Sutor Technology Group Limited News
Sutor Reports Third Fiscal Quarter 2008 Results
DONGBANG TOWN,
Third Fiscal Quarter 2008 Financial Highlights: — Total revenues increased 37.61% over the third fiscal quarter of 2007 to US$98.10 million — Income from operations increased 104.5% over the third fiscal quarter of 2007 to US$10.18 million — Net income increased 100.5% over the third fiscal quarter of 2007 to US$7.79 million — Fully-diluted earnings per common share for the third fiscal quarter 2008 was US$0.21, compared to US$0.11 for the third fiscal quarter 2007
Ms.
Mr.
Third Fiscal Quarter 2008 Unaudited Financial Results
Revenues. Revenues amounted to
Gross Profit. Gross profit increased 63% to
Income from Operations. Income from operations for the third fiscal quarter 2008 was
Operating Expenses. Our total operating expenses decreased by 27.8% to
Other Expense. Other expense increased to
Income before Tax and Minority Interests. As a result of the foregoing, our income before tax and minority interests increased by 90.4% from
Provision for Income Tax. Our provision for income tax increased by 32.4% from
Net Income. Net income increased by 100.31% from
In the three months ended
Business Highlights and Outlook
Production Updates: Third Fiscal Quarter 2008 compares Third Fiscal Quarter 2007
— 71,000 metric tons of hot-dipped galvanized (HDG) steel was produced during third fiscal quarter 2008 while 63,000 metric tons during the same period in 2007. — 36,000 metric tons of pre-painted galvanized (PPGI) steel was produced during third fiscal quarter 2008 while 33,000 metric tons during the same period in 2007. — 68,000 metric tons of cold-rolled steel was produced during third fiscal quarter 2008 while 19,000 metric tons during the same period in 2007. — 71,000 metric tons of acid-pickled (AP) steel was produced during third fiscal quarter 2008 while 49,000 metric tons during the same period in 2007. Vertical Integration Plan Phase II — The Company is on track to complete its vertical integration process and expects its hot-rolled galvanizing steel production system with a designed manufacturing capacity of 400,000 metric tons to become operational in third quarter of 2008. Expansion of Production Lines — We are planning phase III expansion for two more HDG lines and two more PPGI lines. Each of the HDG lines is expected to have about 400,000 metric tons of capacity, and each of the PPGI lines is expected to have about 200,000 metric tons of capacity. — Next, we are planning phase IV product extension where we expect to install one new annealing line with total capacity of 200,000 metric tons and one new skim pass mill with total capacity of 200,000 metric tons. — Currently, we expect both phase III and phase IV production lines to be fully operational during 2010. As a result, the completion of both phases will likely almost triple our total volume to about 3,070,000 metric tons from the existing 1,070,000 metric tons.
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
About Sutor Technology Group Limited
Sutor (Nasdaq: SUTR) is one of the leading private manufacturers of steel finishing fabrication products in
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
(in USD) SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 2008 June 30, 2007 ASSETS Current Assets: Cash and cash equivalents $ 4,895,102 $ 8,832,942 Restricted cash 44,039,788 27,799,475 Trade accounts receivable, net of allowance for doubtful accounts of $73,938 and $2,947, respectively 1,091,491 14,768,954 Other receivables 70,117 44,226 Accounts receivable, related parties 9,721,464 — Advances to suppliers, net of allowance of $3,927,219 and $499,842, respectively 28,499,133 32,791,928 Inventory 54,997,550 22,703,304 Notes receivable 7,120 203,546 Total Current Assets 143,321,765 107,144,375 Property and Equipment, net of accumulated depreciation of $10,075,473 and $6,726,756, respectively 55,670,416 47,571,353 Intangible Assets, net of accumulated amortization of $262,519 and $188,132, respectively 3,186,807 2,988,589 TOTAL ASSETS $202,178,988 $157,704,317 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 7,419,736 $ 3,916,596 Advances from customers 11,638,826 8,414,629 Other payables and accrued expenses 2,752,372 2,707,473 Short-term notes payable 53,606,277 50,954,916 Short-term notes payable - related party 7,099,998 2,325,802 Total Current Liabilities 82,517,209 68,319,416 Minority Interest in Net Assets of Subsidiary 36,044 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 7,748,269 7,748,269 Retained earnings 60,575,771 39,475,731 Accumulated other comprehensive income 14,093,576 4,919,970 Total Stockholders' Equity 119,625,735 89,352,089 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $202,178,988 $157,704,317 (in USD, except per share and other share data) SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) For the Three Months For the Nine Months Ended March 31, Ended March 31, 2008 2007 2008 2007 Revenue: Revenue $45,258,150 $45,004,929 $168,865,930 $94,743,517 Revenue from related parties 52,843,085 26,279,012 143,617,418 116,548,496 Cost of Revenue 98,101,235 71,283,941 312,483,348 211,292,013 Cost of revenue 53,443,350 32,464,340 195,381,301 71,801,289 Purchases from related parties 32,840,446 31,574,392 82,488,474 120,590,904 86,283,796 64,038,732 277,869,775 192,392,193 Gross Profit 11,817,439 7,245,209 34,613,573 18,899,820 Operating Expenses: Selling expense 550,291 456,591 2,085,784 1,655,506 General and administrative expense 1,087,563 1,810,000 5,368,660 3,693,975 Total Operating Expenses 1,637,854 2,266,591 7,454,444 5,349,481 Income from Operations 10,179,585 4,978,618 27,159,129 13,550,339 Other Income (Expense): Interest income 309,486 222,527 663,254 547,563 Other income 90,333 25,297 128,918 183,384 Interest expense (1,764,273) (367,743) (3,936,756) (915,080) Other expense (113,008) (293,726) (343,262) (302,448) Total Other Income (Expense) (1,477,462) (413,645) (3,487,846) (486,581) Income Before Taxes and Minority Interest 8,702,123 4,564,973 23,671,283 13,063,758 Provision for income taxes (903,606) (680,621) (2,568,011) (1,702,128) Minority interest in loss (income) of consolidated subsidiary (6,259) 1,607 (3,232) 20,932 Net Income $7,792,258 $3,885,959 $21,100,040 $11,382,562 Basic and Diluted Earnings per Common Share $0.21 $0.11 $0.56 0.34 Net Income $7,792,258 $3,885,959 $21,100,040 $11,382,562 Foreign currency translation adjustment 4,972,227 131,199 9,173,606 1,569,993 Comprehensive Income $12,764,485 $4,017,158 $30,273,646 $12,952,555 For the Six Months Ended December 31, 2007 2006 Revenue: Revenue $123,607,780 $49,738,588 Revenue from related parties 90,774,333 90,269,484 214,382,113 140,008,072 Cost of Revenue Cost of revenue 141,937,951 39,336,949 Purchases from related parties 49,648,028 89,016,512 191,585,979 128,353,461 Gross Profit 22,796,134 11,654,611 Operating Expenses: Selling expense 1,535,493 1,198,915 General and administrative expense 4,281,097 1,883,975 Total Operating Expenses 5,816,590 3,082,890 Income from Operations 16,979,544 8,571,721 Other Income (Expense): Interest income 353,768 325,036 Other income 38,585 158,087 Interest expense (2,172,483) (547,337) Other expense (230,254) (8,722) Total Other Income (Expense) (2,010,384) (72,936) Income Before Taxes and Minority Interest 14,969,160 8,498,785 Provision for income taxes (1,664,405) (1,021,507) Minority interest in loss (income) of consolidated subsidiary 3,027 19,325 Net Income $13,307,782 $7,496,603 Basic and Diluted Earnings per Common Share $ 0.35 $ 0.23 Net Income $13,307,782 $7,496,603 Foreign currency translation adjustment 4,201,379 1,438,794 Comprehensive Income $17,509,161 $8,935,397 (in USD) SUTOR TECHNOLOGY GROUP LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended March 31, 2008 2007 Cash Flows from Operating Activities: Net income $ 21,100,040 $ 11,382,562 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 2,703,957 1,604,854 Minority interest in income (loss) of consolidated subsidiary 3,232 (20,932) Gain on sale of equipment (2,722) — Stock based compensation — 528,077 Changes in current assets and liabilities: Trade accounts receivable, net 14,187,846 (180,497) Other receivables, net (20,977) (43,346) Advances to suppliers 6,746,811 (25,708,280) Inventories (28,808,894) (5,541,039) Accounts payable 3,006,624 (1,121,282) Advances from customers 2,375,369 (64,368) Other payables and accrued expenses (177,945) 880,562 Related party receivables or payables (9,373,474) 1,916,357 Net Cash (Used in) Provided by Operating Activities 11,739,867 (16,367,332) Cash Flows from Investing Activities: Changes in notes receivable 203,059 33,321 Purchase of property and equipment, net of value added tax refunds received (6,469,417) (5,791,904) Proceeds from sale of equipment 10,139 — Purchase of land use rights — (197,146) Net change in restricted cash (13,152,963) 16,082,694 Net Cash (Used in) Provided by Investing Activities (19,409,182) 10,126,965 Cash Flows from Financing Activities: Proceeds from issuance of notes payable 66,032,525 39,785,358 Proceeds from issuance of notes payable - related party 7,099,998 — Proceeds from issuance of Series B preferred stock — 33,130,712 Payment on notes payable and Short-term loans (67,666,600) (41,000,933) Payment on short-term loans - related party (2,211,931) — Capital distribution to shareholders — (21,036,767) Net Cash Provided by Financing Activities 3,253,992 10,878,370 Effect of Exchange Rate Changes on Cash 477,483 186,536 Net Change in Cash (3,937,840) 4,824,539 Cash and Cash Equivalents at Beginning of Period 8,832,942 6,534,493 Cash and Cash Equivalents at End of Period $ 4,895,102 $ 11,359,032 Supplemental Cash Flow Information Cash paid during the period for interest $ 3,936,756 $ 915,080 Cash paid during the period for taxes $ 2,715,920 $ 1,108,962 Contact: Company Contact (PRC): Mr. Kape Cao Tel: +86-512-5268-0988 Email: investor_relations@sutorcn.com
SOURCE Sutor Technology Group Limited
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