China GengSheng Minerals, Inc., a leading China-based high-tech industrial materials manufacturer producing heat-resistant, energy-efficient materials for a variety of industrial applications, today announced its financial results for the second quarter ended June 30, 2012.
"Our sales recovered gradually from the disappointing first quarter as we stabilized refractory products sales and re-positioned our sales of fracture proppant products to the domestic market. In particular, our sales of fine precision abrasives products achieved significant increase year-over-year despite the challenging market conditions we are facing,” said Mr. Shunqing Zhang, China GengSheng’s Chairman and Chief Executive Officer. “While rising costs continued to put pressure on our bottom line number, we still have confidence in our ability and readiness to capture new market opportunities.”
Financial Results for the Three Months Ended June 30, 2012
For the second quarter of 2012, sales revenue was approximately $19.6 million, a decrease of 4.0%, compared with approximately $20.4 million in the second quarter of 2011. The decrease was mainly attributable to the decreased sales of our fracture proppant products.
Sales of the Company’s core refractory products totaled approximately $11.6 million, or 59.2% of total sales, a decrease of 7.4%, compared with approximately $12.5 million in the same period of 2011.
Sales of fracture proppant products totaled approximately $4.2 million, or 21.5% of total sales, a decrease of 28.9%, compared with approximately $5.9 million in the second quarter of 2011. The year-over-year decrease in fracture proppant products sales revenue was mainly due to the larger portion of sales to the domestic market where the fracture proppant products are typically priced lower than that in the U.S. market.
Sales of fine precision abrasives products totaled approximately $3.3 million, compared with approximately $1.5 million in the second quarter of 2011. The increase in sales revenue was primarily due to the increased sales to a major customer.
Sales of industrial ceramics were approximately $530,000, compared with approximately $492,000 in the second quarter of 2011.
Cost of goods sold totaled approximately $16.6 million, an increase of 9.7%, compared with approximately $15.1 million in the same period of 2011. This increase was primarily due to the higher raw material costs and energy costs compared with the same period in 2011.
Gross profit for the three months ended June 30, 2012 was approximately $3.1 million, or 15.6% of revenue, compared with approximately $5.3 million, or 26.1% of revenue in the second quarter of 2011. The decrease in gross profit and gross profit margin for the quarter was mainly attributable to the decreased gross profit margin in our fine precision abrasives segment and fracture proppants segment.
General and administrative expenses increased by approximately $307,000 to approximately $1.9 million for the second quarter in 2012, from approximately $1.6 million in the same period in 2011. The increase was primarily due to the loss on disposal of equipment in our fine precision abrasives segment as we upgraded the production facilities and the increase in depreciation expenses and salary expenses.
Selling expenses stayed flat at approximately $2.8 million in the second quarter of 2012, compared with the same period in 2011.
Finance costs increased by approximately $379,000, or 24.1% to approximately $2.0 million in the second quarter of 2012, from approximately $1.6 million in the same period in 2011. The increase was primarily attributable to an increase of approximately $606,000 in interest expenses as we increased borrowing activities in the second quarter of 2012.
Net loss attributable to Company’s common stockholders was approximately $3.8 million, or $0.14 per share, compared with approximately $247,000, or $0.01 per share in the same period in 2011. The net loss for the quarter was primarily attributable to the factors described above.
As of June 30, 2012, the Company had cash and cash equivalents totaling approximately $5.2 million, working capital of approximately $5.3 million and total equity of approximately $47.3 million.
