NEW YORK, Nov. 16, 2010 (GLOBE NEWSWIRE) -- 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 overall producers of carbon and graphite products, today reiterated its financial results for its third-quarter ended September 30, 2010.
Third Quarter 2010 Highlights
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Revenue was $9,979,707, up 78.8% from the same quarter of 2009.
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Gross profit was $2,474,084, up 62.2% from the third quarter of 2009 with gross margin of 24.8%, slightly decreased 2.5% from 27.3% for the third quarter of 2009.
- Net income was $1,900,563, an increase of $965,298 or 100% from the third quarter 2009, and earnings per diluted share were $0.09 based on 21,435,161 shares.
Third Quarter 2010 Results
| Q3 2010 | Q3 2009 | CHANGE | |
| Revenue | $9.97 million | $5.58 million | +78.8% |
| Gross profit | $2.47 million | $1.52 million | +62.3% |
| Net Income | $1.9 million | $0.94 million | +100% |
| EPS (Diluted)* | $0.09 | $0.06 | +50% |
| * Weighted average shares outstanding (diluted) for Q3 2010 was 21,435,161 and for Q3 2009 was 15,085,202. | |||
"We are pleased to announce solid financial results and robust growth in the quarter," Donghai Yu, CEO of the Company commented. "Our Third Quarter results came in strong as anticipated, we experienced 78.8% growth in our revenues year over year. Due to our long production cycle, in the quarter, we began to deliver most of the orders we received at the beginning of this year. We expect to see increased demand in higher margin ultra purity graphite electrode, fine grain and high purity graphite product lines. We see this demand extending through 2010 and into 2011, primarily due to anticipated growth in the automobile, aerospace, defense, iron and steel industries in China. Thus far, in 2010, we have doubled our capacity from 15,000 tons to 30,000 tons. We have also begun construction on a new 30,000 ton facility to meet the increasing demands of our customers. Additionally, we have sufficient capital to fund all of our raw material needs for our new capacity expansion through our RMB 180 million loan from China Construction Bank."
"We have recently increased our customer base and expect to establish long term relationships with each new customer. In turn we believe this will further strengthen our robust revenue growth in the future," Mr. Yu continued.
Three Months Ended September 30, 2010 and 2009
During the three months ended September 30, 2010, we had sales of $9,980,000, as compared to sales of $5,581,000, for the three months ended September 30, 2009, an increase of $4,399,000, or approximately 78.82%. Our revenue was generated mainly from sales of fine grain graphite, graphite blanks and semi-processed graphite products. Sales increase was attributable primarily to new customer development and market recovery.
For the three months ended September 30, 2010, four customers accounted for 10% or more of sales revenues, representing 34.0%, 25.0%, 14.0%, and 11.0%, respectively of the total sales. As of September 30, 2010, there were two customers that constitute 23.3% and 14.3% of the accounts receivable. As of December 31, 2009, there were three customers that accounted for 17.6%, 15.4% and 14% respectively of the accounts receivable.
During the three months ended September 30, 2010, our cost of sales was $7,506,000, as compared to $4,056,000, during the three months ended September 30, 2009, an increase of $3,450,000, or 85.05%. As a result, our gross profit increased $949,000, or 62.25%, for the three months ended September 30, 2010. Our gross margin decreased from 27.32% for the three months ended September 30, 2009 to 24.79% for the three months ended September 30, 2010. The decrease was associated with change in product mix. We increased sales of semi-processed graphite products that have lower gross margin.
Net income available for common shareholders was $1,900,000, or $0.09 per share (basic and diluted), for the three months ended September 30, 2010 compared to net income of $935,000, or $0.06 per share (basic and diluted), for the three months ended September 30, 2009.
Nine Months Ended September 30, 2010 and 2009
During the nine months ended September 30, 2010, we had sales of $18,075,000, as compared to sales of $12,132,000, for the nine months ended September 30, 2009, an increase of $5,943,000, or approximately 48.99%. We experienced a significant increase in the demand during the nine months ended September 30, 2010 resulting from the global economic recovery and new client's development.
For the nine months ended September 30, 2010, two customers accounted for 10% or more of sales revenues, representing 25.7% and 23.6%, respectively of the total sales.
During the nine months ended September 30, 2010, our cost of sales was $14,348,000, as compared to $9,013,000, during the nine months ended September 30, 2009, an increase of $5,335,000, or 59.19%. As a result, our gross profit increased $608, or 19.49%, for the nine months ended September 30, 2010. Our gross margin decreased from 25.71% for the nine months ended September 30, 2009 to 20.62% for the nine months ended September 30, 2010. The decrease of gross profit is due to the variance in production mix as in the nine month ended September 30, 2010 more semi-processed products are sold.
Net income available for common shareholders was $1,578,000, or $0.08 per share (basic and diluted), for the nine months ended September 30, 2010 compared to net income of $1,836,000, or $0.13 per share (basic and diluted), for the nine months ended September 30, 2009.
Financial condition
Net cash flow used in operating activities was $6,303,257 in the first three quarters of 2010 as compared to net cash flow provided by operating activities of $7,274,088 in the first three quarters 2009, a decrease of $13,577,345. The decrease is mainly due to increased advance to suppliers.
Net cash flow used in investing activities was $8,874,952 for the first three quarters of 2010 and $4,073,835 for the first three quarters of 2009. The increase is mainly because in the first three quarters 2010, approximately $5 million was used in acquisition of land use rights in connection with the construction of our new plants.
Net cash flow provided by financing activities was $20,959,505 for the first three quarters of 2010, compared to $2,690,362 provided by financing activities for the first three quarters of 2009. The increase is mainly due to increased loan and an equity financing.
About China Carbon Graphite Group, Inc.
China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures carbon and graphite 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 Ministry of Science & Technology as a "National Hi-tech Enterprise." Of the 400 plus carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, visit www.chinacarboninc.com/" target="_top" rel="nofollow">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.
| China Carbon Graphite Group, Inc. and subsidiaries | ||
| Consolidated Balance Sheets | ||
|
September 30, 2010 |
December 31, 2009 |
|
| (Unaudited) | (Audited) | |
| ASSETS | ||
| Current Assets | ||
| Cash and cash equivalents | $ 9,092,008 | $ 2,709,127 |
| Trade accounts receivable, net | 10,232,790 | 5,170,419 |
| Notes receivable | 544,368 | 248,452 |
| Advance to suppliers, net | 16,771,143 | 790,767 |
| Inventories | 21,581,548 | 16,430,754 |
| Prepaid expenses | 536,683 | 50,000 |
| Other receivables | 390,050 | 1,130,795 |
| Total current assets | 59,148,590 | 26,530,314 |
| Property and equipment, net | 23,188,137 | 23,913,965 |
| Construction in progress | 5,859,996 | 2,045,176 |
| Land use rights, net | 8,765,909 | 3,548,273 |
| $ 96,962,632 | $ 56,037,728 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities | ||
| Accounts payable and accrued expenses | $ 3,709,364 | $ 2,005,583 |
| Advance from customers | 4,465,923 | 1,084,206 |
| Short term bank loans | 32,859,150 | 8,573,901 |
| Long term bank loan - current portion | -- | 1,613,566 |
| Trade notes payable | 7,485,000 | -- |
| Taxes payable | -- | 370,777 |
| Other payables | 1,725,830 | 922,109 |
| Dividends payable | 16,604 | -- |
| Total current liabilities | 50,261,871 | 14,570,142 |
| Long Term Liabilities | ||
| Accounts payable in long term | 4,849,095 | 1,243,842 |
| Long term bank loan | -- | 1,613,566 |
| Warrant liabilities | 355 | 708,091 |
| Total liabilities | 55,111,321 | 18,135,641 |
| Stockholders' Equity | ||
| Convertible series A preferred stock, par value $0.001 per share, authorized 20,000,000 shares, issued and outstanding 125,000 shares at December 31, 2009 and none at September 30, 2010, respectively | -- | 125 |
| Convertible series B preferred stock, par value $0.001 per share, authorized 3,000,000 shares, issued and outstanding 2,160,500 and 1,275,000 shares at December 31, 2009 and September 30, 2010, respectively | 1,275 | 2,161 |
| Common stock, par value $0.001 per share, authorized 100,000,000 shares, issued and outstanding 20,160,161 and 18,121,661 shares at September 30, 2010 and December 31, 2009, respectively | 20,160 | 18,122 |
| Deferred consulting fee | (166,100) | -- |
| Additional paid-in capital | 14,844,202 | 13,298,332 |
| Accumulated other comprehensive income | 5,826,338 | 5,037,062 |
| Retained earnings | 21,325,436 | 19,546,285 |
| Total stockholders' equity | 41,851,311 | 37,902,087 |
| Total liabilities and stockholders' equity | $ 96,962,632 | $ 56,037,728 |
| China Carbon Graphite Group, Inc and subsidiaries | ||||
| Consolidated Statements of Income and Comprehensive Income | ||||
| For The Three and Nine Months Ended September 30, 2010 and 2009 | ||||
| (Unaudited) | ||||
| Three months ended September 30, | Nine months ended September 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Sales | $ 9,979,707 | $ 5,580,776 | $ 18,074,914 | $ 12,131,938 |
| Cost of Goods Sold | 7,505,623 | 4,055,953 | 14,348,021 | 9,012,935 |
| Gross Profit | 2,474,084 | 1,524,823 | 3,726,893 | 3,119,003 |
| Operating Expenses | ||||
| Selling expenses | 48,978 | 14,102 | 95,675 | 332,016 |
| General and administrative | 706,235 | 218,522 | 2,097,959 | 675,932 |
| Depreciation and amortization | 74,365 | 19,096 | 112,592 | 57,275 |
| 829,578 | 251,720 | 2,306,226 | 1,065,223 | |
| Operating Income Before Other Income (Expense) and Income Tax Expense | 1,644,506 | 1,273,103 | 1,420,667 | 2,053,780 |
| Other Income (Expense) | ||||
| Interest expense | (308,489) | (356,891) | (782,760) | (761,586) |
| Interest income | -- | -- | -- | -- |
| Other expense | (16) | -- | (2,941) | (1,462) |
| Other income | 556,038 | 19,053 | 556,038 | 545,122 |
| Change in fair value of warrants | 25,129 | -- | 588,147 | -- |
| 272,662 | (337,838) | 358,484 | (217,926) | |
| Income Before Income Tax Expense | 1,917,168 | 935,265 | 1,779,151 | 1,835,854 |
| Income tax expense | -- | -- | -- | -- |
| Net income | $ 1,917,168 | $ 935,265 | $ 1,779,151 | $ 1,835,854 |
| Deemed preferred stock dividend | -- | -- | (132,778) | -- |
| Dividend | (16,605) | -- | (68,038) | -- |
| Net income available to common shareholders | $ 1,900,563 | $ 935,265 | $ 1,578,335 | $ 1,835,854 |
| Other comprehensive income | ||||
| Foreign currency translation loss | 742,712 | 75,900 | 789,276 | 124,645 |
| Total Comprehensive Income | $ 2,659,880 | $ 1,011,165 | $ 2,568,427 | $ 1,960,499 |
| Share data | ||||
| Basic earnings per share | $ 0.09 | $ 0.06 | $ 0.08 | $ 0.13 |
| Diluted earnings per share | $ 0.09 | $ 0.06 | $ 0.08 | $ 0.13 |
| Weighted average common shares outstanding, | ||||
| Basic | 20,160,161 | 15,002,785 | 19,577,342 | 13,800,052 |
| Weighted average common shares outstanding, | ||||
| Diluted | 21,435,161 | 15,085,202 | 20,852,342 | 14,392,450 |
| China Carbon Graphite Group, Inc and subsidiaries | ||
| Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
| Nine months ended September 30, | ||
| 2010 | 2009 | |
| Cash flows from operating activities | ||
| Net Income | $ 1,779,151 | $ 1,835,854 |
| Adjustments to reconcile net cash provided by operating activities | ||
| Depreciation and amortization | 1,308,000 | 1,021,937 |
| Stock compensation | 493,300 | 108,000 |
| Change in fair value of warrants | (588,147) | -- |
| Convertible preferred stock value change | 169,167 | -- |
| Change in operating assets and liabilities | ||
| Accounts receivable | (4,870,117) | (1,966,455) |
| Notes receivable | (285,763) | (266,331) |
| Other receivables | 750,697 | (1,214,925) |
| Advance to suppliers | (15,686,872) | 364,539 |
| Inventory | (4,729,792) | (655,104) |
| Prepaid expenses | (44,504) | (47,200) |
| Accounts payable and accrued liabilities | 1,633,720 | 920,090 |
| Non-current accounts payable | 3,066,461 | 773,324 |
| Trade notes payable | 7,355,000 | 5,847,013 |
| Advance from customers | 3,301,106 | 297,347 |
| Taxes payable | (806,317) | (215,260) |
| Dividends payable | 16,604 | -- |
| Other payables | 835,049 | 471,259 |
| Net cash provided by (used in) operating activities | (6,303,257) | 7,274,088 |
| Cash flows from investing activities | ||
| Acquisition of property and equipment | (2,942) | (1,438,549) |
| Acquisition of land use rights | (5,164,713) | -- |
| Construction in progress | (3,707,297) | (2,635,286) |
| Net cash used in investing activities | (8,874,952) | (4,073,835) |
| Cash flows from financing activities | ||
| Proceeds from issuing common stock | 166,400 | 67,900 |
| Proceeds from issuing series B preferred stock | 338,850 | -- |
| Proceeds from short term loan | 22,072,355 | 5,116,137 |
| Advance to related parties | -- | 290,965 |
| Repayment of bank loans | (1,618,100) | (2,784,640) |
| Net cash provided by financing activities | 20,959,505 | 2,690,362 |
| Effect of exchange rate fluctuation | 601,585 | 105,563 |
| Net increase in cash | 6,382,881 | 5,996,178 |
| Cash and cash equivalents at beginning of period | 2,709,127 | 51,799 |
| Cash and cash equivalents at end of period | $ 9,092,008 | $ 6,047,977 |
| Supplemental disclosure of cash flow information | ||
| Interest paid | $ 782,760 | $ 761,586 |
| Income taxes paid | $ -- | $ -- |
| Non-cash financing activities: | ||
| Deemed preferred dividend reflected in paid-in capital | $ (132,778) | $ -- |
| Reclassification of warrant liability from equity | $ 169,167 | $ -- |
| Issuance of common stock for consulting fee | $ 493,300 | $ 108,000 |
| Deferred consulting fee reflected in paid-in capital | $ 166,100 | $ -- |