-- 4Q08 Revenue Increases 14.5% to US$105.5 Million Compared to 4Q07
-- 4Q08 Net Income increases 9.83% to US$10.04 Million Compared to 4Q07
-- Full Fiscal Year 2008 Revenue increases 61.05% to US$418.03 Million
-- Full Fiscal Year 2008 Net Income increases 51.73% to US$31.14 Million
DONGBANG TOWN, China, Sept. 26 /Xinhua-PRNewswire-FirstCall/ -- Sutor Technology Group Limited (the "Company" or "Sutor") (Nasdaq: SUTR), a leading provider of steel finishing fabrication products in China, today announced its financial results for the fourth quarter and fiscal year ended June 30, 2008.
Fourth Fiscal Quarter 2008 Financial Highlights:
-- Total revenues increased 14.5% over the fourth fiscal quarter of 2007
to US$105.5 million
-- Net income increased 9.83% over the fourth fiscal quarter of 2007 to
US$10.04 million
-- Fully-diluted earnings per common share for the fourth fiscal quarter
2008 was US$0.26, compared to US$0.25 for the fourth fiscal quarter
2007
Ms. Lifang Chen, Chairlady and CEO of Sutor said, "I am pleased to report another strong quarter of growth driven by solid execution of business strategy focusing on vertical integration to provide a total solution for our customers. I look forward to updating our shareholders as we continue our progress."
Fourth Fiscal Quarter 2008 Financial Results:
Revenues. Revenues amounted to US$105.5 million in the fourth fiscal quarter 2008, compared to US$92.15 million revenues for the fourth fiscal quarter 2007, representing an increase of 14.5%.
Gross Profit. Gross profit decreased 11.44% to US$10.31 million for the fourth fiscal quarter 2008 from US$11.64 million in the fourth fiscal quarter 2007. Gross margin was 9.76% in the fourth fiscal quarter 2008, compared to 12.63% in the fourth fiscal quarter 2007. We produced certain products for the use of Sichuan earthquake relief in the fourth fiscal quarter which had a low profit margin.
Income from Operations. Income from operations for the fourth fiscal quarter 2008 was US$11.77 million, representing a 18.5% increase, compared to US$9.93 million in the fourth fiscal quarter 2007. Operating margin for the fourth fiscal quarter 2008 was 11.15%, up from the 10.76% in the fourth fiscal quarter 2007.
Income before Tax and Minority Interests. Our income before tax and minority interests increased by 15.09% from US$8.15 million in the fourth fiscal quarter 2007 to US$9.38 million for the fourth fiscal quarter 2008.
Net Income. Net income increased by 9.83% from US$9.14 million for fourth fiscal quarter 2007 to US$10.04 million for the fourth fiscal quarter 2008.
Full Year 2008 Results:
For the fiscal year ended June 30, 2008, the Company reported revenue of $418.03 million, an increase of 37.76 % compared to the $303.44 million reported for the same period last year. Gross profits for the fiscal year 2008 were $ 44.92 million, or 10.75 % of sales, compared to gross profit of $30.54 million, or 10.06 % of revenue, for the same period last year. Total operating expenses for the fiscal year ended June 30, 2008 were $5.99 million, or 1.43% of revenue, compared to $7.06 million, or 2.33% of revenue, for the same period last year. Net income for the fiscal year ended June 30, 2008 was $ 31.14 million, or $0.82 per fully diluted common share outstanding (based on 37.96 million weighted average shares), an increase of 51.73 % compared to net income of $20.52 million, or $0.59 per common share outstanding (based on 34.60 million weighted average shares) in the same period a year ago.
Financial Condition:
The Company's cash and cash equivalents balances as of June 30, 2008 were $11.81 million, compared to cash equivalents of $8.83million as of June 30, 2007. As of June 30, 2008, the Company had working capital of $76.9 million. Stockholders' equity increased 48.57 % to $132.75 million, compared to $89.35 million as of June 30, 2007.
Functional Currency and Translating Press Release
The functional currency of the Company is the Chinese Yuan Renminbi ("RMB"); however, the accompanying financial information has been expressed in United States Dollars ("USD"). The accompanying consolidated balance sheets have been translated into USD at the exchange rates prevailing at each balance sheet date. The accompanying consolidated statements of operations and cash flows have been translated using the weighted-average exchange rates prevailing during the periods of each statement. Transactions in the Company's equity securities have been recorded at the exchange rate existing at the time of the transaction.
About Sutor Technology Group Limited
Sutor (Nasdaq: SUTR) is one of the leading private manufacturers of steel finishing fabrication products in China. Sutor utilizes a variety of processes and technological methodologies to convert steel manufactured by third parties into steel finishing fabrication products, including hot-dipped galvanized steel, pre-painted galvanized steel, acid-pickled steel, and cold-rolled steel. To learn more about the Company, please visit http://www.sutorcn.com .
Forward-Looking Statements
This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, our future operating results, our expectations regarding the market for our steel finishing fabrication products, our expectations regarding the continued growth of the steel market, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause our actual results to differ materially from those anticipated, expressed or implied in the forward-looking statements. These risks and uncertainties include, but not limited to, the factors mentioned in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended June 30, 2007, and other risks mentioned in our other reports filed with the Securities Exchange Commission, or SEC. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov . The words "believe," "expect," "anticipate," "project," "targets," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.
--FINANCIAL TABLES FOLLOW--
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
2008 2007
ASSETS
Current Assets:
Cash and cash equivalents $11,806,101 $8,832,942
Restricted cash 59,489,508 27,799,475
Trade accounts receivable, net of
allowance for doubtful accounts of
$70,653 and $2,947, respectively 6,268,858 14,768,954
Other receivables 100,271 44,226
Advances to suppliers, related parties 76,118,544 --
Advances to suppliers, net of allowance
of $1,472,828 and $499,842, respectively 28,035,815 32,791,928
Inventory 51,315,521 22,703,304
Notes receivable 130,970 203,546
Deferred taxes 288,976 --
Total Current Assets 233,554,564 107,144,375
Property and Equipment, net of
accumulated depreciation of $12,019,445
and $6,726,756, respectively 59,736,612 47,571,353
Intangible Assets, net of
accumulated amortization of $285,888
and $188,132, respectively 3,238,931 2,988,589
TOTAL ASSETS $296,530,107 $157,704,317
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $6,003,898 $3,916,596
Advances from customers 16,871,618 8,414,629
Other payables and accrued expenses 3,265,860 2,707,473
Short-term notes payable 130,504,380 50,954,916
Short-term notes payable - related
party -- 2,325,802
Total Current Liabilities 156,645,756 68,319,416
Long-Term Notes Payable- Principal
Shareholder 7,099,998 --
Total Liabilities 163,745,754 68,319,416
Minority Interest in Net Assets of
Subsidiary 34,697 32,812
Stockholders' Equity
Undesignated preferred stock -
$0.001 par value; 1,000,000 shares
authorized; no shares outstanding -- --
Common stock - $0.001 par value;
500,000,000 shares authorized;
37,955,602 shares outstanding 37,955 37,955
Additional paid-in capital 37,170,164 37,170,164
Statutory reserves 12,586,995 7,748,269
Retained earnings 65,772,975 39,475,731
Accumulated other comprehensive
income 17,181,567 4,919,970
Total Stockholders' Equity 132,749,656 89,352,089
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $296,530,107 $157,704,317
$ -- $ --
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
For the Years Ended June 30,
2008 2007 2006
Revenue:
Revenue $237,494,371 $147,466,726 $45,941,894
Revenue from related
parties 180,535,469 155,972,011 144,652,445
418,029,840 303,438,737 190,594,339
Cost of Revenue
Other Cost of revenue 266,149,352 115,285,842 57,220,341
Purchases from
related parties 106,960,453 157,615,325 117,436,244
373,109,805 272,901,167 174,656,585
Gross Profit 44,920,035 30,537,570 15,937,754
Operating Expenses:
Selling expense 2,237,957 2,319,728 1,894,452
General and
administrative
expense 3,749,453 4,735,973 1,254,613
Total Operating
Expenses 5,987,410 7,055,701 3,149,065
Income from
Operations 38,932,625 23,481,869 12,788,689
Other Income
(Expense):
Interest income 943,466 566,469 467,443
Other income 188,273 298,488 185,664
Interest expense (6,253,098) (2,258,425) (923,673)
Other expense (756,943) (874,651) (155,497)
Total Other Income
(Expense) (5,878,302) (2,268,119) (426,063)
Income Before Taxes
and Minority Interest 33,054,323 21,213,750 12,362,626
Provision for income
taxes (1,916,468) (696,754) (858,940)
Minority interest in
loss of consolidated
subsidiary (1,885) 3,395 24,514
Net Income $31,135,970 $20,520,391 $11,528,200
Basic and Diluted
Earnings per
Common Share $0.82 $0.59 $0.39
Net Income $31,135,970 $20,520,391 $11,528,200
Foreign currency
translation
adjustment 12,261,597 3,488,320 1,440,146
Comprehensive Income $43,397,567 $24,008,711 $12,968,346
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2006, 2007 AND 2008
Series A Voting Series B Voting
Convertible Convertible
Preferred Stock Preferred Stock
Shares Amount Shares Amount
Balance, June 30, 2005 -- $ -- 279,415.53 $22,586,429
Issuance for cash,
December -- -- 24,767.20 1,999,668
Net income for the year -- -- -- --
Foreign currency
translation
adjustment -- -- -- --
Balance, June 30, 2006 -- -- 304,182.73 24,586,097
Issuance for cash, July -- -- 18,578.48 1,500,000
Issuance for cash,
November -- -- 619.29 21,059,950
Capital distributions -- -- -- (21,036,767)
Issuance for cash,
February -- -- 39,473.56 10,570,762
Issuance to acquire
Bronze Marketing, Inc. 135,000 -- -- --
Issuance for services 20,122 528,077 -- --
Conversion of Series A
Preferred Stock into
common stock (155,122) (528,077) -- --
Conversion of Series B
Preferred Stock into
common stock -- -- (362,854.06) (36,680,042)
Net income for the year -- -- -- --
Foreign currency
translation
adjustment -- -- -- --
Balance, June 30, 2007 -- -- -- --
Net income for the year -- -- -- --
Foreign currency
translation
adjustment -- $ -- -- $ --
Balance, June 30, 2008 -- -- --
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2006, 2007 AND 2008
Additional
Common Stock Paid in Statutory
Shares Amount Capital Reserves
Balance, June 30, 2005 -- $ -- $ -- $3,163,599
Issuance for cash,
December -- -- -- --
Net income for the year -- -- -- 2,501,290
Foreign currency
translation
adjustment -- -- -- --
Balance, June 30, 2006 -- -- -- 5,664,889
Issuance for cash, July -- -- -- --
Issuance for cash,
November -- -- -- --
Capital distributions -- -- -- --
Issuance for cash,
February -- -- -- --
Issuance to acquire
Bronze Marketing, Inc. 150,000 150 (150) --
Issuance for services -- -- -- --
Conversion of Series A
Preferred Stock into
common stock 1,520,196 1,520 526,557 --
Conversion of Series
B Preferred Stock
into common stock 36,285,406 36,285 36,643,757 --
Net income for the
year -- -- -- 2,083,380
Foreign currency
translation
adjustment -- -- -- --
Balance, June 30,
2007 37,955,602 37,955 37,170,164 7,748,269
Net income for the year -- -- -- 4,838,726
Foreign currency
translation
adjustment -- -- -- --
Balance, June 30,
2008 37,955,602 $37,955 $37,170,164 $12,586,995
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2006, 2007 AND 2008
Accumulated
Other Total
Retained Comprehensive Stockholders'
Earnings Income (Loss) Equity
Balance, June 30, 2005 $12,011,810 ($8,496) $37,753,342
Issuance for cash, December -- -- 1,999,668
Net income for the year 9,026,910 -- 11,528,200
Foreign currency translation
adjustment -- 1,440,146 1,440,146
Balance, June 30, 2006 21,038,720 1,431,650 52,721,356
Issuance for cash, July -- -- 1,500,000
Issuance for cash, November -- -- 21,059,950
Capital distributions -- -- (21,036,767)
Issuance for cash, February -- -- 10,570,762
Issuance to acquire Bronze
Marketing, Inc. -- -- --
Issuance for services -- -- 528,077
Conversion of Series A Preferred
Stock into common stock -- -- --
Conversion of Series B Preferred
Stock into common stock -- -- --
Net income for the year 18,437,011 -- 20,520,391
Foreign currency translation
adjustment -- 3,488,320 3,488,320
Balance, June 30, 2007 39,475,731 4,919,970 89,352,089
Net income for the year 26,297,244 -- 31,135,970
Foreign currency translation
adjustment -- 12,261,597 12,261,597
Balance, June 30, 2008 $65,772,975 $17,181,567 $132,749,656
SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30,
2008 2007 2006
Cash Flows from
Operating Activities:
Net income $31,135,970 $20,520,391 $11,528,200
Adjustments to
reconcile net income
to net cash (used in)
provided by operating
activities
Depreciation and
amortization 4,384,418 2,708,805 1,836,727
Minority interest in
loss of consolidated
subsidiary 1,885 (3,395) (24,514)
Deferred income taxes (272,375) -- --
Stock based
compensation -- 528,077 --
Gain on sale of
property and equipment (2,844) -- --
Changes in current
assets and liabilities:
Trade accounts
receivable, net 9,537,171 (13,596,643) (694,786)
Other receivables, net (48,258) (41,539) 62,895
Advances to suppliers 7,869,743 (20,747,998) 355,095
Inventories (24,623,639) (9,075,799) 4,236,357
Accounts payable 1,562,872 395,630 (5,429,417)
Advances from customers 7,102,064 490,208 7,140,491
Other payables and
accrued expenses 257,455 802,466 856,622
Related party
receivables or
payables (71,873,877) (10,536,690) 10,625,951
Net Cash Provided by
(Used in) Operating
Activities (34,969,415) (28,556,487) 30,493,621
Cash Flows from
Investing Activities:
Changes in notes
receivable 89,430 (126,402) (69,593)
Purchase of property
and equipment, net
of value added tax
refunds received (10,872,302) (8,850,305) (18,963,778)
Proceeds from sale of
property and equipment 10,369 -- --
Purchase of land use
rights -- (198,301) 167,530
Net change in
restricted cash (26,998,292) 5,607,772 (9,573,358)
Net Cash Used in
Investing Activities (37,770,795) (3,567,236) (28,439,199)
Cash Flows from
Financing Activities:
Proceeds from issuance
of notes payable 161,549,825 136,558,731 22,210,230
Payments on notes
payable (91,833,084) (112,004,593) (15,037,160)
Proceeds from issuance
of Series B preferred
stock -- 33,130,712 1,999,668
Proceeds from issuance of
notes payable -
principal shareholder 7,099,998 -- --
Payments on notes
payable - related
parties (2,244,164) -- --
Payments on long-term
debt -- (2,554,598) (6,187,169)
Capital distribution to
shareholders -- (21,036,767) --
Net Cash Provided by
Financing Activities 74,572,575 34,093,485 2,985,569
Effect of Exchange Rate
Changes on Cash 1,140,794 328,687 (63,894)
Net Change in Cash 2,973,159 2,298,449 4,976,097
Cash and Cash
Equivalents at
Beginning of Year 8,832,942 6,534,493 1,558,396
Cash and Cash Equivalents
at End of Year $11,806,101 $8,832,942 $6,534,493
Supplemental Cash Flow
Information
Cash paid during the
period for interest $5,952,002 $2,258,425 $923,673
Cash paid during the
period for taxes $3,746,316 $2,436,656 $156,991
For more information, please contact:
Mr. Jason Wang
Sutor Technology Group Limited
Tel: +86-512-5268-0988
