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SMALL BUSINESS
General Steel Holdings Announces First Quarter 2008 Financial Results
First Quarter 2008 Results Q1 2008 Q1 2007 vs. Q1 2007 Revenue $291.6 million $37.6 million +675 % Gross Profit $13.0 million $1.7 million +649 % Net Income $2.2 million $0.47 million +361 % EPS (Fully $0.063 $0.015 +320 % Diluted)
Recent Company Highlights -- In January 2008, acquired a controlling interest in Hancheng Tongxing Metallurgy Co., Ltd.
-- In March 2008, approved for listing on the NYSE Arca
-- In March 2008, initiated Chicago Board of Exchange Option Trading
-- December 2007, completed a private placement with net proceeds of approximately $36.4 million
"We are pleased to begin 2008 with our best-ever first quarter revenue in
the history of General Steel," said
First Quarter 2008 Financial Results
Net sales for the three months ended
Gross profit for the three months ended
Net income was
Pursuant to SFAS 133 and EITF 00-19, the Company determined that both the
warrants and the conversion option embedded in the Notes issued on
As of
Balance Sheet
Cash and restricted cash at
Growth Strategy
General Steel is striving to become one of the largest non-government
owned steel companies in
-- Acquire Chinese steel companies and increase their profitability and
efficiencies with the infusion of applied western management practices,
advanced production technologies and capital resources.
-- Grow through aggressive mergers, joint ventures and acquisitions
targeting state-owned enterprise steel companies and selected entities
with outstanding potential.
Conference Call
The earnings conference call will take place at
This conference call will be broadcast live over the Internet and can be accessed by clicking this link: http://www.videonewswire.com/event.asp?id=48594 .
For those unable to participate during the live broadcast, a replay will be available shortly after the call on General Steel Holdings' website http://www.gshi-steel.com for 90 days.
About General Steel Holdings, Inc.
General Steel Holdings, Inc., headquartered in
Information Regarding 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. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company's Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. 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.
For more information, please contact:
Ross Warner, General Steel Holdings, Inc.
Tel: +86-10-5879-7346 (Beijing)
Email: ross@gshi-steel.com
Skype: ross.warner.generalsteel
Ted Haberfield, HC International, Inc.
Tel: +1-760-755-2716 (USA)
Email: thaberfield@hcinternational.net
Web: hcinternational.net
Financial Statements
GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
A S S E T S
March 31, December 31,
2008 2007
(Unaudited)
CURRENT ASSETS:
Cash $ 13,247,096 $ 43,713,346
Restricted cash 47,482,412 8,391,873
Accounts receivable, net of allowance
for doubtful accounts of $270,235 and
$148,224 as of March 31, 2008
and December 31, 2007, respectively 13,079,339 11,225,678
Accounts receivable - related parties 14,682,192 565,631
Notes receivable 18,569,839 4,216,678
Notes receivable - restricted 4,359,863 12,514,659
Short-term loan receivable - related
parties 1,285,200 1,233,900
Other receivables 786,133 1,280,853
Other receivables - related parties 2,144,266 1,913,448
Dividend receivable 613,719 --
Inventories 100,804,450 77,928,925
Advances on inventory purchases 57,775,966 58,170,474
Advances on inventory purchases -
related parties 37,496,745 9,944,012
Prepaid expenses - current 1,239,190 1,059,866
Prepaid expenses related party - current 51,408 49,356
Deferred tax assets 637,598 399,751
Deferred notes issuance cost 5,120,152 3,564,546
319,375,568 236,172,996
PLANT AND EQUIPMENT, net 255,879,989 218,263,367
OTHER ASSETS:
Advances on equipment purchases 347,848 742,061
Investment in unconsolidated subsidiaries 9,666,132 822,600
Prepaid expenses - - non-current522,193 506,880
Prepaid expenses related party - -
non-current 244,188 142,467
Intangible assets, net of accumulated
amortization 22,575,599 21,756,709
Total other assets 33,355,960 23,970,717
Total assets $ 608,611,517 $ 478,407,080
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $ 129,291,728 $ 102,241,708
Accounts payable - related parties 7,795,581 14,302,738
Short-term loans - bank 93,131,304 93,019,608
Short-term loans - others 34,896,184 19,156,070
Short-term loans - related parties -- 7,317,027
Short-term notes payable 75,327,000 15,163,260
Employee loans 2,356,200 --
Other payables 3,754,540 3,343,684
Other payable - related parties 21,171 2,126,383
Accrued liabilities 7,164,386 5,248,863
Customer deposits 60,883,030 37,872,698
Customer deposits - related parties -- 9,211,736
Deposits due to sales representatives 2,734,620 3,068,298
Taxes payable 22,404,489 27,576,240
Investment payable 6,854,400 6,580,800
Distribution payable to minority
shareholder 2,330,858 2,820,803
Total current liabilities 448,945,491 349,049,916
NOTES PAYABLE, net of debt discount
$33,861,956 6,138,044 5,440,416
DERIVATIVE LIABILITIES 25,812,545 28,483,308
MINORITY INTEREST 65,701,909 42,044,266
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value,
50,000,000 shares authorized, 3,092,899
shares issued and outstanding 3,093 3,093
Common Stock, $0.001 par value,
200,000,000 shares authorized,
34,861,365 and 34,634,765 shares
(including 1,176,665 redeemable shares)
issued and outstanding as of March 31,
2008 and December 31, 2007,
respectively 34,861 34,635
Paid-in-capital 25,541,882 23,429,153
Retained earnings 24,527,303 22,686,590
Statutory reserves 3,980,072 3,632,325
Contribution receivable (959,700) (959,700)
Accumulated other comprehensive income 8,886,017 4,563,078
Total shareholders' equity 62,013,528 53,389,174
Total liabilities and shareholders'
equity $ 608,611,517 $ 478,407,080
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
2008 2007
REVENUES $ 178,492,167 $ 37,607,971
REVENUES - RELATED PARTIES 113,073,832 --
TOTAL REVENUES 291,565,999 37,607,971
COST OF SALES 166,714,663 35,874,966
COST OF SALES - RELATED PARTIES 111,869,221 --
TOTAL COST OF SALES 278,583,884 35,874,966
GROSS PROFIT 12,982,115 1,733,005
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 6,532,821 630,200
INCOME FROM OPERATIONS 6,449,294 1,102,805
OTHER EXPENSE, NET 2,366,155 220,676
INCOME BEFORE PROVISION FOR INCOME
TAXES AND MINORITY INTEREST 4,083,139 882,129
PROVISION FOR INCOME TAXES
Current 666,356 127,270
Deferred (216,533) --
Total provision for income taxes 449,823 127,270
NET INCOME BEFORE MINORITY INTEREST 3,633,316 754,859
LESS MINORITY INTEREST 1,444,856 279,994
NET INCOME 2,188,460 474,865
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustments 4,322,939 223,551
COMPREHENSIVE INCOME $ 6,511,399 $ 698,416
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 34,836,394 31,320,251
Diluted 34,923,614 31,320,251
EARNING PER SHARE
Basic $ 0.063 $ 0.015
Diluted $ 0.063 $ 0.015
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,188,460 $ 474,865
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Minority interest 1,444,856 279,994
Depreciation 4,499,873 561,709
Amortization 205,146 76,524
Loss on disposal of equipment 9,492 --
Stock issued for services and
compensation 548,456 23,760
Interest expense accrued on
mandatory redeemable stock -- 114,726
Amortization of deferred note
issuance cost 8,894 --
Amortization of discount on
convertible notes 697,628 --
Change in fair value of
derivative instrument (2,670,763) --
Deferred tax assets (216,533) --
Changes in operating assets and
liabilities
Accounts receivable (1,459,682) 5,898,381
Accounts receivable - related parties 7,631,355 --
Notes receivable (13,832,292) (1,517,176)
Notes receivable- restricted 8,491,027 --
Other receivables 1,533,823 82,939
Other receivables - related parties (148,056) 333,000
Inventories (17,647,149) (1,760,231)
Advances on inventory purchases 6,516,616 (11,340,142)
Advances on inventory purchases -
related parties (26,563,452) --
Prepaid expense - current (132,390) (123,161)
Prepaid expense - - non-current
5,639 --
Prepaid expense - - non-current -
related parties (93,765) --
Accounts payable 11,144,259 1,951,381
Accounts payable - related parties (6,951,111) --
Other payables (2,579,136) (275,480)
Other payable - related parties (2,118,101) --
Accrued liabilities 522,377 (41,648)
Customer deposits 20,885,570 1,631,391
Customer deposits - related parties (9,391,133) --
Taxes payable (9,585,924) 783,398
Net cash used in operating
activities (27,056,016) (2,845,770)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired from subsidiary 702,237 --
Deposits due to sales representatives (451,457) (411,542)
Advance on equipment purchases 416,045 --
Equipment purchases (28,097,609) (126,928)
Intangible assets purchases 143,465 --
Net cash used in investing
activities (27,287,319) (538,470)
CASH FLOWS FINANCING ACTIVITIES:
Restricted cash (33,726,504) (2)
Borrowings on short-term loans - bank 24,893,037 8,785,581
Payments on short-term loans - bank (28,568,988) (7,495,481)
Borrowings on short-term loans -
related parties 6,168,050 --
Payments on short-term loans -
related parties (5,153,320) --
Borrowings on short-term loan - others 23,147,344 --
Payments on short-term loans - others (16,733,731) --
Borrowings on short-term notes payable 62,896,500 1,161,090
Payments on short-term notes payable (11,614,887) (1,161,090)
Borrowings on employee loans 2,306,205 --
Payment to minority shareholders (594,336) --
Net cash provided by financing
activities 23,019,370 1,290,098
EFFECTS OF EXCHANGE RATE CHANGE IN
CASH 857,715 60,407
INCREASE (DECREASE) IN CASH (30,466,250) (2,033,735)
CASH, beginning of year 43,713,346 6,831,550
CASH, end of year $ 13,247,096 $ 4,797,815
GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
Preferred stock Common stock
Par Par Paid-in
Shares value Shares value capital
BALANCE, January 1,
2007 -- $ -- $31,250,000 $ 31,250 $6,871,358
Net income
Common stock
issued for
conversion of
redeemable stock,
$1.95/share 176,665 177 344,328
Common stock
issued for
service,
$1.32/share 18,000 18 23,742
Foreign currency
translation
adjustments
BALANCE, March 31,
2007, unaudited -- $ -- $31,444,665 $31,445 $7,239,428
Net income
Adjustment to
statutory
reserve
Registered
Capital to be
received from
Baotou Steel by
05/21/09
Common stock
issued for
acquisition
net of dividend
distribution to
Tianjin Victory
New 3,092,899 3,093 8,370,907
Conversion of
redeemable stock,
$1.95 1,000,000 1,000 1,948,992
Conversion of
warrants, $2.50 2,120,000 2,120 5,297,880
Common stock
issued for
compensation,
$8.16 70,100 70 571,946
Foreign currency
translation gain
BALANCE, December 31,
2007 3,092,899 $ 3,093 34,634,765 $34,635 $23,429,153
Net income
Adjustment to
statutory reserve
Common stock
issued
for compensation,
$8.16 76,600 77 548,379
Common stock
issued
for compensation,
$10.43 150,000 150 1,564,350
Foreign currency
translation
adjustments
BALANCE, March 31,
2008, unaudited 3,092,899 $ 3,093 $34,861,365 $34,861 $25,541,882
Retained earnings
Statutory
reserves Unrestricted
BALANCE, January 1, 2007 $ 1,107,010 $ 4,974,187
Net income 474,865
Common stock issued for conversion
of redeemable stock, $1.95/share
Common stock issued for service,
$1.32/share
Foreign currency translation
adjustments
BALANCE, March 31, 2007, unaudited $ 1,107,010 $ 5,449,052
Net income 21,951,056
Adjustment to statutory reserve 2,525,315 (2,525,315)
Registered Capital to be received
from Baotou Steel by 05/21/09
Common stock issued for acquisition
net of dividend distribution to
Tianjin Victory New (2,188,203)
Conversion of redeemable stock,
$1.95
Conversion of warrants, $2.50
Common stock issued for
compensation, $8.16
Foreign currency translation gain
BALANCE, December 31, 2007 $ 3,632,325 $ 22,686,590
Net income 2,188,460
Adjustment to statutory reserve 347,747 (347,747)
Common stock issued for
compensation, $8.16
Common stock issued for
compensation, $10.43
Foreign currency translation
adjustments
BALANCE, March 31, 2008, unaudited $ 3,980,072 $ 24,527,303
Accumulated
other
Subscriptions comprehensive
receivable income Totals
BALANCE, January 1, 2007 $ -- $ 1,076,688 $ 14,060,493
Net income 474,865
Common stock issued for
conversion of
redeemable stock,
$1.95/share 344,505
Common stock issued for
service, $1.32/share 23,760
Foreign currency
translation adjustments 223,551 223,551
BALANCE, March 31, 2007,
unaudited $ -- $ 1,300,239 $ 15,127,174
Net income 21,951,056
Adjustment to statutory
reserve --
Registered Capital to
be received from