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Hebron Technology Co. Announces Second Half and Full Year 2016 Financial Results

Published: Apr 11, 2017

WENZHOU, China, April 11, 2017 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") (Nasdaq: HEBT), a developer, manufacturer and installer of valves and pipe fittings for use in the pharmaceutical, biological, food and beverage, and other clean industries, today announced its financial results for the six months and full year ended December 31, 2016.

Mr. Anyuan Sun, Chairman and Chief Executive Officer of Hebron, commented, "We are pleased to report strong financial results for the second half of 2016 with revenues growing by 17.9% to $16.4 million and net income by 33.5% to $3.8 million, respectively, both of which are record highs since our inception. This capped a banner year for Hebron with highlights that included our successful initial public offering ("IPO") on Nasdaq in December 2016. Looking ahead, we expect the momentum to continue with our increasing public and financial profile following our recent IPO. We believe the market segment we are in remains highly fragmented, providing plenty of opportunities for us to continue to grow at a healthy rate in the foreseeable future."

Six Months Ended December 31, 2016 Financial Results

  • Total revenues increased by 17.9% to $16.4 million, with revenues from installation service and fluid equipment sales increasing by 19.7% and 5.9%, respectively.
  • Gross margin also reached the highest level in six years to 38.9% as the company continued to shift focus from valve manufacturing to higher-margin installation service.
  • Operating margin improved by 3.3 percentage points to 31.1% as a result of increase in gross margin and decrease in operating expenses as a percentage of total revenues.
  • Net income was $3.8 million, or $0.31 per share, for the six months ended December 31, 2016, compared to $2.8 million, or $0.24 per share, for the same period of last year.

Revenues



For the Six Months Ended December 31,

($ millions)


2016


2015


% Change

Revenues


16.4


13.9


17.9%

Installation service


14.5


12.1


19.7%

Fluid equipment sales


1.9


1.8


5.9%








Gross profit


6.4


5.3


19.7%

Gross margin


38.9%


38.3%


0.6 pp

Installation service


41.5%


41.6%


-0.1 pp

Fluid equipment sales


18.2%


15.3%


3.0 pp








Operating income


5.1


3.9


31.8%

Operating margin


31.1%


27.8%


3.3 pp

Net income


3.8


2.8


33.5%

Net margin


23.2%


20.5%


2.7 pp

Diluted earnings per share


0.31


0.24


31.5%

For the six months ended December 31, 2016, total revenues increased by $2.5 million, or 17.9%, to $16.4 million from $13.9 million for the same period of last year. The increase in total revenues was related to increase in revenues from both installation service and fluid equipment sales.

Revenues from installation service increased by $2.4 million, or 19.7%, to $14.5 million for the six months ended December 31, 2016 from $12.1 million for the same period of last year. We provided installation service for 6 projects with average project revenue of $2.3 million in the second half of 2016, compared to 6 projects with average project revenue of $2.0 million in the same period of last year. Revenues from fluid equipment sales increased by $0.1 million, or 5.9%, to $1.9 million for the six months ended December 31, 2016 from $1.8 million for the same period of last year.

Gross profit

Total cost of revenues increased by $1.4 million, or 16.8%, to $10.0 million for the six months ended December 31, 2016 from $8.6 million for the same period of last year. Overall gross profit increased by $1.0 million, or 19.7%, to $6.4 million for the six months ended December 31, 2016 from $5.3 million for the same period of last year. Overall gross margin was 38.9% for the six months ended December 31, 2016, up 57 basis points from 38.3% for the same period of last year.

Cost of revenues for installation service increased by $1.4 million, or 19.9%, to $8.5 million for the six months ended December 31, 2016 from $7.1 million for the same period of last year. Gross profit for installation service increased by $1.0 million, or 19.3%, to $6.0 million for the six months ended December 31, 2016 from $5.0 million for the same period of last year. Gross margin for installation service was 41.5% for the six months ended December 31, 2016, compared to 41.6% for the same period of last year. Cost of revenues for fluid equipment sales was essentially unchanged at $1.5 million for the six months ended December 31, 2016. Gross profit for fluid equipment sales increased by $0.1 million, or 26.3%, to $0.34 million for the six months ended December 31, 2016 from $0.27 million for the same period of last year. Gross margin for fluid equipment sales was 18.2% for the six months ended December 31, 2016, compared to 15.3% for the same period of last year.

Operating expenses

General and administrative expenses decreased by $0.3 million, or 57.0%, to $0.2 million for the six months ended December 31, 2016 from $0.6 million for the same period of last year. Selling expenses increased by $0.2 million, or 28.5%, to $1.0 million for the six months ended December 31, 2016 from $0.8 million for the same period of last year. The increase was mainly due to higher commission and marketing expenses incurred in promoting our installation service in 2016.

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