BEIJING, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- General Steel Holdings, Inc. ("General Steel") (“The Company”) (Amex: GSI), one of China’s leading non-state owned steel products producer; today announced its results for the third quarter which ended September 30, 2007.
Financial Highlights
-- Revenue increased 636% to $345.4 million
-- Net Income increased to $8.0 million, or $0.25 in EPS
-- YTD Revenues reached $504 million, Net Income of $10.4 million and
$0.33 in EPS
Achievements
-- Approved for listing on American Stock Exchange
-- Received tax rate reduction for Longmen Joint Venture
-- Longmen Joint Venture acquired controlling interest in two companies
“As the first full quarter of reporting for all three of our subsidiaries, we are indeed happy to deliver to our shareholders record revenue and profit results. This is a strong confirmation to us that our aggregation strategy in the China steel industry is yielding significant fruit” state Henry Yu, CEO and Chairman of General Steel. He further commented, “We were also pleased this quarter to receive qualification approval from the National Development Reform Commission (NDRC) for the “Go West” special tax treatment lowering our effective tax rate at the Longmen Joint Venture from 33% to 15%. A capstone event of the quarter was our approval to list on the American Stock Exchange. All-in-all, we are very pleased to offer our shareholders the results of this quarter.”
Third Quarter Financial Results
Note: This is the first full quarter of reporting for the Longmen Joint Venture and the Baotou Steel Pipe Joint Venture.
Net sales for the third quarter of 2007 increased 636% to $345.4 million compared to $47.0 million for the same quarter in 2006. The Company produced and shipped 814,456 tons in aggregate, representing a 641% increase compared to 109,912 tons during the third quarter of 2006. Cost of sales for the three months ended September 30, 2007 increased 604% to $319.5 million compared to $45.4 for the same period in 2006.
Quarterly gross profit for the third quarter of 2007 was $25.9 million, an increase of approximately 1566% or $24.3 million from $1.6 million for the same period last year. Gross margins increased to 7.5% from 3.3% for the third quarter of 2007 and 2006 respectively. Selling, general and administrative expenses were $6.8 million for the three months ended September 30, 2007, compared to $0.61 million for the same period of 2006. Net income for the 2007 third quarter increased significantly to $8.0 million, representing earnings per share of $.25, from $0.18 million in net income, or $.01 per share during the third quarter of 2006.
Nine Month Financial Results
Net sales increased approximately 420% to $504.2 million for nine months ended September 30, 2007, as compared to $97 million for the same period last year. Gross profit for the nine months ended September 30, 2007 was approximately $35.7 million, an increase of 692% or $31.2 million from $4.5 million for the same period last year. Gross profit margin increased to 7.1 percent from 4.7 percent for the nine months ended September 30, 2007 and 2006. Operating income for the nine months ended September 30, 2007 was $25.4 million, increased more than ten-fold from the $2.3 million reported in the same period of 2006. Net income was $10.4 million for the nine months that ended September 30, 2007, compared with $0.52 million in the same period last year, an increase of $9.9 million, or approximately 1899%. This equated to earnings of $.33 per share compared to $.02 per share for the first nine months of 2006.
"We have reached a true inflection point in our business, which is the culmination of hard work, prudent planning and solid execution on behalf of our entire organization. “The underlying growth dynamics and fundamentals in the steel industry provide further confirmation that our business model, of finding solid cash constrained steel companies with strong management, is not only sustainable, but scalable. We have confidence in our ability to deliver significant growth on a go forward basis as we identify and capitalize on these accretive transactions and continue to derive the economic benefits of full integration on our completed joint ventures,” Mr. Yu concluded.
Conference Call
Management will host a conference call to discuss its third quarter 2007 financial results at 9:00 a.m. EST on Thursday, November 15, 2007. To access the conference call, dial 800-860-2442, pass code for ALL callers: General Steel Earnings Call. This call is being webcast by MultiVu a PR Newswire Company and can be accessed by clicking on this link http://www.videonewswire.com/event.asp?id=43996 .
About General Steel Holdings, Inc.
General Steel Holdings, Inc., headquartered in Beijing, operates a diverse portfolio of Chinese steel companies. With 3 million tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including reinforced bar (rebar), hot-rolled carbon and silicon sheet and spiral-weld pipe. The Company has steel operations in Shaanxi province (central China), Inner Mongolia autonomous region (northwest China) and Tianjin municipality (northeast China).
Information Regarding Forward-Looking Statements
Certain statements in this news release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which will be made are based on management’s current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company’s Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
ASSETS
September 30, December 31,
2007 2006
(Unaudited)
CURRENT ASSETS:
Cash $6,781,439 $6,831,549
Restricted cash 10,073,014 4,231,523
Accounts receivable, net of
allowance for doubtful accounts of
$142,694 and $137,132 as of September
30, 2006 and December 31, 2006,
respectively 18,522,393 17,095,718
Accounts receivable - related
parties 12,436,638 --
Notes receivable 14,816,424 537,946
Other receivables 2,246,237 268,784
Other receivables - related parties 1,334,000 850,400
Inventories 74,116,266 12,489,290
Advances on inventory purchases 60,350,015 2,318,344
Advances on inventory purchases -
related parties 24,662,603 --
Prepaid expenses - current 470,166 46,152
Total current assets 225,809,195 44,669,706
PLANT AND EQUIPMENT, net 207,347,239 26,606,594
OTHER ASSETS:
Advances on equipment purchases 211,431 --
Prepaid expenses - non current 846,755 740,868
Intangible assets - land use right,
net of accumulated amortization 21,324,413 1,804,440
Total other assets 22,382,599 2,545,308
Total assets $455,539,033 $73,821,608
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $96,096,557 $3,001,775
Accounts payable - related parties 725,131 --
Short term loans - bank 76,267,448 30,284,686
Short term loans - others 37,151,900 --
Short term loans - related parties 19,376,350 --
Short term notes payable 41,247,280 8,153,520
Other payables 6,650,517 355,142
Other payable - related parties 15,461,042 --
Accrued liabilities 7,936,729 1,064,012
Customer deposits 50,909,808 1,093,602
Deposits due to sales
representatives 1,795,297 2,051,200
Taxes payable 16,760,169 5,391,602
Investment payable 6,403,200 --
Distribution payable to minority
shareholder 2,744,676 --
Shares subject to mandatory
redemption -- 2,179,779
Total current liabilities 379,526,104 53,575,318
MINORITY INTEREST 36,582,894 6,185,797
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value,
50,000,000 shares authorized,
3,092,899 and 0 shares
issued and outstanding as of
September 30, 2007 and December
31, 2006, respectively 3,093 --
Common Stock, $0.001 par value,
200,000,000 shares authorized,
34,564,665 and 32,426,665
shares (including 1,176,665
redeemable shares) issued
and outstanding as of
September 30, 2007 and
December 31, 2006, respectively 34,565 31,250
Paid-in-capital 22,857,207 6,871,358
Retained earnings 13,154,645 4,974,187
Statutory reserves 1,107,010 1,107,010
Accumulated other comprehensive
income 2,273,515 1,076,688
Total shareholders’ equity 39,430,035 14,060,493
Total liabilities and
shareholders’ equity $455,539,033 $73,821,608
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
(Unaudited)
Three months ended
September 30,
2007 2006
REVENUES $345,384,337 $46,957,797
COST OF SALES 319,494,586 45,404,450
GROSS PROFIT 25,889,751 1,553,347
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 6,795,307 605,801
INCOME FROM OPERATIONS 19,094,444 947,546
OTHER EXPENSE, NET 2,916,768 623,105
INCOME BEFORE PROVISION FOR INCOME
TAXES 16,177,676 324,441
AND MINORITY INTEREST
PROVISION FOR INCOME TAXES 2,025,389 --
NET INCOME BEFORE MINORITY INTEREST 14,152,287 324,441
LESS MINORITY INTEREST 6,151,792 144,644
NET INCOME 8,000,495 179,797
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustments 374,568 222,417
COMPREHENSIVE INCOME $8,375,063 $402,214
WEIGHTED AVERAGE NUMBER OF SHARES 32,343,332 31,250,000
EARNING PER SHARE, BASIC AND DILUTED $0.25 $0.01
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
(Unaudited)
Nine months ended
September 30,
2007 2006
REVENUES $504,247,052 $96,998,657
COST OF SALES 468,510,928 92,486,613
GROSS PROFIT 35,736,124 4,512,044
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 10,269,918 2,155,612
INCOME FROM OPERATIONS 25,466,206 2,356,432
OTHER EXPENSE, NET 4,378,586 1,370,798
INCOME BEFORE PROVISION FOR INCOME
TAXES 21,087,620 985,634
AND MINORITY INTEREST
PROVISION FOR INCOME TAXES 3,359,271 --
NET INCOME BEFORE MINORITY INTEREST 17,728,349 985,634
LESS MINORITY INTEREST 7,359,688 466,834
NET INCOME 10,368,661 518,800
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustments 1,196,827 405,053
COMPREHENSIVE INCOME $11,565,488 $923,853
WEIGHTED AVERAGE NUMBER OF SHARES 31,704,912 31,250,000
EARNING PER SHARE, BASIC AND DILUTED $0.33 $0.02
For more information, please contact:
Ross Warner
General Steel Holdings, Inc.
Tel: +86-10-5879-7346 (Beijing)
Email: ross@gshi-steel.com
Skype: ross.warner.generalsteel
Matthew Hayden
HC International, Inc.
Tel +1-858-704-5065
Email: matt@haydenir.com
Web: http://hcinternational.net
