General Steel Reports First Quarter 2015 Financial Results
BEIJING, May 15, 2015 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a leading non-state-controlled steel producer in China, today announced its financial results for the first quarter ended March 31, 2015.
Henry Yu, Chairman and Chief Executive Officer of General Steel commented, "The first quarter of 2015 was very tough for China's iron and steel industry, as the combination of the government's stricter environmental enforcement and a slowdown in demand sharply pressured average selling price and profitability. The average price of rebar encountered a steep double-digit sequential decline during the first quarter to the lowest price level in 13 years. Correspondingly, we reduced production volume to preserve working capital, and we took the opportunity to temporarily shut down in the second half of the first quarter in order to perform maintenance on our production equipment.
As the steel industry remains challenging, we believe our accelerated business transformation strategy is on target. In the first quarter, we established our RFID joint venture that in April 2015 launched its first UHF RFID tag, which has thus far received very positive feedback. We anticipate rolling out deployment and commercialization in the second half of 2015. We remain confident that the transformed businesses will drive greater synergies and efficiency enhancements."
John Chen, Chief Financial Officer of General Steel, commented, "Facing macro-environment challenges for steel operations, we continue to focus on those factors that we can control, including management of our operating expenses and working capital, closely aligning with SOEs and local government for financial support, and continuing to optimize our upgraded manufacturing equipment. As we march forward with our business transformation strategy, we will allocate capital and human resources into our RFID joint venture, as well as unlocking hidden value in our land reserves in an effort to drive greater value for our shareholders."
First Quarter 2015 Financial Information
- Sales volume decreased by 27.6% year-over-year to approximately 0.95 million metric tons, compared with 1.32 million metric tons in the first quarter of 2014.
- Sales totaled $328.2 million, compared with $594.2 million in the first quarter of 2014.
- Gross loss was $(32.1) million, or (9.8%) of total sales, compared with $(22.6) million, or (3.8%) of total sales in the first quarter of 2014.
- Loss from operations totaled $(55.7) million, compared with $(43.7) million in the first quarter of 2014.
- Net loss attributable to the Company was $(45.1) million, or $(0.73) per diluted share, compared with $(43.6) million, or $(0.78) per share in the first quarter of 2014.
- As of March 31, 2015, the Company had cash and restricted cash of $259.6 million.
First Quarter 2015 Financial and Operating Results
Total Sales
Total sales for the first quarter of 2015 decreased by 44.8% year-over-year to $328.2 million, compared with $594.2 million in the first quarter of 2014. The year-over-year sales decrease was primarily due to decreases in both total sales volume and average selling price of rebar.
- Total sales volume in the first quarter of 2015 was 0.95 million metric tons, a decrease of 27.6% compared with 1.32 million metric tons in the first quarter of 2014.
- The average selling price of rebar at Longmen Joint Venture in the first quarter of 2015 decreased to approximately $343.8 per metric ton, down by 23.7% from $450.9 per metric ton in the first quarter of 2014.
Gross Loss
Gross loss for the first quarter of 2015 was $(32.1) million, or (9.8)% of total sales, as compared with gross loss of $(22.6) million, or (3.8)% of total sales in the first quarter of 2014. The decrease in gross margin was mainly due to a steeper decrease in average selling price of rebar, compared with the decrease in unit cost of manufactured rebar, as well as a higher fixed manufacturing cost, as the Company proactively paused production for maintenance during the first quarter of 2015.
Operating Expenses and Loss from Operations
Selling, general and administrative expenses for the first quarter of 2015 were $17.4 million, a decrease of 17.6% from $21.1 million in the first quarter of 2014. General and administrative expenses decreased to $11.0 million in the first quarter of 2015, compared with $12.8 million in the first quarter of 2014. Selling expenses were $6.4 million in the first quarter of 2015, compared with $8.3 million in the same period of 2014.
The Company accrued unallocated overheads expenses of $19.1 million in its operating expenses for the first quarter of 2015, which was mainly due to the reallocation of fixed overheads from cost of goods sold to general and administrative in accordance with GAAP, as the Company had temporarily shut down production for maintenance during the period.
Other operating income from a change in the fair value of profit sharing liability during the first quarter of 2015 was $12.9 million, compared with a loss on change in fair value of profit sharing liability of $0.05 million in the same period of last year.
Correspondingly, loss from operations for the first quarter of 2015 totaled $(55.7) million, compared with $(43.7) million for the first quarter of 2014.
Finance Expense
Finance and interest expense in the first quarter of 2015 was $20.6 million, of which $5.2 million was the non-cash interest expense on capital lease, as compared with $5.1 million in the same period of 2014, and $15.4 million was the interest expense on bank loans and discounted note receivables, as compared with $23.6 million in the same period of 2014.
Net Loss and Net Loss per Share
Net loss attributable to General Steel for the first quarter of 2015 was $(45.1) million, or $(0.73) per diluted share, based on 62.0 million weighted average shares outstanding. This compares to a net loss attributable to General Steel of $(43.6) million, or $(0.78) per share, based on 55.8 million weighted average shares outstanding in the first quarter of 2014. The increase in shares count of weighted average shares outstanding was primarily due to the issuance of 5 million shares of the Company's common stock pursuant to a $7.5 million private placement which closed in October 2014.
Balance Sheet
As of March 31, 2015, the Company had cash and restricted cash of approximately $259.6 million, compared to $367.3 million as of December 31, 2014. The Company had an inventory balance of $148.3 million as of March 31, 2015, compared to $156.3 million as of December 31, 2014.
Conference Call and Webcast:
General Steel will hold a corresponding conference call and live webcast at 8:00 a.m. EDT on Friday, May 15, 2015 (which corresponds to 8:00 p.m. Beijing/Hong Kong Time on Friday, May 15, 2015) to discuss the results and answer questions from investors. Listeners may access the call by dialing:
| US Toll Free: |
1-888-346-8982 |
| International Toll: |
1-412-902-4272 |
| China Toll Free: |
400-120-1203 |
| Hong Kong Toll Free: |
800-905-945 |
| Conference ID: |
General Steel Holdings |
The call will also be available as a live, listen-only Webcast under the "Events and Presentations" page on the "Investor Relations" section of the Company's Website at http://www.corpasia.net/us/GSI/irwebsite/index.php?mod=event. Following the live Webcast, an online archive of the Webcast will be available for 90 days.
A replay of the conference call may be accessed through May 22, 2015 by dialing:
| US Toll Free: |
1-877-344-7529 |
|
| International Toll: |
1-412-317-0088 |
|
| Access Code: |
10065799 |
About General Steel Holdings, Inc.
General Steel Holdings, Inc. is a leading non-state-owned steel maker headquartered in Beijing, China. With seven million metric tons of crude steel production capacity under management and operations in Tianjin municipality and China's Shaanxi and Guangdong provinces, the Company produces a variety of steel products including rebar and high-speed wire.
In addition to its steel business, the Company also designs, manufactures, and integrates radio frequency identification ("RFID") systems. The Company's RFID technology provides real-time data on supplies, inventory, and goods, thereby greatly enhancing its customers' administration and planning processes, as well as asset tracking and supply chain 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 [email protected].
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, including those disclosed in the Company's most recent Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission. 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.
Joyce Sung
Tel: +1-347-534-1435
Email: [email protected]
Asia Bridge Capital Limited
Carene Toh
Tel: +1-888-957-3362
Email: [email protected]
| GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
| (UNAUDITED) (In thousands) |
||||||||
| March 31, |
December 31, |
|||||||
| ASSETS |
2015 |
2014 |
||||||
| CURRENT ASSETS: |
||||||||
| Cash |
$ |
9,736 |
$ |
11,641 |
||||
| Restricted cash |
249,820 |
355,685 |
||||||
| Notes receivable |
1,606 |
10,290 |
||||||
| Restricted notes receivable |
80,889 |
111,801 |
||||||
| Loan receivable |
42,569 |
36,001 |
||||||
| Loans receivable - related parties |
6,728 |
34,713 |
||||||
| Accounts receivable, net |
10,686 |
9,321 |
||||||
| Accounts receivable - related parties |
160,286 |
8,498 |
||||||
| Other receivables, net |
103,291 |
63,746 |
||||||
| Other receivables - related parties |
6,364 |
39,670 |
||||||
| Inventories |
148,295 |
156,327 |
||||||
| Advances on inventory purchase |
49,440 |
73,819 |
||||||
| Advances on inventory purchase - related parties |
11,243 |
45,617 |
||||||
| Prepaid expense and other |
5,279 |
4,803 |
||||||
| Prepaid taxes |
5,851 |
5,789 |
||||||
| Short-term investment |
7,503 |
2,688 |
||||||
| TOTAL CURRENT ASSETS |
899,586 |
970,409 |
||||||
| PLANT AND EQUIPMENT, net |
1,561,511 |
1,543,136 |
||||||
| OTHER ASSETS: |
||||||||
| Advances on equipment purchase |
5,270 |
11,438 |
||||||
| Investment in unconsolidated entities |
16,705 |
16,823 |
||||||
| Long-term deferred expense |
452 |
458 |
||||||
| Intangible assets, net of accumulated amortization |
22,885 |
22,960 |
||||||
| TOTAL OTHER ASSETS |
45,312 |
51,679 |
||||||
| TOTAL ASSETS |
$ |
2,506,409 |
$ |
2,565,224 |
||||
| LIABILITIES AND DEFICIENCY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Short term notes payable |
$ |
448,362 |
$ |
661,635 |
||||
| Accounts payable |
608,678 |
612,801 |
||||||
| Accounts payable - related parties |
226,964 |
207,783 |
||||||
| Short term loans - bank |
232,148 |
257,502 |
||||||
| Short term loans - others |
51,995 |
60,717 |
||||||
| Short term loans - related parties |
217,397 |
46,380 |
||||||
| Other payables and accrued liabilities |
51,985 |
55,488 |
||||||
| Other payable - related parties |
96,277 |
87,252 |
||||||
| Customer deposits |
139,106 |
92,974 |
||||||
| Customer deposits - related parties |
148,176 |
132,616 |
||||||
| Deposit due to sales representatives |
19,361 |
17,871 |
||||||
| Deposit due to sales representatives - related parties |
2,553 |
2,509 |
||||||
| Taxes payable |
9,393 |
5,201 |
||||||
| Deferred lease income, current |
2,179 |
2,176 |
||||||
| Capital lease obligations, current |
8,678 |
8,508 |
||||||
| TOTAL CURRENT LIABILITIES |
2,263,252 |
2,251,413 |
||||||
| NON-CURRENT LIABILITIES: |
||||||||
| Long-term loans - related party |
352,850 |
339,549 |
||||||
| Deferred lease income, noncurrent |
72,258 |
72,713 |
||||||
| Capital lease obligations, noncurrent |
397,416 |
393,252 |
||||||
| Profit sharing liability |
57,538 |
70,422 |
||||||
| TOTAL NON-CURRENT LIABILITIES |
880,062 |
875,936 |
||||||
| TOTAL LIABILITIES |
3,143,314 |
3,127,349 |
||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| DEFICIENCY: |
||||||||
| Preferred stock, $0.001 par value, 50,000,000 shares |
3 |
3 |
||||||
| Common stock, $0.001 par value, 200,000,000 shares |
64 |
64 |
||||||
| Treasury stock, at cost, 2,472,306 shares as of March 31, |
(4,199) |
(4,199) |
||||||
| Paid-in-capital |
115,563 |
115,494 |
||||||
| Statutory reserves |
6,539 |
6,472 |
||||||
| Accumulated deficits |
(508,674) |
(463,521) |
||||||
| Accumulated other comprehensive income |
163 |
644 |
||||||
| TOTAL GENERAL STEEL |
(390,541) |
(345,043) |
||||||
| NONCONTROLLING INTERESTS |
(246,364) |
(217,082) |
||||||
| TOTAL DEFICIENCY |
(636,905) |
(562,125) |
||||||
| TOTAL LIABILITIES AND DEFICIENCY |
$ |
2,506,409 |
$ |
2,565,224 |
||||
| GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES |
|||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
|||||||
| (UNAUDITED) |
|||||||
| (In thousands, except per share data)
|
|||||||
| For the Three months ended March 31, |
|||||||
| 2015 |
2014 |
||||||
| SALES |
$ |
270,769 |
$ |
512,005 |
|||
| SALES - RELATED PARTIES |
57,395 |
82,206 |
|||||
| TOTAL SALES |
328,164 |
594,211 |
|||||
| COST OF GOODS SOLD |
297,565 |
530,744 |
|||||
| COST OF GOODS SOLD - RELATED PARTIES |
62,746 |
86,028 |
|||||
| TOTAL COST OF GOODS SOLD |
360,311 |
616,772 |
|||||
| GROSS LOSS |
(32,147) |
(22,561) |
|||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
(17,355) |
(21,053) |
|||||
| UNALLOCATED OVERHEADS EXPENSES |
(19,134) |
- |
|||||
| CHANGE IN FAIR VALUE OF PROFIT |
12,924 |
(49) |
|||||
| LOSS FROM OPERATIONS |
(55,712) |
(43,663) |
|||||
| OTHER INCOME (EXPENSE) |
|||||||
| Interest income |
2,331 |
3,192 |
|||||
| Finance/interest expense |
(20,570) |
(28,695) |
|||||
| Gain on disposal of equipment and intangible assets |
16 |
46 |
|||||
| Income from equity investments |
(37) |
13 |
|||||
| Foreign currency transaction loss |
(873) |
(854) |
|||||
| Lease income |
543 |
546 |
|||||
| Other non-operating income (expense), net |
223 |
(176) |
|||||
| Other expense, net |
(18,367) |
(25,928) |
|||||
| LOSS BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST |
(74,079) |
(69,591) |
|||||
| PROVISION FOR INCOME TAXES |
30 |
5 |
|||||
| NET LOSS |
(74,109) |
(69,596) |
|||||
| Less: Net loss income attributable to |
(28,956) |
(26,032) |
|||||
| NET LOSS ATTRIBUTABLE TO GENERAL |
$ |
(45,153) |
$ |
(43,564) |
|||
| NET LOSS |
$ |
(74,109) |
$ |
(69,596) |
|||
| OTHER COMPREHENSIVE LOSS |
|||||||
| Foreign currency translation adjustments |
(853) |
4,670 |
|||||
| COMPREHENSIVE LOSS |
(74,962) |
(64,926) |
|||||
| Less: Comprehensive loss attributable to |
(29,328) |
(24,226) |
|||||
| COMPREHENSIVE LOSS ATTRIBUTABLE |
$ |
(45,634) |
$ |
(40,700) |
|||
| WEIGHTED AVERAGE NUMBER OF SHARES |
|||||||
| Basic and Diluted |
61,986 |
55,813 |
|||||
| LOSS PER SHARE |
|||||||
| Basic and Diluted |
$ |
(0.73) |
$ |
(0.78) |
|||
| GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES |
|||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
| (UNAUDITED) (In thousands) |
|||||||
| For the Three months ended March 31, |
|||||||
| 2015 |
2014 |
||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||
| Net loss |
$ |
(74,109) |
$ |
(69,596) |
|||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: |
|||||||
| Depreciation, amortization and depletion |
25,164 |
24,346 |
|||||
| Change in fair value of derivative liabilities |
(12,924) |
49 |
|||||
| Gain loss on disposal of equipment and intangible assets |
(16) |
(46) |
|||||
| Provision for doubtful accounts |
1,279 |
(251) |
|||||
| Reservation of mine maintenance fee |
113 |
242 |
|||||
| Stock issued for services and compensation |
69 |
150 |
|||||
| Amortization of deferred financing cost on capital lease |
4,966 |
5,086 |
|||||
| Income (loss) from equity investments |
37 |
(13) |
|||||
| Foreign currency transaction (gain) loss |
873 |
854 |
|||||
| Deferred lease income |
(543) |
(546) |
|||||
| Changes in operating assets and liabilities |
|||||||
| Notes receivable |
32,504 |
(70,354) |
|||||
| Accounts receivable |
(1,373) |
(102) |
|||||
| Accounts receivable - related parties |
(151,218) |
(1,569) |
|||||
| Other receivables |
(40,476) |
355 |
|||||
| Other receivables - related parties |
33,231 |
(4,219) |
|||||
| Inventories |
7,327 |
(730) |
|||||
| Advances on inventory purchases |
24,380 |
176 |
|||||
| Advances on inventory purchases - related parties |
28,436 |
(38,419) |
|||||
| Prepaid expense and other |
(468) |
(516) |
|||||
| Long-term deferred expense |
7 |
56 |
|||||
| Prepaid taxes |
(54) |
4,963 |
|||||
| Accounts payable |
(7,706) |
59,351 |
|||||
| Accounts payable - related parties |
18,856 |
16,986 |
|||||
| Other payables and accrued liabilities |
(3,625) |
15,300 |
|||||
| Other payables - related parties |
8,960 |
(12,676) |
|||||
| Customer deposits |
45,848 |
20,043 |
|||||
| Customer deposits - related parties |
15,341 |
113,895 |
|||||
| Taxes payable |
4,171 |
2,708 |
|||||
| Net cash (used in) provided by operating activities |
(40,950) |
65,523 |
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||
| Restricted cash |
105,911 |
(32,943) |
|||||
| Loan to unrelated parties |
(6,500) |
- |
|||||
| Repayments from related parties |
33,791 |
- |
|||||
| Cash proceeds from short term investment |
81 |
164 |
|||||
| Payments for short term investment |
(4,875) |
- |
|||||
| Cash proceeds from sales of equipment and intangible assets |
- |
24 |
|||||
| Equipment purchase and intangible assets |
(31,589) |
(56,861) |
|||||
| Net cash provided by (used in) investing activities |
96,819 |
(89,616) |
|||||
| CASH FLOWS FINANCING ACTIVITIES: |
|||||||
| Restricted notes receivable |
30,934 |
131,971 |
|||||
| Borrowings on short term notes payable |
96,525 |
439,342 |
|||||
| Payments on short term notes payable |
(309,823) |
(485,455) |
|||||
| Borrowings on short term loans - bank |
61,023 |
95,120 |
|||||
| Payments on short term loans - bank |
(87,471) |
(165,711) |
|||||
| Borrowings on short term loan - others |
74,517 |
9,853 |
|||||
| Payments on short term loans - others |
(54,275) |
(14,426) |
|||||
| Borrowings on short term loan - related parties |
75,641 |
24,528 |
|||||
| Payments on short term loans - related parties |
(569) |
(5,849) |
|||||
| Deposits due to sales representatives |
1,462 |
(425) |
|||||
| Deposit due to sales representatives - related parties |
41 |
- |
|||||
| Borrowings on long-term loans - related party |
56,063 |
- |
|||||
| Payments on long-term loans - related party |
(813) |
- |
|||||
| Principal payment on capital lease obligation |
(1,074) |
- |
|||||
| Net cash used in financing activities |
(57,819) |
(28,948) |
|||||
| EFFECTS OF EXCHANGE RATE CHANGE IN CASH |
45 |
(444) |
|||||
| (DECREASE) INCREASE IN CASH |
(1,905) |
4,411 |
|||||
| CASH, beginning of period |
11,641 |
31,967 |
|||||
| CASH, end of period |
$ |
9,736 |
$ |
36,378 |
|||
SOURCE General Steel Holdings, Inc.
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