CHINA INDUSTRIAL STEEL INC. 
By NEW YORK, Nov. 15, 2013 /PRNewswire/ -- China Industrial Steel, Inc. (the "Company") today announced its earnings for the three months ended September 30, 2013. The Company filed its Form 10-Q with the Securities and Exchange Commission on November 14, 2013.
Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance, "China Industrial Steel's continued growth stems from increasing market demand. Our ability to generate improved revenue and net income despite the lingering pressure on the average unit sales price of our steel products, reflects the strength of our sales and marketing team as well as the efficiency of our production and distribution channels. I am confident that these efforts will continue to positively impact our financial performance going forward, most notably as pricing returns to prior levels."
Highlights of 2013 Third Quarter Financials
-- Revenues increased 11% to $188 million in the three months ended
September 30, 2013 from $169 million for the same period in 2012.
-- Steel products tonnage sales up 12% for the quarter ended September 30,
2013, to 390,234 metric tons as compared to 346,977 metric tons in the
same period of 2012.
-- Net Income for the three months ended September 30, 2013, was
$2,763,622, as compared to a loss of $3,748,289 for the same period in
2012.
-- Earnings Per Share were $0.04 for the third quarter 2013, versus a loss
of $0.05 for the third quarter 2012.
Total revenue from sales in the three months ended September 30, 2013 were $188,594,415, an increase of $19,044,199, or 11% compared to $169,550,216 in the comparable period of 2012. The increase in sales was mainly due to the increase in sales of steel plates, offset by the decrease in sales of steel wires and steel billets. The Company sold 390,234 metric tons steel products in the three months ended September 30, 2013, an increase of 43,257 metric tons, or 12%, compared to 346,977 metric tons in the same period of 2012; the average unit sales price was $472 per ton, a decrease of $6, or 1%, compared to $478 per ton in the comparable period of 2012.
Net income for the three months ended September 30, 2013 was $2,763,622 as compared to a loss of $3,748,280 in the comparable period of 2012. The increase in net income in the three months ended September 30, 2013 was mainly due to the increases in the sales quantity and unit sales price of steel plate and a decrease in unit cost.
CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS (IN US DOLLARS)
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(UNAUDITED)
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September 30 December 31,
2013 2012
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ASSETS
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Current Assets:
Cash $2,380,671 $1,710,887
Bank notes receivable 2,271,305 979,111
Accounts receivables, net 13,677,181 9,639,396
Accounts receivables - related parties 4,781,683 -
Inventories, net 18,187,580 11,585,277
Advances to suppliers, net 15,308,589 2,372,693
VAT recoverable 29,931,075 32,208,807
Advances to related parties 124,317,700 183,797,203
Deferred income tax assets 611,254 -
Other current asset 163,400 3,884,342
Total Current Assets 211,630,438 246,177,716
Machinery and Equipment, Net 110,626,078 101,450,993
Machinery and Equipment - acquired from related parties, Net 80,051,427 85,471,360
Total Machinery and Equipment, Net 190,677,505 186,922,353
Other Assets:
Restricted cash 5,882,400 5,778,360
Land use rights and buildings under capital leases 4,553,077 4,985,732
Total Other Assets 10,435,477 10,764,092
TOTAL ASSETS $412,743,420 $443,864,161
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
Accounts payable $55,941,601 $92,228,161
Accounts payable - related parties 3,747,798 1,833,558
Accrued liabilities 2,783,099 3,123,315
Taxes payables 1,564,983 2,427
Bank loans payable 22,549,200 26,034,722
Bank notes payable 5,392,200 5,296,830
Equipment loan payable - related parties - current 2,936,862 2,884,919
Current obligations under capital leases - related parties - current 698,029 648,893
Short term loan payable - related party 163,400 802,550
Customer financing 19,117,800 31,620,470
Advances from customers 87,399,776 77,275,327
Total Current Liabilities 202,294,748 241,751,172
Long Term Liabilities:
Equipment loan payables - related parties - non current 1,107,541 1,087,952
Obligation under capital leases - related parties - non current 5,238,631 5,669,438
Total Long Term Liabilities 6,346,172 6,757,390
TOTAL LIABILITIES 208,640,920 248,508,562
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Commitments and Contingencies
Stockholders' Equity:
Series A Convertible Preferred Stock, $0.0001 par value, - -
10,000,000 shares authorized, none issued and outstanding
Blank Check Preferred Stock, $0.0001 par value, 10,000,000 - -
shares authorized, none issued and outstanding
Common stock, $0.0001 par value, 980,000,000 authorized, 7,362 7,362
73,620,391 and 73,620,391 issued and outstanding at
September 30, 2013 and December 31, 2012, respectively
Paid-in capital 16,417,235 16,417,235
Statutory reserves 6,530,869 6,530,869
Retained earnings 161,310,448 156,124,507
Accumulated other comprehensive income 19,836,586 16,275,626
Total Stockholders' Equity 204,102,500 195,355,599
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $412,743,420 $443,864,161
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CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN US DOLLARS)
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(UNAUDITED)
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Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
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Revenues
Sales to customers $182,482,721 $162,539,814 $530,297,073 $475,334,300
Sales to related parties 6,111,694 7,010,402 27,387,473 16,816,933
Total Revenues 188,594,415 169,550,216 557,684,546 492,151,233
Cost of Revenue
Cost of Revenue - non-related parties 87,889,927 72,622,372 201,904,677 197,528,829
Cost of Revenue - related parties 94,027,016 99,305,592 340,621,123 283,719,169
Total Cost of Revenue 181,916,943 171,927,964 542,525,800 481,247,998
Gross Profit 6,677,472 (2,377,748) 15,158,746 10,903,235
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Selling and General and Administrative Expenses
Selling and General and Administrative Expenses - non-related parties 1,598,783 579,364 3,230,720 1,940,420
Selling and General and Administrative Expenses - related parties 257,757 165,787 772,282 1,048,696
Total Selling and General and Administrative Expenses 1,856,540 745,151 4,003,002 2,989,116
Income From Operations 4,820,932 (3,122,899) 11,155,744 7,914,119
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Other Income (Expenses)
Interest and other income 55,592 137,276 109,265 191,885
Interest expense (847,765) (584,983) (3,334,508) (2,451,068)
Interest expense - related parties (172,575) (177,674) (514,205) (1,464,263)
Total Other Income (Expenses) (964,748) (625,381) (3,739,448) (3,723,446)
Income from operation before income tax 3,856,184 (3,748,280) 7,416,296 4,190,673
Provision for income tax 1,092,562 - 2,230,355 1,384,392
Net Income 2,763,622 (3,748,280) 5,185,941 2,806,281
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Earnings Per Share - Basic and Diluted $0.04 $(0.05) $0.07 $0.04
Weighted Average Shares Outstanding - Basic and Diluted 73,620,391 73,620,391 73,620,391 73,585,924
Other Comprehensive Income:
Foreign currency translation gain 570,656 2,042,302 3,560,960 243,850
Comprehensive Income $3,334,278 $(1,705,978) $8,746,901 $3,050,131
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About China Industrial Steel, Inc.
China Industrial Steel, Inc., ("CIS" or the "Company") through its wholly owned subsidiary, Handan Hongri Metallurgy Co., Ltd., produces and sells steel plate and steel bar for domestic and export customers. The Company currently operates three production lines from its headquarters on approximately 1,000 acres in Handan City in the Hebei Province, China, where steel production is a significant component of the regional economy.
Forward-looking statements:
The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.
China Industrial Steel, Inc.
www.chinaindustrialsteel.com
For more information, please contact:
Delong Zhou
Chief Financial Officer
Phone +1-917-825-2997
SOURCE China Industrial Steel, Inc.
