China Gengsheng Minerals, Inc. Reports Unaudited Financial Results for the Third Quarter of 2009
GONGYI,
Minerals, Inc. (OTC Bulletin Board: CHGS) (“Gengsheng” or the “Company”), a
leading manufacturer in
high temperature, saving energy and boosting productivity, today reported its
unaudited financial results for the third quarter ended
Third Quarter 2009 Highlights:
-- Sales revenue grew 16.0% to $14.9 million from the same period in 2008
-- Net income attributable to Company's stockholders grew 39.5% to $1.67
million from the same period 2008
-- Diluted EPS was $0.07 vs. $0.05 in 3Q08
-- Cash on hand was $1.9 million at September 30, 2009
“Our third quarter results benefited from solid sales growth in fracture
proppants,” said Mr. Shunqing Zhang, Chairman, President and CEO of Gengsheng.
“Our fracture proppant sales made a new record sale of
third quarter, thanks to strong domestic demand. In addition, we continued to
bring new refractory products into trial use for our steel customers, with
eyes on entering whole new market segments that show significant growth
potential. Lastly, we maintained our cost control, slashing operating expenses
by 5% from last year, which contributed to our net profit outgrowing the
top-line in the last quarter.”
Mr. Zhang continued, “Going forward, we keep a positive outlook on demand
from the steel and oil sectors in
in the macro economy. And we are pleased that our new products, the fine
precision abrasives, have already been currently in trial use by intentional
customers. We look forward to receiving orders for our abrasives from these
potential customers.”
Third Quarter 2009 Results
For the third quarter of 2009, sales revenue was
increase of 16.0% from the same period of 2008. China Gengsheng is organized
into four business segments: Monolithic refractory, Industrial ceramics,
Fracture proppant and Fine precision abrasives. The revenue increase this
quarter came mainly from the increased demand of the company’s fracture
proppant products, which contributed 17.6% of sales in 3Q09 compared to 7.5%
in 3Q08. Proppant sales growth was 174.2% year-over-year, and 74.6%
quarter-over-quarter. Monolithic refractory products contributed 81.6% of
sales in 3Q09 compared to 90.5% in 3Q08. Industrial ceramics contributed 0.7%
of sales in 3Q09 compared to 2.1% in 3Q08.
Cost of sales for the quarter increased 21.7% to
million
material prices.
Gross profit was
2008. Gross margin was 28.3%, compared with 31.7% in the same period of 2008.
The decrease in gross margin was mainly due to the increase in raw material
prices and the gross margin decrease from the Company’s refractory segment.
Selling expenses in the third quarter of 2009 were
the same period of 2008. As a percentage of revenues, the Company’s selling
expenses decreased to 9.8% for the three months period ended
2009
selling expenses as a percentage of revenues was primarily because of the
reduction in market development expenses for fracture proppants as the Company
gained scale in selling the new proppant products. General and administrative
expenses (“G&A”) were
Operating expenses declined 5.0% to
In the third quarter of 2009, income before income taxes and
non-controlling interest was approximately
period ended
the same period in 2008. The increase was primarily attributable to an
increase in sales and other income. The Company recognized income of
million
grant income of
Net income attributable to the Company’s stockholders was
increase of 40.0% from the same period of 2008. Net income margin for the
quarter was 11.2% compared to 9.3% in the third quarter of 2008.
Diluted EPS was
Nine Months 2009 Results
For the first nine months of 2009, sales revenue was
increase of 13.2% from the same period of 2008. Monolithic refractory products
contributed 82.3% of sales in the first nine months of 2009, vs. 88.5% in the
same period of 2008. Industrial ceramics contributed 1.9% of sales, vs. 3.3%
in the same period of 2008. Fracture proppants contributed 15.8% of sales, vs.
8.3% in the same period of 2008.
Cost of sales for the first nine months increased 23.5% to
from
increase in raw material prices.
Gross profit was
2008. Gross margin was 30.0%, compared with 35.5% in the same period of 2008.
Selling expenses were
period of 2008. General and administrative expenses were
increase of 11% from the same period of 2008. As a percentage of total sales,
operating expenses were 18.5%, compared with 20.3% in the same period of 2008.
Net income attributable to the Company’s stockholders was
slightly decrease of 0.7% from the same period of 2008. Diluted EPS was
vs.
As of
of
shareholders’ equity increased to
basis as of
Recent Developments
On
industrial material technology with the invention of a new type of castable.
The new castable product, called Si-Enhanced Anti-Creep High-Aluminum Castable
(
raw materials such as bauxite so that the finished product has the
characteristic of much lower probability of creep, which is a gradual change
of shape under stress during high-temperature industrial processes, for
heating furnaces at steel mills and other industrial plants.
On
refractory product for its steel company customers to cut energy costs and
increase efficiency during steel-making. The Company held a teach-in on the
new, high-performance, thermo-insulating and light castables at
largest steel and iron conglomerate, Shanghai Baosteel, where the Company’s
CEO, Vice President of Product Development and technology adviser shared
product specifications and testing results with Shanghai Baosteel’s directors
of the procurement department, the technology department and various other
managers and in-house experts.
On
2.3 million
development and commercialization of the Company’s new product line, the fine
precision abrasives.
On
government-supported R&D center, housed on the premise of the Company’s
subsidiary, Henan Gengsheng Refractories Co., Ltd., in Gongyi City,
Province
mineral-based industrial materials. The new center, named Henan Monolithic
Refractory Materials Technology Research Center, is one of the 64 key
industrial engineering and technology centers designated by the Henan
Provincial Government this year. The government is expected to provide grants
and low-interest loans for the said institutes to develop new products and key
innovations.
Targeting the high-growth fine precision abrasives market, the Company
announced in July that its new production line to process fine abrasives was
complete and in trial production. Fine precision abrasives are for producing a
super-fine, super-consistent finish applicable in a broader range of areas
including machine manufacturing, electronics, optical glass, architecture,
semiconductors, silicon chips, plastics and lenses. The facilities have an
annual production capacity of 20,000 metric tons, and the initial product
should be delivered in the end of 2009. The Company has also announced its
first abrasives sales contract with a
contract is five years, with 300 to 1,000 tons of the product delivered each
month. Currently, the company has produced standard products, which is being
trialed by intentional customers.
Conference Call
The Company will host a conference call on
may participate in the conference call by dialing +1-877-407-9205 (
America
time.
A replay of the call will be available through
at
+1-877-660-6853 (
entering account number 286 and conference ID number 337318.
About China Gengsheng Minerals, Inc.
China Gengsheng Minerals, Inc. (“Gengsheng”) develops, manufactures and
markets a broad range of high-tech industrial material products, including
monolithic refractories, industrial ceramics and fracture proppants. A market
leader offering customized solutions, Gengsheng sells its products primarily
to the iron-and-steel industry as heat-resistant components for steel-making
furnaces, industrial kilns and other high-temperature vessels to guarantee and
improve the productivity of those expensive pieces of equipment while reducing
their consumption of energy. Founded in 1986 and based in
province, Gengsheng currently has over 200 customers in the iron, steel, oil,
glass, cement, aluminum and chemical businesses located in
countries. Gengsheng conducts business through Gengsheng International
Corporation, a
which are Henan Gengsheng Refractories Co., Ltd., Zhengzhou Duesail Fracture
Proppant Co., Ltd. and Henan Gengsheng High Temperature Materials Co., Ltd.
For more information about the Company, please visit
http://www.gengsheng.com .
Safe Harbor Statement
This press release may contain certain “forward-looking statements”
relating to the business of China Gengsheng Minerals, Inc., and its subsidiary
companies. All statements other than statements of historical fact included
herein are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements regarding the
Company’s ability to meet its projected output for the term of the supply
contract; the general ability of the Company to achieve its commercial
objectives; the business strategy, plans and objectives of the Company and its
subsidiaries; and any other statements of non-historical information. These
forward-looking statements are often identified by the use of forward-looking
terminology such as “believes,” “expects” or similar expressions, involve
known and unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are reasonable,
they do involve assumptions, risks and uncertainties, and these expectations
may prove to be incorrect. Investors should not place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. The Company’s actual results could differ materially from those
anticipated in these forward-looking statements as a result of a variety of
factors, including those discussed in the Company’s periodic reports that are
filed with the Securities and Exchange Commission and available on its website
at http://www.sec.gov . All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
In China:
China Gengsheng Minerals, Inc.
Ms. Wendy Sun
Finance Manager and Investor Relations
Tel: +86-159-3870-8666
Email: gswendy@gengsheng.com
Mr. Shuai Zhang
Investor Relations
Email: gszs@gengsheng.com
In the U.S.:
Grayling
Mr. Valentine Ding
Investor Relations
Tel: +1-646-284-9412
Email: valentine.ding@us.grayling.com
RedChip Companies, Inc.
Mr. Dave Gentry
President
Tel: +1-407-491-4498
Email: dave@redchip.com
China Gengsheng Minerals, Inc.
Condensed Consolidated Balance Sheets
As of September As of December
30, 2009 31, 2008
(Stated in US Dollars) (Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $1,858,655 $955,732
Restricted cash 7,921,800 1,760,400
Trade receivables 35,332,790 30,026,675
Bills receivable 1,515,654 631,560
Other receivables and prepayments 5,611,674 3,608,247
Inventories 12,022,902 12,170,193
Deferred tax assets 31,729 54,869
Total current assets 64,295,204 49,207,676
Deposits for acquisition of property,
plant and equipment 28,062 6,297,205
Deposits for acquisition of land use
right 216,960 --
Goodwill 441,089 441,089
Intangible asset 953,550 953,550
Property, plant and equipment, net 21,299,180 10,654,692
Land use right 940,922 956,916
TOTAL ASSETS $88,174,967 $68,511,128
LIABILITIES AND EQUITY
Current liabilities:
Trade payables $10,645,831 $9,548,854
Bills payable - Note 5 9,975,600 3,520,800
Other payables and accrued expenses 4,856,178 6,010,364
Advances from a director 73,004 2,460,820
Income taxes payable 402,754 349,293
Non-interest-bearing loans 216,750 290,100
Collateralized bank loans 13,789,800 2,640,600
Unsecured interest-bearing loan -- 220,050
Deferred tax liabilities 21,486 21,486
TOTAL LIABILITIES 39,981,403 25,062,367
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value
50,000,000 shares authorized, no
shares issued and outstanding -- --
Common stock - $0.001 par value
100,000,000 shares
authorized,24,038,183 shares issued
and outstanding - Note 12 24,038 24,038
Additional paid-in capital 19,608,044 19,608,044
Statutory and other reserves 7,207,206 7,207,206
Accumulated other comprehensive
income 4,359,162 4,355,605
Retained earnings 16,742,897 12,078,137
Total China Gengsheng Minerals, Inc.
stockholders' equity 47,941,347 43,273,030
NONCONTROLLING INTEREST 252,217 175,731
TOTAL EQUITY 48,193,564 43,448,761
Total liabilities and equity $88,174,967 $68,511,128
China Gengsheng Minerals, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
Nine months ended Three months ended
September 30, September 30,
2009 2008 2009 2008
(Stated in US Dollars) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Sales $41,684,358 $36,816,119 $14,916,423 $12,862,425
Cost of goods sold (29,321,083) (23,735,421) (10,694,531) (8,785,806)
Gross profit 12,363,275 13,080,698 4,221,892 4,076,619
Operating expenses
General and
administrative
expenses 3,323,180 2,982,198 1,086,686 1,172,772
Selling expenses 4,378,227 4,474,375 1,464,701 1,511,888
Total operating
expenses 7,701,407 7,456,573 2,551,387 2,684,660
Net operating income 4,661,868 5,624,125 1,670,505 1,391,959
Other income
(expenses)
Government grant
income 813,838 61,586 44,082 --
Interest income 38,971 9,151 18,762 6,205
Other income 328,598 111,764 266,854 75,998
Finance costs - Note
13 (735,816) (623,983) (293,423) (198,548)
Total other income
(expenses) 445,591 (441,482) 36,275 (116,345)
Income before income
taxes and
noncontrolling
interest 5,107,459 5,182,643 1,706,780 1,275,614
Income taxes - Note 14 (366,214) (474,738) (38,024) (102,919)
Net income 4,741,245 4,707,905 1,668,756 1,172,695
Net income
attributable to
noncontrolling
interest (76,485) (9,416) (1,220) 22,614
Net income
attributable to
Company's
stockholders $4,664,760 $4,698,489 $1,667,536 $1,195,309
Net income $4,741,245 4,707,905 1,668,756 1,172,695
Other comprehensive
income
Foreign currency
translation
adjustment (3,557) 1,975,554 54,020 (103,328)
Comprehensive income $4,737,688 $6,683,459 $1,722,776 $1,069,367
Comprehensive income
attributable to
noncontrolling
interest (76,486) (9,416) (981) 22,614
Comprehensive income
attributable to
Company's
stockholders $4,661,202 $6,674,043 $1,721,795 $1,091,981
Earnings per share-
Basic - Note 15 $0.19 $0.20 $0.07 $0.05
Earnings per share-
Diluted - Note 15 $0.19 $0.19 $0.07 $0.05
Weighted average
number of shares -
Basic 24,038,183 24,038,183 24,038,183 24,038,183
Weighted average
number of shares -
Diluted 24,038,183 24,157,176 24,038,183 24,157,176
China Gengsheng Minerals, Inc.
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30,
2009 2008
(Stated in US Dollars) (Unaudited) (Unaudited)
Cash flows from operating activities
Net income attributable to the
Company's stockholders $4,664,760 $4,698,489
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation 689,917 654,461
Amortization of land use right 15,982 16,282
Deferred taxes 23,123 2,443
Noncontrolling interest 76,486 9,416
Government grant income (813,838) --
Loss on disposal of property plant
and equipment 1,062 --
Write back of unsecured interest-
bearing loan (219,885) --
Changes in operating assets and
liabilities:
Restricted cash (6,156,780) (1,720,440)
Trade receivables (5,302,136) (4,444,439)
Bills receivables (883,432) 5,816,915
Other receivables and prepayments (2,001,926) (1,108,402)
Inventories 147,181 (3,660,509)
Other payables and accrued expenses (1,153,321) 2,705,555
Trade payables 1,096,155 2,371,340
Bills payables 6,449,960 3,440,880
Income tax payable 53,422 (290,439)
Net cash flows (used in) provided by
operating activities (3,313,270) 8,491,552
Cash flows from investing activities
Payments for deposits of acquisition
of land use right (216,798) --
Payments for acquisition of property,
plant and equipment (5,179,541) (4,494,284)
Proceeds from disposal of property,
plant and equipment 116,498 --
Net cash paid to acquire an
subsidiary -- (875,294)
Net cash flows used in investing
activities (5,279,841) (5,369,578)
Cash flows from financing activities
Proceeds from bank loans 14,805,590 --
Repayment of bank loans (3,738,045) (4,917,591)
Repayment to a director (2,386,025) --
Repayment of non-interest-bearing
loans -- (208,802)
Government grant received 813,838 645,165
Net cash flows provided by (used in)
financing activities 9,495,358 (4,481,228)
Effect of foreign currency
translation on cash and cash
equivalents 676 (38,795)
Net increase (decrease) in cash and
cash equivalents 902,923 (1,398,049)
Cash and cash equivalents - beginning
of period 955,732 1,964,390
Cash and cash equivalents - end of
period $1,858,655 $566,341
Supplemental disclosure of cash flow
information:
Cash paid for:
Interest $648,622 $637,130
Income taxes $310,978 $768,911
SOURCE China Gengsheng Minerals, Inc.