GONGYI, China, May 15, 2012 /PRNewswire-Asia-FirstCall/ --
China GengSheng Minerals, Inc. (NYSE Amex: CHGS), a leading
China-based high-tech industrial
materials manufacturer producing heat-resistant, energy- efficient
materials for a variety of industrial applications, today announced
its financial results for the first quarter ended March 31, 2012.
First Quarter 2012 Financial Highlights:
- Revenue decreased 15.3% year-over-year to approximately
$13.7 million.
- Refractories sales were approximately $9.9 million, compared with approximately
$9.9 million in the first quarter of
2011.
- Fine precision abrasives product sales were approximately
$2.4 million, compared with
approximately $819,000 in the first
quarter of 2011.
- Fracture proppant sales were approximately $998,000, compared with approximately
$5.2 million in the first quarter of
2011.
- Gross profit was approximately $2.7
million, or 19.8% of total sales, compared with
approximately $4.3 million, or 26.5%
of total sales in the same period a year ago.
- Total operating expenses increased to approximately
$4.4 million, compared with
approximately $3.6 million in the
first quarter of 2011.
- Net loss attributable to the Company was approximately
$2.9 million, or $0.11 per share, compared with net loss of
approximately $80,000, or
$0.003 per share in the first quarter
of 2011.
- As of March 31, 2012, the Company
had cash and cash equivalents of approximately $2.7 million, total equity of approximately
$51.1 million and working capital of
approximately $8.4 million.
"We experienced a disappointing quarter as a result of weak
sales in fracture proppants segment. The continued slowdown in the
steel industry also had an unfavorable impact on us," said Mr.
Shunqing Zhang, China GengSheng's Chairman and Chief Executive
Officer. "While financing costs and operating expenses weighed on
our results for the first quarter of 2012, we continue to work
towards increasing sales and improving profitability thus create
sustainable value for our shareholders."
Financial Results for the Three Months Ended March 31, 2012
For the first quarter of 2012, sales revenue was approximately
$13.7 million, a decrease of 15.3%,
compared with approximately $16.2
million in the first quarter of 2011. The decrease was
mainly attributable to the decreased sales from the fracture
proppant segments.
- Sales of the Company's core refractory products totaled
approximately $9.9 million, or 72.5%
of total sales, nearly flat compared with the first quarter of
2011.
- Sales of fracture proppant products totaled approximately
$998,000, or 7.3% of total sales, a
decrease of 80.8%, compared with approximately $5.2 million in the first quarter of 2011. The
year-over-year decrease in fracture proppant products sales was
mainly due to the decreased sales in the U.S. market as we were
unable to sell directly to the end users.
- Sales of fine precision abrasives products totaled
approximately $2.4 million, compared
with approximately $819,000 in the
first quarter of 2011. The increase in sales revenue was
primarily due to the increased sales to a major customer.
- Sales of industrial ceramics were approximately $332,000, compared with approximately
$230,000 in the first quarter of
2011.
Cost of goods sold totaled approximately $11.0 million, a decrease of 7.6%, compared with
approximately $11.9 million in the
same period of 2011. The decrease in cost of goods sold was a
result of the decrease in total revenue.
Gross profit for the three months ended March 31, 2012 was approximately $2.7 million, or 19.8% of revenue, compared with
approximately $4.3 million, or 26.5%
of revenue in the first quarter of 2011. The decrease in gross
profit and gross profit margin for the quarter was mainly
attributable to the higher raw material costs and energy costs
compared with the same period in 2011.
General and administrative expenses increased by approximately
$224,000 to approximately
$1.7 million for the first quarter in
2012, from approximately $1.5 million
in the same period in 2011. The increase was primarily due to
higher preliminary expenses related to our new fracture proppants
production facility and higher professional service fees.
Selling expenses increased by approximately $509,000 to approximately $2.5 million in the first quarter of 2012,
compared with approximately $2.0
million in the same period in 2011. The increase in selling
expenses was primarily attributable to the increase in the
allowance for doubtful accounts and higher transportation expenses
compared to the same period in 2011.
Finance costs increased by approximately $784,000, or 81.2% to approximately $1.8 million in the first quarter of 2012, from
approximately $966,000 in the same
period in 2011. The significant increase was primarily attributable
to an increase of approximately $709,000 in bills discounting charges as we
discounted more bills receivable instead of holding them to
maturity; and an increase of approximately $76,000 in interest expenses as we increased
borrowing activities in the first quarter of 2012.
Net loss attributable to Company's common stockholders was
approximately $2.9 million, or
$0.11 per share, compared with
approximately $80,000, or
$0.003 per share in the same period
in 2011. The net loss for the quarter was primarily attributable to
the factors described above.
As of March 31, 2012, the Company
had cash and cash equivalents totaling approximately $2.7 million, working capital of approximately
$8.4 million and total equity of
approximately $51.1 million.
About China GengSheng Minerals, Inc.
China GengSheng Minerals, Inc. ("GengSheng") develops,
manufactures and markets a broad range of high-tech industrial
material products, including monolithic refractories, industrial
ceramics, fracture proppants and fine precision abrasives. A market
leader offering customized solutions, GengSheng sells its products
primarily to the iron and steel industry as heat-resistant
components for steel-making furnaces, industrial kilns and other
high-temperature vessels to guarantee and improve the productivity
of those expensive pieces of equipment, while reducing their
consumption of energy. Founded in 1986 and based in China's Henan
province, GengSheng currently has over 170 customers in the iron,
steel, oil, glass, cement, aluminum and chemical businesses located
in China and other countries.
GengSheng conducts business through GengSheng International
Corporation, a British Virgin
Islands company, and its Chinese subsidiaries, which are
Henan GengSheng Refractories Co., Ltd., Zhengzhou Duesail Fracture
Proppant Co., Ltd., Henan GengSheng Micronized Powder Materials
Co., Ltd, Guizhou SouthEast Prefecture Co., Ltd., GengSheng New
Materials Co., Ltd, Henan GengSheng High Temperature Materials Co.,
Ltd. and Henan Yuxing Proppant Co., Ltd.
For more information about the Company, please visit
http://www.gengsheng.com.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements" relating to the business of China GengSheng Minerals,
Inc., and its subsidiary companies. All statements other than
statements of historical fact included herein are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements regarding the Company's
ability to meet its projected output for the term of the supply
contract; the general ability of the Company to achieve its
commercial objectives; the business strategy, plans and objectives
of the Company and its subsidiaries; and any other statements of
non-historical information. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, involve known and
unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. Investors should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including those discussed in the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website at http://www.sec.gov. All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking
statements.
For more information, please contact:
China GengSheng Minerals, Inc.
Investor Relations
Mr. Shuai Zhang
ir@gengsheng.com
+86-371-6405-9846
|
China GengSheng
Minerals, Inc.
|
|
Condensed
Consolidated Balance Sheets
|
|
|
As of
March 31,
|
|
As of
December 31,
|
|
|
2012
|
|
2011
|
|
|
(Unaudited)
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$2,696,810
|
|
$3,594,361
|
|
Restricted cash
|
|
31,369,567
|
|
21,094,008
|
|
Trade receivables,
net
|
|
48,017,132
|
|
49,167,748
|
|
Bills receivable
|
|
10,963,021
|
|
6,331,997
|
|
Other receivables and
prepayments, net
|
|
10,490,196
|
|
8,451,185
|
|
Advances to senior
management
|
|
-
|
|
360,162
|
|
Inventories,
net
|
|
21,278,336
|
|
16,956,582
|
|
Deferred tax assets, net of
valuation allowance
|
|
-
|
|
-
|
|
|
|
|
|
|
Total current
assets
|
|
124,815,062
|
|
105,956,043
|
|
|
|
|
|
|
Deposit for acquisition of a
non-consolidated affiliate, net
|
|
1,098,285
|
|
1,092,041
|
|
Deposits for acquisition of
land use right, property, plant and equipment
|
|
622,431
|
|
618,892
|
|
Goodwill, net
|
|
-
|
|
-
|
|
Intangible assets,
net
|
|
-
|
|
-
|
|
Property, plant and equipment,
net
|
|
37,835,572
|
|
37,164,849
|
|
Land use rights
|
|
3,134,281
|
|
3,137,961
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$167,505,631
|
|
$147,969,786
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade payables
|
|
$20,038,621
|
|
$18,671,086
|
|
Bills payable
|
|
15,434,250
|
|
16,385,340
|
|
Other payables and accrued
expenses
|
|
5,690,863
|
|
8,877,407
|
|
Deferred revenue - Government
grants
|
|
461,999
|
|
443,632
|
|
Provision for
warranty
|
|
167,698
|
|
184,778
|
|
Income taxes
payable
|
|
72,091
|
|
218,038
|
|
Non-interest-bearing
loans
|
|
3,635,263
|
|
3,318,472
|
|
Collateralized short-term bank
loans
|
|
67,639,532
|
|
45,974,022
|
|
Loan from a third
party
|
|
3,166,000
|
|
-
|
|
Deferred tax
liabilities
|
|
125,397
|
|
112,625
|
|
Warrant liabilities
|
|
-
|
|
-
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
116,431,714
|
|
94,185,400
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
China GengSheng
Minerals, Inc.
|
|
Condensed Consolidated
Balance Sheets (Cont'd)
|
|
|
As of
March 31,
|
|
As of
December 31,
|
|
|
2012
|
|
2011
|
|
|
(Unaudited)
|
|
(Audited)
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Preferred stock - $0.001 par
value per share; authorized 50,000,000 shares in
2012 and 2011, none issued and
outstanding
|
|
$-
|
|
$-
|
|
Common stock - $0.001 par
value per share; authorized 100,000,000 shares in
2012 and 2011, issued and
outstanding 26,803,044 shares in 2012 and 2011
|
|
26,803
|
|
26,803
|
|
Additional paid-in
capital
|
|
28,197,310
|
|
28,197,310
|
|
Statutory and other
reserves
|
|
8,110,972
|
|
8,110,972
|
|
Accumulated other
comprehensive income
|
|
7,895,699
|
|
7,713,341
|
|
Retained earnings
|
|
6,628,728
|
|
9,541,560
|
|
|
|
|
|
|
Total China GengSheng
Minerals, Inc. stockholders' equity
|
|
50,859,512
|
|
53,589,986
|
|
NONCONTROLLING
INTEREST
|
|
214,405
|
|
194,400
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
51,073,917
|
|
53,784,386
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$167,505,631
|
|
$147,969,786
|
|
China GengSheng
Minerals, Inc.
|
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
|
|
Three months ended March
31,
(Unaudited)
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Sales revenue
|
|
$13,710,663
|
|
$16,183,829
|
|
|
Cost of goods
sold
|
|
10,994,309
|
|
11,896,194
|
|
|
|
|
|
|
|
|
Gross profit
|
|
2,716,354
|
|
4,287,635
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
General and administrative
expenses
|
|
1,728,711
|
|
1,504,218
|
|
|
Research and development
expenses
|
|
162,996
|
|
141,327
|
|
|
Selling expenses
|
|
2,480,591
|
|
1,971,935
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
4,372,298
|
|
3,617,480
|
|
|
|
|
|
|
|
|
(Loss) income from
operations
|
|
(1,655,944)
|
|
670,155
|
|
|
|
|
|
|
|
|
Other (expenses)
income
|
|
|
|
|
|
|
Government grant
income
|
|
385,314
|
|
883
|
|
|
Guarantee income
|
|
153,554
|
|
87,296
|
|
|
Guarantee expenses
|
|
(129,178)
|
|
(87,515)
|
|
|
Interest income
|
|
52,574
|
|
119,488
|
|
|
Change in fair value of
warrant liabilities
|
|
-
|
|
260,000
|
|
|
Other income
(expenses)
|
|
5,939
|
|
(34,189)
|
|
|
Finance costs
|
|
(1,750,192)
|
|
(965,732)
|
|
|
|
|
|
|
|
|
Total other
expenses
|
|
(1,281,989)
|
|
(619,769)
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes and noncontrolling interest
|
|
(2,937,933)
|
|
50,386
|
|
|
Income taxes
|
|
(12,348)
|
|
(136,171)
|
|
|
|
|
|
|
|
|
Net loss before
noncontrolling interest
|
|
(2,950,281)
|
|
(85,785)
|
|
|
Net loss attributable to
noncontrolling interest
|
|
37,449
|
|
5,851
|
|
|
|
|
|
|
|
|
Net loss attributable to
Company's common stockholders
|
|
$( 2,912,832)
|
|
$(79,934)
|
|
|
|
|
|
|
|
|
Net loss before
noncontrolling interest
|
|
$(2,950,281)
|
|
$(85,785)
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
239,812
|
|
204,844
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income
|
|
(2,710,469)
|
|
119,059
|
|
|
Comprehensive (income)
loss attributable to noncontrolling interest
|
|
(20,005)
|
|
5,851
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income attributable to Company's common
|
|
|
|
|
|
|
stockholders
|
|
$(2,730,474)
|
|
$124,910
|
|
|
|
|
|
|
|
|
China GengSheng
Minerals, Inc.
|
|
Condensed
Consolidated Statements of Operations and Comprehensive Loss
(Cont'd)
|
|
|
Three months ended March
31,
(Unaudited)
|
|
|
|
2012
|
|
2011
|
|
|
Loss per share - Basic
and diluted
|
|
|
|
|
|
|
attributable to Company's
common
stockholders
|
|
$(0.11)
|
|
$(0.003)
|
|
|
|
|
|
|
|
|
Weighted average number
of shares - Basic and diluted
|
|
26,803,044
|
|
26,627,719
|
|
|
China GengSheng
Minerals, Inc.
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Three months ended March
31,
(Unaudited)
|
|
|
2012
|
|
2011
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Net loss before noncontrolling
interest
|
|
$(2,950,281)
|
|
$(85,785)
|
|
Adjustments to reconcile net
loss before noncontrolling interest
to net cash flows used in
operating activities:
|
|
|
|
|
|
Depreciation
|
|
725,675
|
|
500,644
|
|
Amortization of land use
rights
|
|
21,649
|
|
5,514
|
|
Amortization of intangible
assets
|
|
-
|
|
19,025
|
|
Deferred taxes
|
|
12,348
|
|
162,168
|
|
Loss on disposal of property,
plant and equipment
|
|
447
|
|
-
|
|
Guarantee expenses
|
|
129,178
|
|
-
|
|
Guarantee income
|
|
(153,554)
|
|
-
|
|
Allowance for doubtful
accounts
|
|
304,678
|
|
250,783
|
|
Deferred revenue
amortized
|
|
-
|
|
(45,660)
|
|
Change in fair value of
warrant liabilities
|
|
-
|
|
(260,000)
|
|
Exchange gain
|
|
(55,660)
|
|
-
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
Restricted cash
|
|
(118,875)
|
|
(6,810,950)
|
|
Trade receivables
|
|
1,445,883
|
|
3,242,541
|
|
Bills receivable
|
|
(4,622,703)
|
|
(273,579)
|
|
Other receivables and
prepayments
|
|
(2,437,411)
|
|
(4,509,546)
|
|
Advances to senior
management
|
|
362,678
|
|
-
|
|
Inventories
|
|
(4,230,052)
|
|
(2,435,941)
|
|
Other payables and accrued
expenses
|
|
(3,217,498)
|
|
946,972
|
|
Trade payables
|
|
1,273,464
|
|
2,164,614
|
|
Bills payable
|
|
(1,024,020)
|
|
6,810,950
|
|
Provision for
warranty
|
|
(18,160)
|
|
-
|
|
Income taxes
payable
|
|
(147,063)
|
|
(141,148)
|
|
|
|
|
|
|
Net cash flows used in
operating activities
|
|
(14,699,277)
|
|
(459,398)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Payments for deposits of
acquisition of land use right, property, plant and
equipment
|
|
-
|
|
(1,508,148)
|
|
Payments for acquisition of
property, plant and equipment
|
|
(1,196,013)
|
|
(1,849,334)
|
|
|
|
|
|
|
Net cash flows used in
investing activities
|
|
(1,196,013)
|
|
(3,357,482)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Net proceeds from issuance of
shares
|
|
-
|
|
9,258,466
|
|
Restricted cash
|
|
(10,048,900)
|
|
(7,193,779)
|
|
Proceeds from bank
loans
|
|
24,361,925
|
|
19,299,987
|
|
Repayment of bank
loans
|
|
(2,932,250)
|
|
(6,544,600)
|
|
Proceeds from
non-interest-bearing loans
|
|
642,137
|
|
-
|
|
Repayment of
non-interest-bearing loans
|
|
(375,884)
|
|
(478,016)
|
|
Loan from a third
party
|
|
3,170,000
|
|
-
|
|
Government grant
received
|
|
171,180
|
|
-
|
|
|
|
|
|
|
Net cash flows provided
by financing activities
|
|
14,988,208
|
|
14,342,058
|
|
|
|
|
|
|
Effect of foreign
currency translation on cash and cash equivalents
|
|
9,531
|
|
21,819
|
|
|
|
|
|
|
Net (decrease) increase
in cash and cash equivalents
|
|
(897,551)
|
|
10,546,997
|
|
Cash and cash
equivalents - beginning of period
|
|
3,594,361
|
|
925,052
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
|
$2,696,810
|
|
$11,472,049
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information:
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
Interest
|
|
$688,791
|
|
$965,732
|
|
Income taxes
|
|
$158,232
|
|
$114,639
|
|
|
|
|
|
|
Non-cash operating and
investing activities:-
|
|
|
|
|
|
Proceeds from disposal
of property, plant and equipment settled by offsetting trade
payables
|
|
$11,095
|
|
$-
|
SOURCE China GengSheng Minerals, Inc.