ZHENGZHOU, China, April, 30, 2014 /PRNewswire-FirstCall/ -- China Gerui Advanced Materials Group Limited (NASDAQ: CHOP) ("China Gerui," or the "Company"), a leading high- precision, cold-rolled steel producer in China, today announced audited financial results for the twelve months ended December 31, 2013.
As of December 31, 2013, an adjustment under ASC 840-40-25-3c was made to the financial statements to account for machinery and equipment that were subject to a sale-leaseback financing transaction with a net carrying amount of approximately $23.9 million. An impairment loss of $2.7 million was recognized at the transaction date. The one-time, non-cash adjustment impacts the cost of goods sold and is also reflected under impairment of fixed assets in the statement of cash flows, which was not classified in the earnings release that was filed on March 20, 2014. A description of the adjustment can be found in notes 8 and 12 to the audited financial statements for the year ended December 31, 2013, which were included in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission today and is available at the Company's website: www.geruigroup.com.
Use of Non-GAAP Financial Measures
This release includes the use of non-GAAP EBITDA, which are financial measures that are not defined by U.S. generally accepted accounting principles, or U.S. GAAP. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in the statement of income, balance sheet, or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, the Company has included with this press release a table which includes a reconciliation of non-GAAP EBITDA to the most directly comparable respective U.S. GAAP financial measures. Non-GAAP EBITDA is defined in this earnings release as earnings before interest, taxes, depreciation, and amortization that were incurred in the fiscal year ended December 31, 2013. The Company's management believes that the presentation of these non-GAAP financial measures provides useful information regarding the Company's results of operations because it assists in analyzing and benchmarking the performance and value of the Company's business. The Company's calculation of non-GAAP EBITDA may not be consistent with similarly titled measures of other companies.
About China Gerui Advanced Materials Group Limited
China Gerui Advanced Materials Group Limited is a leading niche and high value-added steel processing company in China. The Company produces high-end, high-precision, ultra-thin, high- strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, they are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The Company sells its products to domestic Chinese customers in a diverse range of industries, including the food and industrial packaging, construction and household decorations materials, electrical appliances, and telecommunications wires and cables. For more information, please visit http://www.geruigroup.com.
Safe Harbor Statement
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 20-F for the year ended December 31, 2013 and otherwise in our SEC reports and filings. Such reports are available upon request from the Company, or from the SEC, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
Company Contact: | Investor Relations Contacts: | |
Email: investors@geruigroup.com | Vivian Chen | Kevin Theiss |
Website: www.geruigroup.com | Managing Director | Account Director |
Grayling | Grayling | |
Phone: 646-284-9427 | Phone: 646-284-9409 | |
Email: vivian.chen@grayling.com | Email: kevin.theiss@grayling.com |
- Financial Tables Follow -
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(IN US DOLLARS) | |||||||||
December 31, 2013 | December 31, 2012 | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash | $ 237,060,422 | $ 228,861,009 | |||||||
Certificates of deposit | 24,200,075 | 16,372,128 | |||||||
Restricted cash | 114,803,746 | 145,413,726 | |||||||
Accounts receivable, net | 2,693,510 | 2,276,153 | |||||||
Notes receivable | 446,008 | 433,379 | |||||||
Inventories | 17,496,675 | 22,762,545 | |||||||
Prepaid purchases | 52,772,830 | 76,268,597 | |||||||
Prepaid expenses | 1,465,287 | 382,569 | |||||||
Other receivables, net | 3,123,914 | 2,270,073 | |||||||
Total current assets | 454,062,467 | 495,040,179 | |||||||
Non-current assets | |||||||||
Property, plant and equipment, net | 132,974,737 | 134,110,657 | |||||||
Land use right, net | 30,997,489 | 13,625,738 | |||||||
Deposit on acquisition of future land use right | - | 24,076,660 | |||||||
Deposit on acquisition of property, plant and equipment | 2,184,217 | 266,312 | |||||||
Other receivable | 6,339,434 | 3,039,835 | |||||||
Certificates of deposit | - | 3,210,221 | |||||||
Total non-current assets | 172,495,877 | 178,329,423 | |||||||
Total assets | $ 626,558,344 | $ 673,369,602 | |||||||
Liabilities and stockholders' equity | |||||||||
Liabilities | |||||||||
Current Liabilities | |||||||||
Accounts payable | $ 8,471,560 | $ 2,279,246 | |||||||
Notes payable | 225,812,313 | 259,546,395 | |||||||
Term loans | 50,299,816 | 57,462,962 | |||||||
Financing obligation, sale-leaseback, current portion | 6,813,055 | - | |||||||
Land use right payable | 1,460,671 | 1,419,314 | |||||||
Income tax payable | 336,829 | 5,140,306 | |||||||
Customers deposits | 14,411,044 | 11,635,999 | |||||||
Accrued liabilities and other payables | 6,799,128 | 5,818,060 | |||||||
Total current liabilities | 314,404,416 | 343,302,282 | |||||||
Non-current liabilities | |||||||||
Financing obligation, sale-leaseback, net of current portion | 13,025,260 | - | |||||||
Total non-current liabilities | 13,025,260 | - | |||||||
Total liabilities | 327,429,676 | 343,302,282 | |||||||
Commitments and Contingencies | |||||||||
Stockholders' equity | |||||||||
Common stock, | |||||||||
Common stock, 100,000,000 shares authorized with no par value; | |||||||||
59,823,730 shares issued, | |||||||||
59,522,910 and 59,561,899 shares outstanding as of | |||||||||
December 31, 2013 and December 31, 2012, respectively | 140,418,118 | 140,418,118 | |||||||
Additional paid-in capital | - | 4,978,698 | |||||||
Treasury stock, at cost, 300,820 and 261,831 shares, | |||||||||
as of December 31, 2013 and December 31, 2012, respectively | (498,799) | (414,063) | |||||||
Retained earnings | 127,963,861 | 163,276,046 | |||||||
Accumulated comprehensive income | 31,245,488 | 21,808,521 | |||||||
Total stockholders' equity | 299,128,668 | 330,067,320 | |||||||
Total liabilities and stockholders' equity | $ 626,558,344 | $ 673,369,602 | |||||||
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(IN US DOLLARS)
| |||||||||||||
For the Three Months Ended | For the Years Ended
| ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
Revenue | $ 46,211,805 | $ 63,889,524 | $ 165,829,096 | $ 265,486,082 | |||||||||
Cost of revenue | (51,624,916) | (57,037,147) | (161,765,763) | (208,541,058) | |||||||||
Gross Profit | (5,413,111) | 6,852,377 | 4,063,333 | 56,945,024 | |||||||||
Operating expenses: | |||||||||||||
General and administrative expenses | (3,757,658) | (5,738,929) | (11,311,200) | (13,168,132) | |||||||||
Selling and marketing expenses | (427,942) | (457,768) | (1,682,443) | (1,446,383) | |||||||||
Total operating expenses | (4,185,600) | (6,196,697) | (12,993,643) | (14,614,515) | |||||||||
Operating (loss)/income | (9,598,711) | 655,680 | (8,930,310) | 42,330,509 | |||||||||
Other income and (expense): | |||||||||||||
Interest income | 1,168,191 | 1,092,002 | 4,619,617 | 3,576,741 | |||||||||
Interest expenses | (1,187,391) | (2,063,684) | (10,617,866) | (8,228,472) | |||||||||
Sundry income | 794,168 | 146,525 | 932,689 | 351,483 | |||||||||
(Loss)/Income before income taxes | (8,823,743) | (169,477) | (13,995,870) | 38,030,261 | |||||||||
Income tax expense | (469) | (364,906) | (141,547) | (11,897,173) | |||||||||
Net (loss)/income | $ (8,824,212) | $ (534,383) | $ (14,137,417) | $ 26,133,088 | |||||||||
(Net loss)/Earnings per share | |||||||||||||
- Basic | $ (0.15) | $ (0.01) | $ (0.24) | $ 0.45 | |||||||||
- Diluted | $ (0.15) | $ (0.01) | $ (0.24) | $ 0.45 | |||||||||
Weighted average common shares outstanding | |||||||||||||
- Basic | 59,522,910 | 59,769,786 | 59,540,872 | 58,543,076 | |||||||||
- Diluted | 59,522,910 | 59,769,786 | 59,540,872 | 58,543,076 | |||||||||
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(IN US DOLLARS) | ||||||||
For the Years Ended December 31, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss)/income | $ (14,137,417) | $ 26,133,088 | ||||||
Adjustments to reconcile net (loss)/income to net | ||||||||
cash from operating activities: | ||||||||
Depreciation of property, plant and equipment | 11,524,981 | 10,899,049 | ||||||
Impairment of fixed asset | 2,713,537 | - | ||||||
Gain on disposal of property, plant and equipment | - | (56,107) | ||||||
Amortization of land use right | 741,816 | 330,244 | ||||||
Stock-based compensation | 32,891 | 3,705,109 | ||||||
Bad debts | 695,244 | - | ||||||
Writedown of inventories | 1,416,661 | 476,266 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (573,816) | 4,126,206 | ||||||
Notes receivable, net | - | 139,228 | ||||||
Inventories | 4,428,013 | 1,453,507 | ||||||
Prepaid expenses | (1,056,729) | 6,435 | ||||||
Prepaid purchases | 25,351,739 | (29,666,016) | ||||||
Other receivable | 778,709 | (142,305) | ||||||
Accounts payable | 6,038,617 | (5,813,580) | ||||||
Income tax payable | (4,741,140) | (369,983) | ||||||
Customers deposit | 2,401,273 | (11,856,194) | ||||||
Accrued liabilities and other payables | 1,921,977 | (1,466,919) | ||||||
Net cash provided by/(used in) operating activities | 37,536,356 | (2,101,972) | ||||||
Cash flows from investing activities: | ||||||||
Cash paid for property, plant and equipment | (10,064,992) | (30,561,916) | ||||||
Proceeds from disposal of property, plant and equipment | - | 59,517 | ||||||
Payment of acquisition of future land use right | (19,214,984) | (11,112,875) | ||||||
Advance to unrelated third parties | (2,521,616) | (4,017,304) | ||||||
Repayment of advance to unrelated third parties | 777,028 | 5,252,326 | ||||||
Repayment of advance to related parties | 311,546 | - | ||||||
Investment in certificates of deposit, net | (3,989,448) | (16,193,047) | ||||||
Net cash used in investing activities | (34,702,466) | (56,573,299) | ||||||
Cash flows from financing activities: | ||||||||
Repayment of term loans | (63,179,835) | (50,484,204) | ||||||
Proceeds from term loans | 54,468,182 | 63,184,632 | ||||||
Repayment of financing obligations, sale-leaseback | (1,612,843) | - | ||||||
Proceeds from sale-leaseback financing | 17,993,226 | - | ||||||
Repayments of notes payable | (578,986,192) | (429,512,621) | ||||||
Proceeds from notes payable | 538,277,535 | 481,505,001 | ||||||
Purchase of treasury stock | (84,736) | (1,554,674) | ||||||
Changes in restricted cash, net | 34,350,716 | (25,788,547) | ||||||
Repayment of advance from unrelated third parties | (1,673,696) | - | ||||||
Advance from unrelated third party | - | 1,587,554 | ||||||
Net cash (used in)/provided by financing activities | (447,643) | 38,937,141 | ||||||
Net increase/(decrease) in cash | 2,386,247 | (19,738,130) | ||||||
Effect on change of exchange rates | 5,813,166 | 1,998,222 | ||||||
Cash as of January 1 | 228,861,009 | 246,600,917 | ||||||
Cash as of December 31 | $ 237,060,422 | $ 228,861,009 | ||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the year for: | ||||||||
Interest paid | $ 10,617,869 | $ 8,322,263 | ||||||
Income tax paid | $ 5,024,234 | $ 12,267,157 | ||||||
Net cash payment during the year for: | ||||||||
Prepaid deposit of land use right as part of the dividend paid to acquire land use right from related company | $ 6,971,373 | $ - | ||||||
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED | |||
RECONCILIATION OF NON-GAAP FINANCIAL DATA (AUDITED) | |||
(IN US DOLLARS) | |||
Non-GAAP EBITDA | |||
For the Year Ended December 31, | |||
2013 | 2012 | ||
Net (Loss) / Income, GAAP amount | $ (14,137,417) | $ 26,133,088 | |
Interest income | (4,619,617) | (3,576,741) | |
Interest expenses | 10,617,866 | 8,228,472 | |
Income tax expense | 141,547 | 11,897,173 | |
Depreciation of property, plant and | 11,524,981 | 10,899,049 | |
Amortization of land use right | 741,816 | 330,244 | |
Impairment of fixed asset | 2,713,537 | - | |
Non-GAAP EBITDA | $ 6,982,713 | $ 53,911,285 | |
Stock based compensation | 32,891 | 3,705,109 | |
Non-GAAP Adjusted EBITDA | $ 7,015,604 | $ 57,616,394 | |
