omniture

China Industrial Steel, Inc. Reports First Quarter Financial Results

2013-05-16 21:45 1821

NEW YORK, May 16, 2013 /PRNewswire/ -- China Industrial Steel, Inc. (the "Company") today announced its earnings for the three months ended March 31, 2013. The Company, whose shares trade in the U.S. OTC market under the stock symbol "CDNN", filed its Form 10-Q with the Securities and Exchange Commission on May 15, 2013.

Commenting on the results, Liu Shenghong, Chief Executive Officer and Chairman of the Company stated, "I am pleased to report China Industrial Steel's financial results for the first quarter of 2013. Company revenues were up as a result of the rebound in China's demand for steel, and we remain profitable despite the industry wide decline in selling prices resulting from inventory stockpiles over the past year."

Chairman Liu went on to say, "Demand for our steel plate and wire increased during the quarter reflecting China's continued economic growth and the government's investment in infrastructure projects, such as roads, railways and bridges. We anticipate market prices will return to prior levels as steel manufacturers work through their backlog to supply these large scale projects and the forecast growth in other steel dependent industries, including the automotive and construction sectors."

Financial Discussion

China Industrial Steel reported revenue of $188,363,697 for the three months ended March 31, 2013 an increase of $11,335,049, or 6% compared to $177,028,648 in the same period of 2012. The increase in sales was mainly due to the increase in sales of steel plates and steel wires, offset by the decrease in sales of steel billets and the decrease in unit sales price in the three months ended March 31, 2013. The average unit sales price was $501 per ton, a decrease of $70, or 12%, compared to $571 per ton in the comparable period of 2012.

Revenue from steel plates was $94,496,510 in the three months ended March 31, 2013, an increase of $30,199,775, or 47% compared to $64,296,735 in the three months ended March 31, 2012. The increase in the sales of steel plates resulted from the rebound of steel market in the first quarter of 2013 which was somewhat offset by a decline in the selling price as compared to the same period in 2012.

In January of this year the Company commenced production on a new 600,000 ton steel wire production line. In the three months ended March 31, 2013, revenue from steel wires was $90,938,130, an increase of $27,991,309, or 44%, compared to $62,946,821 for the first three months of 2012. The Company did not sell any steel billet during the first quarter of 2013 and the sale of byproducts remained relatively flat as compared to the same period in 2012.

The following table illustrates the breakdown of the Company's revenue for the year ended March 31, 2013 and 2012.



2013


2012

Products


Revenue


Quantity

(Ton)


Revenue


Quantity

(Ton)

Steel plates


$

94,496,510



190,230


$

64,296,735



113,822

Steel wires



90,938,130



185,788



62,946,821



110,635

Steel billets



-



-



47,067,680



85,602

Byproducts



2,929,057



-



2,717,412



-

Products Total


$

188,363,697



376,018


$

177,028,648



310,059

The Company reported net income of $1,353,839 in the three months ended March 31, 2013, a decrease of $3,352,205, or 71%, compared to the net income of $4,706,044 for the same period of 2012. The decrease in net income is primarily the result of the decrease in steel product prices (12%) being sharper than the decrease in the prices of raw materials (10%).

CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (IN US DOLLARS)

(UNAUDITED)












March 31,


December 31,




2013


2012

ASSETS







Current Assets:








Cash


$

2,622,083


$

1,710,887


Bank notes receivable



1,835,514



979,111


Accounts receivables, net



15,758,620



9,639,396


Inventories, net



18,767,325



11,585,277


Advances to suppliers, net



479,990



2,372,693


VAT recoverable



31,222,127



32,208,807


Advances to related parties



138,465,397



183,797,203


Other current assets



5,597,242



3,884,342


Total Current Assets



214,748,298



246,177,716









Machinery and Equipment, Net



101,873,890



101,450,993

Machinery and Equipment - acquired from related parties, Net



82,772,390



85,471,360


Total Machinery and Equipment, Net



184,646,280



186,922,353

















Other Assets:








Restricted cash



5,796,360



5,778,360


Land use rights and buildings under capital leases



4,829,669



4,985,732


Total Other Assets



10,626,029



10,764,092









TOTAL ASSETS


$

410,020,607


$

443,864,161









LIABILITIES AND STOCKHOLDERS' EQUITY







Current Liabilities:








Accounts payable


$

64,811,203


$

92,228,161


Accounts payable - related parties



2,536,796



1,833,558


Accrued liabilities



3,209,088



3,123,315


Taxes payables



872,968



2,427


Bank loans payable



27,661,518



26,034,722


Bank notes payable



5,313,330



5,296,830


Equipment loan payable - related parties - current



2,893,906



2,884,919


Current obligations under capital leases - related parties - current



663,216



648,893


Short term loan payable - related party



805,050



802,550


Customer financing



31,718,970



31,620,470


Advances from customers



65,608,300



77,275,327


Total Current Liabilities



206,094,345



241,751,172









Long Term Liabilities:








Equipment loan payables - related parties - non current



1,091,341



1,087,952


Obligation under capital leases - related parties - non current



5,512,068



5,669,438


Total Long Term Liabilities



6,603,409



6,757,390









TOTAL LIABILITIES



212,697,754



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 March 31,
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



157,478,346



156,124,507


Accumulated other comprehensive income



16,889,041



16,275,626


Total Stockholders' Equity



197,322,853



195,355,599

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

410,020,607


$

443,864,161

CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES

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

(UNAUDITED)










Three Months Ended March 31,



2013


2012

Revenues







Sales to customers

$

178,171,390


$

172,444,448


Sales to related parties


10,192,307



4,584,200


Total Revenues


188,363,697



177,028,648








Cost of Revenue







Cost of Revenue - non-related parties


75,010,369



49,889,474


Cost of Revenue - related parties


108,478,792



118,315,091


Total Cost of Revenue


183,489,161



168,204,565








Gross Profit


4,874,536



8,824,083








Selling and General and Administrative Expenses







Selling and General and Administrative Expenses - non-related parties


969,701



1,065,079


Selling and General and Administrative Expenses - related parties


260,674



177,083


Total Selling and General and Administrative Expenses


1,230,375



1,242,162








Income From Operations


3,644,161



7,581,921








Other Income (Expenses)







Interest income


3,783



52,489


Interest expense


(1,390,082)



(944,908)


Interest expense - related parties


(169,858)



(963,068)


Total Other Income (Expenses)


(1,556,157)



(1,855,487)








Income from operation before income tax


2,088,004



5,726,434

Provision for income tax


734,165



1,020,390

Net Income


1,353,839



4,706,044









Earnings Per Share - Basic and Diluted

$

0.02


$

0.06


Weighted Average Shares Outstanding - Basic and Diluted


73,620,391



73,542,058








Other Comprehensive Income:







Foreign currency translation gain


613,415



(120,054)

Comprehensive Income

$

1,967,254


$

4,585,990

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.

Company contact:

Delong Zhou, CFO
China Industrial Steel, Inc.
Phone: (917) 825-2997
Email: ir@chinaindustrialsteel.com

Frank Pena - Director
Phone: (732) 292-0322

Source: China Industrial Steel, Inc.
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