年度股东大会将于2013年6月18日上午10:00（中国当地时间）在山东省寿光市东城工业园蔬菜大厦11层公司总部举行。如需进一步投资者咨询，投资者可继续通过我们网站上披露的电子邮件地址联系我们的IR经理和CEO助理。至此，我们想开放电话会议，回答有关2013年第一季度财务和运营业绩的任何问题。接线员？
Helen Xu
Thank you, Mr. Liu. I’m going to continue with presenting the company’s results for the first quarter of 2013 on the behalf of the company’s CEO, Mr. Liu. The slowdown of the economy growth in China have affected the chemical industry, and caused the selling price of bromine to be lower than the same period of last year, due to the weak market demand and with the main factor that caused the company to report a lower performance in the first quarter of this year in comparisons to the last year’s same period. The average selling price of bromine had decreased from $3,560 per metric ton for the first quarter in 2012 to $3,063 per metric ton for this quarter, representing a decrease of nearly 14 percentage. However the sales volume of bromine increased from $3,770 ton for the three months period ended March 31, 2012 to $3,843 ton for the same period in 2013, an increase of 2% due to increase in the number of our bromine production plant in recent year. The average selling price of crude salt increased from $30 -- approximately $38 per ton for three months period ended March 31, 2012 to approximately $39.52 per ton for the same period in 2013, a increase of 4% and sales volume of crude salt also increased by nearly 4% from $59,836 tons for the three months period ended March 31, 2012 to $62,007 tons for the same period in 2013. Net revenue from our chemical product segment increased from -- approximately $8,079,000 for the three months period ended March 31, 2012 to -- approximately $8,317,000 for the same period in 2013, an increase of approximately 3%. The increase was mainly attributable to the increase in demand for our oil and gas exploration additives and [second] manufacturing additives. Our oil and gas exploration chemicals are the most popular products within the chemical product segments, which contributed $4,621,678 or around 65% and $4,161,559 or around 52% of our chemical segment revenue for the three months period ended March 31, 2013 and 2012. Now, I would like to provide some more detail on the financial performance. You can see that the company’s total revenues was $22,502,580 for the three months period ended March 31, 2013, a decrease of approximately of $1.3 million or around 5% as compared to the same period in 2012. This decrease was primarily attributable to the reduction of our bromine segment products, which decreased from around approximately $30,453,000 for the three months period ended March 31, 2012 to approximately $11,734,000 for the same period in 2013, a decrease of approximately 13%. Gross profit was $4,517,108 .or around 20% of net revenue for three months period ended March 31, 2013, compared to $6,692,792 or around 28% of net revenue over the same period in 2012, a decrease in gross profit percentage was primary attributable to a drop in the margin percent in all of our three segments. Total research and development costs incurred for the three months period ended March 31, 2013 and 2012 were $17,702 and $42,798, respectively, a decrease of 59%. Research and development costs for the three-month period ended March 31, 2013 and 2012 represented raw materials used by company’s subsidiary SYCI for testing the manufacturing routine. General and administrative expenses were $1,969,217 for the three-month period ended March 31, 2013, a decrease of $142,988 around 7% as compared to the same period in 2012 which is approximately $2,112,000. The decrease of this was primarily due to the decrease in legal cost in connection with class action reached from around $411,000 for the three months period March 31, 2012 to $39,000 for the same period in 2013 since the workload was reduced in settlement stage discussion, partially offset by an increase in the depreciation of the newly acquired office units in a commercial building in September 2012. Our income from operations was approximately $2,605,000 for the three-month period ended March 31, 2013 or around 12% of the net revenue, a decrease of approximately $1,972,000 around 43%, over income from operations for the same period in 2012. The decrease resulted primarily from the decrease of selling price of our bromine segment as mentioned early and the increase in depreciation and amortization of the plant and machinery due to the enhancement projects from the second quarter of 2012 to our extraction wells and transmission channels and ducts, which accelerated the depreciation and amortization of the plant and machinery. Other operating income, which represented the sales of wastewater for some of our customers, was $95,562 for the three-month period ended March 31, 2013, representing an increase of $38,488 or around 67% from $57,074 for the same period in 2012. Other income, net of $19,837 represented bank interest income, net of capital lease interest expense for the three-month period ended March 31, 2013, a decrease of approximately 55% as compared to the same period in 2012, mainly due to the lower average bank balance held in the period ended March 31, 2013 compared to the period ended March 31, 2012. Net income was approximately $1,882,965 for the three-month period, a decrease of approximately 43% and approximately $1,404,000 compared to the same period last year. This decrease was primarily attributable to the decrease of selling price for our bromine segment due to the macro-economic tightening policy imposed by the PRC government to slow down the economy as mentioned by Mr. Liu early. Income taxes were $0.7 million for the first quarter of 2013, a decrease of 44% from $1.3 million for the first quarter of 2012. The Company’s effective tax rate was 28% and 29% for the three-month periods ended March 31, 2013 and 2012 respectively. As of March 31, 2013, Gulf Resources had cash of $78.5 million, total liabilities of $12.7 million, and stockholders’ equity of $266.9 million. For the three months ended March 31, 2013, the Company had working capital of $105.3 million. As of March 31, 2013, the Company generated around $13.3 million in cash flow from operations, and used $290,000 in investing activities for additions of prepaid land leases. And we are going to talk about subsequent events. On April 18, 2013 the Company announced that its board of directors has approved a new share repurchase program under which the Company is authorized, but not obligated, to purchase up to $2 million of its issued and outstanding shares of common stock from time to time over the next 12 months. On April 30, 2013, the class action parties of the class action litigation executed a stipulation and agreement of settlement, which is subject to review and approval of the Court. The Company currently cannot estimate the amount or range of the overall costs in connection with this litigation. The Company believes that such costs will be reimbursed by the insurance company to the extent covered by the insurance policies. The Company’s 2013 Annual Meeting of the stockholders will be held on June 18, 2013, at 10:00 a.m. China local time, at the Company’s headquarters located at Level 11, Vegetable Building, Industrial Park of the East City, Shouguang City, Shandong Province. For further investor inquiries, investors may continue to reach our IR manager and CEO’s Assistant at the email address disclosed at our website. With that we’d like to open the call for any questions pertaining to the first quarter 2013 financial and operating performance. Operator?
