Sales Revenue for the Third Quarter Increased by 80%
BEIJING, Nov. 20 /Xinhua-PRNewswire-FirstCall/ -- General Steel Holdings,
Inc. (OTC Bulletin Board: GSHO), a leading manufacturer of high quality hot-
rolled steel sheets primarily for use in tractors, agricultural vehicles and
other specialty vehicles, today announced results for the third quarter ended
September 30, 2006.
For the third quarter of 2006, revenue was $46.9 million, compared to $26
million for the third quarter of 2005. Gross profit for the third quarter of
2006 was $1.55 million, a decrease of 58.5% or $1.09 million, from gross
profit of $2.6 million for the same period last year. Gross profit margin
decreased to 3.3% from 10.1% for the third quarter 2005. The decrease in
gross profit margin is attributable to the decline in average selling price.
Since April 2005, the price of steel products has decreased globally due to
the overall increase in steel supply.
The Company reported comprehensive income of $402,214, or $0.01 per
share, for the quarter ended September 30, 2006, compared to comprehensive
income of $1,157,070, or $0.04 per share, for the same quarter last year.
As of September 30, 2006, the Company had cash of $4.0 million.
Zuosheng Yu, Chairman and President of General Steel said, "Steel prices
worldwide were at historic highs in 2005. In 2006, we have seen some market
correction in pricing which has placed pressure on our margins. We expect
that prices will level off and then begin to rise in the fourth quarter. Our
four new production lines are in full production and the market continues to
show strong demand for our products. We had a 100% increase in goods shipped
third quarter over second quarter -- from 54,740 tons to 109,912 tons. We
feel we are well positioned to take advantage of conditions in the fourth
quarter. Additionally, as the domestic market continues to consolidate from
its fragmented base, we remain ever vigilant to capitalize on newly emerging
opportunities.”
About General Steel Holdings, Inc.
General Steel Holdings, Inc. through its subsidiary, Tianjin Da Qiu
Zhuang Sheet Metal Co., Ltd., is a leading manufacturer of high quality hot-
rolled steel sheets used in the construction of small agricultural and
specialty vehicles. Since 1988, it has expanded its operations to ten
production lines capable of processing 400,000 tons of 0.7-2.0 mm hot-rolled
carbon steel sheets per year. It is now the largest producer in its product
category in China. For more information, visit http://www.gshi-steel.com .
Information Regarding Forward-Looking Statements
Except for historical information contained herein, the statements in
this Press Release are forward-looking statements that are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements involve known and unknown risks and
uncertainties, which may cause our actual results in future periods to differ
materially from forecasted results. These risks and uncertainties include,
among other things, product demand, market competition, and risks inherent in
our operations. These and other risks are described in our filings with the
Securities and Exchange Commission.
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED)
Three months ended Nine months ended
September 30 September 30
2006 2005 2006 2005
REVENUES $46,957,797 $26,032,015 $96,998,657 $72,021,091
COST OF SALES 45,404,450 23,379,706 92,486,613 63,656,562
GROSS PROFIT 1,553,347 2,652,309 4,512,044 8,364,529
SELLING,
GENERAL AND
ADMINISTRATIVE
EXPENSES 605,801 523,063 2,155,612 1,763,706
INCOME FROM
OPERATIONS 947,546 2,129,246 2,356,432 6,600,823
OTHER
EXPENSE, NET (623,105) (447,943) (1,370,798) (1,308,339)
INCOME
BEFORE PROVISION
FOR INCOME TAXES
AND MINORITY
INTEREST 324,441 1,681,303 985,634 5,292,484
PROVISION FOR
INCOME TAXES -- 548,972 -- 1,815,968
NET INCOME BEFORE
MINORITY INTEREST 324,441 1,132,331 985,634 3,476,516
LESS MINORITY
INTEREST 144,644 350,118 466,834 1,121,834
NET INCOME 179,797 782,213 518,800 2,354,682
OTHER COMPREHENSIVE
INCOME:
Foreign currency
translation
adjustment 222,417 374,857 405,053 374,857
COMPREHENSIVE
INCOME $402,214 $1,157,070 $923,853 $2,729,539
WEIGHTED AVERAGE
NUMBER OF SHARES 31,250,000 31,250,000 31,250,000 31,250,000
EARNING PER
SHARE, BASIC
AND DILUTED $ 0.01 $ 0.04 $ 0.02 $ 0.09
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
September December
30, 31,
2006 2005
(Unaudited) (Restated)
ASSETS
CURRENT ASSETS:
Cash $4,009,089 $8,648,373
Restricted cash 2,874,199 2,735,583
Accounts receivable, net of allowance
for doubtful accounts of $1,403
and $1,371 as of September 30, 2006
and December 31, 2005, respectively 11,071,790 993,417
Notes receivable 1,126,406 4,960
Note receivable - related party 280,480 2,976,000
Other receivables 119,644 109,769
Other receivables - related parties 850,400 --
Inventories 15,698,156 10,730,941
Advances on inventory purchases 7,155,375 10,716,293
Short-term investment -- 37,200
Prepaid expenses - current 66,003 64,647
Total current assets 43,251,542 37,017,183
PLANT AND EQUIPMENT, net 22,914,574 18,213,872
OTHER ASSETS:
Advance on equipment purchases -- 1,053,169
Prepaid Expenses - non current 771,161 669,460
Intangible assets - land use right,
net of accumulated amortization 1,857,014 2,039,532
Total other assets 2,628,175 3,762,161
Total assets $68,794,291 $58,993,216
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $664,699 $823,760
Short term loans - bank 31,548,720 27,118,800
Short term notes payable 5,519,760 5,406,400
Other payables 534,217 69,667
Other payable - related party -- 980,000
Accrued liabilities 1,768,695 916,957
Customer deposits 1,369,060 1,276,536
Deposits due to sales representatives 1,833,168 1,261,080
Taxes payable 4,363,420 1,682,330
Total current liabilities 47,601,739 39,535,530
SHARES SUBJECT TO MANDATORY REDEMPTION 2,065,053 1,720,875
Total liabilities 49,666,792 41,256,405
MINORITY INTEREST 5,853,861 5,387,026
SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 par value,
75,000,000 shares authorized,
32,426,665 shares issued and
outstanding 31,250 31,250
Paid-in-capital 6,871,358 6,871,358
Retained earnings 4,726,036 4,207,236
Statutory reserves 840,753 840,753
Accumulated other comprehensive
income 804,241 399,188
Total shareholders’ equity 13,273,638 12,349,785
Total liabilities and
shareholders’ equity $68,794,291 $58,993,216
