General Steel Files 2012 Annual Report on Form 10-K

Company Reports Third, Fourth Quarter and Full Year 2012 Financial Results

Achieves Positive Gross Profits for Full Year 2012

Jun 18, 2013, 08:00 ET from General Steel Holdings, Inc.

BEIJING, June 18, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a leading non-state-owned steel producer in China, today announced financial results for the third quarter ended September 30, 2012, fourth quarter of 2012 and full-year ended December 31, 2012. In conjunction with this announcement, the Company has filed the corresponding Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and Annual Report on Form 10-K for year ended 2012 ("2012 Annual Report") with the U.S. Securities & Exchange Commission (the "SEC"). Upon the filing of the 2012 Annual Report, the Company has regained compliance with the New York Stock Exchange's ("NYSE") continued listing standards relating to the filing of its 2012 Annual Report.

"We are pleased to have completed the filing of our 2012 Annual Report, and thereby regaining compliance with the NYSE's continued listing requirement that we file our Annual Report," said Henry Yu, Chairman and Chief Executive Officer of General Steel. "Again, I would like to thank our finance team for their diligent efforts in completing these filings and we look forward to soon updating the investment community on our business strategy and development efforts for 2013 and beyond."

"According to the China Iron and Steel Association, 2012 was the most difficult year in the last decade for China's steel industry.  Due to the economic slowdown and an oversupply of inventory, steel prices declined sharply in 2012, and, as a result, more Chinese steel companies suffered net losses in 2012[1].  Given the challenging macro environment, we strategically focused on optimizing and upgrading our production capability and on strengthening our market competitiveness via our geographic advantages in Western China and through cooperation with the government and state-owned enterprises.  Our efforts helped us achieve positive gross profits and narrow net losses for the year. Looking ahead, we remain focused on further strengthening our geographic advantages in Western China, while forging ahead with upgrading our production capability and improving operating efficiency."

[1] Source: Press release distributed by China Iron and Steel Association on February 1, 2013.

Full Year 2012 Financial Review

  • Revenue decreased 19.6% year-over-year to $2.9 billion, from $3.6 billion in 2011, mainly due to decreased sales volumes as well as a decrease in average selling price of rebar products.
  • Sales volume totaled approximately 5.3 million metric tons, compared with 6.2 million metric tons in 2011.
  • Gross profit totaled $32.1 million, or 1.1% of revenue, compared with gross loss of $(88.2) million, or gross margin of negative (2.5%) in 2011.
  • Operating loss for the year improved to $(73.0) million, compared with an operating loss of $(180.0) million in 2011.
  • Net loss attributable to the Company narrowed to $(152.7) million, or $(2.78) per diluted share based on 54.9 million weighted average shares outstanding, compared with a net loss of $(177.2) million, or $(3.24) per diluted share based on 54.8 million weighted average shares outstanding in 2011.

The decreased net loss in 2012 was primarily attributable to improved gross profit, a decrease in operating loss, offset by an increase of $70.5 million in other expenses as compared to the same period of 2012. The increase in other expenses are mainly due to increased finance expanse, which include an increase of $15.4 million in interest expense on capital lease, and $45.9 million in interest expense on bank borrowings, related parties borrowings, and discounted notes receivables.

Third Quarter 2012 Financial Review

  • Revenue decreased 28.7% year-over-year to $711.4 million, from $998.2 million in the third quarter of 2011.
  • Sales volume totaled approximately 1.4 million metric tons, down from 1.7 million metric tons in the third quarter of 2011.
  • Gross loss was $(13.6) million, or negative (1.9%) of revenue, compared with gross profit of $34.1 million, or 3.4% of revenue in the third quarter of 2011.
  • Operating loss for the quarter was $(36.4) million, compared with an operating income of $9.7 million in the third quarter of 2011.
  • Net loss attributable to the Company was $(41.6) million, or $(0.76) per diluted share based on 54.5 million weighted average shares outstanding, compared with a net loss of $(13.8) million, or $(0.25) per diluted share based on 55.2 million weighted average shares outstanding in the third quarter of 2011.

Fourth Quarter 2012 Financial Review

  • Revenue decreased 8.8% year-over-year to $723.4 million, from $793.5 million in the fourth quarter of 2011.
  • Sales volume totaled approximately 1.4 million metric tons, compared with 1.6 million metric tons in the fourth quarter of 2011.
  • Gross profit totaled $12.0 million, or 1.7% of revenue, compared with gross loss of $(150.7) million, or negative (19.0%) of revenue in the fourth quarter of 2011.
  • Operating loss for the quarter decreased to $(31.5) million, compared with $(176.6) million in the fourth quarter of 2011.
  • Net loss attributable to the Company was $(49.9) million, or $(0.91) per diluted share based on 54.9 million weighted average shares outstanding, compared with a net loss of $(131.5) million, or $(2.38) per diluted share based on 55.4 million weighted average shares outstanding in the fourth quarter of 2011.

Balance Sheet

As of December 31, 2012, the Company had cash and restricted cash of approximately $369.9 million, compared to $518.2 million as of December 31, 2011. The Company had an inventory balance of approximately $212.7 million as of December 31, 2012, compared to $297.7 million as of December 31, 2011. As of December 31, 2012, the Company had total liabilities of approximately $3.1 billion.

About General Steel Holdings, Inc.

General Steel Holdings, Inc., headquartered in Beijing, China, produces a variety of steel products including rebar, high-speed wire and spiral-weld pipe. The Company has operations in China's Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality with seven million metric tons of crude steel production capacity under management. For more information, please visit www.gshi-steel.com.

To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company's Annual Report on Form 10-K, please send your request to generalsteel@asiabridgegroup.com.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC.  Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

Contact Us

General Steel Holdings, Inc.

In China: Jenny Wang Tel: +86-10-5775-7691 Email: jenny.wang@gshi-steel.com

In the US: Joyce Sung Tel: +1-347-534-1435 Email: joyce.sung@gshi-steel.com

Asia Bridge Capital Limited

Carene Toh Tel: +1-888-957-3362 Email: generalsteel@asiabridgegroup.com

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

December 31,

September 30,

December 31,

ASSETS

2012

2012

2011

CURRENT ASSETS:

Cash

$

46,467

$

83,602

$

120,016

Restricted cash

323,420

436,302

398,216

Notes receivable

145,502

190,507

92,910

Restricted notes receivable

357,900

67,562

584,241

Loans receivable - related parties

69,319

67,159

-

Accounts receivable, net

6,695

7,656

12,601

Accounts receivable - related parties

14,966

28,346

20,593

Other receivables, net

8,407

20,129

22,411

Other receivables - related parties

68,382

65,250

87,679

Inventories

212,671

225,490

297,729

Advances on inventory purchase

79,715

82,060

63,585

Advances on inventory purchase - related parties

46,416

78,860

20,244

Prepaid expense and other

450

549

531

Prepaid taxes

24,116

20,212

24,189

Short-term investment

2,619

2,889

2,906

TOTAL CURRENT ASSETS

1,407,045

1,376,573

1,747,851

PLANT AND EQUIPMENT, net

1,167,836

1,197,472

1,257,236

OTHER ASSETS:

Advances on equipment purchase

6,499

6,748

10,420

Long-term other receivable

43,008

-

-

Investment in unconsolidated entities

1,166

1,027

12,840

Long-term loan receivable - related party

-

2,000

-

Long-term deferred expense 

1,062

517

631

Intangible assets, net of accumulated

amortization

24,066

24,227

25,143

TOTAL OTHER ASSETS

75,801

34,519

49,034

TOTAL ASSETS

$

2,650,682

$

2,608,564

$

3,054,121

 LIABILITIES AND DEFICIENCY

 CURRENT LIABILITIES:

Short term notes payable

$

983,813

$

867,769

$

1,113,504

Accounts payable

352,052

338,812

413,345

Accounts payable - related parties

177,432

117,662

121,828

Short term loans - bank

147,124

139,752

253,954

Short term loans - others

147,323

212,720

246,657

Short term loans - related parties

79,557

82,069

15,710

Current maturities of long-term loans - related

party

54,885

49,997

-

Other payables and accrued liabilities

54,589

74,640

49,548

Other payable - related parties

73,025

118,585

28,873

Customer deposits

125,890

81,761

90,556

Customer deposits - related parties

21,998

83,518

68,277

Deposit due to sales representatives

33,870

34,987

22,890

Deposit due to sales representatives - related

parties

1,238

1,235

943

Taxes payable

16,674

6,498

11,374

Deferred lease income, current

2,120

2,115

2,099

TOTAL CURRENT LIABILITIES

2,271,590

2,212,120

2,439,558

 NON-CURRENT LIABILITIES:

Long-term loans - related party

38,088

42,741

92,035

Long-term other payable - related party

43,008

-

-

Deferred lease income, noncurrent

75,079

75,418

76,425

 Capital lease obligations

330,099

324,171

306,350

 Profit sharing liability

328,827

322,386

303,233

 TOTAL NON-CURRENT LIABILITIES

815,101

764,716

778,043

TOTAL LIABILITIES

3,086,691

2,976,836

3,217,601

 COMMITMENTS AND CONTINGENCIES

 DEFICIENCY:

Preferred stock, $0.001 par value, 50,000,000

shares authorized, 3,092,899 shares issued and

outstanding as of December 31, 2012,

September 30, 2012 and December 31, 2011

3

3

3

Common stock, $0.001 par value, 200,000,000

shares authorized, 57,269,838, 57,100,688 and

56,601,988 shares issued, 54,797,532,

54,628,382 and 55,511,010 shares outstanding

as of December 31, 2012, September 30, 2012

and December 31, 2011, respectively

57

57

56

Treasury stock, at cost, 2,472,306, 2,472,306

and 1,090,978 shares as of December 31, 2012,

September 30, 2012 and December 31, 2011

(4,199)

(4,199)

(2,795)

 Paid-in-capital

105,714

105,475

107,940

 Statutory reserves

6,076

6,078

6,388

 Accumulated deficits

(381,782)

(331,842)

(229,083)

 Accumulated other comprehensive income 

10,185

10,008

10,200

TOTAL GENERAL STEEL

HOLDINGS, INC. DEFICIENCY

(263,946)

(214,420)

(107,291)

 NONCONTROLLING INTERESTS

(172,063)

(153,852)

(56,189)

TOTAL DEFICIENCY

(436,009)

(368,272)

(163,480)

TOTAL LIABILITIES AND DEFICIENCY

$

2,650,682

$

2,608,564

$

3,054,121

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

(In thousands, except per share data)

Three months ended September 30,

Nine months ended September 30,

2012

2011

2012

2011

SALES

$

518,542

$

662,437

$

1,441,325

$

1,978,515

SALES - RELATED PARTIES

192,883

335,724

698,824

791,841

  TOTAL SALES

711,425

998,161

2,140,149

2,770,356

COST OF GOODS SOLD

528,586

639,239

1,426,589

1,930,452

COST OF GOODS SOLD - RELATED

PARTIES

196,435

324,872

693,482

777,465

  TOTAL COST OF GOODS SOLD

725,021

964,111

2,120,071

2,707,917

GROSS PROFIT (LOSS)

(13,596)

34,050

20,078

62,439

SELLING, GENERAL AND 

ADMINISTRATIVE EXPENSES        

22,787

24,309

61,548

65,843

INCOME (LOSS) FROM OPERATIONS

(36,383)

9,741

(41,470)

(3,404)

OTHER INCOME (EXPENSE)

  Interest income

4,337

1,201

13,039

3,080

  Finance/interest expense

(36,615)

(35,081)

(138,929)

(72,317)

  Change in fair value of derivative liabilities

(55)

135

(48)

5,526

  Gain on debt settlement

-

-

-

3,430

  Gain on disposal of equipment

293

689

177

679

  Income from equity investments

44

790

80

4,301

  Foreign currency transaction gain (loss)

(581)

1,271

(1,169)

2,920

  Lease income

528

525

1,588

1,489

  Other non-operating income (expense), net

2,314

(1,047)

3,316

(1,197)

    Other expense, net

(29,735)

(31,517)

(121,946)

(52,089)

LOSS BEFORE PROVISION FOR INCOME

TAXES AND NONCONTROLLING

INTEREST

(66,118)

(21,776)

(163,416)

(55,493)

PROVISION FOR INCOME TAXES

  Current

100

410

510

617

  Deferred

-

144

169

15,384

    Provision for income taxes

100

554

679

16,001

NET LOSS

(66,218)

(22,330)

(164,095)

(71,494)

Less: Net loss attributable to noncontrolling

interest

(24,620)

(8,500)

(61,336)

(25,832)

NET LOSS ATTRIBUTABLE TO GENERAL

STEEL HOLDINGS, INC.

$

(41,598)

$

(13,830)

$

(102,759)

$

(45,662)

NET LOSS

$

(66,218)

$

(22,330)

$

(164,095)

$

(71,494)

OTHER COMPREHENSIVE LOSS

  Foreign currency translation adjustments

(698)

999

(577)

2,399

COMPREHENSIVE LOSS

(66,916)

(21,331)

(164,672)

(69,095)

Less: Comprehensive loss attributable to

noncontrolling interest

(24,888)

(8,247)

(61,721)

(25,517)

COMPREHENSIVE LOSS ATTRIBUTABLE

TO GENERAL STEEL HOLDINGS, INC.

$

(42,028)

$

(13,084)

$

(102,951)

$

(43,578)

WEIGHTED AVERAGE NUMBER OF

SHARES

  Basic and Diluted

54,466

55,166

54,946

54,547

LOSS PER SHARE

  Basic and Diluted

$

(0.76)

$

(0.25)

$

(1.87)

$

(0.84)

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011

(UNAUDITED)

(In thousands, except per share data)

Three months ended December 31,

Twelve months ended December 31,

2012

2011

2012

2011

SALES

$

525,066

$

473,612

$

1,966,391

$

2,452,127

SALES - RELATED PARTIES

198,378

319,928

897,202

1,111,769

  TOTAL SALES

723,444

793,540

2,863,593

3,563,896

COST OF GOODS SOLD

504,204

588,731

1,930,793

2,519,183

COST OF GOODS SOLD - RELATED

PARTIES

207,199

355,462

900,681

1,132,927

  TOTAL COST OF GOODS SOLD

711,403

944,193

2,831,474

3,652,110

GROSS PROFIT (LOSS)

12,041

(150,653)

32,119

(88,214)

SELLING, GENERAL AND 

ADMINISTRATIVE EXPENSES        

43,529

25,984

105,077

91,827

LOSS FROM OPERATIONS

(31,488)

(176,637)

(72,958)

(180,041)

OTHER INCOME (EXPENSE)

  Interest income

2,020

4,812

15,059

7,892

  Finance/interest expense

(37,313)

(42,632)

(176,242)

(114,949)

  Change in fair value of derivative liabilities

57

37

9

5,563

  Gain on debt settlement

-

-

-

3,430

  Gain (loss) on disposal of equipment

(2,311)

14

(2,134)

693

Government grant

2,253

-

2,253

-

Realized (loss) income from future contracts

-

415

-

415

Income from equity investments

137

1,001

217

5,302

  Foreign currency transaction (loss) gain

(79)

504

(1,248)

3,424

  Lease income

531

519

2,119

2,008

  Other non-operating income (expense), net

(1,533)

(245)

1,783

(1,442)

    Other expense, net

(36,238)

(35,575)

(158,184)

(87,664)

LOSS BEFORE PROVISION FOR INCOME

TAXES AND NONCONTROLLING

INTEREST

(67,726)

(212,212)

(231,142)

(267,705)

PROVISION FOR INCOME TAXES

-

-

  Current

117

(442)

627

175

  Deferred

-

35

169

15,419

    Provision (benefit) for income taxes

117

(407)

796

15,594

NET LOSS

(67,843)

(211,805)

(231,938)

(283,299)

Less: Net loss attributable to noncontrolling

interest

(17,905)

(80,280)

(79,241)

(106,112)

NET LOSS ATTRIBUTABLE TO GENERAL

STEEL HOLDINGS, INC.

$

(49,938)

$

(131,525)

$

(152,697)

$

(177,187)

NET LOSS

$

(67,843)

$

(211,805)

$

(231,938)

$

(283,299)

OTHER COMPREHENSIVE LOSS

  Foreign currency translation adjustments

(167)

(2,986)

(744)

(587)

COMPREHENSIVE LOSS

(68,010)

(214,791)

(232,682)

(283,886)

Less: Comprehensive loss attributable to

noncontrolling interest

(18,249)

(80,395)

(79,970)

(105,912)

COMPREHENSIVE LOSS ATTRIBUTABLE

TO GENERAL STEEL HOLDINGS, INC.

$

(49,761)

$

(134,396)

$

(152,712)

$

(177,974)

WEIGHTED AVERAGE NUMBER OF SHARES

  Basic and Diluted

54,871

55,352

54,867

54,750

LOSS PER SHARE

  Basic and Diluted

$

(0.91)

$

(2.38)

$

(2.78)

$

(3.24)

 

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 AND TWELVE MONTHS ENDED DECEMBER 31,

2012 AND 2011

(In thousands)

Nine months ended September 30,

Twelve months ended December 31,

2012

2011

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(164,095)

$

(71,494)

$

(231,938)

$

(283,299)

Adjustments to reconcile net loss to cash provided by

(used in) operating activities:

Depreciation, amortization and

depletion

62,538

40,385

83,931

58,331

Impairment of plant and equipment

-

5,412

20,173

5,424

Change in fair value of derivative

liabilities

48

(5,526)

(9)

(5,563)

Gain on debt settlement

-

(3,430)

-

(3,430)

Loss (gain) on disposal of equipment

(177)

(679)

2,134

(693)

Bad debt (recovery) allowance

2,316

127

(157)

3,529

Reservation of mine maintenance fee

3

-

37

-

Stock issued for services and

compensation

679

1,288

918

1,530

Amortization of deferred financing cost

on capital lease

32,363

17,282

43,122

27,704

Income from equity investments

(80)

(3,887)

(217)

(5,302)

Foreign currency transaction (gain) loss

1,169

(2,920)

1,248

(3,424)

Deferred tax assets

169

15,384

169

15,419

Deferred lease income

(1,588)

5,286

(2,119)

4,782

Changes in operating assets and liabilities

Notes receivable

(99,337)

19,497

(53,946)

(41,318)

Accounts receivable

5,429

(18,986)

6,694

4,761

Accounts receivable - related parties

(7,607)

(6,207)

5,835

(16,015)

Other receivables

(5,460)

(8,626)

7,221

(12,638)

Other receivables - related parties

4,784

(50,311)

1,820

(50,562)

Inventories

73,024

35,305

86,635

169,207

Advances on inventory purchases

(23,365)

(81,430)

(18,677)

(37,674)

Advances on inventory purchases -

related parties

(88,412)

(72,402)

(69,573)

(13,608)

Prepaid expense and other

(183)

4,214

(83)

4,753

Long-term deferred expense

119

793

(424)

845

Prepaid taxes

4,168

22,982

320

14,223

Accounts payable

(48,059)

153,604

(35,719)

160,657

Accounts payable - related parties

31,353

31,609

90,833

38,647

Other payables and accrued liabilities

34,286

6,819

14,138

18,076

Other payables - related parties

95,746

(3,827)

49,991

9,845

Customer deposits

(9,490)

53,645

34,410

(46,870)

Customer deposits - related parties

14,740

(2,241)

(46,960)

11,211

Taxes payable

(5,195)

5,501

4,957

4,834

Net cash provided by (used in)

operating activities

(90,114)

87,167

(5,236)

33,382

CASH FLOWS FROM INVESTING ACTIVITIES:

Restricted cash

(35,094)

13,173

78,826

(190,178)

Loans to related parties

(69,247)

-

(69,299)

-

Cash proceeds from (made to) short term

investment

40

(2,620)

317

(2,858)

Cash proceeds from sales of equipment

19

1,271

337

1,306

Long-term other receivable

-

-

(42,994)

-

Advance on equipment purchase

3,757

-

-

-

Equipment purchase and intangible assets

(19,666)

(54,494)

(27,976)

(110,939)

Effect on cash due to deconsolidating of a

subsidiary

(2,972)

-

(2,975)

-

Net cash used in investing

activities

(123,163)

(42,670)

(63,764)

(302,669)

CASH FLOWS FINANCING ACTIVITIES:

Payments made for treasury stock acquired

(1,404)

(1,925)

(1,404)

(1,923)

Notes receivable - restricted

521,866

(264,708)

232,218

(329,839)

Borrowings on short term notes payable

1,382,976

859,561

1,923,584

1,655,741

Payments on short term notes payable

(1,637,570)

(800,873)

(2,064,571)

(1,049,680)

Borrowings on short term loans - bank

237,535

446,532

260,611

563,007

Payments on short term loans - bank

(355,008)

(337,038)

(371,241)

(600,294)

Borrowings on short term loan - others

160,554

245,381

184,890

330,037

Payments on short term loans - others

(193,964)

(151,375)

(284,242)

(212,661)

Borrowings on short term loan - related parties

269,362

15,414

356,989

15,450

Payments on short term loans - related parties

(221,134)

(9,912)

(297,718)

(14,817)

Deposits due to sales representatives

11,939

(31,753)

10,743

(30,066)

Deposit due to sales representatives - related parties

285

-

286

464

Borrowings on long term loan - related party

-

13,587

-

14,677

Payments on long term loan - related party

-

-

-

(16,865)

Long-term other payable - related party

-

-

42,994

-

Net cash provided by (used in)

financing activities

175,437

(17,109)

(6,861)

323,231

EFFECTS OF EXCHANGE RATE CHANGE IN

CASH

1,426

(946)

2,312

801

INCREASE (DECREASE) IN CASH

(36,414)

26,442

(73,549)

54,745

CASH, beginning of period

120,016

65,271

120,016

65,271

CASH, end of period

$

83,602

$

91,713

$

46,467

$

120,016

 

 

 

SOURCE General Steel Holdings, Inc.



RELATED LINKS

http://www.gshi-steel.com