General Steel Reports First and Second Quarter 2012 Financial Results

Company Reports 18.6% Year-over-Year Increase in Gross Profits in the First Half of 2012

Reiterates Intent to File 2012 Annual Report on Form 10-K on or before June 21, 2013

Jun 11, 2013, 08:00 ET from General Steel Holdings, Inc.

BEIJING, June 11, 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 first quarter ended March 31, 2012 and the second quarter ended June 30, 2012. In conjunction with this announcement, the Company has filed the corresponding Quarterly Reports on Form 10-Q with the U.S. Securities & Exchange Commission (the "SEC").

"The completion of these financial reports is another big step forward in our march towards bringing the Company current in its reporting obligations. I would like to thank our finance team and auditor for their tireless efforts to complete these filings and our shareholders for their continued support of the Company," said Henry Yu, Chairman and Chief Executive Officer of General Steel.

"Statistics from China Iron and Steel Association and reports from other publicly-listed Chinese steel companies clearly showed that 2012 was a very tough year for the entire steel industry.  However, benefiting from our favorable geographic advantage in Western China and close cooperation with the government and state-owned enterprises, I'm encouraged that General Steel was able to significantly grow gross profits and improve gross margin in the first six months of 2012. We remain focused on executing our business strategy."

General Steel is currently preparing its Quarterly Report on Form 10-Q for the period ended September 30, 2012 and Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2012 and intends to file on or before June 21, 2013. Filing the Annual Report will regain compliance with the New York Stock Exchange's continued listing standards.

First Six Months 2012 Financial Review

  • Revenue decreased 19.4% year-over-year to $1.4 billion in the first six months of 2012, from $1.8 billion in the first six months of 2011.
  • Sales volume totaled approximately 2.5 million metric tons, compared with 3.0 million metric tons in the first six months of 2011.
  • Gross profit increased 18.6% year-over-year to $33.7 million, or 2.4% of revenue, up from $28.4 million, or 1.6% of revenue in the first six months of 2011.
  • Operating loss for the quarter improved to $(5.1) million, compared with an operating loss of $(13.1) million in the first six months of 2011.
  • Net loss attributable to the Company was $(61.2) million, or $(1.11) per diluted share based on 55.2 million weighted average shares outstanding, compared with a net loss of $(31.8) million, or $(0.59) per diluted share based on 54.2 million weighted average shares outstanding in the first six months of 2011.

The increase in net loss for the first six months of 2012 was primarily attributable to a provision of inventory allowance of $16.9 million due to drop in market prices, and an increase of $65.1 million in finance expense. The increased in finance expense include an increase of $14.9 million in interest expense on capital lease, and $50.2 million in interest expense on bank borrowings, related parties borrowings, and discounted notes receivables.

First Quarter 2012 Financial Review

  • Revenue decreased 8.8% year-over-year to $648.0 million in the first quarter of 2012, from $710.5 million in the first quarter of 2011.
  • Sales volume totaled approximately 1.2 million metric tons, relatively unchanged from the first quarter of 2011.
  • Gross profit increased 11.5% year-over-year to $5.6 million, or 0.9% of revenue, up from $5.0 million, or 0.7% of revenue in the first quarter of 2011.
  • Operating loss for the quarter was $(13.0) million, compared with an operating loss of $(9.5) million in the first quarter of 2011.
  • Net loss attributable to the Company was $(34.8) million, or $(0.63) per diluted share based on 55.5 million weighted average shares outstanding, compared with a net loss of $(8.9) million, or $(0.16) per diluted share based on 54.8 million weighted average shares outstanding in the first quarter of 2011.

Second Quarter 2012 Financial Review

  • Revenue decreased 26.5% year-over-year to $780.7 million in the second quarter of 2012, from $1.1 billion in the second quarter of 2011.
  • Sales volume totaled approximately 1.3 million metric tons, compared with 1.8 million metric tons in the second quarter of 2011.
  • Gross profit increased 20.2% year-over-year to $28.0 million, or 3.6% of revenue, up from $23.3 million, or 2.2% of revenue in the second quarter of 2011.
  • Operating income for the quarter totaled $7.9 million, compared with an operating loss of $(3.7) million in the second quarter of 2011.
  • Net loss attributable to the Company was $(26.4) million, or $(0.48) per diluted share based on 54.9 million weighted average shares outstanding, compared with a net loss of $(22.9) million, or $(0.42) per diluted share based on 54.3 million weighted average shares outstanding in the second quarter of 2011.

Balance Sheet

As of June 30, 2012, the Company had cash and restricted cash of approximately $465.8 million, compared to $518.2 million as of December 31, 2011. The Company had an inventory balance of approximately $323.3 million as of June 30, 2012, compared to $297.7 million as of December 31, 2011. As of June 30, 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)

June 30,

March 31,

December 31,

ASSETS

2012

2012

2011

CURRENT ASSETS:

 Cash

$

58,404

$

84,516

$

120,016

 Restricted cash

407,430

455,501

398,216

 Notes receivable

79,708

69,373

92,910

 Restricted notes receivable

225,490

608,917

584,241

 Loans receivable - related parties

67,239

63,199

-

 Accounts receivable, net

8,927

18,577

12,601

 Accounts receivable - related parties

87,373

53,056

20,593

 Other receivables, net

12,908

11,410

22,411

 Other receivables - related parties

54,400

76,052

87,679

 Inventories

323,301

360,064

297,729

 Advances on inventory purchase

97,822

97,321

63,585

 Advances on inventory purchase - related parties

52,773

76,849

20,244

 Prepaid expense and other

547

335

531

 Prepaid taxes

22,647

18,891

24,189

 Short-term investment

2,853

2,851

2,906

TOTAL CURRENT ASSETS

1,501,822

1,996,912

1,747,851

 PLANT AND EQUIPMENT, net

1,216,493

1,228,772

1,257,236

 OTHER ASSETS:

 Advances on equipment purchase

14,690

12,780

10,420

 Investment in unconsolidated entities

984

904

12,840

 Long-term loan receivable - related party

2,000

2,000

-

 Long-term deferred expense 

506

549

631

 Intangible assets, net of accumulated amortization

24,623

24,908

25,143

TOTAL OTHER ASSETS

42,803

41,141

49,034

TOTAL ASSETS

$

2,761,118

$

3,266,825

$

3,054,121

 LIABILITIES AND DEFICIENCY

 CURRENT LIABILITIES:

 Short term notes payable

$

910,662

$

1,248,235

$

1,113,504

 Accounts payable

362,692

282,613

413,345

 Accounts payable - related parties

116,683

190,063

121,828

 Short term loans - bank

199,421

318,662

253,954

 Short term loans - others

240,125

299,707

246,657

 Short term loans - related parties

81,524

82,992

15,710

 Other payables and accrued liabilities

44,643

34,461

49,538

 Other payable - related parties

132,948

95,032

28,873

 Customer deposits

88,938

80,669

90,556

 Customer deposits - related parties

39,134

57,403

68,277

 Deposit due to sales representatives

30,602

33,534

22,890

 Deposit due to sales representatives - related parties

1,236

1,236

943

 Taxes payable

6,921

5,355

11,374

 Deferred lease income, current

2,117

2,116

2,099

 Derivative liabilities

3

23

10

TOTAL CURRENT LIABILITIES

2,257,649

2,732,101

2,439,558

 NON-CURRENT LIABILITIES:

 Long-term loans - related party

92,856

92,797

92,035

 Deferred lease income, noncurrent

76,043

76,524

76,425

 Capital lease obligations

319,446

314,080

306,350

 Profit sharing liability

317,174

311,358

303,233

 TOTAL NON-CURRENT LIABILITIES

805,519

794,759

778,043

TOTAL LIABILITIES

3,063,168

3,526,860

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 June 30,

March 31, 2012 and December 31, 2011

3

3

3

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

56,932,788, 56,767,388 and 56,601,988 shares issued,

54,460,482, 55,676,410, and 55,551,010 shares outstanding as of

June 30, March 31, 2012 and December 31, 2011, respectively

57

56

56

 Treasury stock, at cost, 2,472,306, 1,090,978 and 1,090,978

shares as of June 30, March 31, 2012 and December 31, 2011

(4,199)

(2,795)

(2,795)

 Paid-in-capital

105,190

105,059

107,940

 Statutory reserves

6,106

6,227

6,388

 Accumulated deficits

(290,244)

(263,867)

(229,083)

 Accumulated other comprehensive income 

9,982

8,751

10,200

TOTAL GENERAL STEEL HOLDINGS, INC. DEFICIENCY

(173,105)

(146,566)

(107,291)

 NONCONTROLLING INTERESTS

(128,945)

(113,469)

(56,189)

TOTAL DEFICIENCY

(302,050)

(260,035)

(163,480)

TOTAL LIABILITIES AND DEFICIENCY

$

2,761,118

$

3,266,825

$

3,054,121

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, JUNE 30, 2012 AND 2011 AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(UNAUDITED)

(In thousands, except per share data)

For the three months ended March 31,

For the three months ended June 30,

For the six months ended June 30,

2012

2011

2012

2011

2012

2011

SALES

$

383,797

$

501,479

$

538,986

$

814,599

$

922,783

$

1,316,078

SALES - RELATED PARTIES

264,244

208,985

241,697

247,132

505,941

456,117

    TOTAL SALES

648,041

710,464

780,683

1,061,731

1,428,724

1,772,195

COST OF GOODS SOLD

381,726

497,915

516,277

793,298

898,003

1,291,213

COST OF GOODS SOLD - RELATED PARTIES

260,685

207,500

236,362

245,093

497,047

452,593

    TOTAL COST OF GOODS SOLD

642,411

705,415

752,639

1,038,391

1,395,050

1,743,806

GROSS PROFIT

5,630

5,049

28,044

23,340

33,674

28,389

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES        

18,629

14,501

20,132

27,033

38,761

41,534

INCOME (LOSS) FROM OPERATIONS

(12,999)

(9,452)

7,912

(3,693)

(5,087)

(13,145)

OTHER INCOME (EXPENSE)

    Interest income

5,556

1,063

3,146

816

8,702

1,879

    Finance/interest expense

(48,366)

(14,119)

(53,948)

(23,117)

(102,314)

(37,236)

    Change in fair value of derivative liabilities

(13)

3,552

20

1,839

7

5,391

    Gain on debt settlement

-

-

-

3,430

-

3,430

    Gain (loss) on disposal of equipment

(119)

(397)

3

387

(116)

(10)

    Income from equity investments

(43)

1,655

79

1,856

36

3,511

    Foreign currency transaction gain (loss)

385

619

(973)

1,030

(588)

1,649

    Lease income

530

452

530

512

1,060

964

    Other non-operating income (expense), net

(143)

305

1,145

(455)

1,002

(150)

         Other expense, net

(42,213)

(6,870)

(49,998)

(13,702)

(92,211)

(20,572)

LOSS BEFORE PROVISION FOR INCOME TAXES

    AND NONCONTROLLING INTEREST

(55,212)

(16,322)

(42,086)

(17,395)

(97,298)

(33,717)

PROVISION FOR INCOME TAXES

    Current

367

750

43

-

410

207

    Deferred

169

(3,501)

-

18,198

169

15,240

           Provision for income taxes

536

(2,751)

43

18,198

579

15,447

NET LOSS

(55,748)

(13,571)

(42,129)

(35,593)

(97,877)

(49,164)

Less: Net loss attributable to noncontrolling interest

(20,964)

(4,654)

(15,752)

(12,678)

(36,716)

(17,332)

NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(34,784)

$

(8,917)

$

(26,377)

$

(22,915)

$

(61,161)

$

(31,832)

NET LOSS

$

(55,748)

$

(13,571)

$

(42,129)

$

(35,593)

$

(97,877)

$

(49,164)

OTHER COMPREHENSIVE LOSS

    Foreign currency translation adjustments

(1,469)

1,687

1,590

(287)

121

1,400

COMPREHENSIVE LOSS

(57,217)

(11,884)

(40,539)

(35,880)

(97,756)

(47,764)

Less: Comprehensive loss attributable to noncontrolling interest

(21,440)

(4,412)

(15,393)

(12,858)

(36,833)

(17,270)

COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.

$

(35,777)

$

(7,472)

$

(25,146)

$

(23,022)

$

(60,923)

$

(30,494)

WEIGHTED AVERAGE NUMBER OF SHARES

    Basic and Diluted

55,520

54,840

54,857

54,318

55,188

54,233

LOSS PER SHARE

    Basic and Diluted

$

(0.63)

$

(0.16)

$

(0.48)

$

(0.42)

$

(1.11)

$

(0.59)

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(UNAUDITED)

(In thousands)

Three months ended March 31,

Six months ended June 30,

2012

2011

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(55,748)

$

(13,571)

$

(97,877)

$

(49,164)

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Depreciation, amortization and depletion

20,559

8,922

41,329

22,022

Impairment of plant and equipment

-

-

-

5,361

Change in fair value of derivative liabilities

13

(3,552)

(7)

(5,391)

Gain on debt settlement

-

-

-

(3,430)

Loss on disposal of equipment

119

397

74

10

Bad debt allowance

5

5

5

-

Reservation of mine maintenance fee

254

-

50

-

Stock issued for services and compensation

262

647

394

994

Amortization of deferred financing cost on capital lease

10,839

-

21,627

6,698

Income from equity investments

43

(1,655)

(36)

(3,511)

Foreign currency transaction (gain) loss

(385)

(619)

588

(1,649)

Deferred tax assets

169

(2,730)

169

15,240

Deferred lease income

(530)

6,220

(1,060)

5,746

Changes in operating assets and liabilities

Notes receivable

22,048

(68,315)

11,728

(43,854)

Accounts receivable

(5,887)

(7,269)

3,789

(32,086)

Accounts receivable - related parties

(32,374)

3,591

(66,664)

(38,750)

Other receivables

3,371

3,686

2,403

(1,947)

Other receivables - related parties

(5,999)

17,436

15,729

(54,657)

Inventories

(61,814)

(41,747)

(24,713)

(10,460)

Advances on inventory purchases

(36,580)

(7,451)

(36,985)

(25,304)

Advances on inventory purchases - related parties

(68,061)

(3,137)

(54,790)

(6,745)

Prepaid expense and other

32

-

(181)

4,753

Long-term deferred expense

88

-

131

723

Prepaid taxes

5,513

-

1,760

22,256

Accounts payable

(104,700)

27,484

(49,095)

79,242

Accounts payable - related parties

103,918

34,958

54,720

45,926

Other payables and accrued liabilities

(5,924)

8,246

4,254

5,258

Other payables - related parties

72,220

(14,732)

110,061

(354)

Customer deposits

(10,653)

103,096

(2,418)

38,685

Customer deposits - related parties

(11,467)

(14,583)

(29,781)

9,671

Taxes payable

(6,355)

18,791

(4,785)

6,248

Net cash provided by (used in) operating activities

(167,024)

54,118

(99,581)

(8,469)

CASH FLOWS FROM INVESTING ACTIVITIES:

Restricted cash

(54,126)

(4,516)

(5,671)

15,017

Loans to related parties

(65,359)

-

(69,303)

-

Cash proceeds from short term investment

79

-

79

-

Cash proceeds from sales of equipment

-

328

4

258

Cash proceeds from investment in future contracts

-

-

-

410

Advance on equipment purchases

(2,280)

(190)

(4,182)

-

Equipment purchase and intangible assets

(8,449)

(10,912)

(16,368)

(31,097)

Effect on cash due to deconsolidating of a subsidiary

(2,977)

-

(2,975)

-

Net cash used in investing activities

(133,112)

(15,290)

(98,416)

(15,412)

CASH FLOWS FINANCING ACTIVITIES:

Payments made for treasury stock acquired

-

(1,128)

(1,404)

(1,924)

Notes receivable - restricted

(19,891)

(81,509)

364,325

63,055

Borrowings on short term notes payable

467,269

243,985

921,101

400,543

Payments on short term notes payable

(341,435)

(169,105)

(1,134,080)

(542,672)

Borrowings on short term loans - bank

150,252

85,312

184,477

235,006

Payments on short term loans - bank

(87,102)

(59,876)

(241,919)

(212,768)

Borrowings on short term loan - others

119,089

36,128

155,936

186,183

Payments on short term loans - others

(65,486)

(44,664)

(162,212)

(112,199)

Borrowings on short term loan - related parties

85,197

-

178,454

5,662

Payments on short term loans - related parties

(54,453)

-

(138,320)

-

Deposits due to sales representatives

10,481

(23,771)

7,515

(29,068)

Deposit due to sales representatives - related parties

286

-

286

-

Borrowings on long term loan - related party

-

-

-

76,350

Payments on long term loan - related party

-

-

-

(35,144)

Net cash provided by (used in) financing activities

264,207

(14,628)

134,159

33,024

EFFECTS OF EXCHANGE RATE CHANGE IN CASH

429

(161)

2,226

903

INCREASE (DECREASE) IN CASH

(35,500)

24,039

(61,612)

10,046

CASH, beginning of period

120,016

65,271

120,016

65,271

CASH, end of period

$

84,516

$

89,310

$

58,404

$

75,317

 

 

SOURCE General Steel Holdings, Inc.



RELATED LINKS

http://www.gshi-steel.com