PR Newswire | Sep 30, 2020 04:03PM EDT

09/30 15:03 CDT

Tantech Announces Interim Financial Results for Six Months Ended June 30, 2020Reports 9.3% Increase in Revenue and 100% Increase in Earnings Per Share LISHUI, China, Sept. 30, 2020

LISHUI, China, Sept. 30, 2020 /PRNewswire/ -- Tantech Holdings Ltd. (NASDAQ: TANH), ("Tantech" or the "Company"), a clean energy company in China, today announced its unaudited interim financial results for the six months ended June 30, 2020.

Financial Highlights

For the Six Months Ended June 30,

($ millions, expect per share data and 2020 2019 %Changepercentages)

Revenues $ 22.9 $ 21.0 9.3%

Consumer product $ 16.2 $ 20.7 (21.9)%

Trading $ 6.3 $ 0.2 3,180%

Gross profit $ 3.1 $ 3.7 (16.5)%

Gross margin 13.4% 17.6% (4.2) percentage points

Operating margin 7.9% 9.0% (1.1) percentage points

Net income from continuing operations $ 1.0 $ 1.2 ?18.5)%

Net income (loss) from discontinued operations $ 0.00 $ (0.76) (100)%

Net income $ 1.0 $ 0.4 125.3%

Basic/ Diluted earnings per share $ 0.04 $ 0.02 100%

* Total revenues increased 9.3% to $22.9 million from $21.0 million. Sales in the Company's trading segment increased significantly due to a demand surge for bamboo charcoal used for air purification and sanitation products, which more than offset a decrease in the Company's consumer product segment primarily due to the impact of COVID-19 disruptions and closures.

* Gross profit decreased 16.5% to $3.1 million from $3.7 million, and gross margin decreased by 4.2% to 13.4% from 17.65, primarily due to product mix.

* Selling expenses decreased 25% to $0.20 million from $0.27 million, primarily reflects a decrease in in-person sales activities due to COVID-19 closures and a shift toward lower cost, online marketing support during the first six months in fiscal 2020 compared to the same period last year.

* General and administration expenses decreased 48% to $0.76 million from $1.5 million The decrease was primarily attributable to COIVD-19 closures, along with a decrease in professional fees and consulting expenses, as compared to the same period last year.

* Research and development expenses increased $0.30 million from $0.04 million, primarily due to increased activities related to electrical battery and vehicle research in the Company's electric vehicle segment, as compared to the same period last year.

* Other income decreased 50% to $0.02 million from $0.04 million, primarily due to lower government subsidy income, as compared to the same period last year.

* Net income increased 125.3% to $1.0 million from $0.4 million, with a 100% increase in earnings per share on both a basic and diluted basis to $0.04 from $0.02 in the same period last year.

* As of June 30, 2020, the Company had a $15.4 million balance of cash and cash equivalents, with total shareholders' equity of approximately $94.1 million.

Mr. Wangfeng Yan, Chief Executive Officer of Tantech, said, "2020 has been a very challenging year across all industries worldwide. We are truly fortunate that we were able to help people in this time of incredible need and loss. Revenue in our trading segment surged to $6.3 million in the first six months of 2020 from $0.2 million in the year ago period. The strong increase was driven by demand for our bamboo charcoal used for active charcoal masks, air purification and sanitation products in order to combat COVID-19. This growth more than offset the decline in our consumer product segment, which declined due to the temporary suspension of manufacturing activities in compliance with government restrictions around COVID-19. We were able to restart manufacturing activities in the middle of February but had to work with customers and suppliers that continued to face business disruptions and closures. We are pleased to report that we have seen a steady rebound in sales in our consumer product segment, with demand strong through September, as customers continued to purchase our cleaning, purification and deodorization products. We are working to meet the higher than normal seasonal demand levels and expect higher growth in the second half of 2020. Earlier investments we made in our brand, supply chain, strategic inventory and time spent nurturing meaningful relationships are proving critical to us as we maintain full access to raw materials, production facilities and our distribution channel."

"Given the challenging macro environment at the start of 2020, we made the strategic decision to temporarily scale back our EV development and production efforts at the same time we temporarily suspended our consumer product manufacturing activities. In addition to the COVID-19 closures in the first half of 2020, it was evident our EV production costs would not be covered due to changes in the government rebate policy issued in 2019. We have since resumed full activities in this segment given the strong underlying market growth dynamics for electric vehicles led by a sustainability focus, China's environmental protection policy, and an improved, state-of-the-art driver experience. We are building our presence slowly and methodically, in order to maximize the impact of our R&D investments and technology advancements in specialty-use EV motors rather than the more competitive, domestic general consumer EV market. We are confident in our position and remain fully committed to the EV sector, which we expect will be a key long-term growth driver for us, but are also open to evaluating certain international markets in Asia, including those for gasoline powered motors, as we strive to maintain well-balanced working capital and positive operating cash flow."

About Tantech Holdings Ltd.

Established in 2001 and headquartered in Lishui City, Zhejiang Province, China, Tantech, together with its subsidiaries, is now, in addition to be a developer and manufacturer of bamboo-based charcoal, an innovative leader in the design, manufacture and distribution of electric vehicles. The Company has also invested in mining business in 2018 and 2019.

For more information please visit: http://ir.tantech.cn.

Forward-Looking Statements

This news 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. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Tantech Holdings Ltd and SubsidiariesCondensed Consolidated Balance Sheets(Unaudited)

June 30, December 31,

2020 2019

Assets

Current Assets

Cash and cash equivalents (Note 3 at VIE) $ 15,418,825 $ 12,440,457

Restricted cash (Note 3 at VIE) 2,830 205,520

Accounts receivable, net (Note 3 at VIE) 43,407,119 39,352,408

Inventories, net (Note 3 at VIE) 1,898,128 595,627

Advances to suppliers, net (Note 3 at VIE) 3,328,762 13,079,889

Advances to suppliers - related party 1,415,000 -

Prepaid taxes (Note 3 at VIE) 2,249,606 2,396,349

Prepaid expenses and other receivables, net (Note 3 at VIE) 81,801 91,377

Total Current Assets (Note 3 at VIE) 67,802,071 68,161,627

Property, plant and equipment, net (Note 3 at VIE) 2,419,897 2,700,034

Other Assets

Manufacturing rebate receivable (Note 3 at VIE) 7,632,838 7,746,116

Intangible assets, net (Note 3 at VIE) 12,553,791 12,959,017

Long-term Investment 23,534,705 23,883,983

Total Other Assets (Note 3 at VIE) 43,721,334 44,589,116

Total Assets (Note 3 at VIE) $ 113,943,302 $ 115,450,777

Liabilities and Stockholders' Equity

Current Liabilities

Short-term bank loans $ 6,619,370 $ 6,861,208

Bank acceptance notes payable (Note 3 at VIE) 1,417,830 205,520

Accounts payable (Note 3 at VIE) 2,653,740 1,650,851

Due to related parties (Note 3 at VIE) 1,055,926 1,626,120

Customer deposits (Note 3 at VIE) 3,959,521 6,955,142

Taxes payable (Note 3 at VIE) 396,930 102,704

Due to third parties 283,000 287,200

Accrued liabilities and other payables (Note 3 at VIE) 1,655,377 1,444,896

Total Current Liabilities (Note 3 at VIE) 18,041,694 19,133,641

Deferred tax liability (Note 3 at VIE) 1,758,774 1,784,875

Total Liabilities (Note 3 at VIE) 19,800,468 20,918,516

Stockholders' Equity

Common stock, $0.001 par value, 50,000,000 sharesauthorized, 28,888,834 and 28,853,242 shares issued and 28,889 28,853outstanding

Additional paid-in capital 39,343,954 39,310,178

Statutory reserves 6,379,276 6,379,276

Retained earnings 53,283,096 52,058,681

Accumulated other comprehensive loss (8,986,623) (7,590,943)

Total Stockholders' Equity attributable to the Company 90,048,592 90,186,045

Noncontrolling interest 4,094,242 4,346,216

Total Stockholders' Equity 94,142,834 94,532,261

Total Liabilities and Stockholders' Equity $ 113,943,302 $ 115,450,777

Tantech Holdings Ltd and SubsidiariesCondensed Consolidated Statements of Comprehensive Loss(Unaudited)

For the Six Months Ended June 30,

2020 2019

Revenues $ 22,889,784 $ 20,950,575

Cost of revenues 19,817,263 17,271,777

Gross Profit 3,072,521 3,678,798

Operating expenses

Selling expenses 201,217 266,516

General and administrative expenses 763,945 1,480,952

Research and development expenses 302,553 35,751

Total operating expenses 1,267,715 1,783,219

Income (loss) from operations 1,804,806 1,895,579

Other income (expenses)

Interest income 17,962 31,614

Interest expense (184,228) (228,855)

Government subsidy income 10,926 -

Other income, net 6,593 38,200

Total other income (expenses) (148,807) (159,041)

Income before provision for income taxes 1,655,999 1,736,538

Provision for income taxes 684,804 545,520

Net income from continuing operations 971,195 1,191,018

Discontinued operation:

Income from discontinued operations, net of - (759,695)tax

Net income from discontinued operations - (759,695)

Net income 971,195 431,323

Less: net loss attributable tononcontrolling interest from continuing (253,220) (233,808)operations

Net income attributable to common $ 1,224,415 $ 665,131stockholders of Tantech Holdings Ltd.

Net income 971,195 431,323

Other comprehensive income (loss):

Foreign currency translation adjustment (1,394,434) (4,059,144)

Comprehensive income (loss) (423,239) (3,627,821)

Less: Comprehensive loss attributable (251,974) (218,403)to noncontrolling interest

Comprehensive income (loss) attributable tocommon stockholders of Tantech Holdings $ (171,265) $ (3,409,418)Ltd.

Earnings (loss) per share - Basic andDiluted

Continuing operations $ 0.04 $ 0.05

Discontinued operations $ - $ (0.03)

Total $ 0.04 $ 0.02

Weighted Average Shares Outstanding - Basicand diluted

Continuing operations and discontinued 28,872,602 28,853,242operations

Tantech Holdings Ltd and SubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited)

For the Six Months Ended June 30,

2020 2019

Cash flows from operating activities

Net income $ 971,195 $ 431,323

Net loss from discontinued operations - 759,695

Net income from continuing operations 971,195 1,191,018

Adjustments to reconcile net income (loss) to net cash provided by operatingactivities:

Depreciation expense 227,049 237,039

Amortization of intangible asset 216,781 224,708

Amortization of prepaid consulting expense - 140,738

Loss (gain) from disposal of property, plant and equipment 2,867 (8,017)

Issuance of common stock for service 33,812 -

Changes in operating assets and liabilities:

Accounts receivable - non-related party (4,653,105) (2,250,145)

Advances to suppliers 9,607,140 8,132,865

Advances to suppliers- related party (1,422,000) -

Inventory (1,317,697) 123,653

Prepaid expenses and other receivables 8,280 (17,958)

Manufacturing rebate receivable - 1,591,920

Accounts payable 1,032,112 (303,835)

Accrued liabilities and other payables 232,756 (370,284)

Customer deposits (2,908,226) 69,605

Taxes payable 409,442 (25,988)

Net cash provided by continuing operations 2,440,406 8,735,319

Net cash provided by discontinued operations - 2,630,211

Net cash provided by operating activities 2,440,407 11,365,530

Cash flows from investing activities

Acquisition of property, plant and equipment (9,524) (104,815)

Proceeds from disposal of property, plant and equipment 21,450 16,214

Net cash provided by (used in) continuing operations 11,926 (88,601)

Net cash used in discontinued operations - (470)

Net cash provided by (used in) investing activities 11,926 (89,071)

Cash flows from financing activities

Proceeds from (repayment of) loans from third parties - (2,874,595)

Bank acceptance notes payable, net of repayment 1,221,327 (2,048,388)

Proceeds from bank loans 6,652,116 4,242,172

Repayment of bank loans (6,794,316) (4,684,372)

Repayment of loans from related parties, net (557,765) (534,993)

Net cash used in continuing operations 521,362 (5,900,176)

Net cash provided by discontinued operations - -

Net cash used in financing activities 521,362 (5,900,176)

Effect of exchange rate changes on cash, restricted cash and cash equivalents (198,016) (429,963)

Net increase (decrease) in cash, restricted cash and cash equivalents 2,775,678 4,946,320

Cash, restricted cash and cash equivalents, beginning of year 12,645,977 9,869,793

Cash, restricted cash and cash equivalents, end of year $ 15,421,655 $ 14,816,113

Supplemental disclosure information:

Income taxes paid $ 28,487 $ 581,843

Interest paid $ 168,560 $ 237,568

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SOURCE Tantech Holdings Ltd.