NEW YORK, NY — (Marketwire) — 03/30/12 — 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 fourth quarter and year ended December 31, 2011.
Fiscal Year (FY) 2011 Highlights:
- Sales rose 61%, from $31.0 million in FY 2010 to $49.8 million in FY 2011
- EBITDA grew 92%, from $5.0 million in FY 2010 to $9.7 million in FY 2011
- Net income increased 115%, from $1.4 million in FY 2010 to $3.0 million in FY 2011
- Adjusted net income improved 87%, from $2.3 million in FY 2010 to $4.3 million in FY 2011
- Adjusted EPS rose 61%, from $0.12 in FY 2010 to $0.19 in FY 2011
- Gross profit grew 67%, from $7.0 million in FY 2010 to $11.6 million in FY 2011
Fourth Quarter (Q4) 2011 Highlights:
- Net income increased $1.5 million, from a net loss of $0.4 million in Q4 2010 to a net gain of $1.1 million in Q4 2011
Summarized FY 2011 Results:
FY 2011 FY 2010 CHANGE Revenue $49.8 million $31.0 million +61% EBIDTA* $9.7 million $5.0 million +92% Net Income $3.0 million $1.4 million +115% Adjusted Net Income** $4.3 million $2.3 million +87% EPS (Diluted)*** $0.13 $0.06 +117% Adjusted EPS $0.19 $0.12 +52% * Please see the accompanying Non-GAAP EBITDA and Adjusted Net measurements below the "Business Outlook Section." ** Includes $1.3 million of other income in FY 2011. *** Earnings per diluted share of $0.13 on 22.8 million shares. For FY 2010, China Carbon reported fully diluted earnings per share of $0.06 on 18.5 million shares.
Summarized Q4 2011 Results:
Q4 2011 Q4 2010 CHANGE Revenue $12.6 million $13.0 million - 2.1% EBIDTA* $3.2 million $1.3 million - 153% Net Income (loss) $1.1 million ($0.4 million) N/A Adjusted Net Income** $1.5 million $0.03 million +1,100 EPS (Diluted)*** $0.05 ($0.02) N/A Adjusted EPS $0.06 $0.001 4211% * Please see the accompanying Non-GAAP EBITDA and Adjusted Net measurements below the "Business Outlook Section." ** Includes $0.36 million of other income in Q4 of 2011. *** Earnings per diluted share of $0.05 on 22.8 million shares. For Q4 2010, China Carbon reported fully diluted earnings per share of ($0.02) on 18.5 million shares.
“Our full year results in 2011 reflect the outstanding sales growth in our high purity and fine grain graphite products,” said Donghai Yu, Chief Executive Officer of China Carbon. “For the year, our sales of these products rose 211 percent and 68 percent, respectively, and both products provided us with higher margins than our other business segment, graphite electrodes. We further improved our gross margin by making advance deposits to suppliers, offsetting the rises in graphite prices, and the manufacturing of solar and mold products increased the demand for our products as high performance raw materials.”
“In 2012, we are very confident that we will boost our supply of high purity and fine grain graphite products,” continued Mr. Yu. “We recently added a new facility that doubled our production capacity from 30,000 to 60,000 tons and is specializing in the manufacture of both these products. We delivered strong results this past year, achieving tremendous growth in our overall sales, gross profit and net income on the strength of our high purity and fine grain graphite sales, and we believe that we are poised to build on our success with the installation of this facility.”
Fiscal Year 2011 Fourth Quarter 2011 Financial Results
Revenue
In FY 2011, China Carbon had sales of $49.8 million compared to sales of $31.0 million in FY 2010, an increase of $18.8 million or 61 percent. This growth reflects the significant increase in demand China Carbon experienced for its products, which was attributable to market improvement, new customer developments and the Company adjusting its products mix to include more high purity graphite products.
China Carbon’s FY 2011 sales included $6.4 million in graphite electrodes, $21.8 million in fine grain graphite, and $20.7 million in high purity graphite. When comparing FY 2011 with FY 2010, China Carbon’s sales of its fine grain graphite improved 68 percent and its sales of its high purity graphite rose 211 percent. When further comparing FY 2011 with FY 2010, the Company’s average unit selling price increased 24 percent, with the average unit selling prices of its high purity graphite products rising 58 percent, which is a reflection of the large demand for and the rise in prices of the raw materials of such products. The manufacturing of solar and mold products also increased the demand for China Carbon’s products as raw materials. Additionally, the Company’s improved production capacity enabled it to better meet the rising demand it saw for its products in 2011.
In Q4 2011, China Carbon had sales of $12.6 million compared to sales of $13.0 million in Q4 2010, a decrease of $0.4 million.
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. In FY 2011, China Carbon’s cost of sales was $38.3 million compared to a cost of sales of $24.1 million in FY 2010, an increase of $14.2 million or approximately 59 percent. This increase is a result of the rise in the cost of raw materials, as well as China Carbon’s growth in sales and rises in the unit selling prices of its products, in FY 2011.
China Carbon’s growth margin improved from 22.4 percent in FY 2010 to 23.2 percent in FY 2011. This increase is attributable to the Company maintaining its strategy of adjusting its products mix to meet market demand. In FY 2011, China Carbon experienced heightened demand for its high purity graphite products, which provided a higher margin than graphite electrodes. As the Company adapted its product mix to include more high purity graphite products and improved its sales of these products, this helped offset the decreased margin and unit price for fine grain products China Carbon experienced in FY 2011. The decrease in the margin for fine grain products is attributable to the shift in demand for high purity graphite electrodes. As a result of these circumstances, China Carbon’s gross profit was $11.6 million compared to a gross profit of $6.9 million in FY 2010, an improvement of $4.7 million or 67 percent.
In Q4 2011, China Carbon’s cost of sales was $9.4 million as compared to $9.7 million during Q4 2010, a decrease of $0.3 million.
EBITDA
China Carbon’s EBITDA in FY 2011 was $9.7 million compared to $5.0 million in FY 2010, an increase of $4.7 million or 92 percent. The Company’s EBITDA in Q4 2011 was $3.2 million compared to $1.3 million in Q4 2010, representing a increase of $2.9 million.
Net Income
As a result of the factors described above, in FY 2011, China Carbon’s net income was $3.0 million as compared to $1.4 million in FY 2010, an increase of $1.6 million or approximately 115 percent. In Q4 2011, China Carbon’s net income was $1.1 million as compared to a net loss of $0.4 million in Q4 2010, a $1.5 million improvement.
Business Outlook
“We believe that the future of graphite, especially when looking at it from the perspective of high-tech, high-demand applications, is very encouraging,” said Mr. Yu. “Pebble-bed nuclear reactors, lithium ion batteries and solar panels are just some of the next generation technologies that make use of graphite’s unique properties. In China, we are seeing the demand for graphite increase from the nation’s developing iron, steel, automobile, aerospace and defense industries. To better take advantage of this evolving market, we are working hard to further enhance our product line.”
“Specifically, our new plant has technologically advanced equipment capable of producing rounded fine grain electrodes with a diameter as large as 600 millimeters and ultra-high electrodes with a diameter as large as 800 millimeters,” continued Mr. Yu. “Steel plants in China have recently been upgrading their furnace facilities, resulting in substantial increases in demand for large size ultra-high power graphite electrodes. Moreover, the margin for these products is high due to the shortage of supply compared to demand. Accordingly, we are striving to produce 800 millimeter diameter ultra-high graphite electrodes, as we believe selling this product could help us further strengthen our leading position in China’s fine grain graphite market.”
Mr. Yu further commented, “In 2012, we plan to continue adjusting our product mix towards our high purity and fine grain graphite products as a way to further improve our gross profit, and we are also looking to develop isostatic graphite products, including nuclear, solar and semiconductor products, to improve our margins as well. In regards to nuclear graphite, only graphite rods with a diameter of more than 840 millimeters and a purity of more than 99.99 percent may be used in nuclear power reactors and to date, we have produced samples that meet these standards. While we look to develop nuclear graphite and other isostatic graphite products, we are also seeking to acquire and vertically integrate a local graphite mine to supplement our operations. In the meantime, we will work towards maximizing our recently expanded production capacity to better position ourselves to meet potential rises in demand for our products. While 2011 was an excellent year for us in terms of financial growth and our development as a company, we are confident that we will make further progress in 2012, and solidify our position as one of China’s premier graphite companies.”
Non-GAAP Financial Measures Year Ended December 31 ------------------------- 2011 2010 ------------ ------------ Net income $ 2,972 $ 1,383 Stock Based Compensation $ 1,338 $ 916 Adjusted Net $ 4,310 $ 2,300 Quarter Ended December 31 ------------------------- 2011 2010 ------------ ------------ Net income $ 1,089 $ (396) Interest expense $ 357 $ 423 Adjusted Net $ 1,446 $ 27 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.
Financial Statements
China Carbon Graphite Group, Inc. and Subsidiaries Consolidated Balance Sheets As Of December 31, 2011 and 2010 December 31, December 31, 2011 2010 ------------- ------------- ASSETS Current Assets Cash and cash equivalents $ 521,450 $ 296,312 Restricted cash 11,694,820 - Accounts receivable, net 12,541,321 6,222,112 Notes receivable 188,880 460,856 Advance to suppliers 5,921,970 10,198,602 Inventories 37,430,248 26,432,217 Prepaid expenses 452,730 573,094 Other receivables, net allowance of $24,397 and $0, respectively 513,000 335,986 Total current assets 69,264,419 44,519,179 Property and Equipment, net 36,719,595 24,127,189 Construction in Progress 6,414,847 10,265,888 Land Use Rights, net 10,699,059 10,496,930 Total Assets $ 123,097,920 $ 89,409,186 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 1,340,498 $ 5,452,743 Advance from customers 1,360,989 1,060,147 Short term bank loans 45,488,600 33,298,150 Notes payable 16,763,100 - Other payables 3,227,067 2,584,589 Dividends payable 28,099 32,996 Total current liabilities 68,208,353 42,428,625 Amount Due to a Related Party 5,542,855 4,744,634 Warrant Liabilities 174,805 73,121 Total Liabilities 73,926,013 47,246,380 Convertible Series B Preferred Stock, par value $0.001 per share authorized 3,000,000 shares, issued and outstanding 426,110 and 1,225,000 shares at December 31, 2011 and 2010, respectively. 426 1,225 Stockholders' Equity Common stock, par value $0.001 per share, authorized 100,000,000 shares, issued and outstanding 22,981,408 and 20,520,161 shares at December 31, 2011 and 2010, respectively 22,981 20,521 Deferred consulting fee - (57,500) Additional paid-in capital 17,564,951 15,158,291 Accumulated other comprehensive income 7,943,542 6,344,414 Retained earnings 23,640,007 20,695,855 Total stockholders' equity 49,171,481 42,161,581 Total Liabilities and Stockholders' Equity $ 123,097,920 $ 89,409,186 China Carbon Graphite Group, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income For the Years Ended December 31, 2011 and 2010 Years ended December 31, ---------------------------- 2011 2010 ------------- ------------- Sales $ 49,846,744 $ 30,994,150 Cost of Goods Sold 38,261,812 24,062,354 Gross Profit 11,584,932 6,931,796 Operating Expenses Selling expenses 597,802 186,693 General and administrative 5,420,157 4,155,581 Depreciation and amortization 224,074 163,310 6,242,033 4,505,584 Operating Income Before Other Income (Expense) 5,342,899 2,426,212 Other Income (Expense) Interest expense (3,451,037) (1,366,104) Interest income 3 - Other expense - (86,967) Other income, net 1,167,077 24,589 Change in fair value of warrants (86,691) 385,661 (2,370,648) (1,042,821) Net Income $ 2,972,251 $ 1,383,391 Preferred Stock Deemed Dividend - (132,778) Dividend Distribution (28,099) (101,043) Net Income Available To Common Shareholders $ 2,944,152 $ 1,149,570 Other Comprehensive Income Foreign currency translation gain 1,599,128 1,307,351 ------------- ------------- Total Comprehensive Income $ 4,571,379 $ 2,690,742 Share Data Basic earnings per share $ 0.13 $ 0.07 Diluted earnings per share $ 0.13 $ 0.06 Weighted average common shares outstanding, basic 22,418,101 17,323,979 Weighted average common shares outstanding, diluted 22,844,211 18,548,979 ============ ============ China Carbon Graphite Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2011 and 2010 Years ended December 31, ---------------------------- 2011 2010 ------------- ------------- Cash flows from operating activities Net Income $ 2,972,251 $ 1,383,391 Adjustments to reconcile net cash used in operating activities Depreciation and amortization 1,803,770 1,752,232 Bad debt expenses - 1,304,327 Stock compensation 1,891,600 916,300 Change in fair value of warrants 86,691 (385,661) Change in operating assets and liabilities Accounts receivable (5,992,630) (2,290,273) Notes receivable 284,881 (198,806) Other receivable (161,882) 812,570 Advance to suppliers 4,588,784 (9,012,989) Inventories (10,224,660) (9,203,570) Prepaid expenses (219,098) (126,132) Accounts payable and accrued liabilities (4,423,066) 813,460 Advance from customers 257,028 (59,574) VAT and other taxes payable 1,481,487 (760,859) Other payables (601,585) 1,547,429 Net cash used in operating activities (8,256,429) (13,508,155) Cash flows from investing activities Acquisition of property and equipment (5,789,966) (1,000,152) Acquisition of land use rights - (6,819,702) Construction in progress (2,772,094) (5,466,118) Net cash used in investing activities (8,562,060) (13,285,972) Cash flows from financing activities Proceeds from issuing common stock 160,000 166,400 Proceeds from issuing series B preferred stock - 339,010 Proceeds from warrants exercise 371,714 - Dividends paid for series B preferred stock (32,997) (68,047) Proceeds from short-term bank loans 44,795,000 27,287,550 Payment from short-term bank loans (34,022,500) (5,095,155) Common Stock shares to be issued 160,000 - Restricted cash (11,516,500) - Proceeds from a related party 610,492 3,371,663 Proceeds from notes payable 16,507,500 (1,626,900) Net cash provided by financing activities 17,032,709 24,374,521 Effect of exchange rate fluctuation 10,918 6,791 Net increase (decrease) in cash 225,138 (2,412,815) Cash and cash equivalents at beginning of period 296,312 2,709,127 Cash and cash equivalents at end of period $ 521,450 $ 296,312 Supplemental disclosure of cash flow information Interest paid $ 3,451,037 $ 1,366,104 Non-cash activities: Deemed preferred dividend reflected in paid-in capital $ - $ 132,778 Reclassification of warrant liability with equity $ 14,993 $ 249,309 Reclassification from construction in progress to fixed assets $ 7,332,116 $ 985,781 Reclassification from accounts payable to property and equipment $ (15,500) $ 2,480,539 Issuance of common stock for compensation $ 1,891,600 $ 916,300 Deferred consulting fee reflected in equity $ - $ 57,500
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
Article source: http://www.sys-con.com/node/2228476
April 1st, 2012 → 12:09 pm @ carbon
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