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

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.



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