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