China Carbon Graphite Group, Inc. (OTCBB: CHGI) ("China Carbon" or
the "Company"), the largest wholesale supplier of fine-grain and
high-purity graphite in China and one of the nation's top
manufacturers of carbon and graphite products, today announced its
financial results for the first quarter ended March 31, 2012.
First Quarter (Q1) 2012 Highlights:
- Gross profit margin grew from 22.5% in Q1 2011 to 29.0% in Q1
2012
- Continues to advance its product mix optimization process, with
higher margin products made from fine grain and high purity
graphite key development priorities
- Work in progress increased as high-end products made from fine
grain and high purity graphite have longer production cycles
Summarized Q1 2012 Results:
Q1 2012 Q1 2011 CHANGE
Revenue $10.1 million $11.5 million -1.4 million
EBIDTA* $2.29 million $2.52 million -0.23 million
Net Income $0.25 million $0.33 million -0.08 million
Adjusted Net Income $0.91 million $0.63 million 0.28 million
EPS (Diluted)** $ 0.01 $ 0.01 -
Adjusted EPS $ 0.04 $ 0.03 0.01
* Please see the accompanying Non-GAAP EBITDA and Adjusted Net measurements
below the "Business Outlook Section."
** Earnings per diluted share of $0.01 on 23.6 million shares. For Q1 2011,
China Carbon reported fully diluted earnings per share of $0.01 on 22.6
million shares.
"We continued to focus on developing our higher margin business
this past quarter and see an improvement of gross profit rate and a
deduction of our general and administrative expenses," said Donghai
Yu, Chief Executive Officer of China Carbon. "When comparing Q1
2011 with Q1 2012, we raised the percentage of our sales of fine
grain and high purity graphite products, which are both higher
margin products compared to our other business segment, graphite
electrodes, while running at 75% of our 30,000 ton annual
production capacity. Moreover, when further comparing these two
quarters, raw material prices continued to increase, resulting in
the average unit-selling price of our products increasing 49
percent with the average unit-selling price of our high purity
graphite products increasing 47 percent in particular. We
anticipated this trend and were able to offset rising graphite
prices by making advance deposits to suppliers with available cash
to lock in favorable prices."
Mr. Yu added, "While our increase in inventories this past
quarter is a reflection of the rise in the cost of raw materials,
it is also a result of an increase in the amount of our work in
progress. Our high-end products made from fine grain and high
purity graphite require longer production cycles, causing our work
in progress to increase during the quarter. We feel comfortable
with our order book that the robust demand for our fine grain and
high purity graphite products will continue into 2012, and we
anticipate that we will see improved demand for our ultra-high
graphite electrodes during this time as well."
First Quarter 2012 Financial Results
Revenue
China Carbon had sales of $10.1 million in Q1 2012 compared to
sales of $11.5 million in Q1 2011, a decrease of $1.4 million. This
decrease was mainly attributable to a decrease of $654,030 in the
sales of the Company's low-end graphite electrodes products, as
well as a $223,034 decrease in sales of China Carbon's other
products, during Q1 2012, which is a reflection of the Company's
decision to focus on the manufacturing and selling of its higher
margin products.
China Carbon's Q1 2012 sales included $1.1 million in graphite
electrodes, $4.5 million in fine grain graphite, and $4.4 million
in high purity graphite. In Q1 2011, the Company's sales included
$1.8 million in graphite electrodes, $4.7 million in fine grain
graphite, and $4.6 million in high purity graphite. When further
comparing Q1 2011 with Q1 2012, the average unit-selling price of
China Carbon's products increased 49% and the average unit-selling
price of its high purity graphite products increased 47%. The
increase in the average unit-selling price of high purity graphite
is due to a large demand for such products in the market in
addition to an increase in the cost for raw materials. The
manufacturing of solar and mold products increased the demand for
China Carbon's products as raw materials during this time as
well.
Cost of Sales & Gross Margin
China Carbon's cost of goods sold consists of the cost of raw
materials, utilities, labor, and depreciation expenses in its
manufacturing facilities. The Company's cost of goods sold was $7.1
million in Q1 2012 compared to cost of goods sold of $8.9 million
in Q1 2011, a decrease of $1.8 million. This decrease was directly
associated with the decrease in China Carbon's sales.
China Carbon's gross margin however increased from 22.5% for Q1
2011 to 29.0% for Q1 2012. This increase reflects the variance in
China Carbon's product mix, which is attributable to an increase of
percentage in the Company's sales of fine grain graphite products
and high purity graphite products, which are higher margin products
compared to graphite electrodes and other products.
EBITDA
China Carbon's EBITDA in Q1 2012 was $2.29 million compared to
$2.52 million in Q1 2011, a decrease of $0.23 million or 10.0%.
EBITDA includes warrant expenses and non cash stock compensation
totaling $658,662 for the three months ended March 31, 2012.
Net Income
As a result of the factors described above, China Carbon's net
income was $0.25 million in Q1 2012 as compared to $0.33 million in
Q1 2011, a decrease of $0.8 million.
Business Outlook
"While we continue to grow our fine grain and high purity
graphite businesses, we are confident that our top line results
will be better in future quarters as the demand for graphite
electrodes improves," commented Mr. Yu. "We project increasing
demand in the fine grain, high purity and ultra-high power graphite
electrode markets to continue in 2012, especially from China's
evolving iron, steel, automobile, aerospace and defense industries.
In particular, steel plants in China have been modernizing their
current facilities with Electric Arc Furnaces, fueling the demand
for large size ultra-high power graphite electrodes."
"Notably, the margin for large size ultra-high power graphite
electrodes is high due to the shortage of supply compared to
demand," remarked Mr. Yu. "Accordingly, we are working hard to get
our new facility that specializes in the manufacture of fine grain
and high purity graphite products completely up and running, as
this facility will double our annual production capacity to 60,000
tons and will enable us to manufacture a new product: ultra-high
power graphite electrodes with a diameter ranging from 600 to 800
millimeters. By improving our production capacity and capabilities
in regards to these products, and by enhancing our ultra-high
graphite electrodes business, we believe that we will see better
financial results in upcoming quarters."
Non-GAAP Financial Measures
Quarter Ended March 31
--------------------------------
2012 2011
--------------- ---------------
Net income $ 253,117 $ 333,049
Interest expense $ 1,229,745 $ 713,531
Tax - $ 750,000
D&A $ 805,333 $ 433,355
Warrant $ 479,563 $ (56,152)
Non-cash Stock Compensation $ 179,100 $ 292,266
Adjusted EBITDA $ 2,290,000 $ 2,522,201
The presentation of these non-GAAP financial measures should be
considered in addition to our GAAP results and is not intended to
be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.
Management generally compensates for limitations in the use of
non-GAAP financial measures by relying on comparable GAAP financial
measures and providing investors with a reconciliation of non-GAAP
financial measures only in addition to and in conjunction with
results presented in accordance with GAAP. We believe that these
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP results,
provide a more complete understanding of factors and trends
affecting our business.
About China Carbon Graphite Group,
Inc.
China Carbon Graphite Group, through its affiliate, Xingyong
Carbon Co., Ltd., manufactures graphite and carbon based products
in China. The company is the largest wholesale supplier of
fine-grain and high-purity graphite in China and one of the
nation's top overall producers of carbon and graphite products.
Fine grain graphite is widely used in smelting for colored metals
and rare earth metal smelting as well as the manufacture of molds.
High purity graphite is used in metallurgy, mechanical industry,
aviation, electronic, atomic energy, chemical industry, food
industry and a variety of other fields. In September 2007, the
Company was approved and designated by the Ministry of Science
& Technology as a "National Hi-tech Enterprise," a distinction
that the Company still holds. Of the more than 400 carbon graphite
producers in China, China Carbon is the only non-state-owned
company to receive this honor. For more information, please visit
www.chinacarboninc.com.
Safe Harbor Statement
This release contains certain "forward-looking statements"
relating to the business of the Company and its subsidiary
companies. These forward-looking statements are often identified by
the use of forward-looking terminology such as "believes,"
"expects" or similar expressions. Such forward-looking statements
involve known and unknown risks and uncertainties that may cause
actual results to be materially different from those described
herein as anticipated, believed, estimated or expected. Investors
should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of a
variety of factors, including the risk factors set forth in the
Company's annual report on Form 10-K and quarterly reports on Form
10-Q.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
China Carbon Graphite Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, December 31,
2012 2011
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 369,701 $ 521,450
Restricted cash 6,844,280 11,694,820
Accounts receivable, Net 13,965,540 12,541,321
Notes receivable 332,953 188,880
Advance to suppliers 11,181,489 5,921,970
Inventories 41,846,277 37,430,248
Prepaid expenses 283,543 452,730
Other receivables, net of allowance of $24,614 562,178 513,000
------------- -------------
Total current assets 75,385,961 69,264,419
Property And Equipment, Net 36,550,515 36,719,595
Construction In Progress 7,124,665 6,414,847
Land Use Rights, Net 10,498,909 10,699,059
------------- -------------
Total Assets $ 129,560,050 $ 123,097,920
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 1,863,141 $ 1,340,498
Advance from customers 1,966,338 1,360,989
Short term bank loans 45,893,200 45,488,600
Notes payable 10,798,400 16,763,100
Other payables 3,294,113 3,227,067
Loan from unrelated parties 9,331,437 -
Dividends payable 33,117 28,099
------------- -------------
Total current liabilities 73,179,746 68,208,353
Amount Due To A Related Party 5,672,033 5,542,855
Warrant Liabilities 654,368 174,805
------------- -------------
Total Liabilities $ 79,506,147 $ 73,926,013
============= =============
Redeemable convertible Series B preferred
stock, $0.001 par value; 3,000,000 shares
authorized; 331,810 and 426,110 shares
issued and outstanding at March 31, 2012 and
December 31, 2011, respectively $ 398,172 $ 511,332
Stockholders' Equity
Common stock, $0.001 par value; 100,000,000
shares authorized 23,495,708 and 22,981,408
shares issued and outstanding at March 31,
2012 and December 31, 2011, respectively $ 23,495 $ 22,981
Additional paid-in capital 17,426,463 17,054,045
Accumulated other comprehensive income 8,367,439 7,943,542
Retained earnings 23,888,106 23,640,007
------------- -------------
Total stockholders' equity 49,665,731 48,660,575
------------- -------------
Total Liabilities and Stockholders' Equity $ 129,560,050 $ 123,097,920
============= =============
The accompanying notes are an integral part of this statement.
China Carbon Graphite Group, Inc and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2012 and 2011
(Unaudited)
Three months ended March 31,
2012 2011
Sales $ 10,061,210 $ 11,463,335
Cost of Goods Sold 7,143,606 8,883,262
------------- -------------
Gross Profit 2,917,604 2,580,073
------------- -------------
Operating Expenses
Selling expenses 46,798 49,863
General and administrative 851,399 1,554,062
Depreciation and amortization 57,004 46,601
955,201 1,650,526
Operating Income Before Other Income (Expense) 1,962,403 929,547
------------- -------------
Other Income (Expense)
Interest expense (1,229,745) (713,531)
Interest income 22 -
Other income, net - 60,880
Change in fair value of warrants (479,563) 56,152
(1,709,286) (596,499)
Net Income $ 253,117 $ 333,049
Dividend Distribution (5,018) -
Net Income Available To Common Shareholders $ 248,099 $ 333,049
Other Comprehensive Income
Foreign currency translation gain 423,897 268,248
Total Comprehensive Income $ 677,014 $ 601,297
------------- -------------
Share Data
Basic earnings per share $ 0.01 $ 0.02
Diluted earnings per share $ 0.01 $ 0.01
Weighted average common shares
outstanding,
basic 23,315,645 21,630,421
Weighted average common shares
outstanding,
diluted 23,647,455 22,615,787
The accompanying notes are an integral part of this statement
China Carbon Graphite Group, Inc and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2012 and 2011
(Unaudited)
Three months ended March 31,
2012 2011
Cash flows from operating activities
Net Income $ 253,117 $ 333,049
Adjustments to reconcile net cash provided
by operating activities
Depreciation and amortization 805,333 433,355
Stock compensation - 266,100
Change in fair value of warrants 479,563 26,166
Change in operating assets and liabilities
Accounts receivable (1,310,189) (4,042,607)
Notes receivable (142,124) 45,906
Other receivable (44,531) (48,297)
Advance to suppliers (5,197,009) (4,954,347)
Inventories (4,075,391) (853,608)
Prepaid expenses 169,188 121,970
Accounts payable and accrued liabilities 594,274 220,570
Advance from customers 592,123 2,774,722
Taxes payable (110,310) 488,552
Other payables 133,762 737,742
------------- -------------
Net cash used in operating activities (7,852,196) (4,450,727)
------------- -------------
Cash flows from investing activities
Acquisition of property and equipment (15,831) (4,572)
Construction in progress (651,528) (1,554,319)
------------- -------------
Net cash used in investing activities (667,359) (1,558,891)
------------- -------------
Cash flows from financing activities
Proceeds from issuing common stock 50,000 -
Proceeds from warrants exercise - 371,398
Dividends paid for series B preferred
stock - (49,388)
Proceeds from short-term bank loans 4,755,000 5,783,600
Payment to short-term bank loans (4,755,000) (684,900)
Proceeds from loan from unrelated parties 9,313,808 -
Proceeds (payments) for related party 79,727 (436,462)
Proceeds from stock not yet issued 77,500 -
Restricted cash 4,945,200 (3,698,460)
Proceeds from notes payable 10,778,000 5,479,200
Payment to notes payable (16,880,250) -
------------- -------------
Net cash provided by financing activities 8,363,985 6,764,988
------------- -------------
Effect of exchange rate fluctuation 3,819 2,932
Net (decrease) increase in cash (151,749) 758,303
Cash and cash equivalents at beginning of
period 521,450 296,312
------------- -------------
Cash and cash equivalents at end of period $ 369,701 $ 1,054,615
============= =============
Supplemental disclosure of cash flow
information
Interest paid $ 984,830 $ 713,531
============= =============
Non-cash activities:
Deemed preferred dividend reflected in
paid-in capital $ - $ 57,500
============= =============
Preferred stock conversion to common stock $ 94 $ 613
============= =============
Reclassfication of warrant liability with
equity $ - $ 14,993
============= =============
Issuance of common stock for compensation $ - $ 266,100
============= =============
The accompanying notes are an integral part of this statement.
Investor Contact: Mr. Kevin Fickle President NUWA Group, LLC
Tel: +1-925-330-8315 Email: kevin@nuwagroup.com Company Contact:
Mr. Donghai Yu China Carbon Graphite Group, Inc. Tel:
+1-626-589-6525 Email: ir@chinacarboninc.com
China Carbon Graphite (CE) (USOTC:CHGI)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
China Carbon Graphite (CE) (USOTC:CHGI)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
