EX-99.1 2 v406170_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

General Steel Reports Fourth Quarter and Full-Year 2014 Financial Results

Fourth Quarter Sales Volume Increased 17.1% Year-Over-Year

Fourth Quarter Net Income Totaled $9.4 million, or $0.16 Per Diluted Share

Fourth Quarter Operating Cash Flow Was $95.2 Million

 

BEIJING – March 31, 2015 – General Steel Holdings, Inc. (“General Steel” or the “Company”) (NYSE: GSI), a leading non-state-controlled steel producer in China, today announced its financial results for the fourth quarter and full-year ended December 31, 2014.

 

Henry Yu, Chairman and Chief Executive Officer of General Steel commented, “During the fourth quarter of 2014, particularly in December, China’s steel mills accelerated production after the required shut-down during the APEC summit, which caused rapid deterioration in the average selling prices of steel products. We believe the near-term challenges for the steel sector will likely linger, and as such, we are strategically accelerating our business transformation.”

 

“The formation of our RFID joint venture in February 2015, and the joint venture for new petroleum storage facility under-preparation in Maoming City are excellent initial steps in our transformation into the Internet-of-Things and Logistics sectors. We are encouraged by our progress to date, and we anticipate these new joint ventures will drive strong synergies and efficiency enhancements for the whole organization.”

 

John Chen, Chief Financial Officer of General Steel, commented, “Despite the persistently tough steel industry fundamentals, we continued to receive support from our SOE partners and local governments with favorable payment and credit terms that helped us to generate $95.2 million in operating cash flow during the fourth quarter. As we transform our organization, we will proactively review our strategy and asset portfolio and seek to restructure low-efficient, non-core assets, as well as idle land resources to unlock hidden fair value. We aim to transform into a leaner and fitter organization with better profitability, and based on the rapid progress of our recently-formed joint ventures, we believe we are well on our way.”

 

Fourth Quarter 2014 Financial Information

 

·Sales volume increased by 17.1% year-over-year to approximately 1.35 million metric tons, compared with 1.15 million metric tons in the fourth quarter of 2013.
·Sales totaled $544.4 million, compared with $548.7 million in the fourth quarter of 2013.
·Gross loss was $(34.3) million, or (6.3%) of total sales, compared with $(32.7) million, or (6.0%) of total sales in the fourth quarter of 2013.
·Income from operations totaled $22.7 million, compared with $21.7 million in the fourth quarter of 2013.
·Net income attributable to the Company was $9.4 million, or $0.16 per diluted share, compared with a net loss of $102,000, or $(0.002) per share in the fourth quarter of 2013.
·As of December 31, 2014, the Company had cash and restricted cash of $367.3 million.

 

 
 

 

General Steel Holdings, Inc.

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Full Year 2014 Financial Information

 

·Sales volume increased by 6.3% year-over-year to approximately 5.42 million metric tons, compared with 5.10 million metric tons in 2013.
·Sales were $2.3 billion, compared with $2.5 billion in 2013.
·Gross loss narrowed to $(19.2) million, or (0.8%) of total sales, compared with a gross loss of $(55.9) million, or (2.3%) of total sales in 2013.
·Loss from operations was $(6.7) million, compared with income from operations of $34.4 million in 2013.
·Net loss attributable to the Company was $(48.7) million, or $(0.86) per diluted share, compared with $(33.0) million, or $(0.60) per diluted share in 2013.

 

Fourth Quarter 2014 Financial and Operating Results

 

Total Sales

 

Total sales for the fourth quarter of 2014 decreased slightly by 0.8% year-over-year to $544.4 million, compared with $548.7 million in the fourth quarter of 2013. The year-over-year sales decrease was primarily due to a decrease in in average selling price of rebar, partially offset by increased total sales volume.

 

·Total sales volume in the fourth quarter of 2014 was 1.35 million metric tons, an increase of 17.1% compared with 1.15 million metric tons in the fourth quarter of 2013.
·The average selling price of rebar at Longmen Joint Venture in the fourth quarter of 2014 decreased to approximately $403.5 per metric ton, down by 14.9% from $474.3 per metric ton in the fourth quarter of 2013.

 

Gross Loss

 

Gross loss for the fourth quarter of 2014 was $(34.3) million, or (6.3)% of total sales, as compared with gross loss of $(32.7) million, or (6.0)% of total sales in the fourth quarter of 2013. The decrease in gross margin was mainly due to a steeper decrease in average selling price of rebar, compared with the decrease in unit cost of manufactured rebar, as well as higher allowance for inventory during the fourth quarter of 2014.

 

Operating Expenses and Income from Operations

 

Selling, general and administrative expenses for the fourth quarter of 2014 were $22.2 million, a decrease of 10.3% from $24.8 million in the fourth quarter of 2013. Driven by effective headcount expense control, general and administrative expenses decreased to $12.8 million in the fourth quarter of 2014, compared with $15.3 million in the fourth quarter of 2013. Selling expenses were $9.4 million in the fourth quarter of 2014, compared with from $9.5 million in the same period of 2013.

 

Other operating income from a change in the fair value of profit sharing liability during the fourth quarter of 2014 was $79.3 million, compared with $79.1 million recognized in the same period of last year.

 

Correspondingly, income from operations for the fourth quarter of 2014 increased slightly to $22.7 million, compared with $21,7 million for the fourth quarter of 2013.

 

 
 

 

General Steel Holdings, Inc.

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Finance Expense

 

Finance and interest expense in the fourth quarter of 2014 was $21.9 million, of which, $5.3 million was the non-cash interest expense on capital lease, as compared with $5.5 million in the same period of 2013, and $16.6 million was the interest expense on bank loans and discounted note receivables, as compared with $17.5 million in the same period of 2013.

 

Net Income/Loss and Net Income/Loss per Share

 

Net income attributable to General Steel for the fourth quarter of 2014 was $9.4 million, or $0.16 per diluted share, based on 59.8 million weighted average shares outstanding. This compares to a net loss attributable to General Steel of $(102,000), or $(0.002) per share, based on 55.6 million weighted average shares outstanding in the fourth quarter of 2013. The increase in shares count of weighted average shares outstanding was primarily due to the issuance of 5 million Common Stock pursuant to the $7.5 million Private Placement the Company closed in October 2014.

 

Full Year 2014 Financial and Operating Results

 

Total Sales

 

Total sales for the year 2014 decreased by 7.1% year-over-year to $2.3 billion, compared with $2.5 billion in 2013. The year-over-year sales decrease was primarily due to a decrease in in average selling price of rebar, partially offset by increased total sales volume.

 

·Total sales volume in year 2014 was 5.42 million metric tons, an increase of 6.3% compared with 5.10 million metric tons in 2013.
·The average selling price of rebar at Longmen Joint Venture in 2014 decreased to approximately $422.2 per metric ton, down by 14.0% from $490.7 per metric ton in 2013.

 

Gross Loss

 

Gross loss for the year 2014 was $(19.2) million, or (0.8)% of total sales, as compared with a gross loss of $(55.9) million, or (2.3%) of total sales in 2013. The improvement in annual gross margin was mainly attributable to steeper decrease in unit costs of rebar manufactured than the average selling price of rebar.

 

Operating Expenses and Loss/Income from Operations

 

Selling, general and administrative expenses for the year 2014 were $78.6 million, a decreased of 6.7% from $84.2 million in 2013. General and administrative expenses decreased to $44.5 million, compared with $50.1 million in the same period of 2013. Selling expenses totaled $34.1 million, unchanged from the same period of 2013.

 

Other operating income from a change in the fair value of profit sharing liability in 2014 was $91.0 million, compared with $174.6 million in the same period of last year.

 

 
 

 

General Steel Holdings, Inc.

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Correspondingly, loss from operations for the year 2014 was $(6.7) million, compared with income from operations of $34.4 million in 2013.

 

Finance Expense

 

Finance and interest expense for the year 2014 was $96.7 million, of which, $21.3 million was the non-cash interest expense on capital lease, as compared with $20.8 million in the same period of 2013, and $75.4 million was the interest expense on bank loans and discounted note receivables, as compared with $71.1 million in 2013.

 

Net Loss and Net Loss per Share

 

Net loss attributable to General Steel for the year 2014 was $(48.7) million, or $(0.86) per diluted share, based on 56.8 million weighted average shares outstanding. This compares to a net loss attributable to General Steel of $(33.0) million, or $(0.60) per diluted share, based on 55.1 million weighted average shares outstanding in 2013.

 

Balance Sheet

 

As of December 31, 2014, the Company had cash and restricted cash of approximately $367.3 million, compared to $431.3 million as of December 31, 2013. The Company had an inventory balance of $156.3 million as of December 31, 2014, compared to $212.9 million as of December 31, 2013.

 

Conference Call and Webcast:

 

General Steel will hold a corresponding conference call and live webcast at 8:00 a.m. EDT on Tuesday, March 31, 2015 (which corresponds to 8:00 p.m. Beijing/Hong Kong Time on Tuesday, March 31, 2015) to discuss the results and answer questions from investors. Listeners may access the call by dialing:

 

US Toll Free: 1-888-346-8982
International Toll: 1-412-902-4272
China Toll Free: 400-120-1203
Hong Kong Toll Free: 800-905-945
Conference ID: General Steel Holdings

 

The call will also be available as a live, listen-only Webcast under the "Events and Presentations" page on the "Investor Relations" section of the Company's Website at http://www.corpasia.net/us/GSI/irwebsite/index.php?mod=event. Following the live Webcast, an online archive of the Webcast will be available for 90 days.

 

A replay of the conference call may be accessed through April 4, 2015 by dialing:

 

US Toll Free: 1-877-344-7529
International Toll: 1-412-317-0088
Access Code: 10062338

 

 
 

 

General Steel Holdings, Inc.

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About General Steel Holdings, Inc.

 

General Steel Holdings, Inc. is a leading non-state-owned steel maker headquartered in Beijing, China. With seven million metric tons of crude steel production capacity under management and operations in Tianjin municipality and China’s Shaanxi and Guangdong provinces, the Company produces a variety of steel products including rebar and high-speed wire.

 

In addition to its steel business, the Company also designs, manufactures, and integrates radio frequency identification (“RFID”) systems. The Company’s RFID technology provides real-time data on supplies, inventory, and goods, thereby greatly enhancing its customers’ administration and planning processes, as well as, asset tracking and supply chain management. For more information, please visit www.gshi-steel.com.

 

To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company’s Annual Report on Form 10-K, please send your request to investor.relations@ gshi-steel.com.

 

Forward-Looking Statements

 

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, including those disclosed in the Company's most recent Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

 

Contact Us

 

General Steel Holdings, Inc.

Joyce Sung

Tel: +1-347-534-1435

Email: joyce.sung@gshi-steel.com

 

Asia Bridge Capital Limited

Carene Toh

Tel: +1-888-957-3362

Email: generalsteel@asiabridgegroup.com

 

 
 

  

General Steel Holdings, Inc.

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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

   December 31,   December 31, 
   2014   2013 
ASSETS          
CURRENT ASSETS:          
           
Cash  $11,641   $31,967 
Restricted cash   355,685    399,333 
Notes receivable   10,290    60,054 
Restricted notes receivable   111,801    395,589 
Loan receivable   36,001    - 
Loans receivable - related parties   34,713    4,540 
Accounts receivable, net   9,321    4,078 
Accounts receivable - related parties   8,498    2,942 
Other receivables, net   63,746    54,716 
Other receivables - related parties   39,670    54,106 
Inventories   156,327    212,921 
Advances on inventory purchase   73,819    44,897 
Advances on inventory purchase - related parties   45,617    83,003 
Prepaid expense and other   4,803    1,388 
Prepaid taxes   5,789    28,407 
Short-term investment   2,688    2,783 
TOTAL CURRENT ASSETS   970,409    1,380,724 
           
PLANT AND EQUIPMENT, net   1,543,136    1,271,907 
           
OTHER ASSETS:          
Advances on equipment purchase   11,438    6,409 
Investment in unconsolidated entities   16,823    16,943 
Long-term deferred expense   458    668 
Intangible assets, net of accumulated amortization   22,960    23,707 
TOTAL OTHER ASSETS   51,679    47,727 
           
TOTAL ASSETS  $2,565,224   $2,700,358 
           
LIABILITIES AND DEFICIENCY          
CURRENT LIABILITIES:          
Short term notes payable  $661,635   $1,017,830 
Accounts payable   612,801    434,979 
Accounts payable - related parties   207,783    235,692 
Short term loans - bank   257,502    301,917 
Short term loans - others   60,717    62,067 
Short term loans - related parties   46,380    126,693 
Current maturities of long-term loans - related party   -    53,013 
Other payables and accrued liabilities   55,488    45,653 
Other payable - related parties   87,252    94,079 
Customer deposits   92,974    87,860 
Customer deposits - related parties   132,616    64,881 
Deposit due to sales representatives   17,871    24,343 
Deposit due to sales representatives - related parties   2,509    1,997 
Taxes payable   5,201    4,628 
Deferred lease income, current   2,176    2,187 
Capital lease obligations, current   8,508    4,321 
TOTAL CURRENT LIABILITIES   2,251,413    2,562,140 
           
NON-CURRENT LIABILITIES:          
Long-term loans - related party   339,549    19,644 
Deferred lease income, noncurrent   72,713    75,257 
Capital lease obligations, noncurrent   393,252    375,019 
Profit sharing liability   70,422    162,295 
TOTAL NON-CURRENT LIABILITIES   875,936    632,215 
           
TOTAL LIABILITIES   3,127,349    3,194,355 
           
COMMITMENTS AND CONTINGENCIES          
           
DEFICIENCY:          
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding as of December 31, 2014 and December 31, 2013   3    3 
Common stock, $0.001 par value, 200,000,000 shares authorized, 64,458,588 and 58,234,688 shares issued, 61,986,282 and 55,762,382 shares outstanding as of December 31, 2014 and December 31, 2013, respectively   64    58 
Treasury stock, at cost, 2,472,306 shares as of December 31, 2014 and December 31, 2013   (4,199)   (4,199)
Paid-in-capital   115,494    106,878 
Statutory reserves   6,472    6,243 
Accumulated deficits   (463,521)   (414,798)
Accumulated other comprehensive income   644    729 
TOTAL GENERAL STEEL HOLDINGS, INC. DEFICIENCY   (345,043)   (305,086)
           
NONCONTROLLING INTERESTS   (217,082)   (188,911)
           
TOTAL DEFICIENCY   (562,125)   (493,997)
           
TOTAL LIABILITIES AND DEFICIENCY  $2,565,224   $2,700,358 

 

 
 

 

General Steel Holdings, Inc.

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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

 

   For the
Three months ended December 31,		   For the
Twelve months ended December 31,		 
   2014   2013   2014   2013 
   (UNAUDITED)   (UNAUDITED)         
SALES  $423,508   $482,218   $1,900,292   $2,016,548 
SALES - RELATED PARTIES   120,858    66,492    389,120    447,199 
TOTAL SALES   544,366    548,710    2,289,412    2,463,747 
                     
COST OF GOODS SOLD   453,531    511,741    1,913,549    2,062,570 
COST OF GOODS SOLD - RELATED PARTIES   125,144    69,669    395,029    457,115 
TOTAL COST OF GOODS SOLD   578,675    581,410    2,308,578    2,519,685 
                     
GROSS (LOSS) PROFIT   (34,309)   (32,700)   (19,166)   (55,938)
                     
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   (22,219)   (24,762)   (78,555)   (84,226)
CHANGE IN FAIR VALUE OF PROFIT SHARING LIABILITY   79,260    79,132    91,018    174,569 
                     
INCOME (LOSS) FROM OPERATIONS   22,732    21,670    (6,703)   34,405 
                     
OTHER INCOME (EXPENSE)                    
Interest income   11,675    2,557    21,700    11,214 
Finance/interest expense   (21,937)   (22,963)   (96,673)   (91,878)
Change in fair value of derivative liabilities -warrants   -    (1)   -    - 
Gain (loss) on disposal of equipment and intangible assets   (1,008)   311    (1,125)   424 
Government grant   327    4,216    327    4,216 
Income from equity investments   40    66    139    203 
Foreign currency transaction gain   (543)   946    786    1,394 
Lease income   545    545    2,175    2,158 
Gain on deconsolidation of a subsidiary   1,795    1,011    1,795    1,011 
Payment for public highway construction   -    (6,462)   -    (6,462)
Other non-operating income (expense), net   (536)   (515)   (428)   1,044 
Other expense, net   (9,642)   (20,289)   (71,304)   (76,676)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST   13,090    1,381    (78,007)   (42,271)
                     
PROVISION FOR INCOME TAXES                    
Current   64    153    269    354 
Deferred   -    -    -    - 
Provision for income taxes   64    153    269    354 
                     
NET INCOME (LOSS)   13,026    1,228    (78,276)   (42,625)
                     
Less: Net income (loss) attributable to noncontrolling interest   3,676    1,330    (29,553)   (9,609)
                     
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.  $9,350   $(102)  $(48,723)  $(33,016)
                     
NET INCOME (LOSS)  $13,026   $1,228   $(78,276)  $(42,625)
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Foreign currency translation adjustments   81    (2,142)   590    (14,425)
                     
COMPREHENSIVE INCOME (LOSS)   13,107    (914)   (77,686)   (57,050)
                     
Less: Comprehensive income (loss) attributable to noncontrolling interest   3,150    401    (28,652)   (15,107)
                     
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC.  $9,957   $(1,315)  $(49,034)  $(41,943)
                     
WEIGHTED AVERAGE NUMBER OF SHARES                    
Basic and Diluted   59,796    55,570    56,841    55,126 
                     
LOSS PER SHARE                    
Basic and Diluted  $0.16   $(0.002)  $(0.86)  $(0.60)

 

 
 

  

General Steel Holdings, Inc.

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GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

   For the
Twelve months ended December 31,		 
   2014   2013 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(78,276)  $(42,625)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:          
Depreciation, amortization and depletion   96,277    89,048 
Change in fair value of derivative liabilities        (1)
Change in fair value of profit sharing liability   (91,018)   (174,569)
(Gain) loss on disposal of equipment and intangible assets   1,125    (424)
Provision for doubtful accounts   10,110    (677)
Reservation of mine maintenance fee   296    327 
Stock issued for services and compensation   1,122    1,165 
Amortization of deferred financing cost on capital lease   21,252    20,799 
Income from equity investments   (139)   (203)
Foreign currency transaction (gain) loss   (786)   (1,394)
Gain on deconsolidation of a subsidiary   (1,795)   (1,011)
Deferred lease income   (2,175)   (2,158)
Changes in operating assets and liabilities          
Notes receivable   51,841    25,555 
Accounts receivable   (6,037)   1,281 
Accounts receivable - related parties   (5,694)   12,161 
Other receivables   (13,029)   (1,116)
Other receivables - related parties   8,005    (48,017)
Inventories   50,950    (40,632)
Advances on inventory purchases   (32,293)   25,414 
Advances on inventory purchases - related parties   8,332    (145,686)
Prepaid expense and other   (3,418)   (916)
Long-term deferred expense   206    422 
Prepaid taxes   22,464    (3,485)
Accounts payable   49,705    23,760 
Accounts payable - related parties   (26,227)   113,034 
Other payables and accrued liabilities   8,580    (10,508)
Other payables - related parties   (6,370)   8,332 
Customer deposits   6,134    (41,069)
Customer deposits - related parties   68,007    41,636 
Taxes payable   735    (12,367)
Net cash provided by (used in) operating activities   137,884    (163,924)
CASH FLOWS FROM INVESTING ACTIVITIES:          
Restricted cash   41,669    (64,860)
Proceeds from dividends declared   545    - 
Loan to unrelated parties   (35,977)   - 
Loans to related parties   -    (200)
Repayments from related parties   4,540    1,660 
Cash proceeds from (made to) short term investment   81    (81)
Cash proceeds from sales of equipment and intangible assets   36    160 
Equipment purchase and intangible assets   (239,633)   (43,355)
Cash proceeds from sale of equity ownership   -    13,619 
Effect on cash due to deconsolidation of a subsidiary   (267)   (12,735)
Net cash used in investing activities   (229,006)   (105,792)
           
CASH FLOWS FINANCING ACTIVITIES:          
Capital contributed by noncontrolling interest   -    18,028 
Notes receivable - restricted   281,665    (26,066)
Borrowings on short term notes payable   1,570,660    1,913,987 
Payments on short term notes payable   (1,921,644)   (1,911,006)
Borrowings on short term loans - bank   358,001    371,685 
Payments on short term loans - bank   (402,259)   (222,104)
Borrowings on short term loan - others   47,797    69,632 
Payments on short term loans - others   (53,403)   (72,989)
Borrowings on short term loan - related parties   -    393,833 
Payments on short term loans - related parties   (28,712)   (248,119)
Deposits due to sales representatives   (6,348)   (10,455)
Deposits due to sales representatives - related parties   521    711 
Borrowings on long-term loans - related party   219,929    - 
Payments on long-term loans - related party   (1,700)   (22,940)
Principal payment under capital lease obligation   (1,375)   (218)
Proceed from common stock issued to CEO   7,500    - 
Net cash provided by financing activities   70,632    253,979 
EFFECTS OF EXCHANGE RATE CHANGE IN CASH   164    1,237 
DECREASE IN CASH   (20,326)   (14,500)
CASH, beginning of year   31,967    46,467 
CASH, end of year  $11,641   $31,967