SHOUGUANG, China, Nov. 8, 2013 (GLOBE NEWSWIRE) -- Gulf Resources, Inc. (Nasdaq:GURE) ("Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced its financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 Highlights

• Net revenue was $32.9 million, a year-over-year increase of 34%
• Gross profit was $10.9 million, a year-over-year increase of 47%
• Gross margin increased to 33%, as compared to 30% in the third quarter of 2012
• Income from operations was $10.9 million, as compared to $5.6 million in the third quarter of 2012, a year-over-year increase of 94%
• Operating margin was 33%, as compared to 23% for the third quarter of 2012
• Net income was $8.1 million or $0.21 per basic and diluted share, versus $4.1 million, or $0.12 per basic and diluted share a year ago.
• Cash totaled $97.2 million as of September 30, 2013

"We are pleased to report that Company's net revenue for the third quarter of 2013 has increased 34%, income from operations increased 94%, and net income increased 97% as compared with the same quarter of 2012, which is mainly due to the increased sales revenue from all segments of the Company and gain on relocation of bromine factory No.3. As compared with the same period of 2012, the sales revenue of chemical products segment largely increased 45%, crude salt segment increased 65% and bromine segment slightly increased 22%." said Mr. Xiaobin Liu, CEO of the Company.

Third Quarter 2013 Financial Results

Gulf Resources' net revenue was $32,935,277 for the three-month period ended September 30, 2013, an increase of approximately 8.4 million (or 34%) as compared to the same period in 2012. This increase was primarily attributable to the increase of revenues from all of our segments, specifically, including (i) the increase of revenue from the bromine segment from $13,960,118 for the three-month period ended September 30, 2012 to $17,093,087 for the same period in 2013, an increase of approximately 22%; (ii) the increase of revenue from the crude salt segment from $2,360,905 for the three-month period ended September 30, 2012 to $3,902,979 for the same period in 2013, an increase of approximately 65%; and (iii) the increase of revenue from the chemical products segment from $8,209,309 for the three-month period ended September 30, 2012 to 11,939,211 for the same period in 2013, an increase of approximately 45%.

Gross profit was $10,929,021, or 33%, of net revenue for the three-month period ended September 30, 2013 compared to $7,430,442, or 30%, of net revenue for the same period in 2012. The increase in gross profit percentage was primarily attributable to an increase in the margin percentage in all of our three segments.

The total research and development costs incurred for the three-month periods ended September 30, 2013 and 2012 were $33,198 and $28,478, respectively, an increase of 17%. Research and development costs for the three-month periods ended September 30, 2013 and 2012 represented raw materials used by SYCI for testing the manufacturing routine.

Write-off on property, plant and equipment for the three-month periods ended September 30, 2013 and 2012 were $214 and $130,143, respectively, a decrease of 99.8%. Write-off on property, plant and equipment of $130,143 for the three-month period ended September 30, 2012 represented the write-off of certain machinery and equipment replaced during the enhancement work to our bromine production facilities in Factory No. 2 completed in September 2012.

General and administrative expenses were $1,962,496 for the three-month period ended September 30, 2013, an increase of $254,633 (or 15%) as compared to $1,707,863 for the same period in 2012. This increase in general and administrative expenses was primarily due to a sum of $628,718 for insurance compensation received for a legal case in 2012, which offset legal fee included in general and administrative expense, partially offset by a non-cash expense related to stock options granted to employees which decreased to $4,100 for the three-month period ended September 30, 2013 from $477,000 in the same period of 2012.

Gain on relocation of factory was $1,877,779 for the three-month period ended September 30, 2013. In late September 2013, the Transportation Bureau of Dongying City and other local government agencies requested to requisition the land where the original Factory No. 3 was located for railway construction. We recognized such amount in this quarter in 2013.

Other operating income was $107,006 for the three-month period ended September 30, 2013, an increase of $21,756 (or 26%) as compared to $85,250 for the same period in 2012 for sales of wastewater.

Income from operations was $10,892,520 for the three-month period ended September 30, 2013 (or 33% of net revenue), an increase of $5,263,639, or approximately 94%, over the income from operations for the same period in 2012. The increase resulted primarily from the increase in the demand for all of our segment products.

Other income, net of $35,653 represented bank interest income, net of capital lease interest expense for the three-month period ended September 30, 2013, an increase of $21,992 (or approximately 161%) as compared to the same period in 2012

Net income was $8,109,729 for the three-month period ended September 30, 2013, an increase of $3,996,513 (or approximately 97%) compared to the same period in 2012. This significant increase was primarily attributable to the overall increase in demand for our products and gain on relocation of original Factory No.3.

Income taxes were $2.8 million for the third quarter of 2013, an increase of 84% from $1.5 million for the third quarter of 2012. The Company's effective tax rate was 26% and 27% for the three-month periods ended September 30, 2013 and 2012, respectively.

Nine Months Ended September 30, 2013

Net revenue for the nine-month period ended September 30, 2013 was $88,291,753, representing an increase of approximately $8.6 million (or 11%) over the same period in 2012. This increase was primarily attributable to the increase of revenues from all of our segments. Gross profit was $25,039,824, or 28%, of net revenue for the nine-month period ended September 30, 2013 compared to $24,048,429, or 30%, of net revenue for the same period in 2012. The decrease in gross profit percentage was primarily attributable to a drop in the margin percentage of bromine and crude salt segments. Income from operations was $20,876,743 for the nine-month period ended September 30, 2013 (or 24% of net revenue), an increase of $3,037,560, or approximately 17%, over income from operations for the same period in 2012. The increase resulted primarily from the increase in the demand for all of our segment products and gain on relocation of original Factory No.3.

Net income was $15.3 million, or $0.40 per basic and diluted share, respectively, compared to $13.1 million, or $0.38 per basic and $0.37 per diluted share, respectively, for the same period a year ago.

Financial Condition

As of September 30, 2013, Gulf Resources had cash of $97.2 million, total liabilities of $15.0 million, and stockholders' equity of $286.7 million. Ended September 30, 2013, the Company had working capital of $135.7 million. As of September 30, 2013, the Company generated $31.4 million in cash flow from operations, and we used approximately $0.6 million cash for the prepayment of land leases and approximately $0.3 million cash for the construction of our new Factory No.3 due to the resumption of leased land by the Transportation Bureau of Dongying City and other local government agencies for railway construction.

Business Outlook

"The Chemical products segment did have a great performance for the third quarter of 2013 as compared to the same period of 2012 with gross profit margin increased from 29% to 34%. We also noted an upward trend in the average selling price of crude salt since the third quarter of 2011 due to the stable demand of the crude salt. The average selling price increased from $37.19 per tonne in the third quarter of 2011 to $41.39 per tonne in the third quarter of 2013. We expect the average selling price of crude salt to remain at current levels through the end of 2013. Since we are still impacted by China's macro-economic conditions, our bromine price still remains at a competitively low price which result in gross profit margin only increase 2% percent in the condition our sales volume increase 20%. The Company will be continually looking for both of horizontal and vertical acquisition targets, try to expand sales markets, increase its production utilization rate and decrease management and administration expenses." said Mr. Xiaobin Liu, CEO of the Company.

Conference Call

Gulf Resources' management will host a conference call on Monday, November 11, 2013 at 8:00 AM Eastern Time to discuss its financial results for the Third quarter ended September 30, 2013.

Hosting the call will be Mr. Xiaobin Liu, CEO of Gulf Resources. The Company's management team will be available for investor questions following the prepared remarks.

To participate in this live conference call, please dial +1 (877) 275-8968 five to ten minutes prior to the scheduled conference call time. International callers should dial +1 (706) 643-1666. The conference participant pass code is 97694824.

A replay of the conference call will be available for 14 days starting starting from 11:00 AM ET on Monday, November 11, 2013. To access the replay, dial +1 (855) 859-2056. International callers should dial +1 (404) 537-3406. The pass code is 97694824.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://www.gulfresourcesinc.com/events.html. Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a 90-day replay will be available shortly after the call by accessing the same link.

About Gulf Resources, Inc.

Gulf Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil & gas field explorations and as papermaking chemical agents. For more information, visit www.gulfresourcesinc.com.

Forward-Looking Statements

Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Max Ma

Helen Xu