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Asia Carbon Industries, Inc. Announces Second Quarter Financial Results

August 20, 2012

NEW YORK, Aug. 20, 2012 /PRNewswire-Asia/ — Asia Carbon Industries, Inc. (“Asia Carbon”, or the “Company”) today announced its earnings for the quarter ended June 30, 2012. The Company, whose shares trade in the U.S. on the OTCQB Tier of the OTC Markets under the stock symbol “ACRB”, filed its quarterly report on Form 10-Q with the Securities and Exchange Commission on August 14, 2012.

Highlights of Second Quarter 2012 Financials

  • Revenues for the quarter ended June 30, 2012 were $13.2 million, down 2% from $13.5 million for the same period in 2011.
  • Gross profit was $2.94 million in the quarter ended June 30, 2012, a decrease of 0.4% from $2.95 million for the same period in 2011.
  • Net income for the quarter ended June 30, 2012 was $1.87 million, a decrease of 5.5% from $1.98 million for the same period in 2011.
  • Earnings per share remained at $0.04 for the quarter ended June 30, 2012, the same as for the first quarter of 2011.
  • Tonnage sales of carbon black increased to 13,158 tons in the quarter ended June 30, 2012, up 4% from 12,698 tons in the same period in 2011.
  • By-product naphthalene oil sales more than doubled to 1,050 tons in the quarter ended June 30, 2012, compared to 510 tons in the same period of 2011.

Sales for the three months ended June 30, 2012 totaled $13,194,534, a decrease of $306,338 or 2%, compared to $13,500,872 for the comparable period of 2011. The decline in sales was mainly attributable to the decrease in the market selling price of carbon black.

During the three months ended June 30, 2012 and 2011, the Company sold 13,158 tons and 12,608 of carbon blacks, respectively, an increase of 460 tons or 4%. Management attributes the increase in sales quantity to the quality of Asia Carbon’s products and the increase in the number of new customers.

The Company’s total carbon black production capacity is 61,000 tons per annum. The annualized production/total capacity utilization rate was 86% and 83% during three months ended June 30, 2012 and 2011, respectively.

Gross profit was $2,936,673 in the three months ended June 30, 2012, a decrease of $11,905, compared to $2,948,578 for the three months ended June 30, 2011. The gross profit rate has remained consistent at 22% for the three months ended June 30, 2012 and 2011.

Net income was $1,871,477 in the three months ended June 30, 2012, a decrease of $109,963, or 6%, compared to $1,981,440 for the same period in 2011. Net income per share was $0.04 in 2012, the same as for the same period in 2011. The decrease in net income was the result of the decreased unit sales price and an increase in stock incentive expenses.

Yao Guoyun, Asia Carbon’s Chairwoman of the Board and Chief Executive Officer, commented, “Although revenues for the second quarter were flat, primarily due to a decrease in market demand reflected in a decline in carbon black pricing, we were able to generate an increase in tonnage sales through an aggressive marketing effort. Asia Carbon continues to pursue our growth objectives as the economy slowly turns around. Construction of our on-site power plant is on-track for a fourth quarter launch and we are evaluating a number of opportunities to expand capacity.”

                                                COMPARISON OF SALES
                                 FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011
                                 -------------------------------------------------
                                 2012                                2011
                                 ----                                ----
    Product         Sales                           Quantity                       Sales               Quantity
                                                  (Metric Ton)                                       (Metric Ton)
    ---                                            -----------                                        -----------
    N220                   $8,085,500                               8,307                 $8,635,496               8,032
    ----                   ----------                               -----                 ----------               -----
    N330                    2,183,574                               2,426                  2,218,323               2,333
    ----                    ---------                               -----                  ---------               -----
    N660                    2,084,357                               2,425                  2,187,882               2,333
    ----                    ---------                               -----                  ---------               -----
    Naphthalene oil           841,103                               1,050                    459,171                 510
    ---------------           -------                               -----                    -------                 ---
    Total Sales           $13,194,534                              14,208                $13,500,872              13,208
    -----------           -----------                              ------                -----------              ------

                                                        ASIA CARBON INDUSTRIES, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                                         (UNAUDITED)

                                                                                                                     Three Months Ended June
                                                                                                                               30,              Six Months Ended June 30,
                                                                                                                   ------------------------     -------------------------
                                                                                                                          2012           2011         2012           2011
                                                                                                                          ----           ----         ----           ----

    Net Sales                                                                                                      $13,194,534    $13,500,872  $25,776,226    $26,942,388
    Cost of Sales                                                                                                   10,257,861     10,552,294   19,913,601     20,812,378
                                                                                                                    ----------     ----------   ----------     ----------
    Gross Profit                                                                                                     2,936,673      2,948,578    5,862,625      6,130,010
                                                                                                                     ---------      ---------    ---------      ---------

     Operating Expenses:
                                    Depreciation                                                                        25,724         57,586       51,532        114,505
                                    Selling                                                                             93,297         72,411      184,988        143,487
                                    Professional fees                                                                   49,000         48,781      155,500        157,678
                                    Other                                                                              172,678         56,684      350,758        110,596
                                      Total Operating Expenses                                                         340,699        235,462      742,778        526,266
                                                                                                                       -------        -------      -------        -------
    Income From Operations                                                                                           2,595,974      2,713,116    5,119,847      5,603,744
                                                                                                                     ---------      ---------    ---------      ---------
    Other Income and (Expense)
                                    Interest income                                                                      7,044          8,948       18,104          8,948
                                    Interest expense                                                                   (49,247)       (30,882)     (94,881)       (58,060)
                                                                                                                      --------        -------      -------        -------
                                      Total Other Income and (Expense)                                                 (42,203)       (21,934)     (76,777)       (49,112)
                                                                                                                      --------        -------      -------        -------
    Income Before Provision for Tax                                                                                  2,553,771      2,691,182    5,043,070      5,554,632
    Provision for tax                                                                                                  682,294        709,742    1,364,512      1,467,719
                                                                                                                       -------        -------    ---------      ---------
    Net Income                                                                                                       1,871,477      1,981,440    3,678,558      4,086,913

    Other comprehensive income (loss)                                                                                 (268,325)       294,776     (283,736)       454,818
    Comprehensive Income                                                                                            $1,603,152     $2,276,216   $3,394,822     $4,541,731
                                                                                                                    ==========     ==========   ==========     ==========

    Net Income Per Share - Basic                                                                             $0.04       $0.04          $0.07        $0.08
                                                                                                             =====       =====          =====        =====
    Net Income Per Share - Diluted                                                                           $0.04       $0.04          $0.07        $0.08
                                                                                                             =====       =====          =====        =====
    Weighted Average Shares Outstanding - Basic                                                                     52,315,538     50,608,077   51,755,060     50,608,077
                                                                                                                    ==========     ==========   ==========     ==========
    Weighted Average Shares Outstanding - Diluted                                                                   52,315,538     50,608,077   51,755,060     50,608,077
                                                                                                                    ==========     ==========   ==========     ==========

                                                      ASIA CARBON INDUSTRIES, INC. AND SUBSIDIARIES
                                                               CONSOLIDATED BALANCE SHEETS
                                                               ---------------------------
                                                                                                      June 30,              December 31,
                                                                                                                       2012                    2011
    ASSETS                                                                                          (Unaudited)
    ------                                                                                           ----------
    Current Assets:
     Cash and equivalents                                                                                        $4,804,734              $8,092,411
     Accounts receivable, net                                                                                     5,339,488               4,404,319
     Inventories                                                                                                  3,395,284               3,146,756
     Prepaid expenses                                                                                               231,296                  11,138
                                                                                                                    -------                  ------
    Total Current Assets                                                                                         13,770,802              15,654,624
                                                                                                                 ----------              ----------
     Property, Plant and Equipment, Net                                                                          23,658,788              18,431,407
                                                                                                                 ----------              ----------
     Other Assets:
    Land use rights, net                                                                                            212,662                 217,145
                                                                                                                    -------                 -------
    Total Other Assets                                                                                              212,662                 217,145
     TOTAL ASSETS                                                                                               $37,642,252             $34,303,176
                                                                                                                ===========             ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------
     Current Liabilities:
    Short term debt                                                                                              $1,352,152              $1,376,074
    Accounts payable                                                                                              3,144,055               4,009,531
    Accrued liabilities                                                                                             185,381                 153,735
    Taxes payable                                                                                                   896,466                 694,219
    Investor deposit payable                                                                                              -                  49,985
    Due to shareholder                                                                                               26,219                  26,415
                                                                                                                     ------                  ------
    Total Current Liabilities                                                                                     5,604,273               6,309,959
                                                                                                                  ---------               ---------

    Stockholders' Equity:
    Common stock, $0.001 par value, 100,000,000                                                                      52,357                  50,979
    authorized, 52,134,830 and  50,978,580 issued and
    outstanding at March 31, 2012 and December 31,
    2011, respectively
    Additional paid-in capital                                                                                    6,590,901               5,942,339
    Statutory reserves                                                                                            2,025,737               2,025,737
    Retained earnings                                                                                            20,816,671              17,138,113
    Accumulated other comprehensive income                                                                        2,552,313               2,836,049
                                                                                                                  ---------               ---------
    Total Stockholders' Equity                                                                                   32,037,979              27,993,217
                                                                                                                 ----------              ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                  $37,642,252             $34,303,176
                                                                                                                ===========             ===========

About Asia Carbon Industries, Inc.

Asia Carbon Industries Inc. is an emerging, China-based producer of a series of high quality carbon black products under the brand name “Great Double Star.” The Company was established in 2003 in Shanxi, China’s highest coal producing province. Asia Carbon is one of the top ten carbon black producers in the province and has established relationships with a high-profile customer base. The Company went public in 2010 through a registration statement on Form S-1 which was declared effective by the SEC on October 26, 2010, and is currently in the process of expanding its manufacturing capacity to meet the anticipated demand.

This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.

Forward-looking statements:

The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as “anticipate,” “appear,” “believe,” “could,” “estimate,” “expect,” “hope,” “indicate,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “project,” “seek,” “should,” “will,” “would,” and other variations or negative expressions of these terms, including statements related to expected market trends and the Company’s performance, are all “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

Company contact:
Michael Segal, Director
Asia Carbon Industries, Inc.
Phone +1-646-623-6999

SOURCE Asia Carbon Industries, Inc.


Source: PR Newswire