NEW YORK, Aug. 16, 2013 /PRNewswire/ -- China Industrial
Steel, Inc. (the "Company") today announced its earnings for the
three months ended June 30, 2013. The
Company filed its Form 10-Q with the Securities and Exchange
Commission on August 14, 2013.
Liu Shenghong, Chief Executive Officer and Chairman of the
Company commented on the Company's performance, "The Company's
continued revenue growth is a reflection of a solid growth plan and
strong customer relationships. Our renovated manufacturing facility
not only provides us with the additional capacity to satisfy
customer demand, higher production levels also strengthen our
ability to negotiate preferable raw material prices. These actions
have helped us remain profitable despite the market pressure on
selling prices, and we anticipate they will have a positive impact
on our financial performance once pricing returns to normal
levels."
Highlights of 2013 Second Quarter Financials
- Revenues increased 24% to $181
million in the three months ended June 30, 2013 from $146
million for the same period in 2012.
- Steel products tonnage sales up 45% for the quarter ended
June 30, 2013, to 368,311 metric tons
as compared to 253,490 metric tons in the same period of 2012.
- Net Income decreased 42%, to $1.07
million for the three months ended June 30, 2013, as compared to $1.85 million for the prior year.
Total revenue in the three months ended June 30, 2013 were $180,726,434, an increase of $35,154,065, or 24% compared to $145,572,369 in the second quarter of 2012. The
Company sold 368,311 metric tons steel products in the three months
ended June 30, 2013, an increase of
114,821 metric tons, or 45%, compared to 253,490 metric tons in the
same period of 2012. The average unit sales price was $481 per ton, a decrease of $84, or 15%, compared to $565 per ton in the same period of 2012.
The increase in revenue was reflects the increase in the sale of
steel wires which resulted from the Company's new 600,000 ton steel
wire production line which commenced production in January
2013. The Company sold 165,843 metric tons of steel wires, an
increase of 94,907 metric tons, or 134%, in the three months ended
June 30, 2013, compared to 70,936 in
the comparable period of 2012. This was partially offset by the
decrease in revenue generated from the sale of steel plate, which
was primarily the result of the decline in the average unit sales
price for steel plate. The Company sold 202,468 tons of steel
plates in the three months ended June 30,
2013, an increase of 19,914 tons, or 11%, compared to
182,554 tons in the comparable period of 2012. However, the average
unit sales price of steel plates decreased $68 per ton, or 12% to $487 per ton in the three months ended
June 30, 2013 from $555 per ton in the same period of 2012. The
decrease in unit sales price offset the increase in sales
quantities and caused a decrease in revenue generated from steel
plates. Revenue from steel plates was $98,527,863 in 2013, a decrease of $2,768,307, or 3% compared to $101,296,170 in 2012.
Net income for the three months ended June 30, 2013 was $1,068,480 a decrease of $780,037, or 42%, compared to $1,848,517 in the comparable period of 2012. This
decline was primarily the result of an unparalleled decrease in
unit selling price of steel products (15%) and unit purchase price
of raw material (14%).
|
CHINA INDUSTRIAL
STEEL INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (IN US DOLLARS)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
June 30
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash
|
|
$
1,930,922
|
|
$
1,710,887
|
|
Bank notes
receivable
|
|
488,820
|
|
979,111
|
|
Accounts receivables,
net
|
|
11,474,804
|
|
9,639,396
|
|
Accounts receivables
- related parties
|
|
3,713,328
|
|
-
|
|
Inventories,
net
|
|
13,710,929
|
|
11,585,277
|
|
Advances to
suppliers, net
|
|
707,617
|
|
2,372,693
|
|
VAT
recoverable
|
|
31,135,223
|
|
32,208,807
|
|
Advances to related
parties
|
|
104,422,760
|
|
183,797,203
|
|
Deferred income tax
asset
|
|
162,586
|
|
-
|
|
Other current
asset
|
|
1,727,164
|
|
3,884,342
|
|
Total Current
Assets
|
|
169,474,153
|
|
246,177,716
|
|
|
|
|
|
|
|
Machinery and
Equipment, Net
|
|
115,652,383
|
|
101,450,993
|
|
Machinery and
Equipment - acquired from related parties, Net
|
|
80,013,616
|
|
85,471,360
|
|
Total Machinery and
Equipment, Net
|
|
195,665,999
|
|
186,922,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
|
Restricted
cash
|
|
5,865,840
|
|
5,778,360
|
|
Land use rights and
buildings under capital leases
|
|
4,713,910
|
|
4,985,732
|
|
Total Other
Assets
|
|
10,579,750
|
|
10,764,092
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$375,719,902
|
|
$443,864,161
|
|
|
|
|
|
|
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LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
57,094,085
|
|
$
92,228,161
|
|
Accounts payable -
related parties
|
|
3,118,514
|
|
1,833,558
|
|
Accrued
liabilities
|
|
2,570,736
|
|
3,123,315
|
|
Taxes
payables
|
|
395,571
|
|
2,427
|
|
Bank loans
payable
|
|
24,049,944
|
|
26,034,722
|
|
Bank notes
payable
|
|
5,377,020
|
|
5,296,830
|
|
Equipment loan
payable - related parties - current
|
|
2,928,595
|
|
2,884,919
|
|
Current obligations
under capital leases - related parties - current
|
|
683,615
|
|
648,893
|
|
Short term loan
payable - related party
|
|
814,700
|
|
802,550
|
|
Customer
financing
|
|
702,108
|
|
31,620,470
|
|
Advances from
customers
|
|
70,711,357
|
|
77,275,327
|
|
Total Current
Liabilities
|
|
168,446,245
|
|
241,751,172
|
|
|
|
|
|
|
|
Long Term
Liabilities:
|
|
|
|
|
|
Equipment loan
payables - related parties - non current
|
|
1,104,423
|
|
1,087,952
|
|
Obligation under
capital leases - related parties - non current
|
|
5,401,012
|
|
5,669,438
|
|
Total Long Term
Liabilities
|
|
6,505,435
|
|
6,757,390
|
|
|
|
|
|
|
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TOTAL
LIABILITIES
|
|
174,951,680
|
|
248,508,562
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Series A Convertible
Preferred Stock, $0.0001 par value, 10,000,000
shares authorized, none issued and outstanding
|
|
-
|
|
-
|
|
Blank Check Preferred
Stock, $0.0001 par value, 10,000,000 shares
authorized, none issued and outstanding
|
|
-
|
|
-
|
|
Common stock, $0.0001
par value, 980,000,000 authorized,
73,620,391 and 73,620,391 issued and outstanding at June 30,
2013
and December 31, 2012, respectively
|
|
7,362
|
|
7,362
|
|
Paid-in
capital
|
|
16,417,235
|
|
16,417,235
|
|
Statutory
reserves
|
|
6,530,869
|
|
6,530,869
|
|
Retained
earnings
|
|
158,546,826
|
|
156,124,507
|
|
Accumulated other
comprehensive income
|
|
19,265,930
|
|
16,275,626
|
|
Total Stockholders'
Equity
|
|
200,768,222
|
|
195,355,599
|
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$375,719,902
|
|
$443,864,161
|
|
|
|
|
|
|
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The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements.
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F - 1
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CHINA INDUSTRIAL
STEEL INC. AND SUBSIDIARIES
|
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN US
DOLLARS)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
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|
|
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Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
2013
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|
2012
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2013
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|
2012
|
|
Revenues
|
|
|
|
|
|
|
|
|
Sales to
customers
|
$
169,642,962
|
|
$
141,355,618
|
|
$
347,814,352
|
|
$
312,794,486
|
|
Sales to related
parties
|
11,083,472
|
|
4,216,751
|
|
21,275,779
|
|
9,806,531
|
|
Total Revenues
|
180,726,434
|
|
145,572,369
|
|
369,090,131
|
|
322,601,017
|
|
|
|
|
|
|
|
|
|
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Cost of
Revenue
|
|
|
|
|
|
|
|
|
Cost of Revenue -
non-related parties
|
39,004,381
|
|
75,016,983
|
|
114,014,750
|
|
124,906,457
|
|
Cost of Revenue -
related parties
|
138,115,315
|
|
66,098,486
|
|
246,594,107
|
|
184,413,577
|
|
Total
Cost of Revenue
|
177,119,696
|
|
141,115,469
|
|
360,608,857
|
|
309,320,034
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
3,606,738
|
|
4,456,900
|
|
8,481,274
|
|
13,280,983
|
|
|
|
|
|
|
|
|
|
|
Selling and General
and Administrative Expenses
|
|
|
|
|
|
|
|
|
Selling and General
and Administrative Expenses - non-related parties
|
662,236
|
|
295,977
|
|
1,631,937
|
|
1,361,056
|
|
Selling and General
and Administrative Expenses - related parties
|
253,851
|
|
705,826
|
|
514,525
|
|
882,909
|
|
Total Selling and
General and Administrative Expenses
|
916,087
|
|
1,001,803
|
|
2,146,462
|
|
2,243,965
|
|
|
|
|
|
|
|
|
|
|
Income From
Operations
|
2,690,651
|
|
3,455,097
|
|
6,334,812
|
|
11,037,018
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expenses)
|
|
|
|
|
|
|
|
|
Interest
income
|
49,890
|
|
2,120
|
|
53,673
|
|
54,609
|
|
Interest
expense
|
(1,096,661)
|
|
(921,177)
|
|
(2,486,743)
|
|
(1,866,085)
|
|
Interest expense -
related parties
|
(171,772)
|
|
(323,521)
|
|
(341,630)
|
|
(1,286,589)
|
|
Total Other Income
(Expenses)
|
(1,218,543)
|
|
(1,242,578)
|
|
(2,774,700)
|
|
(3,098,065)
|
|
|
|
|
|
|
|
|
|
|
Income from operation
before income tax
|
1,472,108
|
|
2,212,519
|
|
3,560,112
|
|
7,938,953
|
|
Provision for income
tax
|
403,628
|
|
364,002
|
|
1,137,793
|
|
1,384,392
|
|
Net Income
|
1,068,480
|
|
1,848,517
|
|
2,422,319
|
|
6,554,561
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share -
Basic and Diluted
|
$
0.01
|
|
$
0.03
|
|
$
0.03
|
|
$
0.09
|
|
Weighted Average
Shares Outstanding - Basic and Diluted
|
73,620,391
|
|
73,595,428
|
|
73,620,391
|
|
73,568,597
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income:
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain
|
2,376,889
|
|
(1,678,398)
|
|
2,990,304
|
|
(1,798,452)
|
|
Comprehensive
Income
|
$
3,445,369
|
|
$
170,119
|
|
$
5,412,623
|
|
$
4,756,109
|
|
|
The accompanying
notes are an integral part of these unaudited condensed
consolidated financial statements.
|
|
F - 2
|
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.
Contact:
China Industrial Steel, Inc.
Delong Zhou - Chief Financial Officer
Phone +1-917-825-2997
SOURCE China Industrial Steel, Inc.