ANHUI, China, July 15, 2008 (PRIME NEWSWIRE) -- China Runji Cement Inc. (OTCBB:CRJI) ("Runji" or "the Company"), a leading cement manufacturing and distribution company headquartered in Anhui Province, People's Republic of China ("PRC"), today announced its results for the third quarter and nine months ended May 31, 2008.
2008 Key Financial Highlights
* Revenues for the three months ended May 31, 2008 were $11.68 million, up 101% from the same period last year. For the nine months ended May 31, 2008, revenues were $27.9 million, up 39% from $20.1 million for the same period last year. * Gross profit for the three months ended May 31, 2008 was $2.86 million, up 874% from $0.29 million for the same period last year. Gross profit for the nine months ended May 31, 2008 was $6.3 million, up 214% from $2 million for the same period in 2007. * For the three months ended May 31, 2008 gross margin increased to 24.5% from 4.9% for the same period last year. Gross margin for the nine months ended May 31, 2008 was 22.6%, compared with 9.9% of the same period last year. * Net income for the three months ended May 31, 2008 was $2.69 million, or $0.03 per fully diluted share, compared with net loss of $(2,449) in the same period last year. Net income for the nine months ended May 31, 2008 increased 1811% to $4.97 million, or $0.07 per fully diluted share, from $0.26 million, or $0.00 per fully diluted share, of the same period in 2007.
"We are glad to achieve a substantial increase in revenue and net income. In particular we are excited to see a significantly higher margin in the third quarter," said Mr. Shouren Zhao, Chairman & CEO of China Runji Cement Inc. "Over the past quarter, we have overcome the negative effects imposed from overwhelming weather conditions in the second quarter and are back to normal production capacities. In light of the strong market demand and sales price hike in cement industry, we are confident to maintain an expanding margin in the coming quarter. Furthermore, our second cement clinker production line will come online in October, which will substantially increase our production capacity and generate more revenue. We are committed to maintain the best production status to capture the strong market demand."
Third Quarter Fiscal Year 2008 Results
Revenues for the three months ended May 31, 2008 increased by $5,872,213 or 101% to $11,681,719 from $5,809,506 for the same corresponding period in 2007. The increase is primarily attributed to increased sales volume, especially PO42.5 cement, and also due to retail price hike for cement products.
Of the $11,681,719 in revenue for the three months ended May 31, 2008, approximately $8,435,168 (or 72%) was generated from sales of PO42.5 cement, and $453,022 (or 4%) from the premium grade cement PII52.5.
Our gross profit increased by $2,568,446 or approximately 874% to $2,862,188 for the three months ended May 31, 2008 from $293,742 for the same period in 2007. The increase primarily resulted from the increase in the retail price of cement products in China. This increase counter balanced the negative effect imposed by the increase in raw material costs. We are able to transfer the costs of raw materials to our customers by increasing the retail price of cement.
Net income for the third quarter of 2008 was $2.69 million, or $0.03 per fully diluted share, up from net loss of ($2,449), or $0.00 per fully diluted share, in the third quarter of 2007. Net margin for the period grew to 23% from 0.0% in third quarter 2007.
Financial Condition
For the nine months ended May 31, 2008, the Company had $2.2 million in cash and cash equivalents, ($4.6) million in working capital and a current ratio of 0.62. Runji had $0.4 million in short-term loans payable and $19.6 million in shareholders' equity. The Company's cash flows from operations in the nine months of financial year 2008 were $9.3 million. To date, Runji has funded most of its cash needs with loans from related parties, which totaled $28.4 million as of May 31, 2008.
Business Outlook
As the cement demand and market price are growing quickly in China, Runji's operation has experienced high growth in the third quarter. Furthermore, Anhui's annual growth rate of 11%, which is above the national average, has translated into an abundance of construction projects, particularly large-scale government sponsored infrastructure projects which is demanding in cement quality.
"Our current cement clinker output is 2,500 tons per day and our production facilities are operating in full capacity," said Mr. Zhao. "Our second cement production line with same capacity is expected for trial production next month and will be put in full production in October. Furthermore, we are also building a waste heat power generator which will come online in 2009, which will generate electricity of around 63 million KW annually and further reduce our operating costs and increasing margins."
Current Capacity
* Currently have one cement clinker production line with designed capacity of 2,500 tons per day or 775,000 tons per year. * Has been producing at around 120% capacity in the past two years to meet with the high cement demand. * The second production line with 2,500 tons daily output will come online in October 2008. Cement clinker designed capacity of the Company will be doubled to 1.5 million ton per year upon completion.
About China Runji Cement, Inc.
Founded in 2003, China Runji Cement, Inc. is one of the leading players in cement production and distribution. In October 2007, the Company became a U.S. public company following the completion of a share exchange with Fitmedia Inc. The Company's certified manufacturing facilities contain cutting-edge technology and advanced equipment and are capable of producing as much as 1 million tons of cement annually. Furthermore, the Company's solid distribution network and customer-oriented services have earned Runji's products a superior reputation among its customers. Headquartered in Anhui Province, the Company's markets include major local cities such as Hefei, Nanjing, and Liu'an.
For more information on the Company and its products, please visit http://www.chinarunji.com/index.asp.
Safe Harbor Statement
This press release contains certain statements that may include 'forward-looking statements' as defined in the Securities Act of 1933, and the Securities Exchange Act of 1934. All statements, other than statements of historical facts included herein are 'forward-looking statements'. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You 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 those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
China Runji Cement Inc.
Consolidated Balance Sheets
May 31,
2008
------------------
ASSETS
Current Assets
Cash and cash equivalents $ 2,174,858
Accounts receivable, net 2,018,979
Notes receivable 727,666
Due from related parties 67,472
Inventory 1,595,520
Prepaid expenses and other receivables 894,375
------------------
Total Current Assets 7,478,870
Advances 11,428,860
Property, plant and equipment, net 38,272,035
Intangible assets and deferred charges 2,944,119
Total Assets $ 60,123,884
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Payables and accrued liabilities $ 7,569,741
Customer deposit 542,417
Short-term loans 432,277
Due to related parties - short-term 1,541,744
Taxes payable 1,603,588
Wages payable 348,287
------------------
Total Current Liabilities 12,038,054
Due to related parties - long-term 28,466,096
------------------
Total Liabilities 40,504,150
Shareholders' Equity
Preferred stock: $0.0001 par value, 20,000,000
shares authorized, no shares issued and
outstanding --
Common stock: $0.0001 par value, 80,000,000
shares authorized, 78,832,064 shares issued
and outstanding 7,883
Additional paid-in capital 12,327,102
Accumulated other comprehensive income 2,190,430
Retained earnings 5,094,319
------------------
Total shareholders' equity 19,619,734
Total Liabilities and Shareholders' Equity $ 60,123,884
==================
China Runji Cement Inc.
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
May 31, May 31,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Revenues $11,681,719 $ 5,809,506 $27,901,832 $20,080,919
Cost of goods sold 8,819,531 5,515,764 21,584,102 18,071,681
----------- ----------- ----------- -----------
Gross Profit 2,862,188 293,742 6,317,730 2,009,238
Operating Expenses
Selling expenses 30,697 30,174 72,421 222,599
General and
administrative
expenses 375,996 322,661 1,019,430 769,123
Depreciation
expense 26,572 17,166 69,659 72,906
----------- ----------- ----------- -----------
Total operating
expenses 433,265 370,001 1,161,510 1,064,628
----------- ----------- ----------- -----------
Income (Loss) from
Operations 2,428,923 (76,259) 5,156,220 944,610
Other Income
(Expenses)
Interest income 1,051 340 2,482 340
Interest expense (12,620) (3,544) (38,215) (626,404)
Other income 1,307,788 75,052 1,412,513 73,120
----------- ----------- ----------- -----------
Income (Loss)
Before Taxes 3,725,142 (4,411) 6,533,000 391,666
Income taxes 1,035,368 (1,962) 1,559,566 128,743
----------- ----------- ----------- -----------
Net Income (Loss) 2,689,774 (2,449) 4,973,434 262,923
Other Comprehensive
Income
Foreign currency
translation
adjustment 482,874 143,440 1,398,816 494,614
----------- ----------- ----------- -----------
Comprehensive
Income 3,172,648 140,991 $ 6,372,250 757,537
=========== =========== =========== ===========
Earnings Per Share,
Basic and Diluted $ 0.03 $ 0.07
Weighted Average
Shares Outstanding 78,832,064 71,031,033
China Runji Cement, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended
May 31,
------------ ------------
2008 2007
------------ ------------
Cash flows from operating activities:
Net income $ 4,973,434 $ 262,923
Adjustments to reconcile net income to
net cash provided by operating
activities:
Bad debt expense (recovery) (172,409) 25,864
Depreciation expense 2,477,452 2,218,894
Changes in operating assets and
liabilities:
Accounts receivable 1,480,922 (972,139)
Notes receivable (143,901) --
Prepaid expenses and other receivables (93,420) 1,909,210
Inventory 103,059 315,710
Accounts payable and accrued
liabilities 468,713 (36,315)
Customer deposits (210,876) 379,219
Taxes payable 284,799 300,290
Wages payable 135,305 76,759
------------ ------------
Net cash provided by operating activities 9,303,078 4,480,415
Cash flows from investing activities
Advances to suppliers (7,426,140) (148,222)
Collection of loans to related parties 14,947 527,268
Cash paid for intangible assets and
deferred expenses (136,532) (2,747,827)
Cash paid for property, plant and
equipment (9,688,605) (14,037,696)
Net cash used in investing activities (17,236,330) (16,406,477)
Cash flows from financing activities
Proceeds from issuance of debt -- 1,510,210
Payments on debt (1,155,911) --
Proceeds from related party loans 8,476,546 10,529,281
Other (11,820) --
------------ ------------
Net cash provided by financing activities 7,308,815 12,039,491
Effect of exchange rate changes on cash
and cash equivalents 1,398,816 494,614
------------ ------------
Net increase in cash and cash equivalents 774,379 608,043
Cash and cash equivalents, beginning
of year 1,400,479 62,704
------------ ------------
Cash and cash equivalents, end of year $ 2,174,858 $ 670,747
============ ============
Supplemental Disclosures
Interest paid $ 29,482 $ 626,404
Income taxes paid 1,431,995 128,743