TAIYUAN, China, Nov. 13 /PRNewswire-Asia/ -- Puda Coal, Inc. (NYSE Amex: PUDA) ("Puda Coal" or the "Company"), a supplier of high grade metallurgical coking coal used to make coke for steel manufacturing in China, today announced its financial results for the quarter ended September 30, 2009.
Third Quarter 2009 Highlights
-- Net revenue was $56.1 million, down 24.2% from $74.1 million in the
comparable period of 2008 and up 16.9% from $48.0 million in the second
quarter of 2009
-- Gross profit was $5.4 million, down 47.3% from $10.2 million for the
same period of 2008, but up 49.2% from $3.6 million in the second
quarter of 2009
-- Operating income totaled $4.0 million, down 55.1% from $9.0 million in
the third quarter of 2008 and up 51.5% from $2.7 million in second
quarter of 2009
-- Net loss was $0.6 million, or $0.04 per fully diluted share, as
compared to net income of $6.5 million, or $0.43 per diluted share, in
the comparable period of 2008 and $1.7 million in net income, or $0.11
per diluted share, in the second quarter of 2009
-- Excluding the $3.4 million in non-cash expense related to the fair
value loss of derivative securities, adjusted net income was $2.8
million or $0.18 per diluted share down from $6.9 million, or $0.45 per
diluted share in the same period last year, but up 52.4% from $1.8
million, or $0.12 per diluted share, in the second quarter of 2009
-- Sales of cleaned coal totaled 498,000 metric tons (MT), down 17.4% from
603,000 in the comparable period last year and up 13.2% from 440,000 MT
in the second quarter of 2009
-- Average selling price of cleaned coal was $113 per MT, down 8.1%
year-over-year from $123 per MT and up 3.7% from $109 per MT in the
second quarter of 2009 (after adjusting for exchange rate differences)
-- Puda Coal common stock has been listed on NYSE Amex since September 17,
2009
-- Puda Coal received final approval from the Shanxi provincial government
to consolidate 8 coal mines in Pinglu County
"China's 4 trillion RMB economic stimulus package began to drive the demand for steel in the second half of the year. The steel industry, therefore, has been increasing production levels. As a result, we experienced a modest increase in sales orders in the third quarter of 2009, as compared to the second quarter of 2009. We anticipate tonnage sales in the fourth quarter of 2009 will improve from current levels as steel inventories decline and our customers increase order volumes," said Mr. Liping Zhu, President and CEO of Puda Coal. "Since we received final provincial government approval to consolidate 8 coal mines, we have been focused on creating our plan to develop those mines. In addition, we also anticipate receiving approval from the Shanxi government to complete the 18% acquisition of Jianhe Coal in the fourth quarter of 2009."
Third Quarter Results
For the third quarter ended September 30, 2009, net revenue was $56.1 million, down 24.2% from $74.1 million in the third quarter of 2008 but up 16.9% from $48.0 million in the second quarter of 2009. Tonnage sales of cleaned coal were 498,000 MT for the three months ended September 30, 2009, down 17.4% from 603,000 MT for the third quarter of 2008 but up 13.2% from 440,000 MT in the second quarter of 2009. The average selling price was approximately $113, a decrease of 8.1% compared to $123 for the same quarter of 2008, but up 3.7% from $109 per MT in the second quarter of 2009 (after adjusting for exchange rate differences). Gross profit for the quarter was $5.4 million, down 47.3% from $10.2 million for the same period of 2008, but up 49.2% from $3.6 million in the second quarter of 2009. Gross margin was 9.6%, down from 13.8% during the comparable period last year but up from 7.5% in the second quarter of 2009. The year-over-year decrease in gross profit margin was primarily due to higher labor costs and manufacturing overhead, which were due to increases in power, water and materials expenses.
Total operating expenses were $1.3 million, up 11.0% from $1.2 million in the same period last year and up 42.7% from $0.9 million in the second quarter of 2009. The year-over-year increase in operating expenses was the result of higher general and administrative expenses due to an increase in professional expenses relating to internal control compliance, the reincorporation to Delaware and the listing on NYSE Amex, which was partially offset by lower selling expenses associated with lower tonnage sales of cleaned coal. As a percentage of net revenue, operating expenses were 2.4% in the third quarter of 2009, compared to 1.6% in the same quarter last year and 2.0% in the second quarter of 2009.
Operating income was $4.0 million, or 7.2% of revenue in the third quarter of 2009, down 55.1% from $9.0 million, or 12.1% of net revenue, in the third quarter of 2008. Operating income rose 51.5% from $2.7 million, or 5.6% in the second quarter of 2009.
The Company recorded a non-cash expense of $3.4 million related to a loss in fair value of the derivative warrants issued in its November 2005 private placement, as compared to a $0.1 million gain in the comparable period last year and a $0.1 million loss in the second quarter of 2009.
Income tax expense declined $1.2 million to $1.1 million from $2.3 million in the year ago period, primarily due to lower income of Shanxi Coal. Income tax expense in the second quarter of 2009 was $0.7 million.
Net loss was $0.6 million, or $0.04 per diluted share, compared to net income of $6.5 million, or $0.43 per diluted share, in the third quarter of 2008. Net income was $1.7 million, or $0.11 per diluted share, in the second quarter of 2009.
Adjusted net income excluding non-cash gains or losses in the fair value of derivative warrants was $2.8 million, or $0.18 per diluted share, compared to adjusted net income of $6.9 million, or $0.45 per diluted share, for the same period in 2008. Adjusted net income improved 52.4% from $1.8 million, or $0.12 per diluted share, in the second quarter of 2009. Diluted earnings per share were calculated using weighted average shares of 15,387,110, 15,327,393 and 15,370,319 for the quarters ended September 30, 2009, September 30, 2008 and June 30, 2009, respectively, as adjusted for the seven-to-one share conversion.
Nine Months Results
For the nine months ended September 30, 2009, net revenue was $153.8 million, down 13.5% from $177.8 million in the same period of 2008. Gross profit was $12.8 million, or 8.4% of revenue, down 47.2% from $24.3 million, or 13.7% of revenue, in the first nine months of 2008. Operating income was $9.7 million, or 6.3% of revenue, down 52.7% from $20.4 million, or 11.5% of revenue, in the comparable period of 2008. Net income was $3.2 million, or $0.21 per diluted share, compared to net income of $13.7 million, or $0.91 per diluted share, in the first nine months of 2008. Adjusted net income excluding a non-cash expenses related to changes in the fair value of derivative warrants was $6.8 million or $0.44 per diluted share compared to $13.4 million in same period of 2008, or $0.89 per diluted share. Diluted earnings per share were calculated using weighted average shares of 15,386,790 and 15,133,857 for the nine months ended September 30, 2009 and 2008, respectively.
Financial Condition
As of September 30, 2009, Puda Coal held $17.9 million in cash and cash equivalents and $74.5 million in working capital and a current ratio of 6.4 to 1. Long-term debt was $6.8 million, and shareholders' equity totaled $75.6 million.
Net operating cash outflow was $11.4 million for the nine months ended 2009, primarily due to an increase in working capital needs resulting from increased accounts receivable and inventory.
Recent Events
On September 30, 2009, the Shanxi provincial government appointed Puda Coal's subsidiary Shanxi Puda Coal Group Co., Ltd as a consolidator of eight coal mines in Yucheng City, Pinglu County. The Company has commenced the technical geological prospecting process for the targeted coal reserves and the Company will also perform a comprehensive financial analysis of the project and then determine the most efficient plan to develop and construct the targeted consolidated coal mines. The eight mines will be consolidated into five, expanding the total area of the coal mines by 94.5% to 35.6 square kilometers, increasing coal reserves by 232.8% to 163.9 million metric tons and improving coal mine production capacity by 118.2% to 3.6 million metric tons.
Business Outlook
"The Chinese government's stimulus spending continues to support infrastructure and real estate development projects in China, and we expect our tonnage sales to improve in the coming quarters," said Mr. Zhu. "In addition, we have achieved strong progress on our strategic goal to enter the coal mine business. By the end of 2009, we expect to close the acquisition of the 18% interest in Jianhe Coal."
"We recently obtained all the necessary government approvals to consolidate eight coal mines in Yucheng City, Pinglu County. The first phase of the consolidation will be the expansion of two coal mines from current annual capacity of 300,000 metric tons and 150,000 metric tons respectively to the designed 600,000 metric tons and 300,000 metric tons respectively. The overall construction conditions of these target coal mines are relatively good, which will enable their capacities to be expanded without disrupting current mining operations. We plan to complete all of the consolidation activities within three years," concluded by Mr. Zhu.
Upcoming Events
Puda Coal, Inc. will present at the Oppenheimer 4th Annual Industrials Conference on November 18, 2009 and the Brean Murray, Carret & Co. 2009 China Growth Conference on November 20, 2009. Both conferences will be held at the Millennium Broadway Hotel, New York, NY. During the conferences, management will be available for one-on-one meetings.
Conference Call
The Company will host a conference call at 9:00 a.m. ET on Friday, November 13, 2009 to discuss results for the third quarter of 2009. To participate in the live conference call, please dial (888) 419-5570 five to ten minutes prior to the scheduled conference call time. International callers should dial (617) 896-9871. When prompted by the operator, mention conference passcode 459 487 02. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, November 13 at 11:00 a.m. ET. To access the replay, please dial (888) 286-8010. International callers should dial (617) 801-6888. When prompted, enter the conference passcode 699 509 01.
Use of Non-GAAP Financial Information
GAAP results for the three and nine months ended September 30, 2009 and 2008, and for the three months ended June 30, 2009 include non-cash gains and losses related to the change in fair value of the Company's warrants. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of these items in this release, which are non-GAAP net income and non-GAAP diluted earnings per share. 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 in the tables accompanying this press release. 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, supplies premium grade coking coal to the steel making industry in China for use in making coke. The Company currently possesses 3.5 million metric tons of annual coking coal cleaning capacity. Shanxi Province provides 20-25% of China's coal output and supplies nearly 50% of China's coke. For more information, please visit http://www.pudacoalinc.com .
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 management's expectation about tonnage sales as a result of anticipated increase in customer orders, our plan to acquire and consolidate coal mines and to complete the three phases of coal mine consolidation in three years, and the assessment with respect to the production capacity, are subject to, among other things, the risks and uncertainties relating to the market and geological condition, due diligence, negotiation for definitive agreements, etc., which are beyond our control, as well as our management's ability and capacity to execute our coal mine acquisition strategy and manage the coal mine operations. 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.
CONSOLIDATED BALANCE SHEETS
September 30, 2009 and December 31, 2008
(In thousands of United States dollars)
September 30, December 31,
2009 2008
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $17,880 $39,108
Accounts receivable, net 29,791 14,645
Other receivables -- 7
Advances to suppliers
- Related parties 835 879
- Third parties 2,996 5,635
Prepayment 8,790 --
Inventories 27,952 21,589
Total current assets 88,244 81,863
PROPERTY, PLANT AND EQUIPMENT, NET 12,112 13,370
INTANGIBLE ASSETS, NET 3,334 3,399
TOTAL ASSETS $103,690 $98,632
CURRENT LIABILITIES
Current portion of long-term debt
- Related party $1,300 $1,300
Accounts payable 5,432 4,272
Other payables
- Related parties 1,031 1,030
- Third parties 2,462 2,714
Accrued expenses 1,752 1,991
Income taxes payable 1,112 1,319
VAT payable 525 1,726
Distribution payable
- Related party 117 117
Total current liabilities 13,731 14,469
LONG-TERM LIABILITIES
Long-term debt
- Related party 6,825 7,800
Derivative warrants 7,571 4,086
Total long-term liabilities 14,396 11,886
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, authorized 5,000,000
shares, par value $0.01, issued and
outstanding -- --
Common stock, authorized 150,000,000
shares, par value $0.001, issued and
outstanding 15,400,308 (2008: 15,333,680) 15 15
Paid-in capital 31,947 31,647
Statutory surplus reserve fund 1,366 1,366
Retained earnings 34,976 31,752
Accumulated other comprehensive income 7,259 7,497
Total stockholders' equity 75,563 72,277
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $103,690 $98,632
PUDA COAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2009 and 2008
(In thousands of United States dollars, except per share data)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
NET REVENUE $56,106 $74,051 153,817 $177,837
COST OF REVENUE 50,731 63,861 140,969 153,497
GROSS PROFIT 5,375 10,190 12,848 24,340
OPERATING EXPENSES
Selling expenses 655 783 1,765 2,395
General and administrative
expenses 682 422 1,427 1,525
TOTAL OPERATING EXPENSES 1,337 1,205 3,192 3,920
INCOME FROM OPERATIONS 4,038 8,985 9,656 20,420
INTEREST INCOME 16 31 72 84
INTEREST EXPENSE (127) (191) (396) (588)
DEBT FINANCING COSTS -- (118) -- (740)
DERIVATIVE UNREALIZED FAIR
VALUE (LOSS)/GAIN (3,436) 121 (3,549) 341
OTHER EXPENSE -- -- -- (719)
INCOME BEFORE INCOME TAXES 491 8,828 5,783 18,798
INCOME TAXES (1,112) (2,289) (2,559) (5,101)
NET (LOSS)/INCOME (621) 6,539 3,224 13,697
OTHER COMPREHENSIVE INCOME
Foreign currency
translation adjustment (42) 483 (238) 3,943
COMPREHENSIVE (LOSS)/INCOME $(663) $7,022 $2,986 $17,640
EARNINGS PER SHARE
- BASIC $(0.04) $0.43 $0.21 $0.91
- DILUTED $(0.04) $0.43 $0.21 $0.91
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
- BASIC 15,387,110 15,327,393 15,360,301 15,133,857
- DILUTED 15,387,110 15,327,393 15,386,790 15,133,857
PUDA COAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2009 and 2008
(In thousands of United States dollars)
Nine months ended September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,224 $13,697
Adjustments to reconcile net income to net
cash provided by operating activities
Amortization of land-use rights 65 65
Depreciation 1,258 1,244
Allowance for doubtful debts 46 6
Amortization of discount on convertible
notes and warrants -- 361
Derivative unrealized fair value
loss/(gain) 3,549 (341)
Stock compensation 73 29
Changes in operating assets and liabilities:
Increase in accounts receivable (15,187) (1,895)
Decrease in other receivables 7 8
Decrease/(increase) in advances to
suppliers 2,677 (6,081)
(Increase)/decrease in inventories (6,370) 13,088
Increase in accounts payable 1,161 2,107
(Decrease)/increase in accrued expenses (225) 221
Decrease in other payables (248) (562)
Decrease in income tax payable (206) (85)
(Decrease)/increase in VAT payable (1,199) 318
Increase in penalty payable -- 379
Net cash (used in)/provided by operating
activities (11,375) 22,559
CASH FLOWS FROM INVESTING ACTIVITIES:
Prepayment for equity purchase of coal mine (8,782) --
Purchase of property, plant and equipment -- (2)
Net cash used in investing activities (8,782) (2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of note warrants 150 --
Repayment of long-term debt (975) (975)
Net cash used in financing activities (825) (975)
Effect of exchange rate changes on cash (246) 1,466
Net (decease)/increase in cash and cash
equivalents (21,228) 23,048
Cash and cash equivalents at beginning of
period 39,108 16,381
Cash and cash equivalents at end of period $17,880 $39,429
Supplementary cash flow information
PUDA COAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS AND DILUTED EPS
Three months ended
September 30,
US$ - thousands, except per share 2009 2008
Net (Loss)/ Income (621) 6,539
- Adjustment for non-cash--derivative
unrealized fair value(loss)/gain for
warrants issued 3,436 (121)
Adjusted net income excluding non-cash
gain/(loss) 2,815 6,418
Per Diluted Share
- Net (Loss)/Income Per Share $(0.04) $0.43
- Non-cash adjustment per share $0.22 $(0.01)
- Adjusted net income per share $0.18 $0.42
Weighted average shares outstanding - '000
- diluted 15,387 15,327
Three months ended
September 30, June 30,
US$ - thousands, except per share 2009 2009
Net (Loss)/ Income (621) 1,729
- Adjustment for non-cash--derivative
unrealized fair value(loss)/gain for
warrants issued 3,436 121
Adjusted net income excluding non-cash
gain/(loss) 2,815 1,850
Per Diluted Share
- Net (Loss)/Income Per Share $(0.04) $0.11
- Non-cash adjustment per share $0.22 $0.01
- Adjusted net income per share $0.18 $0.12
Weighted average shares outstanding - '000
- diluted 15,387 15,370
Nine months ended
September 30, September 30,
US$ - thousands, except per share 2009 2008
Net Income 3,224 13,697
- Adjustment for non-cash--derivative
unrealized fair value(loss)/gain for
warrants issued 3,549 (341)
Adjusted net income excluding non-cash
gain/(loss) 6,773 13,356
Per Diluted Share
- Net Income Per Share $0.21 $0.91
- Non-cash adjustment per share $0.23 $(0.02)
- Adjusted net income per share $0.44 $0.89
Weighted average shares outstanding - '000
- diluted 15,386 15,133
For more information, please contact:
Investor Relations Contact:
Crocker Coulson, President
CCG Investor Relations
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
Elaine Ketchmere, Partner
VP Financial Writing
CCG Investor Relations
Tel: +1-310-954-1345
Email: elaine.ketchmere@ccgir.com
Web: http://www.ccgirasia.com
Company Contact:
Laby Wu, Chief Financial Officer
Director of Investor Relations
Puda Coal, Inc.
Tel: +86-10-6439-2405
Email: labywu@gmail.com
Web: http://www.pudacoalinc.com
