China Gerui Advanced Materials Group Limited Announces Fourth Quarter and Full Year 2009 Results
ZHENGZHOU, China, March 10 /PRNewswire-Asia-FirstCall/ -- China Gerui Advanced Materials Group Limited (Nasdaq: CHOP) ("China Gerui," or the "Company"), a leading niche and high value-added steel processing company that utilizes advanced technology to produce specialty steel products in China, today announced financial results for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter 2009 Highlights
-- Revenue increased 45.3% to $57.2 million from $39.4 million in the
fourth quarter of 2008
-- Gross profit increased 70.3% to $17.0 million from $10.0 million
-- Gross margin increased 430 basis points to 29.7% from 25.4%
-- Operating income increased 80.9% to $15.7 million from $8.7 million
-- Operating margin increased 550 basis points to 27.5% from 22.0%
-- Net income attributable to common stockholders increased 111.5% to
$11.4 million, or $0.27 per diluted share, from $5.4 million, or $0.18
per diluted share
-- Cash and restricted cash of $79.6 million and $37.5 million,
respectively, as of year-end 2009, compared to $42.6 million and $24.7
million, respectively, as of year-end 2008
-- Accounts receivable of $4.8 million as of year-end 2009, compared to
$10.3 million at year-end 2008
-- Working capital of $49.3 million as of year-end 2009 versus a working
capital deficit of $9.4 million at the end of 2008
-- Shareholders' equity of $87.0 million as of year-end 2009, compared to
$12.5 million at the end of 2008
Full Year 2009 Highlights
-- Full year revenue increased 11.5% to $218.9 million from $196.3 million
in full year 2008
-- Gross profit increased 22.2% to $65.8 million from $53.9 million
-- Gross margin increased 270 basis points to 30.1% from 27.4%
-- Operating income increased 21.6% to $60.3 million from $49.6 million
-- Operating margin increased 230 basis points to 27.6% from 25.3%
-- Net income attributable to common stockholders increased 101.3% to
$43.4 million, or $1.15 per diluted share, from $21.6 million, or $0.72
per diluted share
"We are pleased with our fourth quarter and full year results," said Mr. Mingwang Lu, Chairman and Chief Executive Officer. "Our top line growth was driven by our ability to increase the volume of our sales to meet continued robust customer demand and rising average selling prices for our products. The majority of our revenues come from the domestic consumer market in China, which we believe will continue to exhibit growth. Additionally, our continued focus on operational efficiency and cost controls helped us increase our gross and operating margins and achieve strong bottom line performance. We continue to improve the overall utilization rate of our production capacity and better mobilize existing resources towards higher-margin product offerings to further increase our profitability."
Fourth Quarter 2009 Results
Revenue for the three months ended December 31, 2009 was $57.2 million compared to $39.4 million for the same period in 2008, an increase of 45.3%. The increase in revenue was due to an increase in sales volumes and average selling prices for the Company's products.
Gross profit was $17.0 million compared to $10.0 million for the three months ended December 31, 2008, an increase of 70.3%. Gross margin was 29.7% compared to 25.4% for the same period last year. The increase in gross margin was mostly due to the Company's ability to improve its supply chain management and further optimize its product mix towards higher margin products.
Total operating expenses were $1.3 million, or 2.3% of sales, compared to $1.3 million, or 3.3% of sales, in last year's fourth quarter. Operating income was $15.7 million, or 27.5% of sales, compared to $8.7 million, or 22.0% of sales, in the same period last year, an increase of 80.9%. The increase in operating margin was primarily due to an improvement in operating efficiencies and cost control measures.
Net income attributable to common stockholders was $11.4 million, or $0.27 per diluted share, an increase of 111.5% from $5.4 million, or $0.18 per diluted share, in the same period last year.
Full Year 2009 Results
Revenue for full year 2009 was $218.9 million compared to $196.3 million for the same period in 2008, an increase of 11.5%. Gross profit was $65.8 million compared to $53.9 million for full year 2008, an increase of 22.2%. Total operating expenses were $5.5 million compared to $4.3 million for the same period last year, an increase of 28.8%. Operating income increased 21.6% to $60.3 million, or 27.6% of sales, from $49.6 million, or 25.3% of sales, for full year 2008. Net income attributable to common stockholders increased 101.3% to $43.4 million, or $1.15 per diluted share, compared to $21.6 million, or $0.72 per diluted share, for the same period last year.
Financial Condition
As of December 31, 2009, the Company had $79.6 million in cash and an additional $37.5 million in restricted cash, compared to $42.6 million and $24.7 million, respectively, as of December 31, 2008. Accounts receivable were $4.8 million as of December 31, 2009, compared to $10.3 million as of December 31, 2008. Working capital was $49.3 million versus a working capital deficit of $9.4 million at the end of 2008. Shareholder's equity was $87.0 million, compared to $12.5 million at the end of 2008. The Company has no long-term debt. For the full year 2009, net cash provided by operating activities was $33.8 million.
Recent Developments
-- In February 2010, the Company launched a new corporate website under
the domain name of http://www.geruigroup.com . The new website is
designed to strengthen China Gerui's communications with investors,
customers and business partners.
-- In January 2010, the Company's senior management team rang the opening
bell at the NASDAQ MarketSite in New York City.
-- In December 2009, the Company changed its name to "China Gerui Advanced
Materials Group Limited" from "Golden Green Enterprises Limited."
Business Outlook
China Gerui's existing production facility is running at very close to full capacity and for fiscal year 2010 the Company expects to focus on expanding its production lines in order to meet the demand for its products in the Chinese domestic market. In addition to the high-precision cold-rolled steel strip products, the Company will focus on developing other high-margin steel products in the cold-rolled steel category, such as wide strips and sheets.
The Company is on schedule with its plan to construct a new production facility, including two 75,000 ton chromium-coated production lines to be completed by the second half of 2010 and one 100,000 ton zinc-coated production line to be completed by the end of 2011. This expansion is expected to increase the Company's annual production capacity to 500,000 tons by 2011.
Mr. Lu added, "Our immediate focus for 2010 is increasing our production capacity and expanding our product portfolio into higher margin coated steel and wide strip products. We also expect to continue to benefit from the sustained rise in the purchasing power of the Chinese consumer, who is the ultimate buyer of the products our customers produce. Another market trend that we expect to benefit from is the continuing movement toward import replacement in our industry. Our customers are increasingly turning to our high-end precision steel products, which are more competitively priced but of the same quality as the premium priced imported products that they have historically relied upon."
For the first quarter of 2010, the Company expects to achieve revenues of between $54 million and $56 million and net income of between $10.5 million and $11 million. The Company expects to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2009 on or before April 30, 2010.
Conference Call Information
The Company will also host a conference call at 8:00 am ET on Wednesday, March 10, 2010.
Listeners may access the call by dialing +1 (877) 456-7316 five to ten minutes prior to the scheduled conference call time. International callers should dial +1 (706) 758-1304. The conference participant pass code is 60267064.
A replay of the conference call will be available for 14 days starting from 9:00 am ET on Wednesday, March 10, 2010. To access the replay, dial +1 (706) 645-9291. International callers should dial +1 (800) 642-1687. The passcode is 60267064.
A live and archived webcast of the call will be available on the Company's website at http://www.geruigroup.com/Investors.html . To listen to the live webcast, please go to the Company's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software.
About China Gerui Advanced Materials Group Limited
China Gerui Advanced Materials Group Limited (formerly Golden Green Enterprises Limited) is a leading niche and high value-added steel processing company that utilizes advanced technology to produce specialty steel products in China. The Company produces high-end, high-precision, ultra-thin, high-strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, the Company's products are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The Company sells its products to domestic Chinese customers in a diverse range of industries, including the food packaging, telecommunication, electrical appliance, and construction materials industries. For more information, please visit http://www.geruigroup.com .
Safe Harbor Statement
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 20-F for the year ended December 31, 2008 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov . We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
For more information, please contact:
Company Contact:
Email: [email protected]
Web: http://www.geruigroup.com
Investor Relations Contact:
CCG Investor Relations
Mr. Athan Dounis
Tel: +1-646-213-1916
Email: [email protected]
Financial tables to follow
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED
(FORMERLY GOLDEN GREEN ENTERPRISES LIMITED)
CONSOLIDATED STATEMENTS OF INCOME
(IN US DOLLARS)
For the Three Months Ended For the Year Ended
December 31, December 31,
2009 2008 2009 2008
(Unaudited) (Unaudited)
Revenue $57,241,385 $39,404,168 $218,902,632 $196,264,731
Cost of revenue (40,220,298) (29,408,495) (153,095,354) (142,407,995)
Gross Profit 17,021,087 9,995,673 65,807,278 53,856,736
Operating expenses:
General and
administrative
expenses (1,097,958) (1,057,784) (4,573,512) (3,431,745)
Selling and
marketing
expenses (204,254) (250,000) (919,049) (831,108)
Total operating
expenses (1,302,212) (1,307,784) (5,492,561) (4,262,853)
Operating income 15,718,875 8,687,889 60,314,717 49,593,883
Other income and
(expense):
Interest income 149,792 317,174 829,056 1,395,121
Interest
expenses (728,071) (799,604) (3,237,757) (3,769,423)
Sundry income 77,899 70,777 293,831 155,687
Income before income
taxes and
non-controlling
interest 15,218,495 8,276,236 58,199,847 47,375,268
Income tax expense (3,817,221) (2,202,210) (14,751,569) (11,869,735)
Net income before
non-controlling
interest 11,401,274 6,074,026 43,448,278 35,505,533
Net income
attributable to
non-controlling
interest -- (682,652) -- (13,920,944)
Net income
attributable to
common stockholders $11,401,274 $5,391,374 $43,448,278 $21,584,589
Earnings per share
- Basic $0.30 $0.18 $1.29 $0.72
- Diluted $0.27 $0.18 $1.15 $0.72
Weighted average
common shares
outstanding
- Basic 38,035,225 30,000,000 33,751,844 30,000,000
- Diluted 41,958,860 30,000,000 37,675,479 30,000,000
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED
(FORMERLY GOLDEN GREEN ENTERPRISES LIMITED)
CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)
December 31, December 31,
2009 2008
Assets
Current assets
Cash $79,607,369 $42,622,404
Restricted cash 37,498,169 24,712,349
Accounts receivable, net 4,808,184 10,304,724
Inventories 5,958,880 3,554,313
Prepaid expenses and other
deposits 16,473,710 10,921,055
Other receivables 2,292,133 1,266,097
Total current assets 146,638,445 93,380,942
Non-current assets
Property, plant and equipment,
net 22,338,210 19,941,521
Prepaid machinery deposits 13,973,966 637,882
Land use right, net 1,399,026 1,416,220
Total non-current assets 37,711,202 21,995,623
Total assets $184,349,647 $115,376,565
Liabilities and stockholders' equity
Current Liabilities
Accounts payable $7,617,953 $5,339,350
Notes payable 41,013,622 26,910,956
Term loans 33,982,715 30,677,903
Income tax payable 3,817,304 2,188,677
Customers deposits 8,146,611 17,484,708
Accrued liabilities and other
payables 2,728,585 6,294,406
Dividend payable -- 9,601,549
Due to former minority
shareholders -- 4,310,087
Total current liabilities 97,306,790 102,807,636
Non-current liabilities
Land use right payable, net -- 28,521
Total non-current liabilities -- 28,521
Total liabilities 97,306,790 102,836,157
Stockholders' equity
Common stock,
Common stock, 100,000,000 shares
authorized with no par value;
40,692,323 and 30,000,000
shares outstanding as of
December 31, 2009 and 2008
respectively 45,261,630 300
Additional paid-in capital 6,930,944 6,930,944
Retained earnings 32,438,982 7,515,704
Subscription receivable -- (4,310,087)
Accumulated other comprehensive
income 2,411,301 2,403,547
Total stockholders' equity 87,042,857 12,540,408
Total liabilities and stockholders'
equity $184,349,647 $115,376,565
CHINA GERUI ADVANCED MATERIALS GROUP LIMITED
(FORMERLY GOLDEN GREEN ENTERPRISES LIMITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN US DOLLARS)
For the Year Ended December, 31,
2009 2008
Cash flows from operating activities:
Net income $43,448,278 $21,584,589
Adjustments to reconcile net income
to net cash provided by/(used in)
operating activities:
Depreciation of property, plant and
equipment 2,792,547 2,447,626
Amortization of land use right 30,827 30,280
Net income attributable to non-
controlling interest -- 13,920,944
Changes in assets and liabilities:
Accounts receivable, net 5,496,540 (128,270)
Inventories (2,404,567) 5,106,310
Prepaid expenses and other deposits (5,552,655) (311,563)
Other receivables (1,026,036) (630,379)
Accounts payable 2,278,603 (547,173)
Income tax payable 1,628,627 (408,010)
Customers deposit (9,338,097) 9,035,743
Accrued liabilities and other
payables (3,565,821) 1,005,235
Net cash provided by operating
activities 33,788,246 51,105,332
Cash flows from investing activities:
Capital expenditures for addition of
property, plant and equipment (5,213,329) (6,572,185)
Capital expenditures on addition of
land use right (14,648) --
Changes in restricted cash (12,785,820) (5,485,798)
Changes in prepaid machinery deposits (13,336,084) (637,882)
Proceeds from former owners -- 25,126,394
Net cash (used in)/provided by
investing activities (31,349,881) 12,430,529
Cash flows from financing activities:
Repayment of term loans (37,269,379) (26,662,742)
Proceeds from term loans 40,574,191 39,985,342
Proceeds from common stock issued 26,736,329 --
Proceeds from notes payable 14,102,666 6,430,053
Proceeds from collection of
subscription receivable 4,310,087 --
Dividends paid (9,601,549) (42,254,947)
Land use right payable (28,521) (125,604)
Amount paid to former minority
shareholders (4,310,087) --
Amount paid to former owners -- (61,688)
Net cash provided by / (used in)
financing activities 34,513,737 (22,689,586)
Net increase in cash 36,952,102 40,846,275
Effect on change of exchange rates 32,862 1,557,778
Cash as of January 1 42,622,404 218,351
Cash as of December 31 $79,607,368 $42,622,404
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest paid $3,237,757 $3,769,423
Income tax paid $13,122,287 $12,277,745
Non-cash paid during the year for:
Dividend paid $18,525,000 $--
SOURCE China Gerui Advanced Materials Group Limited
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