WEB NEWS Comments & Business Outlook
Third Quarter 2013 Results
Total revenue from sales were $188,594,415 , an increase of $19,044,199 , or 11% compared to $169,550,216 in the comparable period of 2012.
Earnings Per Share were $0.04 for the third quarter 2013, versus a loss of $0.05 for the third quarter 2012.
Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance, "China Industrial Steel's continued growth stems from increasing market demand. Our ability to generate improved revenue and net income despite the lingering pressure on the average unit sales price of our steel products, reflects the strength of our sales and marketing team as well as the efficiency of our production and distribution channels. I am confident that these efforts will continue to positively impact our financial performance going forward, most notably as pricing returns to prior levels."
Comments & Business Outlook
Second Quarter 2013 Financial Results
Revenues increased 24% to $181 million in the three months ended June 30, 2013 from $146 million for the same period in 2012.
Steel products tonnage sales up 45% for the quarter ended June 30, 2013, to 368,311 metric tons as compared to 253,490 metric tons in the same period of 2012.
Net Income decreased 42%, to $1.07 million for the three months ended June 30, 2013, as compared to $1.85 million for the prior year.
Earnings Per Share - Basic and Diluted was $0.01 vs. last years $0.03
Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance, "The Company's continued revenue growth is a reflection of a solid growth plan and strong customer relationships. Our renovated manufacturing facility not only provides us with the additional capacity to satisfy customer demand, higher production levels also strengthen our ability to negotiate preferable raw material prices. These actions have helped us remain profitable despite the market pressure on selling prices, and we anticipate they will have a positive impact on our financial performance once pricing returns to normal levels."
Comments & Business Outlook
First Quarter 2013 Financial Results
Revenue of $188,363,697 for the three months ended March 31, 2013 an increase of $11,335,049, or 6% compared to $177,028,648 in the same period of 2012.
Earnings Per Share - Basic and Diluted was $0.02 vs. last years $0.06.
Commenting on the results, Liu Shenghong, Chief Executive Officer and Chairman of the Company stated, "I am pleased to report China Industrial Steel's financial results for the first quarter of 2013. Company revenues were up as a result of the rebound in China's demand for steel, and we remain profitable despite the industry wide decline in selling prices resulting from inventory stockpiles over the past year."
Chairman Liu went on to say, "Demand for our steel plate and wire increased during the quarter reflecting China's continued economic growth and the government's investment in infrastructure projects, such as roads, railways and bridges. We anticipate market prices will return to prior levels as steel manufacturers work through their backlog to supply these large scale projects and the forecast growth in other steel dependent industries, including the automotive and construction sectors."
Comments & Business Outlook
Second Quarter 2012 Results
Sales for the three months ended June 30, 2012 were $145,572,369 , a decrease of $71,226,932 , or 33%, compared to $216,799,301 in the comparable period in 2011.
Net income totaled $1,848,517 in the three months ended June 30, 2012 , a decrease of $8,855,692 , or 83%, compared to the net income of $10,704,209 in the comparable period of 2011.
Earnings per share in the three months ended June 30, 2012, were $0.03 vs. $0.15 in prior year.
Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance, "This has been a challenging year for China 's steel industry, and our Company was not an exception. According to the Association of Chinese Steel Industry, 34% of steel manufacturers are experiencing losses, and while our results are off from last year, I am pleased to report that China Industrial Steel has remained profitable throughout this downturn."
Mr. Liu went on to say "Although economic recovery has been slower than expected worldwide, we expect that China 's growth will be a significant driver in the turnaround, and we are working to ensure that China Industrial Steel will fully participate in that growth. In addition to shifting our existing production capabilities to the highest margin product mix, we are evaluating financing alternatives to increase our capacity for specialized steel products, the first of which will be a Galvalume production facility. Galvalume is a coated steel product, which is primarily used in the automotive and home appliance industries."
Comments & Business Outlook
Three Months Ended March 31,
2012
2011
Revenues
Sales to customers
$
172,444,448
$
187,524,816
Sales to related parties
4,584,200
-
Total Revenues
177,028,648
187,524,816
Cost of Revenue
Cost of Revenue - non-related parties
49,889,474
22,137,284
Cost of Revenue - related parties
118,315,091
154,960,989
Total Cost of Revenue
168,204,565
177,098,273
Gross Profit
8,824,083
10,426,543
Selling and General and Administrative Expenses
Selling and General and Administrative Expenses - non-related parties
1,065,079
447,247
Selling and General and Administrative Expenses - related parties
177,083
186,650
Total Selling and General and Administrative Expenses
1,242,162
633,897
Income From Operations
7,581,921
9,792,646
Other Income (Expenses)
Interest income
52,489
215
Interest expense - bank borrowings
(944,908
)
(449,750
)
Interest expense - related parties
(963,068
)
(1,065,316
)
Total Other Income (Expenses)
(1,855,487
)
(1,514,851
)
Income from operation before income tax
5,726,434
8,277,795
Provision for income tax
1,020,390
1,145,021
Net Income
4,706,044
7,132,774
Earnings Per Share - Basic
$
0.06
$
0.10
Weighted Average Shares Outstanding - Basic
73,542,058
72,767,929
Earnings Per Share - Diluted
$
0.06
$
0.10
Weighted Average Shares Outstanding - Diluted
73,542,058
72,767,929
Liquidity Requirements
The Company plans to add a new production line to produce a coated steel product, known as Galvalume, which is primarily used in the automotive and home appliance industries. To implement this expansion strategy, it is estimated that we
will require at least $80 million . The management believes that our
available cash will not be sufficient to fund our expansion requirements and therefore, we will have to finance the expansion through the sale of our equity securities or borrow from bank loans when available.
Reverse Merger Activity
On September 29, 2011 Share holders registered stock to take company public. (Company was originally a private shell that became a non-public operating entity via a reverse merger, prior to registering its stock). In January 2011 the company completed a private placement where it sold an aggregate of 2,579,022 units at $1.50 per unit with each unit consisting of: (i) one share of our common stock, and (ii) a three-year warrant to purchase one share of our common stock at an exercise price of $4.50 per share .
Company Snapshot:
Produces and sells steel plate, bar and billet in ChinaIndustry Snapshot
Use Of proceeds: No money raised from this offering
Underwriter: Self
Completed offering price : $4.50
Post IPO Share Calculation :
73,542,058 : Pre IPO outstanding shares
2,579,022 : Registered shares of Common Stock by current shareholders (will not add to shares outstanding).
2,579,022 : Shares from warrants associated with private placement
GeoTeam® best effort calculation of total post IPO shares assuming full conversions: 76,121,080
Financial Snapshot: December Year End
2011
2010
2009
Revenues
Sales to customers
$
796,011,478
$
546,489,212
$
526,388,941
Sales to related parties
27,095,564
27,177,472
30,366,019
Total Revenues
823,107,042
573,666,684
556,754,960
Cost of Revenue
Cost of Revenue - non-related parties
92,311,499
76,627,193
413,006,181
Cost of Revenue - related parties
669,334,535
459,227,304
81,612,000
Total Cost of Revenue
761,646,034
535,854,497
494,618,181
Gross Profit
61,461,008
37,812,187
62,136,779
Selling and General and Administrative Expenses
Selling and General and Administrative Expenses - non-related parties
1,695,836
1,963,226
586,610
Selling and General and Administrative Expenses - related parties
804,541
569,035
289,970
Total Selling and General and Administrative Expenses
2,500,377
2,532,261
876,580
Income From Operations
58,960,631
35,279,926
61,260,199
Other Income (Expenses)
Interest income
67,303
19,058
14,000
Interest expense - bank borrowings
(1,505,340
)
(353,815
)
(169,128
)
Interest expense - related parties
(4,405,934
)
(4,719,552
)
(2,944,094
)
Gain on disposal of fixed assets
117,255
-
-
Total Other Income (Expenses)
(5,726,716
)
(5,054,309
)
(3,099,222
)
Income from operation before income tax
53,233,915
30,225,617
58,160,977
Provision for income tax
7,432,439
4,455,177
-
Net Income
$
45,801,476
$
25,770,440
$
58,160,977
Other Comprehensive Income:
Foreign currency translation gain
7,753,060
4,122,803
675,123
Comprehensive Income
$
53,554,536
$
29,893,243
$
58,836,100
Net Income Per Share - Basic
$
0.62
$
0.39
$
0.94
Weighted Average Shares Outstanding - Basic
73,351,698
66,308,038
61,576,992
Net Income Per Share - Diluted
$
0.62
$
0.39
$
0.94
Weighted Average Shares Outstanding - Diluted
73,351,698
66,308,038
61,576,992