TAIYUAN, Shanxi, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- Puda Coal, Inc. (OTC Bulletin Board: PUDC) ("Puda Coal" or the "Company"), a supplier of China's high grade metallurgical coking coal used to make coke for the purposes of steel manufacturing, today announced its financial results for the first quarter of 2008.
First Quarter 2008 Highlights
-- Net revenue was a record $50.6 million, up 35.2% from the same period
in 2007
-- Operating income totaled $6.2 million, down 1.4% from the first quarter
of 2007
-- Net income increased 11.6% year over year to $4.3 million, or $0.04 per
share on a fully diluted basis
-- Adjusted net income rose 12.8% to $4.1 million, or $0.04 per diluted
share
-- Sales of cleaned coal totaled 576,000 metric tons (MT), up 23.3% from
the first quarter of 2007
-- Average selling price of cleaned coal was approximately $88 and $87 per
MT (after adjusting for exchange rate differences) for the three months
ended March 31, 2008 and 2007, respectively.
-- Interest expenses was $201,000, down 58.9% from the first quarter of
2007
-- Debt financing costs decreased 33.1% over year to $513,000
-- Derivative unrealized fair value gain was $364,000, down 58.1% from the
first quarter of 2007
-- The Company's registration statement on Form S-1 in connection with a
private placement of convertible promissory notes and warrants was
declared effective by the U.S. Securities and Exchange Commission
("SEC")
"In the first quarter of 2008, we achieved record revenue due to increased sales to new and existing customers. While the first quarter is typically a seasonal slower quarter due to the Chinese New Year holidays, we saw tonnage sales increase more than 23%, as demand for our high-grade cleaned coking coal remained strong," commented Mr. Ming Zhao, Chairman and Chief Executive Officer of Puda Coal.
Results for the First Quarter 2008
For the quarter ended March 31, 2008, net revenue was $50.6 million, up 35.2% from $37.4 million in the first quarter of 2007. Sales of cleaned coal were 576,000 MT in the first quarter of 2008, up 23.3% from 467,000 MT in the same period last year. The increase in the tonnage sales of cleaned coal accounted for approximately 23.0% of the total 35.2% increase in net revenue and the remaining 12% was attributable to exchange rate differences and the slight increase in selling price. The increase in tonnage sales was primarily due to increased sales to existing and new customers as a result of the increase in the general demand for high-grade coking coal in China.
Gross profit for the quarter was $7.5 million, unchanged from the first quarter of 2007. Gross margin was 14.7% in the quarter, down from 20.1% in the same period last year. The decrease was mainly due to an increase in the average price of raw coal during the first quarter of 2008.
Operating expenses for the first quarter of 2008 were $1.2 million, up 3.1% from the same period last year. Selling expenses declined primarily due to lower shipping charges from decreased tonnage sales to customers outside Shanxi Province during the quarter. General and administrative expenses increased mainly due to an increase in legal and professional fees and investor relation expenses. As a percentage of net revenue, operating expenses were 2.4% in the first quarter of 2008, improved from 3.2% in the same quarter last year, due to the benefits of scale.
Operating income was $6.2 million, or 12.3% of net revenue, down slightly from $6.3 million, or 16.9% of net revenue, in the first quarter of 2007.
Net income was $4.3 million, or $0.04 per share on a fully diluted basis, compared to net income of $3.8 million, or $0.04 per share on a fully diluted basis, in the first quarter of 2007. Adjusting net income to exclude non-cash debt financing and other expenses related to the Company's convertible debt and warrants, adjusted net income was $4.1 million, or $0.04 per share on a fully diluted basis, in the first quarter of 2008, up 12.8% from adjusted net income of $3.6 million, or $0.03 per share on a fully diluted basis, in the same period of 2007.
Financial Condition
As of March 31, 2008, Puda Coal had $32.3 million in cash and cash equivalents, $49.9 million in working capital and a current ratio 3.25:1. Long-term debt, excluding current portion, was $12.9 million and shareholders' equity stood at $55.1 million.
The Company generated $15.3 million cash from operating activities for the three months ended March 31, 2008, compared with $2.4 million for the first quarter of 2007. The material increase in cash flow from operating activities was primarily due to the reduction of about $8.6 million in inventory, of which $5.6 million was raw materials inventory.
Business Outlook
"We began 2008 with record revenue and increasing profitability, and we plan to build on this momentum in the coming months. We believe that the Chinese economy will continue driving demand for high-grade coking coal, and expect continued growth in our top line," said Mr. Zhao. "We continue our search for a coal mine acquisition candidate, which will allow us to vertically integrate our coal washing operations and improve our profitability over the long term."
Conference Call
The Company will host a conference call at 9:00 a.m. EDT on Friday, May 16, 2008, to discuss results for the first quarter 2008. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 481-7939. International callers should dial (617) 847-8707. The passcode for the call is 37636359. If you are unable to participate in the call at this time, a replay will be available on Friday, May 16 at 11:00 a.m. EDT, through Thursday, May 29 at 12:00 a.m. EDT. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference passcode is 20261744.
Use of Non-GAAP Financial Information
GAAP results for the three month periods ended March 31, 2008 and March 31, 2007 include certain non-cash debt financing and other expenses related to the Company's convertible notes and warrants. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, which is adjusted net income and adjusted earnings per share, excluding the impact of these items in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of adjustments to GAAP results appears below. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the
non-GAAP information provided by other companies.
About Puda Coal, Inc.
Puda Coal, through its subsidiaries in China, supplies premium grade coking coal to the steel making industry for use in making coke. The Company currently possesses 3.5 million metric tons of annual coking coal cleaning capacity in Shanxi Province, China. Shanxi Province provides 20-25% of China's coal output and supplies nearly 50% of China's coke.
Forward-looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these
forward-looking statements. You should not place undue reliance on
forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, our business strategies, such as our plan to acquire coal mines, are subject to, among other things, the risks and uncertainties relating to the market condition beyond our control. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
- FINANCIAL TABLES FOLLOW -
PUDA COAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2008 and 2007
(In thousands of United States dollars, except per share data)
Three months ended March 31,
2008 2007
NET REVENUE $50,598 $37,415
COST OF REVENUE (43,145) (29,910)
GROSS PROFIT 7,453 7,505
OPERATING EXPENSES
Selling expenses 754 842
General and administrative expenses 477 352
TOTAL OPERATING EXPENSES 1,231 1,194
INCOME FROM OPERATIONS 6,222 6,311
INTEREST INCOME 27 25
INTEREST EXPENSE (201) (489)
DEBT FINANCING COSTS (513) (767)
DERIVATIVE UNREALIZED FAIR VALUE GAIN 364 868
INCOME BEFORE INCOME TAXES 5,899 5,948
INCOME TAXES (1,604) (2,101)
NET INCOME 4,295 3,847
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment 2,175 400
COMPREHENSIVE INCOME $6,470 $4,247
NET INCOME 4,295 3,847
LESS: DIVIDENDS
Option holder preference dividend -- (2,717)
Common dividend -- --
UNDISTRIBUTED EARNINGS $4,295 $1,130
PUDA COAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
For the three months ended March 31, 2008 and 2007
(In thousands of United States dollars, except per share data)
Three months ended March 31,
2008 2007
BASIC EARNINGS PER SHARE
- Option holder preference $0.00 $0.04
- Other common holders 0.04 0.00
$0.04 $0.04
DILUTED EARNINGS PER SHARE
- Option holder preference $0.00 $0.04
- Other common holders 0.04 0.00
$0.04 $0.04
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING-BASIC 105,252,176 94,085,190
-DILUTED 113,298,354 109,277,096
PUDA COAL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2008 and December 31, 2007
(In thousands of United States dollars)
March 31, December 31,
2008 2007
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $32,286 $16,381
Restricted cash 233 233
Accounts receivable, net 8,463 8,137
Other receivables
- Related parties 4 4
- Third parties -- 6
Advances to suppliers
- Related parties 742 685
- Third parties 1,644 1,363
Inventories 28,639 35,953
Total current assets 72,011 62,762
PROPERTY, PLANT AND EQUIPMENT, NET 14,617 15,018
INTANGIBLE ASSETS, NET 3,463 3,484
TOTAL ASSETS $90,091 $81,264
CURRENT LIABILITIES
Current portion of long-term debt
- Related party $1,300 $1,300
Accounts payable
- Related parties 223 182
- Third parties 3,406 2,140
Other payables
- Related parties 1,891 1,851
- Third parties 3,438 2,916
Accrued expenses 1,448 1,350
Income taxes payable 1,638 2,223
VAT payable 2,484 1,379
Distribution payable 1,142 1,096
Convertible notes 1,975 1,841
Derivative conversion feature 1,100 1,100
Penalty payable 2,104 1,725
Total current liabilities 22,149 19,103
LONG-TERM LIABILITIES
Long-term debt
- Related party 8,775 9,100
Derivative warrants 4,116 4,480
Total long-term liabilities 12,891 13,580
PUDA COAL, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
March 31, 2008 and December 31, 2007
(In thousands of United States dollars)
March 31, December 31,
2008 2007
(Unaudited)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, authorized 5,000,000 shares,
par value $0.01, issued and outstanding None -- --
Common stock, authorized 150,000,000 shares,
par value $0.001, issued and outstanding
105,252,176 (2007: 105,252,176) 105 105
Paid-in capital 28,304 28,304
Statutory surplus reserve fund 1,366 1,366
Retained earnings 19,102 14,807
Accumulated other comprehensive income 6,174 3,999
Total stockholders' equity 55,051 48,581
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $90,091 $81,264
PUDA COAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2008 and 2007
(In thousands of United States dollars)
Three months ended March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,295 $3,847
Adjustments to reconcile net income to net cash
provided by operating activities
Amortization of land-use rights 21 20
Depreciation 401 245
Allowance for doubtful debts -- 1
Amortization of debt issue costs -- 6
Amortization of discount on convertible notes and
warrants 134 386
Derivative unrealized fair value gain (364) (868)
Discount on converted shares and exercised
warrants -- 232
Stock compensation 12 --
Changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable 13 (409)
Decrease in other receivables 6 2
Increase/(decrease) in advances to suppliers (247) 45
Decrease/(increase) in inventories 8,633 (1,692)
Increase in accounts payable 1,186 366
Increase/(decrease) in accrued expenses 36 (87)
Increase in other payables 427 574
Decrease in income tax payable (664) (403)
Increase/(decrease) in VAT payable 1,026 (212)
Increase in penalty payable 379 375
Net cash provided by operating activities 15,294 2,428
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of warrants -- 120
Repayment of long-term debt (325) (325)
Net cash used in financing activities (325) (205)
Effect of exchange rate changes on cash 936 255
Net increase in cash and cash equivalents 15,905 2,478
Cash and cash equivalents at beginning of period 16,381 24,943
Cash and cash equivalents at end of period $32,286 $27,421
Supplementary cash flow information:
PUDA COAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL DATA
For the Three Months For the Three Months
ended ended
Adjusted Net income March 31, 2008 March 31, 2007
($ in thousands except per
share data)
Net Income (Loss) Diluted EPS Net Diluted Net Diluted
Income EPS Income EPS
Adjusted Amount 4,065 0.04 3,603 0.03
Adjustments
Non cash debt financing
costs (1) 134 0.00 392 0.00
Unrealized derivative
fair value (Gain)/
Loss (2) (364) (0.00) (868) (0.01)
Discount on converted
shares and exercised
warrants(3) -- 0.00 232 0.00
Amount per consolidated
statement of operations 4,295 0.04 3,847 0.04
(1) Non cash debt financing costs for Q1 2008 includes amortization of
debt issue costs of $0, amortization of discount on convertible
notes and warrants of $134,000; Non cash debt financing costs
for Q1 2007 includes amortization of debt issue costs of $6,000,
amortization of discount on convertible notes and warrants of $386,000
(2) Derivative unrealized fair value gain for Q1 2008 was $364,000;
derivative unrealized fair value gain for Q1 2007 was $868,000
(3) Discount on converted shares and exercised warrants for Q1 2008 was
$0; Discount on converted shares and exercised warrants for Q1 2007
was $232,000
For more information, please contact:
Investor Relations Contact:
Crocker Coulson, President
CCG Elite
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgelite.com
Company Contact:
Wenwei Tian, COO and Director of Investor Relations
Puda Coal, Inc
Tel: +86-351-228-1302
Email: awtian@yahoo.com
