INNER MONGOLIA, China,
Aug. 15, 2013 /PRNewswire/ -- China
Carbon Graphite Group, Inc. (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 second
quarter ended June 30, 2013.
Mr. Donghai Yu, Chief Executive
Officer of China Carbon, commented,
"As China's steel industry continued to battle with over-capacity,
slowing demand growth, and deteriorating steel prices, the graphite
industry remained challenged during the second quarter of 2013. The
difficult industry environment was reflected in our disappointing
financial results for the second quarter. However, graphite prices
had stabilized during the second quarter and likely bottomed in our
view. Looking ahead, we expect the graphite industry to recover in
2014 as demand increases and competition eases when more small
players are forced to exit the market during this downturn."
Second Quarter 2013 Financial Results
|
Three Months Ended
June 30
|
|
2013
|
|
2012
|
|
Sales
|
|
%
of
Total
|
|
Sales
|
|
%
of
Total
|
|
Graphite
Electrodes
|
$1,579,942
|
|
58.2%
|
|
$1,497,743
|
|
12.6%
|
|
Fine Grain
Graphite
|
916,953
|
|
33.8%
|
|
5,307,387
|
|
44.7%
|
|
High Purity
Graphite
|
13,574
|
|
0.5%
|
|
4,902,424
|
|
41.3%
|
|
Others
|
203,784
|
|
7.5%
|
|
169,989
|
|
1.4%
|
|
Total
|
$2,714,254
|
|
100.0%
|
|
$11,877,543
|
|
100.0%
|
Sales: For the three months ended June 30, 2013, sales decreased by $9.16 million, or 77.1%, to $2.71 million from $11.88
million for the second quarter of 2012. The decrease in
sales was mainly due to industry-wide demand weakness for our
products as a result of continued struggles of steel manufacturers.
Demand for our fine grain graphite and high purity graphite
products was particularly weak during the second quarter with sales
decreasing 82.7% and 99.7% to $0.92
million and $0.01 million,
respectively. Sales of graphite electrodes increased 5.5% to
$1.58 million while sales of
semi-processed and other types of products grew 19.9% to
$0.20 million.
Gross Income (Loss): Gross profit for the second quarter
of 2013 was ($1.03) million, compared
to gross profit of $2.89 million for
the same period of last year. Gross margin decreased to (38.1%) for
the second quarter of 2013 from 24.4% for the same period of last
year. The decrease in gross margin was mainly due to increased
percentage of low margin product sales, increased depreciation
allocated to the cost of goods sold due to the transfer of
construction in progress to property and equipment since the end of
2012, and increased fixed cost allocation as a result of decreased
production volume.
Operating Income (Loss):
Selling Expenses:
Selling expenses decreased by 31.8% to $0.03 million for the second quarter of 2013 from
$0.02 million for the same period of
last year. The decrease was mainly due to decreased sales
commission and lower shipping and handling expenses during the
three months ended June 30, 2013 as
compared to the three months ended June 30,
2012, which was resulted from lower sales.
General and Administrative Expenses:
General and administrative expenses increased by $6.23 million, or 532.4%, to $7.40 million for the second quarter of 2013 from
$1.17 million for the same period of
last year. The increase in general and administrative expenses was
mainly due to increased consulting expenses and increased inventory
impairment expenses for the three months ended June 30, 2013 compared to the three months ended
June 30, 2012.
Depreciation and Amortization Expenses:
Depreciation and amortization expenses increased by $0.19 million, or 33.3%, to $0.74 million for the second quarter of 2013 from
$0.56 million for the same period of
last year. The increase in depreciation and amortization expenses
was due to additional fixed assets placed in service.
Operating expenses totaled $7.47
million for the second quarter of 2013, compared to
$1.25 million for the same period of
2012, an increase of $6.23 million,
or 499.6%. Operating income decreased by $10.15 million, or 616.9%, to ($8.51) million for the second quarter of 2013
from $1.65 million for the same
period of last year. As a result of the factors described
above, operating income (loss) margin was (313.4%) for the second
quarter of 3013, compared to 13.9% for the second quarter of last
year.
Net Income (Loss): Net loss available to common
stockholders was ($9.45) million, or
($0.37) per diluted share, for the
second quarter of 2013, compared to net income available to common
stockholders of $0.87 million, or
$0.04 per diluted share, for the
second quarter of 2012.
Six Months Ended June 30, 2013
Financial Results
|
Six Months Ended
June 30
|
|
2013
|
|
2012
|
|
Sales
|
|
%
of
Total
|
|
Sales
|
|
%
of
Total
|
|
Graphite
Electrodes
|
$1,660,902
|
|
28.8%
|
|
$2,645,516
|
|
12.1%
|
|
Fine Grain
Graphite
|
2,331,909
|
|
40.4%
|
|
9,776,198
|
|
44.6%
|
|
High Purity
Graphite
|
1,505,095
|
|
26.1%
|
|
9,260,948
|
|
42.2%
|
|
Others
|
297,266
|
|
5.1%
|
|
256,091
|
|
1.2%
|
|
Total
|
$5,775,172
|
|
100.0%
|
|
$21,938,753
|
|
100.0%
|
Sales: For the six months ended June 30, 2013, sales decreased by $16.16 million, or 73.7%, to $5.78 million from $21.94
million for same period of last year. The decrease in sales
was mainly due to industry-wide demand weakness for our products as
a result of continued struggles of steel manufacturers. Demand for
our fine grain graphite and high purity graphite products was
particularly weak for the six months ended June 30, 2013 with sales decreasing 76.1% and
83.7% to $2.33 million and
$1.51 million, respectively. Sales of
graphite electrodes also decreased by 37.2% to $1.66 million. Sales of semi-processed and
other types of products grew 16.1% to $0.30
million.
Gross Income (Loss): Gross profit (loss) for the six
months ended June 30, 2013 was
($1.29) million, compared to gross
profit of $5.81 million for the same
period of last year. Gross margin decreased to (22.4%) for the six
months ended June 30, 2013 from 26.5%
for the same period of last year. The decrease in gross margin was
mainly due to increased percentage of low margin product sales,
increased depreciation allocated to the cost of goods sold due to
the transfer of construction in progress to property and equipment
since the end of 2012, and increased fixed cost allocation as a
result of decreased production volume.
Operating Income (Loss):
Selling Expenses:
Selling expenses decreased by $0.04
million, or 50.2%, to $0.04
million for the six months ended June
30, 2013 from $0.08 million
for the same period of last year. The decrease was mainly due to
decreased sales commission and lower shipping and handling expenses
during the six months ended June 30,
2013 as compared to the same period of last year, which
resulted from lower sales.
General and Administrative Expenses:
General and administrative expenses increased by $5.76 million, or 285.1%, to $7.79 million for the six months ended
June 30, 2013 from $2.02 million for the same period of last year.
The increase in general and administrative expenses was mainly due
to increased consulting expenses and increased inventory impairment
expenses for the six months ended June 30,
2013 compared to the same period of last year.
Depreciation and Amortization Expenses:
Depreciation and amortization expenses increased by $0.04 million, or 2.58%, to $1.40 million for the six months ended
June 30, 2013 from $1.36 million for the same period of last year.
The increase in depreciation and amortization expenses was due to
additional fixed assets placed in service.
Operating expenses totaled $7.94
million for the six months ended June
30, 2013, compared to $2.20
million for the same period of last year, an increase of
$5.74 million, or 260.8%. Operating
income decreased by $12.85 million,
or 356.0%, to ($9.24) million for the
six months ended June 30, 2013 from
$3.61 million for the same period of
last year. As a result of the factors described above,
operating income (loss) margin was (159.9%) for the six months
ended June 30, 2013, compared to
16.4% for the same period of last year.
Net Income (Loss): Net loss available to common
stockholders was ($10.96) million, or
($0.43) per diluted share, for the
six months ended June 30, 2013,
compared to net income available to common stockholders of
$1.11 million, or $0.05 per diluted share, for the same period of
2012.
Financial Position
As of June 30, 2013, the Company
had cash and cash equivalents of $0.36
million, restricted cash of $27.37
million, and short-term bank loans of $45.78 million. Net cash used in operating
activities was ($5.23) million for
the six months ended June 30, 2013,
compared to net cash provided by operating activities of
$1.83 million for the same period of
last year.
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 Group Inc. is the only
non-state-owned company to receive this honor. For more
information, please visit http://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.
Company Contact:
Donghai Yu, CEO
China Carbon Graphite Group Inc.
Email: ir@chinacarboninc.com
Website: http://www.chinacarboninc.com
Investor Relations Contact:
Tina Xiao
Weitian Group LLC
Tel: +1-917-609-0333
Email: tina.xiao@weitian-ir.com,
Website: http://www.weitian-ir.com
|
China Carbon
Graphite Group, Inc.and subsidiaries
|
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
June 30,
2013
|
|
December 31, 2012
|
|
(Unaudited)
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
356,102
|
|
$
|
129,746
|
|
Restricted
cash
|
|
27,373,155
|
|
|
22,149,000
|
|
Accounts receivable,
Net
|
|
8,063,402
|
|
|
11,239,002
|
|
Notes
receivable
|
|
5,526,864
|
|
|
-
|
|
Advance to
suppliers
|
|
1,840,782
|
|
|
1,177,462
|
|
Inventories
|
|
42,787,195
|
|
|
48,417,875
|
|
Prepaid
expenses
|
|
981,809
|
|
|
280,779
|
|
Other receivables,
net of allowance of $223,683 and $220,339,
respectively
|
|
122,465
|
|
|
35,655
|
|
Total current
assets
|
|
87,051,774
|
|
|
83,429,520
|
|
|
|
|
|
|
|
Property And
Equipment, Net
|
|
40,348,619
|
|
|
40,964,363
|
|
|
|
|
|
|
|
Construction In
Progress
|
|
24,434,608
|
|
|
7,324,379
|
|
|
|
|
|
|
|
Land Use Rights,
Net
|
|
9,753,620
|
|
|
9,657,419
|
|
Total
Assets
|
$
|
161,588,621
|
|
$
|
141,375,681
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
2,359,879
|
|
$
|
2,250,745
|
|
Advance from
customers
|
|
1,779,550
|
|
|
1,368,525
|
|
Short term bank
loans
|
|
45,784,860
|
|
|
38,680,500
|
|
Notes
payable
|
|
50,998,794
|
|
|
40,606,500
|
|
Other
payables
|
|
1,604,246
|
|
|
630,179
|
|
Loan from unrelated
parties
|
|
265,073
|
|
|
338,002
|
|
Dividends
payable
|
|
55,841
|
|
|
46,816
|
|
Total current
liabilities
|
|
102,848,243
|
|
|
83,921,267
|
|
|
|
|
|
|
|
Amount due to related
parties
|
|
4,748,375
|
|
|
4,795,593
|
|
Long Term Bank
Loan
|
|
16,260,957
|
|
|
4,782,900
|
|
Accounts Payable -
Long Term
|
|
-
|
|
|
|
|
Warrant
Liabilities
|
|
78,654
|
|
|
224,362
|
|
Total
Liabilities
|
|
123,936,229
|
|
|
93,724,122
|
|
|
|
|
|
|
|
Redeemable convertible
series B preferred stock, $0.001 par
value;
3,000,000 shares authorized; 300,000 and 300,000
shares issued
and outstanding at
June 30, 2013 and December 31, 2012, respectively
|
|
360,000
|
|
|
360,000
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Common stock, $0.001 par
value; 100,000,000 shares authorized
26,282,518 and
25,077,518 shares issued and outstanding at
June 30, 2013 and
December 31, 2012, respectively
|
|
26,282
|
|
|
25,077
|
|
Additional paid-in
capital
|
|
18,540,025
|
|
|
18,223,781
|
|
Accumulated other
comprehensive income
|
|
9,621,604
|
|
|
8,982,925
|
|
Retained
earnings
|
|
9,104,481
|
|
|
20,059,777
|
|
Total
stockholders' equity
|
|
37,292,392
|
|
|
47,291,558
|
|
Total Liabilities
and Stockholders' Equity
|
$
|
161,588,621
|
|
$
|
141,375,681
|
|
|
|
|
|
|
|
China Carbon
Graphite Group, Inc and subsidiaries
|
|
Consolidated
Statements of Operations and Comprehensive
Income
|
|
For the Three and
Six Months Ended June 30, 2013 and 2012
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
2,714,252
|
|
$
|
11,877,543
|
|
$
|
5,775,170
|
|
$
|
21,938,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
|
3,748,027
|
|
|
8,985,125
|
|
|
7,068,347
|
|
|
16,128,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
(Loss)
|
|
(1,033,775)
|
|
|
2,892,418
|
|
|
(1,293,177)
|
|
|
5,810,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
19,895
|
|
|
29,152
|
|
|
37,836
|
|
|
75,950
|
|
General and
administrative
|
|
7,402,091
|
|
|
1,170,462
|
|
|
7,786,673
|
|
|
2,021,861
|
|
Depreciation and
amortization
|
|
51,814
|
|
|
46,826
|
|
|
119,702
|
|
|
103,830
|
|
Total operating
expenses
|
|
7,473,800
|
|
|
1,246,440
|
|
|
7,944,211
|
|
|
2,201,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Income Before Other Income (Expense)
|
|
(8,507,575)
|
|
|
1,645,978
|
|
|
(9,237,388)
|
|
|
3,608,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(1,054,202)
|
|
|
(1,220,173)
|
|
|
(1,916,650)
|
|
|
(2,449,918)
|
|
Interest
income
|
|
16,502
|
|
|
21
|
|
|
61,806
|
|
|
43
|
|
Other
expense
|
|
-
|
|
|
(215,468)
|
|
|
-
|
|
|
(215,468)
|
|
Other income
(expense), net
|
|
(68)
|
|
|
215,190
|
|
|
253
|
|
|
215,190
|
|
Change in fair value
of warrants
|
|
101,340
|
|
|
445,763
|
|
|
145,708
|
|
|
(33,800)
|
|
Total other expense (income),
net
|
|
936,428
|
|
|
(774,667)
|
|
|
1,708,883
|
|
|
(2,483,953)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income
Before Income Tax Expense
|
|
(9,444,003)
|
|
|
871,311
|
|
|
(10,946,271)
|
|
|
1,124,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Expense
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
(9,444,003)
|
|
|
871,311
|
|
|
(10,946,271)
|
|
|
1,124,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
Dividends
|
|
(4,488)
|
|
|
(4,625)
|
|
|
(9,025)
|
|
|
(9,643)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Available To Common Shareholders
|
|
(9,448,491)
|
|
|
866,686
|
|
|
(10,955,296)
|
|
|
1,114,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain
|
|
492,402
|
|
|
(433,954)
|
|
|
638,679
|
|
|
(10,057)
|
|
Total
Comprehensive Income (Loss)
|
$
|
(8,951,601)
|
|
$
|
437,357
|
|
$
|
(10,307,592)
|
|
$
|
1,114,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
|
(0.37)
|
|
$
|
0.04
|
|
$
|
(0.43)
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
(0.37)
|
|
$
|
0.04
|
|
$
|
(0.43)
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding,
basic
|
|
25,810,980
|
|
|
23,948,851
|
|
|
25,459,203
|
|
|
23,632,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding,
diluted
|
|
25,810,980
|
|
|
24,254,661
|
|
|
25,459,203
|
|
|
23,938,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Carbon
Graphite Group, Inc and subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
2013
|
|
2012
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(10,946,271)
|
|
$
|
1,124,428
|
|
Adjustments to
reconcile net cash provided by (used in)
operating
activities
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
1,395,836
|
|
|
1,360,692
|
|
Related party
interest expenses contribution
|
|
-
|
|
|
222,860
|
|
Stock
compensation
|
|
317,450
|
|
|
374,333
|
|
Change in fair value
of warrants
|
|
(145,708)
|
|
|
33,800
|
|
Bad debt
expenses
|
|
-
|
|
|
-
|
|
Inventory
impairment
|
|
5,328,291
|
|
|
-
|
|
Changes in
operating assets and liabilities
|
|
|
|
|
|
|
Accounts
receivable
|
|
3,318,834
|
|
|
(557,196)
|
|
Notes
receivable
|
|
(5,481,758)
|
|
|
(257,316)
|
|
Other
receivables
|
|
(85,565)
|
|
|
(31,808)
|
|
Advance to
suppliers
|
|
(640,186)
|
|
|
3,529,409
|
|
Inventory
|
|
985,140
|
|
|
(6,755,136)
|
|
Prepaid
expenses
|
|
(691,743)
|
|
|
(2,719)
|
|
Accounts payable and
accrued liabilities
|
|
77,525
|
|
|
2,684,917
|
|
Advance from
customers
|
|
387,073
|
|
|
192,640
|
|
Taxes
payable
|
|
110,025
|
|
|
(444,341)
|
|
Other
payables
|
|
844,271
|
|
|
353,241
|
|
Net cash (used in)
provided by operating activities
|
|
(5,226,786)
|
|
|
1,827,804
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
(2,434)
|
|
|
(37,756)
|
|
Increase of land use
rights
|
|
(116,227)
|
|
|
-
|
|
Addition of
construction in progress
|
|
(16,860,357)
|
|
|
(1,109,403)
|
|
Net cash used in
investing activities
|
|
(16,979,018)
|
|
|
(1,147,159)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Proceeds from issuing
common stock
|
|
-
|
|
|
472,000
|
|
Proceeds from short
term loans
|
|
11,312,400
|
|
|
11,074,000
|
|
Repayments for short
term loans
|
|
(4,848,171)
|
|
|
(17,876,600)
|
|
Proceeds from long
term loans
|
|
21,008,743
|
|
|
4,714,360
|
|
Proceeds from loan
from unrelated parties
|
|
(77,421)
|
|
|
9,162,944
|
|
Payment of loans from
unrelated parties
|
|
-
|
|
|
(9,162,944)
|
|
Proceeds from loan
from related parties
|
|
451,524
|
|
|
31,640
|
|
Repayments to related
parties
|
|
(570,533)
|
|
|
(142,380)
|
|
Proceeds from stock
not yet issued
|
|
-
|
|
|
(145,000)
|
|
Restrict
cash
|
|
(4,848,171)
|
|
|
996,660
|
|
Proceeds from notes
payable
|
|
17,776,629
|
|
|
17,876,600
|
|
Repayments to notes
payable
|
|
(17,776,629)
|
|
|
(16,848,300)
|
|
Net cash provided
by financing activities
|
|
22,428,371
|
|
|
152,980
|
|
|
|
|
|
|
|
Effect of exchange
rate fluctuation
|
|
3,787
|
|
|
(4,185)
|
|
|
|
|
|
|
|
Net increase in
cash
|
|
226,354
|
|
|
829,440
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
129,746
|
|
|
521,450
|
|
|
|
|
|
|
|
Cash and cash
equivalents at ending of period
|
$
|
356,100
|
|
$
|
1,350,890
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
$
|
2,451,059
|
|
$
|
1,643,371
|
|
Income taxes
paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
Non-cash
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
conversion to common stock
|
$
|
-
|
|
$
|
144
|
|
|
|
|
|
|
|
Issuance of common
stock for compensation
|
$
|
317,450
|
|
$
|
153,800
|
|
|
|
|
|
|
SOURCE China Carbon Graphite Group, Inc.