Quantcast
Last updated on April 16, 2014 at 14:14 EDT

China Industrial Steel, Inc. Reports Financial Results For The Second Quarter 2012

August 20, 2012

NEW YORK, Aug. 20, 2012 /PRNewswire-Asia/ — China Industrial Steel, Inc. (the “Company”) today announced its earnings for the three months ended June 30, 2012. The Company filed its Form 10-Q with the Securities and Exchange Commission on August 14, 2012.

Sales for the three months ended June 30, 2012 were $145,572,369, a decrease of $71,226,932, or 33%, compared to $216,799,301 in the comparable period in 2011. Approximately $13.3 million, or 19% of the decrease was due to a decrease in the average sales price and 81% was due to decrease in the quantity sold offset by the new steel wire products.

Gross profit margin was 3.06% in the three months ended June 30, 2012, a decrease of 3.59 percentage points, compared to 6.65% in the same period of 2011. The decrease in gross profit margin resulted mainly from decreased sales price of steel products.

Net income totaled $1,848,517 in the three months ended June 30, 2012, a decrease of $8,855,692, or 83%, compared to the net income of $10,704,209 in the comparable period of 2011. The decrease of net income was attributable primarily to the decrease in revenue, gross profit margin and an increase in selling, general and administrative expenses.

Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company’s performance, “This has been a challenging year for China’s steel industry, and our Company was not an exception. According to the Association of Chinese Steel Industry, 34% of steel manufacturers are experiencing losses, and while our results are off from last year, I am pleased to report that China Industrial Steel has remained profitable throughout this downturn.”

Mr. Liu went on to say “Although economic recovery has been slower than expected worldwide, we expect that China’s growth will be a significant driver in the turnaround, and we are working to ensure that China Industrial Steel will fully participate in that growth. In addition to shifting our existing production capabilities to the highest margin product mix, we are evaluating financing alternatives to increase our capacity for specialized steel products, the first of which will be a Galvalume production facility. Galvalume is a coated steel product, which is primarily used in the automotive and home appliance industries.”

                                                          CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES
                                                      CONDENSED CONSOLIDATED BALANCE SHEETS (IN US DOLLARS)
                                                                           (UNAUDITED)
                                                                                              June 30,              December 31,
                                                                                                               2012                     2011
    ASSETS
    ------
     Current Assets:
     Cash                                                                                                  $226,961               $1,737,495
     Bank notes receivable                                                                                  698,919                2,342,186
     Accounts receivables, net                                                                           12,115,630               20,862,269
     Inventories, net                                                                                    13,803,390               16,139,936
     Advances to suppliers                                                                                2,151,348                3,215,680
     VAT tax recoverable                                                                                 22,624,414               21,612,482
     Advances to related parties                                                                        118,087,616               77,416,285
                                                                                                        -----------               ----------
         Total Current Assets                                                                           169,708,278              143,326,333
                                                                                                        -----------              -----------

     Machinery and Equipment, Net                                                                        82,659,717               84,410,398
     Machinery and Equipment -acquired from related parties, Net                                         95,921,717               98,514,249
                                                                                                         ----------               ----------
    Total Machinery and Equipment, Net                                                                  178,581,434              182,924,647
                                                                                                        -----------              -----------

     Other Assets:
     Restricted cash                                                                                      7,240,860                5,402,600
     Land use rights and buildings under capital leases                                                   5,224,956                5,613,105
                                                                                                          ---------                ---------
         Total Other Assets                                                                              12,465,816               11,015,705
                                                                                                         ----------               ----------
     TOTAL ASSETS                                                                                      $359,290,886             $337,266,685
                                                                                                       ============             ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
     Accounts payable                                                                                    90,138,703               23,095,827
     Accounts payable - related parties                                                                     426,409                  184,447
     Accrued liabilities                                                                                  2,384,275                2,622,224
     Taxes payables                                                                                         536,212                1,868,886
     Bank loans payable                                                                                  26,114,319               34,640,200
     Bank notes payable                                                                                   5,981,580                3,019,100
     Equipment loan payable - related parties                                                             3,896,141               11,562,752
     Current obligations under capital leases - related parties                                             614,009                  597,258
     Short term loan payable - related party                                                                787,050                1,747,900
     Advances from customers                                                                             30,338,502               13,257,487
                                                                                                         ----------               ----------
         Total Current Liabilities                                                                      161,217,200               92,596,081
                                                                                                        -----------               ----------

     Long Term Liabilities:
     Equipment loan payables - related parties                                                                    -               51,093,694
     Obligation under capital leases - related parties                                                    5,878,122                6,254,954
                                                                                                          ---------                ---------
         Total Long Term Liabilities                                                                      5,878,122               57,348,648
                                                                                                          ---------               ----------
     TOTAL LIABILITIES                                                                                  167,095,322              149,944,729
                                                                                                        -----------              -----------

    Stockholders' Equity:
    Common stock, $0.0001 par value, 980,000,000 authorized,
     73,542,058                                                                                               7,362                    7,354
    issued and outstanding
     Paid-in capital                                                                                     16,417,235               16,299,744
     Statutory reserves                                                                                   6,530,869                6,530,869
     Retained earnings                                                                                  156,744,078              150,189,517
     Accumulated other comprehensive income                                                              12,496,020               14,294,472
                                                                                                         ----------               ----------
    Total Stockholders' Equity                                                                          192,195,564              187,321,956
                                                                                                        -----------              -----------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                         $359,290,886             $337,266,685
                                                                                                       ============             ============

                      CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                           (IN US DOLLARS)
                                             (UNAUDITED)

                                                 ---
                                                        Three Months Ended June 30,      Six Months Ended June 30,
                                                               2012            2011          2012            2011
                                                               ----            ----          ----            ----
    Revenues
    Sales to customers                                 $141,355,618    $195,513,869  $312,794,486    $383,038,685
    Sales to related
     parties                                              4,216,751      21,285,432     9,806,531      21,285,432
                                                          ---------      ----------     ---------      ----------
        Total Revenues                                  145,572,369     216,799,301   322,601,017     404,324,117
                                                        -----------     -----------   -----------     -----------
    Cost of Revenue
    Cost of Revenue -
     non-related parties                                 75,016,983      26,715,484   124,906,457      48,852,768
    Cost of Revenue -
     related parties                                     66,098,486     175,674,549   184,413,577     330,635,538
                                                         ----------     -----------   -----------     -----------
      Total Cost of Revenue                             141,115,469     202,390,033   309,320,034     379,488,306
                                                        -----------     -----------   -----------     -----------
    Gross Profit                                          4,456,900      14,409,268    13,280,983      24,835,811
                                                          ---------      ----------    ----------      ----------

    Selling and General and Administrative Expenses
    SG&A Expenses - non-
     related parties                                        295,977         412,040     1,361,056         859,287
    SG&A Expenses -
     related parties                                        705,826         216,799       882,909         403,449
                                                            -------         -------       -------         -------
    Total SG&A Expenses                                   1,001,803         628,839     2,243,965       1,262,736
                                                          ---------         -------     ---------       ---------
    Income From Operations                                3,455,097      13,780,429    11,037,018      23,573,075
                                                          ---------      ----------    ----------      ----------
    Other Income (Expenses)
    Interest income                                           2,120           8,328        54,609           8,543
    Interest expense -
     bank and private
     borrowings                                            (921,177)       (124,846)   (1,866,085)       (574,596)
    Interest expense -
     related parties                                       (323,521)     (1,133,459)   (1,286,589)     (2,198,775)
                                                           --------      ----------    ----------      ----------
        Total Other Income
         (Expenses)                                      (1,242,578)     (1,249,977)   (3,098,065)     (2,764,828)
                                                         ----------      ----------    ----------      ----------

    Income from operation
     before income tax                                    2,212,519      12,530,452     7,938,953      20,808,247
    Provision for income
     tax                                                    364,002       1,826,243     1,384,392       2,971,264
                                                            -------       ---------     ---------       ---------
    Net Income                                           $1,848,517     $10,704,209    $6,554,561     $17,836,983
                                                         ----------     -----------    ----------     -----------
    Earnings Per Share -
     Basic and Diluted                                        $0.03           $0.15         $0.09           $0.24
                                                              =====           =====         =====           =====
    Weighted Average
     Shares Outstanding                                  73,595,428      73,542,058    73,568,597      73,159,247
    Other Comprehensive Income:
    Foreign currency
     translation (loss)
     gain                                                (1,678,398)      1,931,889    (1,798,452)      3,013,380
                                                         ----------       ---------    ----------       ---------
    Comprehensive Income                                    170,119      12,636,098     4,756,109      20,850,363
                                                            =======      ==========     =========      ==========

About China Industrial Steel, Inc.

China Industrial Steel, Inc., (“CIS” or the “Company”) through its wholly owned subsidiary, Handan Hongri Metallurgy Co., Ltd., produces and sells steel plate and steel bar for domestic and export customers. The Company currently operates three production lines from its headquarters on approximately 1,000 acres in Handan City in the Hebei Province, China, where steel production is a significant component of the regional economy.

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.

China Industrial Steel, Inc.

Contacts:

Frank Pena – Director
(732) 292-0322

Delong Zhou – Chief Financial Officer
Phone +1-917-825-2997

SOURCE China Industrial Steel, Inc.


Source: PR Newswire