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 first quarter ended March 31, 2012.
First Quarter 2012 Financial Highlights:
Revenue decreased 15.3% year-over-year to approximately $13.7 million.
Refractories sales were approximately $9.9 million, compared with approximately $9.9 million in the first quarter of 2011.
Fine precision abrasives product sales were approximately $2.4 million, compared with approximately $819,000 in the first quarter of 2011.
Fracture proppant sales were approximately $998,000, compared with approximately $5.2 million in the first quarter of 2011.
Gross profit was approximately $2.7 million, or 19.8% of total sales, compared with approximately $4.3 million, or 26.5% of total sales in the same period a year ago.
Total operating expenses increased to approximately $4.4 million, compared with approximately $3.6 million in the first quarter of 2011.
Net loss attributable to the Company was approximately $2.9 million, or $0.11 per share, compared with net loss of approximately $80,000, or $0.003 per share in the first quarter of 2011.
As of March 31, 2012, the Company had cash and cash equivalents of approximately $2.7 million, total equity of approximately $51.1 million and working capital of approximately $8.4 million.
"We experienced a disappointing quarter as a result of weak sales in fracture proppants segment. The continued slowdown in the steel industry also had an unfavorable impact on us," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "While financing costs and operating expenses weighed on our results for the first quarter of 2012, we continue to work towards increasing sales and improving profitability thus create sustainable value for our shareholders."
Financial Results for the Three Months Ended March 31, 2012
For the first quarter of 2012, sales revenue was approximately $13.7 million, a decrease of 15.3%, compared with approximately $16.2 million in the first quarter of 2011. The decrease was mainly attributable to the decreased sales from the fracture proppant segments.
Sales of the Company's core refractory products totaled approximately $9.9 million, or 72.5% of total sales, nearly flat compared with the first quarter of 2011.
Sales of fracture proppant products totaled approximately $998,000, or 7.3% of total sales, a decrease of 80.8%, compared with approximately $5.2 million in the first quarter of 2011. The year-over-year decrease in fracture proppant products sales was mainly due to the decreased sales in the U.S. market as we were unable to sell directly to the end users.
Sales of fine precision abrasives products totaled approximately $2.4 million, compared with approximately $819,000 in the first 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 $332,000, compared with approximately $230,000 in the first quarter of 2011.
Cost of goods sold totaled approximately $11.0 million, a decrease of 7.6%, compared with approximately $11.9 million in the same period of 2011. The decrease in cost of goods sold was a result of the decrease in total revenue.
Gross profit for the three months ended March 31, 2012 was approximately $2.7 million, or 19.8% of revenue, compared with approximately $4.3 million, or 26.5% of revenue in the first quarter of 2011. The decrease in gross profit and gross profit margin for the quarter was mainly attributable to the higher raw material costs and energy costs compared with the same period in 2011.
General and administrative expenses increased by approximately $224,000 to approximately $1.7 million for the first quarter in 2012, from approximately $1.5 million in the same period in 2011. The increase was primarily due to higher preliminary expenses related to our new fracture proppants production facility and higher professional service fees.
Selling expenses increased by approximately $509,000 to approximately $2.5 million in the first quarter of 2012, compared with approximately $2.0 million in the same period in 2011. The increase in selling expenses was primarily attributable to the increase in the allowance for doubtful accounts and higher transportation expenses compared to the same period in 2011.
Finance costs increased by approximately $784,000, or 81.2% to approximately $1.8 million in the first quarter of 2012, from approximately $966,000 in the same period in 2011. The significant increase was primarily attributable to an increase of approximately $709,000 in bills discounting charges as we discounted more bills receivable instead of holding them to maturity; and an increase of approximately $76,000 in interest expenses as we increased borrowing activities in the first quarter of 2012.
Net loss attributable to Company's common stockholders was approximately $2.9 million, or $0.11 per share, compared with approximately $80,000, or $0.003 per share in the same period in 2011. The net loss for the quarter was primarily attributable to the factors described above.
As of March 31, 2012, the Company had cash and cash equivalents totaling approximately $2.7 million, working capital of approximately $8.4 million and total equity of approximately $51.1 million.
