China Precision Steel News
China Precision Steel Announces Third Quarter Fiscal 2008 Results
2008 Third Fiscal Quarter Highlights — Revenue grew 61.3% year-over-year to $18.7 million. — Gross profit increased 58.0% to $5.3 million and gross margin was 28.4% — Income from operations increased 136.9% to $4.4 million — Net income was $4.6 million, or $0.10 per fully diluted share, up 231.1% year-over-year — Exports accounted for 19.0% of revenue, up from 2.3% a year ago
''Our strong sales growth in exports of low-carbon, hard-rolled products and subcontracting work significantly increased our total revenue to a record level. We maintained our gross margin and saw a significant improvement in operating margin during the quarter, which flowed through to our bottom line,'' commented Dr. Wo
Revenues for the third quarter of fiscal 2008 were
Gross profit for the quarter was
Operating income was
During the quarter, the Company recorded an income tax benefit of
Net income for the third quarter 2008 was
Nine Month Financial Results
Revenues for the first nine months of fiscal 2008 were
Financial Condition
As of
During the third quarter, in view of the recent iron ore price surge and tighter supply of hot-rolled steel coils in the market, China Precision Steel has increased purchase quantities directly from its major and strategic supplier, Baosteel Group, with the aim of ensuring a stable raw material supply and mitigating the impact of expected increases in the cost of raw materials. As the contract terms with Baosteel are 100% payment in advance, this is the primary reason for the
Business Outlook
China Precision Steel's 1400 mm cold-roll mill with 150,000 metric tons of design capacity became operational at the beginning of
''We continue our strive to find an appropriate sales mix that provides us with improved profitability and stability of cash flows, along with the higher margin provided by high precision and individually customized cold-rolled steel products,'' commented Dr. Li. ''With the addition of the continuous annealing line, we will be able to expand our product line to include higher margin, cold-rolled stainless steel. Our strong R&D capabilities and ability to develop precision products provide us with competitive advantages to continue to strengthen our position in the market and improve profitability in the long term.''
About China Precision Steel
China Precision Steel is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel produces high precision ultra-thin, high strength (7.5 mm to 0.05 mm) cold- rolled steel products primarily for automotive components, food packaging materials, saw blades and textile needle manufacturing companies in
Conference Call
The Company will conduct a conference call at
Forward-Looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Precision Steel on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our ability to prepare the company for growth, the Company's planned manufacturing capacity expansion in 2008 and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, business conditions in
Financial Tables Follow China Precision Steel, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) March 31, June 30, 2008 2007 Assets Current assets Cash and equivalents $ 14,295,503 $ 5,504,862 Accounts receivable Trade, net of allowances of $994,313 and $273,461 at March 31, 2008 and June 30, 2007, respectively 25,406,355 8,242,044 Bank acceptance notes 4,197,091 — Other 4,794,735 85,708 Inventories 19,594,824 15,723,704 Deposits — 82,758 Prepaid expenses 429,556 — Advances to suppliers, net of allowance of $2,466,098 and $3,502,184 at March 31, 2008 and June 30, 2007, respectively 38,527,179 11,699,918 Total current assets 107,245,243 41,338,994 Property and equipment Land use rights 1,869,205 1,124,583 Property and equipment, net 35,657,690 29,238,227 Construction-in-progress 12,344,841 10,355,763 49,871,736 40,718,573 Goodwill 99,999 99,999 Total assets $ 157,216,978 $ 82,157,566 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 11,179,506 $ 4,855,932 Advances from customers 6,896,092 1,720,812 Other taxes payables 3,431,415 816,554 Current income taxes payable 4,373,885 1,892,866 Deferred income taxes payable — 1,064,028 Amounts due to directors 2,807,353 — Current portion of long-term debt — 6,163,445 Notes payable 17,400,194 9,842,520 Total current liabilities 46,088,445 26,356,157 Long-term debt, net of current portion shown above — 6,878,714 Stockholders' equity: Preferred stock: $0.001 per value, 8,000,000 shares authorized, no shares outstanding at March 31, 2008 and June 30, 2007; Common stock: $0.001 par value, 62,000,000 shares authorized, 45,896,288 and 37,378,143 issued and outstanding March 31, 2008 and June 30, 2007 45,896 37,378 Additional paid-in capital 73,643,064 31,867,063 Accumulated other comprehensive income 7,745,138 2,192,160 Retained earnings 29,694,435 17,008,238 Total stockholders' equity 111,128,533 51,104,839 Amounts due from directors — (2,182,144) Total liabilities and stockholders' equity $157,216,978 $ 82,157,566 China Precision Steel, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the Three and Nine Months Ended March 31, 2008 and 2007 (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, March 31, March 31, 2008 2007 2008 2007 Revenues Sales revenues $18,723,842 $11,610,673 $59,189,060 $37,121,603 Cost of goods sold 13,399,010 8,240,743 42,172,998 26,635,693 Gross profit 5,324,832 3,369,930 17,016,062 10,485,910 Operating expenses Selling expenses 203,477 92,315 484,926 196,705 Administrative expenses 699,221 1,411,106 2,031,816 2,096,031 Provision for bad debts 10,150 — 661,930 — Depreciation and amortization expense 17,155 11,062 46,585 32,324 Total operating expenses 930,003 1,514,483 3,225,257 2,325,060 Income from continuing operations 4,394,829 1,855,447 13,790,805 8,160,850 Other income (expense) Other revenues 152,894 53,436 945,304 53,436 Interest and finance costs (415,863) (196,787) (1,174,864) (514,869) Total other income (expense) (262,969) (143,351) (229,560) (461,433) Net income from continuing operations before income tax 4,131,860 1,712,096 13,561,245 7,699,417 Provision for (benefit from) income tax Current 1,598,777 1,196,573 2,047,911 2,091,886 Deferred (2,089,956) (880,694) (1,172,863) (966,099) Total income tax expense (491,179) 315,879 875,048 1,125,787 Net income before discontinued operations 4,623,039 1,396,217 12,686,197 6,573,630 Net income from discontinued operations — — — 831,448 Net income $4,623,039 $1,396,217 $12,686,197 $7,405,078 Basic earnings per share From continuing operations $0.10 $0.05 $0.30 $0.26 From discontinued operations $— $— $— $0.03 Total $0.10 $0.05 $0.30 $0.29 Basic weighted average shares outstanding 45,896,288 28,946,086 42,088,128 25,815,157 Diluted earnings per share From continuing Operations $0.10 $0.05 $0.30 $0.26 From discontinued operations $— $— $— $0.03 Total $0.10 $0.05 $0.30 $0.29 Diluted weighted average shares outstanding 46,365,778 29,387,360 42,555,912 25,960,101 The Components of comprehensive income: Net income $4,623,039 $1,396,217 $12,686,197 $7,405,078 Foreign currency translation adjustment 3,548,639 335,929 5,552,978 990,914 Comprehensive income $8,171,678 $1,732,146 $18,239,175 $8,395,992 China Precision Steel, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the Nine Months Ended March 31, 2008 and 2007 (Unaudited) 2008 2007 Cash flows from operating activities Net Income $12,686,197 $ 7,405,078 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation 1,841,947 1,095,981 Less income from discontinued operations - Oralabs, Inc — (831,448) Allowance for bad and doubtful debts 661,930 519,614 Warrants issued for consulting — 447,993 Net changes in assets and liabilities: Accounts receivable, net (26,067,887) 8,200,648 Inventories (2,616,526) (11,548,066) Deposits 89,361 (225,887) Prepayments (429,556) — Advances to suppliers (25,893,725) (6,197,997) Accounts payable and accrued expenses 5,702,234 1,439,529 Advances from customers 5,037,976 984,523 Other taxes payable 2,657,687 108,450 Current income taxes 2,329,987 2,513,992 Deferred income taxes (1,148,927) (960,262) Net cash (used in) provided by operating activities (25,149,302) 2,952,148 Cash flows from investing activities Purchases of property and equipment including construction in progress (7,512,290) (10,329,164) Net cash (used in) investing activities (7,512,290) (10,329,164) Cash flows from financing activities Sale of common stock 44,375,282 19,416,533 Advances from directors, net 2,464,868 (3,708,722) Notes payable proceeds 16,446,667 12,280,943 Repayments of notes payable (23,757,121) (10,204,006) Net cash provided by financing activities 39,529,696 17,784,748 Effect of exchange rate 1,922,537 990,914 Net increase in cash 8,790,641 11,398,646 Cash and cash equivalents, beginning of period 5,504,862 186,955 Cash and cash equivalents, end of period $14,295,503 $11,585,601 Supplemental disclosure of cash flow information Interest paid $1,174,864 $ 572,089 Taxes paid $ — $ — Issuance of 2,798,191 shares of stock for syndication fees $ — $8,394,573 Issuance of 100,000 warrants for services $ — $ 562,731 Issuance of 1,300,059 warrants for syndication fees $ — $2,770,349 Fixed asset purchases in accounts payable $233,885 $ — For more information, please contact: Investor Relations Contact: Mr. Crocker Coulson President CCG Elite Investor Relations Tel: +1-646-213-1915 (NY Office) Email: crocker.coulson@ccgir.com Website: http://www.ccgelite.com
SOURCE China Precision Steel
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